Salesforce reported quarterly revenue that topped analysts’ estimates, boosting investor hopes that the company’s much-hyped strategy for artificial intelligence products will lift financial results. The shares gained about 10 per cent in extended trading.
Sales increased 8.3 per cent to $9.44 billion (€8.95 billion) in the period ending October 31st, the company said on Tuesday in a statement.
Analysts, on average, estimated $9.35 billion, according to data compiled by Bloomberg. Adjusted operating margin, a measure of profitability, was 33.1 per cent, compared with an average estimate of 32.2 per cent.
At the beginning of the year Salesforce had more than 72,600 employees worldwide, and around 2,000 in Ireland.
The top seller of customer relations management software, Salesforce pivoted its AI strategy this year to focus on tools called agents, which are designed to complete tasks such as customer support or sales development without human supervision. The San Francisco-based company launched its product, dubbed Agentforce, in October, with initial pricing of about $2 per agent conversation.
Chief executive Marc Benioff said last month that he was so confident in Agentforce that Salesforce would add 1,000 employees to sell it.
That planned hiring surge follows almost two years of costs cuts at the company, including job reductions, as Mr Benioff worked to control expenses and improve profitability after pressure from activist investors.
The company has signed a “good number” of deals related to Agentforce, executive vice-president Mike Spencer said in an interview after the earnings release. Still, these deals are largely initial roll-outs and will take time to show up in the company’s results, he added.
The stock has been volatile this year, dipping to a low of $218.01 on May 30th after the company projected the slowest sales growth in its history. Since then, the shares have rebounded more than 50 per cent on optimism for Salesforce’s new AI strategy. “Agentforce has overtaken the CRM narrative by storm,” wrote Tyler Radke, an analyst at Citigroup, ahead of the results.
“As I’m sure everybody knows on the quarter, these numbers are not what we’re really excited about,” Mr Benioff said on a conference call after the results were released. “And while the quarter numbers are fantastic, the real excitement is really what is hitting with the technology.”
The shares hit a high of $367 in extended trading after closing at $331.43 in New York. The higher-than-expected profit margin is the standout number in results, said Anurag Rana, an analyst at Bloomberg Intelligence, said in an interview on Bloomberg Television.
Salesforce said fiscal third-quarter profit, excluding some items, was $2.41 a share. Analysts, on average, estimated $2.44. The earnings were affected by losses within Salesforce Ventures, the company’s investment arm, Spencer said.
Revenue will be $9.9 billion to $10.1 billion in the current quarter ending in January, in line with analysts’ estimates. Current remaining performance obligation, a measure of booked sales, will expand about 9 per cent, compared with a 9.2 per cent increase expected by analysts. – Bloomberg
