Salesforce Keeps AI Under Control

Salesforce (NYSE: CRM) recently announced its first quarter results that continued to surpass market expectations. Salesforce is seeing the impact of economic pressures as well. Its clients are looking carefully at deals, which is impacting its sales cycle. Despite that, Salesforce remains optimistic about its outlook.

Salesforce’s Financials

Salesforce’s revenues for the first quarter grew 13% to $8.25 billion, above analyst estimates of $8.17 billion. Adjusted earnings of $1.69 per share was also better than the market’s forecast of $1.61 per share.

By segment, Subscription and support revenues grew 11.5% to $7.64 billion, Professional services and other revenues grew 9% to $0.6 billion.

Salesforce provided a strong outlook. For the second quarter, Salesforce forecast revenues of $8.51-$8.53 billion and an EPS of $1.89-$1.90. The market was looking for revenue of $8.49 billion and an EPS of $1.70. Salesforce expects to end the current fiscal year with revenues of $34.5-$34.7 billion and an EPS of $7.41-$7.43. The market was looking for revenues of $34.64 billion and an EPS of $7.42.

Salesforce’s AI Focus

Recently, Salesforce announced the expansion of its partnership with Google Cloud, helping businesses utilize data and AI to deliver more personalized customer experiences, in addition to better understanding customer behavior and running more effective campaigns at lower costs across marketing, sales, service, and commerce.

During the quarter, Salesforce had announced the launch of its generative AI tool called Einstein GPT. The AI-based tool creates personalized content across every Salesforce cloud, making employees more productive and customer experience better. But AI tools are becoming infamous for spreading misinformation.

To address the issue, Salesforce is rolling out in Service Cloud a chat box with technology that can write an answer to a question based on information already stored in Salesforce. Agents can edit the automatically generated response or hit the send button.

Besides the involvement of the human agent, the company has also narrowed the field of data that can influence the answer.

Salesforce’s stock is trading at $209.53 with a market capitalization of $204.1 billion. It touched a 52-week high of $225.00 in May and a 52-week low of $126.34 in December last year.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

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