salesforce(CRM) - 2026 Q2 - Quarterly Results

Executive Summary Q2 FY26 Performance Highlights Salesforce reported record second-quarter fiscal 2026 results, exceeding guidance across all metrics, with strong performance in revenue, margin, cash flow, and cRPO, positioning the company for a record fiscal 2026 with nearly $15 billion in operating cash flow - Salesforce delivered an outstanding quarter with strong performance across revenue, margin, cash flow, and cRPO, remaining on track for a record fiscal 2026 with nearly $15 billion in operating cash flow[2] - The company exceeded all financial targets and achieved its tenth consecutive quarter of operating margin expansion[2] Q2 FY26 Financial Performance | Metric | Value | Y/Y Change | CC Change | | :-------------------------------- | :---------------- | :--------- | :-------- | | Revenue | $10.2 billion | 10% | 9% | | Subscription & Support Revenue | $9.7 billion | 11% | 9% | | Current Remaining Performance Obligation (cRPO) | $29.4 billion | 11% | 10% | | GAAP Operating Margin | 22.8% | - | - | | Non-GAAP Operating Margin | 34.3% | - | - | | Returned to Shareholders | $2.6 billion | - | - | | Share Repurchases | $2.2 billion | - | - | | Dividends | $399 million | - | - | - Salesforce announced a $20 billion increase to its existing share repurchase program, bringing the total authorized to $50 billion[4] Strategic and Operational Highlights Data Cloud and AI annual recurring revenue (ARR) surpassed $1.2 billion, growing 120% Y/Y, while Agentforce closed over 12,500 deals and handled over 1.4 million requests, with over 40% of Q2 Data Cloud and Agentforce bookings from existing customer expansion and Service and Platform products included in all Q2 Top 10 Deals - Data Cloud and AI annual recurring revenue (ARR) exceeded $1.2 billion, representing a 120% year-over-year increase[5] - Agentforce closed over 12,500 deals, with more than 6,000 being paid, and handled over 1.4 million requests on help.salesforce.com[5] - Over 40% of Data Cloud and Agentforce Q2 bookings originated from existing customer expansion[5] - Service and Platform products were included in all Q2 Top 10 Deals[5] Financial Guidance Q3 FY26 Guidance Salesforce initiated third-quarter fiscal 2026 revenue guidance of $10.24 billion to $10.29 billion, representing 8%-9% Y/Y growth (8% in CC), with diluted net income per share projected between $1.60-$1.62 (GAAP) and $2.84-$2.86 (non-GAAP), and current remaining performance obligation growth slightly above 10% (9% CC) Q3 FY26 Guidance | Metric | GAAP | Non-GAAP | | :-------------------------------- | :---------------------- | :---------------------- | | Revenue | $10.24 - $10.29 billion | - | | Revenue Growth | 8% - 9% Y/Y | 8% CC | | Diluted Net Income Per Share | $1.60 - $1.62 | $2.84 - $2.86 | | Current Remaining Performance Obligation Growth | Slightly above 10% | Slightly above 9% CC | Full Year FY26 Guidance The company raised the low end of its full-year fiscal 2026 revenue guidance to $41.1 billion to $41.3 billion, updated GAAP operating margin guidance to 21.2%, and raised non-GAAP operating margin guidance to 34.1%, with full-year operating and free cash flow growth projected at approximately 12% to 13% Y/Y Full Year FY26 Guidance | Metric | GAAP | Non-GAAP | | :-------------------------------- | :---------------------- | :---------------------- | | Revenue | $41.1 - $41.3 billion | - | | Revenue Growth | 8.5% - 9% Y/Y | Approximately 8% CC | | Subscription & Support Revenue Growth | Approximately 9.5% | Approximately 9% CC | | Operating Margin | 21.2% | 34.1% | | Diluted Net Income Per Share | $6.99 - $7.03 | $11.33 - $11.37 | | Operating Cash Flow Growth | Approximately 12% - 13% | - | | Free Cash Flow Growth | - | Approximately 12% - 13% | Non-GAAP Guidance Reconciliation The company provided a reconciliation of GAAP to non-GAAP operating margin and diluted net income per share for Q3 and full-year FY26, with key adjustments including amortization of purchased intangibles, stock-based compensation expense, and restructuring charges, and a projected non-GAAP tax rate of 22.0% for fiscal 2026 Full Year FY26 Operating Margin Reconciliation | Item | Percentage | | :-------------------------------- | :--------- | | GAAP Operating Margin | 21.2% | | Plus: Amortization of purchased intangibles | 3.7% | | Plus: Stock-based compensation expense | 8.4% | | Plus: Restructuring | 0.8% | | Non-GAAP Operating Margin | 34.1% | Q3 FY26 Diluted Net