Salesforce's AI Bet Faces Scrutiny Amid Weak Forecast and Market Reaction

Salesforce falls after weak annual forecast puts spotlight on AI monetization

Feb 27 (Reuters) - Shares of Salesforce (CRM.N), opens new tab fell over 3% before the bell on Thursday after a downbeat annual revenue and profit forecast raised questions about when the enterprise cloud firm would start to show meaningful returns on its hefty artificial intelligence bets. Salesforce's top boss, Marc Benioff, has made a big effort in recent years to transition the firm beyond traditional cloud computing and toward data driven machine learning and generative AI, in a bid to take advantage of the rapidly evolving tech landscape. But the company's weak annual revenue outlook sows doubt over the pace of monetization for Agentforce - its AI agent builder platform - as its business clouds and subscription revenue lag owing to slower spending from enterprise clients. "Unfortunately for Salesforce, the focus (on Agentforce) is coming at the expense of the rest of the business which continues to decelerate," said Gil Luria, managing director at D.A. Davidson. "Since Agentforce may not become a significant contributor for at least a year or two, that means Salesforce will experience even slower growth this year." Outgoing CFO Amy Weaver said on Wednesday that the adoption cycle for Agentforce is early and the company is focused on deploying the software to customers, but sees "meaningful contribution in fiscal 2027." "Management was explicit that subscription growth should benefit from Data Cloud contributions and a bit from Agentforce this year," Canaccord Genuity analysts said, but noted that it felt like "expectations had perhaps gotten ahead of themselves." Investors have been at the heels of big tech firms including Microsoft (MSFT.O), opens new tab and Meta (META.O), opens new tab to show returns on the billions poured into artificial intelligence. Salesforce's fast-growing Data Cloud remains a bright spot for the company as it is also the driving force behind its agents. Data Cloud and AI annual recurring revenue rose 120% last year which analysts have welcomed and said it could lay a foundation for growth acceleration going forward. Salesforce's 12-month forward price-to-earnings ratio is 27.07 compared to Snowflake's 162.52 and ServiceNow's 55.23 If current losses hold, the company is set to wipe off over $9 billion from its market value. Reporting by Zaheer Kachwala in Bengaluru; Editing by Shailesh Kuber Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Salesforce falls after weak annual forecast puts spotlight on AI monetization

(Reuters) - Shares of Salesforce fell over 3% before the bell on Thursday after a downbeat annual revenue and profit forecast raised questions about when the enterprise cloud firm would start to show meaningful returns on its hefty artificial intelligence bets. Salesforce's top boss, Marc Benioff, has made a big effort in recent years to transition the firm beyond traditional cloud computing and toward data driven machine learning and generative AI, in a bid to take advantage of the rapidly evolving tech landscape. But the company's weak annual revenue outlook sows doubt over the pace of monetization for Agentforce - its AI agent builder platform - as its business clouds and subscription revenue lag owing to slower spending from enterprise clients. "Unfortunately for Salesforce, the focus (on Agentforce) is coming at the expense of the rest of the business which continues to decelerate," said Gil Luria, managing director at D.A. Davidson. "Since Agentforce may not become a significant contributor for at least a year or two, that means Salesforce will experience even slower growth this year." Outgoing CFO Amy Weaver said on Wednesday that the adoption cycle for Agentforce is early and the company is focused on deploying the software to customers, but sees "meaningful contribution in fiscal 2027." "Management was explicit that subscription growth should benefit from Data Cloud contributions and a bit from Agentforce this year," Canaccord Genuity analysts said, but noted that it felt like "expectations had perhaps gotten ahead of themselves." Investors have been at the heels of big tech firms including Microsoft and Meta to show returns on the billions poured into artificial intelligence. Salesforce's fast-growing Data Cloud remains a bright spot for the company as it is also the driving force behind its agents. Data Cloud and AI annual recurring revenue rose 120% last year which analysts have welcomed and said it could lay a foundation for growth acceleration going forward. Salesforce's 12-month forward price-to-earnings ratio is 27.07 compared to Snowflake's 162.52 and ServiceNow's 55.23 If current losses hold, the company is set to wipe off over $9 billion from its market value. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Shailesh Kuber)

