Key Takeaways:
- Q2 revenue hit $11.35 billion, beating consensus of $11.32 billion
- Q3 guidance of $11.42-$11.50 billion tops analyst estimates of $11.41 billion
- Agentforce AI annualized revenue topped $1.5 billion, up 240 percent year over year
Back
Salesforce surges 11% after hours as Q3 revenue guidance beats estimates
Salesforce reported Q2 revenue of $11.35 billion, beating consensus, and guided Q3 revenue to $11.42-$11.50 billion, sending shares up 11 percent after hours.
The company said the results reflect accelerating demand for Agentforce AI products, whose annualized revenue topped $1.5 billion, up 240 percent year over year, according to the earnings statement.
Adjusted earnings per share came in at $5.90. Revenue of $11.35 billion beat the $11.32 billion LSEG consensus. Net income jumped 87 percent to $3.53 billion, or $4.29 a share, from $1.89 billion a year earlier. The company recorded a $2.6 billion gain on its stake in AI startup Anthropic, valued at $965 billion in a May funding round. Free cash flow rose 81 percent to $1.10 billion, above the $643.2 million StreetAccount consensus.
Salesforce raised its full-year revenue outlook to $46.1-$46.4 billion, implying 11 percent growth at the midpoint, up from the prior $45.9-$46.2 billion range. The company also announced a $1.6 billion contract with the U.S. Department of Veterans Affairs and plans to acquire customer service startup Fin for $3.6 billion.
Current remaining performance obligation, a measure of revenue expected to be recognized in the next year, reached $33.5 billion, above the $33.22 billion StreetAccount consensus. The company also unveiled Claudeforce, a plugin for Anthropic's Claude that composes emails for salespeople and updates records through chat.
Agentforce growth accelerated from over 200 percent in the prior quarter, marking the second consecutive quarter of expansion above that threshold. The AI agent business is central to Salesforce's strategy as the company competes with Microsoft and ServiceNow in the enterprise AI software market.
Shares had fallen 22 percent year to date as of Wednesday's close, while the S&P 500 gained 12 percent over the same period. Investors have debated how much of a threat generative AI models pose to traditional software companies. Alphabet and Microsoft have also flagged gains from their own investments in Anthropic.
The results come as enterprise software companies face mounting pressure to demonstrate AI monetization. Salesforce's Agentforce growth rate of 240 percent compares favorably with Microsoft's Copilot adoption and ServiceNow's AI workflow expansion, though all three face questions about whether AI features translate into durable revenue growth.
The raised guidance indicates management expects AI demand to accelerate. Investors will watch the earnings call at 5 p.m. ET for updated segment margins and Agentforce adoption metrics. The stock's after-hours surge suggests the market is beginning to price in AI-driven growth for the cloud software leader.
This article is for informational purposes only and does not constitute investment advice.
