A little air has been let out of the balloon that had become Salesforce (CRM) shares.
Salesforce stock fell 5% in after-hours trading on Wednesday after the company’s 2025 earnings per share outlook came in below consensus. The stock had run up 16% in the six months prior to the earnings release on optimism around the financial impact of Salesforce’s new Agentforce technology.
The stock’s after-hours slide quickened a bit when executives told analysts on the earnings call that Agentforce would have a “modest” contribution to revenue in 2025. A more “meaningful” contribution is forecast for 2026. A stronger US dollar is expected to weigh on sales by $200 million this year.
At close: February 26 at 4:00:02 PM EST
CRM ^GSPC
Salesforce co-founder, chairman, and CEO Marc Benioff told me the company could deliver upside on its operating margin guidance for this year. He noted the guidance for Agentforce is prudent given the company’s recurring revenue model and it being the product’s early days.
“We’ll have a great year,” Benioff said.
Salesforce said it has closed 5,000 Agentforce deals since October, more than 3,000 of which are paid. Annual recurring revenue from data cloud and artificial intelligence more than doubled year over year.
“Not a huge surprise to see a ‘prudent’ guide [guidance] given the imminent CFO transition and between F/X, leap year, and professional services weakness — bears can take a victory lap on the first quarter revenue guide,” Evercore ISI analyst Kirk Materne wrote in a client note. “But in general, we think the story remains more or less the same — namely that the key to 2025 for Salesforce is going to be showing accelerating growth over the year, increasing adoption of Agentforce and further upside to the operating margin guide.”
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Net sales: $10 billion (+8% year over year) vs. $10.04 billion estimate (guidance: $9.9 billion to $10.1 billion
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Current remaining performance obligations: $30.2 billion (+9% year over year) vs. $30.12 billion estimate
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Adjusted operating margin: 33% (vs. 31.2% a year ago) vs. 32.8% estimate
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Diluted earnings per share: $2.78 (+21.4% year over year) vs. $2.61 estimate (guidance: $2.57 to $2.62)
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Full-year sales guidance: $40.5 billion to $40.9 billion vs. $41.46 billion estimate
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Full-year operating margin guidance: 34%
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Full-year EPS guidance: $11.09 to $11.17 vs. $11.20 estimate
Earnings from software vendors pivoting toward the AI era come at an interesting time.
