To The Moon

$Salesforce.com(CRM)$ moved higher after Tuesday's after-hours release of its third-quarter FY2025 financial results, with continued growth in revenues and subscriptions adding to investor optimism despite mixed results and guidance.This, combined with rising risk appetite in the broader market, resulted in a record after-hours performance.

Financials and Market Expectations

Key Financial Indicators

• Revenues: $9.44 billion, up 8.3% year-over-year, exceeding the $9.35 billion generally expected by market analysts;

• Adjusted EPS of $2.41, below market expectations of $2.43

  

Earnings Guidance

For ongoing Q4, the company expects revenues to be in the range of $9.9 billion to $10.1 billion, down from the $10.5 billion widely expected in the market.EPS is expected to be in the range of $2.57 to $2.62, down from the $2.65 expected.

Full-year revenue expectations, however, were raised to $37.8 billion to $38 billion from $37.7 billion previously.

Business performance by segment

Salesforce's business is organized into several core segments including cloud services, subscription and support etc. significant growth in demand for cloud services and generative Artificial Intelligence (AI) solutions were the key contributors in Q3, especially the launch of the Agentforce platform, which is expected to further drive revenue growth in the customer service segment.

Investment Highlights

Despite Salesforce beating expectations on overall operating income, adjusted EPS was below market expectations .

1. Cost Controls and Margins.Possibly as a result of weaker than expected margins, Salesforce has also once again taken steps such as layoffs and cuts in operating expenses to improve short-term profitability and also to improve the overall efficiency of the company.Salesforce will need to find a balance between pursuing margin expansion and maintaining revenue growth, especially as the addition of salespeople to support Agentforce couldimpact margins.

2. Growth Potential of Generative AI: As generative AI technology continues to mature, Agentforce's contribution to business growth warrants continued attention.

3. Competitive Market Dynamics: In light of its position in an increasingly competitive market, particularly from other cloud and CRM solution providers such as Microsoft and Oracle, the company emphasized Salesforce's continued investment in innovation and customer success, and mentioned that it will continue to expand its international presence.

Feedback from the market: Why did the "mixed" results go up so much?

The main thing is still the expectation of Agentforce.

Positioned as the "third wave" of AI, Salesforce's Agentforce is designed to improve efficiency across all functional areas of the enterprise through autonomous agents.Agentforce is not just a tool, but a comprehensive platform that helps organizations automate and intelligentize different business scenarios.automation and intelligence.Agentforce is based on Salesforce's existing rich customer data and data cloud, which enables its AI agents to better understand and respond to customer needs.

During the call, the CEO shared some early adopter success stories.Such as

1. Educational publishing giant $John Wiley & Sons(WLY)$ reported a more than 40% self-directed resolution rate for its customer inquiries after using Agentforce.

2. Kaiser Permanente, the largest healthcare provider in the U.S., also says it has a resolution rate of more than 90% for patient inquiries handled with Agentforce.

If Agentforce has significant results in improving productivity and customer service quality, then the company becomes more optimistic about improving its guidance in the coming year.