Salesforce's Profitability Nears All-Time High
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy CRM?
Source: NASDAQ.COM
- Profitability Boost: Salesforce's GAAP operating margin reached 20.1% and non-GAAP operating margin stood at 34.1% in fiscal year 2026, indicating that the company's profitability is nearing its all-time high, which enhances investor confidence.
- Sustained Revenue Growth: In Q4 of fiscal year 2025, Salesforce's revenue grew 12% year-over-year to $11.2 billion, showing solid performance for a mature company with a market cap exceeding $170 billion, despite a slower growth rate compared to its past.
- Increase in Future Revenue Commitments: Salesforce reported total remaining performance obligations (RPO) of $72 billion in Q4, a 14% year-over-year increase, with CEO Marc Benioff calling this milestone
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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: 185.640
Low
223.00
Averages
326.40
High
405.00
Current: 185.640
Low
223.00
Averages
326.40
High
405.00
About CRM
Salesforce, Inc. is a customer relationship management (CRM) technology company. Its artificial intelligence (AI) powered Agentforce 360 Platform offers sales, service, marketing, commerce, collaboration, data management, integration, analytics, and information technology (IT) service solutions. It enables customers to build and deploy digital labor for employees and customers, leveraging autonomous AI agents across business functions. Its service offerings include Agentforce Sales, Agentforce Service, Agentforce 360 Platform, Slack and Others. The Agentforce Sales provides sales capabilities and tools built for organizations across prospecting, sales engagement, team collaboration, sales analytics and AI, sales programs, sales performance, partner management, and revenue and orders. The Agentforce Service provides field service solutions that enable companies to connect service agents, dispatchers and mobile employees through platform to schedule, dispatch and manage jobs.
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's $50 Billion Buyback and AI Growth Potential
- Buyback Program: Salesforce's board authorized a $50 billion share repurchase program at the start of the year, issuing $25 billion in debt in early March to accelerate this initiative, executing about 80% of the planned buyback, reflecting management's confidence in the stock's current valuation.
- Revenue Growth Rebound: The company has seen a reacceleration in net new annual order value growth in the second half of fiscal 2026, with expectations for actual revenue growth to exceed prior forecasts in the second half of 2027, driven by advancements in AI technology.
- Surge in AI Sales: Agentforce sales skyrocketed by 169% year-over-year to $800 million, and when combined with Data 360 and Informatica cloud businesses, total annual recurring revenue linked to AI efforts reached $2.9 billion, underscoring AI's pivotal role in revenue generation.
- Long-term Financial Outlook: Management has raised its revenue forecast for fiscal 2030 to $63 billion, implying an annualized growth rate of 11%, while also projecting an adjusted operating margin increase to 40%, indicating substantial financial returns from investments in AI.
See More
Investment Opportunities in the SaaS Sector
- Market Growth Potential: Thoma Bravo forecasts a 20% annual growth rate for the SaaS sector over the next few years, indicating that despite current valuation declines, fundamentals are improving, potentially offering a favorable buying opportunity for investors.
- ServiceNow's Competitive Edge: As a core tool for IT departments, ServiceNow continues to grow at a 20% rate through its generative AI suite, Now Assist, and the newly launched Control Tower platform, with an attractive forward P/E of 25 times, highlighting its valuation appeal.
- Salesforce's Market Positioning: Salesforce's leadership in customer relationship management is bolstered by its Data 360 feature, which integrates third-party data; despite a forward P/E of just 14 times, it is expected to achieve stable double-digit revenue growth, showcasing its potential in the AI era.
- Workday's Value Rebound: Although Workday's stock has dropped about 40% year-to-date, its forward P/E is only 12 times, and it maintains low double-digit revenue growth, suggesting that its investments in AI applications may lay the groundwork for future recovery.
See More
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- Market Opportunity Analysis: Thoma Bravo suggests that the recent sell-off in SaaS stocks may create a generational buying opportunity, with an expected annual growth rate of 20% over the next few years indicating improving fundamentals despite current valuation declines.
- Industry Growth Comparison: SaaS companies within the S&P 500 are growing their revenues at three times the rate of firms in other sectors, coupled with significantly higher gross margins, which enhances their competitive edge in the market.
- Winners in the AI Era: Thoma Bravo emphasizes that while not all software companies will survive the AI disruption, those with deep domain expertise in SaaS are likely to emerge as winners in the forthcoming agentic AI age.