Salesforce forecasts annual revenue below estimates

Feb 26 (Reuters) - Business software provider Salesforce (CRM.N), opens new tab forecast fiscal 2026 revenue below Wall Street expectations on Wednesday, weighed down by slower adoption of its artificial intelligence agent platform, sending shares of the company down around 7% in extended trading. The company expects revenue to be between $40.5 billion and $40.9 billion, compared to the average analysts' estimate of $41.35 billion, according to data compiled by LSEG. The software-as-a-service pioneer is banking heavily on AI agents to reinvigorate growth at a time when other cloud firms, including Microsoft (MSFT.O), opens new tab and Amazon (AMZN.O), opens new tab, have firmly established themselves as leaders in the sector while making strides in machine learning. The downbeat forecast indicates that the spending environment remains pressured, with enterprises withholding new financial commitments owing to still-high interest rates and economic uncertainty. The company's fourth-quarter revenue came in at $9.99 billion, missing a consensus estimate of $10.04 billion. Reporting by Zaheer Kachwala in Bengaluru; Editing by Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Salesforce Q4 2025 Earnings: CEO Benioff Dismisses Threat To SaaS From Agentic AI

"Beware the false agents," Salesforce CEO and co-founder Marc Benioff said. Salesforce CEO and co-founder Marc Benioff called concerns that agentic artificial intelligence could mark the end of software-as-a-service applications a "Microsoft narrative" and put down the tech giant's Copilot AI offerings as "repackaged" ChatGPT. "There is kind of a holy trinity here of AI CRM, which is the apps, the data and the agents," Benioff (pictured) said during Wednesday's quarterly earnings call for the San Francisco-based cloud application vendor. "These three things have to kind of work together. ... It's a very interesting point that, yes, the agentic layer is very important. But it doesn't operate by itself. It operates with data, with a data cloud that has to be federated through your company to all your data sources." Benioff also suggested that Salesforce is doing a better job leveraging its AI products than Microsoft is leveraging its own AI products. He pointed to an online version of Salesforce's Agentforce on the company's help portal handling 380,000 conversations with an 84 percent resolution rate and just 2 percent of the requests needing human escalation. "Beware the false agents," Benioff said on the call. "Go out there and take a look. Who's really talking about it and who's really delivering. ... We are the No. 1 AI CRM. We are the leader of the digital labor revolution." [RELATED: ATSG Closes Evolve IP Acquisition: Preparing For Growth, Looking For A New Name] CRN has reached out to Microsoft for comment. Earlier this year, Microsoft Chief Communications Officer Frank Shaw took to the Microsoft-owned LinkedIn social media network to call Benioff's Microsoft attacks part of the CEO's familiar marketing playbook. "If anyone cared to plot a chart of our Copilot and agent news with Benioff's posts on X, you'd find a relationship," Shaw said. "It's all about marketing, less about truth or substance. It can be, as Marc notes, great marketing in the short term to highlight competitors. Of course, the challenge is that long-term success requires actual competition. We're still waiting." The Wednesday earnings call covered Salesforce's fiscal 2025 fourth-quarter, ended Jan. 31, and full-year results. Salesforce has about 12,000 partners worldwide. Benioff also seemed to take a swipe at Microsoft and other AI vendors for spending billions of dollars on data centers to meet AI demand. "We're not doing some of these engineering efforts that may or may not have some kind of huge payoff but is going to take down all of our cash and all of our margin for the next several years," Benioff said. "We're augmenting our existing product line with artificial intelligence, taking advantage of these incredible investments that are being made in infrastructure by others. And we're going to deliver the digital labor revolution." Asked on the call about pricing AI by seat or by consumption, Benioff said Salesforce has historically used both models. "It's always been a mix of products that we have for humans and then products that we have for computers," Benioff said. "Now we have these products that are for agents also. And agents are also a consumption model. ... It's going to be a mix between what's going on with our customers, with how many humans do they have, and then how many agents are they deploying?" Salesforce President and Chief Operating Officer Brian Millham, who is retiring May 1, added on the call that Salesforce will move in "the near future" to a universal credit pricing model from a per conversation