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<p class="has-drop-cap">Salesforce (NYSE: CRM), a leading customer relationship management software provider, reported its <a href="https://s23.q4cdn.com/574569502/files/doc_financials/2025/q1/CRM-Q1-FY25-Earnings-Press-Release-w-financials.pdf" target="_blank" aria-label="first-quarter earnings (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">first-quarter earnings</a> for fiscal year 2025 after market close on Wednesday. The company’s revenue came in at $9.13 billion, representing an 11% year-over-year increase but falling slightly short of analysts’ average outlook of $9.17 billion.</p> 
<p>Salesforce posted a GAAP operating margin of 18.7% and a non-GAAP operating margin of 32.1%. The company’s operating cash flow surged 39% year-over-year to $6.25 billion, while its free cash flow rose 43% to $6.08 billion. During the quarter, Salesforce returned $2.2 billion to stockholders through share repurchases and $0.4 billion through dividends.</p> 
<h3 id="salesforce-earnings-and-guidance-disappoint">Salesforce Earnings and Guidance Disappoint</h3> 
<p>Despite the revenue growth, Salesforce’s performance failed to meet market expectations. The company’s current remaining performance obligations (CRPO) bookings increased by 10% year-over-year, missing the average analyst expectation of 11.9%. <br><br>For the second quarter of fiscal year 2025, Salesforce provided revenue guidance in the range of $9.20 billion to $9.25 billion, representing a 7% to 8% year-over-year growth. However, this guidance fell below analysts’ average estimate of $9.34 billion. The company also lowered its full-year GAAP operating margin guidance to 19.9% while maintaining its non-GAAP operating margin guidance at 32.5%.</p> 
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<h3 id="salesforce-stock-drops-18-as-market-reacts">Salesforce Stock Drops 18% as Market Reacts</h3> 
<p>Following the earnings announcement and guidance, Salesforce stock experienced a significant 18% drop. Major banks, such as Morgan Stanley and Barclays, reacted negatively to the report, citing weak AI revenue contributions and deteriorating business performance as key concerns. <br><br>Analysts doubted Salesforce’s ability to compete effectively in the <a href="https://tokenist.com/3-small-cap-ai-stocks-with-serious-growth-potential/" rel="dofollow" class="deco-link">AI-focused tech landscape</a>, pointing to the company’s weak guidance and execution issues.<br><br>As of 9:58 AM EDT on May 30, 2024, Salesforce stock was trading at $218.49, down 19.57% from the previous day’s close. <br><br>The company’s market capitalization stood at $212.204 billion, with approximately 4,100,000 shares traded. Salesforce’s stock has underperformed the S&amp;P 500 over the past year, with a return of 1.55% compared to the index’s 24.94% gain. The stock’s three-year and five-year returns also lagged behind the <a href="https://tokenist.com/investing/spx-vs-spy/" class="deco-link">S&amp;P 500</a>, at -8.12% and 43.09%, respectively, compared to the index’s returns of 24.98% and 88.80% over the same periods.</p> 
<p>The significant drop in Salesforce’s stock price can be attributed to the company’s weak earnings and disappointing guidance. Prior to the earnings announcement, the stock had already experienced a decline of 2.5% over the previous five days and 12% over the last three months. </p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe> 
<p><strong><em>What other firms might feel the heat of AI-focused tech expectations? Let us know in the comments.</em></strong></p> 
<p><em>Disclaimer: The author does not hold or have a position in any securities discussed in the article.</em></p> 
<h3 id="br"><br></h3> 
<p>The post <a rel="nofollow" href="https://tokenist.com/salesforce-guidance-falls-short-of-expectations-stock-plummets/">Salesforce Guidance Falls Short of Expectations, Stock Plummets</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Salesforce Guidance Falls Short of Expectations, Stock Plummets

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