TLDR
- Salesforce delivered Q3 earnings of $3.25 per share, crushing the $2.86 estimate, while revenue of $10.26 billion slightly trailed the $10.27 billion forecast.
- The company guided Q4 revenue to $11.13-$11.23 billion, well above the $10.9 billion analyst consensus, including contributions from the Informatica deal.
- Agentforce AI software hit over $500 million in annualized revenue with 330% year-over-year growth and more than 9,500 paid deals secured.
- Adjusted operating margins jumped to 35.5% from 33.1% a year ago, showing profitability gains even as revenue growth remains around 8.6%.
- Stock trades down 29% in 2025 despite after-hours gains, underperforming the broader tech sector as AI disruption concerns persist.
Salesforce posted fiscal third-quarter results that exceeded earnings expectations while coming up just short on revenue. The software giant reported adjusted earnings of $3.25 per share, beating the Street’s $2.86 estimate by a wide margin.
Revenue came in at $10.26 billion, missing the $10.27 billion consensus by a thin margin. The quarter ended October 31 showed 8.6% revenue growth from the prior year.
Net income jumped to $2.09 billion compared to $1.53 billion in the same quarter last year. Per-share earnings rose to $2.19 from $1.58, helped by a $263 million gain from strategic investments.
Shares climbed 2% in extended trading following the report. However, the stock remains down 29% year-to-date through December 3, trailing the Nasdaq’s 21% advance.
Free cash flow grew 22% to $2.18 billion, though it fell short of the $2.24 billion StreetAccount consensus. The company continues generating strong cash despite slower top-line growth.
Q4 Guidance Points to Accelerating Growth
Salesforce projected Q4 revenue between $11.13 billion and $11.23 billion, topping analyst expectations of $10.9 billion. The forecast includes approximately 3 percentage points of growth from Informatica, acquired for roughly $8 billion in November.
The guidance implies 11-12% revenue growth for the current quarter. Adjusted earnings per share should range from $3.02 to $3.04, matching the $3.04 analyst estimate.
CFO Robin Washington said the outlook accounts for ongoing cloud migration of MuleSoft and Tableau products. The guidance also factors in continued softness in marketing and commerce offerings.
Washington explained that Tableau saw a higher cloud services mix than expected during Q3. This timing difference affects revenue recognition since on-premises products book immediately while cloud subscriptions spread over time.
Profitability Gains and AI Traction
The profit story stands out in these results. Adjusted operating margin reached 35.5%, beating the expected 34.1% and last year’s 33.1%.
The company has pivoted to prioritizing profitability over growth. Free cash flow margin hit 33% in fiscal 2025, up from 20% in fiscal 2023.
Salesforce has returned cash through dividends and buybacks, reducing its share count by 4.9%. This shift marks a change from its historical pattern of 20%+ annual growth from 1999 through 2022.
Agentforce provided the quarter’s highlight. The AI platform automating sales and customer service workflows generated over $500 million in annualized revenue, surging 330% year-over-year.
The company closed more than 9,500 paid Agentforce deals, up from over 6,000 in September. Management believes AI products can restore double-digit percentage revenue growth.
Salesforce acquired two AI startups during the quarter. Regrello builds AI software for task automation, while Waii uses AI to generate data query code from text prompts.
The company also introduced Agentforce capabilities for IT service management. It announced a $60 billion fiscal 2030 revenue target, surpassing analyst projections.
Despite the earnings beat and AI momentum, investor concerns about AI disruption to core products have weighed on the stock. The year-to-date decline reflects worries that artificial intelligence could replace some traditional CRM functionality.
The Informatica acquisition closed in November for approximately $8 billion. That deal contributes to the stronger Q4 revenue guidance.
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