Dive Brief:

• Salesforce’s recent price hikes and investments in artificial intelligence aren’t expected to have a “significant influence” on the company’s revenue projections for the current fiscal year, CFO Amy Weaver said.

• The software-as-a-service giant is expecting $34.8 billion in revenues for the entire year, an increase of 11% year over year, according to quarterly earnings results released Wednesday. The company raised its projected revenue for the year from $34.7 billion, citing strong second quarter results.

• The current revenue guidance takes into account both the company’s recent price hikes as well as changes related to AI, according to Weaver. “I will say that neither has a significant influence on our guidance for this year,” she said during a Wednesday earnings call. “I think that those opportunities really take a while to roll through our customer base, particularly on pricing as we look to renewal.”

Dive Insight:

Salesforce announced on July 11 that it was increasing list prices on average by 9% across several of its offerings, including Sales Cloud and Marketing Cloud, beginning in August. The price changes come at a time when Salesforce faces pressure from investors to increase profitability, Gartner said in a recent research note, as previously reported by CFO Dive.

Weakening profitability at Salesforce has attracted activist investors during the past year, according to a Wednesday Wall Street Journal report. The company laid off 10% of its workforce and restructured its sales team as part of an effort to reorient the business toward maximizing profits instead of focusing primarily on revenue growth, the report said.

Salesforce’s price changes will impact first-time customers and existing ones who are buying into new cloud services, according to Gartner. Renewing customers may also face challenges as Salesforce moves forward with a recently reinstated policy of imposing a price increase at the point of contract renewal, the research note said. The software vendor has started proposing a 5% increase on many renewals already, it said.

In announcing its decision to raise list prices, Salesforce defended the move by noting that it had not done so in seven years, and the company has, since the last time, delivered 22 new releases and thousands of new features, including recent generative AI innovations.

AI has spurred a significant amount of buzz in the technology industry and across the business community at large since the introduction of ChatGPT, a popular generative AI tool created by Microsoft-backed startup OpenAI.

“I think that AI is about to really ignite a buying revolution,” Salesforce CEO Marc Benioff said during the company’s Wednesday earnings call. “I think we've already started to see that with our customers and even some of these new companies like OpenAI. And we certainly see that in our customers' base as well.”

In June, Salesforce Ventures, the corporate venture capital arm of Salesforce, announced that it was expanding its Generative AI Fund, doubling the $250 million fund to $500 million as part of its “continuing commitment to bolster the AI startup ecosystem and spark the development of responsible generative AI.”