Salesforce, Inc. (NYSE:CRM) pioneered Customer Relationship Management [CRM] software and was ranked number one in the category for 2022 by IDC. Since its founding in 1999, Salesforce has expanded its product suite to include multiple “modules” to enhance all aspects of a business from Marketing automation to customer service. Despite the increasing competition in the market from companies such as Adobe (Marketo) (ADBE) and HubSpot (HUBS), Salesforce has recently recorded super financial results with a “blowout” earnings report than beat both top and bottom-line growth estimates. In this post, I’m going to break down its financial results before revealing my intrinsic valuation model and forecasts for CRM stock. Let’s dive in.
Fourth Quarter Financials:
Salesforce reported super financial results for the fourth quarter of the fiscal year 2023. Its revenue was $8.38 billion, which beat analyst expectations by $391.63 million and increased by a solid 14.44% year over year. If I compare this growth rate to previous growth rates, it was actually slightly faster than the 14.19% reported for Q3,FY23. However, it was slower than the 21.77% growth rate in Q2,FY23 and the 24.28% growth rate in Q1,FY23 (all year-over-year growth figures). Slowing growth rates is a common trend I have spotted in my analysis of many technology companies (see my other posts). A positive is the growth rate decline for Salesforce is not as stark as its competitor HubSpot, as you can see in my prior analysis. I believe this is because Salesforce tends to target larger organizations and enterprises, thus it is slightly more immune to the macroeconomic environment. Whereas HubSpot tends to focus on more Small-Medium sized businesses and venture-backed startups.
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