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Last week was not a great one for Salesforce (NYSE: CRM) when it announced its first-quarter results. The disappointing performance, coupled with a rather weak outlook sent the stock falling 20% in the after-hours trading session. It was the worst day for the stock in the past 20 years.

Salesforce’s Financials

Salesforce’s revenues for the first quarter grew 11% to $9.13 billion, falling short of analyst estimates of $9.17 billion. This was the first time since 2006 that Salesforce missed revenue expectations. Adjusted earnings of $2.44 per share were better than the market’s forecast of $2.38 per share.

By segment, Subscription and support revenues grew 12% to $8.6 billion. Professional services and other revenues fell 9% to $0.55 billion.

For the second quarter, Salesforce forecast revenues of $9.20-$9.25 billion and an EPS of $2.34-$2.36. The market was looking for revenues of $9.37 billion and an EPS of $2.40. Salesforce attributes the weaker outlook and performance to macro conditions that are causing longer sales cycle times and tighter budget spends by companies. Salesforce expects deal compression and slowing projects in the professional services business to continue through the current fiscal year.

Salesforce’s AI Focus

During the quarter, Salesforce remained focused on adding AI capabilities to its entire suite of offerings. It extended generative and predictive AI capabilities to channel sales teams by adding it to Slack and its Partner Relationship Management solution. The Gen AI capabilities are available to channel managers, third-party resellers, brokers, and all indirect sellers to help scale channel management and accelerate partner selling. The release extends Einstein for Sales directly into the workflows of channel managers and their partners, saves time by automating administrative tasks and proactively sharing insights on promising leads and opportunities.

It added new AI-based solutions for MuleSoft’s Anypoint Partner Manager with Intelligent Document Processing (IDP) and MuleSoft Accelerator for Salesforce Order Management. These AI capabilities will help streamline and accelerate end-to-end order lifecycle management by simplifying the connection of essential data across third-party applications, Salesforce OMS, and partner ecosystems for both B2B and B2C customers within MuleSoft. These new solutions will help IT teams unify data from multiple sources to deliver end-to-end order visibility, improved efficiency, and customer satisfaction.

For the marketing teams, Salesforce expanded its Einstein Copilot capabilities by introducing several new AI-based features. Einstein Copilot will be able to help businesses with daily marketing and merchandising tasks. The AI-powered personalization decision engine will help companies personalize customer interactions at every touchpoint using data from any source. For marketers, the assistant has pre-built actions to simplify the campaign creation process by automatically generating marketing briefs, content, and email campaigns. For merchants, the new service uses natural language prompts to streamline storefront setup and generates personalized promotions to improve customer experience and drive higher conversion rates.

Besides improving its product portfolio with AI-capabilities, Salesforce is also expanding its AI-based partnerships. It entered into an expanded partnership with IBM to combine IBM’s watsonx AI and Data Platform capabilities with its own Einstein 1 Platform. The expanded relationship will allow for bidirectional data integration, improve flexibility in large language models, and integrate prebuilt actions and prompts for CRM solutions to accelerate responsible AI development. The integration will empower joint customers of IBM watsonx and Salesforce to utilize models for diverse use cases including industry content generation, field summarization, and classification. IBM will also leverage its consulting division’s expertise to help build industry specific use cases.

Salesforce’s stock is trading at $236.62 with a market capitalization of $229.3 billion. It touched a 52-week high of $318.71 in March and a 52-week low of $193.68 in October last year.

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