basis. "The nice thing that we've seen with our customers is they really understand the ROI associated with digital labor," Millham said. "What we're able to provide with agents is really driving the velocity of transactions that we've seen." As for the benefits of Agentforce on Salesforce's internal operations, Millham said that the AI product has accelerated Salesforce's quoting cycles by more than 75 percent. In outbound prospecting, Agentforce has engaged more than 50 leads per day. Millham said on the call that Salesforce is "leaning into our ecosystem," with partners involved in half of the vendor's Agentforce "wins" and 70 percent of Agentforce activations in the quarter. "Over 127,000 system integrator employees have completed Agentforce training and more than 1,000 ISVs and technology partners are building and selling agents," Millham said. Salesforce's call was its first since Donald Trump was inaugurated as the 47th president and since the formation of Elon Musk's Department of Government Efficiency (DOGE). Asked to weigh in on Musk's cost-cutting efforts, Benioff said that he is "coming at this with a beginner's mind." "We want to see what they are able to deliver with the new administration," Benioff said. "We are huge fans of the United States of America. We want us to be as successful a country as we possibly can be." Benioff said that he believes a balanced budget is important for the U.S., that he is "thrilled" with Salesforce's relationship with the federal government and that he's seen reports of DOGE leveraging Salesforce-owned Slack for communications. "We'll work closely with the government," he said. "We'll do anything we can to help them succeed. And we wish them only the best. And we're here to help at every step of the way." Asked about the potential for Salesforce AI as the federal government looks at lowering costs, Benioff said that AI will have benefits for organizations worldwide. Salesforce itself has about 76,000 employees and will leverage AI to move 9,000 support employees more into sales and marketing, he said. Salesforce doesn't plan to hire new engineers this year and has seen a 30 percent productivity increase in engineering thanks to AI. "We're the last generation of CEOs to only manage humans," Benioff said. "Every CEO going forward is going to manage humans and agents together. I know that's what I'm doing. ... You can see it also in the global economy. I think productivity is going to rise without additions to more human labor, which is good because human labor is not increasing in the global workforce." Salesforce reported $900 million in Data Cloud and AI recurring revenue during the fiscal fourth quarter, more than double year over year. Since October, Salesforce has closed 5,000 Agentforce deals, more than 3,000 of those paid. Data Cloud surpassed 50 trillion records, double year over year. And half of the Fortune 100 are AI and Data Cloud customers. For the quarter ended Jan. 31, Salesforce brought in $10 billion in revenue, up 9 percent year over year, ignoring foreign exchange. That marked the third straight quarter of single-digit revenue growth. Subscription and support revenue was $9.5 billion, up 9 percent year over year. Salesforce's current remaining performance obligation (CRPO) was $30.2 billion, up 11 percent year over year ignoring foreign exchange. Total RPO was $63.4 billion, up 11 percent year over year. Revenue for all of fiscal year 2025 (ended Jan. 31, 2025) was $37.9 billion, up 9 percent year over year. Salesforce reported $35.7 billion in subscription and support revenue, up 10 percent year over year. Slack was in one-third of Salesforce deals worth more than $1 million during the quarter. Its contribution to overall deal size increased double digits year over year, Millham said. Nearly 5 billion messages are sent weekly on Slack. Tableau and MuleSoft were each in nearly half of Salesforce's $1 million-plus deals. Salesforce's industry business, including the public sector, finished the fiscal year with $5.7 billion in annual recurring revenue (ARR), up 20 percent year over year. For fiscal 2026, Salesforce forecasts revenue between $40.5 billion and $40.9 billion, marking a 7 percent to 8 percent increase over the just concluded fiscal 2025. The company is forecasting subscription and support revenue growth of about 9 percent year over year. The price of Salesforce stock, which closed at $307.33 Wednesday, tumbled more than 5 percent in after-hours trading. Just before 8:00 p.m. EST Salesforce stock was priced at $290.50, down 5.48 percent from the close. The company's reported revenue was below the Zacks Consensus Estimate of $10.02 billion (from Zacks Equity Research, as reported on NASDAQ.com). The guidance for fiscal 2026 revenue was also below analysts' expectations, which was $41.32 billion, according to Visible Alpha.

