Salesforce Inc (CRM) — Q1 2026 Earnings Call Transcript

Thank you. Good afternoon. Thanks for joining us today on our fiscal 2026 first quarter results conference call. Our press release, SEC filings, and a replay of today's call can be found on our website. Joining me on the call today is Marc Benioff, Chair and CEO, and Robin Washington, Chief Operating and Finance Officer. In addition, we also have Srini Talabergata, President, Chief Engineering and Customer Success Officer, and Miguel Milano, President and Chief Revenue Officer, joining us for the Q&A portion of the call. Some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions, which could change. Should any of these risks materialize or should our assumptions prove to be incorrect, actual company results or outcomes could differ materially from these forward-looking statements. A description of these risks, uncertainties, assumptions, and other factors that could affect our financial results and outcomes is included in our SEC filings, including our most recent report on Forms 10-K, 10-Q, and any other SEC filings. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. As a reminder, our commentary today will include non-GAAP measures. Reconciliations between our GAAP and non-GAAP results and guidance can be found in our earnings materials and press release. And with that, let me hand the call to Marc.

Alright. Hey. Thanks so much, Mike. I really appreciate everything you're doing and before I get into all these exciting highlights from the quarter, there's so much to talk about. I just want to say a few words about Informatica. I'm sure everybody knows I love Informatica. I've been working with this company since probably 2006. We have a bossy, a former CEO last night, sent me a photo of me and him together at their user conference. I'm so excited that we have signed this definitive agreement to acquire them for $8 billion, which upon close is going to unite our number one AI CRM and, of course, their number one AI MDM and ETL. Bringing these things together, well, I couldn't be more excited about this acquisition. I've followed it very closely. The way they've rewritten their product into the cloud, their incredible engineering leadership, especially some of their incredible new engineering data centers, and what they've built is just awesome. I'm just so impressed with Informatica. We have the company that we really love. We love the people. We've loved the leadership, and I have to say we probably spent the last twenty years discussing how to bring the companies together. We spent a lot of time not only with their new CEO, but with their engineering teams. It all led to this incredible moment. It's an awesome acquisition for us. It's a transformational step. It's a great price for the company. We just want to be as disciplined as possible. At the end of the day, I know all of you already know this, but this is a great price for a great company. It’s got great multiples, it’s accretive, non-dilutive. And Informatica is more important to our customers than ever before because of what's happened with AI. Every AI transformation is a data transformation. The ability to unify or harmonize or activate all the data across the entire enterprise is the key. If you can imagine, you need to deploy all of this incredible agentic data. You've got to get your data right in Informatica combined with Salesforce data cloud and other key assets that we're going to bring to bear. We have big goals for the size and scale that that data business can get to. Robin will go through that in detail. We will work hard to advance this mission of Informatica to make sure that our customers' data is incredible. So, anyway, let me turn it over to Robin to give perspective on Informatica, and then we'll get into the quarter.

Thanks, Marc. We're incredibly excited to welcome Informatica to Salesforce upon closing. Our responsible M&A framework that Marc just spoke to is a key pillar of our capital allocation strategy. It's focused on three areas: customer success and strategic fit, acceleration, and value. Our acquisition strategy is methodical, it's patient, and it's decisive. We expect to achieve accretion on non-GAAP operating margin, non-GAAP EPS, and free cash flow by year two post-close. We are laser-focused on speed of integration. By leveraging our focus on operational excellence and our M&A integration playbook, we aim to achieve accretion as quickly as possible. As a result of our durable free cash flow generation and strong balance sheet, this deal will be financed through a combination of cash and new debt, resulting in no share dilution. This transaction is not expected to disrupt our capital return strategy, inclusive of our share repurchase program and our dividend. Finally, we expect to close by early fiscal year 2027. We view this acquisition as a key enabler for Salesforce's next phase of AI-driven growth and believe it will amplify our market differentiation and deliver sustained benefits for all Salesforce stakeholders. Now back to you, Marc.

