Salesforce (CRM)

BNP Paribas reiterated its Outperform rating on Salesforce.

“Salesforce is doing all of the right things, but the share price will not likely react until Salesforce can 1) demonstrate stability in its core business and 2) demonstrate continued success and adoption of Agentforce along with Data Cloud. The company is signaling we should see revenue growth acceleration in H2 (and we believe it could be as early as Q3). In the meantime, Salesforce continues to manage its cost base, conduct prudent/targeted M&A, and has accelerated significant buybacks to further lower the share count,” said analyst Stefan Slowinski.

The analyst noted that while most investors do not see companies ripping and replacing their Salesforce CRM systems, there is clearly anxiety around the medium-to-long-term growth impact from agentic AI systems increasingly managing and executing customer-related actions.

Slowinski said Salesforce believes it is well-positioned to be a winner in the new agentic layer, as it benefits from the following things.

Context: Salesforce having the customer data and the metadata to provide customer context results in better and more accurate outcomes.

Work: Salesforce has the systems of work in its various apps that customers do not want to rebuild and then be responsible for maintaining, and even the Large Language Model, or LLM, providers are using Salesforce’s apps.

Agency: Salesforce’s Atlas Reasoning Engine can decide which workflows can be executed within Salesforce, and which workflows are best going to use an external LLM, and which LLM would be best for each task.

Engagement: Salesforce has the front-end interaction layer with Slack, but also enables users to leverage Agentforce via Teams, WhatsApp, Voice or other systems.

In terms of AI competition, the analysts said Salesforce sees companies coming back to Salesforce after testing solutions from start-up AI pure plays like Sierra AI and Decagon AI, and having tried do-it-yourself artificial intelligence, or DIY AI, using tools, including LLMs from OpenAI (OPENAI) and Anthropic (ANTHRO). Salesforce sees its 27 years of operational CRM data embedded within its systems of record as an advantage versus both subsets of new competitors, the analyst added.

Slowinski noted that from a pricing standpoint, investors continue to question Salesforce’s evolving AI pricing models.

The analyst said that while they do not see Salesforce looking to ramp monetization of API calls to its data, they do believe that customers will need to continue to be paying Salesforce customers (for premium tier seats) to use their data and metadata in other systems. To date, the company has not seen any mass piping of data out of Salesforce.

In terms of margins, Slowinski said Salesforce expects to continue to see the benefit of moving to third-party clouds from the hyperscalers (namely Amazon, but Google is also ramping up this year). LLM costs will weigh on gross margins, but Salesforce can secure volume discounts and also expects costs per token to come down over time.

Salesforce has started to report Agentic Work Units, or AWU, so that customers and investors can see the growth in actions performed by Salesforce Agents and not just token consumption, the analyst added.

Slowinski noted Salesforce remains confident that its marketing business will stabilize with new product functionality ramping, but also continues to see Commerce taking longer to demonstrate improvements as competitive pressures continue and as the product competes for R&D resources with other AI areas.

Workday (WDAY)

“Workday is returning to an organic product focus with a goal of delivering revenue growth acceleration. This may result in improved Bookings growth in H2 FY’27, and hopefully revenue growth acceleration in FY’28, but could come at the expense of some of the longer-term margin target. With a low attrition rate, a single data model positioning the company well for AI, and ramping of new products, services and business models in H2 and beyond, along with an attractive valuation, we reiterate our Outperform,” said Slowinski.

The analyst noted that Workday believes that its integrated data model across Human Capital Management, or HCM, and Finance provides the company with an advantage as it increasingly sells the full suite.

Slowinski said that while Workday’s co-founder has returned as CEO, the initiatives of the past three years remain relevant, including the push into mid-enterprise, the investments in international and channel selling, including Workday Go, and the push on full suite sales.

The analyst added that Workday used to generate 60% of growth through its existing customer base and then 40% through new customers. Currently, new customer growth is slower as some industries have slowed, such as state and local government and education, or SLED, Healthcare, and some parts of retail. While 60% of growth historically has come from selling into the installed base, Workday is now pushing in this more with AI capabilities and new products to its existing customer base, according to BNP Paribas.

