Salesforce shares jumped 12 percent in extended trading Wednesday after the company reported second-quarter results that beat Wall Street expectations on both earnings and revenue.
The company posted adjusted earnings per share of $5.90 against an LSEG consensus estimate of $3.27. Revenue came in at $11.35 billion, slightly above the $11.32 billion analysts had projected. Net income of $3.53 billion, or $4.29 a share, was up 87 percent from $1.89 billion, or $1.96 a share, in the same period a year ago.
A large portion of that profit surge came from outside Salesforce's core software business. The company reported a $2.6 billion gain on strategic investments tied to its stake in AI startup Anthropic, according to CNBC. In May, Anthropic had raised equity funding at a valuation of $965 billion. Alphabet and Microsoft have also recently reported gains from their own Anthropic investments.
Free cash flow rose 81 percent to $1.10 billion, well above the StreetAccount consensus of $643.2 million. Current remaining performance obligation, a measure of near-term expected revenue, reached $33.5 billion, beating the $33.22 billion analysts had forecast.
Salesforce's AI product line showed sharp growth. Annualized revenue from Agentforce AI products topped $1.5 billion, up 240 percent year over year. That followed a growth rate of over 200 percent the previous quarter. The company also noted "headwinds and volatility" in sales of licenses for integration and analytics software, Robin Washington, Salesforce's chief operating and financial officer, said on the earnings call.
Also Wednesday, Salesforce announced a plugin for Anthropic's Claude model that can compose emails for salespeople, pull up relevant information, and update records through a chat interface. The company deepened other business relationships during the quarter as well, announcing a $1.6 billion contract with the U.S. Department of Veterans Affairs and plans to acquire customer service startup Fin for $3.6 billion. The Fin acquisition is expected to close in the fiscal third quarter, ahead of the original schedule.
Co-founder and CEO Marc Benioff pushed back on concerns that generative AI poses a threat to established software companies like Salesforce. "This is not the SaaSpocalypse," Benioff said on the earnings call. "We've been hearing about this for last two quarters, these dire predictions about the end o" — his remarks were cut off in the published transcript.
For the fiscal third quarter, Salesforce projected adjusted earnings per share of $3.42 to $3.44, and revenue between $11.42 billion and $11.50 billion. Analysts had expected $3.38 in adjusted earnings per share on $11.41 billion in revenue. For the full fiscal year, Salesforce raised its revenue outlook to $46.1 billion to $46.4 billion, implying 11 percent growth at the midpoint, up from a prior range of $45.9 billion to $46.2 billion.
Before the after-hours surge, Salesforce shares had been down 22 percent year to date, even as the S&P 500 gained 12 percent over the same period. The results come as investors continue to debate how much of a long-term threat AI poses to traditional software subscription businesses.
