Salesforce's AI Investments Fail to Impress as Q3 Revenue Forecast Falls Short

Salesforce's Struggling Stock Needs Earnings to Show AI Progress

After months of pain, Salesforce Inc. investors will be scrutinizing the software maker's upcoming earnings for signs it will be a winner in the artificial intelligence boom -- or one of its most high-profile victims. Salesforce shares are down 24% this year, putting them among the 30 worst-performing stocks in the S&P 500 Index. It's been a swift reversal for what had been one of the stock market's brightest lights, which soared over 150% in 2023 and 2024 combined. The plunge has been particularly dramatic in light of the strong showings by software giants like Microsoft Corp., Oracle Corp., and Palantir Technologies Inc., all of whom are considered to be stronger in AI.

Salesforce shares drop as weak revenue forecast signals delayed AI returns

Sept 4 (Reuters) - Salesforce (CRM.N), opens new tab shares dropped nearly 7% before the bell on Thursday, after the cloud software provider's weak third-quarter revenue forecast hinted at delayed returns from its AI investments. Rising investor bets on AI-driven cloud companies are pressuring them to deliver hefty returns on their billion-dollar investments in the breakthrough technology, but economic uncertainty has forced customers to pull back on spending. Salesforce has rapidly rolled out AI across its cloud services. In late 2024, it commercially launched Agentforce, an AI agent platform to automate tasks, streamline operations and help lift margins. The company forecast third-quarter revenue between $10.24 billion and $10.29 billion, with the midpoint coming in below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that did little to cheer investors concerned about the dour forecast. "Growth has not inflected yet and investors are thus not seeing an imminent need to revise their thought process," said J.P. Morgan analysts. With shares down about 24% so far this year, Salesforce has steered toward acquisitions after years on the sidelines, aiming to boost its offerings and profitability. In May, it acquired data management platform Informatica for about $8 billion. The stock trades at over 20.98 times its 12-month forward earnings estimates, compared with rivals Microsoft (MSFT.O), opens new tab and Oracle's (ORCL.N), opens new tab 31.26 and 30.84, respectively. The company beat second-quarter revenue estimates and given its cheap valuation, some analysts expect the company has room for growth. "Second-quarter results and positive company commentary are sufficient at this juncture, considering CRM shares are trading near a historically low valuation level and deep discount to software peers," J.P. Morgan said. Reporting by Akriti Shah and Siddarth S in Bengaluru; Editing by Devika Syamnath Our Standards: The Thomson Reuters Trust Principles., opens new tab

Salesforce's weak quarterly revenue forecast signals lagging AI monetization

Sept 3 (Reuters) - Salesforce (CRM.N), opens new tab forecast third-quarter revenue below Wall Street estimates on Wednesday, signaling lagging monetization for its highly-touted artificial intelligence agent platform as clients dial back spending due to macroeconomic uncertainty. The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that was unable to allay investors' concerns, sending Salesforce's shares down over 5% in extended trading. Since OpenAI's ChatGPT launched in 2022, Salesforce has adopted artificial intelligence on a wide scale, integrating it into its various cloud services and creating an AI agent platform called Agentforce to automate tasks in the hopes of streamlining operations and boosting margins. Investors are on the heels of cloud firms to show returns on the billions poured into AI, while an uncertain macro environment and volatile customer spending weigh on growth prospects. "Investors may feel a sense of frustration, especially as they contemplate the timeline for adequate returns on AI investments, said Melissa Otto, head of research at S&P Global's Visible Alpha. The company has returned to its strategy of acquisitions to expand its existing cloud offerings, potentially inviting activist investor scrutiny. "As Salesforce brings more acquisitions into the fold, it will be able to offer even more intelligent agentic capabilities to customers," said Rebecca Wettemann, CEO of industry analyst firm Valoir. CEO Marc Benioff said last week that Salesforce has cut 4,000 jobs in customer support due to AI, after earlier saying that the technology accounts for about 30% to 50% of the company's work. For the third quarter, Salesforce sees revenue between $10.24 billion and $10.29 billion, with the midpoint coming below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. On an adjusted basis, Salesforce expects earnings per share between $2.84 and $2.86, the midpoint of which is in line with analysts' estimates. Second-quarter revenue was $10.24 billion, beating expectations of $10.14 billion. Reporting by Juby Babu in Mexico City and Zaheer Kachwala in Bengaluru; Editing by Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab

Salesforce shares drop as weak revenue view signals delayed AI returns

Sept 4 (Reuters) - Salesforce (CRM.N), opens new tab shares dropped nearly 8% on Thursday, after the cloud software provider's soft third-quarter revenue forecast hinted at delayed returns from its AI investments. Rising investor bets on AI-driven cloud companies are pressuring them to deliver hefty returns on their billion-dollar investments into the breakthrough technology, even as economic uncertainty forces customers to pull back on spending. The outlook is "giving bears fresh ammo amid mounting fears that the software sector is ripe for disruption and questions over whether incumbents can fully monetize AI," said Matt Britzman, senior equity analyst at Hargreaves Lansdown. Salesforce has rolled out AI across its cloud services at a rapid pace, culminating in the 2024 commercial launch of Agentforce - its AI agent platform designed to automate tasks, streamline operations and help lift margins. The company forecast third-quarter revenue between $10.24 billion and $10.29 billion, with the midpoint coming in below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that did little to cheer investors concerned about the dour forecast. "This growth outlook is uninspiring," analysts at Oppenheimer said. The guidance reveals a "continuing tough macro environment for front-office suppliers like Salesforce this year." With shares down about 24% so far this year, Salesforce has steered toward acquisitions after years on the sidelines, aiming to boost its offerings and profitability. In May, it acquired data management platform Informatica for about $8 billion. The stock trades at over 20.96 times its 12-month forward earnings estimates, compared with rivals Microsoft (MSFT.O), opens new tab and Oracle's (ORCL.N), opens new tab 31.26 and 30.84, respectively. Salesforce beat second-quarter revenue estimates and given its cheap valuation, some analysts expect the company has room for growth. "Second-quarter results and positive company commentary are sufficient at this juncture, considering CRM shares are trading near a historically low valuation level and deep discount to software peers," analysts at J.P. Morgan said. Reporting by Akriti Shah, Siddarth S and Harshita Mary Varghese in Bengaluru; Editing by Devika Syamnath Our Standards: The Thomson Reuters Trust Principles., opens new tab

Salesforce forecasts weak current-quarter revenue, shares fall

Sept 3 (Reuters) - Business software provider Salesforce (CRM.N), opens new tab forecast third-quarter revenue below Wall Street estimates on Wednesday, as clients dial back spending on its enterprise cloud products due to macroeconomic uncertainty. The cloud software provider also announced a $20 billion increase to its existing share buyback program, bringing the total to $50 billion. Shares of the San Francisco, California-based company fell more than 4% in trading after the bell. The stock has lost more than 24% of its value so far this year. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. At the same time, investors have been on the heels of cloud firms to show returns on the billions poured into artificial intelligence as Salesforce invests heavily in automation and AI agents. CEO Marc Benioff said last week that Salesforce has cut 4,000 jobs in customer support due to AI, after earlier saying that the technology accounts for about 30% to 50% of the company's work. The company has been offering AI agents -- programs that can handle routine tasks without human supervision -- to businesses for recruiting and customer service. It has over 4,000 paid deals for "Agentforce," a platform that allows customers to create AI-powered virtual representatives. For the third quarter, Salesforce sees revenue between $10.24 billion and $10.29 billion, with the midpoint coming below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. On an adjusted basis, Salesforce expects earnings per share between $2.84 and $2.86, with the midpoint of $2.85 per share coming in line with analysts' estimates. The company's revenue for the second quarter, ended July 31, was $10.24 billion, beating expectations of $10.14 billion. Reporting by Juby Babu in Mexico City; Editing by Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab

Salesforce CEO calls guidance 'appropriately conservative' as stock declines after earnings

In a Wednesday interview with CNBC's Jim Cramer, Salesforce CEO Marc Benioff defended the guidance his company issued -- even as the the figures disappointed Wall Street. "Our results are absolutely fantastic and our guidance is also, you know, is always appropriately conservative," Benioff said. The enterprise software company posted its quarterly results Wednesday after close. Although the company shared disappointing guidance, it managed to beat estimates for earnings and revenue. The stock dipped more than 5% in extended trading. Salesforce has lagged behind its peers this year as investors worry about the company's revenue growth, which has stalled in the single digits since the middle of last year, CNBC reported. The stock is down over 23% year-to-date. Benioff said Salesforce's customers are pleased with its artificial intelligence agent product, which he said is not just "repackaged ChatGPT," but technology that is "giving them the ability to fundamentally transform their business." Salesforce has also reshaped its own business with AI agents, according to Benioff. He said the company has "reduced the number of heads we have in service and support because we have supplemented that with agents." Benioff said Salesforce has seen success with its biggest customer, the U.S. government. He said the outfit does business with the Department of Defense and managed to beat out Palantir in a deal with the the army. "We had a tremendous success against Palantir, because, by the way, our prices are just so much lower," Benioff said. "We're offering a very competitive product as a much lower cost," he continued.

5 Things to Know About Why Salesforce Stock is Cratering (CRM)

Earlier this week, CEO Marc Benioff said that Salesforce had cut more than 4,000 customer service roles. Salesforce stock was down almost 8% this morning after a disappointing earnings report last night. The company shared third quarter revenue forecast that came in below expectations and investors worry that has to do with AI monetization problems. The company is all-in on AI, but Wall Street's patience for the ROI countdown is running thin it seems. At least it's running thin enough that even though second-quarter revenue came in pretty good and the company shared a $20 billion increase to its existing share buyback program, that was not enough to quell investor worries. Salesforce, which provides customer relationship management (CRM) software to companies, is betting its entire future on AI as office work gets automated. That push is centered around its product Agentforce, a platform of AI agents that can completely automate some CRM processes. The platform is directly wired into company data and can generate personalized emails to clients, spit out sales pitches, and come up with marketing campaigns. Since launching the product last October, the company has closed over 12,000 deals, of which more than 6,000 are paid customers, the company said in the press release. The irony is that as Salesforce contends with the automation of its CRM software, the company is also undergoing a major automation of its own workforce. Earlier this week, CEO Marc Benioff said that Salesforce had cut more than 4,000 customer service roles to have AI agents do the work instead. Salesforce is only one of the many symbols of investor anxiety about when the huge investments in AI will start paying off. Could AI hype slowly be facing reality? The reactions so far might show that investor mood is more "meh" than "wow." The company's stock is down more than 20% this year, marking one of the worst performances in large-cap tech stocks. The decline was the second-steepest in the Dow, CNBC reported, beating only the deeply troubled UnitedHealth. Meanwhile, its competitors in the software space are doing fairly well. Oracle, a huge competitor that is providing agentic AI infused business software itself, is doing well in outperforming investor expectations. On the earnings call on Wednesday, company executives said they will be developing new strategies on pricing and services to compete, and reiterated confidence in their strategy to monetize AI. CEO Benioff even hinted that the increase in the share buyback program â€"now totaling $50 billionâ€" could be used for acquisitions. “If we see great entrepreneurs or great technology or something that we’ve never seen before, that just blows our mind, we’re going to buy it,†Benioff told investors. Salesforce is no stranger to an acquisition driven growth strategy. The company acquired AI-powered cloud data management company Informatica earlier this year in an $8 billion deal. As Salesforce tries to keep up with the automation of work, company executives are restructuring in favor of AI automation themselves as well. Earlier this year, the company made headlines for cutting 1,000 roles, and has since cut many more in layoffs, including as recent as this week. Major competitors like Oracle and Microsoft are also following suit. Last week, Benioff joined an episode of the podcast The Logan Bartlett Show, where he shared that Salesforce reduced its customer support headcount from 9,000 to 5,000. "If we were having this conversation a year ago and you were calling Salesforce, there would be 9,000 people that you would be interacting with globally on our service cloud, and they would be managing, creating, reading, updating, deleting data," CEO Marc Benioff said, adding that now those jobs are 50/50 split between AI agents and humans. Some companies have reportedly started cashing in on AI spend. Microsoft shares skyrocketed the company's valuation to $4 trillion briefly earlier this summer after the tech giant said that sales were up 18% from last year, driven by a revenue surge in its cloud computing platform Azure. Meta shares rose rose in response to the company's latest earnings report in July on accounts that its deployment of AI in its ad system spiked ad revenue for the quarter. But some investors are demanding quicker and bigger profit growth that is directly tied to AI. That's not the reality yet, and might not be for some time. Experts believe that AI adoption will be certain but slow, and thus it just might take the time to show up in profits. In a paper published earlier this summer, the Federal Reserve claimed the biggest challenge with generative AI was not the potential of the tech itself but rather getting people and businesses to actually use it. The technology isn’t necessarily adopted widely outside of large firms in a handful of industries. Even though the Fed had belief in a bounce in AI demand, the magnitude of that is still a mystery. If it ends up being less than expected, then overspending is a real risk that could have "disastrous consequences," Fed researchers warned.

Salesforce beats expectations but its stock falls on weak guidance and fears over AI - SiliconANGLE

