(Bloomberg) – Salesforce Inc. reported quarterly revenue that beat analysts’ expectations, raising investor expectations that the company’s much-touted artificial intelligence product strategy will boost results. Shares rose about 10% in extended trading.
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The company said in a statement Tuesday that revenue for the period ended Oct. 31 rose 8.3% to $9.44 billion. Analysts’ average estimate was $9.35 billion, according to data compiled by Bloomberg. Adjusted operating margin, a measure of profitability, was 33.1% versus the average estimate of 32.2%.
Salesforce, a top-selling customer relationship management software, shifted its AI strategy this year to focus on a tool called Agent, which is designed to complete tasks like customer support and sales development without human supervision. The San Francisco-based company launched a product called Agentforce in October, with an initial price tag of about $2 per agent conversation.
CEO Marc Benioff said last month that he was so confident in Agentforce that Salesforce would add 1,000 employees to sell Agentforce. The planned hiring surge follows nearly two years of cost-cutting efforts by the company, including layoffs, as Mr. Benioff sought to rein in expenses and improve profitability under pressure from activist investors. It is.
Mike Spencer, the company’s executive vice president, said in an interview after the earnings release that the company had signed “a significant number” of contracts related to Agentforce. Still, he added that these transactions are largely early-stage developments and will take time to be reflected in the company’s results.
The stock has been volatile this year, hitting a low of $218.01 on May 30 after the company projected its lowest ever sales growth. Since then, the stock has rebounded more than 50% on optimism about Salesforce’s new AI strategy. “Agentforce has taken over the CRM story,” Citigroup analyst Tyler Radke said ahead of the results.
“I think everyone knows about this quarter, these numbers aren’t what we’re really excited about,” Benioff said on a post-earnings conference call. “The quarterly numbers are great, but the real excitement is coming from the technology.”
The stock closed at $331.43 in New York, before hitting a high of $367 in extended trading. Bloomberg Intelligence analyst Anurag Rana said in an interview on Bloomberg TV that the better-than-expected profit margin was the highlight of the performance.
