Salesforce on Wednesday reported better-than-expected quarterly results and provided guidance that, on its face, seemed strong. But the market response was muted, as investors discovered what was really driving the improved outlook. Revenue in its fiscal 2026 first quarter rose 8% year over year to $9.83 billion, topping expectations of $9.75 billion, according to LSEG. Adjusted earnings per share (EPS) in the three months ended April 30 totaled $2.58, beating the consensus estimate by 4 cents, LSEG data showed. On a year-over-year basis, adjusted EPS was up 6%. Salesforce’s stock was volatile in extended trading Wednesday night, initially jumping about 5% before surrendering almost all of those gains. Shortly after its conference call with analysts concluded, the stock was up a little more than 1%. The enterprise software company came into the earnings release in need of a spark, having lost the momentum built last fall on the launch of its new AI offering Agentforce. Shares were down 18% year to date as of Wednesday’s close, trailing both the S & P 500 , which was up 0.3%, and a popular software exchange-traded fund known as the IGV , which advanced around 3%. Salesforce crushed both the S & P 500 and IGV in the final four months of 2024 — a period that included the unveiling of Agentforce in September and its general availability in late October. Its all-time closing high of $367.87 a share came on Dec. 4. CRM 1Y mountain CRM 1-year return Bottom line We had some reservations about Salesforce ahead of Wednesday’s release, recognizing that an uncertain economic backdrop has previously pressured enterprise software spending. Our hope was that Salesforce’s two AI products — Data Cloud and the newer Agentforce — would show additional traction with customers and suggest that revenue growth could return to double-digit percentages sooner than Wall Street expects. Keep in mind: When Salesforce reported earnings in late February, executives said they expected a “modest” contribution this year from Agentforce, a suite of tools to build so-called AI agents that can perform tasks without human intervention. Meanwhile, Data Cloud helps customers organize and unify their data, and it is basically seen as laying the groundwork for Agentforce adoption. Based on everything we heard Wednesday night, we’re not ready to get super bullish on the stock. However, at current levels and valuation it would be unwise to jump off the train. There is momentum on AI and the long-term opportunity for Agentforce is still huge. For that reason, the stock should leave the station within the next couple of quarters. We’re reiterating our buy-equivalent 1 rating, while lowering our price target to $350 a share from $400 to account for the skepticism in the marketplace around Salesforce’s growth trajectory. Commentary The good news is that Wednesday’s results showed progress on AI, with Salesforce saying that the combined annual recurring revenue (ARR) for Data Cloud and Agentforce is more than $1 billion, up from the $900 million provided in February. In an interview Wednesday on “Mad Money,” CEO Marc Benioff told Jim Cramer that Agentforce, in particular, is now an “over $100 million ARR product.” Additionally, nearly 60% of the company’s largest 100 deals in the quarter included both Data Cloud and Agentforce. Salesforce also said it has closed more than 8,000 deals involving Agentforce since its launch, with half of those being paid deals. In February’s earnings report, the company said those numbers were 3,000 paying customers and 2,000 non-paying trials. That is a clear sign that customer interest is growing. Benioff called out Pepsi and the Latin American department store chain Falabella as two customers using Agentforce. Considering the stock’s underperformance, investors should theoretically be stoked that Salesforce’s second-quarter revenue and earnings guidance came in above expectations, and that its full-year outlook also was increased for both of those important metrics. However, the reason investors’ excitement may be more measured Wednesday night is that Salesforce is now seeing a benefit from the weaker U.S. dollar when the company was initially baking in foreign-exchange headwinds into its guidance. The U.S. dollar index, which measures the greenback against a basket of other currencies including the euro and Japanese yen, has fallen considerably since Salesforce reported in February, as President Donald Trump’s evolving trade policy ripples through financial markets. That provides an on-paper benefit to Salesforce and other multinational companies as they convert the business they’ve done overseas in stronger currencies back into now-weaker dollars. But in general, it doesn’t really say anything about a firm’s…
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