Losses Moderate

Salesforce will host its conference call in 15 minutes. You can register to join here.

While Salesforce shares are down, here are a couple reasons to be happy with tonight’s earnings:

• Adjusted EPS guidance of $11.35 at the midpoint beats Wall Street’s current expectations of $11.29.
• The company is now authorized to rebuy $50 billion in shares. That’s a large number considering Salesforce is worth $245 billion at today’s close.
• The company is on track to deliver $15 billion in operating cash flow this year.

Again, Wall Street is focusing mostly on the company’s full-year revenue guide, which is the reaosn shares are down. Yet, all these other areas are fairly optimistic.

In our first update we posted that Salesforce had dropped by about 4% after issuing its prior two earnings.

Tonight looks to continue that trend. Shares are down 3.9% before the company’s conference call. If these losses hold tomorrow it would mean Salesforce has dropped by roughly the same amount for three straight earnings releases.

As of 4:24 p.m. ET, Salesforce shares are down 4.2%.

It’s a tough after hours for SaaS stocks. Shares of GitLab are down 89% after issuing disappointing Fiscal 2026 revenue guidance.

CRM | Salesforce Q2’26 Earnings Highlights:

• Adj. EPS: $2.91 [✅]; UP +13.5% YoY
• Revenue: $10.2B [✅]; UP +10% YoY
• Adj. Gross Margin: 34.3% [✅]; UP +60 bps YoY
• Net Income: $1.887B [✅]; UP +32.2% YoY
• Operating Cash Flow: $7.216B; UP +1.1% YoY
• Free Cash Flow: $605M; DOWN -19.8% YoY

Outlook:

• Revenue: $10.24 – $10.29B [✅]
  • Guidance reflects continued strong demand across all segments, particularly in AI and Data Cloud.
  • Expectations for growth driven by existing customer expansions and new customer acquisitions.

Q2 Segment Performance:

• Subscription & Support Revenue: $9.7B [✅]; UP +11% YoY
• Professional Services Revenue: $546M [✅]; DOWN -2.7% YoY

Other Key Q2 Metrics:

• Adj. Operating Income: $2.332B [✅]; UP +30.8% YoY
• Adj. Operating Expenses: $5.662B [✅]; UP +5.2% YoY
• R&D Expenses: $1.481B [✅]; UP +9.8% YoY
• Effective Tax Rate: 21.6% (vs. 22.3% YoY)
• Current Remaining Performance Obligation: $29.4B; UP +11% YoY

CEO Commentary:

• Marc Benioff: “We delivered an outstanding quarter to close out the first half of the year, with strong performance across revenue, margin, cash flow, and cRPO—and we remain on track for fiscal 2026 to be a record year with nearly $15 billion in operating cash flow. These results reflect the success of our customers—like Pfizer, Marriott, and the U.S. Army—who are transforming into agentic enterprises, where humans and AI agents work side by side to reimagine workflows, accelerate productivity, and deliver customer success.”

CFO Commentary:

• Robin Washington: “Our second quarter results highlight our ability to drive profitable growth while helping our customers and ourselves become agentic enterprises. We exceeded all our financial targets while achieving our tenth consecutive quarter of operating margin expansion, delivering strong returns and maximizing value for our customers and shareholders.”

“We delivered an outstanding quarter to close out the first half of the year, with strong performance across revenue, margin, cash flow, and cRPO—and we remain on track for fiscal 2026 to be a record year with nearly $15 billion in operating cash flow.”

Marc Benioff

Revenue was $10.2 billion, above the $10.14 billion consensus estimate. EPS was $2.91, above the $2.78 estimate. Salesforce reported a 10% year-over-year revenue increase for Q2 2026, with subscription and support revenue rising 11%.

The company achieved a GAAP operating margin of 22.8% and a non-GAAP margin of 34.3%. Salesforce returned $2.6 billion to shareholders through share repurchases and dividends and announced a $20 billion increase to its share repurchase program.

The company raised its full-year revenue guidance to $41.1 billion to $41.3 billion and operating cash flow growth to 12%-13%.

Revenue hit $10.24 billion (beats Wall Street estimates that were ~$10.14 billion).

EPS of $2.91 beats estimates of ~$2.78.

Looks like a slight beat on both revenue and EPS but shares are down 4% immediately. We’ll continue updating this live blog with news and analysis.

Salesforce earnings are expected just moments after the closing bell. If you’re looking for new and analysis, simply leave this page open and new updates will post automatically right after the company’s earnings are released. 

Just a couple quarters ago Salesforce shares jumped after earnings after the company spoke bullishly about building traction on its AgentForce platform.

Fast forward to today and Wall Street has turned bearish on the stock. Salesforce shares are down 22% year-to-date. It’s far from the only software stock to see underwhelming returns so far this year.

The big fear holding software stocks back is that rather than providing a powerful tailwind, AI will reduce the pricing power of leading companies. Salesforce will have an opportunity to turn around this narrative tonight. Snowflake recently reported earnings and after struggling during the summer route in software stocks jumped more than 20% the next day as AI demand caused an inflection in product revenue.

On average over the past year, the stock moved just under -2.00% after a week of trading following an earnings release.