Salesforce (NYSE:CRM) Reports Q4 In Line With Expectations But Full-Year Guidance Underwhelms

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Salesforce (NYSE:CRM) Reports Q4 In Line With Expectations But Full-Year Guidance Underwhelms

Customer relationship management software maker Salesforce (NYSE:CRM) reported results in line with analysts’ expectations in Q4 FY2024, with revenue up 10.8% year on year to $9.29 billion. The company expects next quarter’s revenue to be around $9.15 billion, in line with analysts’ estimates. It made a non-GAAP profit of $2.29 per share, improving from its profit of $1.68 per share in the same quarter last year.

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Salesforce (CRM) Q4 FY2024 Highlights:

  • Revenue: $9.29 billion vs analyst estimates of $9.22 billion (small beat)

  • EPS (non-GAAP): $2.29 vs analyst estimates of $2.27 (1.1% beat)

  • Revenue Guidance for Q1 2025 is $9.15 billion at the midpoint, roughly in line with what analysts were expecting

  • Management’s revenue guidance for the upcoming financial year 2025 is $37.85 billion at the midpoint, missing analyst estimates by 2% and implying 8.6% growth (vs 11.2% in FY2024)

  • Free Cash Flow of $3.26 billion, up 138% from the previous quarter

  • Gross Margin (GAAP): 76.9%, up from 75% in the same quarter last year

  • Market Capitalization: $289.9 billion

Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software-as-a-service platform that helps companies access, manage, and share sales information.

Sales Software

Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrates data analytics with sales and marketing functions.

Sales Growth

As you can see below, Salesforce’s revenue growth has been mediocre over the last two years, growing from $7.33 billion in Q4 FY2022 to $9.29 billion this quarter.

Salesforce Total RevenueSalesforce Total Revenue

Salesforce Total Revenue

This quarter, Salesforce’s quarterly revenue was once again up 10.8% year on year. We can see that Salesforce’s revenue increased by $567 million quarter on quarter, which is a solid improvement from the $117 million increase in Q3 2024. Shareholders should applaud the acceleration of growth.

Next quarter’s guidance suggests that Salesforce is expecting revenue to grow 10.9% year on year to $9.15 billion, in line with the 11.3% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $37.85 billion at the midpoint, growing 8.6% year on year compared to the 11.2% increase in FY2024.

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Cash Is King

If you’ve followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills. Salesforce’s free cash flow came in at $3.26 billion in Q4, up 26.7% year on year.

Salesforce Free Cash FlowSalesforce Free Cash Flow

Salesforce Free Cash Flow

Salesforce has generated $9.50 billion in free cash flow over the last 12 months, an eye-popping 27.2% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.

Key Takeaways from Salesforce’s Q4 Results

It was great to see Salesforce to grow free cash flow and improve its gross margin this quarter. On the other hand, its full-year revenue guidance was below expectations and suggests growth will slow down. Overall, this was a mediocre quarter for Salesforce. The company is down 3.7% on the results and currently trades at $289 per share.

Salesforce may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.

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