Salesforce reported strong financial results in its fiscal second quarter ended July 31, driving a significant jump in its stock price. The company’s revenue climbed 11% year-over-year, while net income surged 87% compared to the prior-year period. On a per-share basis, the company earned $4.29 in net income, up from $1.96 a year earlier.
A substantial portion of the earnings gain came from strategic investment holdings. Salesforce recorded a $2.6 billion gain on investments linked to artificial intelligence startup Anthropic, in which the company holds a stake. The valuation of Anthropic reached $965 billion following a funding round completed earlier. Free cash flow performance also stood out, climbing 81% to $1.10 billion, exceeding analyst consensus expectations of $643.2 million.
Looking ahead, Salesforce issued guidance that again topped analyst expectations. For the third quarter, the company projected adjusted earnings between $3.42 and $3.44 per share on revenue between $11.42 billion and $11.50 billion, compared to consensus estimates of $3.38 and $11.41 billion respectively. Full-year revenue guidance was raised to $46.1 billion to $46.4 billion, representing approximately 11% growth at the midpoint.
During the period, Salesforce announced significant business developments, including a $1.6 billion contract with the U.S. Department of Veterans Affairs and plans to acquire customer service startup Fin for $3.6 billion. The company’s artificial intelligence product line showed robust expansion, with annualized revenue from Agentforce AI products exceeding $1.5 billion, up 240% year-over-year. However, the vendor noted some challenges in selling integration and analytics software licenses.
Despite the strong quarterly performance, Salesforce shares remained down 22% year-to-date as of Wednesday’s close, significantly trailing the S&P 500’s 12% gain. Company leadership addressed concerns about generative artificial intelligence disrupting traditional software businesses, with co-founder Marc Benioff stating that predictions of software industry decline have not materialized.
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