Key Takeaways from Salesforce’s Q1 2025 Results Report (CRM)

Salesforce, Inc. (NYSE: CRM) this week reported better-than-expected earnings for the first three months of fiscal 2025. However, shares of the customer relationship management platform saw a sell-off following the results, reflecting market disappointment with weak second quarter guidance. Today, the technology company is undergoing an AI transformation, enabling customers to become more efficient through the use of technology.

Sell ​​out

Stocks tumbled Wednesday night, marking their biggest decline in nearly two decades. At the next session, CRM prices reached their lowest level in over six months and were 32% lower than the March peak. In the first quarter, the company paid its first-ever quarterly dividend of $0.40 per share, for a total of 388 million shares, which could attract more income investors to the stock.. Salesforce has made predictive AI available across its clouds with Einstein, which is an integrated set of AI technologies for its CRM platform.

While market conditions for the broad technology sector have improved significantly after a difficult period, persistent macroeconomic uncertainty continues to worry companies like Salesforce. The current slowdown does not appear to be secular, but rather more cyclical. While company management is optimistic about the growing capabilities of AI, easing interest rates and economic recovery are expected to be catalysts for future revenue growth.

Beating profits

The cloud software provider has a history of consistently beating analyst earnings estimates. Over the last decade and a half, quarterly EPS has either bettered or matched Street View. In the first quarter of 2025, adjusted net income rose sharply to $2.44 per share from $1.69 per share in the same period last year. Analysts expected slower earnings growth. On an adjusted basis, net income rose to $1.53 billion, or $1.56 per share, in the first quarter from $199 million, or $0.20 per share, in the same period in 2024.

Anticipating that positive momentum will continue into the current quarter, the company forecasts second-quarter earnings per share in the range of $2.34 to $2.36 and full-year EPS between $9.86 and $9.94. However, forecasts for the second quarter are lower than analysts’ consensus. The company ended the first quarter with strong free cash flow of $6.1 billion, up 43% year over year.

“We continue to implement artificial intelligence in Salesforce. Under the leadership of our Chief People Officer, Nathalie Scardino; and our CIO, Juan Perez, we integrated Einstein directly into Slack, helping our employees plan, schedule and summarize meetings and answer employee questions. In one quarter, Einstein has already responded to almost 370,000 employee inquiries. In our engineering organization, our developers currently save over 20,000 programming hours each month by leveraging our AI tools.” said Chief Operating Officer Brian Millham on a first-quarter earnings call.

Revenues higher by 11%

Revenue for the April quarter rose 11% year-over-year to $9.13 billion, but missed estimates. All key operating segments recorded double-digit revenue growth within three months. Management forecasts revenue growth in the July quarter to $9.20-9.25 billion, below market forecasts. Full-year revenue guidance is in the range of $37.7 billion to $38 billion.

Recovering from a decline in profits, Salesforce shares were trading higher on Friday afternoon after closing the previous session lower. They are down about 25% in the last three months.