CRM software giant Salesforce (NYSE: CRM) met Wall Streets revenue expectations in Q3 CY2025, with sales up 8.6% year on year to $10.26 billion. The company expects next quarter’s revenue to be around $11.18 billion, coming in 2.5% above analysts’ estimates. Its non-GAAP profit of $3.25 per share was 13.6% above analysts’ consensus estimates.
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Salesforce (CRM) Q3 CY2025 Highlights:
- Revenue: $10.26 billion vs analyst estimates of $10.28 billion (8.6% year-on-year growth, in line)
- Adjusted EPS: $3.25 vs analyst estimates of $2.86 (13.6% beat)
- Adjusted Operating Income: $3.64 billion vs analyst estimates of $3.51 billion (35.5% margin, 3.8% beat)
- Revenue Guidance for Q4 CY2025 is $11.18 billion at the midpoint, above analyst estimates of $10.9 billion
- Management raised its full-year Adjusted EPS guidance to $11.76 at the midpoint, a 3.6% increase
- Operating Margin: 21.3%, up from 20% in the same quarter last year
- Free Cash Flow Margin: 21.2%, up from 5.9% in the previous quarter
- Billings: $8.7 billion at quarter end, up 13.1% year on year
- Market Capitalization: $223.4 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 performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Salesforce grew its sales at a 14.7% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds.
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% over the last two years was below its five-year trend. 
This quarter, Salesforce grew its revenue by 8.6% year on year, and its $10.26 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 11.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 9% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not lead to better top-line performance yet.
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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 $8.7 billion in Q3, and over the last four quarters, its growth was underwhelming as it averaged 10% 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 represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
It’s relatively expensive for Salesforce to acquire new customers as its CAC payback period checked in at 137.2 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 Q3 Results
We were impressed by Salesforce’s optimistic full-year EPS guidance, which blew past analysts’ expectations. We were also glad its billings outperformed Wall Street’s estimates. On the other hand, its revenue was in line. Overall, this print had some key positives. The stock traded up 4% to $248.66 immediately following the results.
Sure, Salesforce had a solid quarter, but if we look at the bigger picture, is this stock a buy? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
