Salesforce earnings beat fails to ease AI concerns over software growth

Traders Union
All News
Financial News
Salesforce earnings and AI growth

Highlights

Salesforce reports quarterly revenue of $11.13 billion, up 13.3% year over year, and adjusted EPS of $3.87, beating estimates by 76 cents.
AI-driven Agentforce platform achieves $1.2 billion annual recurring revenue, up 205% year over year, but overall sentiment stays cautious due to legacy business weakness.
Salesforce launches a $25 billion accelerated share repurchase and buys back $27.1 billion of stock, while trimming full-year GAAP outlook despite stronger-than-expected margins.

Quarterly results and AI platform momentum

As reported by CNBC, Salesforce posts revenue of $11.13 billion for the quarter ended April 30, up 13.3% from a year earlier and above the $11.05 billion expected by analysts polled by LSEG. Adjusted earnings per share reach $3.87, beating consensus estimates by 76 cents and rising 50% year over year.

Management reiterates that revenue growth is expected to reaccelerate in the second half of the fiscal year, but investors remain cautious. Shares fall about 1% in after-hours trading to roughly $176, leaving the stock down about 33% year to date.

Salesforce says its AI-focused Agentforce platform closes a record 98 deals in the quarter. Agentforce annual recurring revenue reaches $1.2 billion, up 205% year over year from $800 million in the fourth quarter, and Chief Executive Marc Benioff says customers include LVMH, Chobani and the U.S. Air Force.

Combined with Data 360, the cloud and annual recurring revenue base reaches $3.4 billion, up 200% from a year earlier. Even so, weaker trends in the legacy business continue to weigh on sentiment, with current remaining performance obligation rising 13% year over year in constant currency and total remaining performance obligation up 11% year over year.

Buybacks, outlook and market pressure

Profitability is stronger than expected, with both GAAP and non-GAAP margins improving from a year earlier and topping Wall Street expectations. However, the market response remains restrained because Salesforce trims its full-year GAAP outlook while leaving its non-GAAP outlook unchanged.

With the stock staying below $200 amid concerns that AI could replace traditional software as companies build their own CRM tools, Salesforce accelerates capital returns. In March, the company launches a $25 billion accelerated share repurchase program, described in the text as the largest in ASR history, and buys back a total of $27.1 billion of stock in the quarter.

For the second quarter of fiscal 2027, Salesforce forecasts revenue of $11.27 billion to $11.35 billion and adjusted earnings per share of $3.25 to $3.27. For the full fiscal year 2027, it expects revenue of $45.9 billion to $46.2 billion and raises adjusted earnings per share guidance to $14.06 to $14.12 from $13.11 to $13.19.

Salesforce remains a major enterprise software provider, and the company argues that Agentforce can help customers automate work across teams and organizations. Still, investors appear to want clearer proof that AI can drive meaningful top-line acceleration rather than simply support margins and buybacks.

In our earlier coverage of Zscaler’s selloff after earnings, we explained how the stock dropped sharply despite beating quarterly estimates as management issued a softer-than-expected outlook. We also noted that leadership changes and higher projected spending added to investor concerns about growth durability, against a broader backdrop of AI-related disruption weighing on software and cybersecurity names.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.