On the risk to the seat-based model, Slowinski said Workday prices its initial contracts based largely on the size of the overall customer employee base and their needs, with a three-year minimum commitment. The analyst added that renewals then reflect the growing size of the customer’s business, and inflation (consumer price index, or CPI), and any new functionality purchased. While customers may be able to reduce spending if the size of their institution has reduced, the ‘floor’ is typically the initial year 1 base price. In the near term, if customers are no longer growing headcount, and as CPI inflation has come back, then that impacts revenue growth, the analyst noted.

Slowinski said Workday’s Data Cloud offering is expected to ramp up in the second half, which will be charged on a consumption basis based on the amount of data. In addition, Flex Credit revenues are expected to start ramping up in fiscal year 2027 for new agentic offerings, which will be outcome-based, helping ensure that customers understand the value from the new services.

The analyst noted that Workday has mentioned potential monetization through charging more for API calls. The analyst believes this is likely to be limited to heavy users and to third parties who attempt to come ‘over the top’ to access Workday data.

Workday is being less vocal about seeing revenue growth acceleration potential this year (unlike Salesforce and ServiceNow), but Workday believes that should it be successful with new initiatives, second-half bookings should show improvement. The analyst said that if this is the case, then they believe Workday could deliver an inflection in revenue growth in fiscal year 2027.

Workday is committed to continuing to improve margins over time, but as the company re-enters a period of greater focus on organic product development, the analyst believes margin targets may be lowered, with the company focusing on accelerating top-line growth and ensuring the product portfolio is relevant in the upcoming Agentic AI world.

In addition, the analyst said that Workday is committed to continuing to improve margins over time. However, as the company re-enters a period of greater focus on organic product development, they believe margin targets may be lowered, with the company focusing on accelerating top-line growth and ensuring the product portfolio is relevant in the upcoming Agentic AI world.

Snowflake (SNOW)

BNP hosted Snowflake’s CFO Brian Robins and Investor Relations at the conference.

“We see Snowflake as a key beneficiary of AI. Not only can AI help drive acceleration in demand for Snowflake’s core platform (migration projects), but it also provides opportunities for Snowflake to extend its use (more use cases) and extend its reach (more users) through development simplification. We reiterate our Outperform,” said Slowinski.

The analyst noted that investor excitement around the company’s AI coding agent Cortex Code, or CoCo, is clear. Snowflake sees AI as an opportunity to increase the accessibility of its technologies to more business users, rather than just business and data analysts, by putting tools such as CoCo in people’s hands.

The analyst added that while Snowflake partners with the main LLM providers, including Anthropic, making Claude available to run on Snowflake, the company believes customers are finding value in using Snowflake’s own coding tool for data operations. This is because it is better at identifying patterns and context within Snowflake data, while also benefiting from Snowflake security and governance controls

In terms of the LLM providers themselves, Snowflake has collaborations with both Anthropic and OpenAI. While Snowflake does not rule out those companies potentially looking to enter the data platform market, the LLM companies appear more focused on disrupting the applications market, according to the analyst.

On AI more broadly, Slowinski said Snowflake is seeing some customers already replace some third-party point solution application functionality by running workflows directly in Snowflake.

The analyst noted that overall, AI native is likely less than 2% of revenues but may have already helped drive the beat in the fourth quarter. The analyst would expect AI Annual Recurring Revenue, or ARR, to be provided periodically. While AI products will likely create some gross margin headwind, Snowflake is committed to maintaining product gross margins at 75% this year, the analyst added.

AI technologies can be used to accelerate system and data migration (automate code conversion, but also testing), while reducing risk, time, and cost. Leaning into this is a top priority for Snowflake, and the analyst expects to hear more about this in the year in terms of tools to accelerate migration, and also pricing, contracting, and packaging.

In addition, the analyst noted that Snowflake signing a $400M deal in the fourth quarter, having many other large deals, and growing Remaining Performance Obligations, or RPO, 42% last quarter, has raised eyebrows about how Snowflake still has room to scale significantly with existing large customers.