Alright. Right on. Well, Robin, thank you so much. You are doing a fantastic job as our new cohost. We are just extremely excited to welcome Informatica, and I can't wait to close the deal. In Q1, we delivered $9.83 billion in revenue, which was up 8% year-over-year. Subscription and support, 9% in constant currency. We saw very strong growth in our small and medium market business. We delivered 32.3% non-GAAP margin in the quarter. We had $60.9 billion in remaining performance obligations (RPO), up 13% year over year. And we had exceptional performance with current remaining performance obligations (CRPO) growing 11% year over year in constant currency. We're raising our fiscal year 2026 guidance by $400 million to $41.3 billion at the high end of the range. This was just a great quarter, and that is why we're able to deliver this incredible raise. We are very well positioned to take advantage of this multitrillion-dollar opportunity in AI and enterprise software. We're also excited about AgentForce, where we now have more than four thousand paid deals. AgentForce has reached more than a hundred million in AOV. We launched hundreds of prebuilt AgentForce templates for different industries, roles, and tasks. We're learning a lot about how to make agents successful, productive, and scale. We've introduced flex credits, a new consumption-based pricing model, after a huge amount of customer feedback. We've done now eight or seven or eight thousand agent force deals, and it's only been a few months. The success of AgentForce is building on the strong growth we've seen in our data cloud, which surpassed twenty-two trillion records up 175% year over year. This is an exciting moment for us.

Thank you, Marc. I've been in the role for a little over fifty days now. I've spent that time deeply listening to our shareholders, employees, and customers. And what I've heard has been instrumental in shaping my top priorities for the year ahead, which are delivering customer success and accelerating AI adoption to drive growth, driving operational excellence to maximize shareholder value, and responsible capital allocation. We're already making progress against these priorities. Our core clouds continue to be a cornerstone of our product portfolio. Our industry-specific solutions continue to deliver significant value to customers like the US Air Force and University of Chicago Medicine. Nearly half of our top one hundred deals included an industry cloud. We're innovating faster than ever, and this is a core part of how we will drive operational excellence to maximize shareholder value.

To discuss the quarter in more context, revenue was $9.83 billion up 8% year-over-year in nominal and constant currency, and we had an operating cash flow of $6.5 billion. We saw strong new business growth in the UK, France, Canada, and Asia Pacific, particularly South Asia. Our small and mid-market businesses performed exceptionally well, and comms, media, and health and life sciences were strong in this quarter. The balance sheet remains healthy, and we're continuing to invest where it matters most.

We've been gutting operating expenses to fuel innovation in AI, helping drive Customer 360 and future top-line leverage. This approach will maximize shareholder value while ensuring we are focused on efficiency and profitability. Our capital return strategy is proceeding well, and we expect revenue growth together with our investment in accelerating AI adoption. As we speak, our general mission continues to gain momentum.

Excellent. Thank you, guys, for taking the question, and congratulations on a great start to the fiscal year. Can you talk to us about some of the specifics in terms of when we can see acceleration in growth from the AgentForce and data cloud initiatives?

It's a big commitment of the company that we are gonna, first and foremost, maintain our margin framework while being deeply committed to growth. Growth is important because every company is coming to us saying, how do I go forward and how do I deliver this incredible agentic revolution? One area of growth is happening already in the small and medium business sector, and we are hiring another one to two thousand more salespeople. We can supercharge these key areas of our business.

Thank you for the question. Obviously, growth is our obsession. We have strong pipeline, open pipeline, great pipe gen momentum, and velocity. We're seeing demand across every geography, industry, and account; everyone we meet needs to activate their data. Our efforts in expanding distribution capacity are crucial right now.

We do see this overall balanced portfolio reflecting in our guidance and the puts and takes. From what we know, our strong momentum in data and AI gives us confidence in our positions today. We're excited about our capacity and the options we have to grow.

Can you talk a little bit about how the combined portfolio of Tableau, MuleSoft, and Informatica is going to change the game for you around agents and the whole company?

The agentic layer and Tableau’s integration with our data cloud is incredibly powerful. We're super excited about that. Tableau is now part of every core functionality within Salesforce and it will drive more agents and more conversations.

What indicators are you looking at that give you the comfort that this cycle is going to be material for the company? What do you see on the leading edge in terms of applications, impact, and ROI of AgentForce?

This is a transformational initiative. The proof is in the numbers; we have seen rapid adoption of AgentForce, which has exceeded our expectations. We will relentlessly drive our distribution organization to support these initiatives and deliver on customer value around success metrics.

What is holding the enterprise back in terms of a larger adoption of AgentForce?

While there is a high consumer adoption of AI models, enterprises have regulated datasets, which restricts the use of such technologies unless they are tightly controlled and governed. The Informatica acquisition is a critical step in addressing these limitations. We have the opportunity to harmonize all data and extend our digital labor capabilities into all enterprises.

How do you think Salesforce can help companies navigate the change coming from AI, while maintaining a human touch or human oversight?

AI can create significant efficiencies, but it does not eliminate the need for human involvement or oversight. We need digital labor combined with human insight to lead the transformation effectively, and we will support this mission by continually advancing our AI capabilities.