Stock in the Dow Jones index experiencing an uptick in after-hours trading on Tuesday evening.
Salesforce, the leading customer relationship management (CRM) company, has released its financial projections for the upcoming quarters and the full fiscal year 2025. The tech giant expects a slight dip in its Q2 FY 2025 revenue and earnings per share (EPS), but maintains a positive outlook for the rest of the year and into FY26.
For Q2 FY 2025, Salesforce anticipates revenue of $9.2 billion to $9.25 billion, with adjusted EPS between $2.34 and $2.36. These figures are slightly below consensus estimates of $9.37 billion revenue and $2.40 EPS. However, for the full fiscal year 2025, Salesforce maintains a revenue guidance range of $37.7 billion to $38 billion, reflecting year-over-year growth of about 8% to 9%.
Despite some moderation in revenue guidance earlier in the year, Salesforce is projected to finish FY25 with approximately $37.9 billion in revenue and a significant net income increase to $6.2 billion, up nearly 50%. This indicates strong operational improvements for the company.
Looking beyond FY25, analysts project Q3 2025 to Q1 2026 revenue around $9.44 billion to $9.99 billion, with the midpoint revenue guidance for Q2 2026 at about $10.14 billion. The expected EPS for Q2 2026 is approximately $2.77, signifying continued growth for Salesforce.
Operating cash flow for the full year is expected to rise by 21% to 22%. Salesforce has also reduced its sales estimate by roughly $300 million from its previous forecast of $32 billion to $32.1 billion for the full year. Despite being one of the worst performers in the Dow in 2022, Salesforce is seen by some investors as a good candidate for a bounce.
Salesforce's professional services segment saw a 30% year-over-year increase in revenue during the quarter, while subscription and support revenue grew at a 24% annual rate. Salesforce reported a 24% year-over-year increase in revenue for the quarter ending April 30, reaching $7.41 billion. The company expects sales of $7.69 billion to $7.7 billion for the fiscal second quarter ending in July, a 21% increase from year-earlier levels. Adjusted earnings for the fiscal second quarter are projected to rise slightly to between $1.01 and $1.02 per share.
Salesforce's adjusted net income for the quarter was $982 million, down from $1.14 billion in the same quarter last year. For the full year, Salesforce projects revenue of $31.7 billion to $31.8 billion, up 20% from fiscal 2022. The company also projects adjusted earnings of $4.74 to $4.76 per share for the full year.
In terms of its financial obligations, about half of Salesforce's remaining performance obligations consist of current obligations, with the remaining performance obligations being 20% higher than the previous year, at approximately $42 billion. The company expects a 15% increase in current remaining performance obligations for the fiscal second quarter.
In summary, Salesforce's financial projections for the upcoming quarters and the full fiscal year 2025 reflect a modest shortfall in near-term Q2 FY 2025 revenue and EPS expectations versus consensus but an overall positive trajectory with increasing efficiency and profitability metrics for FY25 and into FY26.
Investors in Salesforce may find the tech giant's financial projections encouraging, as it anticipates an increase in revenue and earnings in the future. Despite a slight dip in Q2 FY 2025 revenue and earnings per share, the company maintains a positive outlook for the rest of the year and into FY26.
Salesforce's financial strategy seems to be heavily focused on the business sector and technology, as evidenced by the strong growth in its professional services segment and its revenue from subscription and support.
The expected operational improvements and net income increase for FY25, along with the projected growth in revenue and earnings for Q3 2025 to Q1 2026, demonstrate that Salesforce is poised for significant financial growth in the coming fiscal years.
