Salesforce Rises As New AI Features Come With Higher Pricing

Salesforce (CRM:US) shares trade higher on Wednesday after the software company said it will increase prices by an average of 9% for its flagship products. 

Effective in August, products like Sales Cloud, Service Cloud, Marketing Cloud, Industries, and Tableau, will come with higher prices. For instance, the new price for Professional Edition is $80, up by $5. Enterprise Edition and Unlimited Edition will see their prices rise by $15 and $30, respectively.

It remains to be seen whether the new pricing structure is baked into the current guidance. In late May, Salesforce shares modestly fell in the past when the company guided for adjusted earnings per share of $1.89 - $1.90 a share on revenue of $8.51 billion to $8.53 billion for the ongoing quarter.

This is compared to the analyst consensus for adjusted earnings of $1.70 a share on revenue of $8.49 billion. On a full-year basis, Salesforce expects earnings per share of $7.41 to $7.43, higher than the prior forecast of $7.12 - $7.14.

“While margin expansion and cash flows remain the key focus of investors in the near term and we anticipate upside to expectations in F1Q, we believe the long-term growth potential of the business will once again enter the spotlight as we progress through the year,” Stifel analysts wrote in a client note in the aftermath of the Q1 earnings report.

In the comments to investors, CEO Marc Benioff said that the company has been integrating generative AI across the entire product portfolio. It could be that the new pricing is introduced to offset higher costs due to expensive AI investments.

Congress members Jonathan Jackson, Ro Khanna, Daniel S. Goldman, and Josh Gottheimer were all witnessed stocking up on CRM shares this year.