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CNBC
3 minutes ago
- Business
- CNBC
Why Salesforce's beat-and-raise quarter isn't quieting the stock's doubters
Salesforce on Wednesday reported better-than-expected quarterly results and provided guidance that, on its face, seemed strong. But the market response was muted, as investors discovered what was really driving the improved outlook. Revenue in its fiscal 2026 first quarter rose 8% year over year to $9.83 billion, topping expectations of $9.75 billion, according to LSEG. Adjusted earnings per share (EPS) in the three months ended April 30 totaled $2.58, beating the consensus estimate by 4 cents, LSEG data showed. On a year-over-year basis, adjusted EPS was up 6%. Salesforce's stock was volatile in extended trading Wednesday night, initially jumping about 5% before surrendering almost all of those gains. Shortly after its conference call with analysts concluded, the stock was up a little more than 1%. The enterprise software company came into the earnings release in need of a spark, having lost the momentum built last fall on the launch of its new AI offering Agentforce. Shares were down 18% year to date as of Wednesday's close, trailing both the S & P 500 , which was up 0.3%, and a popular software exchange-traded fund known as the IGV , which advanced around 3%. Salesforce crushed both the S & P 500 and IGV in the final four months of 2024 — a period that included the unveiling of Agentforce in September and its general availability in late October. Its all-time closing high of $367.87 a share came on Dec. 4. CRM 1Y mountain CRM 1-year return Bottom line We had some reservations about Salesforce ahead of Wednesday's release, recognizing that an uncertain economic backdrop has previously pressured enterprise software spending. Our hope was that Salesforce's two AI products — Data Cloud and the newer Agentforce — would show additional traction with customers and suggest that revenue growth could return to double-digit percentages sooner than Wall Street expects. Keep in mind: When Salesforce reported earnings in late February, executives said they expected a "modest" contribution this year from Agentforce, a suite of tools to build so-called AI agents that can perform tasks without human intervention. Meanwhile, Data Cloud helps customers organize and unify their data, and it is basically seen as laying the groundwork for Agentforce adoption. Based on everything we heard Wednesday night, we're not ready to get super bullish on the stock. However, at current levels and valuation it would be unwise to jump off the train. There is momentum on AI and the long-term opportunity for Agentforce is still huge. For that reason, the stock should leave the station within the next couple of quarters. We're reiterating our buy-equivalent 1 rating, while lowering our price target to $350 a share from $400 to account for the skepticism in the marketplace around Salesforce's growth trajectory. Commentary The good news is that Wednesday's results showed progress on AI, with Salesforce saying that the combined annual recurring revenue (ARR) for Data Cloud and Agentforce is more than $1 billion, up from the $900 million provided in February. In an interview Wednesday on "Mad Money," CEO Marc Benioff told Jim Cramer that Agentforce, in particular, is now an "over $100 million ARR product." Additionally, nearly 60% of the company's largest 100 deals in the quarter included both Data Cloud and Agentforce. Salesforce also said it has closed more than 8,000 deals involving Agentforce since its launch, with half of those being paid deals. In February's earnings report, the company said those numbers were 3,000 paying customers and 2,000 non-paying trials. That is a clear sign that customer interest is growing. Benioff called out Pepsi and the Latin American department store chain Falabella as two customers using Agentforce. Considering the stock's underperformance, investors should theoretically be stoked that Salesforce's second-quarter revenue and earnings guidance came in above expectations, and that its full-year outlook also was increased for both of those important metrics. However, the reason investors' excitement may be more measured Wednesday night is that Salesforce is now seeing a benefit from the weaker U.S. dollar when the company was initially baking in foreign-exchange headwinds into its guidance. The U.S. dollar index, which measures the greenback against a basket of other currencies including the euro and Japanese yen, has fallen considerably since Salesforce reported in February, as President Donald Trump's evolving trade policy ripples through financial markets. That provides an on-paper benefit to Salesforce and other multinational companies as they convert the business they've done overseas in stronger currencies back into now-weaker dollars. But in general, it doesn't really say anything about a firm's underlying business, which is why investors may not reward a company benefiting from foreign exchange tailwinds. Indeed, on the call, CFO Robin Washington explained that the company now expects a $250 million tailwind to revenue from foreign exchange this fiscal year, up $400 million from its prior guidance. Accordingly, the high end of Salesforce's fiscal 2026 revenue outlook was raised by $400 million, to $41.3 billion. On a constant currency basis, which removes these foreign exchange fluctuations, the company still sees subscription and support revenue growth of roughly 9% this fiscal year. In his interview with Jim, Benioff acknowledged that Salesforce was benefiting from the weaker dollar, but he argued the actual business is improving, too. "Currency was working in our favor," Benioff told Jim. However, he continued, "Bookings are in working in our favor. Revenue is working in our favor. Everything is working in our favor. And sometimes, when everything is going well for you, it's all good. Sometimes everything is not going well, but right now, we are just going to have a great year." 