Salesforce faced another setback as investors reassessed the company’s revenue trajectory after a cautious third-quarter outlook, even as the latest quarterly results showed resilience in growth and profitability metrics. The stock sold off by roughly 5% in after-hours trading, extending the year-to-date decline to about 27% and creating the bleakest performance among large-cap technology peers for 2025. This downturn underscores investor unease about the pace at which Salesforce can translate its strategic initiatives into sustained revenue expansion, particularly in an environment where the AI upgrade cycle appears to be uneven across the broader software ecosystem.
Second-quarter results: momentum, beat on revenue, and a cautious third-quarter forecast
Salesforce delivered a revenue increase of 10% year over year in its fiscal second quarter, marking the first time the company achieved double-digit growth since early 2024. The $10.24 billion top line surpassed the consensus expectation of $10.14 billion, and earnings per share also exceeded analyst estimates. This demonstrates that Salesforce continues to scale its core software offerings and capture demand across its diversified SaaS portfolio, even amid macroeconomic headwinds that have weighed on many tech companies.
Despite the strong quarterly showing, Salesforce issued cautious guidance for the fiscal third quarter. The company projected revenue in the range of $10.24 billion to $10.29 billion, while analysts had anticipated about $10.29 billion, according to data from LSEG. This alignment with expectations on the midpoint highlights a period of limited upside revision and reflects conservative forecasting as the company navigates competitive pressures and evolving customer buying cycles. The guidance signals that Salesforce remains on track with its strategic initiatives but faces a environment where incremental growth may be more measured than during prior periods.
From a profitability and operations standpoint, Salesforce continues to emphasize the potential of its investments in artificial intelligence and its software-as-a-service (SaaS) ecosystem. While the AI narrative remains central to investor conversations, the company has not experienced the same immediate, outsized uplift from AI as some of its technology peers—particularly those focused on infrastructure and platform-level AI capabilities. This divergence in AI-related performance contributes to the broader concern among investors that AI’s impact on the software sector, in the near term, may be uneven across participants.
Analysts have weighed the mixed signals, with some acknowledging the company’s execution at scale while cautioning that the AI-driven growth story needs clearer, more widespread customer traction and monetization. In a market environment where software demand is being re-evaluated through the lens of AI-enabled efficiency and automation, Salesforce’s progress in converting bookings into revenue and expanding large, multi-year agreements remains a focal point for evaluation.
AI investment, SaaS trajectory, and the broader software landscape
Salesforce continues to tout its investments in artificial intelligence and ongoing advancements within its SaaS offerings as central components of its long-term strategy. However, the company’s AI efforts have not produced the same transformational lift as observed with other tech peers that emphasize AI infrastructure and platform capabilities. This distinction matters because it shapes how investors perceive Salesforce’s growth potential relative to the broader AI-enabled software ecosystem.
In parallel, Wall Street has shown concerns that AI could disrupt traditional software models, potentially compressing software margins or altering the competitive dynamics across the sector. The analysis from KeyBanc Capital Markets captured this sentiment, noting a general investor anxiety about the future of SaaS even as Salesforce demonstrates scale and execution. The firm maintained a buy rating on Salesforce, signaling confidence in the company’s long-term value despite the near-term concerns.
One area of focus for investors and executives alike is the company’s ability to monetize AI-driven enhancements in a way that translates into meaningful bookings and revenue growth. While Salesforce continues to invest in AI and advanced analytics, the immediate market response depends on customers’ willingness to adopt these capabilities at scale and to incorporate them into their enterprise workflows. As Salesforce navigates this transition, the company’s ability to articulate a compelling ROI for AI-driven features will be critical to sustaining investor confidence.
Customer adoption, product traction, and the Agentforce platform
Salesforce’s earnings release highlighted notable product adoption and customer engagement indicators. Specifically, the company reported closing more than 12,500 total deals for Agentforce, a product designed to automate and streamline the handling of customer service inquiries. Among these deals, 6,000 were paid, signaling meaningful monetization and a clear pathway to recurring revenue from this automation solution.
