Salesforce shares fell in extended trading Wednesday on mixed quarterly results and weak guidance. However, the enterprise software giant’s AI business is picking up steam, which should propel the stock higher over time. Sales in the fiscal 2025 fourth quarter rose 8% on an annual basis to $9.99 billion, a touch shy of the $10.04 billion consensus, according to LSEG. Stripping out the impact of foreign exchange rates, revenue rose 9%. Adjusted earnings per share (EPS) jumped 21% year over year to $2.78, well ahead of the $2.61 estimate, LSEG data showed. Bottom line This was not the cleanest earnings report, primarily due to lighter-than-expected revenue and earnings guidance for both the current quarter and the full fiscal 2026. Foreign exchange headwinds also added to the noise. But the immediate reaction in extended trading, which saw the stock tumble roughly 10%, was overdone. Shares fought back and were briefly positive, but lost steam during the post-earnings call with investors and were down about 5% as of 8 p.m. ET. CRM 1Y mountain Salesforce 1-year stock performance The stock was limping into the report, down nearly 15% since closing at roughly $360 a share Jan. 28. The bulk of those losses occurred after Feb. 5, when Robin Washington — a longtime Salesforce board member and Gilead’s former CFO — was announced as the replacement for veteran finance chief Amy Weaver, who disclosed plans to depart last year but stayed on until the role was filled. Washington, who starts March 21, also will be chief operating officer, succeeding Brian Millham, who is retiring in May. Some analysts cited worries about the pace of turnover as a drag on shares. Did Salesforce do enough Wednesday night to kickstart the stock? Probably not right away. Still, we don’t see cause for immediate concern. The biggest takeaway for the bulls is that adoption of Salesforce’s two artificial intelligence products — Data Cloud and the still-nascent Agentforce — is growing, and a timeline for material Agentforce monetization, in particular, has been established. Its beat on earnings per share also was substantial and is further evidence of its commitment to profitability. “This is just the beginning of an incredible new chapter for Salesforce,” CEO Marc Benioff told Jim on “Mad Money.” We’re keeping our buy-equivalent 1 rating on Salesforce shares and a price target of $400. Salesforce Why we own it : Salesforce is a leading enterprise software tool for companies across all industries, helping employees to better communicate with colleagues internally and with their customers. The company’s balance of margin expansion with the potential for faster topline growth — aided by AI adoption — should lead to strong earnings growth. Competitors : SAP , Microsoft , HubSpot Most recent buy : Dec. 21, 2022 Initiation : June 15, 2018 Commentary The bulk of Salesforce’s earnings call was unsurprisingly spent discussing Agentforce and AI, and there was plenty to like. Data Cloud helps unify data from multiple sources into one platform and is seen as key to its AI strategy. The newer Agentforce is a suite of tools to create AI-powered assistants that can perform tasks and make decisions autonomously. Salesforce already has 3,000 paying Agentforce customers, Benioff said, and there’s another 2,000 non-paying trial deals. The Florida-based homebuilder Lennar and Danish jeweler Pandora are among the companies using Agentforce, according to Benioff. Agentforce became generally available in late October, and we heard on the company’s prior earnings report that it closed over 200 deals for the product in that first week. In mid-December, Benioff said more than 1,000 paid Agentforce deals had been signed. Customer interest is clearly there. All of the 10 biggest deals that Salesforce signed in the fourth quarter included both Data Cloud and Agentforce, Benioff said. At year-end, Salesforce’s annual recurring revenue for “Data Cloud and AI” was a combined $900 million, up 120% year over year. “Our AI product line now we can see as a multibillion-dollar product line,” Benioff said. On the call, Weaver said Agentforce should deliver a “modest contribution” to revenue in fiscal 2026 while momentum builds “throughout the year.” She said “a more meaningful contribution” is expected in fiscal 2027. More broadly, the company inked more than 400 deals worth at least $1 million. Weaver said Salesforce’s top 100 deals on averaged involved six of its clouds, the company’s term for applications. Deals involving multiple applications are positive signs because that suggests companies will be stickier customers. On the third-quarter earnings call, Weaver said its top 25 deals in that period averaged “more than five clouds each.” Salesforce ended the fourth quarter with a current remaining performance obligation, or cRPO, of $30.2 billion, up 9% year over year on a reported basis and 11% when stripping out a $300 million foreign-exchange headwind. The cRPO metric, which is closely watched by investors, reflects the amount of contracted revenue expected to be recorded in the next 12 months. Salesforce’s RPO, which is total value of contracted revenue, topped $60 billion for the first time. We also liked to see that Salesforce is forecasting additional margin expansion in fiscal 2026, even as it invests heavily behind the launch of Agentforce with thousands of new hires and a marketing blitz. On a full-year basis, Salesforce expects GAAP operating margin of 21.6% and adjusted operating margin of 34%, compared with 18.2% and 33.1% in fiscal 2025. Investors understandably want to see Salesforce’s top-line growth reaccelerate into double digits, but in the meantime, its much-improved profitability in recent years and ability to throw off cash to return to shareholders through buybacks and a small dividend should not be ignored. Would we have liked to see Salesforce’s revenue and earnings guidance come in above expectations? Of course. But the company’s C-suite turnover is an important bit of context that adds extra incentive to be conservative with the initial outlook. Handing Washington the finance reins with a high bar to clear would be unwise. Guidance Here’s a closer look at Salesforce’s outlook. The first-quarter guidance is as follows: Total revenue in the range of $9.71 billion to $9.76 billion, implying between 6% to 7% growth. That’s a bit lighter than the $9.9 billion expected. Adjusted earnings per share in the range of $2.53 to $2.55, below the $2.62 estimate, per FactSet. Current remaining performance obligation (cRPO) growth of roughly 10%, including a roughly $100 million headwind tied to foreign exchange. For the full year: Total revenue in the range of $40.5 billion to $40.9 billion, implying between 7% to 8% growth. The LSEG consensus was $41.35 billion. On a constant currency basis, subscription and support revenue is seen up 9% year over year, lifted by momentum in Data Cloud and a bit from Agentforce. Weakness in its marketing and commerce clouds will partially offset that, according to Weaver. Adjusted earnings per share in the range of $11.09 to $11.17, short of the $11.18 consensus, LSEG data showed. Adjusted operating margin of 34%, a pinch better than the 33.9% expected, according to FactSet. GAAP operating margin is expected to be 21.6%. Operating cash flow growth of roughly 10% to 11%. (Jim Cramer’s Charitable Trust is long CRM. See here for a full list of the stocks.) 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Salesforce shares fell in extended trading Wednesday on mixed quarterly results and weak guidance. However, the enterprise software giant’s AI business is picking up steam, which should propel the stock higher over time.