Salesforce beats expectations but its stock falls on weak guidance and fears over AI Salesforce Inc. racked up a solid earnings and revenue beat as it delivered its second-quarter financial results today, showing that it's making progress in its transition to an agentic artificial intelligence platform. However, the company's guidance for the current quarter came up short, and investors bailed in extended trading. The company reported earnings before certain costs such as stock compensation of $2.91 per share, easily surpassing the analyst forecast of $2.78. Revenue for the period rose 10% from a year earlier to $10.24 billion, ahead of Wall Street's forecast of $10.14 billion. Profitability also rose, with net income reaching $1.89 billion, up from $1.43 billion in the year-ago quarter. Salesforce also reported current remaining performance obligations, which represents the amount in revenue it expects to receive over the next year from services not yet delivered, of $29.4 billion, up 11% year-over-year and above the consensus forecast of $29.2 billion. Salesforce Chair and Chief Executive Marc Benioff (pictured) said the company delivered an "outstanding quarter", showing a strong performance in terms of revenue growth, margin and cash flow. "These results reflect the success of our customers like Pfizer, Marriott, and the U.S. Army, who are transforming into agentic enterprises, where humans and AI agents work side by side to reimagine workflows, accelerate productivity, and deliver customer success," he insisted. However, the company's solid performance was undone in the eyes of investors when it issued its guidance for the current quarter. Salesforce officials projected revenue of between $10.24 billion and $10.29 billion, with the midpoint of that range far below the Street's target of $10.29 billion. For the full-year, Salesforce did at least raise the lower end of its guidance range, saying it now expects total revenue of $41.1 billion and $41.3 billion, up from an earlier range of $41 billion to $41.3 billion. But it's still below the Street's forecast of $41.4 billion, and that may well be what prompted the company's stock to decline over 5% in after-hours trading. Salesforce has lost some of its luster on Wall Street this year as a result of its somewhat pedestrian revenue growth, which until this quarter had been stuck in the single digits since the beginning of fiscal 2024. Although the company regularly talks of its achievements in AI and especially its Agentforce platform, which allows businesses to create and manage AI agents that use large language models to automate business tasks from a simple prompt, it hasn't managed to succeed in the same way as many of its peers in that industry. In the year to date, Salesforce's stock has declined 22%. Although Agentforce is seeing strong adoption among enterprises, the problem investors have is that the company has struggled to monetize the platform as quickly as hoped, Valoir analyst Rebecca Wettemann told SiliconANGLE. "Salesforce is having to show customers the money before they're willing to spend on Agentforce," she said. "This is reasonable given the disillusionment that many companies have experienced with early DIY AI science projects, many of which were real money pits." However, Wettemann sees encouraging signs for Salesforce in the growth of its Data Cloud business. She pointed out that the company's combined annual recurring revenue from Data Cloud and AI came to $1.2 billion in the quarter, up more than 120% from the previous year. "This is an important number to focus on because data is the foundation for AI," Wettemann said. "$1.2 billion is not an insignificant number, nor is the growth figure, given the size and growth rate of AI revenues at Salesforce's main competitors." The analyst said she's also optimistic about the launch of Agentforce for government, which could provide faster time to value for public sector customers, which is a key market for Salesforce, though it faces tough competition there from the likes of Oracle Corp. and ServiceNow Inc. Salesforce recently made a bold step to increase the relevance of its Data Cloud platform, announcing its intent to acquire the data management software giant Informatica LLC for $8 billion, which could further strengthen its AI foundation. The company also announced that it's raising the prices of some of its products in an effort to boost its revenues. But for all of Salesforce's efforts in AI, some analysts are unconvinced, and believe that many agentic AI startups could ultimately upend the company's business in the same way that Salesforce upended legacy software providers with its cloud-based model in the early 2000s. Investor sentiment in the software industry has generally been low this year as a result of these fears, said Matt Stucky, chief portfolio officer of Northwestern Mutual, in an interview with MarketWatch. "It will take a noticeable amount of top-line revenue acceleration for Salesforce to refute the bear argument about the competitive threat of AI," Stucky said.

Salesforce's weak quarterly revenue forecast signals lagging AI monetization - The Economic Times

The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that was unable to allay investors' concerns, sending Salesforce's shares down over 5% in extended trading.Salesforce forecast third-quarter revenue below Wall Street estimates on Wednesday, signaling lagging monetization for its highly-touted artificial intelligence agent platform as clients dial back spending due to macroeconomic uncertainty. The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that was unable to allay investors' concerns, sending Salesforce's shares down over 5% in extended trading. Since OpenAI's ChatGPT launched in 2022, Salesforce has adopted artificial intelligence on a wide scale, integrating it into its various cloud services and creating an AI agent platform called Agentforce to automate tasks in the hopes of streamlining operations and boosting margins. Investors are on the heels of cloud firms to show returns on the billions poured into AI, while an uncertain macro environment and volatile customer spending weigh on growth prospects. "Investors may feel a sense of frustration, especially as they contemplate the timeline for adequate returns on AI investments, said Melissa Otto, head of research at S&P Global's Visible Alpha. The company has returned to its strategy of acquisitions to expand its existing cloud offerings, potentially inviting activist investor scrutiny. "As Salesforce brings more acquisitions into the fold, it will be able to offer even more intelligent agentic capabilities to customers," said Rebecca Wettemann, CEO of industry analyst firm Valoir. CEO Marc Benioff said last week that Salesforce has cut 4,000 jobs in customer support due to AI, after earlier saying that the technology accounts for about 30% to 50% of the company's work. For the third quarter, Salesforce sees revenue between $10.24 billion and $10.29 billion, with the midpoint coming below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. On an adjusted basis, Salesforce expects earnings per share between $2.84 and $2.86, the midpoint of which is in line with analysts' estimates. Second-quarter revenue was $10.24 billion, beating expectations of $10.14 billion.

Salesforce shares drop as weak revenue view signals delayed AI returns - The Economic Times

Rising investor bets on AI-driven cloud companies are pressuring them to deliver hefty returns on their billion-dollar investments into the breakthrough technology, even as economic uncertainty forces customers to pull back on spending.Salesforce shares dropped nearly 8% on Thursday, after the cloud software provider's soft third-quarter revenue forecast hinted at delayed returns from its AI investments. Rising investor bets on AI-driven cloud companies are pressuring them to deliver hefty returns on their billion-dollar investments into the breakthrough technology, even as economic uncertainty forces customers to pull back on spending. The outlook is "giving bears fresh ammo amid mounting fears that the software sector is ripe for disruption and questions over whether incumbents can fully monetize AI," said Matt Britzman, senior equity analyst at Hargreaves Lansdown. Salesforce has rolled out AI across its cloud services at a rapid pace, culminating in the 2024 commercial launch of Agentforce - its AI agent platform designed to automate tasks, streamline operations and help lift margins. The company forecast third-quarter revenue between $10.24 billion and $10.29 billion, with the midpoint coming in below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that did little to cheer investors concerned about the dour forecast. "This growth outlook is uninspiring," analysts at Oppenheimer said. The guidance reveals a "continuing tough macro environment for front-office suppliers like Salesforce this year." With shares down about 24% so far this year, Salesforce has steered toward acquisitions after years on the sidelines, aiming to boost its offerings and profitability. In May, it acquired data management platform Informatica for about $8 billion. The stock trades at over 20.96 times its 12-month forward earnings estimates, compared with rivals Microsoft and Oracle's 31.26 and 30.84, respectively. Salesforce beat second-quarter revenue estimates and given its cheap valuation, some analysts expect the company has room for growth. "Second-quarter results and positive company commentary are sufficient at this juncture, considering CRM shares are trading near a historically low valuation level and deep discount to software peers," analysts at JP Morgan said.

