Salesforce Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Salesforce CRM reported first-quarter fiscal 2026 non-GAAP earnings of $2.58 per share, which beat the Zacks Consensus Estimate by 1.6%. The bottom line improved 5.7% year over year.

Salesforce’s fiscal first-quarter revenues of $9.83 billion surpassed the Zacks Consensus Estimate by 0.95%. This top line increased 7.7% year over year.

The growth in top and bottom lines reflects the benefits of CRM’s go-to-market strategy and sustained focus on customer success. The initiatives to integrate generative artificial intelligence (AI) into its offerings also boosted demand for Salesforce’s solutions during the reported quarter.

Salesforce’s Q1 Performance in Detail

Coming to CRM’s business segments, revenues from Subscription and Support (94.6% of total revenues) increased 8.3% year over year to $9.3 billion. Professional Services and Other (5.4% of total sales) revenues decreased 3% to $532 million. Our estimates for Subscription and Support, and Professional Services and Other segments’ revenues were pegged at $9.2 billion and $519 million, respectively.

Salesforce Inc. Price, Consensus and EPS Surprise

Salesforce Inc. price-consensus-eps-surprise-chart | Salesforce Inc. Quote

Under the Subscription and Support segment, Sales Cloud revenues grew 7% year over year to $2.1 billion. Revenues from Service Cloud increased 7% to $2.3 billion. Marketing & Commerce Cloud revenues rose 4% to $1.3 billion. Platform & Other revenues were up 14% to $2.0 billion. The company has renamed the Data sub-segment to the Integration and Analytics division. Revenues from the Integration and Analytics division grew 10% year over year to $1.5 billion.

Our estimates for Sales, Service, Market & Commerce, Platform & Other and Integration & Analytics services revenues were pegged at $2.14 billion, $2.34 billion, $1.35 billion, $1.84 billion and $1.54 billion, respectively.

Revenues from America (66.3% of total revenues) increased 7% year over year to $6.5 billion. Sales in the EMEA (23.4%) grew 9% to $2.3 billion, while the Asia Pacific (10.3%) region’s revenues rose 11% to $1.0 billion.

Non-GAAP operating income of $3.17 billion was up 8.6% from the year-ago quarter’s $2.92 billion. Moreover, the non-GAAP operating margin expanded 20 bps to 32.3%.

Salesforce’s Balance Sheet & Other Details

Salesforce exited the fiscal first quarter with cash, cash equivalents and marketable securities of $17.41 billion, up from $14 billion at the end of the previous quarter. CRM generated an operating cash flow of $6.5 billion and a free cash flow of $6.3 billion in the quarter.

As of April 30, the current remaining performance obligation reflecting revenues under contract for the next 12 months was $29.6 billion, up 12% on a year-over-year basis. The company bought back shares worth $2.7 billion and paid $402 million in dividends during the quarter.

Salesforce’s Guidance for Q2 & FY26

Salesforce provided guidance for the second quarter of fiscal 2026. It projects total sales between $10.11 billion and $10.16 billion for the aforementioned quarter, which indicates 8-9% growth from the year-ago level. The Zacks Consensus Estimate for revenues is currently pegged at $10.02 billion.

CRM anticipates non-GAAP earnings per share in the band of $2.76-$2.78 for the second quarter of fiscal 2026. The consensus mark for second-quarter earnings is currently pegged at $2.72, indicating year-over-year growth of 6.3%.

For fiscal 2026, Salesforce now expects revenues in the range of $41-$41.3 billion, up from the previous guidance of $40.5-$40.9 billion. The consensus mark for fiscal 2026 revenues is pegged at $40.75 billion, indicating a year-over-year increase of 7.53%.

It now anticipates Subscription and Support revenues to increase approximately 9.5%, up from the previously announced growth rate of 8.5% on a year-over-year basis.

Salesforce now expects fiscal 2026 non-GAAP earnings per share in the range of $11.27-$11.33, up from the previous guidance of $11.09-$11.17. The consensus mark for the bottom line currently stands at $11.12 per share. Non-GAAP operating margin is still projected to be approximately 34%. CRM now anticipates the operating cash flow growth rate to be 10-11%.

Salesforce Zacks Rank & Stocks to Consider

Salesforce currently carries a Zacks Rank #3 (Hold).

Amphenol APH, Juniper Networks JNPR and Upwork UPWK are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. APH, JNPR and UPWK sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

APH shares have gained 28.2% in the year-to-date period. The Zacks Consensus Estimate for APH’s full-year 2025 earnings is pegged at $2.66 per share, up by 8 cents over the past 30 days, suggesting a growth of 32.33% from the year-ago quarter’s reported figure.

JNPR shares have lost 4.1% in the year-to-date period. The Zacks Consensus Estimate for JNPR’s full-year fiscal 2025 earnings has been revised upward to $2.09 in the past 30 days, suggesting year-over-year growth of 21.5%.

UPWK shares have lost 4.6% in the year-to-date period. The Zacks Consensus Estimate for UPWK’s full-year 2025 earnings is pegged at $1.14 per share, implying a rise of 9.62% from the year-ago quarter’s levels.

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This article originally published on Zacks Investment Research (zacks.com).

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