Salesforce Q3 Earnings: ‘AI Craze Has Not Hit But It Will’ -

Salesforce Q3 Earnings: ‘AI Craze Has Not Hit But It Will’

Nov 29, 2023Jeremy ParkinsonFinance0

Salesforce Inc (NYSE: CRM) just reported better-than-expected earnings for its third financial quarter. Its shares are up 7.0% in extended hours.

Salesforce initiates Q4 guidance
Investors are content because the guidance matched Street estimates as well.Salesforce now forecasts its revenue to fall between $9.18 billion and $9.23 billion. Analysts, in comparison, were at $9.21 billion. According to Brent Thill – a Jefferies analyst:

The AI craze has not hit [Salesforce] in a big way but it will. It will have a meaningful impact on their business. I think it has a big role in 2024 – not this year.

We don’t ride waves, we make them. 🤖🌊

At Salesforce, the AI wave isn’t new — we’ve been in the game with #EinsteinAI since 2016. See how we’re using and developing AI on #SFonSF: https://t.co/CL2Rt5SSd3 pic.twitter.com/pFpcZLGeN0

— Salesforce (@salesforce) November 29, 2023
The cloud-based software company also raised its outlook for operating cash flow growth in fiscal 2024 by some 300 basis points to 33% today.

Salesforce Q3 earnings snapshot

Earned $1.22 billion versus the year-ago $210 million

Per-share earnings also climbed from 21 cents to $1.26

Adjusted EPS printed at $2.11 as per the press release

Revenue popped 11% year-on-year to $8.72 billion

Consensus was $2.06 a share on $8.72 billion in revenue

Salesforce came in ahead of expectations for adjusted operating margins as well that stood at 31.2% in the third quarter. On CNBC’s “Closing Bell”, Thill added:

Activity is picking back up in tech spend. We believe Slack can begin its outperformance with the new leadership. [So], there’s a tremendous opportunity in front of Salesforce.

What else was noteworthy?
Other notable figures in the earnings report include a 13% annualised increase in subscription and support revenue to $8.14 billion that helped offset a 4.0% hit to professional services revenue in Q3.Salesforce ended its third quarter with $23.9 billion of remaining performance obligations – up 14%. The Jefferies analyst also said today:

Salesforce trades at a discount on many valuation metrics. That’s why the stock can continue to climb. If AI kicks in, they should be able to charge more and drive even faster backlog growth.

His $275 price target on CRM suggests over 10% upside from here.More By This Author:Cigna May Soon Merge With HumanaFoot Locker Stock Popped 20% On Wednesday Harbour Energy Share Price Has Collapsed: Buy The Dip Or Sell The Rip?