Salesforce Set to Reveal Earnings: Analysts Predict Growth Amidst Recent Challenges

Salesforce (NYSE: CRM), the well-known customer relationship management software leader, is set to release its quarterly earnings report on February 26, just after the market closes.

In the previous quarter, Salesforce surprised analysts by surpassing revenue expectations by a slim 1%, achieving a total of $9.44 billion—a year-over-year increase of 8.3%. However, it was a mixed performance: while the company recorded a strong upturn in EBITDA, its guidance for earnings per share (EPS) fell short of analysts' forecasts. As they look to the upcoming quarter, analysts are predicting revenue growth of 8.1% compared to last year, bringing the expected total to $10.04 billion. This marks a deceleration from the previous year’s 10.8% growth during the same period. The consensus for adjusted earnings per share is set at $2.61.

Aside from expectations, the sentiment among analysts has remained relatively stable over the last month, indicating a belief that Salesforce can maintain its course. Notably, Salesforce has only missed revenue estimates once in the past two years, averaging a 1.1% beat over that timeframe—something traders usually keep a keen eye on.

When comparing Salesforce to its competitors within the sales and marketing software sector, the recent earnings reports from companies like Freshworks and HubSpot provide some interesting insights. Freshworks celebrated a robust year-over-year revenue growth of 21.5%, exceeding predictions by 2.7%, while HubSpot posted a commendable 20.8% increase, surpassing expectations by 4.4%. Following these results, Freshworks saw its stock remain flat, whereas HubSpot’s share price increased by 4.3%. Overall, while many growth stocks have yet to regain their pre-2021 valuation heights, bullish market sentiment—especially following recent rate cuts and potential political developments—has kept investors hopeful. Nonetheless, stocks in the sales and marketing software space have struggled lately, with average share prices down approximately 4.8% over the past month. Salesforce has underperformed in this regard, dipping 11% during the same timeframe and currently trading at $309.69, with an average analyst price target of $395.72.

On a different note, Salesforce recently announced that Robin Washington, the former CFO of Gilead Sciences (NASDAQ: GILD), will be joining the company as Chief Operating and Financial Officer on March 21. She will take over from COO Brian Millham, who plans to retire in May, and CFO Amy Weaver, who will also leave once her replacement is found. Analysts at Oppenheimer labeled Millham's exit a "negative surprise" but expressed confidence in Washington’s ability to enhance operational efficiency moving forward. They’ve maintained an "outperform" rating alongside a target price of $415, dubbing Salesforce "one of the healthiest long-term profitable growth stories" in the software-as-a-service arena.

As of Tuesday, Salesforce shares fell slightly by 0.8%, trading at $305.88. It's worth noting that 2025 has not exactly started on a high note for the company, with nearly a 9% drop in share price thus far, despite having outperformed the S&P 500 in 2024. Traders should closely watch the upcoming earnings report for signals on the company’s trajectory amidst a volatile market landscape.