"Leading" Salesforce's revenue exceeds expectations, stock price surges, U.S. software stocks "add fuel to the fire"

"Leading" Salesforce's revenue is impressive and is expected to inject new vitality into the already strong U.S. software stocks.

The financial report released on Tuesday shows that Salesforce's third-quarter earnings slightly missed expectations, but revenue exceeded expectations:

Salesforce's adjusted earnings per share for the third quarter were $2.41, below analysts' expectations of $2.44 per share; the company stated that this was mainly affected by strategic investments, resulting in a loss of 18 cents per share;

Third-quarter revenue was $9.44 billion, higher than the FactSet consensus expectation of $9.35 billion;

The adjusted operating profit margin for the third quarter increased by 1.9 percentage points to 33.1%;

Operating cash flow was $1.98 billion, a 29% increase compared to the same period last year.

Salesforce's guidance for the fourth quarter also exceeded expectations, and it slightly raised its revenue guidance for fiscal year 2025:

Salesforce expects revenue for this quarter to be between $9.9 billion and $10.1 billion, higher than the consensus expectation of $10.05 billion;

It raised the full-year operating cash flow growth expectation to 24% to 26%, up from the previous target of 23% to 25%;

It expects revenue for fiscal year 2025 to be between $37.8 billion and $38 billion, up from the previous expectation of $37.7 billion to $38 billion.

Salesforce's stock price rose over 10% in after-hours trading on Tuesday, and the company's stock has increased by 29% year-to-date.

As a barometer of technology spending in the software industry, Salesforce's better-than-expected revenue performance is seen as the latest signal of healthy industry spending, likely to further fuel the booming software stock market.

Overnight, software stocks, especially AI applications, continued to soar, with U.S. mobile technology company AppLovin rising 7.62%, Palantir rising 6.88%, Snap rising 6.19%, Reddit rising 5.78%, Duolingo rising 4.17%, and META rising 3.51%.

The software-themed ETF - iShares Expanded Tech-Software Sector ETF (IGV) rose about 1% in after-hours trading on Tuesday, with an increase of nearly 35% since the beginning of the year.

CFRA Research senior equity analyst Angelo Zino stated that Salesforce's recently released AI agent is "very important" because "it actually gives investors insight into the company's AI strategy" and alleviates some concerns about "the resistance Salesforce faces in AI."Salesforce CEO Marc Benioff stated in the company's financial report: "Agentforce is a complete AI system we built for enterprises, embedded within the Salesforce platform, and is at the core of transformative change. The rise of autonomous AI agents is fundamentally changing the global workforce and reshaping the operations and scale of industries."

Agentforce was officially launched in late October, which means its impact on performance will take one or two quarters to reflect in the company's financial reports. However, Salesforce stated that its current remaining performance obligations (cRPO) for this quarter are $26.4 billion, a 10% increase from the same period last year, exceeding Wall Street's expectations of $26.1 billion