TLDR:
- Salesforce’s Q3 revenue reached $9.44 billion, an 8.3% increase and above analyst estimates of $9.35 billion
- Stock surged nearly 13% in premarket trading, heading toward record high
- Company launched Agentforce AI platform in October, priced at $2 per agent conversation
- Salesforce plans to hire 1,400 employees in Q4 to support Agentforce demand
- Company raised lower end of fiscal year 2025 revenue forecast to $37.8-38 billion
Salesforce Inc. reported better-than-expected third-quarter revenue on Tuesday, driving its stock up nearly 13% in premarket trading. The company’s shares, which closed at $331.43 in New York, are poised to reach their highest level ever if the gains hold.
The San Francisco-based software maker posted revenue of $9.44 billion for the quarter ending October 31, marking an 8.3% increase from the previous year. This figure topped Wall Street analysts’ average estimate of $9.35 billion, according to data from Bloomberg.
The company’s adjusted operating margin came in at 33.1%, exceeding analyst expectations of 32.2%. However, adjusted earnings per share were $2.41, slightly below the forecasted $2.44, impacted by losses in Salesforce Ventures, the company’s investment division.
In October, Salesforce launched its new AI product called Agentforce, priced at $2 per agent conversation. The platform is designed to handle tasks like customer support and sales development without human supervision.
CEO Marc Benioff expressed strong confidence in Agentforce during the earnings call. “While the quarter numbers are fantastic, the real excitement is really what is hitting with the technology,” he stated.
To support the growing demand for Agentforce, Salesforce announced plans to hire 1,400 employees in the fourth quarter. This expansion comes after nearly two years of cost-cutting measures and job reductions implemented under pressure from activist investors.
The company’s Executive Vice President Mike Spencer noted that while Agentforce has already secured several deals, these are primarily initial rollouts that will take time to reflect in financial results.
Looking at division performance, the company’s marketing and e-commerce software unit grew 8% in constant currency during the quarter, slightly ahead of market expectations. However, growth slowed in some acquired divisions, with Mulesoft’s revenue increasing just 1% in constant currency compared to 13% in the previous quarter.
The Commerce Cloud product faces increased competition from Shopify Inc., which claims to have attracted hundreds of former Salesforce clients.
Client spending on Salesforce’s enterprise cloud portfolio remained strong as companies continue to invest in streamlining their workflows and processing large amounts of data while incorporating artificial intelligence.
For the current quarter ending in January, Salesforce projects revenue between $9.9 billion and $10.1 billion, aligning with analyst estimates. The company’s current remaining performance obligation, which measures booked sales, is expected to grow about 9%.
Salesforce has revised its fiscal year 2025 revenue forecast, raising the lower end to $37.8 billion while maintaining the upper end at $38 billion, compared to its previous range of $37.7-38 billion.
The company’s stock has shown volatility throughout the year, reaching a low of $218.01 on May 30 before rebounding more than 50% on optimism surrounding its new AI strategy.
Charlie Miner, an analyst at Third Bridge, emphasized that Agentforce’s execution and adoption will be crucial for the company’s future performance.
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