Earnings surpass estimated values reported by Salesforce, prompting an upgrade in their full-year financial projection.
Salesforce Boosts Full-Year Outlook Following Robust Q1 Earnings
Cloud software giant Salesforce has raised its revenue and adjusted earnings per share (EPS) forecast for the fiscal year ending January 2026. The company now expects revenue to range between $41 billion and $41.3 billion, an increase from its earlier projection of $40.5 billion to $40.9 billion. Additionally, Salesforce has revised its adjusted EPS estimate to $11.27 to $11.33, up from $11.09 to $11.17.
These revisions come after Salesforce reported first-quarter earnings that surpassed analyst estimates. The company posted quarterly revenue of $9.83 billion, a 8% year-on-year increase, and adjusted net income of $2.5 billion, or $2.58 per share. This contrasts with analysts' expectations of $40.79 billion in revenue and adjusted EPS of $11.15.
The strong results are attributed to an 8% increase in subscription and support revenue to $9.3 billion and a 12% increase in the current remaining performance obligation (CRPO) to $29.6 billion. This indicates a robust future revenue pipeline.
Salesforce's growth is partially fueled by its advancements in artificial intelligence (AI) products, specifically its 'Agentforce' AI agent platform launched in October. The company has closed over 4,000 paid deals for Agentforce, and its data organization and AI division has achieved annual recurring revenue above $1 billion.
In a related development, Salesforce announced it will acquire Informatica, an AI-powered data management software provider, for $8 billion. The deal, expected to close early in Salesforce's 2027 fiscal year, will allow Salesforce to strengthen its data management capabilities.
Salesforce Chief Operating and Financial Officer Robin Washington commented, "I'm pleased by our momentum as we capitalize on the exciting agentic AI opportunity." CEO Marc Benioff added, "With our agreement to acquire Informatica, we will bring together the industry's leading AI CRM and AI-powered MDM and ETL platform to create the most complete, intelligent AI and data platform for the enterprise."
Salesforce's shares gained nearly 2% in after-hours trading following the earnings announcement. Despite this, the stock had declined about 17% for the year through Wednesday's close.
The revisions in Salesforce's outlook reflect the company's confidence in its long-term profitability and its strong performance in AI and data cloud offerings. The planned acquisition of Informatica is expected to further bolster these capabilities, contributing to optimistic investor sentiment.
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