Salesforce.com co-founder and CEO, billionaire Marc Benioff, has always been a vocal champion of his software company. However, for over a year, capital markets have largely ignored this enthusiasm. A prevailing view is that new AI models from entities like OpenAI and Anthropic could render companies like Salesforce obsolete within a few years. A native San Franciscan, Benioff is not one to surrender. He has launched a powerful countermeasure, signaling to Wall Street skeptics that they are mistaken. The core development: Salesforce announced on Wednesday evening that it completed a staggering $27 billion in stock repurchases last quarter. For context, the company's buyback in the prior quarter was $3.9 billion. When a company repurchases its own shares, it typically signals to investors that management believes the stock is undervalued. After all, the cash used could have been allocated to other operational investments like building new facilities or purchasing equipment. In recent months, the "AI will disrupt traditional software" narrative, dubbed by some as a "SaaS apocalypse," has weighed heavily on software stocks, with Salesforce being a notable casualty. This massive buyback is Benioff's latest move to push back against this negative sentiment. Nevertheless, Salesforce's stock fell 2% in pre-market trading on Thursday, bringing its cumulative decline over the past year to 35%. Earnings Highlights Driven significantly by the large-scale buyback (which reduced the total share count by 10%), Salesforce's adjusted earnings per share reached $3.88, far exceeding Wall Street's expectation of $3.12. Quarterly revenue was $11.13 billion, a 13% year-over-year increase, also surpassing the consensus estimate of $11.05 billion. The company's full-year revenue guidance midpoint is $46.05 billion, slightly below the analyst consensus of $46.12 billion. It is this minor shortfall against expectations that prevented a significant stock price surge. Investors remain uncertain about when Salesforce's AI initiatives will translate into substantial revenue and profit. For the current quarter, Salesforce provided revenue guidance in the range of $11.27 billion to $11.35 billion, while the market expected $11.36 billion, again a slight miss. Given the current pressure on the software sector, even a minor deviation in guidance can provide fuel for bearish narratives. Wall Street Analyst Perspectives
Citi Analyst Tyler Radke Current quarter remaining performance obligation guidance showed a slight positive trend (partly due to M&A activity), and management is optimistic about revenue acceleration in the second half. However, we see limited support for sustained high growth. We expect overall revenue growth to settle in the mid-to-high single digits after fiscal year 2027, below market expectations.
Guggenheim Analyst John DiFucci While AI-related annual recurring revenue has surpassed $1 billion, its concrete contribution remains difficult to discern from the financials. On the positive side, the company followed its $25 billion debt issuance with the execution of this $27 billion stock repurchase plan.
Stifel Analyst J. Parker Lane Metrics like intelligent agent work units and token consumption indicate rapid adoption and scaling of the company's Agentforce/D360 platform, with related business growth exceeding 200%. However, investors still seek clarity on the full commercial potential and future growth trajectory of these offerings. Currently, the company's enterprise value to free cash flow ratio is approximately 10x, presenting a favorable risk-reward profile long-term. Pricing and product packaging adjustments are ongoing. Leveraging its vast customer base, Salesforce remains well-positioned to capitalize on the proliferation of intelligent agents and AI workflows.
Kimberlite Capital Analyst Jackson Ader The company's AI-related operational metrics are strong: Agentforce added $400 million in quarterly ARR sequentially, with year-over-year growth accelerating to 205%; intelligent agent work units doubled sequentially. The goal of accelerated growth in the second half remains achievable. We maintain a Buy rating but have lowered our price target to $290 due to the broader software sector valuation compression.
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