Salesforce shares experienced a notable dip in after-hours trading, shedding 5% despite the customer relationship management giant announcing robust financial results. While the company’s performance met and slightly exceeded Wall Street’s revenue expectations for the fourth quarter of fiscal 2026, its revenue outlook for fiscal 2027 fell short of projections, triggering investor caution.
The company reported adjusted earnings per share of $3.81, surpassing the consensus estimate of $3.04. Revenue for the quarter stood at $11.20 billion, a hair above the expected $11.18 billion. This marks a 12% year-over-year revenue increase, the fastest growth rate Salesforce has achieved in two years.
In a significant move, Salesforce announced a $50 billion share buyback program, with CEO Marc Benioff citing the current stock valuation as an attractive opportunity. This comes at a time when Salesforce shares have seen a considerable decline of approximately 28% year-to-date, contrasting with the S&P 500’s modest 1% gain.
Net income for the quarter rose to $1.94 billion, or $2.07 per share, up from $1.71 billion, or $1.75 per share, in the prior year. These figures are net of stock-based compensation, amortization of purchased intangibles, and restructuring costs.
The company’s remaining performance obligations (RPO), a key indicator of future revenue, reached $35.1 billion, exceeding the consensus estimate of $34.53 billion. This figure represents contracted revenue that has not yet been recognized.
Looking ahead, Salesforce provided guidance for the first quarter of fiscal 2027, projecting adjusted earnings per share between $3.11 and $3.13 on revenues of $11.03 billion to $11.08 billion. This outlook is stronger than analysts’ expectations of $3.00 per share and $10.99 billion in revenue.
However, the company’s projection for the full fiscal year 2027 forecasts revenues between $45.8 billion and $46.2 billion, implying a growth rate of 10% to 11%. This range is slightly below the LSEG consensus estimate of $46.06 billion, and it’s this forward-looking guidance that appears to have unnerved investors.
This cautious sentiment in the software sector has been amplified by concerns surrounding the impact of generative artificial intelligence (AI). The rapid advancements in AI technologies have sparked anxieties about potential disruptions to the growth trajectories of established software companies. This sentiment was recently highlighted by a significant drop in IBM’s stock price, which fell 13% following news of an AI tool capable of modernizing legacy code.
Salesforce has been actively integrating AI into its offerings. During the quarter, the company launched an AI-enabled Slackbot assistant for its communication platform and completed its acquisition of Informatica, a data management software firm that contributed $399 million in revenue during the period. Salesforce also announced plans to acquire Qualified, a marketing automation company.
The company also raised its long-term revenue target to $63 billion for fiscal 2030, an increase from its previous projection of over $60 billion. This upward revision incorporates the contributions from Informatica.
Salesforce’s competitive landscape is also evolving. CEO Marc Benioff highlighted that five customers have recently transitioned to Salesforce’s IT service management product from a competing offering, underscoring the company’s efforts to gain market share.
The company continues to champion its Agentforce AI technology, designed to automate customer service and other business functions. Annualized revenue from Agentforce has now surpassed $800 million. Industry analysts at Morgan Stanley maintain a positive outlook, noting that their conversations with partners suggest the market is still in the early stages of AI adoption.
A notable financial gain for Salesforce during the quarter came from its strategic investment in Anthropic. The company recorded an $811 million gain from its stake in the AI research company, a significant increase from $96 million in the year-ago period. Benioff indicated further investment, stating, “We’re at about $330 million into Anthropic invested. It’s almost about 1% of Anthropic. And believe me, I wish we had invested a lot more.”
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