Koa Delayed: Salesforce AI Model Falls Short of Revenue Growth Expectations
Salesforce's latest AI model, Koa, has been touted as a significant development in the CRM space. The company claims that Koa produces roughly three times fewer errors on CRM actions than leading alternatives, based on its own benchmark test. However, broader availability of Koa is still pending, with select customers currently piloting the model.
The delayed rollout is likely to impact Salesforce's revenue growth, as a model no one can buy yet cannot lift bookings, retention, or margins this quarter. The company's stock price has already taken a hit, closing at $243 on Thursday after a 2.84% intraday decline.
Despite the excitement around Koa, analysts are cautioning that it may not be enough to move the needle for Salesforce until 2027. The bear case is that model capability is only an input to commercial outcomes, and noncurrent debt has jumped to $39.3 billion to fund the accelerated buyback.
On a more positive note, Salesforce's Agentforce ARR crossed $1.5 billion in Q2 FY27, up over 240% year-over-year. Management also reported that the company added 2,000 paying customers into production last quarter, although most of them have not yet started their AI transformations.