By Christine Ji
Salesforce comes up a bit shy with its sales outlook for the current quarter
Salesforce surpassed analysts’ expectations for revenue and earnings on Wednesday.
Salesforce Inc.’s earnings beat on Wednesday proved that it’s making progress on its transition from a traditional software company to an agentic artificial-intelligence platform, but the results weren’t enough to satisfy investors as the company’s guidance came up a hair short.
Salesforce (CRM) reported second-quarter revenue of $10.24 billion, a 10% increase year over year. Analysts tracked by FactSet were anticipating $10.14 billion for the quarter.
The company’s current remaining performance obligations (cRPO), or the amount of expected revenue in the next year from services not yet delivered, was $29.4 billion, up 11% year over year and beating the consensus of $29.2 billion.
However, the forward-looking estimate for next quarter came in slightly softer than analysts expected. Salesforce projects $10.24 billion to $10.29 billion in revenue for the fiscal third quarter, which at the midpoint is below Wall Street’s expectations of $10.29 billion.
For the full year, the company raised the low end of its revenue guidance to between $41.1 billion and $41.3 billion in total revenue, indicating a 8.5% to 9% increase. Last quarter, the low end of Salesforce’s full-year outlook was $41.0 billion.
Shares of Salesforce dropped as much as 5% in after-hours trading.
Investor sentiment in the software industry has been low overall as AI technology appears poised to disrupt establish software business models. While many Wall Street analysts have been bullish on the stock, Salesforce shares have declined 22% year to date.
Matt Stucky, chief portfolio manager of equities at Northwestern Mutual, told MarketWatch on Wednesday before the earnings announcement that it would take a noticeable amount of “top-line revenue acceleration” for Salesforce to “refute the bear argument” about the competitive threat of AI.
Salesforce’s revenue growth did accelerate in the latest quarter, to 10% on a reported basis and 9% on a constant-currency basis, versus 8% growth for both in the fiscal first quarter. But investors perhaps wanted more.
Jefferies analyst Brent Thill expressed a similar view in a note from last week, writing that investors would be watching for cRPO growth greater than 10% and proof of AI monetization.
-Christine Ji
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09-03-25 1634ET
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