Salesforce Earnings: Signs of Acceleration in a Solid Quarter Overall

Key Morningstar Metrics for Salesforce

• Fair Value Estimate: $300
• Morningstar Rating: ★★★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of Salesforce’s Earnings

Salesforce CRM’s fiscal fourth-quarter revenue grew 10% in constant currency to $11.20 billion, while non-GAAP operating margin was 34.2%. Fiscal 2027 guidance is approximately in line with FactSet consensus estimates on the top and bottom lines.

Why it matters: Artificial intelligence remains key, and momentum here is positive, with total Agentforce and Data 360 annual recurring revenue of $2.9 billion, up 200% year over year, while stand-alone Agentforce ARR passed $800 million and was up 169% year over year.

• Both subscriptions and services were about in line with our model, with the various clouds coming in about as expected. Billings accelerated again to 18% year-over-year growth, topping revenue growth and consistent with management’s call for top-line acceleration in the second half.

The bottom line: We lower our fair value estimate for Salesforce to $300 per share from $325 previously, on lower long-term growth estimates. The seat-based model the firm uses is under intense scrutiny, which pressured software stocks in 2025 and into 2026, despite our belief that AI is more of a tool than a threat.

• While shares look cheap, we note the AI fear around software with our High Morningstar Uncertainty Rating. For context, our model shows a fair value of $240 with growth beyond year 10 set at 0%. We also note that our model is meaningfully below management’s fiscal 2030 targets.
• We think wide-moat Salesforce will survive the current iteration of the death of software and probably even thrive in the age of AI. That said, it is hard to recommend any software stock in this environment of extreme uncertainty.

Coming up: The fiscal 2027 outlook is slightly better than we expected, with revenue of $45.80 billion to $46.20 billion, a 34.3% non-GAAP operating margin, and non-GAAP earnings per share of $13.11-$13.19.

• Management’s confidence around revenue acceleration is higher, so much so that they have firmed up the timeline to the second half of fiscal 2027.