Salesforce AI Boost Promise Pays Off After Share Prices Surge
Salesforce stocks have hit a new high after quarterly revenue surpassed analyst expectations. The company’s shares gained 11% to trade at $367.20 on December 4, 2024 following strong Q3 earnings. According to Yahoo Finance, the increase in stock value raised investor hopes regarding the Salesforce AI boost promise.
Salesforce revenues for the period ended October 31, 2024, rose by 8.3% to reach the $9.44 billion mark. This was more than analyst projections of $9.35 billion. The company’s operating margin stood at 33.1% against the average 32.2% estimated by analysts.
Salesforce AI Growth
The top CRM software company unveiled its AI strategy earlier this year. The company has been focusing on developing AI agents that help users to complete a range of tasks, including sales development and customer support without human supervision. Salesforce unveiled Agentforce two months ago at a cost of $2 per agent conversation.
Last month, CEO Marc Benioff expressed his confidence in Salesforce AI CRM boost saying the company will add 1,000 employees to sell it. The hiring surge comes two years after Salesforce started implementing cost cutting measures like job reductions to boost profitability and control expenses.
Agentforce Deals
Salesforce has already signed several deals relating to Agentforce. The company is at the initial stages of rolling the deals out and it will take time before the impact can reflect on the company’s earnings reports.
Salesforce stocks have been fragile throughout the year. In May this year, share prices hit a low of $218.01 after the software giant projected slow sales growth. The stocks have since rebounded following the optimism generated by the company’s new AI strategy.
“As I’m sure everybody knows on the quarter- these numbers are not what we’re really excited about. And while the quarter numbers are fantastic, the real excitement is really what is hitting with the technology,” Benioff said during the earnings call.
In June this year, Salesforce and Workday unveiled plans to launch an AI-powered service agent that can automate routine tasks, offer data-driven insights, and provide personalized support to users.
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Salesforce Profit Margins
For many analysts, it is Salesforce strong revenue growth and higher profit margins that stood out in the earnings. According to Salesforce Q3 earnings report, the company reported a $2.41 profit per share against analyst estimates of $2.44 per share. Losses from investment arm, Salesforce Ventures affected the earnings.
Revenue growth from the company’s acquired divisions dipped in quarter three. These divisions are Mulesoft, Slack, and Tableau. Revenue from Mulesoft rose by 1% compared to 13% in the previous quarter. The company’s e-commerce and marketing software business unit grew by 8% during the current quarter.
Salesforce expects its quarter four earnings to range between $9.9 billion and $10.1 billion. The company spent $344 million to acquire data-focused startup, Zoomin. Salesforce is yet to disclose the terms for this deal since it announced it three months ago.
Salesforce acquired data management and protection solutions firm, Own at $1.9 billion in September 2024. The acquisition is the biggest deal for the software company since it bought Slack in 2021 for $27.7 billion. Earlier this year, Salesforce wanted to acquire data management software company, Informatica but dropped the idea.
