Salesforce, a leading customer relationship management platform, recently disclosed its fiscal fourth-quarter results, revealing mixed performances that have captured the attention of investors and analysts alike. For the period ending January 31, Salesforce reported a revenue increase of 8% year-over-year, reaching a significant $9.99 billion.
However, this figure fell short of Wall Street's consensus estimate of $10.04 billion, as compiled by FactSet. This discrepancy has raised eyebrows among market watchers as Salesforce's revenue growth trajectory appears to be slowing down, especially in light of previous years' performances. Despite the revenue shortfall, Salesforce demonstrated a stronger-than-anticipated earnings performance with adjusted earnings per share (EPS) rising to $2.78, an increase from $2.29 in the previous year.
This result exceeded market expectations, which had approximated the adjusted EPS to be around $2.61. Following the announcement, Salesforce's shares experienced a notable decline, dropping by 5.6% in after-hours trading, indicating the market's negative reaction to the revenue figures. Breaking down the revenue streams, the subscription and support revenue saw an increase of 8%, totaling $9.45 billion.
Additionally, proceeds from professional services and other income slightly rose to $542 million from $539 million. Looking forward, Salesforce has provided guidance for fiscal 2026, projecting an adjusted EPS range of $11.09 to $11.17. While this reflects growth from the $10.20 reported for the year that ended in January, it falls short of the expected consensus estimate of $11.20, suggesting potential caution amidst fluctuating market conditions. Salesforce anticipates that revenue growth will stabilize between 7% to 8%, estimating total revenues of $40.5 billion to $40.9 billion for the upcoming fiscal year.
This marks a deceleration from the previous year's 9% growth rate and remains below market expectations of $41.37 billion for fiscal 2026. In terms of immediate projections, Salesforce has indicated expectations for the current quarter, forecasting an adjusted EPS of $2.53 to $2.55, with anticipated revenue between $9.71 billion and $9.76 billion.
This guidance hints at year-over-year growth of 6% to 7%. However, the average market estimates stand at $2.62 for EPS and $9.91 billion for revenue, reflecting a cautious outlook as the company navigates through its financial landscape. Investors will be watching closely to assess how Salesforce adapts to a shifting market environment and manages to sustain its growth amidst increasing challenges..