Salesforce stock reversed down in early trading on Thursday after the enterprise software maker reported first-quarter earnings and revenue that edged by estimates while revenue guidance for the July quarter came in above expectations.
The April-quarter Salesforce earnings report was released after the market close on Wednesday. The company slightly raised fiscal-year 2026 guidance.
"Salesforce reported better than feared results, but the fiscal 2026 outlook adjusting for currency and the Q1 beat was lowered versus the initial guide as growth in the core cloud segments continues to decelerate, partially offset by data cloud and AI tailwinds," said Gil Luria, analyst at D.A. Davidson in a report. "CRPO growth was one point better than expected, however, the Q2 (CRPO) guide came in slightly lighter than expected with the outlook implying single digit constant currency growth which would be the first time in company history."
Salesforce earnings rose nearly 6% to $2.58 per share on an adjusted basis. Also, the San Francisco-based enterprise software firm said revenue climbed 8% to $9.8 billion.
Salesforce stock analysts expected Salesforce to report earnings of $2.55 a share on sales of $9.75 billion.
Q1 Not Game Changing?
Meanwhile, Salesforce stock initially rose in extended trading on Wednesday, then reversed down. On the stock market today, Salesforce stock fell 6.4% to 258.35 in morning trading.
A key financial metric, current remaining performance obligations, known as CRPO bookings, topped views. In Q1, CRPO rose 12% to $29.6 billion vs. estimates of $29.04 billion. CRPO bookings are an aggregate of deferred revenue and order backlog.
"Q1 results, while not game changing, point to a stable demand environment, with continued strength in the Agentforce new product cycle," said Bank of America analyst Brad Sills in a report. "Q1 CRPO growth of 11% nicely exceeded our 10.4% estimate. An unchanged outlook for fiscal 2026 subscription growth of 9% is a welcome relief, given concerns that weaker channel tone could prompt a guide down."
For the current quarter ending in July, Salesforce projected revenue in the range of $10.11 billion to $10.16 billion vs. estimates for $10.02 billion.
For fiscal 2026, the company slightly raised guidance, citing a weakening dollar as a "tailwind."
Salesforce forecast full-year revenue in a range of $41 billion to $41.3 billion, up from its earlier outlook of $40.5 billion to $40.9 billion.
Salesforce Stock: Informatica Deal
Heading into the Salesforce earnings release, CRM stock had retreated about 16% this year.
In a move to boost its artificial intelligence strategy, Salesforce on Tuesday agreed to buy data-management software maker Informatica in an all-cash deal valued at $8 billion.
Salesforce told analysts it expects the Informatica deal to be accretive to margins in two years after the deal closes — a timeframe that UBS analyst Karl Kierstead in a report called "disappointing."
Amid slowing revenue growth, some investors have focused on Salesforce's ability to improve operating margins.
At RBC Capital, analyst Rishi Jaluria on Thursday downgraded Salesforce stock to sector perform.
"While we like the margin expansion story at Salesforce and the valuation is undemanding, deal risk with Informatica has tipped the scales for us, and we now recommend waiting on the sidelines until either we see more positive data points for Agentforce or if the Informatica deal goes better than expected," he said in a report.
In Q1, Salesforce said its "Agentforce" products, new auotonomous, task-performing AI agents, reached $100 million in annual recurring revenue.
Salesforce Stock: Technical Ratings
"Stepping back, we don't anticipate Q1 results will meaningfully change the bull or bear narrative on the shares," said Deutsche Bank analyst Brad Zelnick in a report. "Bulls come away still constructive on Salesforce's positioning in an Agentic world and bears point to Agentforce having a limited impact on inflecting the growth rate with more modest margin expansion going forward."
Further, Salesforce stock is among IBD's AI stocks to watch.
Salesforce offers access to business software applications based on a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. In addition, the company has expanded into marketing, customer services and e-commerce.
Some analysts expect upside from Salesforce's push into the life sciences market.
The software maker hosts its annual Dreamforce conference in mid-October.
Meanwhile, CRM stock owns a Composite Rating of 79 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity, quantum computing and cloud computing.
