Salesforce Wants to Accelerate AI Adoption with Fin Acquisition

Salesforce’s (NYSE: CRM) continues to up the ante on AI through acquisitions. The market keeps projecting a SaaSocalypse for Salesforce, but so far the company’s financial performance has been outstanding. Earlier this summer, Salesforce also announced its biggest acquisition of the year, its fourth largest to date.

Salesforce’s Financials

For the second quarter, Salesforce’s revenue grew 11% to $11.35 billion, ahead of analyst estimates of $11.32 billion. EPS of $5.90 was far ahead of analyst estimates of $3.27.

By segment, subscription revenues grew 12% to $10.8 billion. Professional services revenues fell from $546 million last year to $525 million.

Among key metrics, Salesforce’s annualized revenue from Agentforce AI products grew 240% over the year to $1.5 billion. It ended the quarter with $33.5 billion in current remaining performance obligation, ahead of the market’s expected $33.22 billion.

For the third quarter, Salesforce expects revenues of $11.42-$11.50 billion and an EPS of $3.42-$3.44 compared with market estimates of $11.41 billion revenues and EPS of $3.38. The company expects revenues of $46.1-$46.4 billion and an EPS of $16.67-$16.71 for the year. The market was looking for revenues of $46.11 billion for the year.

Salesforce’s Acquisitions

Salesforce continued to grow its AI capabilities through acquisitions. This summer, it announced a $3.6 billion acquisition of Fin, formerly known as Intercom. San Francisco-based Fin was founded in 2011 by Eoghan McCabe, Des Traynor, Ciaran Lee, and David Barrett who wanted to make internet business more personal. The team wanted to create a solution where people connected with businesses in a more customized manner instead of just receiving vague emails that felt like spam, or standard cookie-cutter answers to problems they did not even have. But with the launch of AI solutions, Intercom pivoted itself to become an AI-first company and an advanced AI customer service agent that was built to autonomously resolve customer support conversations.

Intercom’s AI agent was called Fin and has since moved beyond customer service and expanded into use cases supporting other teams including sales, support, and ecommerce to deliver seamless customer experiences. The agent has been built for multiple industry use-cases and claims to be able to solve complex issues in highly regulated industries like Finance and Fintech. It is also powerful enough for high-volume industries like eCommerce and eGaming. The agent works on customer queries across chat, email, WhatsApp, SMS, phone, and Slack. Earlier this year, Intercom renamed itself to Fin.

Salesforce plans to leverage Fin to complement Agentforce. Together, Salesforce and Fin will give customers more and faster ways to deploy AI agents across their customer service operations. They will support customers at every stage of AI adoption and help organizations improve autonomous resolution, reduce cost-to-serve, and accelerate AI adoption across their service organizations. Prior to the acquisition, Fin had a customer base of over 30,0000 businesses and an ARR of over $400 million. Fin has raised $490 million in venture and debt funding. Earlier this year, it raised $250 million in debt funding from Hercules Capital. Earlier funding rounds have been supported by Kleiner Perkins, Google Ventures, Bessemer Venture Partners, and Index Ventures.

Salesforce’s stock is trading at $229.79 with a market capitalization of $187.8 billion. It hit a 52-week high of $269.11 last month and has recovered from the 52-week low of $146.32 that it had fallen to in July.

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.