On Databricks, Slowinski said that competition from Databricks is not new, and competitive fears appear to have died down from their peak a couple of years ago.

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The company is aiming for a U.S. bond offering of at least $20B. The notes could be sold as soon as this week, but the timing may change. This would be the software company’s largest-ever note sale, the report added.

Salesforce did not immediately respond to a request for comment from Seeking Alpha.

The software giant mandated JPMorgan Chase, Bank of America, Barclays, Citigroup, and Wells Fargo to arrange fixed-income investor calls for Tuesday, the report noted.

In February, Salesforce had announced a $50B share repurchase program along with its fourth quarter results.

The company last accessed the U.S. bond market in 2021, when it raised $8B to help fund its acquisition of Slack, the report added.

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Of the 81 S&P 500 companies that reported earnings this week, 36 beat EPS expectations, 14 missed, and 1 came in line. On a year-over-year basis, 33 companies posted higher earnings.

On the top line, 44 companies topped revenue estimates, while 7 fell short. Year over year, 44 companies reported revenue growth.

Let’s take a look at some of the companies that reported earnings this week:

Tech giant Nvidia (NVDA) beat street views and provided guidance that topped Wall Street’s forecast by a wide margin. It touched a record quarterly data center revenue of $62.3B, up 22% from Q3 and up 75% from a year ago. For Q1 fiscal 2027, the IT company is expecting revenue to be $78B, plus or minus 2%, vs. a consensus of $72.03B, not assuming any data center compute revenue from China in its outlook.

Home Depot (HD) reported a Q4 top and bottom-line beat, but its revenue decreased 3.8% Y/Y to $38.2B. An additional week in Q4 FY2024 contributed approximately $2.5B in sales, which impacted the comparison. Looking ahead, the company expects total sales to increase approximately 2.5% to 4.5% in FY26. The midpoint of the guidance range implies revenue short of the consensus estimate of $171.1B

Salesforce (CRM) slipped 5% after releasing its Q4 earnings as the outlook landed just below estimates; Benioff projects $63B revenue by FY30 while expanding Agentforce and a $50B buyback.

Financial services and digital payments conglomerate Block (XYZ) Q4 earnings merely matched the Wall Street consensus. However, the company raised 2026 gross profit growth guidance to 18% with a $12.2B target following a workforce reduction of more than 40% because intelligent technology means fewer people can do more. The company’s stock jumped 24% with the news.

American Tower (AMT) beat Q4 earnings and issued light 2026 guidance amid a cost efficiency push. The company targets 200–300 bps tower margin expansion by 2030 as DISH default reshapes the 2026 outlook.

Agilent Technologies (A) Q1 results disappointed, but it raised its EPS guidance for the year. The company was hurt in the quarter by Y/Y operating margin percentage declines in two of its three segments: life sciences and diagnostics markets and Agilent CrossLab.

Dell (DELL) jumped after Q4 results as guidance blew past Wall Street’s forecast on AI strength. The company outlined a $50B AI revenue target for FY ’27. For Q4, revenue reached $33.4B, gross margin dollars increased to $6.8B, and gross margin rate was 20.5%

Earnings next week

Consumer staples and discretionary are poised to dominate next week’s earnings calendar, with 11 companies from the S&P 500 scheduled to report. Key names reporting earnings include Costco (COST), Norwegian Cruise Line (NCL), Target (TGT), and The Kroger (KR).

Other notable reports are expected from Broadcom (AVGO), CrowdStrike (CRWD), Best Buy (BBY), and AutoZone (AZO) among others.

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Of the 81 S&P 500 companies that reported earnings this week, 36 beat EPS expectations, 14 missed, and 1 came in line. On a year-over-year basis, 33 companies posted higher earnings.

On the top line, 44 companies topped revenue estimates, while 7 fell short. Year over year, 44 companies reported revenue growth.

