Quick Summary
- Q1 adjusted earnings per share reached $3.88, significantly surpassing Wall Street’s $3.13 projection
- Quarterly revenue totaled $11.13 billion with 13% year-over-year growth, though Q2 forecast missed by approximately $40 million
- Remaining performance obligations (current) increased 14% to $33.6 billion but fell below analyst predictions
- Agentforce platform now represents $1.2 billion in annualized revenue, jumping from $440 million nine months prior
- Shares dropped roughly 2% in extended trading after closing at $177.51, down approximately 33% year-to-date
Salesforce delivered fiscal first-quarter results that topped analyst expectations, yet provided a forward-looking revenue projection that slightly missed Wall Street’s benchmarks, triggering a roughly 2% decline in after-hours stock activity.
Shares concluded Wednesday’s regular session at $177.51, reflecting a year-to-date decline of approximately 33%. This performance mirrors similar struggles among enterprise software peers including ServiceNow and Adobe, which have experienced comparable downward pressure.
The company reported adjusted earnings of $3.88 per share for the period concluding April 30. This figure substantially exceeded the Street consensus of $3.13 and marked significant improvement from the $2.58 reported in the prior-year quarter.
Quarterly revenue climbed to $11.13 billion, representing 13% year-over-year expansion and narrowly surpassing the $11.05 billion consensus. The November acquisition of Informatica for $8 billion contributed $444 million to the quarter’s sales performance.
Forward Guidance Misses the Mark
Looking ahead to Q2, Salesforce projected revenue of approximately $11.3 billion. Wall Street had anticipated $11.4 billion. The company’s adjusted earnings forecast of $3.26 per share edged out estimates by just one cent.
Current remaining performance obligations—a critical backlog indicator closely monitored by analysts—expanded 14% to $33.6 billion, yet underperformed against the projected total RPO of $68.9 billion.
The company modestly increased its full-year revenue projection while boosting adjusted earnings guidance by roughly 7% at the midpoint.
The disappointing element of the report isn’t new. For more than a year, market participants have expressed concern that artificial intelligence agents might erode Salesforce’s user-based licensing model, which generates 75% gross margins. The underlying fear: companies could develop proprietary CRM systems using AI technology, eliminating their dependence on Salesforce subscriptions.
Palantir reinforced this anxiety earlier in May by announcing it had replaced its internal CRM software with a custom-developed alternative.
Agentforce Shows Momentum
In response to these competitive pressures, Salesforce has aggressively promoted its proprietary AI agent product, Agentforce. The platform now generates $1.2 billion in annualized revenue, climbing from $800 million reported in February and $440 million approximately nine months earlier.
AI model utilization across the Salesforce ecosystem more than doubled from the previous quarter, according to company disclosures.
Unlike the company’s traditional software offerings, Agentforce employs consumption-based pricing rather than per-user fees. Chief Financial and Operating Officer Robin Washington indicated the organization intends to maintain a blended pricing approach moving forward.
“We will adapt to a consumption model,” Washington stated. “I think we’ll always be hybrid.”
Barclays analyst Raimo Lenschow suggested the Agentforce metrics, though encouraging, might not be sufficient to change market sentiment. “We are not sure this will be enough to drive a meaningful reaction,” he noted.
Washington emphasized that the company hasn’t experienced any decline in user counts thus far. Salesforce additionally reported 23% revenue growth in its infrastructure and data division, while application revenue increased 7%, both measured on a constant-currency basis.
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