Salesforce Earnings: Stock Attractive With Agentforce Momentum Building

Key Morningstar Metrics for Salesforce

• Fair Value Estimate: $315
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of Salesforce’s Earnings

Salesforce reported results for its fiscal first quarter that were ahead of the top end of guidance. Revenue growth of 8%, both as reported and in constant currency, to $9.83 billion was driven primarily by strength in data cloud, while non-GAAP operating margin was 32.3%.

Why it matters: Both subscriptions and services were ahead of our model, with Agentforce and data cloud providing notable strength during the quarter. We see solid results around the world and note management’s positive remarks on strength in small business customers.

• Multicloud deals continue to perform well, with more than half the top 100 deals in the quarter including six or more clouds. Almost 60% of the top 100 deals include both data cloud and artificial intelligence.
• Salesforce has closed more than 8,000 Agentforce deals so far, half which are paid. Agentforce is generating $100 million in annually recurring revenue, which is impressive given the solution has been available for just two full quarters.

The bottom line: We are raising our fair value estimate to $325 per share from $315 and see shares as attractive. Based on results and guidance that skew positive, we nudged our near-term estimates slightly higher while holding our long-term model in check.

• Management offered broad commentary on the Informatica deal, announced yesterday, noting the importance of the firm’s data integration tools in the AI age and recommitted to both its capital allocation strategy and margin targets.

Coming up: Management raised guidance for the full-year beyond quarterly upside, including an assist from improving currency impacts. Given product momentum, we see potential for results that track even better throughout the year.

• Guidance for fiscal 2026 includes revenue of $41.0 billion to $41.3 billion, up from $40.5 billion to $40.9 billion previously, with non-GAAP operating margin unchanged at 34.0%. Second-quarter guidance was better than we were modeling on both the top and bottom lines.