Salesforce Inc (NYSE: CRM) prepares to report fiscal second-quarter earnings on Wednesday, Aug. 26. Management highlights rapid growth in AI-driven Agentforce annual recurring revenue (ARR) while noting organic revenue growth may slow to 6%-7% in the near term.

The company’s financial outlook presents a mixed picture as it balances strong demand for its new AI capabilities against broader headwinds in core customer relationship management (CRM) sales cycles.

Analyst Outlook and Ratings

Two major firms have maintained Buy ratings on the stock ahead of the report, though their price targets differ.

• BTIG: Analyst Allan Verkhovski maintained a Buy rating with a $255 price target. The firm remains confident in Salesforce’s valuation despite investor skepticism regarding potential acceleration in the second half of the fiscal year.
• Canaccord Genuity: Analyst David Hynes maintained a Buy rating with a $225 price target. Hynes noted that achieving significant revenue growth in the back half will be a "steep target," requiring substantial acceleration from current levels.

AI and Agentforce Momentum

A key focus for investors will be the durability and breadth of AI-driven growth. Hynes highlighted impressive sequential gains in the firm’s AI initiatives:

• Agentforce ARR grew 205% year-over-year in the first quarter, surpassing $1.2 billion.
• Combined Agentforce and Data 360 ARR reached $3.4 billion, up more than 200% year over year and around 100% organically.
• Hynes described the ~$400 million sequential increase in Agentforce ARR as impressive against Salesforce’s massive existing revenue base. He added that contributions from Fin are expected to layer on once that transaction closes.

BTIG’s Verkhovski added that channel checks indicate a growing number of customers are putting Agentforce into production, with AI budgets remaining a clear priority for many enterprises.

Revenue Guidance and Customer Trends

Management has suggested that net new average order value (NNAOV) could boost overall revenue growth in the second half. For the past four consecutive quarters, new customer business (NNAOV) has grown faster than existing business (average order value or AOV).

However, challenges remain in the core CRM business:

• Second-quarter guidance suggests organic growth could slow to around 6%-7%, excluding contributions from Informatica.
• Microsoft Corp (NASDAQ: MSFT) indicated moderation in Dynamics sales cycles, while HubSpot Inc (NYSE: HUBS) highlighted softer demand and greater budget sensitivity.
• Tableau continues to face challenges, according to BTIG channel checks.

Hynes stated that for Salesforce to meet its revenue target for the second half, sales growth would need to accelerate significantly from the current 6%-7% level. Upside to the second-quarter cRPO (current remaining performance obligation) guidance would signal that improving bookings momentum is likely to flow through to the forward revenue base.

FQ2 Estimates

BTIG analyst Allan Verkhovski provided these estimates for the upcoming report:

Verkhovski noted that most investors remain skeptical that CRM can deliver acceleration in the second half, making this earnings report particularly interesting.

Price Action

Shares of Salesforce declined by 0.94% to $207.08 at the time of publication on Tuesday.

Parnassus Investments Chief Investment Officer Todd Ahlsten warned that the seat-based licensing model, a core revenue driver for enterprise software giants Salesforce (NYSE: CRM) and ServiceNow (NYSE: NOW), faces structural pressure from the rise of AI agents. The concern stems from the potential for companies to increase output without adding employees, thereby reducing the need for additional software licenses.

Ahlsten stated on Bloomberg Tech that the long-term bankability of the seat license model is challenging as AI tools from Anthropic, OpenAI, and Google’s Gemini allow firms to do more work with fewer human users. "The seat license model is just going to be under a lot of pressure," he said. "We wish them well. They're good companies. I just think the long-term bankability of that is going to be challenging."

Shift in Pricing Dynamics

Traditionally, software revenue grew in tandem with corporate hiring. AI disrupts this link by enabling productivity gains without corresponding headcount expansion. Consulting firm Bain & Company analyzed more than 30 SaaS vendors introducing generative AI and found that about 65% had adopted hybrid pricing. This approach layers AI usage or feature-based charges on top of traditional seat pricing, signaling a move away from pure headcount dependency.

Company Adaptations

Both Salesforce and ServiceNow are adjusting their revenue models to account for this shift. They are adding usage-based AI pricing to capture value from digital workers even if human seat growth stalls.

Salesforce CEO Marc Benioff noted that the company maintained its engineering workforce at about 15,000 for roughly two years while AI helped engineers achieve more output. This internal efficiency mirrors the external risk Ahlsten highlighted: if customers grow without hiring, they may require fewer new seats.

However, Salesforce reported on its May earnings call that its Sales and Service products still saw year-over-year seat growth. Additionally, the company noted that its 10 customers making the heaviest use of its AI agents increased their total Salesforce spending by 1.5 times over the previous year.

ServiceNow CEO Bill McDermott told the Wall Street Journal that roughly half of net new business revenue now comes from non-seat-based models. This diversification suggests the company is already mitigating reliance on traditional licensing.

What the Numbers Show

The data reveals a divergence between traditional growth drivers and emerging revenue streams. While Salesforce reports continued seat growth, its highest-value AI adopters are increasing spend by 1.5 times, suggesting that usage-based models may yield higher revenue per unit of engagement than seat licenses alone. Meanwhile, ServiceNow’s disclosure that 50% of net new revenue is non-seat-based indicates a more advanced transition away from headcount-dependent metrics compared to peers still reporting pure seat growth.