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Salesforce Poised to Temper Revenue Growth Acceleration Outlook for Second Half, UBS Says

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Salesforce Poised to Temper Revenue Growth Acceleration Outlook for Second Half, UBS Says

Salesforce (CRM) could temper expectations for an acceleration in second-half revenue amid mixed customer feedback regarding their software spending, UBS Securities in a note sent Wednesday.

The customer relationship management platform is scheduled to release its fiscal second-quarter results on Aug. 26. UBS is projecting earnings per share of $3.44 for the quarter, above the consensus of $3.27.

In May, Salesforce guided second-quarter revenue in the range of $11.27 billion to $11.35 billion, indicating a 10% to 11% increase year over year. It raised the midpoint of its full-year revenue guidance, pegging sales at $45.9 billion to $46.2 billion.

During the earnings call in May, Chief Financial Officer Robin Washington projected a reacceleration in organic revenue in the second half of fiscal 2027 amid growth momentum in annual order value.

"For several quarters now, Salesforce has signaled improving bookings, especially downmarket, that is expected to convert to an acceleration in core revs growth in (the October and January quarters)," UBS analyst Karl Keirstead wrote. "While these checks were more about mid-large enterprise demand, they did not support a view that demand is improving."

The feedback from Salesforce customers is that demand remains muted, similar to the last quarter, and "did not point to a material growth acceleration" in the second half.

"By product segment, the big sales and service cloud segments remained relatively steady and the feedback on data cloud was very strong, while the feedback on marketing, commerce and tableau was cautious," Keirstead said. "Bottom line, we attach a higher probability to Salesforce tempering its outlook for a (second-half) acceleration."

Agentforce adoption seemed to be strong, but "the commentary did not point to any material usage inflection and privately-held Sierra was flagged more as a rival," Keirstead said.

Salesforce's stock is down 27% year to date.

UBS maintained a neutral rating on Salesforce, though it raised the price target to $210 from $185.

Price: $192.37, Change: $-5.10, Percent Change: -2.59%

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