- Forecasts weak annual profit and revenue as leadership transitions create uncertainty.
- Salesforce faces stiff competition from industry giants such as Microsoft and ServiceNow in the AI space.
Salesforce Inc., a prominent player in the customer relationship management (CRM) software sector, provided a fiscal-year revenue forecast that fell short of market expectations, casting a shadow over the anticipated growth driven by its new artificial intelligence product, Agentforce.
The San Francisco-based company projected revenue between $40.5 billion and $40.9 billion for the year ending January 2026. While the adjusted operating margin is expected to be approximately 34 per cent, slightly exceeding the analyst average of 33.9 per cent, the overall sentiment surrounding Salesforce’s financial outlook remains cautious.
The introduction of Agentforce, designed to automate customer service tasks with minimal human intervention, represents Salesforce’s strategic pivot towards AI-driven solutions. Launched in October, the product aims to enhance operational efficiency and customer engagement.
Facing stiff competition
However, Salesforce faces stiff competition from industry giants such as Microsoft Corp. and ServiceNow Inc., both of which are pursuing similar AI initiatives. Despite this competitive landscape, Salesforce has reported a significant uptake of Agentforce, claiming to have “closed 5,000” deals for the product.
CEO Marc Benioff highlighted the success of Agentforce during a recent interview, noting its implementation by notable clients such as Pfizer Inc., Singapore Airlines, and Equinox.
Financially, Salesforce reported a 7.6 per cent increase in revenue for the fiscal fourth quarter ending January 31, totaling $9.99 billion. However, this marks the third consecutive quarter of single-digit growth, a notable decline from the company’s historical performance characterised by robust expansion.
Profit figures also surpassed expectations, with earnings of $2.78 per share compared to the average estimate of $2.61. Nevertheless, the mixed results led to a tepid response from investors, with shares experiencing a modest decline in after-hours trading, closing at $307.33.
Over the past year, Salesforce’s stock has gained only 2.3 per cent, trailing behind many of its software industry peers.
Market uncertainty
Investor sentiment has been further complicated by recent changes in Salesforce’s executive leadership. The departures of longtime Chief Financial Officer Amy Weaver and Chief Operating Officer Brian Millham have raised concerns about the company’s strategic direction.
Robin Washington, a seasoned technology executive and board member since 2013, has been appointed to the newly created role of Chief Financial and Operations Officer.
Such leadership transitions often create uncertainty, particularly during a period when the company is simultaneously navigating a challenging market environment and implementing significant organisational changes.
Salesforce has made the difficult decision to cut more than 1,000 jobs in an effort to realign its resources toward AI-focused initiatives. This move underscores the company’s commitment to prioritising its investments in artificial intelligence, which has garnered increasing attention and resources across the technology landscape.
Additionally, Salesforce has taken strategic steps to diversify its infrastructure partnerships, awarding a substantial $2.5 billion cloud contract to Alphabet Inc.’s Google, thereby expanding its operational framework beyond its traditional reliance on Amazon Web Services.