As Salesforce prepares to report its second-quarter earnings, analysts are assessing the demand landscape and outlook for the rest of the year. In a recent note, UBS’s Karl Keirstead shared insights from six partners and customers, providing a pulse check on the current state of the market and potential growth challenges ahead.

According to Keirstead’s checks, demand during the second quarter was relatively stable compared to the first quarter, but still faces spending scrutiny and longer sales cycles. While all three partners surveyed landed in line or slightly below their targets, the average growth rate for Salesforce practices was only 4%, significantly lower than the 7-9% total revenue growth that Salesforce has posted in each of the last three quarters.

The constrained spending backdrop and maturity of the CRM market are cited as major factors hindering growth, particularly in product segments like Marketing, Commerce, and Tableau. The recent price increase on August 1 is expected to help bookings in the second half, but Keirstead believes that c/c cRPO growth may moderate from a steady 10-11% level to around 9% (or lower) in the second half of the year.

Keirstead maintains his neutral rating on Salesforce stock, citing valuation and belief in Agentforce’s slightly more optimistic rhetoric. However, he questions the durability of the core growth drivers, particularly given the muted checks and lower-than-expected practice growth rates.

Overall, while demand remains stable, the outlook for Salesforce’s growth in the second half of the year is uncertain due to ongoing challenges in the CRM market and potential moderation of cRPO growth. As such, investors may want to approach the stock with caution and await further clarity on the company’s prospects before making any significant moves.