Salesforce delivers strong AI growth but disappoints on fiscal 2026 forecast - SiliconANGLE

Salesforce delivers strong AI growth but disappoints on fiscal 2026 forecast Shares in Salesforce Inc. were down over 2% in late trading today after the cloud-based software company fell short of expectations on revenue in its fiscal 2025 fourth quarter and both its first quarter and full-year fiscal 2026 outlooks. For the quarter that ended on Jan. 31, Salesforce reported adjusted earnings per share of $2.78, up from $2.29 per share in the same quarter of the previous fiscal year, on revenue of $9.99 billion, up 8% year-over-year. Analysts had been expecting $2.61 per share and revenue of $10.04 billion. The majority of Salesforce's revenue came from subscription and support, which came in at $9.45 billion in the quarter, up 8.04% year-over-year, while professional services and other rounded out the revenue total with $542 million, up 0.56%. Salesforce ended the quarter with current remaining performance obligations of $30.2 billion, up 9% year-over-year and total remaining performance obligation of $63.4 billion, up 11%. Salesforce also ended the quarter with $900 million in data cloud and artificial intelligence recurring revenue, up 120% year-over-year, driven by customer growth, with 5,000 Agentforce deals being signed since October, including over 3,000 paid. Business highlights in the quarter included the December announcement of Agentforce 2.0, an improved version of Salesforce's flagship AI product for enterprises with significantly improved features. Agentforce allows companies to build and customize generative AI agents, which augment the work of employees autonomously without the need for human supervision. During a presentation for media and analysts in San Francisco on Dec. 17, Marc Benioff, chairman and chief executive officer of Salesforce, along with other Salesforce executives, emphasized how being able to build and customize generative AI agents will transform workflows across the enterprise and that a key element in this approach will be the rise of digital labor, a trend at the core of the company's strategy. For its full fiscal year 2025, Salesforce reported adjusted earnings per share of $10.20, up from $8.22 in fiscal year 2024, on revenue of $34.9 billion, up 8.72% year-over-year. "We had an incredible quarter and year, with strong performance across all our key metrics, including the highest cash flow in our company's history and more than $60 billion in RPO," Benioff said in the company's earnings release. "No company is better positioned than Salesforce to lead customers through the digital labor revolution." Salesforce may be well set to lead a digital labor revolution, but its guidance fell short. For its fiscal 2026 first quarter, Salesforce expects revenue of $9.71 billion to $9.76 billion, short of the $9.91 billion analysts were expecting. It was a similar story with the full-year outlook, with Salesforce forecasting $40.5 billion to $40.9 billion versus the $41.46 billion expected by analysts.

CRM: AI Questions Not Yet Fully Answered | The Motley Fool

Salesforce posted nearly 8% revenue growth and 21% growth in earnings per share in the last three months of its fiscal 2025, but the revenue number fell a bit short of expectations. The company, a maker of a range of customer management and related corporate software tools, said it was the highest-cash-flow-quarter in corporate history. Much of the focus these days is on Agentforce, Salesforce's AI-powered tools that are designed to solve multistep problems without human supervision. The company said since the product's rollout in October, it has closed 5,000 Agentforce deals, including more than 3,000 paid, and said that data cloud and AI annual recurring revenue was up 120% year over year. But that surge of business does not appear to be enough to meet analyst expectations for the year to come. Salesforce guided for $40.5 billion to $40.9 billion in revenue for the fiscal year ending January 2026, slightly below the $41.5 billion Wall Street consensus. The outlook appeared to weigh heavily on investors, with Salesforce shares down as much as 6% in after-market trading immediately following the earnings release. The stock had recouped most of that decline heading into the company's call with investors. Coming into earnings season, all of the attention on Salesforce was focused on the company's rollout of AI agents. Although the initial customer numbers are impressive, investors are likely to view the slightly worse-than-expectations guidance as a potential worry that the AI products are not yet delivering the revenue growth the market had hoped for. Expect a lot of questions about the initial success of Agentforce and other AI tools and forecasts about how quickly those tools can hit the bottom line. There is also likely to be commentary about recent changes in the executive ranks and Salesforce's move earlier this month to cut about 1,000 workers. Salesforce remains a powerful force in the world of corporate software, but investors might have to wait a few more quarters for some key initiatives to spark the company higher from here.

