Investors Are Wondering Why Salesforce Stock Is Down After Beating Q1 Estimates: Here's What You Need To Know

Salesforce Inc CRM shares are trading lower on the heels of the company’s first-quarter financial results. GAAP earnings guidance and mixed analyst reactions appear to be weighing on shares. Here’s what you need to know.

What Happened: Salesforce beat estimates on the top and bottom lines in the first quarter with revenue of $9.83 billion coming in ahead of estimates of $9.75 billion, and adjusted earnings of $2.58 per share beating estimates of $2.55 per share.

Total revenue was up 8% on a year-over-year basis and free cash flow increased 4% year-over-year to $6.3 billion.

Salesforce guided for second-quarter revenue of $10.11 billion to $10.16 billion versus estimates of $10.01 billion. The company also forecasted second-quarter adjusted earnings of $1.80 to $1.82 per share versus estimates of $1.71 per share.

Full-year revenue guidance of $41 billion to $41.3 billion was also stronger than analyst expectations, but full-year GAAP earnings guidance appears to be a soft spot in the report. Salesforce guided for full-year 2026 GAAP earnings of $7.15 to $7.21 per share versus estimates of $7.24 per share. On an adjusted basis, the company expects full-year earnings of $11.27 to $11.33 per share versus estimates of $11.16 per share.

Analysts had mixed reactions to the print with RBC Capital analyst Rishi Jaluria downgrading Salesforce from Outperform to Sector Perform and lowering the price target from $420 to $275. DA Davidson and Bernstein raised price targets ranging from $225 to $255, but both firms maintained Underperform ratings. Meanwhile, Goldman Sachs maintained a Buy rating and raised its target to $385 and Needham reiterated Buy and maintained its price target of $400.

CEO Marc Benioff said in the earnings release that the company has built a deeply unified enterprise AI platform that is “unmatched” in the industry.

“With Agentforce, Data Cloud, our Customer 360 apps, Tableau, and Slack all built on one trusted, unified foundation, companies of every size can build a digital labor force — boosting productivity, reducing costs and accelerating growth," Benioff said.

CRM Price Action: Salesforce shares initially surged more than 5% on the report, climbing above the $290 level before pulling back. The stock was down 5.45% at $261.08 at the time of publication Thursday, according to Benzinga Pro.

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Photo: courtesy of Salesforce.