Salesforce (CRM) stock experienced a 5% decline in after-hours trading on Wednesday, following the release of a 2025 earnings per share outlook that fell short of consensus estimates. This drop comes after a six-month period where the stock rallied 16% fueled by optimism surrounding the financial impact of Salesforce’s new Agentforce technology.
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The downward trend accelerated when executives revealed during the earnings call that Agentforce’s revenue contribution in 2025 would be “modest,” with a more “meaningful” impact anticipated in 2026. Additionally, a stronger US dollar is projected to negatively impact sales by $200 million this year.
Salesforce co-founder, chairman, and CEO Marc Benioff expressed confidence in the company’s ability to exceed its operating margin guidance for the year. He emphasized the cautious nature of the Agentforce guidance, attributing it to the company’s recurring revenue model and the nascent stage of the product’s lifecycle. “We’ll have a great year,” Benioff stated.
Since October, Salesforce has secured 5,000 Agentforce deals, with over 3,000 being paid contracts. Annual recurring revenue generated from data cloud and artificial intelligence initiatives more than doubled year over year.
Evercore ISI analyst Kirk Materne commented, “Not a huge surprise to see a ‘prudent’ guide given the imminent CFO transition and between F/X, leap year, and professional services weakness — bears can take a victory lap on the first quarter revenue guide. But in general, we think the story remains more or less the same — namely that the key to 2025 for Salesforce is going to be showing accelerating growth over the year, increasing adoption of Agentforce and further upside to the operating margin guide.”
Salesforce Q4 Earnings: A Closer Look
Salesforce exceeded expectations in key areas:
- Net sales: $10 billion (+8% year over year), surpassing the estimated $10.04 billion (guidance: $9.9 billion to $10.1 billion).
- Current remaining performance obligations: $30.2 billion (+9% year over year), exceeding the estimated $30.12 billion.
- Adjusted operating margin: 33%, exceeding the estimated 32.8% and up from 31.2% a year ago.
- Diluted earnings per share: $2.78 (+21.4% year over year), surpassing the estimated $2.61 (guidance: $2.57 to $2.62).
Guidance Misses Across the Board
Despite the positive Q4 results, Salesforce’s full-year guidance fell short of expectations:
- Full-year sales guidance: $40.5 billion to $40.9 billion, below the estimated $41.46 billion.
- Full-year operating margin guidance: 34%.
- Full-year EPS guidance: $11.09 to $11.17, below the estimated $11.20.
AI Sector Performance: A Mixed Bag
The earnings report from Salesforce arrives during a period of mixed performance for tech companies embracing AI. While Meta (META) has significantly outperformed the S&P 500 (^GSPC) with a 16% year-to-date gain, other “Magnificent Seven” components like Nvidia (NVDA) and Tesla (TSLA) have faced declines.
Conversely, software companies have generally reported strong earnings, leading to positive stock movements. Snowflake (SNOW) and ZoomInfo (ZI) saw significant gains after exceeding expectations. Workday (WDAY) also experienced a surge following a positive earnings report and outlook. This divergence in performance highlights the dynamic nature of the current market landscape, particularly within the tech and AI sectors.
