Salesforce on Wednesday evening delivered better-than-expected quarterly results, but it wasn’t enough to convince the market that AI will help — not hurt — its enterprise software business. Revenue in the quarter ended April 30 rose 13.3% year over year to $11.13 billion, topping expectations of $11.05 billion, according to LSEG. Adjusted earnings per share totaled $3.87, beating the consensus estimate by 76 cents, LSEG data showed. On a year-over-year basis, adjusted EPS increased 50%. CRM 1Y mountain Salesforce 1-year return Shares of Salesforce dipped 1% in the after-hours session to about $176. Shares are down about 33% year to date and about $12 above its 52-week low close of $164.96. Bottom line Salesforce is doing everything it can to signal to the market that this year’s sell-off is unwarranted and shares trading at less than 14 times earnings don’t appropriately reflect the long-term value of the business. But investors remain hesitant to step in until the company delivers more meaningful revenue acceleration alongside expanding margins. Offering some hope, management reiterated its expectations that revenue growth will reaccelerate in the second half of this fiscal year. The better-than-expected quarterly result, along with the promise of building momentum in the near future, might explain why the after-hours move isn’t as wicked as that of some other software stocks in this earnings cycle. The company’s important new AI-powered platform, Agentforce, closed 98 deals in the quarter, a record, the company said. Agentforce Annual Recurring Revenue (ARR) is now at $1.2 billion, up 205% year over year, from $800 million in the fourth quarter. On the call, CEO Marc Benioff listed LVMH, Chobani, and the U.S. Air Force as organizations that have signed up for Agentforce. Combined with Data 360, the company’s cloud unit, and ARR is $3.4 billion, up 200% year over year. While the Agentforce platform is showing promising momentum, the legacy side of Salesforce has been sluggish, and the miss on the remaining performance obligation (RPO) and current remaining performance obligation (cRPO) doesn’t help the narrative. The cRPO, which measures contracted revenue expected to be realized in the next 12 months, increased 13% year over year in constant currency. Meanwhile, RPO was up 11% year over year. The margin performance was better than expected in the quarter. Both GAAP and Non-GAAP margins improved year over year and outperformed Street expectations, resulting in a big earnings beat. However, the market may not give the company full credit for margin performance, since the full-year GAAP outlook was trimmed while the non-GAAP outlook was left unchanged. With the stock languishing below $200 amid concerns that AI could replace traditional software as companies build their own CRM tools, management aggressively ramped up share repurchases, even issuing debt to fund buybacks. In March, the company launched a $25 billion accelerated share…
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