Key Takeaways
- Salesforce delivered adjusted earnings of $3.88 per share for Q1, crushing the Street consensus of $3.13
- Quarterly revenue reached $11.13 billion, representing 13% annual growth, though Q2 projections fell approximately $40 million below analyst expectations
- The company’s current remaining performance obligations climbed 14% to $33.6 billion, falling short of Wall Street projections
- The Agentforce platform now generates $1.2 billion in annualized revenue, a significant jump from $440 million recorded nine months earlier
- Shares of CRM declined roughly 2% during after-hours sessions following a regular close at $177.51, marking a 33% year-to-date decline
Salesforce delivered fiscal first-quarter results that exceeded analyst projections on the bottom line, but the enterprise software giant’s forward-looking revenue estimates disappointed investors, triggering a roughly 2% decline in extended trading.
Shares finished Wednesday’s regular session at $177.51, reflecting a steep 33% decline year-to-date. The performance mirrors broader weakness across the application software sector, with peers like ServiceNow and Adobe experiencing comparable headwinds.
The company reported adjusted profit of $3.88 per share for the period ending April 30. This figure substantially exceeded the Wall Street consensus of $3.13 and represented a significant improvement from the $2.58 posted in the prior-year quarter.
Quarterly revenue totaled $11.13 billion, marking 13% year-over-year expansion and slightly surpassing analyst forecasts of $11.05 billion. The Informatica acquisition, which closed for $8 billion last November, added $444 million to the top line.
Forward Projections Miss the Mark
Salesforce projected second-quarter revenue of approximately $11.3 billion. Wall Street had been anticipating $11.4 billion. The company’s adjusted earnings guidance of $3.26 per share narrowly topped estimates by just one cent.
Current remaining performance obligations—a critical indicator of future contracted revenue—expanded 14% to $33.6 billion. However, this figure trailed the $68.9 billion in total RPO that analysts had been modeling.
For the complete fiscal year, management modestly increased its revenue projection and lifted adjusted EPS guidance by roughly 7% at the midpoint.
The pressure point isn’t new. For more than a year, market participants have expressed concerns that artificial intelligence agents might disrupt Salesforce’s traditional user-based licensing structure, which generates 75% gross margins. The fundamental worry: enterprises could leverage AI to construct proprietary CRM systems, eliminating their dependence on Salesforce subscriptions.
Palantir reinforced these concerns earlier this month by announcing it had replaced its internal CRM infrastructure with a custom-developed alternative.
Agentforce Shows Momentum
Salesforce has been aggressively promoting AI agent product Agentforce as its strategic response to competitive threats. The platform now tracks $1.2 billion in annualized recurring revenue, climbing from $800 million in February and $440 million approximately nine months prior.
The company reported that AI model usage across its platform more than doubled sequentially.
Unlike its traditional software offerings, Agentforce operates on a consumption-based pricing structure rather than per-user licensing. Chief Financial and Operating Officer Robin Washington indicated the company intends to maintain both approaches simultaneously.
“We will adapt to a consumption model,” Washington explained. “I think we’ll always be hybrid.”
Barclays analyst Raimo Lenschow suggested the Agentforce metrics, while encouraging, might not be sufficient to reverse negative market sentiment. “We are not sure this will be enough to drive a meaningful reaction,” he noted.
Washington also emphasized that the company hasn’t observed any degradation in user counts thus far. Additionally, Salesforce reported 23% constant-currency growth in its infrastructure and data division, while application revenue increased 7% on the same basis.