Let’s take a look at some of the companies that reported earnings this week:

Tech giant Nvidia (NVDA) beat street views and provided guidance that topped Wall Street’s forecast by a wide margin. It touched a record quarterly data center revenue of $62.3B, up 22% from Q3 and up 75% from a year ago. For Q1 fiscal 2027, the IT company is expecting revenue to be $78B, plus or minus 2%, vs. a consensus of $72.03B, not assuming any data center compute revenue from China in its outlook.

Home Depot (HD) reported a Q4 top and bottom-line beat, but its revenue decreased 3.8% Y/Y to $38.2B. An additional week in Q4 FY2024 contributed approximately $2.5B in sales, which impacted the comparison. Looking ahead, the company expects total sales to increase approximately 2.5% to 4.5% in FY26. The midpoint of the guidance range implies revenue short of the consensus estimate of $171.1B

Salesforce (CRM) slipped 5% after releasing its Q4 earnings as the outlook landed just below estimates; Benioff projects $63B revenue by FY30 while expanding Agentforce and a $50B buyback.

Financial services and digital payments conglomerate Block (XYZ) Q4 earnings merely matched the Wall Street consensus. However, the company raised 2026 gross profit growth guidance to 18% with a $12.2B target following a workforce reduction of more than 40% because intelligent technology means fewer people can do more. The company’s stock jumped 24% with the news.

American Tower (AMT) beat Q4 earnings and issued light 2026 guidance amid a cost efficiency push. The company targets 200–300 bps tower margin expansion by 2030 as DISH default reshapes the 2026 outlook.

Agilent Technologies (A) Q1 results disappointed, but it raised its EPS guidance for the year. The company was hurt in the quarter by Y/Y operating margin percentage declines in two of its three segments: life sciences and diagnostics markets and Agilent CrossLab.

Dell (DELL) jumped after Q4 results as guidance blew past Wall Street’s forecast on AI strength. The company outlined a $50B AI revenue target for FY ’27. For Q4, revenue reached $33.4B, gross margin dollars increased to $6.8B, and gross margin rate was 20.5%

Earnings next week

Consumer staples and discretionary are poised to dominate next week’s earnings calendar, with 11 companies from the S&P 500 scheduled to report. Key names reporting earnings include Costco (COST), Norwegian Cruise Line (NCL), Target (TGT), and The Kroger (KR).

Other notable reports are expected from Broadcom (AVGO), CrowdStrike (CRWD), Best Buy (BBY), and AutoZone (AZO) among others.

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“Salesforce highlighted an impressive Agentforce product ramp—Agentforce annual recurring revenue of $800 million (up 169%), Data 360 now at $1 billion in ARR, Agentforce deal count exceeding 29,000 (up 50% QoQ), with over 60% of the Agentforce and Data 360 bookings in the quarter coming from expansion of existing Agentforce customers (indicating ramping usage of the solution),” said Morgan Stanley analysts, led by Keith Weiss, in a Thursday investor note.

However, Weiss indicated that the Agentforce product cycle alone is not enough to lure more investors to the stock. They also need to see revenue growth accelerate.

“In that regard the quarter fell flat,” he noted. “After subtracting out a 3% currency benefit and a 4% point contribution from recently acquired Informatica from the 16% YoY current remaining performance obligation (cRPO) growth, the 9% organic CC cRPO growth comes just in line with the company’s Q4 guidance and shy of investor expectations for a 100-150 bps beat.”

Morgan Stanley retained its Overweight rating and $287 price target.

Meanwhile, J.P. Morgan also retained its Overweight rating and lowered its price target to $320 from $365.

“While organic cRPO growth of ~9% CC came in only very slightly above guidance rather than meaningfully exceeding it, we note that cRPO may increasingly understate underlying demand as the business model shifts toward consumption-based Flex Credits (50% of Q4 Agentforce bookings), a dynamic the company itself flags may alter the traditional cRPO-to-revenue relationship,” said J.P. Morgan analysts, led by Mark Murphy, in a note. “Coupled with a record $50B buyback authorization, FY27 revenue guidance roughly in line with consensus, and Salesforce’s commitment to organic revenue growth reacceleration in 2H FY27, we view Q4 as reinforcing the eventual growth inflection thesis despite the margin guide-below and lingering softness in Marketing & Commerce and Tableau.”

