Salesforce Q2 Earnings: Mixed Signals Ahead

Salesforce's upcoming Q2 earnings report is expected to be mixed, according to BTIG analyst Allan Verkhovski. The company's performance could be impacted by a softer demand environment and longer sales cycles, as indicated by competitors Microsoft Corp (NASDAQ:MSFT) and HubSpot Inc (NYSE:HUBS).

Verkhovski noted that channel checks suggest some green shoots in core growth drivers, including Sales, Service, and Slack. Additionally, AI budgets remain a priority for many enterprises, and the analyst's channel checks indicate growing customer interest in Agentforce.

However, Tableau continues to face challenges, and Headless 360 has added new capabilities that are not yet showing significant customer interest. Some customers are even considering moving away from Salesforce due to evolving AI capabilities.

Despite these mixed signals, Verkhovski maintained a Buy rating and price target of $255 for the company. He also noted that estimates suggest growth in cRPO (current remaining performance obligation) of at least 13.5% in constant currency terms, with total revenue growth of 10.0%. For the third quarter, management could guide to total revenue growth of about 11% and cRPO growth of about 13%.