CRM software giant Salesforce (NYSE: CRM) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 12.1% year on year to $11.2 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $46 billion at the midpoint. Its non-GAAP profit of $3.81 per share was 24.9% above analysts’ consensus estimates.
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Salesforce (CRM) Q4 CY2025 Highlights:
- Revenue: $11.2 billion vs analyst estimates of $11.18 billion (12.1% year-on-year growth, in line)
- Adjusted EPS: $3.81 vs analyst estimates of $3.05 (24.9% beat)
- Adjusted Operating Income: $3.84 billion vs analyst estimates of $3.82 billion (34.2% margin, in line)
- Revenue guidance for the upcoming financial year 2027 is $46.0 billion at the midpoint, missing analyst estimates
- Adjusted EPS guidance for the upcoming financial year 2027 is $13.15 at the midpoint, in line with analyst estimates
- Operating Margin: 16.7%, down from 18.2% in the same quarter last year
- Free Cash Flow Margin: 47.5%, up from 21.2% in the previous quarter
- Billings: $19.87 billion at quarter end, up 15.1% year on year
- Market Capitalization: $173.7 billion
Company Overview
With its cloud-based platform named after its stock ticker symbol CRM (Customer Relationship Management), Salesforce (NYSE: CRM) provides customer relationship management software that helps businesses connect with their customers across sales, service, marketing, and commerce.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Salesforce grew its sales at a 14.3% compounded annual growth rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the software sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Salesforce’s recent performance shows its demand has slowed as its annualized revenue growth of 9.1% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, Salesforce’s year-on-year revenue growth was 12.1%, and its $11.2 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 11.1% over the next 12 months. While this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Salesforce’s billings came in at $19.87 billion in Q4, and over the last four quarters, its growth was underwhelming as it averaged 11.3% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
It’s relatively expensive for Salesforce to acquire new customers as its CAC payback period checked in at 134.9 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low.
Key Takeaways from Salesforce’s Q4 Results
It was great to see Salesforce expecting revenue growth to accelerate next year. We were also glad its EPS guidance for next quarter exceeded Wall Street’s estimates. On the other hand, full-year revenue guidance missed expectations. Overall, we think this was a mixed quarter. Investors were hoping for more, and shares traded down 3.7% to $184.70 immediately after reporting.
So should you invest in Salesforce right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