Wells Fargo maintained its Equal-weight rating and reduced its price target to $210 from $235.

“Our estimates are left largely unchanged as Agentforce strength was offset by less 4Q upside than expected,” said Wells Fargo analysts, led by Michael Turrin, in a note. “Though mgmt commentary continues to call for 2H’27 reaccel, we await clearer signs given leading indicators still fading and maintain EW.”

Citi Research reiterated its Neutral rating and $197 price target.

“All in, the results were disappointing on an organic basis with a miss on revenue, negative marketing/commerce growth, and decelerating Data Cloud/Agentforce ARR growth,” Citi noted. “The organic growth initiatives around Agentforce do not appear to be enough to reaccelerate the business (at least so far), and we expect shares to trade down.”

Finally, Wedbush maintained its Outperform rating but reduced its price target to $325 from $375. Wedbush continues to argue that the enterprise software sell-off due to AI concerns is overblown.

“This was a step in the right direction for CRM as Agentforce continues to build incremental momentum with a strong pipeline, putting the company on its way to reach its $63 billion revenue target by 2030,” said Wedbush analysts, led by Dan Ives, in a note.

Salesforce also announced a monstrous $50B share buyback program, which replaces all previously unused authorizations.

Shares had inched up 0.4% during early market trading on Thursday.

Salesforce competitors ServiceNow (NOW) and monday.com (MNDY) were up 2% and 0.2%, respectively. SAP (SAP) had increased 1.6%, and Oracle (ORCL) had increased by 0.5%.

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Management View

• Marc Benioff, Co-Founder, Chairman & CEO, highlighted “one of the absolute best years in our history and one of the best performances in software ever,” citing $41.5 billion in revenue for the full year, up 10% year-over-year, and $11.2 billion for the fourth quarter, up 12% year-over-year. He emphasized, “we’re updating our fiscal year ’30 revenue target to $63 billion,” and announced a new $50 billion share repurchase authorization.
• Benioff pointed to the rapid growth of Agentforce and Data 360, mentioning that “Agentforce and Data 360 ARR, including Informatica, now exceeds $2.9 billion, up 200% year-over-year.” He also noted, “wins over $1 million were up 26% year-over-year” and “wins over $10 million were up 33% year-over-year” in Q4.
• The CEO stressed significant customer traction: “the U.S. Army…has awarded us a 10-year indefinite delivery, indefinite quantity contract with a ceiling of $5.6 billion.”
• Major product momentum was called out: “In its first 15 months, we closed 29,000 [Agentforce] deals, up 50% quarter-over-quarter. Customers in production have increased as well, nearly 50% in Q4.”
• Robin Washington, President, Chief Operating & Financial Officer and Director, stated, “we finished the fiscal year ’26 with second half net new AOV growth ahead of second half AOV growth.” She added, “Agentforce and Data 360 ARR, inclusive of Informatica Cloud ARR reached $2.9 billion. That’s up over 200% year-over-year.”
• Washington also explained, “we returned more than $14 billion or 99% of our free cash flow to shareholders” and confirmed the Board “approved a 5.8% increase in our quarterly dividend to $0.44 per share.”

Outlook

• Benioff reiterated the updated fiscal year ’30 revenue target of $63 billion. Washington provided fiscal year ’27 revenue guidance of $45.8 billion to $46.2 billion, representing approximately 10% to 11% growth. She further guided for subscription and support growth of slightly under 12% year-over-year. Non-GAAP operating margin guidance was set at 34.3% and GAAP operating margin at 20.9%.
• For Q1, Washington forecasted revenue of $11.03 billion to $11.08 billion, with CRPO growth of approximately 14% year-over-year.
• She indicated, “we are more confident in our path to reaccelerate organic revenue in second half FY ’27 as outlined at Investor Day.”

