Salesforce, Inc. (CRM) Earnings

Management highlights

### Strategic Focus on the Agentic Enterprise - Management frames agentic AI as the largest growth opportunity for Salesforce since moving CRM to the cloud, positioning the company as the world's number one agentic CRM. The 'SaaSpocalypse' narrative is redefined as the end of software that requires humans to do all work, replaced by autonomous agentic software that collaborates with employees to drive productivity and cost savings. - Customer success stories demonstrate tangible value: PenFed Credit Union cut call handle time by 10%, reduced after-call work by 50%, and expects $1.6 million in annual cost savings from AgentForce; UCLA Health cut provider pre-procedure preparation time from 90 minutes to 90 seconds and can see 40% more patients daily; Vivino supports 74 million users with only 37 customer service reps, cutting resolution time by 70% via autonomous agents. The company processed 28.6 trillion tokens in Q1, up 152% quarter-over-quarter, converted into 3.8 billion agentic work units, up 111% quarter-over-quarter, reflecting broad customer adoption. ### New Product Launches and Capabilities - Headless 360 was launched this quarter, exposing all Salesforce capabilities via MCP, APIs, and CLI to meet customers where they work, allowing agents and external coding tools to access Salesforce data and workflows from any platform. Since launch in April, Headless 360 has already processed 4.5 million MCP calls, and Salesforce handled nearly 1 trillion total API calls in Q1. - AgentForce Coworker, a new built-in autonomous agent for all Salesforce applications, converts user search into actionable work, eliminating cross-system data gathering that previously took up to 60 minutes per query. Over 1 billion internal Salesforce searches occur monthly, creating large immediate deployment potential. - The company completed the acquisition of Qualified, integrating its SDR agent Piper into the Salesforce platform; over 700 customers already use Piper, which engages 50% of Salesforce.com traffic and delivers 45% more pipeline than traditional web agents. ### Operational Excellence and Capital Allocation - Salesforce operates as its own 'Customer Zero', using its agentic tools internally to drive efficiency: AI coding tools doubled feature and code output year-over-year while reducing incidents and defects; internal Slackbot delivers 3.8 million hours of annualized productivity gains for employees. - The company commenced a $25 billion accelerated share repurchase (ASR), half of its total $50 billion repurchase authorization, reducing diluted Q1 share count by 10% year-over-year; the ASR alone cut share count by 103 million shares (11% of outstanding), boosting non-GAAP EPS by 23 cents and GAAP EPS by 14 cents. The company remains on track to hit its FY30 Rule of 50 profitability and growth framework.

Guidance

- Management raised the midpoint of full-year FY27 revenue guidance to a range of $45.9 billion to $46.2 billion, maintaining expected constant currency subscription and support growth of approximately 11% year-over-year. - Non-GAAP operating margin guidance for FY27 is reiterated at 34.3%; GAAP operating margin guidance is adjusted to 20.6%, driven by higher restructuring costs. - Operating cash flow and free cash flow guidance is updated to 4-5% year-over-year growth, reflecting a ~5 percentage point headwind from recent debt issuance tied to the ASR program. - Q2 FY27 revenue guidance is set at $11.27 billion to $11.35 billion, representing ~10% constant currency year-over-year growth, with Q2 CRPO growth expected to be approximately 13% constant currency. - Management confirms continued confidence that first half net new ACV growth will outpace total ACV growth, driving organic revenue reacceleration in the second half of FY27. Guidance reflects strong momentum in AgentForce, Data360, and Slack, offset by ongoing weakness in Marketing, Commerce, and Tableau, as well as expected higher license revenue volatility from the addition of Informatica on-premise business.

