Salesforce (CRM) is set to report its fiscal third-quarter earnings before the U.S. market opens on Wednesday, December 13. Based on current options pricing, the market is expecting a 7.88% move in the stock following the results. That is much larger than the cloud software giant’s three-year average post-earnings move of -0.65%, which reflects a modest decline.
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The implied volatility reflects uncertainty about Salesforce’s ability to deliver strong top-line growth while maintaining profitability.
Currently, analysts expect CRM to post revenue of $10.27 billion in Q3, up from $9.44 billion in the year-ago quarter. Further, the company is expected to report earnings of $2.86 per share, compared with $2.41 in the prior-year quarter.
What to Watch in CRM’s Q3 Earnings
Here are the key metrics that investors will likely watch closely in Salesforce’s upcoming results.
- Revenue Growth: Slowing organic revenue growth has been a major cause of worry for investors. Thus, focus will be on subscription and support revenue guidance, which makes up the bulk of Salesforce’s business.
- Impact of Informatica Acquisition: Salesforce recently closed the acquisition of Informatica, an AI cloud data management company. Investors will look for details on its integration and how it is expected to contribute to Salesforce’s overall financial outlook.
- Margins: The company’s cost-cutting initiatives have led to improved operating margins. Investors will monitor if Salesforce can maintain a strong bottom line and cash flow, even with continued AI investments.
- AI Integration: Salesforce has been marketing its Einstein AI and Data Cloud offerings. Investors want evidence that these initiatives are translating into real customer adoption.
Is CRM a Buy, Sell, or Hold?
Turning to Wall Street, CRM stock has a Moderate Buy consensus rating based on 30 Buys, nine Holds, and one Sell assigned in the last three months. At $324.08, the average Salesforce stock price target implies a 37.85% upside potential.
