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Salesforce, Inc. is a global leader in customer relationship management (CRM) technology, offering a platform that connects companies with their customers through data, AI, and CRM solutions. The company's primary product is the AI-powered Customer 360 platform, which integrates various business functions by unifying customer data across systems, apps, and devices to create a comprehensive view of customers . Salesforce generates revenue primarily from subscription and support services, as well as professional services and other revenues .
- Subscription and Support Revenues - Provides access to enterprise cloud computing services and software licenses, recognized over the contract term or at the point in time when the software is made available to the customer.
- Professional Services and Other Revenues - Offers advisory services, project management, implementation services, and training, recognized as services are rendered or over the contract term.
What went well
- Strong customer adoption of Agentforce across key products: Salesforce is experiencing significant traction with over 200 initial Agentforce deals, primarily as add-ons to their Service Cloud offerings. There is a great opportunity ahead with Agentforce also across Sales Cloud, Marketing Cloud, Commerce Cloud, and Data Cloud, which is included in all Agentforce deals.
- Value-driven usage-based pricing model: The $2 per conversation usage-based pricing for Agentforce provides high value to customers compared to their current spending, making pricing discussions significantly easier and demonstrating the cost savings delivered through Agentforce.
- Unified platform enhances AI effectiveness and differentiation: Salesforce's initiatives like 'More Core' and 'Foundations' integrate sales, service, marketing, analytics, Data Cloud, and Slack into one platform, vital for AI to work effectively by leveraging shared data and metadata. This unified approach enhances the effectiveness of AI solutions like Agentforce, uniquely differentiating Salesforce in the market.
What went wrong
- Data Integration Challenges May Delay Agentforce Adoption: According to Brian Millham, for customers with siloed data across different divisions, it can take "6 months even to bring that data together" and harmonize it for Agentforce implementation. This prolonged timeline may slow down the adoption of Agentforce and delay revenue realization.
- Revenue Constraints in Key Markets: Amy Weaver noted that while there was strong new business growth in LATAM, Canada, and Australia, "the United States and parts of EMEA remained constrained". Ongoing constraints in these significant markets could impact overall revenue growth.
- Limited Near-Term Financial Impact from Agentforce: Despite the excitement around Agentforce, Amy Weaver stated, "we do not expect a material contribution to CRPO from Q4 Agentforce related bookings". This suggests that the financial benefits of Agentforce may not be realized in the near term, potentially affecting short-term revenue growth.
Q&A Summary
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Agentforce Deals and Growth
Q: Can you provide details on the 200 Agentforce deals?
A: We're seeing incredible traction with Agentforce as add-ons to our Service Cloud offerings. The initial 200 deals were largely upsells within Service Cloud, but customers recognize it's a platform opportunity. We feel great about the opportunities ahead with Sales Cloud, Marketing Cloud, Commerce Cloud, and Data Cloud, which is included in all Agentforce deals. These 200 deals are just the tip of the iceberg for Agentforce. -
Agentforce Pricing
Q: How are pricing discussions for Agentforce progressing?
A: Agentforce has a usage-based pricing structure at $2 per conversation, offering high value to customers given their current spending. Customers understand their labor costs, and deploying agents helps manage interactions more efficiently. Pricing conversations are significantly easier, and we've provided calculators on our website to help customers understand the cost structures. -
More Core Initiative
Q: Tell us more about the "More Core" initiative and its significance.
A: Over the past two years, we've significantly invested in AI and "More Core," increasing our engineers' productivity and numbers. This has resulted in integrating products like Commerce and Marketing into our core platform. Having Sales, Service, Marketing, Analytics, Data Cloud, and Slack on one platform enhances AI capabilities, allowing for comprehensive functionality that's unique to Salesforce. -
Data Readiness for Agentforce
Q: How prepared are customers with data to leverage Agentforce?
A: It varies by customer. Those with strong data architecture can turn on Data Cloud, harmonize data, and leverage our AI solutions in weeks or months. Others with siloed data may take up to six months. All customers recognize the need for harmonized data, and there's tremendous demand for the technology and people to achieve it. -
Foundations Offering Adoption
Q: What's the customer response to Foundations, adoption outlook?
A: Foundations showcases our platform's evolution, allowing customers to access Sales, Service, Marketing, Analytics, Data Cloud, and Slack seamlessly. Customers see they don't need separate products—they can just flip the switch. There's still work to educate customers on our capabilities, but we're excited because we're highly differentiated. -
Agentforce Halo Effect
Q: How is Agentforce affecting other product lines?