- Individual Stock Performance Analysis: Companies like ServiceNow, Salesforce, and Workday are strategically positioning themselves in the AI landscape and maintaining revenue growth, showing potential for future success, especially as their valuations have dropped to attractive levels.
See More
Salesforce Stock Buyback Plan Boosts Market Confidence
- Stock Buyback Plan: Salesforce announced a $50 billion stock repurchase authorization, with $20 billion completed by March 15, an additional $5 billion expected by FY27 end, and the final $25 billion yet to be scheduled, significantly reducing the diluted share count for FY27 and enhancing earnings per share.
- Target Price Increase: BNP Paribas raised Salesforce's target price from $220 to $230, reflecting confidence in the company's future growth potential, particularly as the market begins to recognize the adoption of its AI products, which may attract more investor interest.
- CEO Event Catalyst: Salesforce CEO Marc Benioff will host an event on March 31 to showcase Slack's latest features; while the buyback plan has not yet sparked immediate investor interest, this event could serve as a catalyst to demonstrate real-world customer adoption of Salesforce's AI offerings.
- Ongoing Market Pressure: Despite a 35% decline in Salesforce's stock over the past year, analysts believe the current stock price may have reached a low point, and with upcoming catalysts, there may be opportunities for investors to reassess their positions.
See More
Salesforce Stock Decline Amid Strong Performance Metrics
- Revenue Growth: Salesforce reported a 12% year-over-year revenue increase in Q4 2025, reaching $11.2 billion, which, despite a slowdown, remains impressive for a mature company with a market cap exceeding $170 billion, indicating sustained market demand.
- Future Revenue Commitments: The company disclosed $72 billion in remaining performance obligations (RPO) in Q4, a 14% year-over-year rise, which CEO Marc Benioff described as an 'incredible milestone', highlighting the stability of future revenues.
- Profitability Improvement: Salesforce achieved a GAAP operating margin of 20.1% and a non-GAAP operating margin of 34.1% in fiscal year 2026, nearing its highest levels ever, which boosts investor confidence in its financial health.
- Share Repurchase Plan: The announcement of a $50 billion share repurchase plan, following $12.7 billion in buybacks last fiscal year, reflects Salesforce's strategy to leverage its current attractive valuation to enhance shareholder returns, demonstrating confidence in future growth.
See More
Salesforce's Profitability Nears All-Time High
- Profitability Boost: Salesforce's GAAP operating margin reached 20.1% and non-GAAP operating margin stood at 34.1% in fiscal year 2026, indicating that the company's profitability is nearing its all-time high, which enhances investor confidence.
- Sustained Revenue Growth: In Q4 of fiscal year 2025, Salesforce's revenue grew 12% year-over-year to $11.2 billion, showing solid performance for a mature company with a market cap exceeding $170 billion, despite a slower growth rate compared to its past.
- Increase in Future Revenue Commitments: Salesforce reported total remaining performance obligations (RPO) of $72 billion in Q4, a 14% year-over-year increase, with CEO Marc Benioff calling this milestone
See More
Salesforce's $50 Billion Buyback and AI Growth Potential
- Buyback Program: Salesforce's board authorized a $50 billion share repurchase program at the start of the year, issuing $25 billion in debt in early March to accelerate this initiative, executing about 80% of the planned buyback, reflecting management's confidence in the stock's current valuation.
- Revenue Growth Rebound: The company has seen a reacceleration in net new annual order value growth in the second half of fiscal 2026, with expectations for actual revenue growth to exceed prior forecasts in the second half of 2027, driven by advancements in AI technology.
- Surge in AI Sales: Agentforce sales skyrocketed by 169% year-over-year to $800 million, and when combined with Data 360 and Informatica cloud businesses, total annual recurring revenue linked to AI efforts reached $2.9 billion, underscoring AI's pivotal role in revenue generation.
- Long-term Financial Outlook: Management has raised its revenue forecast for fiscal 2030 to $63 billion, implying an annualized growth rate of 11%, while also projecting an adjusted operating margin increase to 40%, indicating substantial financial returns from investments in AI.
See More
Investment Opportunities in the SaaS Sector
- Market Growth Potential: Thoma Bravo forecasts a 20% annual growth rate for the SaaS sector over the next few years, indicating that despite current valuation declines, fundamentals are improving, potentially offering a favorable buying opportunity for investors.
