Salesforce’s Q4 earnings are set to be reported next week, and it’s a fraught time for the software company. After its Q3 results were announced on December 3 last year, Salesforce stock saw a bump as revenue forecasts topped estimates, with Agentforce and Data 360 delivering some impressive results.
But, at the time of writing (February 19), CRM stock is down 23% since that date, with Salesforce a major character in the so-called ‘SaaSpocalypse’ episode which hit the stock market in recent weeks amid fears that AI could – or to some extent already can – do what legacy software does, but better, cheaper, and quicker. Let’s examine why next week will be so pivotal for Salesforce.
Salesforce’s Q4 Danger and the ‘SaaSpocalypse’
On the one hand, there might be some reason to panic.
Salesforce and other SaaS technologies have not, over the last few years, seen the same explosive growth they did in 2021/22, and they are arguably less exciting as potential investments – especially with some very exciting stocks from AI rivals on the market.
New tools from companies like Anthropic can send shivers through the software stock market because of features which seemingly remove (or at least reduce) the need for typical systems of record, with a similar fear – that AI tools are ‘killing SaaS’ – seemingly on investors’ minds at the moment. Tools like the recently released Claude Cowork will, it is feared, render traditional SaaS platforms and IT services obsolete by automating complex, multi-step tasks.
Earlier this month, the so-called ‘SaaSpocalypse’ saw stock in Salesforce dip to levels reminiscent of the post-Covid crash of 2023, when tech stocks dropped following a considerable boom during the coronavirus pandemic.
It’s worth noting, too, that activist investors have taken a renewed interest in CRM recently, harkening back to another dark year for the company, 2022, when Salesforce came under intense pressure by activist investors to deliver better margins and operational efficiencies.
Q4 will be the first major chance for Salesforce management (who have undergone something of a shakeup recently) to demonstrate that the recent CRM stock downturn is overblown. If they don’t, and the quarterly results reveal less than favorable figures, then this might be seen by more jittery investors as confirmation of the ‘SaaSpocalypse’ narrative. Needless to say, this would be quite bad for Salesforce – which, traditionally, has been something of a B2B barometer for the stock market, as one of the largest suppliers of solely B2B software.
A rather amusingly titled article from the WSJ describes how Wall Street has ‘fallen out of love’ with software stocks, reporting that investors have been increasingly concerned about how their ‘newest crush’ – AI companies – could upend them.
Rishi Jaluria, a software analyst at RBC Capital Markets, told the outlet that “the narrative has really shifted”, and investors have switched from initially believing software companies could benefit from AI to now asking: “Is AI just the death of software?”.
Another article from Bloomberg, given the startling headline kicker ‘Get Me Out’, describes how Wall Street has been skeptical of software stocks, but sentiment has graduated “from bearish to doomsday lately”, with traders dumping shares across the industry.
Jeffrey Favuzza, who works on the equity trading desk at Jefferies, said: “We call it the ‘SaaSpocalypse,’ an apocalypse for software-as-a-service stocks. Trading is very much ‘get me out’ style selling.”
Salesforce is likely feeling huge pressure to show how its AI is leading to (or at least will soon lead to) meaningful revenue, and not just AI positioning.
So, that’s the danger – or at least, the perceived danger – but in terms of Salesforce and its suite of products becoming obsolete, it’s definitely worth a dose of positive realism here.
Why Risk a Homebrew Solution?
Businesses have spent decades implementing – and customizing – Salesforce. It’s baked into how some of the largest enterprises on the planet handle their daily work.
Of course, complacency would be a problem (if Salesforce was in fact complacent), and existing deals can be terminated, but, even with shiny new AI tools on the market, are businesses really going to face years of implementation pain, risking some serious disruption to their workflows in the process, for the sake of gambling on (arguably quite controversial) AI tools?
Salesforce is tried and tested. That’s a point in its favor – though it doesn’t necessarily mean Salesforce is unchallenged.
But Vernon Keenan, Senior Industry Analyst and Founder of Keenan Vision, told SF Ben that predictions of SaaS going away “don’t make sense” to him.
He said: “It looks like the sector is being downgraded as a whole because SaaS vendors don’t have a great answer for what to do about the loss of seat-based pricing. Plus, so many SaaS products hold systems of record for companies, I don’t see them taking the risk of running company data on a homebrew solution anytime soon.”