Additionally, Salesforce noted that more than 40% of bookings for Agentforce and its data cloud offerings came from existing customers. This finding suggests that the company is successfully expanding its footprint within its current client base, leveraging loyalty and deeper penetration to drive incremental revenue. The emphasis on existing customers for a substantial portion of bookings indicates that Salesforce’s product ecosystem is delivering value that encourages organizations to deepen their engagements, even as broader market conditions create a cautious backdrop for new customer acquisitions.
Management has framed this progress as evidence of a broader transformation underway in enterprise technology. CEO Marc Benioff has consistently described a landscape where AI-enabled automation, data-driven decision-making, and enhanced customer service capabilities are reshaping how companies operate. The emphasis on Agentforce, in particular, underscores Salesforce’s focus on automating core business processes and reducing friction in customer interactions. This strategy aligns with the company’s ambition to monetize more of its platform through practical, scalable use cases that resonate with existing customers seeking efficiency and better outcomes.
Benioff has continued to articulate a forward-looking view that positions Salesforce at the forefront of a sweeping transformation in enterprise software. On earnings calls and public statements, he has pushed back against negative narratives circulating on social media and elsewhere, arguing that customer reality and practical deployments tell a different story from the more speculative commentary seen in some online discussions. The management narrative remains optimistic about Salesforce’s ability to translate AI investments into durable value, even as near-term results reflect a cautious, data-driven approach to growth.
Financial outlook: full-year guidance and earnings potential
Salesforce reaffirmed its full-year revenue outlook while signaling an improved path to profitability. The company now targets adjusted earnings per share (EPS) in the range of $11.33 to $11.37, with revenue expected between $41.1 billion and $41.3 billion. This updated guidance indicates a more favorable margin trajectory and underscores confidence in the company’s ability to convert top-line growth into higher profitability, notwithstanding the cautious near-term revenue projection for the current quarter.
From a strategic perspective, the updated guidance reflects a balance between sustaining growth initiatives and maintaining operational efficiency. Salesforce’s continued emphasis on AI deployment, coupled with the expansion of its data cloud and automation capabilities, is designed to create durable demand for its SaaS offerings. The company’s portfolio strategy—combining CRM, marketing, commerce, analytics, and customer service automation—supports a diversified revenue mix that can help cushion against volatility in any single product category.
Analysts will be closely watching how Salesforce translates its AI investments into measurable bookings and revenue growth over the remainder of the fiscal year. Sustained improvement in key metrics, such as deal size, win rates, and the pace of new business alongside expansion within existing accounts, would provide greater conviction that the company can achieve higher earnings y/y growth as AI-driven features become more embedded in customer operations. Investors will also assess the strength of demand in marketing and commerce products, where executives acknowledged ongoing challenges in selling these components and will be interested in how product enhancements and competitive positioning address these headwinds.
Management commentary: reassurance from leadership amid market chatter
During earnings discussions, Salesforce’s leadership sought to reassure investors about the company’s long-term value proposition and the reliability of its AI-enabled roadmap. Marc Benioff, the company’s founder and chief executive, embraced an upbeat tone, contending that the enterprise software landscape is undergoing one of the most significant transformations in history. He contended that critics who dismiss AI progress as overblown are not reflecting real customer experiences or the practical outcomes Salesforce delivers. He asserted that the current period represents a substantial opportunity to reshape how businesses leverage automation, data, and analytics to drive customer engagement and operational efficiency.
Benioff’s stance on AI and software transformations is complemented by statements from other executives that emphasize the robustness of Salesforce’s platform and the breadth of its product offerings. The leadership team has repeatedly emphasized that the company’s SaaS and AI-driven tools are becoming essential components of enterprises’ digital strategies, capable of delivering measurable improvements in customer service, data integration, and decision-making. The message is that Salesforce’s investments are aimed at enabling customers to realize tangible benefits, which should translate into sustained demand and long-term value creation despite short-term revenue volatility.
On the earnings call, Salesforce addressed concerns about potential AI threats to software markets by reiterating the tangible benefits of AI for its customers and the real-world improvements delivered by its platform. The company highlighted a strong pipeline of opportunities tied to its AI-enabled solutions, while acknowledging that some external discussions about AI’s impact may not reflect the day-to-day customer experiences and outcomes Salesforce sees in its deployments. This approach reflects a strategic emphasis on customer-centric value realization as a cornerstone of Salesforce’s growth narrative.
