Salesforce earnings has made it raise its annual revenue forecast on Wednesday and projected quarterly sales above estimates as it benefits from a recent price hike and resilient demand for its cloud and business software offerings in an uncertain economy.
Salesforce shares jumped 6% in extended trading on Wednesday. This was as Salesforce Q2 earnings results and guidance was announced and it surpassed Wall Street’s expectations.
Salesforce earnings
An uncertain economy continues to pressure Salesforce’s growth, finance chief Amy Weaver said on a conference call with analysts. The company encountered softness in the U.S. during the quarter, and in several industries like technology, retail and consumer goods, she said.
“We are still seeing elongated sales cycles, additional deal approval layers, and deal compression in our subscription and support and professional-services businesses,” Weaver said. Clients have been more careful since July 2022, she said.
Optimism as Salesforce earnings increases
The results fan optimism about a recovery in technology spending in the second half of 2023 after earnings from major cloud players including Amazon.com (AMZN.O) and Alphabet-owned Google suggested that the slowdown was nearing an end.
Salesforce Q2 earnings adjusted called for $2.05 to $2.06 per share on $8.7 billion to $8.72 billion in revenue. Salesforce Q2 earnings per share forecast was also above estimates.
The company delivered growth in all five of its product categories, and CEO Marc Benioff sees expansion ahead through artificial intelligence.
“We’re leading our customers into the new AI era,” he was quoted as saying in a statement.
Confident Salesforce forecast
A full year Salesforce forecast was unveiled and it now sees $8.04 to $8.06 in adjusted earnings per share on $34.7 billion to $34.8 billion in revenue, implying 11% revenue growth. Analysts had been looking for $7.45 per share in profit and $34.65 billion in revenue. Three months ago, the company issued guidance of $7.41 to $7.43 in adjusted earnings per share and $34.5 billion to $34.7 billion in revenue, which would have meant 10% revenue growth.
During the Salesforce Q2 earnings declaration, it said AI enhancements to its Sales Cloud and Service Cloud applications were available for $50 per person per month on top of existing costs. And it announced an AI Cloud that will encompass tools for marketing and data analysis.
“We’re leading our customers into the new AI era,” CEO Marc Benioff said in a statement.
Neither AI nor a recent price hike will have a major impact on the full-year guidance Salesforce forecast as per Weaver.
Salesforce shares ascend
Salesforce shares have climbed 62% so far this year, while the S&P 500 index has gained about 18% over the same stretch.
Analysts are also optimistic about the boost from the company’s first price hike in seven years, which raised prices of its major offerings by an average of 9% from August.
