Marc Benioff, CEO of Salesforce, shares his insights during a discussion at the World Economic Forum in Davos, Switzerland, on January 22, 2025.
Chris Ratcliffe | Bloomberg | Getty Images
Following the release of robust fiscal first-quarter results and optimistic future guidance, Salesforce’s stock experienced notable fluctuations during extended trading hours on Wednesday. The enterprise, renowned for its customer relationship management (CRM) and cloud-based solutions, demonstrated resilience despite broader market uncertainties.
Quarterly Performance Versus Market Expectations
Here’s a breakdown of Salesforce’s recent financial performance compared to analyst forecasts:
- Adjusted earnings per share: $2.58, surpassing the expected $2.54
- Revenue: $9.83 billion, exceeding the anticipated $9.75 billion
In the quarter ending April 30, Salesforce reported a 7.6% year-over-year increase in earnings. The company’s net income reached approximately $1.54 billion, or $1.59 per share, remaining relatively flat compared to the $1.53 billion, or $1.56 per share, recorded in the same period last year.
Impact of External Factors and Strategic Moves
Despite early April’s announcement of sweeping tariffs on imported goods by President Donald Trump, Salesforce’s leadership remained optimistic about its quarterly results. CEO Marc Benioff highlighted the company’s strategic acquisition of data management firm Informatica for $8 billion, announced on Tuesday. This move could potentially be Salesforce’s most significant purchase since the $27.1 billion acquisition of Slack in 2021, which marked a turning point in its acquisition strategy.
Following Slack’s integration, Salesforce faced scrutiny from activist investors concerned about the company’s aggressive spending and slowing profit growth. In response, Salesforce announced a reduction of 10% in its workforce and disbanded its mergers and acquisitions committee. The company also projected that these cost-cutting measures could enable it to achieve margin improvements ahead of schedule, potentially within two years. Additionally, Salesforce began distributing dividends to shareholders, signaling a shift toward more shareholder-friendly policies.
Market Reactions and Analyst Perspectives
The initial market response to the Informatica deal was largely positive. Analysts from Stifel, led by J. Parker Lane, noted that Salesforce was paying a reasonable valuation for Informatica, making the acquisition more digestible for investors compared to previous large deals like Slack. The firm maintained a buy rating on Salesforce shares, citing confidence in the company’s strategic direction.
Benioff expressed his long-standing vision of integrating Informatica’s data management capabilities with Salesforce’s ecosystem. He revealed that although the two companies had previously explored a merger, talks fell through last year. Now, with Informatica’s strong financials-quarterly revenues of $403.9 million, up 3.9%, and cloud subscription revenues of $848 million, up 30%-the prospects for synergy appear promising.
Informatica’s Role in Salesforce’s Ecosystem
Founded in 1993 and publicly listed in 1999, Informatica has a storied history of innovation in data integration and management. It was acquired by Permira Funds and the Canada Pension Plan Investment Board in 2015, with Microsoft and Salesforce holding stakes before its 2021 return to public markets. The company’s recent earnings report highlighted steady growth, reinforcing its strategic importance for Salesforce’s data-driven initiatives.
Benioff emphasized that Informatica’s smaller scale compared to Salesforce’s extensive distribution network offers significant growth opportunities. He explained that Salesforce’s global reach could accelerate the adoption of Informatica’s solutions, which are increasingly vital as organizations seek to harness artificial intelligence (AI) and big data for competitive advantage.
Innovations and Future Outlook
During the first quarter, Salesforce launched the AgentExchange marketplace, a platform dedicated to AI agents. The company reported that internal deployment of its Agentforce AI agents resulted in substantial cost savings, including the reallocation of 500 customer support staff, saving approximately $50 million.
Looking ahead, Salesforce projects its second-quarter earnings to be between $2.76 and $2.78 per share, on revenues of $10.11 billion to $10.16 billion. This outlook slightly exceeds analyst expectations, which forecast $2.73 per share and $10.01 billion in revenue. The company also raised its full-year guidance, now expecting adjusted earnings per share of $11.27 to $11.33 and total revenues between $41.0 billion and $41.3 billion, representing growth of 8% to 9%.
While Salesforce remains optimistic, it anticipates some headwinds, including softer performance in advertising and commerce cloud segments, and slower growth from existing clients with renewal contracts. As of Wednesday, Salesforce’s stock had declined approximately 18% in 2025, contrasting with the S&P 500’s relatively flat performance during the same period.
