Salesforce ( CRM ) reported its second-quarter earnings after the bell on Wednesday, recording gains in revenues, margins and earnings per share.
The software giant has been riding the artificial intelligence hype train, leading to earnings as the company invests in the technology’s “AI wave,” and its stock is up more than 61 percent year-to-date.
Salesforce stock jumped more than 5% in afternoon trading.
Salesforce invested heavily in AI, and investors were soon looking to see results.
Chris Versace, chief investment officer of Thematica Research, told Yahoo Finance Live: “That’s the kind of change that people want. “The key here is to go: Is this the new thing or the real thing? That’s really something investors want to understand. Somewhat…we got a little confused about some of the promises. He delivered relative to his promise, or promise, if you will.
The incomes have fallen
Here are the key numbers Salesforce reported compared to analyst estimates, according to Bloomberg data:
Income: It is estimated at $8.60 billion versus $8.53 billion.
Adjusted EPS: $2.12 versus $1.90 is estimated.
Adjusted Operating Margin: 31.6% is estimated with 28.2%
Free cash flow; $630 million versus an estimate of $445.1 million.
Salesforce’s fiscal second quarter revenue win represents an 11% year-over-year jump.
The company also raised its 2024 revenue outlook to $34.7 billion to $34.8 billion, after previously seeing $34.5 billion to $34.7 billion, beating estimates of $34.66 billion.
“For a stock to perform, you not only have to deliver a strong quarter, but you have to deliver relatively clear guidance,” Versace told Yahoo Finance Live ahead of the results.
Notably, the company’s adjusted revenue of $2.72 billion came in above estimates of $2.42 billion, a 77 percent year-over-year jump.
What we’re looking at: AI
AI has become a buzzword for Salesforce this revenue cycle, and the company certainly seems to be attributing its success to AI.
“Based on our performance and our mid-year outlook, we are raising our guidance for fiscal ’24 revenue, operating margin and operating cash flow growth,” Salesforce CEO Marc Benioff said in a statement. “As the #1 AI CRM, with industry-leading clouds, Einstein, DataCloud, MuleSoft, Slack and Tableau, all integrated into one trusted, unified platform, we’re leading our customers into the new era of AI.”
Expect more AI discussion on the earnings call later today.
What analysts were saying pre-earnings:
“While the macro isn’t all roses and rainbows, CRM is still struggling with various headwinds, overall we saw stronger sales activity than checks this quarter, and particular strength on the front end of the table with a number of large change-set wide deals during the quarter. Also, Benioff and company behind Slack We believe it is making great strides in integrating it into the broader CRM suite.” -Dan Ives, Wedbush
“Our CRM survey and checks indicate a sluggish demand environment. Expectations for F2Q are low due to mixed demand checks and relatively heavy comps. Focus will be on whether CRM can deliver with 28% F24 margin guidance. We await feedback. Restructuring and AI.” – Brent Till, Jeffries
“It was an interesting quarter for CRM in June, with a highly marketed, but relatively painful AI event, organizational changes, and sudden price hike announcements. -Tyler Radke, CT
Ali Garfinkle He is a senior tech reporter at Yahoo Finance. Follow her on Twitter @agarfinks And on LinkedIn.
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