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Investing.com -- Salesforce Inc (NYSE:CRM) posted fiscal first-quarter results that topped Wall Street expectations and raised its full-year guidance. The company cited strong execution and increasing demand for its AI and Data Cloud offerings as key drivers behind the quarter’s performance.
Salesforce shares initially rose more than 4% in extended trading following the report, but the gains narrowed to less than 0.5% in Thursday’s premarket.
The San Francisco-based software firm reported adjusted earnings per share of $2.58 for the three months ended April 30, ahead of consensus estimates of $2.54. Revenue rose 8% year-over-year to $9.8 billion, slightly above expectations of $9.75 billion.
Salesforce missed consensus expectations for margins, reporting 32.3%, compared to the consensus projection of 32.5%.
"Salesforce delivered very much of an in-line quarter, beating on revenue and missing consensus on margins, but FX accounted for most of the revenue beat and all the FY guide increase," Bernstein analysts said in a post-earnings note.
"In some ways we could say this was a boring quarter (other than the acquisition), but frankly boring is good. With concerns about macro and the potential of a recession it is nice yet again to see a company deliver an in-line quarter with no visible macro effect," they added.
“We delivered strong Q1 results and are raising our guidance by $400 million to $41.3 billion at the high end of the range,” said Marc Benioff, Chair and CEO of Salesforce. “With Agentforce, Data Cloud, our Customer 360 apps, Tableau, and Slack all built on one trusted, unified foundation, companies of every size can build a digital labor force—boosting productivity, reducing costs, and accelerating growth.”
The company now expects full-year revenue to be between $41.0 billion and $41.3 billion, up from an earlier analyst consensus of $40.82 billion. Adjusted EPS guidance was raised to a range of $11.27 to $11.33, exceeding prior expectations of $11.17 and backed by an anticipated operating cash flow increase of 10% to 11%.
Salesforce also posted a 12% year-over-year increase in current remaining performance obligation (cRPO) to $29.6 billion, a forward-looking metric reflecting booked business not yet recognized as revenue. Non-GAAP operating margin came in at 32.3%, while GAAP operating margin was 19.8% for the quarter.
AI and data innovations played a significant role in the quarter, with annual recurring revenue from Data Cloud and AI surpassing $1 billion, growing more than 120% year-over-year. The company reported that Agentforce had closed over 8,000 deals since launch, with nearly half being paid engagements.
Alongside the results, Salesforce also confirmed its plan to acquire Informatica for $8 billion, stating that the transaction is expected to close in early fiscal 2027 and will not impact fiscal 2026 guidance.
RBC Capital Markets downgraded Salesforce shares to Sector Perform from Outperform and reduced its price target to $275 from $420. Apart from in-line results, the broker said the downgrade "is primarily driven by the formally announced acquisition of Informatica for $8B ... as well as longer-term concerns."
"While we understand wanting to control the full stack at the data layer, we don’t know that it was mission-critical to own Informatica outright, especially with Informatica having integrations with Salesforce (including Agentforce)," RBC analysts said.
Salesforce initiated second-quarter revenue guidance of $10.11 billion to $10.16 billion, reflecting 8% to 9% growth. Investors will watch for continued adoption of Salesforce’s unified AI stack across customer segments and updates on integration strategy for the Informatica acquisition.
“Our Q1 performance reflects solid execution, driven by our continued focus on innovation, operational excellence, and maximizing value for our customers and shareholders,” said Robin Washington, President and Chief Operating and Financial Officer.
(Luke Juricic contributed to this report.)