Salesforce’s FY26 results have been in the high single digits to around 10% revenue growth, both year-over-year (Y/Y) and in constant currency (CC):
- First quarter revenue of $9.8B, up 8% both Y/Y and in CC.
- Second quarter revenue of $10.2B, up 10% Y/Y and 9% in CC.
- Third quarter revenue of $10.3B, up 9% Y/Y and 8% in CC.
So too is the US economy in a seemingly comfortable position right now. According to the US Bureau of Economic Analysis (BEA), corporate profits for Q3 2025 were +4.5%.
Some investors and analysts have also argued that the software stock sell-off might have been something of an overreaction, according to S&P Global, which reports that analyst at Wedbush Securities, Dan Ives, recently told investors: “We believe the market is baking in a doomsday scenario for software companies in the near term, which we believe is extremely overblown.”
Ives continues: “Many customers won’t be willing to put their data at risk to capitalize on AI implementation strategies until there is less risk with these migration projects.”
So what should we look out for then?
Oh Look, It’s ‘The Year of Agentforce’ Again
This is the quarter – and, yes, the year – where we’re likely going to truly see the longer-term impact from Agentforce. The AI solution was launched in October 2024, making it well over a year old now. Some customers have been using it for much of that time, so transactions (and revenue) should be taking off properly now.
If Salesforce can get this flywheel to spin up, they could be in the running to be an early leader in the SaaS AI race. It’s also the last quarter of their fiscal year, potentially meaning big discounts from Salesforce, so if customers are happy with Agentforce, they could have bought big, with AI budgets expanding.
But Salesforce’s customers have not been embracing AI agents as quickly as investors initially thought, making the company a “poster child” for doubts hanging over the technology, according to chief market strategist for investment banking firm Freedom Capital Markets, Jay Woods.
So, this coming earnings call will likely see Agentforce monetization – not just deals – as its number one topic. Investors will want proof that Agentforce is making money, and a strong FY27 would be a much-needed shot in the arm, too.
The grace period is, arguably, coming to an end.
Marc Benioff to Discuss Results on Live “Earnings Show”
Salesforce announced on February 19 that Founder and CEO Marc Benioff would appear on Technology Business Programming Network (TBPN) to discuss the company’s fourth quarter and full year fiscal 2026 results, and “vision for the Agentic Enterprise”.
Following that, Salesforce will introduce an “updated format for its results presentation, moving beyond traditional financial commentary to a live ‘earnings show’ broadcast from Salesforce Tower”, starting at 2PM PT (5PM ET).
What form this live “earnings show” takes exactly will certainly be interesting, but in any case, this is quite a bold move from the Salesforce CEO. It could, on the one hand, speak to a certain confidence in what the results will reveal. Arguably, Benioff would not want to make a huge song and dance of figures that were less than favorable, so it could imply that things are looking up for Salesforce.
On the other hand, perhaps Benioff is putting on such a bold display as a way of overemphasizing his apparent calm, to keep the wolves (or perhaps bears) of the stock market at bay.
There is also quite a common tactic known to journalists and public figures alike, called ‘deadcatting’. The strategy is based on an analogy that if you are losing an argument, throwing a dead cat on the table makes everyone talk about the dead cat rather than the original, uncomfortable subject.
Appearing on a live broadcast would be a good opportunity to toss a dead cat on the table, so to speak.
Final Thoughts: Look Upon My Works, Ye Mighty
Salesforce’s Founder, Marc Benioff, has famously integrated some Buddhist teachings into his own philosophy. In the early days of Salesforce, Benioff hung a picture of the Dalai Lama in his office as a source of inspiration, and has since gone on record talking about the concept of the ‘beginner’s mind’ – taken from Zen Buddhism – as a way of dealing with life as a CEO.
Benioff will likely then be quite familiar with the key Buddhist concept of impermanence. No matter how great, powerful, wealthy, and seemingly permanent something may seem, it will, one day, cease to be. Yes, Salesforce is a behemoth, welded into the global economy and a mainstay for businesses worldwide. But so too did Ozymandias’s empire once span a vast territory. Anyone who has read that poem knows how that ended for him, eventually.
