(Bloomberg/Brody Ford) — Salesforce Inc. projected lackluster quarterly sales growth, suggesting its artificial intelligence product isn’t yet paying off as quickly as hoped in the face of competition from emerging AI companies.
Revenue will be $10.2 billion to $10.3 billion in the period ending in October, the company said Wednesday in a statement. Analysts, on average, estimated $10.3 billion. Current remaining performance obligations, a measure of bookings, will increase “slightly above” 10%, in line with analysts’ average projections.
Investors have been increasingly anxious that incumbent software makers will be outshined by new AI-based vendors. Companies like Salesforce, which make applications that are charged per user, have faced the steepest skepticism because of the view that AI will take over some of the tasks they provide and reduce the workforce of their customers.
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“Investors will have to look at the qualitative Agentforce numbers and wait for the Dreamforce conference next month to increase their enthusiasm,” Raimo Lenschow, an analyst at Barclays, wrote in a note after the results.
Salesforce is trying to get clients to use its Agentforce AI tool, which can complete tasks such as sales development and customer management without human supervision. The company launched the product late last year and said it has closed more than 6,000 paid deals since then. In May, Salesforce said the tool had $100 million in annual recurring revenue. The company didn’t update that figure Wednesday.
It’s taking time for large businesses and regulated industries to feel comfortable implementing AI tools, Chief Financial and Operating Officer Robin Washington said in an interview after the results were released. Salesforce added more pricing options and hired additional salespeople to help fuel adoption, she said.
The shares fell about 6.8% in early trading on Thursday before markets opened in New York. The stock has dropped 23% this year through Wednesday’s close as “the AI disruption narrative grows louder,” Morgan Stanley analyst Keith Weiss wrote in a note before the results were released.
Despite the investor concern, Chief Executive Officer Marc Benioff remained enthusiastic about the future of the Agentforce product.
“We’ve seen a 60% increase quarter-over-quarter in customers who’ve gone from pilot to production, and they’re expanding use cases and scaling consumption, and this is just the beginning of the most transformative time in our industry ever,” Benioff said on a conference call with analysts. “I’ve never been more excited about anything in my entire career.”
Still, the first question from analysts during the earnings call Wednesday was about the potential disruption from AI. Kash Rangan, an analyst at Goldman Sachs Group Inc., asked how defensible is the subscription software business model, which is known as software-as-a-service or SaaS.
There’s “this strange narrative that somehow enterprise SaaS or apps or something are going away,” Benioff said. “Now, I guess nothing lasts forever, but I just look at how I’m running my own business and the business of our customers — I don’t understand what the replacement is.”
In the fiscal second-quarter, Salesforce reported that revenue increased 9.8% to $10.2 billion. Current remaining performance obligations rose 11% to $29.4 billion. Profit, excluding some items, was $2.91 per share. Analysts had estimated profit of $2.78 a share on $10.1 billion revenue, according to data compiled by Bloomberg.
Annual recurring revenue for the company’s Data Cloud and AI segment was $1.2 billion. The company also announced it would add $20 billion to its existing share buyback program, raising the total authorized to $50 billion.
During the call, Benioff said Salesforce will spend more time developing products for information technology service management. This will likely bring the company into more direct competition with ServiceNow Inc., which specializes in this category.
In May, Salesforce said it would acquire data-focused software company Informatica Inc. The deal should close in the quarter ending in January 2026 or shortly after, Washington said on the call.
(Updates with premarket trading in seventh paragraph.)
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