The changes in CRM stock over the recent years have been far from consistent. Returns for the stock were 14% in 2021, -48% in 2022, 98% in 2023, and 28% in 2024.
In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, 24% in 2023, and 23% in 2024 - indicating that CRM underperformed the S&P in 2021 and 2022.
Note: Salesforce's FY'25 ended on January 31, 2025.
The company posted total revenues of $10.2 billion in Q2 2026 - up 10% y-o-y. This was driven by an 11% increase in subscription & support revenues.
For FY 2025 (ended Jan 2025), the company's revenue was $37.9 billion, up 9% y-o-y. Subscription and support revenues were $35.7 billion, an increase of 10% y-o-y. FY25 GAAP Operating Margin was 19%, and Non-GAAP Operating Margin was 33%.
For FY2026, the company expects its revenue to be $41.2 billion and adjusted earnings to be $11.35 per share, at the mid-point of the provided range.
In August 2019, Salesforce.com completed its acquisition of Tableau in an all-stock transaction worth $15.7 billion. Later, in Dec 2020, the company acquired Slack for $27.7 billion.
Below are key drivers of Salesforce.com's value that present opportunities for upside or downside to the current Trefis price estimate for Salesforce.com:
For additional details, select a driver above or select a division from the interactive Trefis split for Salesforce.com at the top of the page.
Salesforce.com specializes in providing customer relationship management (CRM) software solutions, encompassing sales and customer service tools, along with cloud-based application, database, and platform services. These solutions empower businesses to effectively manage customer data, improve customer service, and drive sales growth. As a pioneer in cloud-based delivery, Salesforce.com delivers its software remotely via the Internet.
Salesforce.com delivers its software through the cloud, eliminating the need for on-site installations or server maintenance. Customers access online software with minimal implementation efforts. Revenue is primarily generated through subscription and support fees for these applications, which facilitate efficient data management and optimization across various business functions like sales, marketing, and customer service. As a leading provider of cloud-based application services, over 94% of Salesforce.com's revenue comes from subscription and support fees.
Beyond its core CRM offerings, Salesforce.com is strategically positioned to capitalize on the growing adoption of cloud-based solutions across corporate IT departments. As businesses shift away from traditional hardware and on-premise software, Salesforce.com aims to provide a comprehensive suite of cloud services, encompassing SaaS, PaaS, and IaaS. This expansion includes Force.com, an application development platform, and AppExchange, an application marketplace.
Furthermore, Salesforce.com has introduced a range of cloud-based applications and services, such as Chatter, Database.com, Data.com, Desk.com, Heroku, and Radian6. The acquisition of ExactTarget further solidified its commitment to becoming a complete cloud-based provider for all industries.
Cloud-Based Customer Software is Salesforce.com's core and most valuable business. The division's value depends heavily on three main factors:
The CRM software market consists of two types of software: (1) On-Premise Software, and (2) On-Demand (Cloud-Based) Software.
The overall CRM market has rapidly grown over the years. Salesforce.com has been the undisputed market leader for many years now and currently commands around 21-22% of the market share, which is more than double that of the nearest competitor.
Salesforce.com has been increasing its share in the CRM market at a consistent rate for the last few years. This growth is attributable in large part to the shift from on-premise CRM software to cloud-based CRM software globally from IT enterprises, which benefits Salesforce.com. Going forward, we expect Salesforce to continue with its strategy of investing heavily in sales & marketing and R&D activities to support a strong, double-digit top-line growth rate.
Salesforce's additional offerings, comprising development tools and data management suites, provide a holistic product portfolio for small businesses and should complement the company's strong top-line growth rate in the future.
Software as a Service (SaaS) offers businesses online access to software through a subscription model, where they pay only for the features they use. This cost-effective approach is particularly beneficial for small and medium enterprises with limited IT budgets. Since the software is hosted on the service provider's servers, businesses eliminate the need for costly software purchases and implementations. We anticipate a continued rise in SaaS adoption.
While large enterprises often hesitate to adopt cloud services due to data security concerns — with 75% fearing breaches, according to GTRA research — the pressure to reduce costs is driving a shift towards SaaS deployments. Despite concerns about data residing outside their control, the elimination of hefty hardware costs is proving compelling. Consequently, we anticipate a broader adoption of SaaS across various industries.
