Salesforce recently showcased its strength to investors during its fourth-quarter earnings announcement. The company reported a revenue of $10.7 billion for the quarter, marking a 13% increase from the previous year. For the entire year, Salesforce achieved $41.5 billion in revenue, up 10%, bolstered by its $8 billion acquisition of Informatica in May.
Net income was impressive, reaching $7.46 billion, and Salesforce projected revenue for the next year between $45.8 billion and $46.2 billion, reflecting a growth of 10% to 11%. Notably, their “remaining performance obligation” stands at over $72 billion, indicating strong future revenue potential.
Despite these bright numbers, concerns loom over the software-as-a-service (SaaS) sector. Companies in this model, including Salesforce, have recently faced declining stock prices. Investors worry that the rise of AI could make these business models outdated. During the earnings call, CEO Marc Benioff referenced the term “SaaSpocalypse” multiple times, indicating a looming threat.
Benioff remarked, “If there is a SaaSpocalypse, it may be eaten by the Sasquatch because there are a lot of companies using a lot of SaaS because it just got better with agents.” This highlights the competition that AI poses for traditional software models.
To reassure stakeholders, Salesforce introduced several initiatives. They raised their dividend by nearly 6% to $0.44 per share and initiated a $50 billion share buyback program, which often boosts stock prices by reducing the number of shares in circulation.
The earnings call also took an innovative turn. Benioff interviewed various satisfied customers, including the CEOs of SharkNinja and Wyndham Hotels, who praised Salesforce’s AI features. This strategy personalizes the presentation while showcasing real-world benefits.
Salesforce introduced a new metric called agentic work units (AWU) to assess its AI products. This metric focuses on whether an AI agent actually completes tasks, rather than just generating text. Salesforce logged 19 trillion tokens last quarter—a notable figure, yet minimal compared to the broader AI landscape.
As stated by Patrick Stokes, Salesforce’s president and CMO, “You can ask it a question and it can write you a poem, but that’s not really all that valuable in the enterprise world.” Thus, AWU aims to measure practical outcomes.
Salesforce also shared its vision for the future, positioning itself as a leading player in SaaS while suggesting that AI could become a basic underlying service. This perspective stands in contrast to OpenAI’s recent positioning with its enterprise agent, Frontier, which suggests a different architecture where AI companies take the lead.
Adding to his message, Benioff appeared in a black leather jacket, reminiscent of Nvidia CEO Jensen Huang, further underscoring Salesforce’s alignment with the cutting-edge AI landscape.
In summary, while Salesforce is doing well financially, it must navigate the challenges posed by the evolving AI landscape. Stakeholders are watching closely to see how the company will adapt and thrive in this changing environment.
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Marc Benioff,SaaS sales,Salesforce
