Key Morningstar Metrics for Salesforce
- : USD 280.00Fair Value Estimate
- : ★★★★Morningstar Rating
- : NarrowMorningstar Economic Moat Rating
- : HighMorningstar Uncertainty Rating
What We Thought of Salesforce’s Earnings
Salesforce CRM’s fiscal first-quarter revenue grew 12% in constant currency to USD 11.13 billion, while non-GAAP operating margin was 34.8%. Fiscal 2027 guidance was raised slightly to account for upside in the quarter and the substantially accelerated share repurchase program.
Why it matters: Artificial intelligence continues to show momentum, which should persist through 2028, with total Agentforce and Data 360 annual recurring revenue of USD 3.4 billion, up more than 200% year over year, while stand-alone Agentforce ARR was USD 1.2 billion, up 205% year over year.
- Subscriptions drove nearly all of the upside relative to our model, with on-premises Informatica revenue strength overcoming continued weakness in commerce cloud and Tableau. Management highlighted meaningful revenue acceleration at Informatica over the last several quarters.
- We see conflicting cross-currents on the road to management’s continued call for top-line acceleration in the second half. Billings decelerated sharply to 4% year-over-year growth, while the current remaining performance obligation accelerated to 14% year-over-year growth.
The bottom line: We maintain our fair value estimate of USD 280 per share for narrow-moat Salesforce. We think Salesforce will survive the current iteration of the death of software and probably thrive in the age of AI. We think the firm’s outlook for revenue acceleration should serve as a catalyst.
- Shares look cheap, but we note the AI fear around software with our High Morningstar Uncertainty Rating. For context, to force our model to show a fair value estimate near the USD 180 level shares currently hover near, we have to input meaningful revenue contraction over time, which we think is unlikely.
Coming up: We characterize the outlook for the second quarter as being mildly disappointing, which is kept in check by the slight increase to the full-year outlook. Second-quarter revenue is expected to be USD 11.310 billion at the midpoint, with a non-GAAP operating margin of 34.3%.
