Salesforce Faces Uncertainty Ahead of Earnings Report
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy CRM?
Source: Fool
- High Stock-Based Compensation: In Q3 of fiscal 2026, Salesforce reported $805 million in stock-based compensation, representing about 8% of quarterly revenue, which poses a dilution risk for shareholders compared to Alphabet's 6%, despite Salesforce's efforts to repurchase shares to mitigate this dilution.
- Strong Cash Flow: Salesforce's revenue grew 9% year-over-year to $10.3 billion in Q3 2026, with free cash flow increasing by 22% to $2.2 billion, indicating robust performance in the software-as-a-service sector, yet concerns about long-term growth potential remain.
- Rapid AI Product Growth: The annual recurring revenue from Salesforce's AI products, including Agentforce and Data 360, reached nearly $1.4 billion, up 114% year-over-year, showcasing the effectiveness of its AI investments, but also introducing risks of intensified competition and margin compression.
- Increased Market Uncertainty: Although Salesforce's price-to-earnings ratio is around 24, suggesting it is not overly expensive, the high single-digit revenue growth raises investor concerns about future profitability and pricing power, particularly as AI becomes more central to its operations.
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Analyst Views on CRM
Wall Street analysts forecast CRM stock price to rise
39 Analyst Rating
29 Buy
9 Hold
1 Sell
Moderate Buy
Current: 185.160
Low
223.00
Averages
326.40
High
405.00
Current: 185.160
Low
223.00
Averages
326.40
High
405.00
About CRM
Salesforce, Inc. is a provider of customer relationship management (CRM) technology. The Company helps organizations of any size reimagine their business for the world of artificial intelligence (AI). With Agentforce, its platform, organizations can bring humans together with AI agents to drive customer success on one deeply unified platform. With the Salesforce platform, it delivers a single source of truth, connecting customer data with integrated AI across systems, apps and devices to help companies sell, service, market and conduct commerce from anywhere. Agentforce is a new layer of the Salesforce platform that enables companies to build and deploy AI agents that can respond to inputs, make decisions and take action autonomously across business functions. Agentforce includes a suite of customizable agents for use across sales, service, marketing and commerce. Datablazer is a data-driven innovator, which leverages the Company’s platform to unlock insights and drive decisions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Salesforce Shares Drop Amid Analyst Downgrades and Broader Software Sell-Off
- Stock Decline: Salesforce shares fell 3.8% today, closing at $178.16, reflecting the broader software stock retreat and the impact of analysts lowering their price targets, indicating market concerns about the company's future performance.
- Analyst Rating Changes: Despite two Wall Street analysts lowering their price targets, they maintained buy ratings, suggesting confidence in Salesforce's long-term potential, although the stock's 33% decline year-to-date raises short-term concerns.
- Uncertain Industry Outlook: Salesforce's stock hit a 52-week low, although it outperformed the iShares Expanded Tech-Software ETF, which dropped 4.8%, highlighting the pressure and uncertainty facing the software sector as a whole.
- Upcoming Earnings Report: Salesforce is set to report its fourth-quarter earnings on Tuesday, with analysts expecting a 12% revenue increase to $11.2 billion and adjusted earnings per share to rise from $2.78 to $3.05, with the market closely watching for any potential AI disruption impacts.
See More
Canva Acquires Startups to Counter Market Challenges
- Acquisition Strategy: Canva's acquisition of startups Cavalry and MangoAI aims to bolster its competitive edge in animation and short video advertising, particularly as Adobe faces market pressures, demonstrating Canva's proactive approach to market changes.
- Technology Integration: Cavalry's animation technology will be integrated into Canva's core products and the Affinity application, enhancing user capabilities in motion graphics while allowing Cavalry to operate independently to meet diverse designer needs.
- Revenue Growth: Canva reported an annualized revenue exceeding $4 billion in 2025, a 36% increase year-over-year, indicating strong growth momentum in a competitive market, despite Adobe's market capitalization reaching $101 billion.
- AI Application Prospects: Canva plans to incorporate MangoAI technology into its Canva Grow advertisement generator, assisting users in analyzing video performance and optimizing content strategies, further enhancing product competitiveness and user experience.
See More
Salesforce Faces Uncertainty Ahead of Earnings Report
- High Stock-Based Compensation: In Q3 of fiscal 2026, Salesforce reported $805 million in stock-based compensation, representing about 8% of quarterly revenue, which poses a dilution risk for shareholders compared to Alphabet's 6%, despite Salesforce's efforts to repurchase shares to mitigate this dilution.
