Salesforce topped fourth-quarter revenue expectations but delivered a muted sales forecast for fiscal 2027, fuelling investor concerns about competition and disruption in the artificial intelligence era.
BNN Bloomberg spoke with Patrick Walravens, managing director and director of technology research at Citizens JMP, who said the company is navigating another major technology transition under CEO Marc Benioff while working to offset AI-related headwinds in parts of its core business.
Key Takeaways
- Salesforce projected about $46 billion in revenue for fiscal 2027, a forecast that met expectations but failed to excite investors.
- Organic revenue growth slowed to eight per cent from nine per cent, with weakness in Marketing Cloud, Commerce Cloud and Tableau amid AI competition.
- The company’s Agentforce AI product generated about $800 million in quarterly revenue, up 170 per cent year over year and representing roughly five per cent of total revenue.
- Management authorized a $50 billion share repurchase program as the stock remains down sharply year to date.
- Analysts say long-term success will depend on whether established software firms can successfully transition to the AI era, noting many failed to adapt in past platform shifts.
Read the full transcript below:
ROGER: Well, Salesforce reported a fourth-quarter revenue beat but issued a disappointing outlook for 2027 amid AI fears. Let’s get more now from Patrick Walravens, managing director and director of technology research at Citizens JMP. Patrick, thanks very much for joining us today.
PATRICK: It’s my pleasure. Thanks for having me on.
ROGER: The numbers looked solid. Let’s take a look back for a second. Was it a solid earnings report?
PATRICK: Yeah, overall, it was pretty good. I would say that Mr. Benioff and his team are battling through yet another transition. He founded this company in 1999. There was COVID, there was the Great Financial Crisis, and now they have to adapt to the AI era.
ROGER: And that’s the big thing, right? Nobody’s looking back anymore. They’re all looking forward. The fear is software is done with AI. Is that realistic?
PATRICK: It’s a little more nuanced than that. If you look at what’s going on at Salesforce, there are really three things I would point to — one piece of bad news and two pieces of good news in this earnings call.
The bad news is, if you look at the business organically, the growth rate decelerated a little bit from nine per cent to eight per cent. That’s really the AI headwinds hitting some parts of their business. It’s hurting their Marketing Cloud, their Commerce Cloud and a business intelligence product they have called Tableau. Those are all areas where we’re seeing a lot of advances in AI.
Now the good news. The first piece of good news is that Salesforce has its own pure AI product. It’s called Agentforce, and it is growing like hotcakes. It did $800 million this quarter, and that is up 170 per cent year over year.
The second piece of good news is the stock is down, I think, 27 per cent year to date. It was down another five per cent last night. Now it seems to be recovering a little bit this morning. We’ll see. It might even end up in the green. They announced a $50 billion buyback. That’s like 25 to 30 per cent of the entire market cap of this company.
BRYDEN: One question I have on that note specifically is, it’s interesting — and you’re starting to see it with maybe a Salesforce pivot — but obviously the profitability of all of these software companies is still immense. To see the market reaction over the last couple of weeks, in light of what is still an incredibly profitable business — whether you look at gross margins, return on capital, return on equity — it’s substantial.
Do you think management teams need to do a little bit of a pivot in terms of announcing buybacks and focusing on capital allocation? A lot of the investor community had always looked at year-over-year or quarter-over-quarter growth. Does a lot of it have to move to the whole package of what these companies are doing in terms of buybacks? Because if your business is solid, a buyback at this level must be very accretive.
PATRICK: The key part you just said was “if your business is solid.” You need to make sure your business is solid, and that means you need to adapt to the AI era.
Just as a touch point here, if you look at the percentage of software companies that made it from the on-premise software era to the SaaS era, about 65 per cent of them didn’t make it. No one goes bankrupt, but their growth slows and eventually they get bought. I think that’s a good rule of thumb for what’s going to happen this time around.
Point number one, you’ve got to develop your own AI products that will offset the parts of your business that are getting hurt. Salesforce is doing a great job of that. Workday is also trying to do it. Basically every software company has to do it.
Point number two, if you feel like you’ve made those changes and the market hasn’t recognized it, then, yeah, we would love to see the executives themselves buying the stock. A big buyback by the company — like this $50 billion buyback by Salesforce — is another great signal.
ROGER: I just want to go back to Salesforce for a second. One hundred and seventy per cent growth — obviously not sustainable at that level — but does it look like they can continue to grow that at a decent clip?
PATRICK: I think that’s going to keep going for a while. That’s really only five per cent of Salesforce’s total revenue at this point. This product didn’t exist — they launched it in November 2024, then launched version two a few months later, and version three about a year later. They really leaned in early and hard on coming up with their own AI solution.
It can be a lot more than five per cent of the total business. Agentforce has a long way to run.
BRYDEN: In terms of their AI business and the growth they’ve had this last year, are there still substantial investments they’re making into this? How does Benioff get the message out in terms of adoption? As you’ve highlighted, that pivot to AI is something you’re seeing all of these companies start to do. How do you think they’re going to continue to do that, and are there levels of investment required for that?
PATRICK: Yes, they have to keep investing in it. How do they get the word out? They did something really unusual — and I wouldn’t want to see this on every earnings call — but last night it was quite effective.
Mark Benioff actually had three customers dial into the earnings call. One was a small company called SaaStr, one was mid-sized SharkNinja, and one was large — Wyndham, one of the largest hotel chains in the world. Each of them talked about how they are using Agentforce in their business.
That’s how he’s trying to get the word out. He is a gifted marketer. He also needs to explain how he fits in with OpenAI and Anthropic. Salesforce is a small investor in Anthropic. Anthropic recently had an enterprise agents event, and Salesforce was highlighted as one of the customers embedding Anthropic in a product Salesforce has called Slack.
Those are the kinds of things they need to keep doing to help customers understand that Salesforce has a strong solution and they should be giving it a try.
ROGER: All right, we have to wrap it up there, Patrick, but thank you very much for joining us.
PATRICK: Thanks for having me.
ROGER: Patrick Walravens, managing director and director of technology research at Citizens JMP.
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This BNN Bloomberg summary and transcript of the Feb. 26, 2026 interview with Patrick Walravens are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
