Salesforce Inc. released its first-quarter earnings for the period ending April 30, 2026, showing revenue that surpassed analyst expectations, but a weaker-than-anticipated outlook for the current quarter dampened investor sentiment. The stock traded down 0.8% in after-hours activity to $177.51, following a more pronounced decline earlier in the extended session.
Q1 Results Beat, But Guidance Disappoints
The company posted first-quarter revenue of $11.13 billion, edging past the consensus estimate of $11.05 billion, according to LSEG data. GAAP earnings per share climbed 52% year over year to $2.42, while adjusted EPS rose 50% to $3.88. However, the second-quarter revenue guidance of $11.27 billion to $11.35 billion came in below the $11.36 billion Wall Street had anticipated, raising fresh concerns about the pace of growth.
AI Strategy Under Scrutiny
Investor focus remains squarely on Salesforce's artificial intelligence initiatives, particularly its Agentforce platform. The company reported that annual recurring revenue (ARR) from Agentforce and Data 360 nearly doubled to $3.4 billion, with Agentforce alone contributing $1.2 billion. More than half of the bookings for these products came from existing customers. Despite these gains, analysts question whether AI agents will generate new revenue streams or simply replace traditional software subscriptions.
Bank of America analyst Tal Liani recently initiated coverage on Salesforce with an Underperform rating and a $160 price target, citing slow customer growth, weak upselling, and an "underwhelming" Agentforce monetization trajectory. He also highlighted competitive threats from ServiceNow, Google, Adobe, and Shopify.
Market Context and Outlook
Salesforce's stock has fallen nearly 33% in 2026, following a more than 20% decline in 2025, as the software sector grapples with AI disruption. The company's current remaining performance obligation (cRPO), a key metric for future revenue, rose 14% to $33.6 billion. Free cash flow increased 4% to $6.6 billion.
For the full fiscal year 2027, Salesforce raised the midpoint of its revenue guidance to $45.9 billion to $46.2 billion and maintained its non-GAAP operating margin target of 34.3%. However, it trimmed its operating and free cash flow growth outlook to around 4% to 5%, citing a $25 billion debt issuance linked to an accelerated share buyback.
Competitive Landscape
The mixed signals in the software sector were evident as Snowflake, a data software competitor, boosted its full-year product revenue outlook and announced a $6 billion AWS agreement tied to AI infrastructure, sending its shares sharply higher after hours. In contrast, Salesforce's results left investors debating whether AI will ultimately benefit or undermine its subscription-based business model.
CEO Marc Benioff described agentic AI as the "biggest growth opportunity" for the company and its clients, while CFO Robin Washington reiterated guidance for organic revenue acceleration in the second half of fiscal 2027.