Salesforce Forecasts Annual Revenue Below Estimates

(Reuters) - Business software provider Salesforce forecast fiscal 2026 revenue below Wall Street expectations on Wednesday, weighed down by slower adoption of its artificial intelligence agent platform, sending shares of the company down around 7% in extended trading. The company expects revenue to be between $40.5 billion and $40.9 billion, compared to the average analysts' estimate of $41.35 billion, according to data compiled by LSEG. The software-as-a-service pioneer is banking heavily on AI agents to reinvigorate growth at a time when other cloud firms, including Microsoft and Amazon, have firmly established themselves as leaders in the sector while making strides in machine learning. The downbeat forecast indicates that the spending environment remains pressured, with enterprises withholding new financial commitments owing to still-high interest rates and economic uncertainty. The company's fourth-quarter revenue came in at $9.99 billion, missing a consensus estimate of $10.04 billion. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Alan Barona)

Salesforce Gives Tepid Growth Outlook, Dashing AI Agent Hopes

Salesforce Inc. gave a fiscal-year revenue forecast that fell short of estimates, dimming optimism for the company's new artificial intelligence product. Revenue will be $40.5 billion to $40.9 billion in the year ending January 2026, the San Francisco-based company said Wednesday in a statement. Analysts, on average, estimated $41.5 billion, according to data compiled by Bloomberg. Adjusted operating margin will be about 34% compared with an average analyst estimate of 33.9%.

Salesforce Q4 2025 Earnings Preview: Five Things To Know

Growth in artificial intelligence offers. A combination COO and CFO. And more insight into the post-DeepSeek AI market. These are some of the subjects expected to come up Wednesday when Salesforce reports results for its fourth fiscal quarter ended Jan. 31. Partners have been reporting positive early work around the San Francisco-based CRM vendor's Agentforce AI platform, according to multiple investment firm reports issued in the lead-up to the earnings call. Salesforce has about 12,000 partners worldwide. [RELATED: Salesforce To Lay Off Over 1,000 Employees Amid AI Hiring Spree] Still, the hiring of a combination CFO-COO could mean Salesforce delivers a conservative forecast for its 2026 fiscal year, multiple investment firms said. Partners who spoke with Morgan Stanley said that they see budget scrutiny and extended deal cycles but are optimistic for demand improving with the U.S. presidential election over and generative AI deals moving from proof of concept to monetization. "Salesforce's position as a consolidator of front office data that is ripe for GenAI disruption and a sticky workflow application to expose new functionality positions the company in the right place for the shift towards Agentic Computing," the investment firm said in a report Monday. KeyBanc predicted in a Friday report that Salesforce reports less revenue for the quarter compared with the Wall Street consensus. The investment firm predicted $10.02 billion in revenue -- representing 7.9 percent growth year over year -- compared with the consensus' $10.05 billion, representing 8.2 percent growth year over year. The firm predicted 9 percent to 9.5 percent forecast subscription revenue growth, a slight deceleration from the prior fiscal year. Here's more of what to expect when Salesforce co-founder and CEO Marc Benioff and his team report quarterly earnings Wednesday.