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 : March 5, 2025 Initiation : June 15, 2018 There was another push-pull in Salesforce's results: Remaining performance obligation (RPO) in the quarter was better than expected, and the same goes for current RPO, or cRPO. RPO is the total value of contracted revenue, while cRPO measures the amount of contracted revenue expected to be recorded in the next 12 months. At the same time, as seen in the chart above, the performance of Salesforce's individual applications — such as Sales Cloud and Service Cloud — fell short of expectations. One of the narratives pushed by investors who are bearish on Salesforce is that its core business was being neglected at the expense of AI initiatives that will take time to materialize. Our pushback has been that the AI opportunity is so significant that Salesforce needs to pursue it aggressively. Encouragingly, Salesforce's integration and analytics segment, which houses Data Cloud and Agentforce, delivered stronger-than-projected revenues in the first quarter. So while Wednesday's results are unlikely to put this bear narrative to rest, the counter argument is in good shape over the long term. Commentary on Informatica As expected, Salesforce's $8 billion acquisition of Informatica, which was announced Tuesday, was a point of discussion on the call. Informatica makes data management and integration software — basically, it's a collection of tools to help companies track and analyze the diverse types of data collected by the firm. While the amount of data that companies collect has exploded in recent years, it tends to be stored across multiple systems and in various formats — a problem called "data fragmentation" within the industry. Informatica's software seeks to address this fragmentation. Benioff noted that this is particularly relevant as businesses look to adopt AI. In many cases, companies need to get their data cleaned up and organized in such a way that it can be fed into and utilized by AI applications. Data is the foundation of any AI application. Salesforce sees Informatica strengthening Data Cloud and its overall strategy on AI agents. Benioff called them complementary. "This is a great price for a great company. It's got great multiples. It's accretive. It's non-dilutive [to existing shareholders]. It's coming together in an incredible way. This is a moment where Informatica is more important to our customers than ever before because of AI," Benioff said on the call. Benioff and finance chief Washington both stressed that Salesforce was disciplined in evaluating the acquisition — notable, given that one of the reasons that multiple activist investors targeted Salesforce beginning in late 2022 was concerns about its aggressive and expensive approach to M & A. Washington was asked by an analyst why Salesforce only expects the transaction to boost adjusted operating margins, EPS and free cash flow in the second year following its closing. That is expected to happen early in calendar 2026, meaning the benefits will show up in calendar 2027. "The framework that we've talked about when we look at deals, we assume: Can we get it accretive within two years, right? So, that's kind of our goal. Our desire is always to under promise and over deliver," she said. "I think with our playbook that we have in place, we're going to go fast as possible. We're really focused on accelerating integration. So, we'll see how that works out." Complete guidance breakdown As mentioned, Salesforce's second-quarter outlook came in better than expected, with the weaker U.S. dollar is now acting as a tailwind for its results. Here's a closer look at its Q2 guidance compared with Wall Street's expectations (GAAP stands for Generally Accepted Accounting Principles): Revenue in the range of $10.11 billion to $10.16 billion, which even at the low end exceeded the FactSet consensus of $10.02 billion. That would translate to year-over-year revenue growth of 8% to 9% on a GAAP basis, ahead of the 7.4% growth rate implied by the revenue estimate. On a constant currency basis, which excludes foreign exchange fluctuations, second-quarter revenue is projected to rise 7% to 8%, which would be more in line with expectations. Adjusted EPS in the rage of $2.76 to $2.78 a share, beating the $2.74 estimate, according to FactSet. Current remaining performance obligation (cRPO) growth of roughly 10% on a GAAP basis, or 9% on a constant-currency basis. The FactSet consensus called for 10% cRPO growth, though it's unclear that estimate is GAAP or currency neutral. For the full year, Salesforce upped its revenue forecast to $41 billion to $41.3 billion, compared with its initial guidance of $40.5 billion to $40.9 billion. The new range implies 8% to 9% growth, up by a percentage point on the high and low ends. Subscription and support revenue growth , in particular, is still seen rising roughly 9% year over year on a constant currency basis. Adjusted EPS is now projected to be $11.27 to $11.33, up from its prior range of $11.09 to $11.17. Operating margin is still projected to be 21.6% on a GAAP basis and 34% on an adjusted basis. Operating cash flow also was unchanged at approximately 10% to 11% growth. (Jim Cramer's Charitable Trust is long CRM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Hindustan Times
