Salesforce, a customer relationship management (CRM) company, experienced a drop in its share value by over 17% during extended trading on Wednesday. This decline followed the release of its fiscal first-quarter earnings report, which revealed revenue figures that fell short of analysts’ estimates and provided guidance for the second quarter that was weaker than expected.
In the first fiscal quarter of 2025, Salesforce reported revenue of $9.13 billion, showing an 11% increase from the same period last year. However, this figure failed to meet the expectations of analysts compiled by Visible Alpha.
Despite the disappointing revenue results, Salesforce maintained its previously announced full-year outlook. This news provided some reassurance amidst the stock’s significant decline.
The market’s reaction to Salesforce’s earnings report underscores the importance of meeting or exceeding analysts’ expectations, as it can significantly impact a company’s stock performance.
In the same period last year, the company reported a net income of $199 million or 20 cents per share. However, in the current period, the company exceeded analysts’ expectations by reporting a net income of $1.53 billion or $1.56 per share.
Although analysts had anticipated second-quarter revenue to be around $9.35 billion, the company projected a slightly lower range of $9.2 billion to $9.25 billion. Nevertheless, Salesforce maintained its previously announced full-year revenue guidance of $37.7 billion to $38 billion.
Salesforce CEO, Marc Benioff, expressed optimism about the company’s prospects in the era of artificial intelligence (AI). He emphasized that this presents a significant opportunity for customers to engage with their own customers in innovative ways through AI.
Following the release of these results, Salesforce shares experienced a decline of 17.3% to $224.55 during extended trading on Wednesday.