By Zaheer Kachwala
(Reuters) -Salesforce raised its annual profit forecast and its third-quarter results beat Wall Street targets on Wednesday, benefiting from a strong demand for its cloud and business products in an uncertain economy.
Its shares rose 7% after the bell as it also forecast fourth-quarter revenue and profit above expectations, raising optimism that tech spending is picking up pace in the second half as inflation cools.
The company now expects full-year adjusted profit between $8.18 and $8.19 per share compared with $8.04 to $8.06 it had forecast earlier.
This also indicates that the profitability push is paying off for the company that has primarily gained market share through acquisitions and by expanding its product portfolio.
Salesforce (NYSE:CRM) had said in September it would hire more than 3,000 people across various departments after cutting jobs by 10% in January to drive up margins.
"Salesforce's terrific earnings are another signal that their core business is trending upward, as their increasingly profitable growth and forecasted AI tailwinds continue to fuel a tremendous YTD stock resurgence," said Third Bridge analyst Charlie Miner.
The company launched its generative AI tool, Einstein Copilot, which can summarize video calls and generate emails for various purposes across its suite of apps, including Slack and Tableau, in September.
Salesforce expects fourth-quarter adjusted profit in the range of $2.25 to $2.26 per share compared with estimates of $2.17.
It forecast revenue between $9.18 billion and $9.23 billion, the midpoint of which exceeded estimates of $9.21 billion, according to LSEG data.
The company's third-quarter revenue of $8.72 billion narrowly beat expectations, while adjusted profit of $2.11 per share beat estimates by 5 cents.
It also raised the lower end of its annual revenue forecast to $34.75 to $34.8 billion.