4 minutes ago
- Politics
- Hindustan Times
New rules to fast-track joint services commands
India has notified new rules under an overarching law to boost jointness, command efficiency and operational synergy in the armed forces at a critical moment when they are charting a path towards theaterisation --- a long-awaited reform for the best use of the military's resources to fight future wars, weeks after the May 7-10 clash with Pakistan that saw the three services work jointly for best battle outcomes. The government notified the rules under the Inter-Services Organisations (Command, Control and Discipline) Act, 2023 in the Gazette of India on May 27, signalling its intent to fast-track the setting up of joint services commands --- a key goal of the ongoing theaterisation drive. Such commands will consist of military elements, assets, and personnel drawn from the three services and placed under a commander-in-chief. 'This significant step aims to bolster command, control, and efficient functioning of Inter-Services Organisations (ISOs), thereby strengthening jointness among the armed forces,' the defence ministry said on Wednesday. Jointness among the three services is an essential prerequisite to the creation of theatre commands and was in focus during Operation Sindoor --- New Delhi's direct military response to the April 22 Pahalgam terror attack in which 26 people were killed. It led to a four-day confrontation that showcased the Indian military's synergy. The moves comes a year after the Act was notified in the gazette, empowering the government to set up ISOs --- including joint services commands --- and bestowing powers on the heads of such organisations to exercise command and control over the tri-services personnel serving under them to ensure discipline and effective discharge of duties. Such personnel were earlier governed by the respective laws of the three services: the Army Act, 1950, the Air Force Act, 1950, and the Navy Act, 1957. 'The rules (notified) are a critical enabler for the functioning of ISOs and establish a comprehensive framework for discipline, administrative control, and operational synergy,' the defence ministry said in a statement. The setting up of theatre commands for integrated application of force, operational efficiency, and optimal resource utilisation is among the nine areas identified by the defence ministry for focused intervention in 2025, which the ministry has declared as the 'year of reforms.' Other areas include building indigenous capabilities to strengthen the armed forces, simplifying acquisition procedures for swifter capability development and new domains such as cyber and space. Defence minister Rajnath Singh is conducting a quarterly review of the defence reforms --- including theaterisation --- being driven by the government to boost the armed forces' combat readiness. The theaterisation model being pursued involves raising the China-centric northern theatre command in Lucknow, the Pakistan-centric western theatre command in Jaipur, and the maritime theatre command in Thiruvananthapuram. The earlier legal framework of the armed forces had its limitations when it came to tri-services matters as officers of one service lacked the authority to exercise disciplinary and administrative powers over personnel belonging to another service. For instance, a three-star general heading a joint command could not act against air force or navy personnel serving under him. The lack of such powers had a direct impact on command, control and discipline, officials aware of the matter said. 'With the notification of these rules, the Act is now fully operational. This will empower the heads of ISOs, enable the expeditious disposal of disciplinary cases, and help avoid the duplication of proceedings,' the defence ministry said. The actions of the three services during the May7-10 military confrontation with Pakistan reflected the synergy of the country's armed forces, the information and broadcasting ministry said on May 18, in a backgrounder titled Operation Sindoor: Forging One Force. 'The operation unfolded across land, air, and sea --- a seamless demonstration of synergy between the army, air force and navy,' the I&B ministry said at the time. It added that efforts were underway to restructure forces through the setting up of integrated theatre commands by unifying the capabilities of the three services based on geography and function. Operation Sindoor triggered four days of strikes and counterstrikes with fighter jets, missiles, drones, long-range weapons and heavy artillery before the Indian and Pakistani forces reached an understanding on stopping all military action on May 10. Between the launch of the operation in the early hours of May 7 and the ceasefire, Indian forces bombed nine terror camps in Pakistan and Pakistan-occupied Kashmir (PoK), killing at least 100 terrorists, and the Indian