ZLARK LLC

Earnings Timing

Earnings are expected today after market close. Investors have been looking for a reversal in the stock, which sits about 30% below where it began the year.

Price Performance

The decline this year has occurred despite the company’s operational execution and its leading position in customer relationship management. Part of the downward pressure reflects investor preference in 2025 for faster-growing segments; by comparison, some semiconductors and hyperscalers have reported revenue growth in the 30-60% range. Salesforce posted revenue growth of 8% and 10% in the prior two quarters.

AI Initiatives

Salesforce is offering several AI-focused products and integrations as part of its strategy to drive additional growth. Key items include:

• Agentforce 360 and AI Agents
• Slack positioned as an AI hub
• Partnership with Anthropic - if Anthropic goes public next year, its partners may get a boost

Business Structure

The company’s products are deeply embedded in many customer operations, creating a degree of customer retention that can make switching providers difficult. Management is pursuing AI-related upsell as a route to expand revenue within that installed base.

Valuation

Salesforce trades at a price-to-earnings ratio of 33x, which is above the S&P 500 average range of 27-30x. Given that premium, meeting profit expectations on the upcoming earnings report and any guidance updates are likely to be closely watched by market participants.

Threats

Competitive pressure in the CRM market comes from Microsoft Dynamics 365, Oracle, SAP, HubSpot, Zendesk, and other vendors. A weak job market is also noted as a potential headwind for growth.

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