A: Our top customers are adopting a comprehensive "agent-first" suite, integrating Sales, Service, Marketing, Analytics, Data Cloud, and Slack. In our top 25 deals, we saw collaboration with five clouds each. Customers realize that building agent-first companies requires access to comprehensive data and metadata, and we're unique in offering this integrated platform.
Guidance Changes
Quarterly guidance for Q4 2025:
- Revenue: $9.9B to $10.1B (no prior guidance)
- CRPO Growth: ~9% year-over-year (no prior guidance)
- GAAP EPS: $1.55 to $1.60 (no prior guidance)
- Non-GAAP EPS: $2.57 to $2.62 (no prior guidance)
Annual guidance for FY 2025:
- Revenue: $37.8B to $38.0B (raised from $37.7B to $38.0B )
- Subscription and Support Revenue: ~10% year-over-year in constant currency (no change from prior ~10% )
- Non-GAAP Operating Margin: 32.9% (raised from 32.8% )
- GAAP Operating Margin: Slightly below 20% (no change from prior guidance )
- GAAP Diluted EPS: $6.15 to $6.20 (raised from $6.05 to $6.13 )
- Non-GAAP Diluted EPS: $9.98 to $10.03 (lowered from $10.03 to $10.11 )
- Operating Cash Flow Growth: 24% to 26% (raised from 23% to 25% )
- CapEx: Slightly below 2% of revenue (no change from prior guidance )
- Free Cash Flow Growth: 26% to 28% (raised from 25% to 27% )
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Given that some customers take up to six months to harmonize their data for Agentforce integration, how are you addressing these challenges to accelerate adoption and help customers streamline their data preparation?
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With Agentforce priced at $2 per conversation on a consumption basis, how do you ensure this model remains sustainable and attractive for customers as interactions scale, and how might this impact your revenue predictability and margins?
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Can you provide more clarity on the new 'Foundations' offering, specifically how it differs from your existing products, and what strategies you're employing to drive its adoption in the coming year?
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As you heavily focus on deploying Agentforce and AI agents, what potential risks do you foresee related to data privacy, security, and customer trust, and how are you mitigating these concerns to ensure sustained adoption?
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The 'More Core' initiative aims to integrate all your products into a single platform; what are the primary technical and organizational challenges you're encountering, and how might these impact your timelines and the overall performance of your platform?
Q3 2025 Earnings Call
- Issued Period: Q3 2025
- Guided Period: Q4 2025 and FY 2025
Guidance:
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FY 2025:
- Revenue: $37.8 billion to $38 billion, growth of 8% to 9% year-over-year.
- Subscription and Support Revenue: Expected to grow approximately 10% year-over-year in constant currency.
- Non-GAAP Operating Margin: 32.9%, a 240 basis point improvement year-over-year.
- GAAP Operating Margin: Slightly below 20%, a 540 basis point improvement year-over-year.
- GAAP Diluted EPS: $6.15 to $6.20.
- Non-GAAP Diluted EPS: $9.98 to $10.03.
- Operating Cash Flow Growth: 24% to 26%, inclusive of cash tax headwinds.
- CapEx: Slightly below 2% of revenue.
- Free Cash Flow Growth: 26% to 28%.
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Q4 2025:
- Revenue: $9.9 billion to $10.1 billion, up 7% to 9% year-over-year.
- CRPO Growth: Approximately 9% year-over-year, including a $100 million FX headwind.
- GAAP EPS: $1.55 to $1.60.
- Non-GAAP EPS: $2.57 to $2.62 .
Q2 2025 Earnings Call
- Issued Period: Q2 2025
- Guided Period: Q3 2025 and FY 2025
Guidance:
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FY 2025:
- Revenue: $37.7 billion to $38 billion, growth of 8% to 9% year-over-year.
- Non-GAAP Operating Margin: 32.8%, a 230 basis point improvement year-over-year.
- GAAP Operating Margin: Slightly below 20%, a 530 basis point improvement year-over-year.
- GAAP Diluted EPS: $6.05 to $6.13.
- Non-GAAP Diluted EPS: $10.03 to $10.11.
- Operating Cash Flow Growth: 23% to 25%, inclusive of cash tax headwind.
- CapEx: Slightly below 2% of revenue.
- Free Cash Flow Growth: 25% to 27%.
- Subscription and Support Revenue Growth: Approximately 10% year-over-year in constant currency.
- Attrition: Slightly above 8%.
- Stock-Based Compensation: 8.4% as a percent of revenue.
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Q3 2025:
- Revenue: $9.31 billion to $9.36 billion, up 7% year-over-year.
- CRPO Growth: 9% year-over-year, including a $100 million FX tailwind .
