The Beat
Salesforce reported better-than-expected earnings Wednesday. The company topped Wall Street estimates with its revenue guidance for the fourth quarter.
The stock rose 2% to 3% in extended trading.
Salesforce posted adjusted earnings of $3.25 per share versus $2.86 expected. Revenue came in at $10.26 billion, roughly matching the $10.27 billion estimate.
Revenue increased 8.6% to 9% from a year earlier in the fiscal third quarter, which ended October 31.
The AI Driver
CEO Marc Benioff said Salesforce's Agentforce was a major driver of growth. The software helps companies build customized AI agents that automate sales and customer service workflows.
Annualized revenue from Agentforce jumped 330% from a year earlier to over $500 million. Salesforce said it has won over 9,500 paid deals to date, up from over 6,000 as of September.
Annual recurring revenue from Agentforce and Data 360 offerings more than doubled year-over-year to $1.4 billion.
The Raised Outlook
For the fiscal fourth quarter, Salesforce called for $3.02 to $3.04 in adjusted earnings per share on $11.13 billion to $11.23 billion in revenue. Analysts expected $3.04 per share and $10.9 billion in revenue.
Looking ahead, Salesforce now sees full-year adjusted earnings of $11.75 to $11.77 on revenue of $41.45 to $41.55 billion. That's up from its earlier forecast of $11.33 to $11.37 EPS on revenue of $41.1 billion to $41.3 billion.
The Growth Sources
The guidance implies revenue growth of between 11% and 12%. About 3 percentage points come from Informatica, the data management company Salesforce acquired for around $8 billion in November.
During the fiscal third quarter, Salesforce acquired startups Regrello and Waii. Regrello's AI software performs tasks. Waii uses AI to compose code for running queries on data based on a few words of human input.
The company also introduced Agentforce AI software for managing IT service requests and issued a $60 billion fiscal 2030 revenue target.
The Headwinds
The guidance factors in the continued shift to cloud for MuleSoft and Tableau, as well as ongoing weakness from marketing and commerce products, said Robin Washington, Salesforce's chief operating and financial officer.
The Tableau data analytics business had a higher mix of cloud services than predicted during the quarter. Revenue from on-premises Tableau and MuleSoft products are recognized during the quarter, rather than over time.
Free cash flow grew 22% to $2.18 billion, but the total was below the $2.24 billion consensus.
The Stock Struggles
Salesforce's stock has badly underperformed the broader tech sector this year. Concerns about AI potentially replacing some product capabilities have weighed on shares.
The stock is down 29% to 30% in 2025, while the Nasdaq has gained about 21%.
The stronger outlook could help kick-start a rebound after prior guidance disappointed investors.
The Bottom Line
Salesforce posted a strong earnings beat and raised its full-year outlook as Agentforce AI agent software hit $500 million in annualized revenue, up 330% year-over-year, offering hope for a stock rebound after shares fell nearly 30% in 2025 on AI replacement concerns.
