Salesforce Stock Falls After Conservative Q3 Guidance

2025-09-05 companies

San Francisco, Friday, 5 September 2025.
Salesforce’s stock declined over 5% following a Q3 earnings report revealing conservative revenue guidance, despite beating earnings expectations and strong AI integration advancements.

Earnings Report and Market Reaction

Salesforce (NYSE: CRM) reported its second quarter fiscal 2026 earnings on September 3, 2025, showcasing a strong performance with earnings per share of $2.91, surpassing analyst expectations of $2.78. The company also achieved a revenue of $10.2 billion, marking a 10% year-over-year increase [2][5]. Despite these positive results, Salesforce’s stock fell over 5% in extended trading due to its conservative guidance for the third quarter, with revenue projections between $10.24 billion and $10.29 billion, which met the lower end of analyst estimates [5][6].

Conservative Guidance and Investor Concerns

The cautious revenue guidance issued by Salesforce has raised concerns among investors about the company’s future growth trajectory. Analysts have noted a deceleration in Salesforce’s core cloud businesses, which has contributed to the stock’s decline. Despite these concerns, Salesforce CEO Marc Benioff defended the company’s guidance, describing it as ‘appropriately conservative’ during an interview with CNBC [6]. The ongoing integration of AI into Salesforce’s operations, particularly through its AI agent products, is seen as a key strategy to enhance business transformation for its clients [6].

Strategic Shifts and Workforce Changes

Amidst its earnings announcement, Salesforce has also been making significant shifts in its workforce and strategic direction. The company laid off 4,000 employees in its customer support division, a move justified by its increased reliance on AI technologies to handle customer interactions. This shift is part of Salesforce’s broader strategy to double down on AI, a move that CEO Marc Benioff believes will be crucial for the company’s future [4][6]. Despite the layoffs, Salesforce reported a 120% year-over-year increase in its AI and Data Cloud annual recurring revenue, highlighting the growing impact of these technologies on its business model [2].

Future Outlook and Market Position

Salesforce’s future outlook remains a topic of interest as the company continues to navigate economic uncertainties and evolving technological landscapes. The company has increased its share repurchase program by $20 billion, bringing the total authorization to $50 billion, signaling confidence in its long-term value [2][5]. As Salesforce prepares for its annual Dreamforce conference in October 2025, where further AI advancements are expected to be announced, the company’s strategic focus on AI integration and customer transformation will be critical to enhancing its competitive edge in the market [5][6].

Sources

stock decline Salesforce earnings