Ahead of Salesforce Inc's (NYSE: CRM) fiscal second-quarter report, due Wednesday, management has suggested that NNAOV (net new average order value) could boost overall revenue growth in the back half. According to Canaccord Genuity analyst David Hynes, this is a steep target to achieve.
The Salesforce Analyst: Hynes maintained a Buy rating and price target of $225.
The Salesforce Thesis: For the past four consecutive quarters, new customer business (NNAOV) has grown faster than existing business (AOV). Management suggests that this steady inflow will propel total revenue higher in the back half of fiscal 2027, Hynes said in a research note.
The customer relationship management software giant's second-quarter guidance suggests organic growth to slow to around 6%-7%, excluding contributions from Informatica.
For Salesforce to meet its revenue target for the second half, sales growth would need to accelerate significantly from this level, the analyst stated.
Upside to the second-quarter cRPO (current remaining performance obligation) guidance would be an indication that "improving bookings momentum is in fact likely to flow through to the forward revenue base," he further wrote.
Continued Agentforce Monetization: Agentforce ARR (annual recurring revenue) grew 205% year-over-year in the first quarter, surpassing $1.2 billion, while combined Agentforce and Data 360 ARR reached $3.4 billion, up more than 200% year over year and around 100% organically, Hynes said.
"Against Salesforce's massive existing revenue base, the ~$400M sequential increase in Agentforce ARR is impressive, with contributions from Fin expected to layer on once that transaction closes," he further wrote.
During the earnings call on Wednesday, the focus would not just be on "continued absolute Agentforce ARR acceleration" but also on factors indicating the "durability and breadth of AI-driven growth," the analyst stated.
CRM Price Action: Shares of Salesforce had declined by 0.94% to $207.08 at the time of publication on Tuesday.