Salesforce Reports Quarterly Earnings Exceeding Expectations
Strong Performance Amid AI Profitability Concerns
The world's largest enterprise customer relationship management (CRM) software company, Salesforce, received a rare round of applause from the market after announcing second-quarter results that exceeded expectations. Having adopted AI technology early on, Salesforce had previously faced concerns that growth might have stalled following a first-quarter earnings shock. This strong performance has effectively dispelled worries about growth related to AI profitability.
Salesforce Delivers Strong Earnings
Marc Benioff Salesforce CEO
On the 28th (local time), after the New York Stock Exchange closed, Salesforce announced its second-quarter results for fiscal year 2025 (April to June 2024), reporting quarterly revenue of $9.33 billion, an 8% increase compared to the same period last year. This revenue surpassed analysts' estimates of $9.23 billion. The second-quarter earnings per share (EPS) also exceeded expectations, coming in at $2.56 versus the forecasted $2.35.
The company also raised its annual guidance. The revenue forecast for this year was increased from $37.7 billion to $38.0 billion, and EPS guidance was raised from $9.94 to a range of $10.03 to $10.11. Amy Weaver, Salesforce's Chief Financial Officer (CFO), explained, “We continue to deliver profitable growth, and this quarter's operating margin reached an all-time high.” Despite closing the regular trading session down by over 2%, Salesforce's stock rose about 4% in after-hours trading, buoyed by the strong earnings.
Salesforce holds a dominant position in providing solutions that enhance corporate work efficiency and is recognized for its active investment in AI. Earlier this year, it introduced ‘Einstein,’ an AI solution that enables enterprise customers to make decisions based on AI data. However, following the first-quarter earnings shock, there were numerous analyses suggesting that the demand outlook for AI products might be overly optimistic.
“Meaningful Earnings Amid AI Bubble Concerns”
On Wall Street, considering the market's growing expectation that AI products must generate meaningful profitability, Salesforce's strong earnings are seen as highly significant. Anurag Rana, an analyst at Bloomberg Intelligence, stated, “The results are stabilizing and showing signs of gradual improvement,” emphasizing that “this indicates a positive signal amid a challenging software purchasing environment.”
This also helped alleviate concerns about the so-called ‘AI bubble’ that had been raised by some on Wall Street. Ahead of the big tech earnings season, the market had seen a spread of bubble theories suggesting that AI-related investments by these companies were excessive relative to demand, which led to sharp declines in related stocks. However, as big tech companies reaffirmed their commitment to AI investment, counterarguments emerged that these bubble concerns were exaggerated. On the same day, Nvidia, a leader in AI semiconductors, also reported second-quarter results and third-quarter outlooks that exceeded market expectations.
Meanwhile, Salesforce announced the resignation of CFO Amy Weaver on the same day, without providing a specific reason. Weaver said, “My time at Salesforce has been an amazing journey, and it has been an honor to work with such a talented and dedicated team.” Salesforce CEO Marc Benioff commented, “CFO Weaver delivered unprecedented margins and led financial discipline at Salesforce.” Once a successor is appointed, Weaver is expected to remain with Salesforce as an advisor.
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