Salesforce CEO Marc Benioff Says 'AI Makes Every Entrepreneur A Super Entrepreneur' -- SMBs, Mid-Markets Now A Strategic Priority - Salesforce (NYSE:CRM)

Enterprise cloud solutions provider, Salesforce Inc. CRM, is turning its focus toward small and medium-sized businesses, alongside middle-market companies, as artificial intelligence reshapes how businesses adopt enterprise technologies. CRM is encountering selling pressure. See what is driving the move here. Turns Entrepreneurs Into Super Entrepreneurs During the company's second-quarter earnings call on Wednesday, Salesforce CEO Marc Benioff said that AI was accelerating growth across segments that were once seen as underserved. He noted that demand from smaller companies is expanding faster than ever, fueled by Salesforce's AI-powered AgentForce platform and Slack integration. See Also: How To Earn $500 A Month From Salesforce Stock Ahead Of Q2 Earnings The reason behind this, Benioff says, is that AI turns "entrepreneurs into super entrepreneurs" while making SMBs look more like "middle-market businesses." He says, that while Fortune 500 remains core for the company, small and mid-market is becoming equally strategic. "We're extremely strong in SMB," he says, adding that AI is lowering barriers for firms that lack CIOs or large IT teams. "They need prepackaged software... We are their software hyperscaler." Chief Revenue Officer Miguel Milano described the company's execution shift, pointing out that Salesforce added 20% more account executives year over year, with greater emphasis on the lower end of the market. "We are investing significantly more in the mid and low end of the market than we're investing in the high end," Milano said. He added that these customers are buying faster, with shorter sales cycles. Stock Plunges Despite Strong Q2 Performance The company released its second quarter results on Wednesday, reporting $10.24 billion in revenue, up 9.77% year-over-year, and ahead of consensus estimates at $10.14 billion. Earnings during the quarter stood at $2.91 per share, beating estimates of $2.78. Salesforce shares were up 1.42% on Wednesday, closing at $256.45, but it has since dropped 6.59% in pre-market trade, following its earnings announcement. The stock scores high on Growth in Benzinga's Edge Stock Rankings, but has an unfavorable price trend in the short, medium and long terms. Click here for deeper insights into the stock. Read More: Marc Benioff Isn't Sold On AGI Hype, Says He's 'Extremely Suspect' Despite AI Shaping Salesforce Ahead Of Q2 Earnings Photo courtesy: bluestork / Shutterstock CRMSalesforce Inc$239.39-6.65%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum28.20Growth95.31Quality53.87Value10.13Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Marc Benioff Uses Salesforce Earnings To Warn Against AGI Hype, Dismisses Narrative Of SaaS Becoming Obsolete: 'Nonsense' - Salesforce (NYSE:CRM)

Salesforce Inc. CRM reported stronger-than-expected second-quarter results on Wednesday, but shares slipped in after-hours trading as CEO Marc Benioff used the earnings call to caution investors and peers against the hype surrounding artificial general intelligence. Salesforce Beats Q2 Estimates, Raises Full-Year Guidance The cloud software giant posted revenue of $10.24 billion, topping analyst estimates of $10.14 billion. Adjusted earnings came in at $2.91 per share, above forecasts of $2.78. Revenue grew 10% year-over-year, while adjusted operating margin hit 34.3%. The company lifted its fiscal 2026 revenue outlook to a range of $41.1 billion to $41.3 billion, slightly ahead of Wall Street expectations and raised its adjusted earnings guidance to $11.33 to $11.37 per share. Despite the beat and stronger guidance, Salesforce's stock fell 5.58% after hours, according to data from Benzinga Pro. See Also: Spotlight on Salesforce: Analyzing the Surge in Options Activity Benioff Pushes Back On AGI, Dismissing The Idea Of It Taking Over The World The Salesforce chief said that the company's focus is not on chasing AGI, but on expanding software-as-a-service into what he calls the "agentic enterprise." He described a future where human workers and AI-powered agents collaborate at scale, lowering costs while improving efficiency. "AGI, that seems like a fantastical term. I know it's coming in the next week or two, evidently. But this idea that there's some kind of AGI that's about to take over the whole world. Well, let me just help everybody understand that's not exactly what's about to happen," he stated. While acknowledging industry chatter about AGI and even predictions that SaaS applications could become obsolete, he dismissed such narratives as "nonsense," stating that the real proof lies in customer use cases and Salesforce's own operations. Benioff added that he plans to outline the company's vision for this transformation in greater detail at Dreamforce on Oct. 14. "I guess AGI is gonna happen tomorrow, so I'm ready for that, but there's so much nonsense," he stated, adding, "You gotta separate the forest from the trees." What Benioff's Peers Think About AGI Previously, Benioff pushed back against the growing optimism among tech leaders about AGI, saying current AI systems lack anything resembling consciousness. Meanwhile, Google DeepMind CEO Demis Hassabis has said that true AGI would mirror the brain's consistent intelligence across tasks, unlike today's uneven systems. He noted that key missing elements are genuine creativity and the ability to invent. The debate comes as leading voices in the industry put forward their own timelines. Anthropic's co-founder has indicated AGI might be possible by 2028, while OpenAI's Sam Altman has speculated it could surface during Donald Trump's presidency. Former Google CEO Eric Schmidt has also argued that AGI could reasonably be expected to appear sometime between 2028 and 2030. Benzinga's Edge Stock Rankings indicate that CRM is experiencing a downward trend in the short, medium and long term. Additional performance details can be found here. Read Next: Retail Investors' Top Stocks With Earnings This Week: Broadcom, NIO, Figma And More Photo Courtesy: Lev Radin on Shutterstock.com Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. CRMSalesforce Inc$242.15-4.24%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum27.73Growth95.28Quality53.55Value10.20Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Salesforce Stock Falls After Q2 Beat As Marc Benioff Tells Jim Cramer Investors Should Stop Nitpicking: 'Our Results Are Absolutely Fantastic' - Salesforce (NYSE:CRM)

Salesforce Inc. CRM delivered stronger-than-expected fiscal second-quarter results on Wednesday, but shares dropped in after-hours and further in pre-market trading on Thursday as CEO Marc Benioff told Jim Cramer that investors are focusing too much on guidance instead of the company's AI-driven transformation. Salesforce Beats Q2 Estimates With Strong Revenue And Profit The cloud software giant reported revenue of $10.24 billion, topping Wall Street's consensus of $10.14 billion. Adjusted earnings came in at $2.91 per share, beating estimates of $2.78. Revenue rose 10% year-over-year, while adjusted operating margin reached 34.3%. Salesforce ended the quarter with remaining performance obligations of $29.4 billion, up 11% from a year ago. The company also returned capital to shareholders, buying back $2.2 billion worth of stock and paying $399 million in dividends. Cash and equivalents stood at $10.37 billion as of July 31. See Also: Spotlight on Salesforce: Analyzing the Surge in Options Activity Benioff Pushes Back On Concerns About Guidance Despite raising its full-year outlook, Salesforce's conservative third-quarter guidance weighed on investor sentiment. The company forecast third-quarter revenue between $10.24 billion and $10.29 billion, compared to estimates of $10.29 billion and projected adjusted earnings of $2.84 to $2.86 per share, versus expectations of $2.85. Speaking with Cramer on CNBC's Mad Money, Benioff dismissed concerns over guidance. "Our results are absolutely fantastic, and our guidance is ... always appropriately conservative," he said. He added that investors risk "missing the forest for the trees" by nitpicking short-term forecasts rather than focusing on Salesforce's long-term transformation. The Agentic Enterprise And AI Momentum Benioff highlighted Salesforce's vision of the "agentic enterprise," where human workers and AI-powered agents collaborate to improve efficiency. He said Salesforce has already logged about 1.5 million customer interactions handled by AI agents, matching the volume managed by human support teams, with customer satisfaction scores roughly equal. "We've lowered our costs by 17% this year because we were able to bring in agents," Benioff said, pointing to AI's role in driving profitability. He also noted that Salesforce's AI business is already generating over $1 billion in annual revenue, calling it the fastest-growing segment in company history. Cramer agreed, saying investors should focus on the company's transformation rather than quarterly nitpicks. "There is great growth here. Stop looking at the stock. Start thinking about the business." Outlook And Market Reaction Salesforce raised its fiscal 2026 revenue guidance to a range of $41.1 billion to $41.3 billion, slightly above Wall Street's $41.2 billion estimate. It also lifted its full-year adjusted earnings forecast to between $11.33 and $11.37 per share, versus the consensus of $11.31. Still, shares slipped 5.58% in after-hours trading as investors weighed near-term guidance against long-term AI-driven growth. The share declined further in the pre-market trading on Thursday by 6.78%, at the time of writing, according to data from Benzinga Pro. Benzinga's Edge Stock Rankings show that CRM continues to decline across short, medium and long-term timeframes. More detailed performance insights are available here. Read Next: Retail Investors' Top Stocks With Earnings This Week: Broadcom, NIO, Figma And More Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock CRMSalesforce Inc$239.49-6.61%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum28.20Growth95.31Quality53.87Value10.13Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Salesforce Posts 10% Revenue Gain in Q2