Income Per Share Reconciliation | Item | Amount | | :-------------------------------- | :----- | | GAAP Diluted Net Income Per Share Range | $1.60 - $1.62 | | Plus: Amortization of purchased intangibles | $0.40 | | Plus: Stock-based compensation expense | $0.88 | | Plus: Restructuring | $0.30 | | Less: Income tax effects and adjustments | $(0.34) | | Non-GAAP Diluted Net Income Per Share | $2.84 - $2.86 | FY26 Diluted Net Income Per Share Reconciliation | Item | Amount | | :-------------------------------- | :----- | | GAAP Diluted Net Income Per Share Range | $6.99 - $7.03 | | Plus: Amortization of purchased intangibles | $1.60 | | Plus: Stock-based compensation expense | $3.57 | | Plus: Restructuring | $0.34 | | Less: Income tax effects and adjustments | $(1.17) | | Non-GAAP Diluted Net Income Per Share | $11.33 - $11.37 | - The projected GAAP tax provision for Q3 FY26 is approximately 23.0% and for full-year FY26 is 22.5%[7] - The non-GAAP tax provision uses a long-term projected tax rate of 22.0%[7] Business Updates Product Releases and Enhancements Salesforce delivers three major updates annually for its core platform and apps, with additional regular updates across its portfolio, all resulting from multi-year R&D investments aimed at improving customer cost savings, efficiency, and trust, including the latest Summer 2025 Product Release - Salesforce releases major updates for its core platform and apps three times a year, with additional regular updates[9] - These releases are a result of significant research and development investments, designed to help customers drive cost savings, boost efficiency, and build trust[9] - The latest major release is the Summer 2025 Product Release[11] Environmental, Social, and Governance (ESG) Strategy Salesforce maintains an active ESG strategy, with details on its latest initiatives and priorities available in its Stakeholder Impact Report - Information on Salesforce's latest ESG initiatives and priorities is available in its Stakeholder Impact Report[12] Company Information Quarterly Conference Call Salesforce will host a conference call at 2:00 p.m. (PT) / 5:00 p.m. (ET) to discuss its financial results with the investment community, with webcast and replay details available on its Investor Relations website - A conference call to discuss financial results is scheduled for 2:00 p.m. (PT) / 5:00 p.m. (ET)[13] - Live webcast and replay details will be available on the Salesforce Investor Relations website[13] About Salesforce Salesforce is the world's 1 AI CRM, assisting organizations of all sizes in transforming their businesses with AI, and its Agentforce solution integrates with Customer 360 applications, Data Cloud, and Einstein AI to create a unified, trusted platform where humans and AI agents collaborate for customer success - Salesforce is the world's 1 AI CRM, helping organizations reimagine their business with AI[14] - Agentforce, the first digital labor solution for enterprises, integrates with Customer 360 applications, Data Cloud, and Einstein AI to create a limitless workforce[14] Forward-Looking Statements and Risk Factors The press release contains forward-looking statements regarding financial and operating results, guidance, and product releases, which are subject to various risks, uncertainties, and assumptions, including the pending acquisition of Informatica, security and service performance, data center capacity, reliance on third-party providers, uncertainties in AI technologies, evolving ESG matters and government regulations, litigation, ability to expand new services (including AI and Agentforce), and successful integration of acquisitions - The press release contains forward-looking statements about the Company's financial and operating results and guidance, including expected GAAP and non-GAAP financial results, revenue growth, operating margin, and timing of product releases[15] - Key risks and uncertainties include the ability to consummate the pending acquisition of Informatica, maintaining security levels and service performance, securing sufficient data center capacity, reliance on third-party infrastructure providers, uncertainties regarding AI technologies and their integration, evolving ESG matters and government regulations, and the ability to successfully expand or introduce new services and product features, including related to AI and Agentforce[16] - Further information on these and other factors that could affect the Company's