Salesforce Stock Eyes Record Following AI-Fueled Q3 Sales Outperformance: Retail Upbeat

Customer relationship management software provider Salesforce, Inc. ($CRM) shares rallied sharply in premarket trading following the release of fiscal year 2025 third-quarter results.

The San Francisco, California-based company reported third-quarter non-GAAP earnings per share (EPS) of $2.41, missing the consensus estimate of $2.44. However, the bottom line exceeded the year-ago quarter’s $2.11

The non-GAAP EPS was hit by a loss of $0.18 per share, stemming from strategic investments.

Revenue rose 8% year-over-year (YoY) from $8.72 billion to $9.44 billion, exceeding the consensus estimate of $9.35 billion and the high end of the guidance range of $9.31 billion—$9.36 billion.

Among operational metrics, the remaining performance obligations rose 10% YoY to $26.4 billion, the same pace of increase as in the previous quarter.

Third-quarter non-GAAP operating margin was at 33.1%. Salesforce generated $1.98 billion in operating cash flow and $1.78 billion in free cash flow.

Marc Benioff, Salesforce's chair and CEO, said, “We delivered another quarter of exceptional financial performance across revenue, margin, cash flow, and cRPO.”

“Agentforce, our complete AI system for enterprises built into the Salesforce Platform, is at the heart of a groundbreaking transformation.”

Looking ahead, the company guided to fourth-quarter non-GAAP EPS of $2.57-$2.62 and revenue of $9.90 billion—$10.10 billion. This compares to the $2.65 and $10.05 billion consensus, respectively.

The company nudged the low end of its full-year revenue guidance from $37.7 billion to $37.8 billion while maintaining the high end at $38 billion. Analysts, on average, estimate revenue of $37.87 billion for the year. It maintained the YoY subscription and support revenue growth guidance of slightly below 10%.

Salesforce raised the full-year operating margin and operating cash flow growth guidance.

It now anticipates non-GAAP EPS of $9.98-$10.03 for fiscal year 2025, compared to the $10.09 consensus.

Following the earnings, sell-side analysts raised their price targets for Salesforce stock, the Fly reported. Wells Fargo upped the price target from $330 to $345, Piper Sandler from $395 to $405, and Barclays from $415 to $425.

CRM sentiment and message volume December 4, 2024, premarket as of 6:@8 am ET | Source: Stocktwits

On Stocktwits, sentiment toward Salesforce stock improved to ‘extremely bullish’ (97/100) from ‘neutral’ a day ago, with increased optimism accompanied by ‘extremely high’ message volume.

The retail crowd was particularly impressed with the company’s cash flow generation, among other things.

Some did question the strong post-earnings stock reactions, given the earnings were about in line.

In premarket trading, as of 6:28 a.m. ET, Salesforce stock jumped 13.10% to $374.84. If the premarket gain is sustained in the regular session, the stock is on track to scale a new peak. It has gained over 27% this year. 

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