Salesforce (CRM -7.96%), provider of cloud-based customer relationship management software, reported its Q2 FY2026 earnings on Sept. 3, 2025. The period delivered $10.2 billion in revenue, a 10% year-over-year increase. Adjusted earnings per share landed at $2.91. Adjusted operating margin rose to 34.3%. This marked the 10th consecutive quarter of operating margin expansion. While the business demonstrated robust efficiency and growing adoption of its AI and data-driven products, overall revenue growth stayed at the same pace as recent quarters. Management raised full-year FY26 revenue guidance and maintained guidance for operating cash flow, citing ongoing strength in its subscription businesses and the early success of artificial intelligence initiatives. Source: Salesforce. Note: Fiscal 2026's second quarter ended July 31, 2026. Fiscal 2025's Q2 ended July 31, 2024. Business Overview and Recent Strategic Focus Salesforce operates a suite of software products delivered over the cloud, helping organizations manage customer relationships, sales, support, and marketing. Its platform integrates data from different sources, providing a unified view for customer engagement. Subscription and support services make up the majority of revenue. In recent years, Salesforce has prioritized artificial intelligence and automation integration, launching products like Agentforce, an AI tool that deploys autonomous agents for sales and support tasks. The expansion of its Data Cloud, which connects and analyzes information across the customer journey, is a key pillar. The company also focuses on creating industry-specific solutions to serve sectors like healthcare, financial services, and public organizations, and maintains a strong partner ecosystem leveraging its AppExchange marketplace. Key success factors for Salesforce include driving adoption of AI capabilities, expanding within existing customer accounts, delivering efficient operations, and strengthening its position with targeted industry offerings. Quarter in Review: Financial Results and Operational Highlights The quarter saw revenue rise to $10.24 billion, which came in above the high end of company expectations and suggests stable customer demand. Subscription and support revenue grew 11% year over year (GAAP, Q2 FY2026). The fastest growth among major units came from Platform and Other, which saw revenue increase 16.7% year over year. Professional services, including consulting and implementation, noted a revenue decline of 3%. Adjusted operating margin climbed to 34.3%, marking the 10th straight quarter of operating margin expansion. Non-GAAP earnings per share of $2.91 also topped internal guidance. This reflects cost discipline even while investing in research and development, especially for AI initiatives. Salesforce's push into artificial intelligence received further validation this quarter. Annual recurring revenue from Data Cloud and AI solutions surpassed $1.2 billion, up 120% year-over-year compared to Q2 FY2025 for Q2 FY2026. Over 12,500 Agentforce deals have closed since launch, with more than 6,000 converted to paid arrangements. Salesforce closed more than 60 deals greater than $1 million each that included both Data Cloud and AI features. Despite rapid growth in these areas, management noted that a large portion of this demand is coming from expansion within the company's existing customer base, not from entirely new accounts. On the bookings front, the current remaining performance obligation, or CRPO -- a measure of near-term revenue under contract -- grew 10% in constant currency, though not a sharp uptick. The largest enterprise deals again cut across multiple product lines, especially Platform and Service. Revamped industry-specific offerings helped the company secure notable wins in healthcare and public sector, mentioning firms like Pfizer and the U.S. Army as customers. Marketing and Commerce, which includes marketing automation tools and digital commerce platforms, saw only 4% constant currency growth, continuing a slower trend first observed in prior quarters. Free cash flow for the quarter was $605 million, down nearly 20% year over year. Salesforce returned $2.6 billion to shareholders, mostly through share repurchases and $399 million in dividend payments. The board approved a $20 billion increase in the company's authorized repurchase program, taking it to $50 billion in total. This period did not see material one-time events impact the results directly, though the company's pending $8 billion acquisition of data integration software provider Informatica remains open as of the end of Q1 FY2026 and is expected to close in fiscal 2027. Integration costs and the financial implications of this deal are likely to become relevant in future reporting periods. Outlook and What's Ahead Salesforce raised the low end of its FY2026 GAAP revenue guidance to a new range of $41.1 billion-$41.3 billion, representing 8.5% to 9% year-over-year growth. Guidance for Q3 FY2026 is GAAP revenue of $10.24-$10.29 billion and non-GAAP earnings per share of $2.84-$2.86. Non-GAAP operating margin guidance also ticked up slightly to 34.1%. The company's outlook assumes CRPO growth will remain slightly above 10 %. Forecasts for operating cash flow growth have also increased, now expected at approximately 12% to 13%. Company leadership highlighted ongoing plans to expand sales capacity, push further into global and small- to mid-sized markets, and continue cross-selling new features to its existing customer base. Management reiterated its focus on increasing the share of AI-driven and industry-tailored revenue, though for now most of these AI sales are derived from current accounts. The expected closing and eventual integration of Informatica in the next fiscal year presents additional risks and opportunities to track in future quarters. Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Why Salesforce Stock Fell 8.5% This Morning | The Motley Fool

Shares of Salesforce (CRM -5.58%) took a significant hit on Thursday. Following the company's release of second-quarter results, the stock fell as much as 8.5% in the morning session. By 11:30 a.m. ET today, Salesforce had recovered to a 5.7% overnight price drop. Wall Street's average analyst had expected second-quarter earnings to rise about 8.6% year over year, landing near $2.78 per share. Revenue was targeted at roughly $10.1 billion, reflecting an 8.7% increase. The enterprise software giant exceeded the consensus analyst targets across the board, posting earnings of $2.91 per share on sales of $10.2 billion. Looking ahead, management set full-year guidance targets just above the current analyst projections. So it was a beat-and-raise performance, but the stock still took a tumble. Salesforce investors were probably looking for stronger guidance targets. After all, CEO Marc Benioff recently said that his company is removing roughly half of its customer support staff in favor of artificial intelligence (AI) tools. Specifically, deploying agentic AI systems to support human customer service specialists can deliver top-notch support outcomes at a faster pace and lower cost. But this report highlights how the company isn't exactly laying off that redundant support staff. Instead, the workers are being redeployed into sales and marketing operations, where the human touch makes a bigger difference these days. So, if you were hoping for a large cost-cutting effect from Salesforce's agentic AI moves, the reported financials told a different story.

