Salesforce Earnings: Lots of Buzz for Agentforce, Even if No Meaningful Revenue Impact Yet

Key Morningstar Metrics for Salesforce

• Fair Value Estimate: $315.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of Salesforce’s Earnings

We are maintaining our fair value estimate of $315 per share for Salesforce CRM after the company reported solid fiscal fourth-quarter results. The newly initiated outlook for fiscal 2026 was slightly below our expectations on both the top and bottom lines after normalizing for increasing currency headwinds. Management remains excited about Agentforce, which we think represents a good long-term opportunity to transition from a mostly human agent labor force to a mostly virtual agent pool over time. Importantly, management believes consumption pricing will be a meaningful net positive for the company. After a dramatic run from June through November 2024, where we thought shares ended up overvalued, the stock has pulled back.

We were impressed with some of the data points around Agentforce, including Data Cloud, but we continue to think of the mature Salesforce as a high-single-digit growth company. Total revenue grew 8% year over year as reported and 9% in constant currency to $9.99 billion. Subscriptions were slightly light compared with our model, with all clouds similarly light, while services were slightly better than expected. Multicloud deals continue to perform well, with top 100 deals averaging six clouds. Management noted some signs of stabilization in the United States in the midmarket while still closing 400 deals at $1 million or more. Importantly, the company closed 5,000 Agentforce deals in the quarter, its first full quarter of availability. From a segment perspective, health and life sciences and communications and media performed well, while technology, manufacturing and automotive, and energy were more measured.

While profitability remains a source of strength, we see a path for continued margin expansion, even as the firm invests in artificial intelligence innovation. Non-GAAP operating margin was 33.1% versus 31.4% a year earlier.