Salesforce CEO Benioff warns against agentic false prophets as a new Holy Trinity of CRM + Data + AI takes shape

There's a new Holy Trinity of CRM + Data + AI at play as Salesforce turns in its first ever (near) $10 billion quarter. The firm's full year revenue for fiscal '25 came in at $37.9 billion, up nine percent year-on-year, with a profit of $6.2 billion. Q4 revenue was $9.99 billion, which was actually below consensus Wall Street estimates. Other stats of note in a stat-filled post-results analyst call: As Salesforce goes into its new fiscal year at the end of what has been a transformative few months by anyone's standards, Benioff has one clear objective in mind: Our goal is to be the number one provider of digital labor in the world. That's it. I don't think there really is another goal. You can say we're the number one AI CRM, which we already are. But when you're the number one AI CRM, you're also going to lead the digital labor revolution. And that is going to be the focus of fiscal year '26...This is the year of Digital Labor and it is going to be the year where every Trailblazer is going to become an Agentblazer. But with the cited new Holy Trinity of CRM + Data + AI comes a new breed of 'false prophet', warned Benioff: You've got to beware of the false agent. Because the false agent is out there, where people can use the word agent or they're trying to whitewash all the agent thing everywhere. But the reality is there are the real agents and there are the false agents. Who can he be thinking of? Well, I'm glad you asked that. As you might have noticed in recent months, Microsoft is firmly in the firing line here: Microsoft has had Copilot available for, I think, about two years or more than two years, and they are the reseller of OpenAI and they've kind of re-packaged ChatGPT, whatever. But where on their side are they delivering agents? Where in their company have they done this? Where are they at best practice? Because I think that while they can say such a thing, do they have humans and agents working together to create customer success? Are they re-balancing their workforce with humans and agents?...Beware of the false agents. Go out there and take a look. Who is really talking about it and who is really delivering? Salesforce is eating its own dog food, he added, noting that Q4 saw 360,000 transactions going through Agentforce via help.salesforce.com, with an 84% resolution rate and only two percent of requests requiring human escalation. Agentforce is also being used for quoting, accelerating quoting cycles by more than 75%, and outbound prospecting, engaging more than 50 leads per day with personalized outreach and timely follow-ups in order to free up humans to focus on high-value conversions. Outside of Salesforce as 'Customer Zero', the number of Agentforce paying customers now numbers 3,000, up from 1,000 at the end of calendar 2024. As for use cases, reservation service OpenTable has been one of the mostly frequently cited, reporting a 50% improvement in performance after three weeks of having Agentforce handle 73% of all its restaurant web queries. Benioff also names jewellery chain Pandora, already a Commerce Cloud user, which plans to handle 30% to 60% of its service cases using Agentforce, as well as the US' largest house building firm Lennar, which intends to provide 24/7 support and sales leads using agents, and Pfizer, whose 20,000 customer-facing employees are being augmented with Agentforce sales agents. The agent revolution also looks to bring a pricing model evolution in the form of pricing for humans and pricing for agents, with Benioff pointing out that Salesforce has products that are priced per user and those that are on a consumption basis. So, the likes of Marketing Cloud or Sales Cloud would fall into the first camp, while Agentforce and Data Cloud are consumption products. In the future, he predicted: It's going to be a mix. It's going to be a mix between what's going on with our customers with how many humans do they have and then how many agents are they deploying? He cited the example of a $20 million annual contract value deal with a telco that included all of the core Salesforce clouds and now Agentforce: The Agentforce component, I think, was maybe $7 million in the transaction. So [the CEO] was buying $7 million of Agentforce. She bought $13 million in our products for humans. And I think that was about $20 million in total. These are about approximate numbers. I think that's kind of the idea, that you're going to see us be able to deliver the right package for the right customer...I think that the mix is the most exciting thing. I don't know any company that's 100% agents; I don't know of any company that doesn't need automation for its humans. Of additional note on what was a very content-heavy analyst call, was the final public outing for Amy Weaver and Brian Millham as CFO and Chief Operating Officer respectively, both sent on their way with an exhortation to come back if they get bored of the golf course. When I covered the announcement of their replacements as joint Chief Operating and Financial Officer in the shape of Robin Washington, I wondered about whether this new job title took in Millham's sales responsibilities. I now have an answer to that as Benioff confirmed that Miguel Milano, one of the high-profile 'boomerang' returnees to the executive ranks last year as Chief Revenue Officer, will now be running the global sales organization and reporting directly to Benioff himself. That strikes me as a savvy appointment and a very safe pair of hands at a time when there may be some understandable nervousness around all the change that's going on, both in terms of the pivot to Agentforce and the executive top ranks movement. It can't be ignored that the Salesforce share price took a tumble yesterday on the back of the results announcement. The Agentforce uptake to date is impressive - there are a further 2,000 users out there, not yet paying - but Wall Street is very quickly going to adapt its 'show us the money' demands around gen AI to agents. One of her last actions as CFO saw Weaver laying down expectations for Agentforce over the next 12 months: We are incredibly excited about the customer momentum we are seeing. However, the adoption cycle is still early as we focus on deployment with our customers. As a result, we are assuming a modest contribution to revenue in fiscal '26. We expect the momentum to build throughout the year, driving a more meaningful contribution in fiscal '27. That's set out the stall quite clearly, although whether Wall Street short-termists pay heed is quite another matter, of course. For now, the big ask for Salesforce in the coming months is going to be to continue to roll out the use cases with C-level testimony to evangelise the gospel being preached around the new Holy Trinity. Next up, Salesforce's TDX developer conference at which Agentforce will again be front-and-center.

