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Salesforce (CRM) delivered a mixed Q3 performance. While revenue exceeded Wall Street expectations, earnings came in below estimates. Further, its Q4 earnings forecast fell short of the Street’s projections. Despite this, the spotlight was on the customer relationship management (CRM) software provider's newest innovation, Agentforce—a cutting-edge addition to the Salesforce platform that empowers businesses to deploy artificial intelligence (AI) agents capable of autonomously managing tasks across various functions.
Investor excitement around Agentforce has propelled Salesforce stock up by 13% in pre-market trading. The company's strategic focus on AI is paying off handsomely; since unveiling Agentforce in September 2024, CRM stock has surged over 30%, signaling strong investor confidence in its AI-driven growth trajectory.
With Agentforce gaining traction and AI initiatives driving growth, is Salesforce stock a buy at current levels? Let’s delve into its prospects.
Q3 Performance and Guidance
Salesforce delivered third-quarter revenue of $9.44 billion, up 8% year-over-year to surpass analysts’ estimate of $9.34 billion. CRM posted adjusted earnings per share (EPS) of $2.41, up about 14% year-over-year. However, it missed the Street’s forecast of $2.44.
Looking ahead, Salesforce projects revenue in the range of $9.90 billion to $10.10 billion, up 7-9% year-over-year. Analysts expected Salesforce to post revenue of $10.05 billion in Q4. EPS guidance for the quarter was $2.57 to $2.62, which was below the consensus estimate of $2.65.
Salesforce raised the lower end of its FY2025 sales guidance for the full year. The company now anticipates revenue between $37.8 billion and $38 billion, slightly up from its previous range of $37.7 billion to $38 billion. The midpoint of this updated guidance—$37.9 billion—is roughly in line with analysts’ expectations.
Agentforce and Data Cloud: Key Catalysts for Salesforce
Salesforce is strategically positioned to lead the enterprise AI revolution, offering businesses a cutting-edge digital workforce solution. While the company reported mixed Q3 results and provided cautious EPS guidance for Q4, its innovative solutions, particularly Agentforce and other AI-driven initiatives, are paving the way for significant growth.
Salesforce’s Q3 highlights include a remarkable surge in AI-related deals, with wins exceeding $1 million, tripling year-over-year, and over 2,000 AI deals signed. Among these, more than 200 were for Agentforce alone. This rapid growth in demand has prompted the company to expand its workforce in Q4 to capitalize on the momentum.
Agentforce has gained substantial traction across Salesforce’s ecosystem, driven by its large network of global partners involved in 75% of Q3 deals, including nine of the company’s top 10 wins. Over 80,000 system integrators have completed Agentforce training, and numerous independent software vendors and technology partners are building and marketing their agents.
Salesforce has also embraced Agentforce internally, reflecting its potential to revolutionize digital labor. By integrating Agentforce into its customer service operations and deploying it on its website, Salesforce has automated processes such as lead generation, qualification, and meeting bookings. These innovations are expected to save millions of hours and unlock significant cost efficiencies, which can be reinvested into strategic growth initiatives.
Agentforce’s success is intertwined with Salesforce’s Data Cloud, which helps clients unify and optimize their data. The company’s Data Cloud continues to gain traction, as eight of its top 10 deals in the third quarter included both Data Cloud and AI, including Agentforce. Moreover, 25% of the Fortune 100 companies use Data Cloud, which is evidence of its enterprise appeal.
Acquisitions to Bolster Growth
Salesforce’s acquisitions continue to strengthen its portfolio. The company’s purchase of Zoomin enhances its ability to extract insights from unstructured data for personalized AI interactions. Similarly, its acquisition of Own Company bolsters data security and compliance offerings. These strategic investments align with Salesforce’s broader vision of embedding AI-driven capabilities across its product suite. This approach is reflected in the robust double-digit growth of its Sales Cloud and Service Cloud products during Q3.
Other Areas of Growth
Salesforce’s broader ecosystem is thriving. Slack, Tableau, and MuleSoft remain integral to Salesforce’s strategy. Slack achieved nearly 50% quarter-over-quarter growth in AI-related spending. Tableau and MuleSoft continued to drive digital transformations for major clients like SiriusXM (SIRI) and Hitachi. Additionally, industry-specific solutions such as Life Science Cloud are gaining traction in highly regulated sectors.
International markets remain a growth driver, contributing half of Salesforce’s top 10 wins in Q3. Prominent deals included partnerships with Brenntag and Finnair. Furthermore, new channels like the Agentforce partner network and AWS Marketplace are unlocking additional revenue streams, with AWS transactions doubling quarter-over-quarter.
Bottom Line: Is Salesforce Stock a Buy?
Salesforce's strategic shift to becoming an AI-first enterprise is paying off, with innovative products and a strong ecosystem driving its growth trajectory. Its AI-driven initiatives, including Agentforce, are gaining significant traction, earning the company a "Strong Buy" consensus from Wall Street analysts.
By integrating AI, data, and strategic partnerships, Salesforce has positioned itself as a leader in the enterprise AI space. This strategy is expected to bolster its market presence and support its share price over the long term.
