Salesforce Reports Strong Q3 Earnings but Relies on Investment Gains
Salesforce (CRM) reported better-than-expected earnings for the quarter, with revenue rising to $11.3 billion and free cash flow surging by 81%. Adjusted earnings per share came in at $5.90, well above analyst expectations of $3.27. However, a significant portion—$2.6 billion—of this profit gain stemmed from strategic investments, including its stake in Anthropic, rather than core business performance. The company also announced Claudeforce, an AI partnership with Anthropic that integrates Claude's capabilities into Salesforce software. While the move aims to counter concerns about AI disrupting traditional SaaS models like CRM, Claudeforce is still limited to pilot customers and will only launch in beta later this year. Despite these developments, core business growth appears modest. Salesforce’s stock surged over 20% following the report as investors celebrated improved guidance and optimism around its AI strategy. However, analysts caution that much of the earnings beat was driven by investment gains rather than organic performance from selling AI-powered solutions to customers.
Tickers: $CRM
Topics: AI integration free cash flow revenue growth SaaSpocalypse Salesforce