Core Viewpoint - Salesforce reported strong fiscal Q2 2026 results, exceeding analyst expectations, but the stock declined due to unchanged high-end revenue guidance, raising investor concerns about AI's impact on its business model [1][2] Financial Performance - Revenue increased by 10% year over year to $10.23 billion, surpassing guidance of $10.11 billion to $10.16 billion [6] - Subscription and support revenue rose 11% to $9.69 billion, while platform sales grew 16% [6] - Adjusted earnings per share (EPS) increased 14% to $2.91, exceeding analyst consensus of $2.78 [8] - Operating cash flow was $740 million, and free cash flow was $605 million, with $15.4 billion in cash and short-term investments [9] Growth Drivers - The Agentforce platform has over 6,000 paid deals, with a 60% sequential increase in customers moving to full production [4] - Data Cloud's annual recurring revenue surged 120% year over year to $1.2 billion, with a 140% increase in customers [5] Future Outlook - Remaining performance obligations rose 11% year over year to $29.64 billion, indicating future revenue potential [10] - The company slightly increased the low end of its full-year revenue outlook to $41.1 billion to $41.3 billion [10] - For fiscal Q3, revenue is forecasted to rise by 8% to 9%, with adjusted EPS expected between $2.84 and $2.86 [10] Market Sentiment - Investor sentiment has driven Salesforce's stock to low valuations, with a forward price-to-sales multiple of 5 and a PEG ratio below 0.5, indicating potential undervaluation [14] - The company is adapting to AI trends by reducing its customer service headcount and focusing on AI agents [11][12]

Core Viewpoint - Salesforce reported solid results for its fiscal 2025 fourth quarter and is focusing on agentic AI as a key growth driver, despite a challenging start to 2025 for its stock [1][2] Group 1: Financial Performance - Salesforce's revenue increased by 8% year over year to $10 billion, aligning with its guidance range [6] - Adjusted earnings per share (EPS) rose by 21% to $2.78, with free cash flow generated during the quarter amounting to $3.8 billion [7] - Current remaining performance obligations (cRPOs) grew by 10% year over year to $30.2 billion, indicating a positive revenue outlook [7] Group 2: Agentic AI and Product Development - The company introduced Agentforce, an agentic AI solution, which has gained traction with 5,000 deals closed, including 3,000 paid deals [2][3] - Agentforce offers various out-of-the-box AI agents for tasks in customer service, HR, and technical support, and allows customers to create custom agents using low-code and no-code tools [3][4] - The product is consumption-based, costing $2 per interaction, aimed at enhancing productivity and efficiency [4] Group 3: Partnerships and Ecosystem - Salesforce's partnership network has been instrumental, with half of Agentforce sales and 70% of activations coming from this ecosystem [5] - The company has 127,000 system-integrated employees trained on Agentforce and over 1,000 technology partners involved in building and selling agents [5] Group 4: Future Guidance - For fiscal 2026, Salesforce forecasts revenue growth of 7% to 8%, projecting total revenue between $40.5 billion and $40.9 billion [8] - The company anticipates subscription and support revenue to grow by about 8.5% and expects fiscal Q1 revenue growth of 6% to 7% year over year [8][9] Group 5: Valuation and Market Position - Salesforce trades at a forward price-to-sales multiple of under 7 and a forward price-to-earnings (P/E) ratio under 27, with a price/earnings-to-growth (PEG) ratio of 0.5, indicating potential undervaluation [10] - The valuation is considered attractive if Agentforce can accelerate revenue growth, with conservative guidance suggesting a good chance of exceeding expectations throughout the year [11]