Salesforce Q3 earnings: ‘AI craze has not hit but it will’

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 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:

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:

His $275 price target on $CRM suggests over 10% upside from here.