Is It Time to Buy Salesforce Stock? | The Motley Fool

Salesforce isn't just an AI story. It's an underrated cash cow funding huge buybacks and a growing dividend. Salesforce's (CRM -4.70%) latest quarter delivered a powerful combination of triple-digit growth in artificial intelligence (AI) and robust financials. The customer relationship management software company posted steady top-line growth, expanding margins, and incredible momentum in its newer AI offerings -- all while returning a meaningful chunk of cash to shareholders. On Sept. 3, the company reported fiscal Q2 results for the period ended July 31. A few days removed from the headline noise, the investment case looks stronger, not weaker. Sure, the Street's knee-jerk reaction to the report seemed centered on short-term noise. Management guided to worst-than-expected sequential growth for fiscal Q3, and shares took a hit in after-hours trading. But a slight miss on guidance is just a small detour in the company's promising growth story. The underlying engine here is throwing off cash, and the AI layer is starting to scale. For its fiscal second quarter, Salesforce delivered strong results on the metrics that matter. Revenue rose 10% year over year to $10.2 billion. Operating margin reached 22.8%, with non-GAAP operating margin at 34.3% -- both an improvement from the same quarter last year. Current remaining performance obligation (cRPO), a leading indicator for revenue growth, rose 11% year over year to $29.4 billion. Meanwhile, Salesforce's AI story is moving from nascent to substantial. The company's data cloud and AI annual recurring revenue topped $1.2 billion, up 120% year over year. On this note, AI agents are turning out to be a big hit as companies transform into agentic enterprises. Management highlighted broad-based adoption of Angentforce -- Salesforce's platform for creating and deploying autonomous AI agents. There have been over 12,500 Agentforce deals since launch, of which more than 6,000 are paid. These are still early days for AI agents, but the interest is clearly high. And Salesforce is managing to do all of this while turning out big profits and having excess cash left over to return to shareholders. In Q2, Salesforce returned $2.6 billion to shareholders, including $2.2 billion in repurchases and $399 million in dividends. The board also lifted the buyback authorization by $20 billion, bringing total capacity to $50 billion. Q2's mix of double-digit revenue growth and margin expansion points to a business that's getting more efficient as it scales. Subscription and support revenue -- a recurring revenue stream that Salesforce arguably pioneered -- grew 11% and remains the bedrock of the model. Looking ahead, management reiterated confidence in cash generation, and full-year guidance calls for mid-teens operating cash flow growth -- fuel for both product investment and capital returns. The message is consistent: profitable growth today, with a long runway to keep investing behind it. Near term, management's guidance indicated a modest deceleration in top-line growth. For Q3, Salesforce expects revenue of $10.24 billion to $10.29 billion, up 8 to 9% year over year. That outlook initially disappointed the market, but it keeps the company firmly on track for an all-time high in cash flow while protecting margins. With cRPO up double digits and AI annual recurring revenue inflecting, it wouldn't be surprising to see revenue growth rates return to double-digit rates in the coming quarters. Of course, it's always possible that Salesforce beats its fiscal Q3 guidance and top-line growth doesn't drop to a single-digit rate after all. Unlike some tech stocks, the bull case doesn't hinge on AI hype alone. Salesforce already runs a large, profitable, recurring software franchise -- now adding a high-growth AI and data cloud layer on top. That should support mid- to high-single-digit revenue growth, healthy margins, and significant excess cash. Management is signaling how that cash will be used: bigger buybacks and a steady dividend, with room to keep investing through cycles. If execution holds, shareholders can win two ways: through compounding cash flows and a gradually shrinking share count. Of course, Salesforce does operate in an intensely competitive space. Enterprise spending can tighten, competitive intensity in AI is rising, and any stumble in large-deal timing could pressure growth for a quarter or two. But given the mix of durable subscription revenue, improving margins, and disciplined capital returns, I think the growth stock's risk-reward tilts positive, with shares trading at a price-to-earnings ratio in the thirties as of this writing. For investors looking past the next quarter, Salesforce looks like a buy.

Salesforce Shares Dip Despite Solid Revenue and Earnings Growth. Should Investors Buy the Dip or Run for the Hills? | The Motley Fool

Salesforce (CRM 2.62%) reported solid fiscal 2026 second quarter results that topped analyst expectations, but the stock fell after the company failed to raise the high end of its revenue guidance. Investors have been wary of how artificial intelligence (AI) will impact its business moving forward, and the business model of software-as-a-service (SaaS) companies in general. The stock has now lost more than a quarter of its value this year. Let's take a closer look at Salesforce's report to see if the stock can recover from its recent malaise. While investors question the role of Salesforce in an AI world, the company has pushed all in on AI agents. On its conference call, it said it is "rebuilding every single one of [its] products to be agentic." Its Agentforce platform now has more than 6,000 paid deals and more than 12,500 in total. About 40% of these bookings came from existing customers. It also added that it saw a 60% sequential increase in customers moving from piloting Agentforce to full production. It said its new Agentforce consumption-based pricing model, FlexCredits, has helped drive growth, with 80% of new bookings using the new pricing structure. Salesforce's other big growth driver has been its Data Cloud offering, which helps customers unify their data into a single source. Data Cloud's annual recurring revenue (ARR) surged 120% year over year to $1.2 billion, while its number of customers soared 140%. Overall, Salesforce's revenue increased 10% year over year to $10.23 billion, surpassing its guidance range of $10.11 billion to $10.16 billion. Subscription and support revenue jumped 11% to $9.69 billion. Platform sales, where Agentforce and Data Cloud reside, were strong, up 16%, while marketing and commerce was its weakest area, with growth of only 3%. Among its other core products that came from prior big acquisitions, Tableau led the way with 15% growth. Slack revenue, meanwhile, climbed 11%, while Mulesoft revenue rose 9%. Adjusted earnings per share (EPS) jumped 14% to $2.91. The results came in ahead of analyst consensus expectations for adjusted EPS of $2.78 on revenue of $10.14 billion, as compiled by LSEG. The company continues to generate a lot of cash. Operating cash flow came in at $740 million, while free cash flow was $605 million. The company ended the quarter with $15.4 billion in cash and short-term investments and $8.4 billion in debt. It spent $2.6 billion buying back shares and paying dividends during the quarter, and added an additional $20 billion to its repurchase program, bringing it to $50 billion. Salesforce's current remaining performance obligations rose by 11% year over year to $29.64 billion. They are the part of a company's contracted revenue that is expected to be recognized within the next 12 months and is a measure of future revenue. The company slightly boosted the low end of its full-year revenue outlook, while increasing its EPS guidance, as you can see below: Data source: Salesforce. For fiscal Q3, the company forecast revenue to rise by 8% to 9% to between $10.24 billion and $10.29 billion. It is looking for adjusted EPS in a range of $2.84 to $2.86. Analysts were looking for adjusted EPS of $2.85 on $10.29 billion in revenue. With the advent of AI, investors have turned sour on seat-based SaaS companies, fearing that the emerging technology will lead to fewer workers and put pressure on their business models. Salesforce itself is leaning into that theme, trying to essentially create a digital workforce. It's even reduced its own customer service headcount and replaced many workers with its AI agents. Over time, the SaaS model may evolve, but so do great companies. Salesforce is not sitting still, and its AI agent platform, Agentforce, is gaining solid traction. Its move to FlexCredits looks like a smart move, and helps the company better align the usefulness of its agents with their costs. Flexible credits are something some cybersecurity companies have adopted with nice success, and it is showing early signs of working for Salesforce, as well. In the future, it wouldn't be surprising if most of SaaS eventually evolves more into a consumption-type model. Investor sentiment, meanwhile, has pushed down Salesforce's stock to very low valuations on multiple metrics. Based on next year's fiscal 2027 analyst estimates, it now trades at a forward price-to-sales multiple of 5, a forward price-to-earnings (P/E) ratio of 19, and a price/earnings-to-growth (PEG) ratio of below 0.5. A PEG ratio less than 1 is generally reflective of an undervalued stock. It also has $7 billion in net cash, or $7.35 per share, on its balance sheet. Salesforce is going to have to prove to investors it's not an AI loser, but if it can, the stock has a lot of potential upside at its current valuation level. As such, I'd be buying the dip.

