Salesforce (CRM) stock is the worst Dow Jones stock Thursday after the software-as-a-service (SaaS) firm reported mixed results for its fiscal 2025 fourth quarter and issued a weaker-than-expected outlook for fiscal 2026.
In the three months ending January 31, Salesforce said its revenue increased 7.6% year over year to $9.99 billion. Its earnings per share (EPS) rose 21.4% from the year-ago period to $2.78.
"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 $60 billion in RPO," said Salesforce CEO Marc Benioff in a statement.
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Benioff added that Salesforce is best-positioned to "lead customers through the digital labor revolution" and is able to "seamlessly integrating our Customer 360 apps, Data Cloud and Agentforce." As a result, the company is able to deliver "unprecedented levels of productivity, efficiency and cost savings for thousands of companies."
The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $10.04 billion and earnings of $2.61 per share, according to MarketWatch.
For fiscal year 2026, Salesforce said it expects to achieve revenue in the range of $40.5 billion to $40.9 billion and earnings of $11.09 to $11.17 per share. These forecasts came up short of analysts' expectations for revenue of $41.35 billion and earnings of $11.18 per share.
For its fiscal first quarter, Salesforce anticipates revenue in the range of $9.71 billion to $9.76 billion and earnings between $2.53 to $2.55 per share. Analysts, meanwhile, are calling for fiscal Q1 revenue of $9.9 billion and earnings of $2.61 per share.
Is Salesforce stock a buy, sell or hold?
Salesforce has lagged the broader market over the past 12 months, up 2.9% on a total return basis (price change plus dividend) through its February 26 close vs the S&P 500's 19.1% gain. But Wall Street remains bullish on the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for CRM stock is $386.95, representing implied upside of roughly 30% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Wedbush maintained its Outperform rating (equivalent to a Buy) on the blue chip stock following the earnings release, along with its $425 price target.
"The monetization of Agentforce [Salesforce's AI platform] is still in the early stages of playing out, and we believe that the company is taking a prudent approach to scaling the Agentforce that will pay off over the long term with the AI Revolution now entering the software phase," wrote Wedbush analyst Daniel Ives in a note this morning.
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