- Strong Cash Flow: Salesforce's revenue grew 9% year-over-year to $10.3 billion in Q3 2026, with free cash flow increasing by 22% to $2.2 billion, indicating robust performance in the software-as-a-service sector, yet concerns about long-term growth potential remain.
- Rapid AI Product Growth: The annual recurring revenue from Salesforce's AI products, including Agentforce and Data 360, reached nearly $1.4 billion, up 114% year-over-year, showcasing the effectiveness of its AI investments, but also introducing risks of intensified competition and margin compression.
- Increased Market Uncertainty: Although Salesforce's price-to-earnings ratio is around 24, suggesting it is not overly expensive, the high single-digit revenue growth raises investor concerns about future profitability and pricing power, particularly as AI becomes more central to its operations.
See More
Salesforce Earnings Preview: Challenges of AI and Stock Compensation Costs
- Earnings Anticipation: Salesforce is set to report its fourth-quarter and full-year fiscal 2026 results on Wednesday, with market sentiment cautious due to revenue growth cooling to high single digits, creating a mix of investor expectations and concerns about future performance.
- Stock Compensation Pressure: In Q3 of fiscal 2026, Salesforce reported stock-based compensation expenses of $805 million, approximately 8% of quarterly revenue, which is heavier compared to Alphabet's 6%; although the company is repurchasing shares to offset dilution, shareholders still bear the associated costs.
- AI Product Growth: The annual recurring revenue from Salesforce's AI products, including Agentforce and Data 360, reached nearly $1.4 billion, marking a 114% year-over-year increase, indicating strong momentum in the AI sector, but also facing risks of intensified competition and margin compression.
- Market Position Uncertainty: While Salesforce's price-to-earnings ratio is around 24, suggesting it is not overly expensive, the slowdown in revenue growth raises uncertainties about the company's future
See More
Salesforce Shares Under Pressure Ahead of Earnings Report
- High Stock-Based Compensation: In Q3 of fiscal 2026, Salesforce reported $805 million in stock-based compensation, which accounted for 8% of quarterly revenue, compared to Alphabet's 6%, indicating a higher dilution risk for shareholders, even as the company repurchases shares to mitigate this impact.
- Steady Revenue Growth: Salesforce's revenue rose 9% year-over-year to $10.3 billion in Q3 of fiscal 2026, with free cash flow increasing by 22% to $2.2 billion, demonstrating the company's ongoing strong performance in the SaaS sector, although growth rates have slowed.
- Strong Momentum in AI Products: The latest earnings report highlighted that Salesforce's AI products achieved nearly $1.4 billion in annual recurring revenue, up 114% year-over-year, indicating successful investments in AI, but also raising concerns about intensified competition and potential margin compression.
- Increased Market Uncertainty: Despite a price-to-earnings ratio of around 24 suggesting the stock isn't overly expensive, the high single-digit revenue growth raises investor concerns about future profitability and pricing power, necessitating clearer guidance from management to regain investor confidence.
See More
Analysis and Outlook: A Surge of Concerns
- Supreme Court Ruling: The Supreme Court's decision that certain tariffs were illegal led to a temporary boost in the markets on Friday.
- Presidential Tariffs: President Donald Trump's announcement of 15% global tariffs caused a decline in the markets on Monday.
See More
Salesforce Shares Drop Amid Analyst Downgrades and Broader Software Sell-Off
- Stock Decline: Salesforce shares fell 3.8% today, closing at $178.16, reflecting the broader software stock retreat and the impact of analysts lowering their price targets, indicating market concerns about the company's future performance.
- Analyst Rating Changes: Despite two Wall Street analysts lowering their price targets, they maintained buy ratings, suggesting confidence in Salesforce's long-term potential, although the stock's 33% decline year-to-date raises short-term concerns.
- Uncertain Industry Outlook: Salesforce's stock hit a 52-week low, although it outperformed the iShares Expanded Tech-Software ETF, which dropped 4.8%, highlighting the pressure and uncertainty facing the software sector as a whole.
- Upcoming Earnings Report: Salesforce is set to report its fourth-quarter earnings on Tuesday, with analysts expecting a 12% revenue increase to $11.2 billion and adjusted earnings per share to rise from $2.78 to $3.05, with the market closely watching for any potential AI disruption impacts.
