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Investing.com -- Salesforce on Wednesday reported quarterly profit, but shares slumped more than 7% on soft guidance for the current quarter.
The cloud software company posted second-quarter earnings of $2.91 per share, beating analysts’ average estimate of $2.78.
Revenue rose to $10.2 billion from $8.6 billion a year earlier, compared with expectations of $10.14 billion.
Data Cloud and AI annual recurring revenue (ARR) rose by about $200 million quarter-on-quarter, up 120% year-on-year, reaching $1.2 billion across 6,000 paid deals. The quarter included 60 deals worth more than $1 million that combined both Data Cloud and AI.
Looking ahead, Salesforce projected third-quarter revenue of $10.24 billion to $10.29 billion, with the midpoint falling just below the $10.29 billion average analyst estimate, according to LSEG data.
Adjusted earnings per share are expected at $2.84 to $2.86, with the midpoint matching market forecasts.
For the full fiscal 2026, Salesforce forecast earnings of $11.33 to $11.37 per share, which was above consensus estimates of $11.29.
It raised the low-end of revenue guidance to $41.1 billion to $41.3 billion, in line with the $41.2 billion expected by analysts.
Salesforce forecasts full-year free cash flow growth of 12%-13%, well above the consensus of 9.4%.
Stifel analysts said Salesforce’s revenue guidance was roughly in line with expectations, with only the lower end of the full-year range raised. That weighed on the stock in extended trading, even as the outlook for fiscal 2026 free cash flow growth improved.
The team believes that “Dreamforce will play more of a role in shaping the narrative around Salesforce than F2Q results,” a view they maintain following the earnings release.
Separately, KeyBanc analysts said Salesforce’s quarterly results were better than expected but not "earth-shattering", with full-year guidance only inching higher.
While performance at scale is impressive, it is “not enough to reshape the narrative” amid broader investor concerns over SaaS, analysts said. KeyBanc reiterated its Overweight rating but cut its price target to $400 from $440 to reflect market conditions.
Chief Executive Marc Benioff said the company closed out the first half of the year with strong performance across revenue, margins and cash flow.
President and Chief Operating Officer Robin Washington said the company had achieved its tenth consecutive quarter of operating margin expansion, adding that it exceeded all financial targets in the second quarter.
(Pratyush Thakur contributed to this report.)