Analyst perspectives and market sentiment
Analysts have continued to evaluate Salesforce’s performance through the lens of AI adoption, enterprise demand for CRM and automation capabilities, and the company’s ability to monetize its platform effectively. While some analysts, like those at KeyBanc Capital Markets, expressed optimism about Salesforce’s long-term growth potential, they also highlighted the challenges inherent in the near-term transition toward a more AI-driven revenue model. The buy rating from KeyBanc captures confidence in Salesforce’s strategic trajectory, even if the near-term results require patience as the market digests the path to higher-margin earnings and a more expansive AI-enabled product portfolio.
Market sentiment remains cautious as investors weigh the potential for AI to reshape software margins and the sustainability of double-digit growth in a post-pandemic technology landscape. Salesforce’s ability to sustain growth in its core offerings—CRM, analytics, marketing, commerce, and customer service automation—will be a critical determinant of how the stock evolves over the next several quarters. The conversation continues to focus on whether AI investments will translate into faster revenue growth, higher utilization of existing products, and broader customer adoption across industries and geographies.
Competitive positioning and industry context
Within the software sector, Salesforce operates in a competitive environment where AI capabilities and platform scalability are increasingly central to enterprise software purchasing decisions. The company’s multi-product strategy—spanning sales, service, marketing, data, and automation—offers a broad value proposition but also requires ongoing investment to maintain differentiation. As other technology firms expand their AI offerings and move toward more integrated AI infrastructure, Salesforce faces pressure to demonstrate that its AI-enhanced tools can deliver superior customer outcomes, faster deployment, and deeper integration with enterprise workflows.
This competitive backdrop emphasizes the importance of execution in product development, customer success, and pricing strategies. Salesforce’s continued focus on expanding Agentforce use cases and data cloud capabilities may help to differentiate its platform by delivering tangible improvements in customer support and data-driven operations. The capacity to demonstrate measurable ROI from AI features will be a key driver of customer adoption and expansion within existing accounts as well as in acquiring new customers.
Risks and forward-looking considerations
Despite the constructive earnings trajectory, Salesforce faces several risks and uncertainties that could influence future performance. The near-term revenue trajectory is sensitive to how quickly AI-driven enhancements are adopted by customers and whether incremental AI features translate into meaningful deals. Additionally, the market’s changing expectations for SaaS growth and the possibility of competitive pricing pressures may constrain top-line expansion and margins.
The ongoing challenge of selling marketing and commerce products, as acknowledged by the company’s leadership, remains a potential headwind. Salesforce will need to continue refining its go-to-market strategies, improving product-market fit in these segments, and demonstrating clear value to customers who may be cautious about expanding their use of multiple product lines. In a broader sense, the industry context suggests that investors will remain vigilant about the pace at which AI investments pay off in terms of revenue growth, profitability, and overall shareholder value.
Practical takeaways for stakeholders
- Salesforce posted solid quarterly growth and beat on revenue, illustrating the company’s ability to scale its core SaaS offerings and convert demand into earnings upside.
- The company maintains its full-year revenue outlook while signaling a favorable path to higher earnings per share, reflecting confidence in its profitability framework and cost discipline.
- AI investments remain central to the strategic narrative, but the near-term market response depends on tangible customer deployments and measurable ROI from AI-enabled features.
- Agentforce and data cloud bookings show healthy uptake, particularly among existing customers, underscoring the value customers place on automation and data capabilities within Salesforce’s ecosystem.
Conclusion
Salesforce’s latest results underscore a business navigating a complex transition, balancing steady growth in its core software offerings with a cautious revenue outlook for the near term. The company’s emphasis on AI-enabled automation and data-driven customer service solutions signals a long-term value proposition, even as investors navigate concerns about near-term growth momentum and the broader AI-driven software cycle. With continued progress in expanding Agentforce and data cloud bookings among existing customers, Salesforce aims to translate its AI investments into stronger profitability and sustainable long-term value. The leadership’s focus on customer outcomes and practical AI deployment will be decisive as the company seeks to reaffirm confidence in its strategic path and maintain momentum through the remainder of the fiscal year.
