Salesforce pops 9% on third-quarter beat, positive Agentforce commentary

Investing.com -- Salesforce delivered upbeat annual guidance Tuesday following mixed third-quarter results as earnings fell short of Wall Street estimates.

Salesforce Inc (NYSE:CRM ) shares gained around 9% after the Wednesday market opening.

Salesforce reported Q3 adjusted EPS of $2.41 on revenue of $9.44 billion. Analysts polled by Investing.com anticipated EPS of $2.44 on revenue of $9.35B.

Salesforce is heavily investing in its new Agentforce product as part of its strategy to boost growth, aligning with a broader trend among tech firms like Microsoft (NASDAQ:MSFT ) in creating AI agents capable of performing tasks autonomously.

During a post-earnings call, Salesforce executives announced plans to hire 1,400 employees in the fourth quarter to support the growing demand for Agentforce. 

Salesforce said Agentforce closed over 200 deals in just one week.

"Q3 results suggest that the company is leading the way in agentic AI cycle with Agentforce," Bank of America analysts said in a note.

"Commentary on pipeline suggests meaningful customer interest in the weeks following October release. Also, this emerging product cycle is not derailing margin expansion, with a net 10 bps raise for FY25," they added, raising the price target on the stock from $390 to $440.

For Q4, Salesforce guided adjusted EPS in a range of $2.57 to $2.62 on revenue in the range of $9.90B to $10.10B. 

Looking to fiscal 2025  the company sees adjusted EPS in a range of $9.98 to $10.03 and raised the low end of its revenue guidance to $37.8B to $38.0B, compared with a prior estimate of between $37.7B to $38.0B.  

The company also raised its full-year operating margin guidance to 19.8% from 19.7% previously. 

Commenting on the report, Stifel analysts said the 200 Agentforce deals and a significant pipeline serve as strong proof of Salesforce's ability "to capture AI workloads and its positioning relative to enterprise competitors."

"We continue to believe that CRM is the best way to play AI within our coverage universe due to its sizable, multi-cloud customer base and its advantageous position of 'being born on third base' with preexisting ownership of relevant agent workflows and data across the Customer 360," analysts led by J. Parker Lane added.    Yasin Ebrahim contributed to the report. 

 

Source: Investing.com