Salesforce on Wednesday night reported better-than-expected fourth-quarter financial results for 2026 as its Agentforce artificial intelligence platform becomes increasingly embedded across its business. However, the stock fell in after-hours trading as investors remained concerned about the potential for AI to disrupt traditional enterprise software companies. LSEG said its revenue for the quarter ended Jan. 31 was $11.2 billion, up 12% from the same period last year, beating expectations of $11.18 billion. Adjusted earnings per share totaled $3.81, beating consensus estimates by 77 cents, according to LSEG data. Year over year, adjusted EPS increased 37%. CRM YTD Mountain Salesforce YTD Salesforce stock fell about 4.5% in after-hours trading to about $183, not far from its 52-week closing low of $178.16. In conclusion, Salesforce had a better-than-expected quarter with revenue growth in double-digit territory, driven by strong sales from Agentforce Sales and the Agentforce 360 platform, Slack, and others. Meanwhile, three other subscription and support revenue items were below analysts’ expectations. As for our key new product, Agentforce, our AI-powered platform has closed more than 29,000 deals since launch and now generates $800 million in annual recurring revenue. During the conference call, CEO Marc Benioff named Amazon, Ford, AT&T, Moderna, General Motors, and Pfizer as global brands that have chosen Salesforce to lead their agency transformations. We also appreciate the comments from SharkNinja and the CEO of Wyndham Hotels & Resorts on the earnings call about how Agentforce is enhancing their operations. One of management’s frustrations is that the market doesn’t understand and appreciate Agentforce enough. So it was refreshing to hear from a real CEO about the positive impact this product has had on his business. SharkNinja talked about how Agentforce has improved the customer service experience, while Wyndham said Agentforce has reduced labor costs and generated millions of dollars in increased revenue. Investing Club reporter Natasha Abellard spoke with SharkNinja’s chief information officer about Agentforce in September 2025 and heard a similar story. Remaining performance obligations (RPO) and current remaining performance obligations (cRPO) were better than expected, but there are some nuances. cRPO, which measures contracted revenue expected to be realized within the next 12 months, increased 13% year over year, excluding currency effects. This includes 4 percentage points from the recently completed Informatica acquisition. So Salesforce’s organic growth rate was just 9%, disappointing for investors who were expecting double-digit growth. A higher number would have put to rest any bearish claims that Salesforce cannot grow Agentforce and its core legacy business at the same time. Margin performance was mixed, with GAAP results contracting year-over-year and missing the mark, but non-GAAP results were stronger than expected, with healthy beats on adjusted earnings per share. Using non-GAAP or adjusted measures allows companies to exclude certain items that are considered non-recurring. While some may be quick to celebrate non-GAAP results, increased scrutiny across software groups could lead investors to focus more on GAAP, generally accepted accounting principles. It’s clear that the company is fed up with the falling stock price. Excluding after-hours movements, the stock is down 27% since the beginning of the year, making it one of the worst-performing stocks in the S&P 500 index. The decline will also occur after the terrible year 2025. I ended up in a nightmare position. We should have exited this small position a long time ago, but all we can do now is look to the future and watch for signals that the business continues to grow and the stock is getting too cheap. To that end, we liked how Salesforce bought back $4 billion in stock in the fourth quarter and announced a new program worth up to $50 billion on Wednesday night. Its market capitalization is $180 billion, which is about 27% of the company. Still, the company needed to exceed expectations on every front to resist the “AI eats software” narrative, and issues around GAAP margins and cRPO organic growth haven’t helped matters. In addition, sales and GAAP operating margin forecasts for the new fiscal year were slightly weak. One would think that with the stock having fallen so much from its highs and trading at about 14.5 times the midpoint of the fiscal year 2027 non-GAAP earnings estimate, there would be some wiggle room. But as we explained earlier Wednesday, the challenge for software companies is not short-term performance, but rather how investors value their long-term terminal value. Club analyst Zeb Fima and club report’s Paulina Ricos have created a video explaining the dynamic. That’s why we haven’t seen any reactions saying, “It’s not as bad as feared.” Workday, a member of the enterprise software peer group, managed to reverse after-hours losses after Tuesday’s earnings and ended the regular session on Wall Street higher on Wednesday. However, we are not yet ready to call this a new pattern in software and buy this decline in Salesforce. We maintain our 2 rating on Salesforce, but lower our price target from $300 to $250 per share to reflect the price-to-earnings compression occurring across software. Guidance For Salesforce’s first quarter of fiscal 2027, management expects: Revenue in the range of $11.03 billion to $11.08 billion. The midpoint of $11.06 billion beat the consensus estimate of $11.01 billion. Adjusted EPS ranged from $3.11 to $3.13 per share, beating the Street’s estimate of $3.01. cRPO increased 13% at constant currency, with Informatics contributing 4 percentage points to growth. FactSet consensus called for cRPO to increase by approximately 12.8%. For the full year 2027, Salesforce expects: Revenue of $45.8 billion to $46.2 billion, compared to the consensus estimate of $46.1 billion. Revenue guide indicates year-over-year growth of 10% to 11% excluding currency effects. GAAP and non-GAAP margins are expected to be 20.9% and 34.3%, respectively. Both were below consensus estimates of 22.0% and 34.9%, respectively. Adjusted EPS is expected to be in the range of $13.11 to $13.19, compared to the Street’s estimate of $13.15. GAAP EPS was expected to be between $7.85 and $7.93. This is well below the FactSet consensus estimate of $8.24. Free cash flow is expected to increase 9% to 10% year over year, with capital expenditures accounting for 1.5% of revenue. (Jim Cramer’s Charitable Trust is a long CRM. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investing Club, you’ll receive trade alerts from Jim Cramer before he makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
