5 Interesting Learnings from Salesforce at $40 Billion in ARR
"Half of Salesforce's AI sales are through partners. If you only sell direct in SaaS and B2B, you lose so many opportunities."
So Salesforce has now grown into the active granddad of SaaS. Maybe not growing quite as fast as it once did. But it’s matured into a true force of nature. Only Microsoft, Oracle and now Salesforce have crossed $40 Billion in enterprise software ARR:
$40 Billion in ARR
Growing 9%
33% Non-GAAP Operating Margins (19% GAAP)
Generating $13B of free cash flow a year!!
Perhaps most importantly, Salesforce has leaned deeply into AI … and while the early usage is impressive, so far it hasn’t materially changed growth. So far:
Since October, closed 5,000 Agentforce deals, including more than 3,000 paid just 90 days after officially launching
Salesforce says Agentforce has managed 380,000 conversations, with only 2% escalated to humans and an 84% resolution rate
So far, at the public company level, it’s the infra players that are seeing the crazy AI growth. Nvidia, Google Cloud, Azure, etc. But how about 2026+? We’ll see. As Marc Benioff notes below, Salesforce’s just started. It’s only been selling AgentForce for a few months. He’s incredibly excited and bullish on where it’s going. It’s clearly rejuvenated him. Maybe AI will for all of us.
Let’s dig in more
5 Interesting Learnings:
#1. Only 21% of Salesforce’s Revenue is from … Sales
This has been true for many years, but it often comes as a surprise to those that don’t know the company as well as they know its CRM.
#2. The Big Acquisitions Are Doing Well. Mulesoft, Slack and Tableau Still Growing Faster Than The Average
Salesforce’s big ecomm and marketing bets on ExactTarget ($2.5B) and Demandware ($2.8B) may have seen growth slow to 9%, but its huge bet on Slack ($27B), seemingly crazy expensive bet on Tableau ($17B) and sizeable bet on Mulesoft ($6B) all seem to still be paying off. Kudos:
#3. Salesforce May Be Hiring 1,000+ Reps To Sell AI, But Overall Sales & Marketing Spend is down
From 32% of revenue a year ago to 30% today. That’s a material drop.
#4. No Net Dilution From Employee Grants or Otherwise. -1% Dilution
Many faster growing public SaaS and Cloud companies aim for 2% a year dilution or less from employee grants, down from the 10%+ common at start-ups. Salesforce, using its ample free cash flow, has gone further using buybacks. It’s now at -1%!
#5. Professional Services Down to 5% of Revenue, Still Loses Money
Salesforce for many years has driven its partners to do the vast majority of pro services, and it’s a massive ecosystem. They still do some for their largest customers, and it’s down to about 5% of revenues. But they still lose money here.
And a few other interesting learnings:
#6. Partners were involved in 50% of our Agentforce wins and 70% of our Agentforce activations in Q4.”
If you only sell direct in SaaS and B2B, you lose so many opportunities. Another reminder.
#7. Closed 3 $10m+ Deals Last Quarter, and 25 Over $1m
Actually I would have thought it was even more enterprise than this. Still, a big focus on $1m+ deals at Salesforce.
#8. 76,000 Employees, So Abour $525,000 In Revenue Per Employee
Per efficient for SaaS, although not super efficient. Salesforce is still a sales & marketing driven engine. Still, driving this ratio up further will be key to continue to increase profit margins.
#9. Not Adding Any Engineers This Year, But Growing Sales Org 10%-20%
What a contrast. Salesforce is seeing AI drive a 30% productivity in engineering, and “wants to drive that up.” But sales? They are growing it dramatically. As much as 20%, far faster than revenue growth.
#10. Salesforce’s Top Goal Now: To Be The #1 Provider of Digital Labor in the World
We’ll see. It seems unlikely they’ll be #1. And yet, I wouldn’t bet against Salesforce. They sell $40B+ of enterprise SaaS a year. They know how to … sell it.
#11. Salesforce Will Deliver $14 Billion+ of Free Cash Flow This Year, With 33%+ Non-GAAP Operating Margins
That’s how business software … is supposed to work ;). As Marc put it, “We’re generating far more cash than I ever thought we would” 🙂
$40 Billion ARR. Not too shabby! And while 9% growth isn’t crazy, think about the scale for a moment. It’s still adding almost $4B in net new bookings. A year.
Go beat that if you can.