Air Force (IAF) struck targets at 13 Pakistani airbases and military installations. The IAF struck two terror sites at Markaz Subhanallah in Bahawalpur and Markaz Taiba near Muridke, while the army hit targets at seven places including Mehmoona Joya in Sialkot, Sawai Nala and Syed Na Bilal in Muzaffarabad, Gulpur and Abbas in Kotli, Barnala in Bhimber, and Sarjal. The IAF also struck military targets in Rafiqui, Murid, Chaklala, Rahim Yar Khan, Sukkur, Chunian, Pasrur, Sialkot, Skardu, Sargodha, Jacobabad, Bholari and Malir Cantt in Karachi. The navy played a critical role during the operation. The forward presence of aircraft carrier INS Vikrant in the northern Arabian Sea, along with its Mig-29K fighters and airborne early warning helicopters, prevented hostile aircraft from coming within several hundred kms of the carrier battle group. 'It compelled the Pakistani air elements to remain bottled up close to the Makran coast, with the Indian Navy denying the enemy any opportunity to be a threat in the maritime space,' a top navy official earlier said. In March, the defence ministry told a parliamentary panel that a raft of complex issues must be addressed before rolling out integrated theatre commands as they have a direct bearing on the proposed force structure, calling it 'a trailblazing reform.' The ministry's response to a pointed question on theaterisation was part of a report tabled by the standing committee on defence in Parliament. 'Deliberations on reorganising the armed forces into integrated theatre commands are in progress and currently being examined at various levels before finalisation of an optimal organisational structure to meet the operational requirements,' the report said. The joint structures would help create and integrate new war-fighting capabilities along with faster assimilation of future technology and tactics, it said. 'The concept of theaterisation seeks to mitigate the shortcomings of single service operations and support modern war fighting,' the report added. The chief of defence staff (CDS) General Anil Chauhan is heading the theaterisation drive. The appointment of a CDS was one of the most significant recommendations made by the K Subrahmanyam-led Kargil Review Committee (KRC) that was constituted after the 1999 Kargil war to examine various lapses and suggest measures to boost national security. In 2000, the KRC recommended appointing a CDS to provide single-point military advice to the government and foster synergy in warfighting. A year later, a group of ministers backed the appointment of a CDS, who would bring about much needed jointness among the three services and prioritise defence planning. The need for a CDS was stressed by several committees and parliamentary panels between 2002 and 2016. But successive governments were unable to build political consensus around a CDS until Prime Minister Narendra Modi announced the post on August 15, 2019. General Bipin Rawat was appointed the country's first CDS on December 31, 2019. He was killed in a helicopter crash on December 8, 2021.
Hindustan Times
4 minutes ago
- Politics
- Hindustan Times
Bastar inches closer to gaining ‘Maoist-free' tag
In a notification dated March 2025, the Union home ministry has reclassified Bastar district in the Bastar division of Chattissgarh as a 'district of legacy and trust' from its previous classification as a district affected by Left Wing Extremism (LWE). The notification, which HT has seen, came into effect on April 1. The Bastar division comprises seven district including Bastar, Kanker, Konadagaon, Narayanpur, Sukma, Bijapur and Dantewada. Hindustan Times reported in December that the home ministry could consider removing Baster and Konadagaon from the list of districts affected by LWE. Konadagaon has also been re-categorised as a district of legacy and trust. 'This re-categorization, part of a broader LWE review by the Centre, places Bastar district among 28 districts across India where Maoist activity has significantly declined but where continued vigilance and sustained developmental and operational focus are still required. However, this marks a critical step toward declaring Bastar entirely free of Maoist influence,' a senior officer of Chhattisgarh police said. Inspector General of Police (Bastar Range), Sundarraj P, emphasized the strategic progress made in the region. 'The recent re-categorization underlines a significant shift in the LWE landscape of the Bastar Range, particularly with Bastar and Kondagaon now identified as 'districts of legacy'. This means that Maoist activities have come down to a great extent. Our focus will now be on consolidating peace through consistent anti-Naxal operations, development projects, and community engagement.' Sundarraj also explained the home ministry's new framework which 'classifies 18 LWE-affected districts nationwide into three equal categories: Most Affected, Other Affected, and Districts of Concern, with six districts in each.' Within the Bastar Range, Sukma, Bijapur, Narayanpur, and Kanker continue to be listed among the Most Affected LWE districts, while Dantewada is placed in the Other Affected category. The recent encounter in which 29 Maoists were killed happened at Kanker. 'Bastar and Kondagaon's shift to the legacy category reflects not just a decrease in violence but also an increasing presence of civil governance and infrastructure development,' Sundarraj added.
