CRM's Agentforce ARR Jumps 330% Y/Y: Is It the Next Growth Engine?

Core Insights - Salesforce's Agentforce is experiencing significant growth, with an annual recurring revenue (ARR) of $540 million in Q3 FY26, representing a 330% year-over-year increase [1][9]. Group 1: Agentforce Performance - Since its launch, Salesforce has closed over 18,500 Agentforce deals, with 9,500 being paid transactions, indicating strong market adoption [2]. - More than 50% of new Agentforce bookings are from existing customers, showcasing customer retention and expansion [2]. - Agentforce has processed 3.2 trillion tokens since launch, with 540 billion tokens processed in October alone, reflecting a 25% sequential increase [2]. - The platform has achieved 1.2 billion LLM calls to date, with over 200 million calls processed in Q3 FY26, indicating robust early adoption [3]. Group 2: Business Model and Revenue Growth - The consumption-based model, supported by flexible payment options like Flex Credits, is driving demand for Agentforce, which may enhance recurring revenue growth over time [4]. Group 3: Competitive Landscape - Microsoft and ServiceNow are also advancing AI automation in the enterprise market, with Microsoft integrating AI features into Dynamics 365 and ServiceNow automating IT service management and customer support [5][6]. Group 4: Financial Performance and Valuation - Salesforce shares have declined by 2.5% year-to-date, compared to a 4.9% decline in the Zacks Computer – Software industry [7]. - The company trades at a forward price-to-sales ratio of 5.47, which is below the industry average of 7.55, indicating potential undervaluation [10]. - The Zacks Consensus Estimate for Salesforce's fiscal 2026 and 2027 earnings suggests year-over-year increases of approximately 15.10% and 10.53%, respectively, with recent upward revisions [13].