Q1 2025 Earnings Call
- Issued Period: Q1 2025
- Guided Period: Q2 2025 and FY 2025
Guidance:
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FY 2025:
- Revenue: $37.7 billion to $38 billion, growth of 8% to 9% year-over-year.
- Subscription and Support Revenue Growth: Approximately 10% year-over-year in constant currency.
- GAAP Operating Margin: Approximately 20%, a 550 basis point improvement year-over-year.
- Non-GAAP Operating Margin: 32.5%, a 200 basis point improvement year-over-year.
- GAAP Diluted EPS: $6.04 to $6.12.
- Non-GAAP Diluted EPS: $9.86 to $9.94.
- Operating Cash Flow Growth: 21% to 24%, inclusive of cash tax payment headwinds.
- CapEx: Slightly below 2% of revenue.
- Free Cash Flow Growth: 23% to 26%.
- Attrition: Slightly above 8%.
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Q2 2025:
- Revenue: $9.2 billion to $9.25 billion, up 7% to 8% year-over-year.
- CRPO Growth: 9% year-over-year, resulting in 10% constant currency growth.
- GAAP EPS: $1.31 to $1.33.
- Non-GAAP EPS: $2.34 to $2.36 .
Q4 2024 Earnings Call
- Issued Period: Q4 2024
- Guided Period: Q1 2025 and FY 2025
Guidance:
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FY 2025:
- Revenue: $37.7 billion to $38 billion, growth of 8% to 9% year-over-year.
- Non-GAAP Operating Margin: 32.5%, a 200-basis-point improvement year-over-year.
- GAAP Operating Margin: 20.4%, a 600 basis point improvement year-over-year.
- GAAP Diluted EPS: $6.07 to $6.15.
- Non-GAAP Diluted EPS: $9.68 to $9.76.
- Operating Cash Flow Growth: 21% to 24%, including a 10-point year-over-year headwind from cash taxes.
- Free Cash Flow Growth: 23% to 26%.
- CapEx: Slightly below 2% of revenue.
- Subscription and Support Revenue Growth: Slightly above 10% year-over-year in constant currency.
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Q1 2025:
- Revenue: $9.12 billion to $9.17 billion, up 11% year-over-year.
- CRPO Growth: 11% year-over-year, resulting in 12% constant currency growth.
- GAAP EPS: $1.42 to $1.44.
- Non-GAAP EPS: $2.37 to $2.39 .
Competitors mentioned in the company's latest 10K filing.
- Vendors of packaged business software, as well as companies offering enterprise apps delivered through on-premises offerings from enterprise software application vendors and cloud computing application service providers, either individually or with others .
- Software companies that provide their product or service free of charge as a single product or when bundled with other offerings, or only charge a premium for advanced features and functionality, as well as companies that offer solutions that are sold without a direct sales organization .
- Vendors who offer software tailored to specific services, industries or market segments, as opposed to Salesforce's full suite of service offerings, including suppliers of traditional business intelligence and data preparation products, integration software vendors, marketing vendors or e-commerce solutions vendors .
- Productivity tool and email providers, unified communications providers and consumer application companies that have entered the business software market .
- Traditional platform development environment companies and cloud computing development platform companies who may develop toolsets and products that allow customers to build new apps that run on the customers’ current infrastructure or as hosted services, as well as would-be customers who may develop enterprise applications for internal use .
Recent developments and announcements about CRM.
Financial Reporting
Earnings Call
Salesforce recently held its fiscal 2025 third-quarter earnings call, where several key points were discussed. The company reported strong financial performance, with revenue reaching $9.44 billion, an 8% increase year-over-year, driven by resilience in its core clouds . Subscription and support revenue also grew by 9% year-over-year . Salesforce's operating margin improved, with a non-GAAP operating margin of 33.1% and a GAAP operating margin reaching 20% for the first time in company history .
The company highlighted the success of its new Agentforce platform, which is seen as a revolutionary transformation in digital labor. Agentforce enables companies to achieve higher efficiency and productivity by integrating AI agents into their operations. In Q3, Salesforce closed over 200 Agentforce deals, and the platform is expected to drive significant future growth . The company is also expanding its sales force to meet the growing demand for Agentforce .
Salesforce's Data Cloud continues to be a critical component of its AI strategy, included in a significant portion of its top deals. The integration of Data Cloud allows customers to harmonize their data, enhancing the effectiveness of AI solutions like Agentforce .
Management provided forward guidance, raising the low end of its fiscal year 2025 revenue guidance to $37.8 billion, with expectations of 8% to 9% growth year-over-year. The company also anticipates a non-GAAP operating margin of 32.9% for the fiscal year .
