Salesforce (CRM) Stock: Earnings Smash Estimates as AI Revenue Surges Past $500 Million

TLDR

• Salesforce beat Q3 earnings with $3.25 per share versus $2.86 expected, though revenue of $10.26 billion narrowly missed the $10.27 billion consensus.
• Q4 revenue guidance of $11.13-$11.23 billion exceeded analyst expectations of $10.9 billion, signaling accelerating growth ahead.
• Agentforce AI platform generated over $500 million in annualized revenue, jumping 330% year-over-year with 9,500+ paid customer deals.
• Operating margins expanded to 35.5% from 33.1% last year, demonstrating improved profitability despite revenue growth of just 8.6%.
• Shares rose 2% after-hours but remain down 29% year-to-date, underperforming the Nasdaq’s 21% gain.

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Salesforce reported fiscal third-quarter results that beat earnings expectations while revenue came in just below forecasts. The company posted adjusted earnings of $3.25 per share, crushing Wall Street’s estimate of $2.86.

Revenue reached $10.26 billion, slightly missing the $10.27 billion consensus. Despite the small revenue shortfall, the stock jumped 2% in after-hours trading on strong forward guidance.

Net income climbed to $2.09 billion from $1.53 billion in the year-ago quarter. Earnings per share rose to $2.19 from $1.58, boosted by a $263 million gain from strategic investments.

Salesforce, Inc., CRM

The quarter ended October 31 showed revenue growth of 8.6% year-over-year. Free cash flow increased 22% to $2.18 billion, though it trailed StreetAccount’s $2.24 billion estimate.

Profit Margins Expand as Business Model Shifts

The real story lies in profitability gains. Salesforce’s adjusted operating profit margin hit 35.5%, well above the expected 34.1% and last year’s 33.1%.

CFO Robin Washington attributed part of the revenue timing to product mix shifts. Tableau saw higher cloud adoption than anticipated during the quarter.

On-premises revenue from Tableau and MuleSoft gets recognized immediately, while cloud services spread over time. This shift impacts quarterly comparisons but reflects long-term business model improvements.

The company has transformed from a high-growth story to a cash-generating machine. Free cash flow margin reached 33% in fiscal 2025, up from 20% in fiscal 2023.

Salesforce has deployed this cash through dividends and buybacks, shrinking the share count by 4.9%. Revenue growth has slowed from the 20%+ rates it maintained from 1999 to 2022.

Strong Q4 Outlook and AI Momentum

Salesforce issued Q4 revenue guidance of $11.13-$11.23 billion, topping analyst estimates of $10.9 billion. The forecast includes roughly 3 percentage points from the Informatica acquisition, which closed in November for about $8 billion.

Adjusted earnings per share should land between $3.02 and $3.04 for the current quarter. The guidance implies revenue growth of 11-12%, marking a potential acceleration from recent trends.

Washington noted the outlook factors in continued cloud migration for MuleSoft and Tableau, plus persistent weakness in marketing and commerce products.

Agentforce delivered the quarter’s standout performance. The AI platform for automating sales and customer service workflows generated over $500 million in annualized revenue.

That represents 330% growth from a year earlier. Salesforce has secured more than 9,500 paid Agentforce deals, up from over 6,000 in September.

The company acquired AI startups Regrello and Waii during the quarter. It also launched Agentforce tools for IT service management and announced a $60 billion revenue target for fiscal 2030.

Despite the earnings beat and AI traction, shares remain down 29% in 2025 through December 3. The Nasdaq has gained 21% over the same period as investors weigh concerns about AI potentially disrupting Salesforce’s core offerings.

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