actual results is included in reports on Forms 10-K, 10-Q, and 8-K filed with the SEC[17] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Operations The condensed consolidated statements of operations show Salesforce's revenues, costs, and net income for the three and six months ended July 31, 2025, and 2024, with total revenues for Q2 FY26 at $10,236 million, up from $9,325 million in Q2 FY25, resulting in a net income of $1,887 million, up from $1,429 million in the prior year Three Months Ended July 31 (in millions) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Total Revenues | $10,236 | $9,325 | | Gross Profit | $7,994 | $7,166 | | Income from Operations | $2,332 | $1,783 | | Net Income | $1,887 | $1,429 | | Diluted Net Income Per Share | $1.96 | $1.47 | Six Months Ended July 31 (in millions) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Total Revenues | $20,065 | $18,458 | | Gross Profit | $15,558 | $14,137 | | Income from Operations | $4,274 | $3,492 | | Net Income | $3,428 | $2,962 | | Diluted Net Income Per Share | $3.55 | $3.03 | As Absolute Values The detailed absolute values of revenues, costs, and net income for the three and six months ended July 31, 2025 and 2024, are presented, showing growth in total revenues and net income year-over-year Condensed Consolidated Statements of Operations (in millions) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Subscription and support revenues | $9,690 | $8,764 | $18,987 | $17,349 | | Professional services and other revenues | $546 | $561 | $1,078 | $1,109 | | Total revenues | $10,236 | $9,325 | $20,065 | $18,458 | | Total cost of revenues | $2,242 | $2,159 | $4,507 | $4,321 | | Gross profit | $7,994 | $7,166 | $15,558 | $14,137 | | Total operating expenses | $5,662 | $5,383 | $11,284 | $10,645 | | Income from operations | $2,332 | $1,783 | $4,274 | $3,492 | | Net income | $1,887 | $1,429 | $3,428 | $2,962 | | Diluted net income per share | $1.96 | $1.47 | $3.55 | $3.03 | As Percentage of Total Revenues In Q2 FY26, subscription and support revenue constituted 95% of total revenues, consistent with the six-month period, while gross profit margin was 78%, operating income margin improved to 23%, and net income margin rose to 18% Three Months Ended July 31 (as % of total revenues) | Metric | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Subscription and support | 95 % | 94 % | | Professional services and other | 5 | 6 | | Total revenues | 100 | 100 | | Total cost of revenues | 22 | 23 | | Gross profit | 78 | 77 | | Total operating expenses | 55 | 58 | | Income from operations | 23 | 19 | | Net income | 18 % | 15 % | Six Months Ended July 31 (as % of total revenues) | Metric | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Subscription and support | 95 % | 94 % | | Professional services and other | 5 | 6 | | Total revenues | 100 | 100 | | Total cost of revenues | 22 | 23 | | Gross profit | 78 | 77 | | Total operating expenses | 56 | 58 | | Income from operations | 22 | 19 | | Net income | 17 % | 16 % | Condensed Consolidated Balance Sheets As of July 31, 2025, Salesforce reported total assets of $97,573 million, a decrease from $102,928 million at January 31, 2025, with total liabilities also decreasing to $36,245 million from $41,755 million, while total stockholders' equity slightly increased to $61,328 million from $61,173 million Condensed Consolidated Balance Sheets (in millions) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :-------------- | :--------------- | | Cash and cash equivalents | $10,365 | $8,848 | | Total current assets | $25,331 | $29,727 | | Total assets | $97,573 | $102,928 | | Total current liabilities | $22,532 | $27,980 | | Total liabilities | $36,245 | $41,755 | | Total stockholders' equity | $61,328 | $61,173 | Condensed Consolidated Statements of Cash Flows For the six months ended July 31, 2025, net cash provided by operating activities was $7,216 million, a slight increase from $7,139 million in the prior year, while net cash used in investing activities was $(402) million, and net cash used in financing activities decreased to $(5,423) million due to reduced common stock repurchases Six Months Ended July 31 (in millions) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net income | $3,428 | $2,962 | | Net cash provided by operating activities | $7,216 | $7,139 | | Net cash provided by (used in) investing activities | $(402) | $(10) | | Net cash used in financing activities | $(5,423) | $(7,910) | | Cash