Key Takeaways
- Q1 adjusted earnings per share reached $3.88, significantly surpassing Wall Street’s $3.13 consensus forecast
- Quarterly revenue totaled $11.13 billion, representing 13% year-over-year growth, though Q2 projections fell approximately $40 million below expectations
- Current remaining performance obligations increased 14% to $33.6 billion, falling short of analyst predictions
- Agentforce revenue run rate expanded to $1.2 billion annually, climbing from $440 million nine months earlier
- Shares dropped roughly 2% during extended trading hours following a regular session close of $177.51, marking a 33% year-to-date decline
The enterprise software giant delivered fiscal first-quarter results that exceeded analyst expectations on the bottom line, yet provided forward-looking revenue projections that came up short, triggering a modest decline in extended trading.
Shares finished Wednesday’s regular session at $177.51, representing approximately a 33% decline year-to-date. This performance mirrors broader weakness across application software peers including ServiceNow and Adobe, which have experienced comparable headwinds.
The company reported adjusted profit of $3.88 per share during the three-month period ending April 30. This figure substantially exceeded the Street’s $3.13 projection and represented significant growth from the year-ago quarter’s $2.58.
Quarterly sales totaled $11.13 billion, marking 13% annual expansion and narrowly surpassing the $11.05 billion consensus. A meaningful portion of this growth stemmed from the $8 billion Informatica acquisition completed last November, which generated $444 million in quarterly revenue.
Forward Projections Disappoint
Salesforce issued second-quarter revenue guidance centered around $11.3 billion. The Street had anticipated $11.4 billion. The company’s adjusted earnings projection of $3.26 per share barely edged past consensus by a single cent.
Current remaining performance obligations—a critical backlog indicator closely monitored by analysts—expanded 14% to $33.6 billion, though this missed the $68.9 billion total RPO figure analysts had projected.
For fiscal 2026, management modestly increased its full-year revenue outlook and elevated adjusted earnings guidance by roughly 7% at the midpoint.
The disappointing element represents ongoing concerns. For more than a year, market participants have expressed anxiety that artificial intelligence agents might disrupt Salesforce’s user-based licensing approach, which generates 75% gross margins. The fundamental worry: enterprises could develop proprietary CRM solutions leveraging AI, eliminating their need for Salesforce subscriptions.
Palantir reinforced these concerns earlier this month by announcing it had abandoned its CRM software in favor of an internally-developed alternative.
AI Agent Strategy Accelerates
The company has aggressively promoted its proprietary AI agent product, Agentforce, as its competitive response to this existential threat. The offering now generates a $1.2 billion annual revenue run rate, climbing from $800 million in February and $440 million approximately nine months prior.
Artificial intelligence model utilization across the Salesforce ecosystem more than doubled from the previous quarter, according to company statements.
Unlike the core platform, Agentforce employs consumption-based pricing rather than per-user fees. Chief Financial and Operating Officer Robin Washington indicated the organization intends to maintain both pricing 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 momentum, though encouraging, may prove insufficient to reverse market sentiment. “We are not sure this will be enough to drive a meaningful reaction,” he noted.
Washington emphasized that the company has observed no decline in user counts thus far. Management also highlighted that infrastructure and data segment revenue advanced 23%, while application revenue climbed 7%, both measured on a constant-currency basis.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
