Salesforce Inc's (NYSE:CRM, ETR:FOO) results after hours offered reassurance on several fronts: steady top-line growth, expanding margins, and further evidence that its shift towards artificial intelligence is beginning to bear fruit.
For UK investors with indirect holdings through global funds and ETFs, the numbers merit attention, not least because of the company’s strategic pivot and the surprise revival of large-scale acquisitions.
Earnings: solid, if unspectacular
First-quarter revenue rose 7.6% year on year to $9.83 billion, narrowly ahead of consensus forecasts. Adjusted earnings per share of $2.58 also beat expectations, while net profit held steady at $1.54 billion.
The update was competent rather than thrilling, but stability is no bad thing for a business that has spent the past 18 months recovering from a crisis of confidence over its earlier buying spree.
Guidance raised, confidence growing
More significant was the company’s decision to lift full-year revenue guidance to between $41 billion and $41.3 billion, alongside a slightly higher profit forecast.
This implies growth of around 8 to 9% for the year, a modest step up, but one that reflects the company’s confidence in its cost controls and pipeline. The operating margin target remains at 34%, while free cash flow is expected to grow by up to 10%.
That, in the current climate of tighter IT budgets and increased scrutiny of cloud spending, is an encouraging sign.
Agentforce begins to deliver
Crucially, Salesforce is now showing that its AI strategy, branded Agentforce, is translating into commercial gains.
The company closed 8,000 AI-related deals during the quarter, 4,000 of which were paid contracts, up sharply from the previous period.
Its Data Cloud and AI product suite is now running at a $1 billion annualised revenue pace, up 120% year on year.
Agentforce is more than a rebranding exercise. Salesforce has begun deploying its own AI agents internally, reassigning hundreds of support staff and claiming $50 million in cost savings.
Wedbush, one of several bullish analysts, believes AI could eventually add as much as $80 per share in long-term value.
Informatica: a familiar story, retold
Still, much of the after-hours volatility was linked to Salesforce’s $8 billion offer for Informatica, its largest deal since the $27.1 billion acquisition of Slack in 2021.
That earlier spree, now seen as the peak of a growth-at-any-cost approach, led to a sharp investor backlash, board-level changes, and heavy cost-cutting.
Boss Marc Benioff’s latest move is more restrained, but not without risk. Informatica is a data integration specialist, useful for companies trying to deploy AI effectively, and could strengthen
Salesforce’s offering across its core cloud products. Analysts at Stifel described the price tag as reasonable and the integration as digestible.
Even so, investor trust remains fragile. Execution will matter.
Wedbush: upbeat and unwavering
Analysts at Wedbush maintained their 'outperform' rating and raised their 12-month price target to $425.
They see Salesforce as well-positioned for the software phase of the AI cycle and argue that recent progress suggests the company is going on the offensive after a period of consolidation.
In particular, the report notes that 60% of Salesforce’s largest deals now include both AI and Data Cloud, with half incorporating six or more cloud products, a sign that customers are embracing the platform model in full.
For the longer view
Salesforce remains a bellwether for the broader enterprise software sector. It is not the most explosive growth story in AI, nor is it without execution risk.
But with margins stable, cash generation improving and a more disciplined tone on M&A, it is beginning to resemble a company regaining its stride.
UK investors, particularly those exposed via diversified global technology portfolios, would do well to watch how effectively Salesforce manages the integration of Informatica and whether Agentforce becomes more than just an idea whose time has come.