Salesforce Q4 EPS Beats, Revenue Lags | The Motley Fool

Salesforce (CRM 0.47%), a leading cloud-based software company known for its customer relationship management solutions, reported mixed fiscal year 2025 fourth-quarter earnings on Wednesday, Feb. 26. Adjusted EPS of $2.78 exceeded analysts' consensus expectations of $2.61. Q4 revenue of $9.99 billion slightly lagged behind the expected $10.04 billion, but was up 8% year over year. Overall, the quarter showcased strong operational efficiency and significant cash flow improvements, even as revenue growth fell just short of targets. Source: Salesforce. Note: Analysts' consensus estimates for the quarter provided by FactSet. FY = Fiscal year. YOY = Year over year. RPO = Remaining performance obligations. Salesforce is renowned for its Customer 360 platform, which offers a comprehensive suite of tools that create a unified customer experience across sales, service, marketing, and commerce. The versatility and scalability of this platform allow businesses to seamlessly integrate Salesforce into their existing systems. This integration is a crucial factor in Salesforce's success, along with its strategic progression in artificial intelligence (AI) and data-driven solutions. Recently, Salesforce has emphasized AI innovation, particularly within its Agentforce and Data Cloud platforms. These areas are key growth drivers, amplified by strategic partnerships, like those with Alphabet's Google Cloud. Salesforce's ability to scale its offerings globally while adapting industry-specific solutions supports its continuous expansion plans. Salesforce revenue in Q4 grew 8% year over year as subscription and support revenue showed healthy gains, although results were mildly tempered by broader market conditions. The AI and data integration focus yielded significant results. Annual recurring revenue from the AI and Data Cloud sectors surged to $900 million, a remarkable 120% growth. The integration of AI within customer interactions, such as Agentforce facilitating 380,000 conversations with an 84% resolution rate, illustrates the rising importance of AI in Salesforce's offerings. Operational efficiency was underscored by a jump in operating cash flow to $3.97 billion, up 16.7% from the previous year. This increase contributed to Salesforce exceeding its non-GAAP operating margin expectations, achieving a margin of 33%, compared to the prior period's 31.4% margin. Material factors affecting the quarter include strategic partnerships and AI advancements. Notably, integration with Google's AI model shows Salesforce's commitment to enhancing its offerings through AI capabilities. For fiscal year 2026, Salesforce management provided revenue guidance of $40.5 billion to $40.9 billion, aiming for a growth rate of 7%-8% year over year. Operating cash flows are projected to grow by approximately 10% to 11%, indicating confidence in ongoing operational improvements and efficiency. The company called for $2.53 to $2.55 in adjusted EPS for fiscal 2026's first quarter, with $9.71 billion to $9.76 billion in revenue. These estimates came in short of analysts' consensus estimates. Investors should watch Salesforce's commitment to AI expansion, the integration of Customer 360, and its global market strategies. Updated guidance revises GAAP operating margin to 21.6% and non-GAAP margin to 34%, reflecting anticipated profitability enhancements. Salesforce's strategic AI initiatives and geographic expansion underpin its growth trajectory in this competitive tech landscape.

