- Enterprise software giant sees stock jump to all-time high
- AI-powered AgentForce shows early promise
- Strong Q4 and 2025 in store, believe analysts
Outside of a handful of obvious candidates - Microsoft (MSFT:NASDAQ), for example – AI hasn’t yet really woken the growth beast for applications firms, but that could be changing at Salesforce (CRM:NYSE).
The customer relationship management gorilla talked up the impact of its new autonomous AI agent for business customers AgentForce as it unveiled third-quarter results which topped estimates and lifted guidance for the fourth quarter.
Salesforce reported Q3 adjusted EPS (earnings per share) of $2.41 on revenue of $9.44 billion, versus $2.44 EPS on $9.35 billion revenue forecast.
‘It’s quite a turn in fortune at Salesforce, showing much stronger deal momentum than in previous quarters,’ said Megabuyte analyst Sumitha Pillay.
Salesforce shares surged 13.5% overnight to an all-time high of $376.67.
IMPACT OF AGENTFORCE
AgentForce only launched in October, its automation platform featuring sales and service AI agents that automatically resolve customer enquiries, but it featured in 200 contracts secured during the quarter, taking AI-powered deals to more than 2,000 in the period.
That’s the sort of rapid payback optimists might have hoped for, but few would have anticipated, putting the company in a much stronger position for the beginning of 2025 than it was at the beginning of 2024.
BALANCING INVESTMENT AND RETURNS
As we wrote in our recent Shares preview article (read here), Salesforce spent 2024 (and 2023) trying to rebuild profit margins after activist investor StarboardValue started kicking up a stink. Last quarter, the company posted an operating margin of 33.1% while operating cash inflow grew 29% to $2 billion, funding $1.2 billion in share repurchases and $0.4 billion in dividends.
StarboardValue may feel much of its work is done, but there’s still plenty for Salesforce to grapple with, particularly balancing hefty AgentForce investment.
A good end to the year beckons for Salesforce (which runs to end January 2025), ‘and maybe for enterprise software suppliers more broadly’, believes Megabuyte’s Pillay. But investors should remain wary of companies promising too much too soon, we know how that usually goes, it is still early days for AI.
