$CRM reported an inline qtr and Q4 guidance.

Core business is chugging along at ~10% yy growth w/ meaningful margin expansion because of greater operating discipline while capital return is shrinking sharecount. The big story is AgentForce which is early, getting good early reviews and could be material over time.

Story stable and might get better if AgentForce ramps, and numbers seem fine w/ upward bias to revenue (9% price increase starts flowing through + AgentForce + cyclical recovery) and FCF.

Risk / reward still pretty good.

Upside of 51% to 30x my CY26 FCF – maybe that’s too aggressive and 25X FCF / 41 GAAP EPS would be 27% upside

Downside of -17% to 18x street CY26 FCF.

Positioning catching-up to fundamentals but people probably still offsides on the whole "AI is going to kill software" view that created the buying opp in the sector earlier this year.

The Quarter
Subscription rev of 8.9b grew 9% yy cc (slight decel from 10% last qtr and 13% the qtr before that) > 8.8b w/ net rev add of 115m down from 135m last Q3 and up from 90m the Q3 prior to that.

Sales cloud was 2.1b up 11% yy cc w/ net rev add of 48m up from 11m last Q3 and 22m the Q3 before that. Nice stabilization / improvement and this is before AgentForce kicks in which should stabilize to slightly accelerate growth.

Service cloud was 2.3b up 10% yy cc w/ net rev add of 31m up from 25m last Q3 and up from 28m the Q3 before that. Also nice stabilization / improvement and also before AgentForce impact.

Platform cloud was 1.8b up 8% yy cc w/ net rev delta of 39m down from 48m last Q3 and up slightly from 35m the Q3 before that. Slack growth was pretty weak underneath and dropped to 8% yy down from high teens over the past 4 qtrs.

Marketing cloud was 1.3b up 8% yy cc w/ net rev delta of 26m up from -8m last Q3 and 8m the Q3 before that. Nice to see stabilization here.

Data cloud was 1.3b only up 5% yy cc w/ net rev delta of -29m down from 59m last Q3 and -3m the Q3 before that. Team had flagged tough comps this and next qtr given perpetual nature of Tableau / Mulesoft.

By geo, US was surprisingly weak and decelerated to 6% yy while EMEA grew 9% yy and APAC 14% yy.

Total RPO of 53.1b was up 10% yy but who knows about duration adjusted growth. cRPO of 26.4b more useful and up 10% yy cc.

PF OM of 33.1% up nicely from 31.2% last Q3. SBC of 8.7% up a bit from 7.9% last Q3. GAAP OM of 20.6% up nicely from 17.8% last Q3 and includes various non-cash items like amortization, etc.

Capital return via share buyback was 1.3b so logical pullback from 4.3b last qtr when stock was much lower. Shares now shrinking ~2% / year which is nice to see.

Guidance for Q4 was fine. cRPO growth of 9% consistent w/ Q3. Assuming a standard 1% beat, subscription revs should remain ~9%.

Highlights
-AgentForce 2.0 demo on 12/17. Went GA last week of qtr.

-Signed 200 AgentForce deals mostly in Service Cloud and have thousands in pipeline

-135k customers total to target

-Hiring 1,400 sales reps to focus on AI in Q4. Said deployment of AI sales tools also will free up hundreds of millions of expense to reinvest. So investment could be covered over F12 months by this.

-[Still not sure why CFO is taking off]
#CRM