Salesforce Earnings Preview: Jefferies Highlights Second-Half Growth as Key Test for Investors

Salesforce Inc is set to report its fiscal first-quarter earnings, and investors are watching closely for signs that the software giant can return to stronger growth later in the year.

According to a Jefferies preview cited by Proactive Investors, the brokerage expects Salesforce to deliver results broadly in line with market expectations. Jefferies’ partner survey showed that 55% of respondents finished the quarter on plan, while 30% performed ahead of plan.

Revenue Growth and AI Adoption in Focus

Jefferies expects Salesforce’s total revenue to grow by about 12.5%, while current remaining performance obligations may rise around 14%. The firm also estimates fiscal 2027 earnings per share of $13.14.

The biggest question for investors is whether Salesforce can accelerate organic revenue growth in the second half of the year. Much of that hope is tied to Agentforce, Salesforce’s AI-powered product push.

At present, AI revenue makes up only about 2% of Salesforce’s total revenue. However, bullish investors believe Agentforce could create a broader “halo effect” across Salesforce’s product portfolio, supporting stronger demand and possibly helping the company return to double-digit revenue growth by fiscal 2028.

Margins Could Improve, but Bigger Gains May Come Later

Jefferies sees modest upside to its fiscal 2027 operating margin estimate of 34.3%. Still, the firm expects more meaningful margin expansion to appear in fiscal 2028, especially if Salesforce can balance AI investment with disciplined cost control.

For shareholders, margins matter because Salesforce has been under pressure to prove it can grow efficiently. Stronger profitability could help offset concerns about slower software spending and rising competition in the AI market.

Bear Case: Seat Reductions, AI Competition, and Executive Departures

Despite the constructive outlook, Jefferies also pointed to several risks. One concern is seat compression, where customers reduce the number of paid users during contract renewals. Around 25% of surveyed partners reported seat reductions, compared with only 5% in the previous quarter.

This trend is important because Salesforce has traditionally relied on seat-based pricing. If companies cut headcount or move toward AI-driven workflows, demand for traditional user licenses could weaken.

Competition is another concern. Jefferies’ survey found that 75% of partners now see Anthropic as the biggest AI threat to Salesforce, up sharply from the previous quarter. AI-native firms such as Sierra, Decagon, and Intercom are also reportedly winning business inside Salesforce’s customer base.

Investor sentiment has also been affected by executive departures, including senior leaders connected to product strategy and Agentforce.

Valuation May Offer Opportunity for Patient Investors

Salesforce shares have fallen sharply this year, underperforming the broader software sector. Jefferies noted that the stock is trading near 10 times fiscal 2027 free cash flow, a valuation level approaching lows last seen around the 2008 financial crisis.

That cheaper valuation may attract long-term investors, but only if Salesforce can show clearer evidence of second-half growth, stronger AI monetization, and stable customer demand.

Why This Earnings Report Matters

This earnings release is more than a routine quarterly update. It could help define how investors view Salesforce’s AI strategy, pricing power, and long-term growth profile.

If Salesforce shows that Agentforce adoption is gaining traction, the market may become more confident in the company’s ability to compete in enterprise AI. However, weak guidance or signs of continued seat reductions could increase concerns that AI may disrupt Salesforce’s traditional business model faster than expected.

In simple terms, investors want proof that Salesforce can turn AI excitement into real revenue. The company does not need to solve every issue in one quarter, but it does need to show progress.

Outlook

Jefferies remains generally constructive on Salesforce, despite the risks. The firm sees potential upside for patient investors if Salesforce can deliver stronger second-half growth and prove that Agentforce can become a meaningful revenue driver.

The upcoming results will likely be judged not only by first-quarter numbers, but also by management’s comments on demand trends, AI adoption, customer renewals, and future profitability.

Source: Proactive Investors

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