and cash equivalents, end of period | $10,365 | $7,682 | - Repurchases of common stock decreased from $6,468 million in the six months ended July 31, 2024, to $4,858 million in the same period of 2025[24] Additional Financial Metrics Remaining Performance Obligation (RPO) As of July 31, 2025, Salesforce's total remaining performance obligation (RPO) was $59.9 billion, comprising $29.4 billion in current RPO and $30.5 billion in noncurrent RPO, representing a decrease from $63.4 billion at January 31, 2025, but an increase from $53.5 billion at July 31, 2024 Remaining Performance Obligation (in billions) | As of | Current | Noncurrent | Total | | :---------------- | :------ | :--------- | :---- | | July 31, 2025 | $29.4 | $30.5 | $59.9 | | April 30, 2025 | $29.6 | $31.3 | $60.9 | | January 31, 2025 | $30.2 | $33.2 | $63.4 | | July 31, 2024 | $26.5 | $27.0 | $53.5 | - Current remaining performance obligation (cRPO) was $29.4 billion, up 11% Y/Y and 10% in constant currency[4] Unearned Revenue Unearned revenue at July 31, 2025, was $16,555 million, a decrease from $20,743 million at the beginning of the six-month period, with billings and other for the six months ended July 31, 2025, at $15,877 million, leading to $18,895 million in revenue recognized over time Unearned Revenue (in millions) | Metric | July 31, 2025 | July 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Unearned revenue, end of period | $16,555 | $15,222 | Six Months Ended July 31 (in millions) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Billings and other | $15,877 | $14,677 | | Revenue recognized over time | $(18,895) | $(17,423) | Disaggregation of Revenue This section breaks down Salesforce's revenue by its service offerings and geographic regions, providing insight into the performance of different product categories and market segments Subscription and Support Revenue by Service Offerings For the three months ended July 31, 2025, Service revenue was the largest component at $2,458 million, followed by Sales at $2,267 million, and Platform and Other at $2,084 million, with Integration and Analytics revenue showing strong growth, reaching $1,516 million Subscription and Support Revenue by Service Offerings (Three Months Ended July 31, in millions) | Service Offering | 2025 | 2024 | | :----------------------- | :----- | :----- | | Sales | $2,267 | $2,071 | | Service | $2,458 | $2,257 | | Platform and Other | $2,084 | $1,786 | | Marketing and Commerce | $1,365 | $1,308 | | Integration and Analytics | $1,516 | $1,342 | | Total | $9,690 | $8,764 | Total Revenue by Geographic Locations The Americas region continued to be the largest revenue contributor, generating $6,736 million for the three months ended July 31, 2025, with Europe contributing $2,429 million and Asia Pacific contributing $1,071 million, demonstrating broad geographic revenue generation Total Revenue by Geographic Locations (Three Months Ended July 31, in millions) | Region | 2025 | 2024 | | :------------- | :----- | :----- | | Americas | $6,736 | $6,201 | | Europe | $2,429 | $2,184 | | Asia Pacific | $1,071 | $940 | | Total | $10,236 | $9,325 | Constant Currency Growth Rates For the three months ended July 31, 2025, total subscription and support revenue grew 9% in constant currency, with Platform and Other showing the highest growth at 16%, while total revenue by geographical region also grew 9% in constant currency, led by Asia Pacific at 11%, and current remaining performance obligation grew 10% in constant currency Subscription and Support Revenue Constant Currency Growth Rates (Three Months Ended July 31, 2025 vs. 2024) | Service Offering | Growth Rate | | :----------------------- | :---------- | | Sales | 8% | | Service | 8% | | Platform and Other | 16% | | Marketing and Commerce | 3% | | Integration and Analytics | 12% | | Total Growth | 9% | Revenue Constant Currency Growth Rates by Geographical Region (Three Months Ended July 31, 2025 vs. 2024) | Region | Growth Rate | | :------------- | :---------- | | Americas | 9% | | Europe | 7% | | Asia Pacific | 11% | | Total Growth | 9% | - Current remaining performance obligation constant currency growth rate was 10% as of July 31, 2025, compared to July 31, 2024[30] Non-GAAP Financial Measures Reconciliation Non-GAAP Income from Operations and Operating Margin For the three months ended July 31, 2025, non-GAAP income from operations was $3,509 million, resulting in a non-GAAP operating margin of 34.3%, an increase