Financial Results

• Full-year revenue reached $41.5 billion, up 10% year-over-year. Fourth quarter revenue was $11.2 billion, up 12% year-over-year.
• Current remaining performance obligation (CRPO) at the end of Q4 was $35.1 billion, up 16% year-over-year. Total RPO reached $72 billion, up 14% year-over-year.
• Informatica Cloud ARR reached $1.1 billion. Agentforce ARR was approximately $800 million, up 169% year-over-year.
• The company increased its share repurchase authorization to $50 billion and raised its dividend to $0.44 per share.

Q&A

• Keith Weiss, Morgan Stanley: Questioned if Salesforce can sustain Agentforce growth while maintaining momentum in its broader portfolio, noting CRPO growth was at guidance. Benioff responded, “we are innovating, we’re creating the future, we’re adding to the future, we’re also renewing our customers” and expressed pride in the numbers. Washington added, “we’re monetizing AI…through many different fashions,” highlighting continued seat growth and incremental value from agentic technology.
• Brent Thill, Jefferies: Asked about the $50 billion buyback versus technology acquisitions. Benioff stated, “we will continue to do acquisitions, but using our new formula…that are accretive to the business, but not dilutive to investors,” and emphasized the opportunity to buy back stock at current prices.
• S. Kirk Materne, Evercore: Sought clarity on potential competition from model providers like Anthropic. Benioff described the evolving platform landscape but emphasized Salesforce’s unique integration and customer relationships.
• Gabriela Borges, Goldman Sachs: Asked about translating tokens and Agentic Work Units (AWUs) into monetization and gross margin. Patrick Stokes explained AWUs as a measure of actual AI work and their relationship to tokens consumed. Washington commented, “short term, we don’t see gross margins getting worse, fairly neutral. Long time, we’re doing everything…to continue to get efficiencies.”
• Raimo Lenschow, Barclays: Inquired about scaling Agentforce adoption across customers. Milano detailed the three monetization approaches: premium SKUs, expanded seat coverage, and Flex Credits for customer-facing agentic use cases, noting “this is the #1 product that we sell now.”

Sentiment Analysis

• Analysts were inquisitive and at times skeptical regarding the sustainability of Agentforce growth, the balance between core and new products, and the company’s capital allocation strategy.
• Management maintained an upbeat and confident tone, frequently emphasizing record results, robust adoption, and strong product momentum. Phrases like “we are certain now” and “I’m very confident” were used to convey confidence. There was some defensiveness in responses to concerns about CRPO and competition from AI model providers.
• Compared to the previous quarter, management’s tone remained highly optimistic, with an even greater focus on Agentforce adoption and monetization.

Quarter-over-Quarter Comparison

• Guidance for FY ’30 revenue increased from $60 billion to $63 billion.
• Share repurchase authorization jumped from a previously higher-than-typical level to $50 billion, and the dividend was raised.
• Agentforce and Data 360 ARR growth accelerated, and the company reported more large deals and a surge in Agentforce transactions.
• CRPO growth was strong but management addressed concerns about it matching guidance rather than surpassing it, as analysts had anticipated.
• Management’s sentiment continued to be highly confident, while analysts pressed more on the sustainability of growth and capital allocation.

Risks and Concerns

• Management referenced ongoing market volatility, using terms like “SaaS Pocalypse” and noting “this is not a rational market.”
• Continued weakness in Marketing, Commerce, and Tableau segments was cited as a partial offset to otherwise strong results.
• Analysts questioned whether Agentforce growth could sustain overall company momentum, and probed on risks from emerging AI model platform competitors.
• Management discussed evolving pricing models and the need to educate and onboard customers at scale as a continuing challenge.

Final Takeaway

Salesforce management highlighted a record year of revenue and cash flow, a significant expansion of Agentforce and Data 360, and raised long-term growth targets to $63 billion in revenue by FY ’30. The company underscored confidence in its multi-pronged monetization strategies for AI, announced a $50 billion buyback, and increased its dividend, all while confronting market uncertainties and adapting to competitive and internal adoption challenges.

Read the full Earnings Call Transcript

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