Salesforce Q4 Earnings Preview: Can Cloud, AI Growth Power Company To Record Results? - Salesforce (NYSE:CRM)

Cloud software company Salesforce Inc CRM could highlight its growth in AI and recent partnerships when the company reports fourth-quarter financial results after market close Wednesday. Earnings Estimates: Analysts expect Salesforce to report fourth-quarter revenue of $10.04 billion. That's up from $9.29 billion in last year's fourth quarter according to data from Benzinga Pro. Salesforce has beaten analyst estimates for revenue in two straight quarters and nine of the last 10 quarters overall. Analysts expect the company to report fourth-quarter earnings per share of $2.61, up from $2.29 in last year's fourth quarter. The company missed analyst estimates for earnings per share in the third quarter, but has beaten estimates in nine of the last 10 quarters. Several of the figures reported by the company could be records if analyst estimates are met. Guidance from Salesforce calls for fourth-quarter revenue to be in a range of $9.9 billion to $10.1 billion. The company expects fourth-quarter earnings per share will come in a range of $2.57 to $2.62. Read Also: Rocket Lab, Kratos, Archer Aviation And More Earnings This Week Could Have A Big Impact On Cathie Wood's Ark ETFs What Analysts Are Saying: Analysts have been mixed on Salesforce stock heading into the earnings print. JPMorgan analysts highlighted Salesforce as a potential winner in the AI ripple effect created by DeepSeek's entry in the AI space. The analysts said companies like Salesforce that enable seamless AI adoption could see an acceleration in demand. Rival companies that are reliant on legacy infrastructure could be hurt by the presence of DeepSeek, the analysts said. Here are recent analyst ratings on Salesforce and their price targets: Citigroup: Maintained Neutral rating, lowered price target from $390 to $350 BMO Capital: Maintained Outperform rating, lowered price target from $425 to $375 Loop Capital: Maintained Hold rating, lowered price target from $360 to $330 Needham: Reiterated Buy rating, with $400 price target TD Cowen: Upgraded stock from Hold to Buy, raised price target from $380 to $400 Key Items to Watch: The financial results from Salesforce come after several recent business announcements. Salesforce announced it is expanding its strategic partnership with Google to offer greater flexibility to businesses in selecting AI models and deploying AI-driven agents. Through the partnership, Salesforce customers can build Agentforce agents using Google's Gemini and deploy Salesforce on Google Cloud. Salesforce also recently announced its plan to invest $500 million in Saudi Arabia to boost its artificial intelligence deployment. The company will roll out Hyperforce in Saudi Arabia through an alliance with Amazon Web Services. Salesforce is setting up a regional headquarters in Riyadh as part of its plan to expand its AI footprint around the world. The company is ramping up hiring for AI sales roles as the sector becomes a larger driver for growth. Analysts and investors will be looking for more commentary on the company's Agentforce, which got plenty of love from CEO Marc Benioff in the third-quarter results commentary. "With Agentforce, we're not just witnessing the future -- we're leading it, unleashing a new era of digital labor for every business and every industry," Benioff said. Investors and analysts will also be looking forward to guidance for the next fiscal year. Price Action: Salesforce stock is down 0.7% to $306.00 Tuesday versus a 52-week trading range of $212.00 to $369.00. Salesforce stock is down 7.5% year-to-date in 2025. Read Next: Super Bowl Commercials 2025: Complete List of Super Bowl LIX Ads And Companies Behind Them Image: Shutterstock CRMSalesforce Inc$306.50-0.59%OverviewMarket News and Data brought to you by Benzinga APIs