Salesforce stock popped on Wednesday after the enterprise software maker reported third-quarter earnings that missed estimates amid a one-time investment loss, while revenue and a key metric came in above expectations. Salesforce appears to be gaining traction with new artificial intelligence products, analysts said.
The October-quarter Salesforce earnings report was released after the market close on Tuesday. Salesforce earnings were $2.41 per share on an adjusted basis, including a 18-cent loss on investments.
CRM Stock: Margins Beat
Operating margin came in at 33.1%, topping estimates of 32.2%. Net income rose 25% to $1.5 billion, topping views.
"Management commentary suggests meaningful pipeline builds for Agentforce for both service and sales," said Bank of America analyst Brad Sills in a report.
"The release of Agentforce for Sales in 2025 is likely to provide a catalyst for deal closure in the coming quarters. Margin results suggest that Salesforce continues to operate under a balanced growth philosophy. Salesforce is deploying Agentforce internally to drive efficiency in service case deflection."
The San Francisco-based enterprise software firm said revenue climbed 8% to $9.44 billion.
For Q3, analysts projected adjusted EPS of $2.44 on revenue of $9.3 billion.
"Non-GAAP EPS included an 18 cent charge resulting from mark to market fluctuation in strategic investments. Excluding the charge, non-GAAP EPS was solidly above our estimate and Q3 EPS guidance," said Truist analyst Terry Tillman in a report.
Salesforce Stock: Key Metric Beats
Moreover, Salesforce recently pivoted to autonomous AI agents. As a result, expectations for monetizing artificial intelligence products have increased. Salesforce is incorporating AI technology into its broad array of customer management, customer service and marketing automation products.
"Agentforce commentary was center stage in Q3," added Tillman. "The company signed 200 Agentforce deals in the quarter, which we believe is notable given that Agentforce was released just one week before quarter-end. We believe the number of customers signed was likely quadruple initial expectations in the quarter."
For Salesforce stock, one key financial metric is current remaining performance obligations. CRPO bookings are an aggregate of deferred revenue and order backlog.
In Q3, CRPO rose 10% to $26.4 billion vs. estimates of $26.1 billion.
"We will look to see if Agentforce will be a meaningful contributor to CRPO in the coming quarters, though management has indicated that Agentforce will not be a meaningful contributor to Q4 CRPO growth," said Jefferies analyst Brent Thill in a report.
In the January quarter, Salesforce forecast revenue of $10 billion, in line with consensus estimates.
On the stock market today, Salesforce stock popped 9.7% to 363.71 in morning trading.
Salesforce Stock Technical Ratings
Heading into the Salesforce earnings release, CRM stock was up 25% this year.
Salesforce is among AI stocks to watch.
Also, Salesforce offers access to business software applications based on a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. In addition, the company has expanded into marketing, customer services and e-commerce.
Meanwhile, CRM stock owns a Relative Strength Rating of 96 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