Salesforce shares drop as weak revenue forecast signals delayed AI returns

Salesforce shares dropped nearly seven per cent before the bell on Thursday, after the cloud software provider's weak third-quarter revenue forecast hinted at delayed returns from its AI investments. Rising investor bets on AI-driven cloud companies are pressuring them to deliver hefty returns on their billion-dollar investments in the breakthrough technology, but economic uncertainty has forced customers to pull back on spending. Salesforce has rapidly rolled out AI across its cloud services. In late 2024, it commercially launched Agentforce, an AI agent platform to automate tasks, streamline operations and help lift margins. The company forecast third-quarter revenue between US$10.24 billion and $10.29 billion, with the midpoint coming in below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that did little to cheer investors concerned about the dour forecast. "Growth has not inflected yet and investors are thus not seeing an imminent need to revise their thought process," said J.P. Morgan analysts. With shares down about 24 per cent so far this year, Salesforce has steered toward acquisitions after years on the sidelines, aiming to boost its offerings and profitability. In May, it acquired data management platform Informatica for about $8 billion. The stock trades at over 20.98 times its 12-month forward earnings estimates, compared with rivals Microsoft and Oracle's 31.26 and 30.84, respectively. The company beat second-quarter revenue estimates and given its cheap valuation, some analysts expect the company has room for growth. "Second-quarter results and positive company commentary are sufficient at this juncture, considering CRM shares are trading near a historically low valuation level and deep discount to software peers," J.P. Morgan said.

Salesforce Q2 Revenue of $10.24 Billion Beats Estimates, Amid Slow AI Growth

Despite the strong numbers, the company gave a cautious forecast for the next quarter. Salesforce expects revenue between $10.24 billion and $10.29 billion, slightly below analyst predictions. Full-year revenue guidance stays at $41.1 billion to $41.3 billion. Investors reacted cautiously, and Salesforce share price dropped about 5% after hours. The key challenge facing Salesforce's AI initiatives is the platform. Agentforce was launched last year; today, it boasts over 6,000 paid deployments and $100 million in annual recurring revenue. That said, sales have not been very rapid. Largely, the slow growth rate has also been because large companies and other regulated sectors have chosen to proceed cautiously. CEO Marc Benioff remains optimistic about AI's potential, calling it a "transformative" time for the company. At the same time, CFO Robin Washington pointed out that adoption in big enterprises is gradual, and more proof is needed to show AI is driving fast revenue growth. A lot of things are happening to lead the fostering of growth with Salesforce. It is also offering flexible pricing for Agentforce and is further building its sales force. In one big acquisition, Salesforce is buying Informatica Inc. for $8 billion to enhance its data management and AI prowess. Salesforce has now upped total share buybacks to $50 billion, which signals much confidence in its future. Even after these moves, the market waits for to match peers growing rapidly-earned by AI. Analysts think the upcoming Dreamforce event could present updates on Agentforce adoption and customer success stories, thereby boosting investor confidence. Put simply, Salesforce Q2 Earnings put up a strong show, also making progress in , Agentforce being one of them, but cautious growth forecasts left investors uneasy. The next few quarters will matter in saying whether Salesforce can convert AI innovations into speedy revenues and broader adoption.

Salesforce Shares Slip as Investors Fret Over Light AI Returns - 2nd Update

Salesforce's light sales outlook and investor concerns about artificial-intelligence returns weighed on its shares, despite higher-than-expected revenue and profit in the second quarter. The customer-relationship management platform said Wednesday that it expects revenue in the current third quarter to be $10.24 billion to $10.29 billion, while Wall Street was looking for $10.29 billion. Adjusted earnings guidance was in line with estimates. Shares fell 6%, to $242.26, in after-hours trading. At the close, the stock was down 23% this year. Salesforce executives emphasized its focus on AI investments, primarily its Agentforce assistant that launched last October. More than 12,500 Agentforce deals have closed since its debut, with about 6,000 of those currently paid. Some investors are getting anxious about when the investments in AI will show up as returns in Salesforce's balance sheet. "Overall, there's a sense of frustration in the market," Melissa Otto, head of research at S&P Global Visible Alpha, said in a note. Analysts on Wednesday's call asked management how it could compete with AI-native apps and custom-built AI. Chief Operating and Financial Officer Robin Washington responded by saying Salesforce was doubling down on innovation and developing strategies on pricing and launching new services. "It is early days in the adoption cycle, but we are really confident in our strategy to monetize AI," she said. In the second quarter, which ended July 31, data-cloud and AI annual recurring revenue was $1.2 billion. Salesforce also said it was increasing its share-buyback program by $20 billion, bringing the total to $50 billion. Chief Executive Marc Benioff said the company would consider using the funds for acquisitions. "If we see great entrepreneurs or great technology or something that we've never seen before, that just blows our mind, we're going to buy it," he said. Revenue rose 10%, to $10.24 billion. Analysts surveyed by FactSet forecast revenue of $10.14 billion. Subscription and support sales rose 11%. Salesforce had a profit of $1.89 billion, or $1.96 a share, up from $1.43 billion, or $1.47 a share, a year earlier. Stripping out certain one-time items, adjusted per-share earnings were $2.91, ahead of the $2.78 anticipated by analysts, according to FactSet. Salesforce expects $41.1 billion to $41.3 billion in revenue for this fiscal year. Adjusted earnings per share are projected to be $11.33 to $11.37, compared with the $11.32 analysts are anticipating. Write to Katherine Hamilton at [email protected]

Salesforce 2Q Sales, Profit Rise as AI Agentforce Expands

Salesforce logged higher-than-expected revenue and profit in the second quarter, as its AI business continues to grow. The customer-relationship management platform on Wednesday posted a profit of $1.89 billion, or $1.96 a share, in the quarter ended July 31, up from $1.43 billion, or $1.47 a share, a year earlier. Stripping out certain one-time items, adjusted per-share earnings were $2.91, ahead of the $2.78 anticipated by analysts, according to FactSet. Revenue rose 10% to $10.24 billion. Analysts surveyed by FactSet forecast revenue of $10.14 billion. Subscription and support sales rose 11%. Salesforce, which specializes in helping companies manage customer interactions, is investing more in AI. Data cloud and AI annual recurring revenue more than doubled to $1.2 billion. In October, the San Francisco company launched its AI assistant Agentforce, which automates tasks from a prompt and is designed for use in human resources, information technology and financial reporting. More than 12,500 Agentforce deals have closed since its debut. Pfizer, Marriott and the U.S. Army are among Salesforce's customers for agentic AI, it said. Salesforce expects $41.1 billion to $41.3 billion in revenue this year. Adjusted earnings per share are projected to be $11.33 to $11.37, compared with the $11.32 analysts are anticipating. In the current third quarter, Salesforce is guiding for $10.24 billion to $10.29 billion in revenue, while Wall Street was looking for $10.29 billion. It forecasts $2.84 to $2.86 in adjusted earnings per share, in line with the Street's $2.85 estimate.

