The News
Yesterday, December 3, 2024, Salesforce reported its Q3 / 2025 numbers.
The company reported a total GAAP revenue of $9.44B US, which is a year-over-year change of eight percent and also slightly above the guidance of up to $9.36B that it gave after Q2. In addition, Salesforce raised the lower end of its full year FY25 guidance by $100M to $37.8B. What is also visible is the continued focus on operative margin and operating cash flow, which are up by 280 basis points and 29 percent, respectively.
These numbers exceeded ‘market expectations’, with the corresponding impact on the Salesforce share price.
"We delivered another quarter of exceptional financial performance across revenue, margin, cash flow, and cRPO,” said Marc Benioff, Chair and CEO, Salesforce. “Agentforce, our complete AI system for enterprises built into the Salesforce Platform, is at the heart of a groundbreaking transformation. The rise of autonomous AI agents is revolutionizing global labor, reshaping how industries operate and scale. With Agentforce, we’re not just witnessing the future—we’re leading it, unleashing a new era of digital labor for every business and every industry."
“We continue to drive disciplined profitable growth with third quarter GAAP operating margin of 20.0%, up 280 basis points year-over-year, and non-GAAP operating margin of 33.1%, up 190 basis points year-over-year,” said Amy Weaver, President and CFO of Salesforce. “To date, our total capital returns have surpassed $20 billion and we remain focused on driving shareholder value.”
The Bigger Picture
Salesforce has managed to become the biggest vendor of enterprise software in only 25 years. This is nothing short of amazing, especially, when considering that this market has been changing and is continuing to change fast and that Salesforce started out as a player in a small niche of this market. Add to that who has been there already. Since its humble early days, the company pivoted a couple of times, from a single application company to a multi-application company, from best of breed to best of suite, to platform company, to AI company.
Which is straightforward, as AI, combined with conversational interfaces, are the current battleground of the enterprise software market. Companies that are able to establish themselves with these pivotal technologies, have a great chance at becoming quite sticky. It is one thing to migrate a database from one vendor’s system to another’s.
It is a totally different ballgame to migrate proprietary models that are ingrained in a software stack.
My Point of View and Analysis
In my eyes the quarter’s Salesforce numbers, in contrast to what Benioff boldly stated, are not exactly overwhelming. They are in line or below the growth figures of other major vendors.
Yet, Salesforce is telling a very compelling story.
Salesforce is in another iteration of the clash of titans, this time it is not about dominance in the wider CRM market, now it is about AI and about the whole enterprise. It looks like Salesforce has found a way to make it into ‘core enterprise software land’ by virtue of its Data Cloud and Agentforce. It is basically attacking the vendors that support the full enterprise value chain via its data platform, its ecosystem, and AI.
The compelling story is the story of the rise of a new market of “digital labor” and, of course, Salesforce being the “largest supplier of digital labor” in this market. Personally, I find the moniker ‘digital labor’ dangerous as it, in contrast to contemporary wording, does not convey the message of ‘human augmented by machine’. It is a pivot away from it, albeit a straightforward one.
In fact, it is the story of Agentforce that allegedly fundamentally changes how businesses can operate. It is the story of AI agents doing a lot of the work that will not be done by humans anymore for various reasons; these reasons may include work being dull or dangerous, a lack of ‘skilled labor’ or mere linear thinking in terms of efficiency. According to Benioff, “productivity is no more tied to workforce growth but to this intelligent technology that can be scaled without limits”. The intelligent technology being Agentforce, that has turned into a platform, along with the whole company Salesforce. The problem with bold statements like this is that there are no real proof points yet. Agentforce is live only for a few weeks at the time of this writing. Yet, I agree that this market is “so much bigger […] than the data management market”. This is largely because the data management market is a prerequisite, a part of the foundation of the agent market – as evidenced by Salesforce’s failed attempt to acquire Informatica and the subsequent acquisition of Own.
While Benioff cites some success stories, these are still the same as the ones used during Dreamforce.
Yes, Agentforce works off the huge Salesforce databases, and yes, there are guardrails in place, but still … call me a pessimist, but as long as there are still too many incidents of language models, I would prefer if vendors like Salesforce openly addressed this topic along with possible ways to overcome it. I’d also like to see a few more implemented use cases along with their value.
Other vendors are working with less exuberant messaging. Maybe, this is part of Salesforce’s success.
Now, it is time to deliver.
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