Sustainable Growth Advisers, LP - U.S. Large Cap Growth on Salesforce
Thesis
SGA continues to own Salesforce despite cautious investor sentiment and growth that has recently only met guidance. Weakness in Marketing, Commerce, and Tableau has been partially offset by strength in Sales Cloud, Service Cloud, Slack, and Data Cloud. Agentforce has become a rapidly growing business, reaching approximately 1.2 billion dollars of annualized recurring revenue and growing 205%. Management expects bookings strength and lower attrition to support a second-half reacceleration and continues to target double-digit organic growth through 2029. SGA believes Salesforce's deep integration into customer workflows, large installed base, and broad product suite should allow it to compete effectively in agentic AI. The manager expects these advantages to support low-teens earnings growth over the next three years.
“we believe Salesforce’s integration into customer business processes, large installed base, and wide product set position it well to compete effectively”
Key risks
- AI-driven competition.
- Continued weakness in Marketing, Commerce, and Tableau.
- Growth could remain modest if bookings and lower attrition fail to produce the expected reacceleration.