Salesforce

Salesforce has announced its first quarterly dividend program, signaling confidence in its financial stability and future growth. The decision marks a shift from solely focusing on growth through reinvestment and acquisition to rewarding shareholders. Analysts view this as a sign of maturity and financial discipline, reflecting Salesforce’s recurring revenue allowing for both growth funding and shareholder returns. The company faces increasing competition and must balance dividend payouts with maintaining its competitive edge and R&D spending in the long run.

Salesforce (CRM) shares tumbled 8% after a tepid revenue forecast, extending its year-to-date slump to 28%. While Q2 revenue beat expectations with a 10% increase to $10.24 billion, forward guidance fell short. Despite AI investments and SaaS offerings, Salesforce hasn’t capitalized on the AI boom like competitors. Concerns persist about AI disrupting the software sector. Salesforce acknowledges challenges in marketing and commerce product sales, but highlights success with Agentforce. The company maintains full-year revenue outlook but raised earnings guidance, prioritizing profitability.

Salesforce ($CRM) shares declined after-hours despite exceeding Q2 earnings and revenue expectations due to a weaker outlook. While Q2 revenue rose 10% to $10.24 billion and net income increased, forward guidance fell slightly short of estimates. Investors are concerned about slowing revenue growth and the efficacy of Salesforce’s AI investments, especially compared to gains made by other tech companies in the AI sector. The company aims to address these concerns through its Agentforce AI software and the acquisition of Informatica. The market is demanding concrete evidence of accelerated growth and profitable AI integration.

Salesforce CEO Marc Benioff revealed that the company has reduced its customer support staff by approximately 4,000 positions due to the increased efficiencies of AI, specifically its “Agentforce” suite. Benioff stated AI now handles a significant workload. While Salesforce cites increased efficiency, analysts like Ed Zitron suggest AI is being used as a scapegoat for past over-hiring, prioritizing growth over employee well-being. HR consultant Laurie Ruettimann urges workers to acquire new skills in response to AI’s widespread impact.

Salesforce’s stock has significantly underperformed compared to Oracle, reversing their pandemic-era market cap crossover. Investors await Salesforce’s quarterly results amid slowing growth in its core CRM market. AI presents both a challenge and an opportunity, with Salesforce launching Agentforce, an AI-powered customer support system. Analysts are watching improvements in remaining performance obligations and the impact of the Informatica acquisition. Activist investors remain engaged, seeking further improvements in profitability. Oracle, meanwhile, benefits from cloud infrastructure commitments related to AI.