Salesforce 2026 Q1 Earnings Modest Growth as Net Income Rises 0.5%
Daily EarningsWednesday, May 28, 2025 9:13 pm ET
57min readSalesforce (CRM), ranking 36th by market capitalization, reported its fiscal 2026 Q1 earnings on May 28th, 2025. The company posted a revenue of $9.83 billion, surpassing analyst expectations of $9.75 billion. Earnings per share (EPS) also exceeded forecasts, coming in at $2.58 compared to the expected $2.54. Salesforce raised its full-year revenue guidance to $41.0 billion to $41.3 billion, signaling strong future performance. This quarter's results highlight the company's solid execution and growing demand for its AI and cloud services, despite broader economic uncertainties.
Revenue
Salesforce reported a 7.6% increase in total revenue for Q1 2026, reaching $9.83 billion, compared to $9.13 billion in Q1 2025. Subscription and support revenue grew to $9.30 billion, while professional services and other revenues amounted to $532 million, contributing to the total revenue figure.
Earnings/Net Income
Salesforce's EPS rose 1.9% to $1.61 in Q1 2026 from $1.58 in Q1 2025, reflecting continued earnings growth. Net income reached $1.54 billion, marking a 0.5% increase from $1.53 billion in Q1 2025. The EPS performance was modest, indicating stable financial health.
Price Action
The stock price of Salesforce has edged down 0.60% during the latest trading day, has dropped 4.18% during the most recent full trading week, and has climbed 3.05% month-to-date.
Post-Earnings Price Action Review
The strategy of buying CRM when there is a revenue miss and holding for 30 days resulted in a 38.87% return, significantly underperforming the benchmark return of 86.09%. The strategy's Sharpe ratio was notably low at 0.19, indicating poor risk-adjusted returns, and it experienced a maximum drawdown of -62.01%, which highlights its high risk. The strategy's volatility stood at 36.78%, further emphasizing its risky nature. Overall, this strategy demonstrated poor performance, making it a risky consideration for investors.
CEO Commentary
"We delivered strong Q1 results and are raising our guidance by $400 million to $41.3 billion at the high end of the range," said Marc Benioff, Chair and CEO, Salesforce. He highlighted the company's unified enterprise AI platform, emphasizing its potential to boost productivity, reduce costs, and accelerate growth. Benioff also mentioned the strategic acquisition of Informatica, aiming to enhance their AI and data capabilities. Robin Washington, President and Chief Operating and Financial Officer, Salesforce, noted solid execution and a focus on innovation, operational excellence, and maximizing value for customers and shareholders.
Guidance
Salesforce initiates second-quarter FY26 revenue guidance of $10.11 billion to $10.16 billion, reflecting year-over-year growth of 8% to 9%. The full-year FY26 revenue guidance is raised to $41.0 billion to $41.3 billion, also indicating an 8% to 9% increase year-over-year. The company maintains GAAP operating margin guidance of 21.6% and non-GAAP operating margin guidance of 34.0%. Operating cash flow growth is expected to be approximately 10% to 11%, while free cash flow growth is anticipated at around 9% to 10%.
Additional News
Salesforce recently confirmed its intention to acquire Informatica for $8 billion, a strategic move designed to bolster its data management and cloud ecosystem. This acquisition, however, is not expected to impact revenue until fiscal 2027. In other developments, Marc Benioff, CEO, highlighted the successful integration of the Agentforce platform, which has already secured thousands of deals, underscoring Salesforce’s strategic pivot towards AI-enhanced cloud solutions. Furthermore, Salesforce continues to expand its enterprise offerings, emphasizing its commitment to leveraging AI and data-driven technologies to maintain its competitive edge in the market.
Revenue
Salesforce reported a 7.6% increase in total revenue for Q1 2026, reaching $9.83 billion, compared to $9.13 billion in Q1 2025. Subscription and support revenue grew to $9.30 billion, while professional services and other revenues amounted to $532 million, contributing to the total revenue figure.
Earnings/Net Income
Salesforce's EPS rose 1.9% to $1.61 in Q1 2026 from $1.58 in Q1 2025, reflecting continued earnings growth. Net income reached $1.54 billion, marking a 0.5% increase from $1.53 billion in Q1 2025. The EPS performance was modest, indicating stable financial health.
Price Action
The stock price of Salesforce has edged down 0.60% during the latest trading day, has dropped 4.18% during the most recent full trading week, and has climbed 3.05% month-to-date.
Post-Earnings Price Action Review
The strategy of buying CRM when there is a revenue miss and holding for 30 days resulted in a 38.87% return, significantly underperforming the benchmark return of 86.09%. The strategy's Sharpe ratio was notably low at 0.19, indicating poor risk-adjusted returns, and it experienced a maximum drawdown of -62.01%, which highlights its high risk. The strategy's volatility stood at 36.78%, further emphasizing its risky nature. Overall, this strategy demonstrated poor performance, making it a risky consideration for investors.
CEO Commentary
"We delivered strong Q1 results and are raising our guidance by $400 million to $41.3 billion at the high end of the range," said Marc Benioff, Chair and CEO, Salesforce. He highlighted the company's unified enterprise AI platform, emphasizing its potential to boost productivity, reduce costs, and accelerate growth. Benioff also mentioned the strategic acquisition of Informatica, aiming to enhance their AI and data capabilities. Robin Washington, President and Chief Operating and Financial Officer, Salesforce, noted solid execution and a focus on innovation, operational excellence, and maximizing value for customers and shareholders.
Guidance
Salesforce initiates second-quarter FY26 revenue guidance of $10.11 billion to $10.16 billion, reflecting year-over-year growth of 8% to 9%. The full-year FY26 revenue guidance is raised to $41.0 billion to $41.3 billion, also indicating an 8% to 9% increase year-over-year. The company maintains GAAP operating margin guidance of 21.6% and non-GAAP operating margin guidance of 34.0%. Operating cash flow growth is expected to be approximately 10% to 11%, while free cash flow growth is anticipated at around 9% to 10%.
Additional News
Salesforce recently confirmed its intention to acquire Informatica for $8 billion, a strategic move designed to bolster its data management and cloud ecosystem. This acquisition, however, is not expected to impact revenue until fiscal 2027. In other developments, Marc Benioff, CEO, highlighted the successful integration of the Agentforce platform, which has already secured thousands of deals, underscoring Salesforce’s strategic pivot towards AI-enhanced cloud solutions. Furthermore, Salesforce continues to expand its enterprise offerings, emphasizing its commitment to leveraging AI and data-driven technologies to maintain its competitive edge in the market.
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