Salesforce shares surged 12 percent in extended trading Wednesday after the company reported fiscal second-quarter earnings and guidance that crushed Wall Street expectations.
The stock closed the regular session at $205.62 before jumping to $231.70 after-hours. Here's why the move is justified—and likely incomplete.
Salesforce reported net income of $3.53 billion, or $4.29 per share, up 87 percent year-over-year from $1.89 billion, or $1.96 per share, in the prior-year quarter. Revenue grew 11 percent to an unstated total. Free cash flow spiked 81 percent to $1.10 billion, crushing StreetAccount's consensus estimate of $643.2 million by 71 percent.
The headline driver is the $2.6 billion gain on the Anthropic investment. Anthropic's May funding round valued the AI startup at $965 billion. But here's the key insight: this one-time gain masks the operational performance. Strip out the Anthropic windfall and Salesforce still delivered a beat on cash flow and guidance—precisely what buy-side investors care about.
The company raised full-year revenue guidance to $46.1 billion to $46.4 billion, implying 11 percent midpoint growth and exceeding LSEG consensus of $46.11 billion.
Agentforce—Salesforce's AI product line—posted $1.5 billion in annualized revenue, a 240 percent year-over-year jump. That run-rate is material. For context: most new software categories require five years to hit $1 billion ARR. Agentforce did it in roughly two. Even accounting for headwinds Chief Operating and Financial Officer Robin Washington flagged in integration and analytics licensing, the trajectory is unmistakable.
Current remaining performance obligation hit $33.5 billion, beating StreetAccount's forecast of $33.22 billion. That's the revenue Salesforce can touch within 12 months—a key bellwether of pipeline durability.
During the quarter, Salesforce landed a $1.6 billion contract with the U.S. Department of Veterans Affairs. The company also announced plans to acquire customer service startup Fin for $3.6 billion, closing in Q3. The timing matters: Fin's technology plugs a gap in Salesforce's service cloud and accelerates its move down-market into customer support automation.
On Wednesday, Salesforce unveiled a new Claude plugin for Anthropic's AI, allowing salespeople to compose emails, access information, and update records via chat. It's a small product move but underscores the partnership depth—and Salesforce's ability to ship integrated AI features faster than competitors.
CEO Marc Benioff addressed AI skepticism head-on during the earnings call. "This is not the SaaSpocalypse," he said, pushing back on predictions that generative AI would disintermediate traditional software. "We've been hearing about this for the last two quarters, these dire predictions about the end of software and how the models eat everything, but none of them have come true for us."
That matters for valuation. Salesforce trades at 28x forward earnings—a 20 percent discount to its five-year average despite crushing execution. With Agentforce scaling at 240 percent and the Anthropic stake now a $2.6 billion upside trigger, analysts should be raising targets.
