2. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 154
Annual Sales Growth Over the Past 5 Years: 21.44%
Salesforce, Inc. (NYSE:CRM) stands out as a leading American provider of cloud-based software, specializing in customer relationship management (CRM) solutions. The company offers a comprehensive suite of software and applications designed for sales, customer service, marketing automation, e-commerce, analytics, and application development, addressing a wide range of business needs.
In its fiscal 2025 first-quarter earnings report, Salesforce, Inc. (NYSE:CRM) reported an 11% year-over-year revenue growth, reaching $9.13 billion. The subscription and support segment saw a 12% increase, significantly bolstering the company’s performance. Despite a challenging economic environment, the company maintained its full-year revenue guidance of $37.7 billion to $38 billion. Key growth drivers included the company’s focus on AI transformation and strategic investments, supported by the management of over 250 petabytes of customer data. Notably, Salesforce, Inc. (NYSE:CRM)’s Data Cloud has been particularly impactful, with 25% of large deals incorporating it. International expansion and multi-cloud deals were also highlighted as significant growth factors. For FY25, Salesforce, Inc. (NYSE:CRM) expects a non-GAAP operating margin of 32.5% and a GAAP operating margin of approximately 20%, along with anticipated operating cash flow growth between 21% and 24%.
Additionally, Oppenheimer reaffirmed its positive outlook on CRM, maintaining an Outperform rating and a price target of $280.00. This endorsement followed a meeting with Salesforce, Inc. (NYSE:CRM)’s Senior Vice President for Product Management, Generative AI and Search, Kaushal Kurapati, during Oppenheimer’s Annual Software Bus Tour. The discussions provided insights into the company’s strategic focus and product development, especially in artificial intelligence (AI) and data management. The analyst emphasized Salesforce, Inc. (NYSE:CRM)’s large and established customer base as a key advantage, supporting growth driven by the increasing adoption of AI technologies and the demand for comprehensive, industry-specific solutions.
Harding Loevner Global Equity Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its first quarter 2024 investor letter:
“Leading software companies have the advantage of high switching costs and the ability to incorporate new features into products customers already use. For example, Microsoft has added its Copilot chatbot functionality to everything from search (Bing Chat, recently renamed to just Copilot) to coding (GitHub Copilot) and workplace applications (Copilot for Microsoft 365). Software sold by Microsoft and other companies such as Salesforce, Inc. (NYSE:CRM), SAP, and ServiceNow are also already deeply integrated into their customers’ operations and workflow.
As large enterprises search for the right balance, Salesforce’s Data Cloud, a flagship offering, is designed to address a critical issue for them so they can make better use of AI tools. After a hectic buildout over the last few years of “data warehouses” and “data lakes”—two types of repositories for storing and processing data—across the various business units of large companies, many companies are left with what feels like islands of trapped data. Data Cloud solves this by creating a single platform to access and leverage all of an enterprise’s data, eliminating the need to constantly duplicate large amounts of information across different platforms. Users are then able to apply generative-AI technology, such as Salesforce’s Einstein tool, to a more comprehensive dataset, which enables them to better glean customers’ intentions, personalize marketing messages, and automate the processing of customer-service requests. As users build these systems, Einstein’s copiloting functionality helps their programmers work more efficiently so that IT departments with limited budgets and manpower can still develop the necessary tools. Salesforce’s management projects that revenue and earnings will climb about 9% and 45%, respectively, in fiscal 2025, citing the company’s operating leverage and cost discipline. We think these figures are achievable given the renewed focus on profitable growth, and so we added to the stock during the quarter.”