See More
Canva Acquires Startups to Counter Market Challenges
- Acquisition Strategy: Canva's acquisition of startups Cavalry and MangoAI aims to bolster its competitive edge in animation and short video advertising, particularly as Adobe faces market pressures, demonstrating Canva's proactive approach to market changes.
- Technology Integration: Cavalry's animation technology will be integrated into Canva's core products and the Affinity application, enhancing user capabilities in motion graphics while allowing Cavalry to operate independently to meet diverse designer needs.
- Revenue Growth: Canva reported an annualized revenue exceeding $4 billion in 2025, a 36% increase year-over-year, indicating strong growth momentum in a competitive market, despite Adobe's market capitalization reaching $101 billion.
- AI Application Prospects: Canva plans to incorporate MangoAI technology into its Canva Grow advertisement generator, assisting users in analyzing video performance and optimizing content strategies, further enhancing product competitiveness and user experience.
See More
Salesforce Faces Uncertainty Ahead of Earnings Report
- High Stock-Based Compensation: In Q3 of fiscal 2026, Salesforce reported $805 million in stock-based compensation, representing about 8% of quarterly revenue, which poses a dilution risk for shareholders compared to Alphabet's 6%, despite Salesforce's efforts to repurchase shares to mitigate this dilution.
- Strong Cash Flow: Salesforce's revenue grew 9% year-over-year to $10.3 billion in Q3 2026, with free cash flow increasing by 22% to $2.2 billion, indicating robust performance in the software-as-a-service sector, yet concerns about long-term growth potential remain.
- Rapid AI Product Growth: The annual recurring revenue from Salesforce's AI products, including Agentforce and Data 360, reached nearly $1.4 billion, up 114% year-over-year, showcasing the effectiveness of its AI investments, but also introducing risks of intensified competition and margin compression.
- Increased Market Uncertainty: Although Salesforce's price-to-earnings ratio is around 24, suggesting it is not overly expensive, the high single-digit revenue growth raises investor concerns about future profitability and pricing power, particularly as AI becomes more central to its operations.
See More
Salesforce Earnings Preview: Challenges of AI and Stock Compensation Costs
- Earnings Anticipation: Salesforce is set to report its fourth-quarter and full-year fiscal 2026 results on Wednesday, with market sentiment cautious due to revenue growth cooling to high single digits, creating a mix of investor expectations and concerns about future performance.
- Stock Compensation Pressure: In Q3 of fiscal 2026, Salesforce reported stock-based compensation expenses of $805 million, approximately 8% of quarterly revenue, which is heavier compared to Alphabet's 6%; although the company is repurchasing shares to offset dilution, shareholders still bear the associated costs.
- AI Product Growth: The annual recurring revenue from Salesforce's AI products, including Agentforce and Data 360, reached nearly $1.4 billion, marking a 114% year-over-year increase, indicating strong momentum in the AI sector, but also facing risks of intensified competition and margin compression.
- Market Position Uncertainty: While Salesforce's price-to-earnings ratio is around 24, suggesting it is not overly expensive, the slowdown in revenue growth raises uncertainties about the company's future
See More
Salesforce Shares Under Pressure Ahead of Earnings Report
- High Stock-Based Compensation: In Q3 of fiscal 2026, Salesforce reported $805 million in stock-based compensation, which accounted for 8% of quarterly revenue, compared to Alphabet's 6%, indicating a higher dilution risk for shareholders, even as the company repurchases shares to mitigate this impact.
- Steady Revenue Growth: Salesforce's revenue rose 9% year-over-year to $10.3 billion in Q3 of fiscal 2026, with free cash flow increasing by 22% to $2.2 billion, demonstrating the company's ongoing strong performance in the SaaS sector, although growth rates have slowed.
- Strong Momentum in AI Products: The latest earnings report highlighted that Salesforce's AI products achieved nearly $1.4 billion in annual recurring revenue, up 114% year-over-year, indicating successful investments in AI, but also raising concerns about intensified competition and potential margin compression.
- Increased Market Uncertainty: Despite a price-to-earnings ratio of around 24 suggesting the stock isn't overly expensive, the high single-digit revenue growth raises investor concerns about future profitability and pricing power, necessitating clearer guidance from management to regain investor confidence.
See More
Analysis and Outlook: A Surge of Concerns
- Supreme Court Ruling: The Supreme Court's decision that certain tariffs were illegal led to a temporary boost in the markets on Friday.
- Presidential Tariffs: President Donald Trump's announcement of 15% global tariffs caused a decline in the markets on Monday.
See More
