Shares in Salesforce Inc. plunged over 15% in after-hours trading today after the cloud-based software company missed on revenue in its fiscal first quarter — the first time it has reported a revenue miss since 2006 — and also fell short on its outlook.

For its first quarter ended April 30, Salesforce reported adjusted earnings per share of $2.44, up from $1.69 in the same quarter of last year, on revenue of $9.13 billion, up 11% year-over-year. Adjusted earnings were a beat, as analysts had expected $2.38 per share, but Salesforce’s revenue missed a forecast of $9.15 billion.

The growth was driven by subscription and support revenue, which rose 12% year-over-year, to $8.59 billion. The company ended the quarter with current remaining performance obligations of $26.4 billion, up 10% year-over-year and a total remaining performance obligations of $53.9 billion. Remaining performance obligations represent the amount of revenue Salesforce expects to recognize in the future from existing contracts with customers.

Operating cash flow in the quarter rose 39% from a year ago, to $6.247 billion. Free cash flow on an adjusted base rose 43%, to $6.084 billion. The quarter also saw Salesforce spend $2.2 billion on share repurchases and $400 million in dividend payments to shareholders.

Recent business highlights include Salesforce making its Einstein Copilot generative artificial intelligence assistant generally available on April 25. Einstein Copilot integrates with Salesforce and pulls data and metadata directly from enterprise corporate clouds, providing it the context to understand what users are doing so that it can “chat” with them.

Salesforce also rolled out data visualization and AI infrastructure improvements for its Tableau Software platform on April 30. Tableau is a visual analytics platform designed to allow people and organizations to make data understandable and solve problems collaboratively using AI and machine learning.

“Our profitable growth trajectory continues to drive strong cash flow generation,” Marc Benioff, chairman and chief executive officer of Salesforce, said in the company’s earnings release. “We are at the beginning of a massive opportunity for our customers to connect with their customers in a whole new way with AI.”

For its fiscal 2025 second quarter, Salesforce expects adjusted earnings of $2.34 to $2.36 on revenue of $9.2 billion to $9.25 billion. The revenue outlook was below the $9.34 billion expected by analysts. For its full fiscal year, the company expects to book adjusted earnings per share of $9.86 to $9.94 on revenue of $37.7 billion to $38 billion.

Commenting on the earnings release, Charlie Miner, analyst at global research firm Third Bridge Group Ltd., noted that “while Salesforce remains the undisputed leader in CRM and application software, its growth story, now driven by modest price hikes and drawn-out cross-sells, clashes with its desire to be viewed as an inspiring, nimble software leader, ready to capitalize on a tremendous AI opportunity.”

“Today’s earnings were a total mess for Salesforce, marking it as yet another application software leader to suffer during this historically poor software earnings season,” Miner added. “A lack of top-line momentum coupled with a deceleration in margin growth marks a sharp reversal from the period of increasingly profitable growth story that drove their 2023 stock surge.”

Param Kahlon, executive vice president and general manager of Salesforce, spoke with theCUBE, SiliconANGLE Media Inc.’s livestream studio in April to discuss how Salesforce is powering new artificial intelligence use cases with Data Cloud and integrated capabilities:

Photo: Wikimedia Commons