Salesforce.com (CRM.US) is set to report its third-quarter earnings after the U.S. market closes on December 3 (early morning December 4, Beijing time). Wall Street analysts project the cloud services giant to post earnings per share (EPS) of $2.86, up 18.7% year-over-year, with revenue expected at $10.27 billion, an 8.8% increase.
In the previous quarter, Salesforce.com surpassed both revenue and profit expectations. During its Q2 earnings call, the company forecast Q3 revenue between $10.24 billion and $10.29 billion. Since then, Salesforce.com has been active in AI and M&A, forming partnerships with Google (GOOGL.US), OpenAI, and Anthropic, while acquiring Informatica, Spindle AI, and Regrello. It also updated its AI platform, Agentforce, and raised growth targets. However, mixed guidance has left some analysts cautious.
One analyst noted that Salesforce.com is well-positioned to benefit from AI-driven growth, stating, "Current remaining performance obligations (a key metric for future revenue) should meet or exceed management's guidance of slightly above 10% year-over-year growth, signaling potential revenue acceleration." The analyst added that strategic partnerships and acquisitions could further boost performance.
Others remain skeptical about its AI progress. Jay Woods, Chief Market Strategist at Freedom Capital Markets, commented, "Salesforce.com has become emblematic of the broader slowdown in AI/tech spending. As AI-related stocks lose momentum, the company's shares have been among the first to reflect this." Woods acknowledged the hype around Agentforce but emphasized that Salesforce.com is now being judged on its AI monetization capabilities. "The AI narrative is under intense scrutiny. If growth slows or guidance weakens, investors may reassess its trajectory."
Historically, Salesforce.com has beaten EPS estimates in 88% of quarters over the past two years and revenue estimates in 75% of cases. Over the last three months, analysts have raised EPS estimates 22 times and lowered them 14 times, while revenue estimates saw 11 upward and 21 downward revisions.
The stock has declined nearly 9% over the past month and about 30% year-to-date.