During the call, analysts inquired about the pricing strategy for Agentforce, which is based on a usage model, and the potential for upselling across Salesforce's various cloud offerings . Management expressed optimism about the platform's potential to transform customer interactions and drive growth across multiple product lines .
Earnings Report
Salesforce has announced its third quarter fiscal 2025 results, highlighting several key financial metrics and trends. Revenue for the third quarter was $9.44 billion, marking an 8% increase year-over-year both in actual and constant currency terms. This includes Subscription & Support Revenue of $8.88 billion, which also saw a 9% year-over-year increase .
The company's GAAP diluted net income per share was $1.58, while the non-GAAP diluted net income per share was $2.41. Both figures were impacted by losses on strategic investments, which affected GAAP and non-GAAP diluted net income per share by $(0.17) and $(0.18), respectively .
Salesforce reported a GAAP operating margin of 20.0% and a non-GAAP operating margin of 33.1%. The operating cash flow for the quarter was $1.98 billion, representing a 29% increase year-over-year, and the free cash flow was $1.78 billion, up 30% year-over-year .
The company returned $1.6 billion to stockholders in the form of share repurchases and dividend payments during the third quarter .
Looking ahead, Salesforce has provided guidance for the fourth quarter of fiscal 2025, with expected revenue between $9.90 billion and $10.10 billion, reflecting a 7% to 9% year-over-year growth. The full-year fiscal 2025 revenue guidance has been raised to $37.8 billion to $38.0 billion, with a projected 8% to 9% year-over-year growth .
Salesforce's CEO, Marc Benioff, emphasized the role of Agentforce, their AI system, in driving transformation and leading the future of digital labor .
Overall, Salesforce continues to demonstrate strong financial performance with significant growth in revenue, operating margins, and cash flow, while also focusing on returning value to shareholders through share repurchases and dividends.
Legal & Compliance
- Salesforce, Inc.: The primary company involved, acting as the borrower.
- Bank of America, N.A.: Acts as the administrative agent, swingline lender, and an issuing lender.
- Other Financial Institutions: Includes Citibank, N.A., JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche Bank Securities Inc., RBC Capital Markets, LLC, and Wells Fargo Securities, LLC, among others, serving as lenders and joint lead arrangers.
- Salesforce, Inc. entered into a new Credit Agreement on October 31, 2024, which replaces a previous agreement from December 23, 2020. The new agreement provides for a $5.0 billion unsecured, multicurrency revolving credit facility with a term of five years. This facility includes provisions for issuing letters of credit and borrowing swingline loans, with specific amounts allocated for each purpose.
- The agreement allows Salesforce to borrow, repay, and reborrow loans in various currencies, including Dollars, Sterling, and Euros, subject to certain conditions and interest rates based on the company's credit ratings.
- The Credit Agreement includes customary representations, warranties, covenants, and events of default typical for unsecured financings of this nature.
- The new Credit Agreement increases Salesforce's borrowing capacity from $3.0 billion to $5.0 billion, providing greater financial flexibility for general corporate purposes, including potential acquisitions.
- The agreement's terms, including interest rates and fees, are tied to Salesforce's credit ratings, which could impact the cost of borrowing.
- The facility's multicurrency nature allows Salesforce to manage its international financial operations more effectively, potentially reducing currency risk.
- The termination of the previous credit agreement and the establishment of the new one may involve certain costs, such as fees and interest breakage charges, although voluntary prepayments and reductions of unused commitments are allowed without penalty.
Legal Proceedings
Summary of Legal Matter Involving Salesforce, Inc.
Key Parties Involved:
Nature of the Proceedings:
Potential Financial or Operational Consequences:
This summary provides an overview of the legal and financial implications of Salesforce's new Credit Agreement, highlighting the increased borrowing capacity and the strategic flexibility it offers the company .
Financial Actions
Debt Issuance
Alert: Creation of a Direct Financial Obligation by Salesforce, Inc.
On October 31, 2024, Salesforce, Inc. entered into a new Credit Agreement with a consortium of lenders, including Bank of America, N.A. as the administrative agent. This agreement establishes a $5.0 billion unsecured, multicurrency revolving credit facility with a term of five years. This facility replaces a previous $3.0 billion credit agreement that was set to mature in December 2025. The new facility allows Salesforce to borrow, repay, and reborrow loans in various currencies, including Dollars, Sterling, and Euros, subject to the terms of the agreement. The interest rates for borrowings are tied to the company's credit ratings and can fluctuate based on the chosen currency and rate benchmarks. This financial obligation could impact Salesforce's balance sheet by increasing its available credit and potentially affecting its leverage ratios, depending on the extent of its utilization .