from 33.7% in the prior year, compared to a GAAP operating margin of 22.8% for the same period Three Months Ended July 31 (in millions, except %) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | GAAP Income from Operations | $2,332 | $1,783 | | Non-GAAP Income from Operations | $3,509 | $3,144 | | GAAP Operating Margin | 22.8 % | 19.1 % | | Non-GAAP Operating Margin | 34.3 % | 33.7 % | Six Months Ended July 31 (in millions, except %) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | GAAP Income from Operations | $4,274 | $3,492 | | Non-GAAP Income from Operations | $6,681 | $6,072 | | GAAP Operating Margin | 21.3 % | 18.9 % | | Non-GAAP Operating Margin | 33.3 % | 32.9 % | Non-GAAP Net Income and Diluted Net Income Per Share For the three months ended July 31, 2025, non-GAAP net income was $2,795 million, leading to a non-GAAP diluted net income per share of $2.91, compared to GAAP net income of $1,887 million and GAAP diluted net income per share of $1.96 Three Months Ended July 31 (in millions, except per share) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | GAAP Net Income | $1,887 | $1,429 | | Non-GAAP Net Income | $2,795 | $2,495 | | GAAP Diluted Net Income Per Share | $1.96 | $1.47 | | Non-GAAP Diluted Net Income Per Share | $2.91 | $2.56 | Six Months Ended July 31 (in millions, except per share) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | GAAP Net Income | $3,428 | $2,962 | | Non-GAAP Net Income | $5,294 | $4,902 | | GAAP Diluted Net Income Per Share | $3.55 | $3.03 | | Non-GAAP Diluted Net Income Per Share | $5.48 | $5.01 | Computation of Basic and Diluted GAAP and Non-GAAP Net Income Per Share This section details the calculation of both basic and diluted net income per share under GAAP and non-GAAP measures, showing the shares used in computation for the three and six months ended July 31, 2025 and 2024 Three Months Ended July 31 (per share data) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | GAAP Basic Net Income Per Share | $1.97 | $1.48 | | Non-GAAP Basic Net Income Per Share | $2.92 | $2.59 | | GAAP Diluted Net Income Per Share | $1.96 | $1.47 | | Non-GAAP Diluted Net Income Per Share | $2.91 | $2.56 | - Shares used in computing diluted net income per share for Q2 FY26 were 962 million (GAAP and Non-GAAP)[34] Free Cash Flow For the six months ended July 31, 2025, free cash flow, a non-GAAP measure, was $6,902 million, a slight increase from $6,839 million in the prior year, derived from GAAP net cash provided by operating activities of $7,216 million, less capital expenditures of $314 million Free Cash Flow (in millions) | Metric | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :-------------------------------- | :------------------------------- | :----------------------------- | | GAAP Net Cash Provided by Operating Activities | $740 | $7,216 | | Capital Expenditures | $(135) | $(314) | | Free Cash Flow | $605 | $6,902 | Explanation of Non-GAAP Financial Measures This section clarifies the company's use of non-GAAP financial measures, explaining that they are supplemental to GAAP and provide a more complete view of operational performance by excluding certain items like stock-based compensation, amortization of purchased intangibles, restructuring charges, and strategic investment gains/losses, which are not considered reflective of core ongoing operations - Non-GAAP financial measures are used to provide supplemental information to investors and enable evaluation of the Company's results in the same way management does, offering a more complete view of operational performance[36][37] - Non-GAAP operating margin excludes stock-based compensation expense, amortization of acquisition-related intangibles, and charges associated with restructuring activities[38] - Non-GAAP net income per share excludes stock-based compensation expense, amortization of purchased intangibles, restructuring charges, and income tax adjustments[38] - The company uses a fixed long-term projected non-GAAP tax rate of 22.0% for fiscal 2026[40] - Constant currency information is presented to assess underlying business performance excluding the effect of foreign currency rate fluctuations[41] - Data Cloud and AI annual recurring revenue (ARR) is defined as the annualized recurring value of active Data Cloud and certain generative Artificial Intelligence (AI) subscription agreements[42] - Free cash flow is defined as GAAP net cash provided by operating activities, less capital expenditures[42]