Salesforce, Inc. (CRM.US) exceeds earnings expectations but faces sharp stock price decline, exacerbated by lackluster sales guidance and heightened competition concerns in the AI era.

While delivering quarterly financial results that exceeded expectations, American customer relationship management software giant Salesforce, Inc. (CRM.US) saw a sharp drop in its stock price after hours on Wednesday due to lackluster sales growth outlook for the new fiscal year that failed to impress investors. The market is growing increasingly concerned that in the era of artificial intelligence (AI), this traditional software giant may lose its edge in competition with emerging rivals. Flat annual guidance, rising concerns about AI competition According to the statement released, Salesforce, Inc. expects revenue for the fiscal year ending January 2027 to be around $46 billion. While this forecast was largely in line with analysts' expectations, it failed to ignite market enthusiasm. After the financial report was released, the company's stock price fell by more than 5% in after-hours trading. In terms of specific financial data, for the fourth quarter ending January 31, Salesforce, Inc. reported revenue of $11.2 billion, a 12% year-over-year increase, slightly higher than the market's expected $111.8 billion and the fastest growth rate in two years. Earnings per share, excluding certain items, were $3.81, well above the market's expected $3.04. At the same time, the remaining performance obligations (CRPO) amount, a measure of contracted revenue to be recognized in the next twelve months, reached $35.1 billion, higher than the market's expected $34.53 billion. However, this growth was partly attributed to the recent acquisition of data software company Informatica, which contributed $399 million in revenue. Excluding the impact of exchange rate fluctuations, revenue growth for the company's two core business lines - sales and customer service software - was 8% and 7%, respectively, slightly below Wall Street's expectations. As a leader in customer management software, Salesforce, Inc. has become a typical representative of Wall Street's anxiety about how AI will impact existing software vendors. Over the past twelve months, the company's stock price has fallen by about 37%, as investors worry that AI technology will lower entry barriers in the industry, making it easier to develop competing products and thus weaken Salesforce, Inc.'s pricing power. To address the challenges and opportunities brought by AI, Salesforce, Inc. is heavily betting on its AI platform, Agentforce. This tool can complete tasks such as sales development and customer service without human supervision. The company disclosed that annual recurring revenue for this product in the fourth quarter had exceeded $800 million, higher than the $500 million in the previous quarter. However, analysts point out that against the backdrop of concerns about how AI may disrupt the traditional software-as-a-service (SaaS) business, Salesforce, Inc. needs to demonstrate that it is effectively converting its early AI technology advantages into broader business applications. "Salesforce, Inc. must show the market how customers are progressing AI agents from pilot projects to large-scale production," said Rebecca Wettemann, CEO of industry analyst firm Valoir. Raising targets for 2030, launching a $50 billion buyback Despite market concerns, Salesforce, Inc. remains optimistic about its short-term prospects. The company expects first-quarter revenue to be between $11.03 billion and $11.08 billion, with adjusted earnings per share of $3.11 to $3.13, both higher than analysts' expectations. The company also expects full-year revenue growth of 10% to 11% and anticipates that "organic growth will reaccelerate in the second half of the year." In addition, facing a continuous decline in its stock price - down about 28% year-to-date, Salesforce, Inc. announced a new $50 billion stock buyback plan and raised its quarterly dividend to 44 cents per share. The company stated that these measures "reinforce our commitment to creating significant value for our shareholders." CEO Marc Benioff bluntly stated during the analyst conference call that the buyback was because "the current price is very low." The company also disclosed that its investment in AI startup Anthropic brought in $811 million in revenue in the quarter and has made additional investments, currently holding a stake of about 1%. Benioff emphasized in the statement that the company is steadily progressing towards achieving its goal of $63 billion in annual revenue for the fiscal year 2030, a figure higher than the previously expected $60 billion and exceeding Wall Street's current expectation of around $59.07 billion. Benioff stated that the AI smart agent is one of the growth drivers. Analysts at Morgan Stanley also maintained a "buy" rating for Salesforce, Inc. in a report, noting that communication with partners indicates that the promotion of its AI business is still in the early stages.