Salesforce, Inc. (NYSE: CRM)

Salesforce's first quarter fiscal 2026 results demonstrated strong execution across all key metrics, with total revenue reaching $9.8 billion, representing 8% year-over-year growth both on a reported and constant currency basis. This growth was driven primarily by subscription and support revenue, which increased 8% to $9.3 billion (9% in constant currency), representing 95% of total revenue and highlighting the strength of the company's recurring revenue model.

The company's profitability metrics remained robust, with GAAP operating margin of 19.8% and non-GAAP operating margin of 32.3%. Net income increased modestly to $1.54 billion from $1.53 billion in the prior year, while diluted earnings per share improved to $1.59 on a GAAP basis and $2.58 on a non-GAAP basis, reflecting the benefit of ongoing share repurchase activities.

Current Remaining Performance Obligation (cRPO) grew an impressive 12% year-over-year to $29.6 billion (11% in constant currency), providing strong visibility into future revenue streams. This metric represents contracted revenue that has not yet been recognized and is expected to be recognized over the next 12 months, indicating healthy demand for Salesforce's solutions.

Cash flow generation remained strong with operating cash flow of $6.5 billion, up 4% year-over-year, and free cash flow of $6.3 billion, also up 4%. The company returned a significant $3.1 billion to shareholders during the quarter, including $2.7 billion in share repurchases and $402 million in dividends, demonstrating its commitment to returning capital to shareholders while investing in growth.

The standout performance came from Salesforce's AI and Data Cloud initiatives, with Data Cloud and AI annual recurring revenue exceeding $1 billion, up more than 120% year-over-year. This represents a significant milestone in the company's AI strategy and positions it well for continued growth in the rapidly expanding AI market.

Service Cloud generated the highest revenue at $2.33 billion, growing 7% year-over-year. This steady growth reflects continued demand for customer service solutions as organizations prioritize customer experience and support automation capabilities.

Sales Cloud revenue reached $2.13 billion, also growing 7% year-over-year. The consistent growth demonstrates the enduring strength of Salesforce's core CRM offering and its ability to help organizations optimize their sales processes and drive revenue growth.

Platform and Other showed the strongest growth at 14% year-over-year to $1.96 billion. This category includes Salesforce Platform, AppExchange, and other development tools, reflecting increased adoption of low-code/no-code development solutions and the growing ecosystem of third-party applications.

Integration and Analytics grew 10% to $1.54 billion, driven by strong demand for data integration and business intelligence solutions. This includes Tableau, MuleSoft, and other analytics tools that help organizations make data-driven decisions.

Marketing and Commerce experienced slower growth at 3% to $1.33 billion (4% in constant currency), reflecting continued challenges in the digital marketing space as organizations optimize their marketing spend and focus on ROI-driven initiatives.

Americas remained Salesforce's largest market, generating $6.47 billion in revenue, representing 66% of total revenue and growing 7% year-over-year. The steady growth in this mature market demonstrates Salesforce's continued ability to expand within existing accounts and win new customers in its home region.

Europe showed strong performance with revenue of $2.34 billion, growing 9% year-over-year both on a reported and constant currency basis. This represents 24% of total revenue and reflects successful expansion in European markets despite macroeconomic headwinds in the region.

Asia Pacific delivered the highest growth rate at 10% year-over-year (11% in constant currency) to $1.02 billion, representing 10% of total revenue. This strong performance demonstrates Salesforce's continued expansion in high-growth markets and its ability to localize solutions for diverse regional requirements.

The geographic diversification provides Salesforce with resilience against regional economic fluctuations while offering significant expansion opportunities in international markets. The stronger growth rates in Europe and Asia Pacific suggest successful market penetration and increased adoption of cloud-based CRM solutions globally.

