Salesforce scoffs at SaaSpocalypse fears with a crushing earnings beat

Salesforce Inc., a provider of customer relationship management software, surpassed Wall Street expectations with its strong second-quarter earnings and revenue, causing shares to rise over 13% in late trading. The company reported adjusted earnings of $5.90 per share, significantly exceeding the target of $3.27 per share. Revenue grew 11% year-over-year to $11.35 billion, surpassing the $11.32 billion forecast.

Net income jumped 87% to $3.53 billion, up from $1.89 billion a year earlier. Salesforce also gained $2.6 billion from its investment in AI startup Anthropic PBC, which raised equity funding, lifting its valuation to $965 billion.

Looking ahead, Salesforce predicts earnings of $3.42 to $3.44 per share and revenue between $11.42 billion and $11.5 billion. This optimistic outlook led the company to raise its full-year guidance, targeting fiscal 2027 revenue of $46.1 billion to $46.4 billion, indicating growth around 11%. CEO Marc Benioff dismissed the notion of a looming "SaaSpocalypse," stating that AI is actually bolstering their business instead of harming it.

He cited the growing use of Salesforce and Slack by nine of the top 10 AI companies, with their combined spending on these platforms increasing by 435% year-over-year.

Benioff argued that AI models like Anthropic's Claude require the vast amounts of customer data and business context present on Salesforce's platform. He introduced a new plugin for Claude, "Claudeforce," allowing the model to create emails for salespeople using information stored in Salesforce and Slack. While some confusion remains around Salesforce's Agentforce AI products, the platform's revenue from these products grew 240% year-over-year to $1.5 billion.

Salesforce also secured a $1.6 billion contract with the U.S. Department of Veterans Affairs and announced plans to acquire customer service startup Fin for $3.6 billion. Despite some challenges in selling licenses for integration and analytics software, Salesforce ended the quarter with $33.5 billion in current remaining performance obligations, exceeding analysts' expectations.