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Salesforce, a titan in the Customer Relationship Management (CRM) space, has long been synonymous with rapid growth and market dominance. However, the recent deceleration in its growth rate has sparked concerns among investors. With quarterly revenue growth slowing to 8% in FY2025 Q2, down from 12% in FY2024 Q2 and a striking 29% in FY2021 Q2, the question arises: should investors be worried, or is this simply a natural progression for a company of Salesforce’s size?
The deceleration in Salesforce’s growth is undeniable. From a peak growth rate of 29% in FY2021 Q2, the company has seen a steady decline, reaching a mere 8% in the latest quarter. Sangram Vajre, CEO of GTM Partners and former Salesforce executive, acknowledged the slowdown but offered a broader perspective: “Past double-digit growth is a dream for most SaaS companies, and Salesforce has birthed almost all modern-day SaaS businesses. So let’s be kind.” Vajre’s point is clear: while Salesforce’s growth is slowing, it remains a significant player in the SaaS market, and a shift in growth trajectory might be inevitable for a company of its magnitude.
However, Vajre also hints at a potential issue if the CRM category itself is growing faster than Salesforce: “If the CRM as a category is growing 10x and other companies in that category are growing at a faster rate than Salesforce, then there is a real problem.” This sentiment echoes a broader concern among industry analysts: Is Salesforce losing its competitive edge?
A closer look at Salesforce’s financials reveals another critical factor contributing to the slowdown: a reduction in marketing and sales expenses. Gaurav Bhatia, Chief Marketing & Digital Officer, points out that Salesforce has significantly cut its spending in this area, from 45% of total revenue in 2021 to 37% in 2025. This reduction is stark, especially compared to peers who typically spend around 10% of their revenue on marketing and sales. “Salesforce’s growth has a direct correlation with its investment in marketing and sales,” Bhatia asserts. The implication is that the company’s decision to tighten its belt in these areas might be coming at the cost of its growth rate.
Despite the slowdown, Salesforce has made strategic decisions aimed at improving its margins. The company has shifted its focus from aggressive growth to margin improvement, a strategy that has included significant cost-cutting measures. In January, Salesforce announced it was cutting 10% of its workforce, a move aimed at streamlining operations and boosting profitability. These efforts have borne fruit, with the company achieving a 30% adjusted operating margin three quarters earlier than expected, as noted by Amy Weaver, Salesforce’s CFO.
However, this shift in strategy has also led to concerns about underinvestment in critical areas such as sales and marketing, potentially contributing to the slowdown in revenue growth. Scott Vaughan, a GTM Strategy and Revenue Accelerator, highlighted Salesforce’s recent history of acquiring high-growth companies like Tableau and Slack but criticized its current strategy: “As a shareholder and analyst, they lost their way. But it doesn’t mean they can’t reinvent by getting back to innovation and customer focus, not just selling software.”
Salesforce’s challenges are compounded by increasing competition in the CRM and cloud computing markets. Tech giants like Microsoft, Oracle, and SAP have all ramped up their efforts, posing a significant threat to Salesforce’s market dominance. This competition is particularly intense in the AI space, where Salesforce has struggled to keep pace with leaders like Microsoft and Google.
Menny M., a Salesforce developer and technical architect, points out that Salesforce’s once-unassailable position is now under scrutiny: “Salesforce has been a CRM powerhouse for years, but is the shine starting to fade?” He highlights several issues, including the increasing complexity of Salesforce’s platform and the perception that the company is lagging behind in AI innovations. “While others like Microsoft and Google soar with AI, Salesforce is still catching up,” he adds.
This sentiment is echoed by Itai Shmida, a Salesforce Architect, who believes that Salesforce’s pricing and complexity are becoming deterrents for mid-sized businesses: “Salesforce prices are too high, especially for mid-sized businesses. Add to that bigger complexity, which translates to higher spend on professionals.”
In response to these challenges, Salesforce has turned to its roots, bringing back several former executives, or “boomerangs,” to help steer the company through these turbulent times. Ariel Kelman, who recently returned as Chief Marketing Officer after a decade away, sees this as a pivotal moment for the company: “This is a company that I had a great time at,” Kelman said at Salesforce’s Dreamforce conference. The return of these seasoned leaders is part of Salesforce’s broader strategy to refocus on its core strengths and drive innovation.
Miguel Milano, another returning executive, has taken on the role of Chief Revenue Officer. His return is part of a broader effort to revamp Salesforce’s sales strategy and reconnect with the company’s original mission. “It took a couple swipes,” said Brian Millham, Salesforce’s Chief Operating Officer, who convinced Milano to rejoin the company. Millham, who has been with Salesforce for 24 years, sees this as a critical time to leverage the experience of these returning leaders: “When you grow up here, you have a certain commitment to the company.”
So, should investors panic? The answer is complex. Salesforce is undoubtedly facing significant challenges, from slowing growth to increased competition and internal restructuring. However, the company is also making strategic moves to adapt to these challenges, focusing on profitability, innovation, and leveraging its scale.
Janet Gehrmann, co-founder of Scoop Analytics, remains optimistic about Salesforce’s future: “Salesforce has economies of scale that make it too soon to write off—they can do many interesting things with AI other companies can’t yet dream of due to their scale.” The key, according to Gehrmann, lies in the company’s ability to execute its strategy effectively and continue to innovate in a rapidly changing market.
In the end, while Salesforce’s slowing growth may be a cause for concern, it is also a reflection of the company’s maturation and the broader challenges facing the tech industry. As long as Salesforce can maintain its profitability and continue to adapt to market conditions, it remains a formidable player in the CRM space. Investors may need to adjust their expectations, but there is no need to panic—at least not yet.
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