Salesforce's AI and Data Cloud initiatives represent a transformative growth driver, with several key achievements highlighting the company's leadership in enterprise AI:

Agentforce and AI Adoption

• Deal Volume: Closed over 8,000 Agentforce deals since launch, with half being paid deals
• Customer Service Impact: Agentforce handled over 750,000 requests on help.salesforce.com, reducing case volume by 7% year-over-year
• Enterprise Penetration: Nearly 60% of Q1 top 100 deals included Data Cloud and AI components
• Multi-Cloud Adoption: More than half of Q1 top 100 deals included 6+ Salesforce Clouds

Data Cloud Growth

Data Cloud demonstrated exceptional growth with 22 trillion records ingested in Q1, representing a 175% year-over-year increase. This massive data ingestion capability positions Salesforce as a central data platform for enterprises, enabling more sophisticated AI and analytics capabilities.

The Data Cloud and AI annual recurring revenue exceeding $1 billion represents a significant milestone, demonstrating that enterprise customers are willing to pay premium prices for advanced AI capabilities that deliver measurable business value.

Strategic Platform Integration

Salesforce has built what CEO Marc Benioff describes as "a deeply unified enterprise AI platform—with agents, data, apps, and a metadata platform—that is unmatched in the industry." This integration includes:

• Agentforce for autonomous AI agents
• Data Cloud for unified data management
• Customer 360 applications for comprehensive CRM
• Tableau for advanced analytics
• Slack for collaboration and communication

The announcement of the planned Informatica acquisition further strengthens this platform by adding industry-leading AI-powered Master Data Management (MDM) and Extract, Transform, Load (ETL) capabilities, creating what the company positions as "the most complete, intelligent AI and data platform for the enterprise."

Salesforce maintained strong operational efficiency while continuing to invest in growth initiatives and AI development:

• GAAP Operating Margin: 19.8% in Q1 FY2026, up from 18.7% in the prior year, demonstrating improved operational leverage
• Non-GAAP Operating Margin: 32.3%, compared to 32.1% in the prior year, showing consistent profitability execution
• Gross Profit Margin: 77% of total revenue, reflecting the high-margin nature of the software-as-a-service business model
• Operating Expenses: 57% of revenue, well-controlled despite increased investments in R&D and AI development

The company's expense structure reflects strategic priorities, with research and development representing 15% of revenue as Salesforce continues to invest heavily in AI capabilities, platform development, and innovation. Sales and marketing expenses remained at 35% of revenue, consistent with prior periods and reflecting the company's focus on growth and market expansion.

Stock-based compensation expense increased to $814 million from $750 million in the prior year, reflecting the company's continued investment in attracting and retaining top talent in competitive markets, particularly in AI and cloud technologies.

The company's restructuring initiatives, while generating $36 million in charges during the quarter, are expected to drive long-term operational efficiency and cost optimization as Salesforce adapts its organizational structure to support its AI-first strategy.

Salesforce raised its full-year guidance, reflecting confidence in its execution capabilities and market position:

Updated Full-Year FY2026 Guidance

• Revenue: $41.0 - $41.3 billion, up 8-9% year-over-year (raised by $400 million at the high end)
• Subscription & support revenue growth: Approximately 9.5% (9% in constant currency)
• GAAP operating margin: 21.6%
• Non-GAAP operating margin: 34.0%
• Operating cash flow growth: Approximately 10-11%
• Free cash flow growth: Approximately 9-10%

Q2 FY2026 Guidance

• Revenue: $10.11 - $10.16 billion, up 8-9% year-over-year
• GAAP diluted EPS: $1.80 - $1.82
• Non-GAAP diluted EPS: $2.76 - $2.78
• Current RPO growth: Approximately 10% (9% in constant currency)

The guidance incorporates a currency tailwind due to U.S. dollar weakening in Q1, with approximately $250 million positive foreign exchange impact expected for the full year. The company noted no anticipated impact from the planned Informatica acquisition based on expected closing timing in early FY2027.

Management's confidence in raising full-year guidance despite a challenging macroeconomic environment reflects the strength of Salesforce's AI strategy, the growing adoption of Data Cloud, and the company's ability to drive value for enterprise customers through integrated platform solutions.