Salesforce Stock Down 5%: “Modest” Agentforce Contribution and Weak Outlook : Tom M
by: Tom M
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**Summary of Salesforce's Q4 and Fiscal Year 2025 Results** Salesforce's stock fell over 5% in after-hours trading following the release of its Fourth Quarter and Fiscal Year 2025 financial results. The company reported a revenue of $10 billion for Q4, marking an 8% increase compared to the previous year. Despite this growth, the revenue fell short of Wall Street's expectations of $10.04 billion. CEO Marc Benioff highlighted a strong performance across key metrics, including record cash flow. He emphasized Salesforce's position in the AI and digital labor sectors, particularly with their new product, Agentforce. However, the company's revenue forecast for Fiscal Year 2026 was lower than anticipated, contributing to the stock decline. **Key Financial Highlights:** - Q4 revenue: $10 billion (up 8% year-over-year) - FY25 revenue: $37.9 billion (up 9% year-over-year) - Operating cash flow: $13.1 billion (up 28% year-over-year) - Returned $9.3 billion to shareholders through buybacks and dividends **Future Outlook:** Salesforce projects FY26 revenue between $40.5 billion and $40.9 billion, reflecting a growth of 7-8%. However, the company anticipates challenges in its professional services segment and expects only a modest contribution from Agentforce in the upcoming fiscal year. **Context and Additional Information:** The drop in stock price may be attributed to investor skepticism regarding the effectiveness of Agentforce and the overall economic environment. Analysts suggest that companies are cautious about investing heavily in AI until they see proven results. The upcoming quarters will be crucial for Salesforce to demonstrate the value of its AI offerings. **Hashtags for SEO:** #Salesforce #CRM #FinancialResults #StockMarket #AI #Agentforce #CloudComputing #FiscalYear2025 #EarningsReport #TechStocks
Salesforce’s stock dropped by more than 5% in extended trading as its Fourth Quarter and Fiscal Year 2025 results were released.
The cloud giant reported a revenue of $10BN – a year-on-year increase of 8% – during a conference call that was hosted at 2pm Pacific Time (5pm Eastern Time) to discuss its financial results with the investment community.
Salesforce Q4 and Fiscal Year 2025 Earnings at a Glance
Salesforce CEO Marc Benioff said the company had an “incredible” quarter and year, with strong performances across every key metric, including the highest cash flow in Salesforce’s history.
Credit: Google
Characteristically turning to the world of AI and “digital labor”, Marc added: “No company is better positioned than Salesforce to lead customers through the digital labor revolution.
“With our deeply unified platform, seamlessly integrating our Customer 360 apps, Data Cloud, and Agentforce, we’re already delivering unprecedented levels of productivity, efficiency, and cost savings for thousands of companies.”
Here are some key takeaways from the Salesforce Fourth Quarter and Fiscal Year 2025 Results:
- Q4 revenue of $10.0BN; an increase of 8% Y/Y; up 9% in constant currency (CC), inclusive of subscription and support revenue of $9.BN, up 8% Y/Y, up 9% in CC
- A current remaining performance obligation of $30.2BN billion, up 9% Y/Y, up 11% in CC
- Total remaining performance obligation of $63.4BN, up 11% Y/Y
- FY25 revenue of $37.9BN, up 9% both Y/Y & in CC, inclusive of subscription & support revenue of $35.7BN, up 10% both Y/Y & in CC
- FY25 GAAP operating margin of 19.0% and non-GAAP operating margin of 33.0%
- FY25 operating cash flow of $13.1BN, up 28% Y/Y, and free cash flow of $12.4BN, up 31% Y/Y
- The cloud giant returned $7.8BN in the form of share repurchases and $1.5BN in dividend payments to stockholders
- Total cash returned to stockholders of $9.3BN in FY25
While Marc and Salesforce are obviously keen to point out the company’s wins, its forecast for 2026 revenue fell below Wall Street expectations, sending shares down around 5% in extended trading.
The SaaS giant has been focusing on its agentic AI product Agentforce as its vision for the future, and this may be behind the stock price dip, combined with general economic uncertainty.
Salesforce’s Q4 revenue was lower than a consensus estimate of $10.04BN.
Reuters reported that Rebecca Wettemann, CEO of industry analyst firm Valoir, said: “Given how poor initial generative AI experiments were for many companies, they’re not just writing blank checks until Salesforce shows them Agentforce actually works. The next quarter or two will be critical for Salesforce.”
Here are the key takeaways from the company’s Full Year FY26 Guidance:
- Initiates revenue guidance of $40.5BN to $40.9BN, up 7% – 8% both Y/Y & in CC
- Initiates subscription and support revenue growth guidance of approximately 8.5% Y/Y & approximately 9% in CC
- Initiates GAAP operating margin guidance of 21.6% and non-GAAP operating margin guidance of 34.0%
- Initiates operating cash flow growth guidance of approximately 10% to 11% Y/Y
“The Quarter of Agentforce”
It’s been a busy Q4 for Salesforce, and Marc Benioff left little room for interpretation about what truly matters for the company by dubbing this time period as “the quarter of Agentforce”.
He told the earnings call that “few enterprise software companies have really ever delivered these kinds of numbers” when discussing the company’s cash flow, and he had plenty to brag about in terms of the company’s growth figures.
Marc also said the company has “never seen products grow at these levels, especially Agentforce”, telling the call that he “couldn’t be more excited” about the future.
Indeed, Salesforce is keen to stress their wins with their latest products, revealing the following results in Fiscal Year 25 for Agentforce and Data Cloud specifically:
- $900M Data Cloud and AI annual recurring revenue, up 120% year-over-year
- 5,000 Agentforce deals, including more than 3,000 paid, closed since October
- Data Cloud surpassed 50 trillion records, which doubled Y/Y
- Nearly half of the Fortune 100 are both “AI & Data Cloud customers”
- “All” of Salesforce’s top 10 wins in Q4 included Data and AI, the company said
- On help.salesforce.com, Agentforce has handled 380,000 conversations; it achieved an 84% resolution rate, with just 2% of the requests needing human escalation
President and Chief Financial Officer Amy Weaver spoke about guidance for the 2026 Fiscal Year, with the company expecting a revenue of between $40.5BN and $40.9BN, according to a transcript of the call posted on The Motley Fool.
She added that Salesforce expects its professional services businesses to be a “headwind to growth” this year, which is reflected in the guidance for total revenue.
Amy told investors that part of the company’s overall implementation strategy was to “lean more on our partner ecosystem”, adding that partners were involved in 50% of their Agentforce wins and 70% of Agentforce activations in Q4.
But she also delivered something of a sour note on the company’s flagship AI product, telling the call: “Finally, on Agentforce, 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.”
Agentforce was made generally available on October 25, 2024, making the product not even half a year old, so perhaps a “modest” contribution to revenue is all that can be expected at this point.
But the Salesforce (CRM) stock drop in extended trading still indicates a somewhat weaker outlook for the company following its fiscal results.
Final Thoughts
Salesforce’s figures are far from disastrous, with Y/Y growth in several key areas, including revenue. Why, then, did the extended trading price drop?
Marc Benioff may have been right when he dubbed the past few months “the quarter of Agentforce”, but it remains to be seen precisely what that means for the cloud giant’s longevity.
While Salesforce are often keen to shout about customer success stories with their flagship AI product, it may be that Valoir CEO Rebecca Wettemann was right to say that many companies remain skeptical about AI in general, and they won’t be “writing blank checks” until the cloud giant can prove the product is as good as they say it is.
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February 27, 2025 at 05:36PM
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