Canada Standard
4 minutes ago
- Business
- Canada Standard
BREAKING: Landmark German Court Ruling Could Bring Corporate Climate Liability to Canada
A landmark court ruling against a German utility could open the door to corporate liability for climate pollution in Canada, a leading environmental lawyer says. In Hamm, Germany earlier today, the Higher Regional Court ruled that major emitters can be held liable for the consequences of climate change, even though it threw out the specific civil case by Peruvian mountain guide Sal Luciano Lliuya against energy giant RWE. "Today the mountains have won," Luciano Lliuya declared. "Even if my case doesn't go any further, it has reached an important milestone, and that makes me proud. This ruling shows that the big polluters driving the climate [emergency] can finally be held legally responsible for the harm they have caused." While the judges concluded that the flood risk to Luciano Lliuya's home below a melting glacier was not sufficient to warrant compensation, "it confirmed for the first time that major emitters can be held liable under German civil law for risks resulting from climate change," Germanwatch wrote. "This sets a legal precedent with far-reaching implications, potentially influencing similar cases in countries like Switzerland and Belgium, and applicable in other jurisdictions such as the UK, the Netherlands, the USA, or Japan." Or in Canada, said Ecojustice Climate Director Charlie Hatt. "There is every chance this principle will eventually become a precedent in Canadian courts, as well," Hatt said in a release. "Investors and fossil execs take note-it is only a matter of time before the bill for climate harms will come due." Already, "as governments and large corporations fail to control their climate pollution, claimants are increasingly finding success holding them accountable in the courts, including examples like the youth-led Mathur case here in Canada," he added. "The principle is simple: it is wrong to produce and burn fossil fuels in excess of the limits defined by climate science because it harms people, and anyone harmed may get a legal remedy against the wrongdoers." International legal experts heaped praise on what Jasper Tuelings, strategic advisor at the Climate Litigation Network, declared a "historic judgement". "The Peruvian mountain guide has paved the way for a new era of holding fossil fuel companies accountable," said Sebastien Duyck, senior attorney at the Center for International Environmental Law. "For too long, these heavy emitters have been able to harm our environment with no regard to the consequences," but "that time is over," Ducyk said. "Sal's breakthrough opens up a well of opportunities for the more than 40 similar cases ongoing. It makes it more likely that those living at the sharp edge of climate change, such as Saul and his community, can succeed in holding heavy emitters to account for the damage they cause." Source: The Energy Mix
Economic Times
4 minutes ago
- Science
- Economic Times
'Dead star or something new': Mysterious object found in Milky Way emits X-rays and radio waves every 44 minutes
Astronomers have identified ASKAP J1832−091, a peculiar object in the Milky Way, emitting synchronized X-ray and radio waves every 44 minutes. Discovered by chance during Chandra X-ray Observatory observations, its unique behavior challenges existing astrophysical classifications. Researchers suggest it could be a highly magnetized dead star or an entirely new cosmic entity, prompting further investigation into stellar evolution. This image provided by NASA shows X-rays from NASA's Chandra X-ray Observatory (represented in blue) that have been combined with infrared data from NASA's retired Spitzer Space Telescope (cyan, light blue, teal and orange), and radio from MeerKat (red). An inset shows a more detailed view of the immediate area around this unusual object in X-ray and radio light. Tired of too many ads? Remove Ads A Puzzling Celestial Phenomenon Discovery by Chance Tired of too many ads? Remove Ads What This Means for Astronomy Astronomers have discovered a highly unusual object within the Milky Way that emits both X-rays and radio waves in a synchronized cycle roughly every 44 minutes. The object, named ASKAP J1832−091, was first identified during a period of heightened activity using NASA 's Chandra X-ray Observatory, and its peculiar behavior has scientists J1832−091 is located around 15,000 light-years away in a dense region of the galaxy rich in stars, gas, and dust. What makes this object remarkable is its coordinated emission of X-rays and radio signals in regular bursts—a pattern never observed before in any known Galactic discovery, published in Nature, suggests that ASKAP J1832−091 could be a highly magnetized dead star, such as a neutron star or white dwarf. However, researchers also acknowledge that it may represent an entirely new and exotic class of object, prompting a reexamination of existing astrophysical X-ray signals were detected by chance in 2023, while Chandra was observing a nearby supernova remnant—the remains of an exploded star. During this period, the object entered a hyperactive state that lasted about a month, emitting strong signals before falling silent. Interestingly, it's unclear whether the object is connected to the nearby remnant due to uncertainty in its exact researcher Ziteng Andy Wang from Curtin University called the detection of X-rays from such a long-period radio transient "a first" and a major step forward in understanding these elusive discovery challenges long-standing theories and hints that many more such objects could be lurking undetected in the galaxy. According to Wang, 'We're either witnessing a completely new kind of cosmic object or seeing a known one behave in a way never documented before.'The findings reinforce the importance of space-based observatories like Chandra, which orbits Earth and captures high-energy X-ray emissions from distant cosmic environments. Continued observations of ASKAP J1832−091 and similar objects may offer fresh insights into stellar evolution and the complex dynamics of our plan to monitor this object further using a combination of radio and X-ray telescopes to better understand its nature—and perhaps uncover more like it.