Salesforce shares drop as weak revenue forecast signals delayed AI returns

(Reuters) -Salesforce shares dropped nearly 7% before the bell on Thursday, after the cloud software provider's weak third-quarter revenue forecast hinted at delayed returns from its AI investments. Rising investor bets on AI-driven cloud companies are pressuring them to deliver hefty returns on their billion-dollar investments in the breakthrough technology, but economic uncertainty has forced customers to pull back on spending. Salesforce has rapidly rolled out AI across its cloud services. In late 2024, it commercially launched Agentforce, an AI agent platform to automate tasks, streamline operations and help lift margins. The company forecast third-quarter revenue between $10.24 billion and $10.29 billion, with the midpoint coming in below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that did little to cheer investors concerned about the dour forecast. "Growth has not inflected yet and investors are thus not seeing an imminent need to revise their thought process," said J.P. Morgan analysts. With shares down about 24% so far this year, Salesforce has steered toward acquisitions after years on the sidelines, aiming to boost its offerings and profitability. In May, it acquired data management platform Informatica for about $8 billion. The stock trades at over 20.98 times its 12-month forward earnings estimates, compared with rivals Microsoft and Oracle's 31.26 and 30.84, respectively. The company beat second-quarter revenue estimates and given its cheap valuation, some analysts expect the company has room for growth. "Second-quarter results and positive company commentary are sufficient at this juncture, considering CRM shares are trading near a historically low valuation level and deep discount to software peers," J.P. Morgan said. (Reporting by Akriti Shah and Siddarth S in Bengaluru; Editing by Devika Syamnath)

The AI equation weighs on Salesforce

Disappointing forecasts and artificial intelligence that is still under-monetized: the customer management software giant continues to face obstacles, quarter after quarter. Salesforce shareholders have reason to feel dizzy. The stock leapt 150% in 2023-2024, although has lost 28% so far this year. Salesforce is even one of the 30 worst performers in the S&P 500. The comparison is harsh when compared to software giants that are better credited with AI (Microsoft, Oracle and Palantir). Let's talk about AI, because it is the company's main underlying problem. Salesforce may be stepping up its game with Agentforce, its AI agent platform launched in late 2024 to automate tasks and processes in the cloud (sales, support, marketing), improve productivity, and generate margin gains through data exploitation, and it may have acquired Informatica for $8bn, but the market doubts the progress made on this front. This is especially true given that its peers are now more than one step ahead in this technology. The sector backdrop does not help. There is a real risk of a possible migration to AI agents capable of generating software functionality, initially in the front office (contact centers, marketing, sales), with the potential to significantly challenge the group's subscription models. This would imply a decline in per-user billing in favor of models based on usage, performance, or volume of tasks performed. Of course, Salesforce is not alone in this respect. Adobe, for example, and others are facing the same fears. Operationally, Q2 (ended July 31) was fairly good in terms of execution. Revenue reached $10.2bn (+10%) with EPS exceeding the consensus. However, it was Q3 expectations that dampened the mood, with a modest revenue range of $10.24bn to $10.29bn (+8-9%). That said, regarding valuation, the stock's multiples are historically low compared to Microsoft and Oracle. At around 21x 12-month earnings, Salesforce appears to be fairly cheap, especially since the share buyback program has been increased by $20bn (to a total of $50bn) and the hedge fund Starboard Value has increased its position. However, at this stage, there is only one way for Salesforce to regain the confidence of its shareholders: i.e. credibly integrate AI into its growth strategy and ensure that this technology is better monetized. Otherwise, the discount may persist, even at historically low levels.

Salesforce forecasts weak current-quarter revenue, shares fall

(Reuters) -Business software provider Salesforce forecast third-quarter revenue below Wall Street estimates on Wednesday, as clients dial back spending on its enterprise cloud products due to macroeconomic uncertainty. The cloud software provider also announced a $20 billion increase to its existing share buyback program, bringing the total to $50 billion. Shares of the San Francisco, California-based company fell more than 4% in trading after the bell. The stock has lost more than 24% of its value so far this year. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. At the same time, investors have been on the heels of cloud firms to show returns on the billions poured into artificial intelligence as Salesforce invests heavily in automation and AI agents. CEO Marc Benioff said last week that Salesforce has cut 4,000 jobs in customer support due to AI, after earlier saying that the technology accounts for about 30% to 50% of the company's work. The company has been offering AI agents -- programs that can handle routine tasks without human supervision -- to businesses for recruiting and customer service. It has over 4,000 paid deals for "Agentforce," a platform that allows customers to create AI-powered virtual representatives. For the third quarter, Salesforce sees revenue between $10.24 billion and $10.29 billion, with the midpoint coming below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. On an adjusted basis, Salesforce expects earnings per share between $2.84 and $2.86, with the midpoint of $2.85 per share coming in line with analysts' estimates. The company's revenue for the second quarter, ended July 31, was $10.24 billion, beating expectations of $10.14 billion. (Reporting by Juby Babu in Mexico City; Editing by Alan Barona)

Salesforce shares drop as weak revenue view signals delayed AI returns

(Reuters) -Salesforce shares dropped nearly 8% on Thursday, after the cloud software provider's soft third-quarter revenue forecast hinted at delayed returns from its AI investments. Rising investor bets on AI-driven cloud companies are pressuring them to deliver hefty returns on their billion-dollar investments into the breakthrough technology, even as economic uncertainty forces customers to pull back on spending. The outlook is "giving bears fresh ammo amid mounting fears that the software sector is ripe for disruption and questions over whether incumbents can fully monetize AI," said Matt Britzman, senior equity analyst at Hargreaves Lansdown. Salesforce has rolled out AI across its cloud services at a rapid pace, culminating in the 2024 commercial launch of Agentforce - its AI agent platform designed to automate tasks, streamline operations and help lift margins. The company forecast third-quarter revenue between $10.24 billion and $10.29 billion, with the midpoint coming in below analysts' average estimate of $10.29 billion, according to data compiled by LSEG. The cloud software provider also announced a $20 billion increase to its existing share buyback program, but that did little to cheer investors concerned about the dour forecast. "This growth outlook is uninspiring," analysts at Oppenheimer said. The guidance reveals a "continuing tough macro environment for front-office suppliers like Salesforce this year." With shares down about 24% so far this year, Salesforce has steered toward acquisitions after years on the sidelines, aiming to boost its offerings and profitability. In May, it acquired data management platform Informatica for about $8 billion. The stock trades at over 20.96 times its 12-month forward earnings estimates, compared with rivals Microsoft and Oracle's 31.26 and 30.84, respectively. Salesforce beat second-quarter revenue estimates and given its cheap valuation, some analysts expect the company has room for growth. "Second-quarter results and positive company commentary are sufficient at this juncture, considering CRM shares are trading near a historically low valuation level and deep discount to software peers," analysts at J.P. Morgan said. (Reporting by Akriti Shah, Siddarth S and Harshita Mary Varghese in Bengaluru; Editing by Devika Syamnath)