Customer relationship management software maker Salesforce (NYSE:CRM) will be reporting results tomorrow after market close. Here’s what you need to know.
Salesforce beat analysts’ revenue expectations by 1% last quarter, reporting revenues of $9.44 billion, up 8.3% year on year. It was a mixed quarter for the company, with a solid beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations.
Is Salesforce a buy or sell going into earnings? Read our full analysis here, it’s free.
This quarter, analysts are expecting Salesforce’s revenue to grow 8.1% year on year to $10.04 billion, slowing from the 10.8% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $2.61 per share.
Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Salesforce has only missed Wall Street’s revenue estimates once over the last two years, exceeding top-line expectations by 1.1% on average.
Looking at Salesforce’s peers in the sales and marketing software segment, some have already reported their Q4 results, giving us a hint as to what we can expect. Freshworks delivered year-on-year revenue growth of 21.5%, beating analysts’ expectations by 2.7%, and HubSpot reported revenues up 20.8%, topping estimates by 4.4%. Freshworks’s stock price was unchanged after the results, while HubSpot was up 4.3%.
Read our full analysis of Freshworks’s results here and HubSpot’s results here.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market has been optimistic as of late due to a soft landing. This is an economic situation where rate hikes successfully quelled inflation but did not send the economy into a recession. Furthermore, recent rate cuts and Donald Trump's triumph in the 2024 Presidential election have been tailwinds for the market, and while some of the sales and marketing software stocks have shown solid performance, the group has generally underperformed, with share prices down 4.8% on average over the last month. Salesforce is down 11% during the same time and is heading into earnings with an average analyst price target of $395.72 (compared to the current share price of $309.69).
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