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Salesforce Earnings Rise on AI Push, Cost-Cutting Measures

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Key Takeaways

  • Salesforce posted stronger-than-expected earnings for the third quarter.
  • Revenue grew 11.2% to $8.72 billion, while net income was also up year-over-year at $1.22 billion.
  • The company is going all-in on AI after reducing its workforce and cutting costs earlier this year.
Salesforce ()'s third-quarter earnings climbed faster than analysts predicted as customers shifted toward the company's cloud-based services in anticipation of new AI offerings.

The cloud software firm posted net income of $1.22 billion, for diluted earnings per share of $1.25, up significantly year-over-year. Revenue was boosted by subscription and support services and increased by 11.2% to $8.72 billion.

Salesforce has signaled its intention to go all-in on AI in recent months. The company has repackaged many of its popular products into a single cloud-based platform.

However, a recent report by KeyBanc suggests that it may take more time for Salesforce's AI developments to yield increased sales. For the time being, customers are moving toward the company's cloud-based platform in anticipation of AI-related benefits down the line.

“We're now the third largest enterprise software company by revenue, the number one AI CRM and the number one enterprise apps company," said CEO  Marc Benioff in a prepared statement. "Most importantly, we're bringing CRM, data, AI and trust together in a single, integrated platform, leading our customers into a new era of incredible productivity and growth.” 

The company has also aimed to right-size its workforce this year and to reduce costs in the process. It laid off about 10% of its overall workforce early in 2023 and has since announced plans to hire more than 3,000 in an effort to continue to bolster its AI development process.

More recently, it has also made moves to cut down on sales-related costs by planning to offer many of its most popular tools as self-service purchases available through Amazon Web Services ().

All of this has been a boon for Salesforce shares, which have risen by about 52% in the last year as of Nov. 29. Salesforce stock previously shed more than half of its value between Nov. 2021 and late 2022.

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