Salesforce beat Wall Street's second-quarter profit estimate and its shares jumped in after-hours trading, helped by a paper gain on its Anthropic investment. The company also deepened its Anthropic partnership through a new integration called Claudeforce and raised its full-year revenue guidance.
Salesforce shares popped 13% higher in extended trading on Wednesday after the software company beat Wall Street's second-quarter profit estimate. It marked the biggest post-earnings jump for the stock since August 2024, when shares rose 26%, according to Dow Jones Market Data. The company posted $11.35 billion in revenue for the quarter, an 11% increase from a year earlier that topped Wall Street's estimate of $11.33 billion.
Anthropic gain drives the EPS beat
Adjusted earnings per share came in at $5.90, well above the $3.27 consensus estimate, boosted largely by a paper gain on Salesforce's investment in Anthropic. Stripping out that gain, adjusted earnings would have been $3.37 a share. Salesforce has held a stake in Anthropic since the AI company's Series C funding round in 2023.
According to Salesforce CEO Marc Benioff: "AI is delivering value across every layer of our platform." The company's Anthropic partnership also deepened on Wednesday with a new integration called Claudeforce that embeds Anthropic's Claude directly into Salesforce's platform.
AI products and cash flow both accelerate
Annual recurring revenue from Salesforce's Agentforce and Data 360 products grew more than 210% year-over-year to just shy of $3.9 billion. The company also generated $1.1 billion in free cash flow, up 81% from a year earlier, according to Investing.com. Current remaining performance obligations, a measure of contracted future revenue, reached $33.5 billion, up 14% from a year earlier and above Wall Street's $33.4 billion estimate, according to an Evercore ISI note cited by MarketWatch.
Guidance rises on the stronger pipeline
For the fiscal third quarter, Salesforce guided for revenue between $11.42 billion and $11.5 billion, above the $11.415 billion analysts expected. The company also raised its full-year revenue guidance to a range of $46.1 billion to $46.4 billion, up from Wall Street's $46.112 billion forecast. Separately, Salesforce is running a $25 billion accelerated share buyback program and expects to repurchase at least 14% of shares outstanding at an average price of $176 each, according to Investing.com.
Salesforce shares are still down 23% so far this year, though they have risen 33% from their late-July low as investors reassess the AI bear case that had weighed on software stocks.
Sources: MarketWatch, Investing.com
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