To The Moon

$Salesforce.com(CRM)$ is scheduled to release its Q1 Fiscal Year 2026 earnings after market close on Wednesday, 28 May 2025.

Earnings Per Share (EPS): Analysts generally expect Salesforce to report adjusted EPS in the range of $1.87 to $2.55. Salesforce's own guidance (issued after Q4 FY 2025): $2.53 to $2.55. We need to note that there is a fair bit of variance in these analyst estimates.

Revenue: The consensus revenue forecast for Q1 FY 2026 is around $9.750 billion. Salesforce's own guidance for Q1 revenue was between $9.71 billion and $9.76 billion. This would represent a year-over-year increase of approximately 6.76%.

Analysts generally expect a slight decline in adjusted EPS compared to Q1 FY 2025 ($1.90 reported in Q1 FY2025 by some sources, though Public.com shows $2.44 for Q1 FY 2025). Revenue is expected to show modest year-over-year growth.

Salesforce (CRM) Last Positive Earnings Call Saw Share Price Declined By 6.12%

Salesforce had a positive earnings call on 26 Feb 2025 which saw its share price declined by 6.12% since.

The earnings call highlighted Salesforce's strong financial performance, particularly its record-breaking revenue and successful deployment of Agentforce, contributing to significant productivity and efficiency gains. However, foreign exchange headwinds and challenges in specific industry segments were noted. Despite these, the overall sentiment remains positive due to the company's robust growth metrics and optimistic outlook for fiscal 2026.

Salesforce (CRM) Guidance

In the Salesforce Fourth Quarter and Full Year Fiscal 2025 Results Conference Call, the company provided robust guidance for the upcoming fiscal year. Salesforce reported a record $13.1 billion in operating cash flow for FY25 and set a guidance of approximately $14.5 billion for FY26.

Revenue for FY25 was $37.9 billion, marking a 9% year-over-year increase, with Q4 alone reaching $10 billion. They also surpassed $60 billion in Remaining Performance Obligation (RPO).

The company expects FY26 revenue to be between $40.5 billion and $40.9 billion, with a 7% to 8% year-over-year increase. Salesforce emphasized growth in their Data Cloud and AI products, which saw 120% year-over-year growth, and Agentforce, which secured over 3,000 paying customers shortly after launch. The company projects a FY26 non-GAAP operating margin of 34%, up from 33% in FY25, and non-GAAP diluted EPS between $11.09 and $11.17. The focus for the coming year will be on the expansion of Agentforce and integrating AI into their offerings, expecting it to drive significant productivity and efficiency gains for customers.

Factors to Watch and Potential Influences

AI Integration and Agentforce: Salesforce has been heavily emphasizing its AI offerings, particularly "Agentforce." Investors will be keen to hear updates on its adoption, revenue contribution, and how it's impacting sales cycles. While partners have expressed optimism, some have noted that AI decisions are taking longer, and cost parameters could potentially limit full utilization. Details on the pricing model (e.g., $2 per interaction) and its impact on margins will be important.

Agentforce has been deployed by thousands of brands, achieving significant productivity and efficiency gains. In just 90 days, 3,000 paying customers were onboarded. Data Cloud and AI annual recurring revenue grew nearly 120% year-over-year, reaching $900 million.

Subscription and Support Revenue Growth: This is a core driver for Salesforce. While Q4 FY2025 saw 8% year-over-year growth in this segment, it still missed analyst expectations. Investors will be looking for improved performance here. Remaining Performance Obligation (RPO) surpassed $60 billion for the first time, reaching $63.4 billion, up 11% year-over-year.

Guidance for Q2 FY2026 and Full Fiscal Year 2026: Salesforce's guidance for Q1 FY2026 and the full fiscal year 2026 after its Q4 FY2025 results disappointed investors, leading to a stock dip. The company's updated outlook for future quarters will be crucial for market reaction.

Salesforce achieved a non-GAAP operating margin of 33%, up 250 basis points year-over-year.

Macroeconomic Environment: The broader economic climate can influence enterprise software spending. Any commentary on customer spending patterns or pipeline strength will be closely monitored.

Salesforce experienced a $300 million FX headwind in Q4, impacting growth rates. While Health and Life Sciences performed well, Technology, Manufacturing, Automotive, and Energy were more measured.

Competition: The competitive landscape in the CRM and cloud software space remains intense. Salesforce's ability to maintain its market position and differentiate through innovation (especially AI) will be key. The professional services business continues to be a headwind to growth, leaning more on partner ecosystems.

Salesforce (CRM) Price Target

Based on 48 analysts from Tiger Brokers offering 12 month price targets for Salesforce in the last 3 months. The average price target is $357.08 with a high forecast of $442.00 and a low forecast of $200.00. The average price target represents a 26.12% change from the last price of $288.06.

Salesforce reported Q4 FY2025 adjusted EPS of $2.78, beating analyst estimates of $2.61. Revenue for Q4 FY2025 was $10 billion, which slightly missed the consensus estimate of $10.04 billion. Subscription and support revenue grew 8% year-over-year.

So if Salesforce were to meet or exceed previous earnings target, we could see a move to the higher end of the price target band.

Technical Analysis - Exponential Moving Average (EMA)

The stock price experienced a dip following Q4 FY 2025 earnings due to the somewhat disappointing Q1 and full-year FY2026 guidance. We are seeing negative momentum since its last Q4 FY 2025 earnings, and only recently a positive momentum start to form.

But one thing to note is the sideway trading along the 200-day period, which could indicate some concern of whether Salesforce can overcome its headwinds, especially when the foreign exchange headwinds impact its growth rates. This is on top of the competition headwind in the professional services business.

Though the headwind concerns might continue to haunt the investors, we are not seeing any increased short interest which could indicate that investors are not planning to take profits or sell off.

But we need to stay cautious if there is any significant improvement in RPO and share price, investors might start to take profit.

Summary

While Salesforce has a history of beating EPS estimates, the market will be keenly focused on the company's revenue performance, the trajectory of its AI initiatives, and its updated guidance for the rest of fiscal year 2026 to gauge its growth prospects and overall health.

I will be watching Salesforce earnings result closely as there might be some surprise from the RPO growth, but can this growth override the headwinds Salesforce faced.

Appreciate if you could share your thoughts in the comment section whether you think Salesforce can overcome the headwinds with a better RPO growth.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.