- ServiceNow's Competitive Edge: As a core tool for IT departments, ServiceNow continues to grow at a 20% rate through its generative AI suite, Now Assist, and the newly launched Control Tower platform, with an attractive forward P/E of 25 times, highlighting its valuation appeal.
- Salesforce's Market Positioning: Salesforce's leadership in customer relationship management is bolstered by its Data 360 feature, which integrates third-party data; despite a forward P/E of just 14 times, it is expected to achieve stable double-digit revenue growth, showcasing its potential in the AI era.
- Workday's Value Rebound: Although Workday's stock has dropped about 40% year-to-date, its forward P/E is only 12 times, and it maintains low double-digit revenue growth, suggesting that its investments in AI applications may lay the groundwork for future recovery.
See More
SaaS Stock Sell-Off May Present Generational Buying Opportunity
- Market Opportunity Analysis: Thoma Bravo suggests that the recent sell-off in SaaS stocks may create a generational buying opportunity, with an expected annual growth rate of 20% over the next few years indicating improving fundamentals despite current valuation declines.
- Industry Growth Comparison: SaaS companies within the S&P 500 are growing their revenues at three times the rate of firms in other sectors, coupled with significantly higher gross margins, which enhances their competitive edge in the market.
- Winners in the AI Era: Thoma Bravo emphasizes that while not all software companies will survive the AI disruption, those with deep domain expertise in SaaS are likely to emerge as winners in the forthcoming agentic AI age.
- Individual Stock Performance Analysis: Companies like ServiceNow, Salesforce, and Workday are strategically positioning themselves in the AI landscape and maintaining revenue growth, showing potential for future success, especially as their valuations have dropped to attractive levels.
See More
Salesforce Stock Buyback Plan Boosts Market Confidence
- Stock Buyback Plan: Salesforce announced a $50 billion stock repurchase authorization, with $20 billion completed by March 15, an additional $5 billion expected by FY27 end, and the final $25 billion yet to be scheduled, significantly reducing the diluted share count for FY27 and enhancing earnings per share.
- Target Price Increase: BNP Paribas raised Salesforce's target price from $220 to $230, reflecting confidence in the company's future growth potential, particularly as the market begins to recognize the adoption of its AI products, which may attract more investor interest.
- CEO Event Catalyst: Salesforce CEO Marc Benioff will host an event on March 31 to showcase Slack's latest features; while the buyback plan has not yet sparked immediate investor interest, this event could serve as a catalyst to demonstrate real-world customer adoption of Salesforce's AI offerings.
- Ongoing Market Pressure: Despite a 35% decline in Salesforce's stock over the past year, analysts believe the current stock price may have reached a low point, and with upcoming catalysts, there may be opportunities for investors to reassess their positions.
See More
Salesforce Stock Decline Amid Strong Performance Metrics
- Revenue Growth: Salesforce reported a 12% year-over-year revenue increase in Q4 2025, reaching $11.2 billion, which, despite a slowdown, remains impressive for a mature company with a market cap exceeding $170 billion, indicating sustained market demand.
- Future Revenue Commitments: The company disclosed $72 billion in remaining performance obligations (RPO) in Q4, a 14% year-over-year rise, which CEO Marc Benioff described as an 'incredible milestone', highlighting the stability of future revenues.
- Profitability Improvement: Salesforce achieved a GAAP operating margin of 20.1% and a non-GAAP operating margin of 34.1% in fiscal year 2026, nearing its highest levels ever, which boosts investor confidence in its financial health.
- Share Repurchase Plan: The announcement of a $50 billion share repurchase plan, following $12.7 billion in buybacks last fiscal year, reflects Salesforce's strategy to leverage its current attractive valuation to enhance shareholder returns, demonstrating confidence in future growth.
See More
Salesforce's Profitability Nears All-Time High
- Profitability Boost: Salesforce's GAAP operating margin reached 20.1% and non-GAAP operating margin stood at 34.1% in fiscal year 2026, indicating that the company's profitability is nearing its all-time high, which enhances investor confidence.
- Sustained Revenue Growth: In Q4 of fiscal year 2025, Salesforce's revenue grew 12% year-over-year to $11.2 billion, showing solid performance for a mature company with a market cap exceeding $170 billion, despite a slower growth rate compared to its past.
- Increase in Future Revenue Commitments: Salesforce reported total remaining performance obligations (RPO) of $72 billion in Q4, a 14% year-over-year increase, with CEO Marc Benioff calling this milestone
See More