Segment performance

Total Q1 FY27 revenue was $11.13 billion, up 13% year-over-year (12% constant currency), beating prior guidance. Total Remaining Performance Obligation (CRPO) was $33.6 billion, up ~14% nominal (13% constant currency). AgentForce, the company's flagship agentic AI product, reached over $1 billion in ARR this quarter, and combined with Data360, total AI and data ARR hit $3.4 billion. 50% of AgentForce and Data360 bookings came from existing customer expansions. Core Sales and Service applications, which embed AgentForce capabilities, collectively represent more than 60% of Q1 net new ACV, with year-over-year seat growth for both human and agent users. Premium agentic SKUs anchored in Sales and Service (A1E and A4X) grew nearly 60% year-over-year. Slack was a key growth driver, accounting for nearly half of all Q1 deals over $1 million in new ACV, up 80% year-over-year; Slack Active Work Units (AWUs) grew nearly 350% quarter-over-quarter. The recently acquired Informatica, integrated into the Data360 suite, has seen accelerated revenue growth since acquisition, contributing to Q1 revenue outperformance alongside timing of professional services. Partially offsetting growth was ongoing softness in Commerce Cloud and weakening bookings and renewals for Tableau.

Risks & headwinds

- Ongoing softness in Commerce Cloud and increasing weakness in Tableau bookings and renewals act as a drag on overall topline growth. - The addition of Informatica's on-premise business introduces greater license revenue volatility to quarterly results, driven by the timing of large renewals. - Forward-looking growth and margin outcomes depend on successful execution of the second half revenue reacceleration plan, with market debate around whether strong agentic usage metrics will translate into corresponding bookings growth. - The new Headless 360 monetization model is still being developed with customers and partners, creating near-term uncertainty around how new use cases will translate to revenue. - All forward-looking statements are subject to general market and macroeconomic risks, which are detailed in the company's SEC 10-K and 10-Q filings.

Analyst Q&A

• Q: Beyond the published AgentForce adoption numbers, what unreported customer pipeline signals are you seeing that excites you about the AI transformation? /

  A: The biggest recent development is that AgentForce now replaces native Salesforce search, embedding agentic capabilities directly into the core user workflow for millions of daily users without requiring complex new implementations. AgentForce is already autonomously handling 4 million support inquiries on Salesforce's own help channels, more than double the volume handled by human agents, and autonomously qualified 220,000 leads in Q1 generating $42 million in new pipeline. Customer success stories like PenFed and UCLA Health help model adoption for other customers, as the pace of innovation currently outpaces broad customer adoption, so sharing real-world use cases is a key part of driving broader adoption.

• Q: With strong AgentForce usage metrics but lagging overall bookings growth and weakness in Tableau and Commerce, why are you confident in second half revenue reacceleration? /

  A: We have already seen net new ACV growth outpace total ACV growth in the second half of FY26, and this trend continues into the first half of FY27, which will flow through to revenue acceleration in H2. We closed 98 deals over $1 million in new ACV in Q1, with the top 10 deals delivering 2.5x the TCV of the top 10 deals last year, driven by three monetization levers: premium seat upgrades for existing customers (which grew 60% this quarter), new seat expansion into previously untapped user groups, and flex credit purchases for customer-facing agent use cases. The recently acquired Informatica has already seen significant booking acceleration beyond expectations, adding to topline growth. Headless 360 will also expand the addressable market by opening Salesforce to new users on third-party platforms.

• Q: How does Headless 360 work, and how do you avoid value abstraction if customers use Salesforce capabilities from third-party platforms or build in-house tools on top of your data? /

  A: Headless 360 means Salesforce exposes all its underlying capabilities via open MCP and APIs for use in any workflow or tool, not that Salesforce is removing its own applications. Customers are not using this to build replacement tools in-house; they are using it to access Salesforce value in their existing flow of work, which increases overall platform consumption. Early examples include Anthropic, which has seen 5x growth in Sales Cloud usage since adopting headless access via Slack and other tools. Open monetization for new headless use cases is still being developed with customers, but the platform already sees massive existing API usage, and new MCP tool calls are growing rapidly, creating new incremental revenue opportunities.

• Q: How do fast-growing token and AWU usage metrics translate to revenue, and how have you maintained stable gross margins despite surging token costs? /

  A: Higher AWU usage directly correlates to higher customer spending: the top 10 AWU customers have increased their total Salesforce spending by 1.5x over the past year, with usage monetized over time through consumption and expanded platform value. Margin stability comes from internal efficiency gains: Salesforce has kept engineering headcount mostly flat at ~15,000 for two years, using AI coding tools to double output while reducing defects, offsetting third-party token costs. The company's internal Customer Zero productivity program is core to hitting the long-term FY30 Rule of 50 target, as AI improves both top-line growth and operational efficiency.