Shares of Salesforce Inc. rose just over 4% in extended trading today after the company reported strong second quarter results that came in ahead of Wall Street’s estimates and raised its full-year earnings outlook.
The company also revealed that its longtime Chief Financial Officer Amy Weaver is set to step down from her role. She’ll remain in the post until a successor can be found, and afterwards she’ll continue to be involved with the company as an advisor. Both internal and external candidates are invited to apply for the job, said Salesforce co-founder, Chairman and Chief Executive Marc Benioff (pictured) on a call with analysts.
Weaver seems to be leaving the company in pretty good shape. Salesforce delivered second quarter earnings before certain costs such as stock compensation of $2.56 per share on revenue of $9.33 billion during the latest quarter, coming in ahead of Wall Street’s targets. Analysys had been looking for earnings of just $2.36 per share on lower sales of $9.23 billion.
All told, the company delivered net income of $1.43 billion, up from a profit of $1.27 billion in the year-ago period.
The numbers suggest that spending on Salesforce’s suite of cloud products remains healthy, even as the company faces stiff competition from rivals such as ServiceNow Inc.
The after-hours stock increase helped to mask the fact that Salesforce’s forecast wasn’t that great. While the company is projecting earnings for the current quarter that’s in-line with analysts’ predictions, its revenue guidance came up short. On the other hand, it did increase its full-year profit forecast.
Officials said the company is looking for third-quarter earnings of between $2.42 and $2.44 per share on sales of $9.31 billion to $9.36 billion. Wall Street is looking for earnings of $2.43 per share on higher revenue of $9.41 billion.
Looking at the full year picture, Salesforce said it anticipates fiscal 2025 earnings of between $10.03 and $10.11 per share on revenue of $37.7 billion to $38 billion, implying growth of 8% to 9%. Three months ago, it had called for earnings of between $9.86 to $9.94 per share on the same revenue forecast. As for Wall Street, its consensus estimate calls for earnings of $9.89 per share on revenue of $37.8 billion.
Weaver said on a conference call with analysts that the company is “assuming that the conditions we’ve been experiencing over the past few years will persist.” Previously, she has told analysts that the company has had to deal with longer sales cycles and increased deal scrutiny as customers tighten their budgets.
Salesforce encouraged investors to gauge its long-term prospects by looking at a metric called “current remaining performance obligations” or cRPO, which is a measure that combines the current quarter’s new business bookings with future revenue remaining from existing subscriptions.
Three months earlier, Salesforce predicted that its cRPO would increase by 9%, but instead it gained 10% to $26.5 billion.
In July, Salesforce said it’s planning to launch a new breed of generative artificial intelligence agents called Einstein Copilot for Merchants. They’re based on a newer technology known as “agentic AI”, which can take actions on behalf of users. The company said this new breed of agents will be able to do things such as create product pages and promotions of those products, with only a few words of human input.
Earlier this month, it unveiled a second type of agentic AI agent built on its new Agentforce platform that’s able to qualify sales prospects and train salespeople to deal with specific customers, prior to them taking a call.
In the conference call, Benioff talked up the capabilities of these new agents, distancing them from the “copilots” popularized by the company’s rival Microsoft Corp.
“This is not copilots. So many customers are so disappointed in what they bought from Microsoft, and copilots, because they aren’t getting the accuracy and the responses they want,” the CEO insisted. “Microsoft has disappointed so many customers with AI. Listen. These agents are autonomous, able to act with accuracy, come right out of the box, able to go right out of the platform.”
Valoir analyst Rebecca Wettemann told SiliconANGLE the secret sauce behind the Agentforce agents is their tight integration with the collaboration tool Slack.
“The Agentforce development platform is not just about CRM but about building agents for any enterprise application,” she said. “This extends Salesforce’s total addressable market beyond CRM, and Salesforce already has a backdoor with the hundreds of application vendors that have integrated with Slack, making Slack the conversational interface for enterprise application users across the enterprise stack.”
She added that the Agentforce agents provide sales organizations with a significant opportunity, saying they’ll be able to support seasonal and ongoing sales needs at a much lower cost and with greater reliability compared to using junior sales representatives.
Valoir also agreed with Benioff’s controversial claims that many customers have been disappointed with the capabilities of Microsoft’s co-pilot offerings.
“Those that did try to build their own, or use a copilot not grounded and trained with business data, are simply not getting the results they hoped for,” she said, saying she has heard this from multiple customers. “In contrast, Salesforce customers – even with imperfect data – are seeing rapid deployment times and significant benefits.”
During the quarter, the activist investors Starboard Value LLP and ValueAct Capital LLC both increased their stakes in Salesforce, suggesting that Benioff and his team will be under pressure to translate the promise of their agentic AI agents into higher growth.
Prior to today’s after-hours move, Salesforce’s stock was down 2% in the year to date, trailing the broader S&P 500 Index, which has gained 17% over the same period.
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