Salesforce has forecast lower-than-expected revenue growth of 7% to 8% for its fiscal year 2026, with anticipated revenue between $40.5bn and $40.9bn. The forecast falls below Wall Street expectations of $41.35bn, according to LSEG data. The company also provided guidance for subscription and support revenue growth of approximately 8.5% and projected an operating margin of 21.6% under GAAP, with a non-GAAP margin of 34%. Operating cash flow is expected to increase by 10% to 11% year-over-year.
Stock decline following earnings release
Shares of Salesforce declined about 5% in extended trading following the announcement. The stock has fallen approximately 8% since the start of the year, reflecting investor concerns over the company’s ability to maintain growth momentum amid economic uncertainty and competitive pressures in the cloud computing sector.
For the fourth quarter ending 31 January 2025, Salesforce reported revenue of $10bn, marking an 8% year-over-year increase. The figure came in just below analysts’ expectations of $10.04bn. Earnings per share (EPS) for the quarter stood at $2.78, surpassing estimates of $2.61. Subscription and support revenue, which remains a key driver for the company, rose 8% to $9.5bn. The company’s current remaining performance obligation (RPO) increased 9% to $30.2bn, while total RPO rose 11% to $63.4bn.
For the full fiscal year 2025, Salesforce reported total revenue of $37.9bn, up 9% year-over-year. Operating cash flow increased 28% to $13.1bn, while free cash flow grew 31% to $12.4bn. The company returned $9.3bn to shareholders through share repurchases and dividend payments.
Salesforce has placed a strong emphasis on AI and cloud-based solutions to drive future growth. Its AI-powered Agentforce platform and Data Cloud have been central to this strategy. Since October, the company has closed 5,000 Agentforce deals, including more than 3,000 paid agreements. Data Cloud has now surpassed 50 trillion records, doubling year-over-year. Meanwhile, Agentforce has handled 380,000 customer interactions on Salesforce’s support platform, resolving 84% of requests with only 2% requiring human escalation.
“We had an incredible quarter and year, with strong performance across all our key metrics, including the highest cash flow in our company’s history and more than $60bn in RPO,” said Salesforce chair and CEO Marc Benioff. “No company is better positioned than Salesforce to lead customers through the digital labor revolution. With our deeply unified platform, seamlessly integrating our Customer 360 apps, Data Cloud and Agentforce, we’re already delivering unprecedented levels of productivity, efficiency and cost savings for thousands of companies.”
The slower-than-expected forecast comes as enterprises remain cautious about IT spending amid high interest rates and economic uncertainty. Cloud computing firms, including Microsoft and Amazon, continue to expand their AI-driven offerings, increasing competition in the enterprise software market. Analysts have noted that Salesforce’s ability to return to double-digit revenue growth will depend on the adoption of its AI-driven platforms.
Earlier this month, reports emerged that Salesforce plans to cut over 1,000 jobs as it transitions into its new fiscal year. Bloomberg, which first reported the development, stated that the job reductions are occurring alongside the company’s continued hiring efforts to grow its sales team for AI products. A source with knowledge of the situation told the news agency that affected employees may have the option to apply for other roles within the company.
Read more: Salesforce unveils Agentforce 2.0 to streamline operations and cut human reliance
