Salesforce shares were volatile in extended trading on Wednesday after the sales and customer service software maker reported upbeat fiscal first-quarter results and guidance.
Here’s how the company performed relative to LSEG consensus:
- Earnings per share: $2.58 adjusted vs. $2.54 expected
- Revenue: $9.83 billion vs. $9.75 billion expected
Salesforce’s revenue grew 7.6% year over year in the quarter, which ended on April 30, according to a statement. Net income of $1.54 billion, or $1.59 per share, was basically flat compared with $1.53 billion, or $1.56 per share, a year ago.
President Donald Trump announced sweeping tariffs on goods imported into the U.S. in early April. Co-founder and CEO Marc Benioff sounded positive about the company’s results for the quarter anyway, pointing to its plan, announced on Tuesday, to buy data management company Informatica for $8 billion.
It would be Salesforce’s priciest acquisition since the $27.1 billion Slack deal in 2021. Slack marked the top end of the buyouts Salesforce had made under Benioff. Activist investors raised concerns about all the spending, in addition to slowing revenue growth.
Salesforce sprang into action, slashing 10% of its headcount. Benioff proclaimed that the board’s mergers and acquisitions committee had been disbanded. The company’s finance chief at the time said it would reach a margin expansion goal two years early. Salesforce started paying dividends to shareholders.
Initial reception to the Informatica announcement was generally favorable. “Salesforce is paying a reasonable multiple for the asset, in our view, and the deal should be more easily digested by investors than some of the company’s large deals in the past (i.e. Slack),” Stifel analysts led by J. Parker Lane wrote in a note to clients. The investment bank has a buy rating on Salesforce shares.
Benioff had spent around 20 years talking about how to bring Informatica and Salesforce together, he said on a conference call with analysts. Last year, the two companies walked away after holding deal talks, he said.
Informatica was founded in 1993 and went public in 1999. Permira Funds and Canada Pension Plan Investment Board bought it in 2015, and at that time, Microsoft and Salesforce purchased stakes. It returned to public markets in 2021. Earlier this month, Informatica said its revenue from the latest quarter of $403.9 million increased 3.9%, while annualized revenue from cloud subscriptions, at $848 million, was up 30%.
Those that want to deploy artificial intelligence agents that draw on extensive data will need to clean up their data first, and Informatica can help along with other Salesforce tools, Benioff said.
“Look, Informatica is a small company,” he said. “They don’t have the distribution scale that we have. I’m not going to tell you what the size of their distribution organization is because it’s probably covered under my NDA, but … it’s orders of magnitude less than Salesforce, I’ll tell you that. So that idea that we have the ability to really go out there and start to sell that product to all companies worldwide, to really show them that they need this, for this capability. Now, this is why I have this fever about growing.”
During the fiscal first quarter, Salesforce introduced the AgentExchange marketplace for AI agents. Salesforce has been finding gains from internal use of its Agentforce agent. It was able to reassign 500 customer support workers, bringing $50 million in savings, said Robin Washington, the company’s president and chief operating and financial officer.
Management sees $2.76 to $2.78 in adjusted earnings per share on $10.11 billion to $10.16 billion in revenue for the fiscal second quarter. Analysts polled by LSEG had expected $2.73 in adjusted earnings per share on $10.01 billion in revenue.
Salesforce bumped up its full-year forecast. It called for $11.27 to $11.33 in adjusted earnings per share and $41.0 billion to $41.3 billion in revenue, implying revenue growth between 8% and 9%. The LSEG consensus included net income of $11.16 per share and $40.82 billion in revenue. The guidance in February was $11.09 to $11.17 in adjusted earnings per share, with $40.5 billion to $40.9 billion in revenue.
The company reiterated guidance for 9% growth in subscription and support revenue, given some contribution from Agentforce, Washington said. At the same time, Washington said she anticipates weakness in marketing and commerce software revenue and slower growth from clients with contracts that are set to conclude.
As of Wednesday’s close, the stock had slipped about 18% so far in 2025, while the S&P index was unchanged.
Read the original article here