Earnings Live: Quarterly Results Are In

Salesforce’s Q1 results provide direct answers to the themes Wall Street analysts have been pressing on:

1. Subscription Revenue Growth Stability
   Growth came in at +8% YoY, consistent with prior quarters and in line with full-year guidance of ~9.5%, validating Salesforce’s predictability even as macro conditions remain mixed.

2. Data Cloud & Agentforce Monetization
   Data Cloud ARR passed $1B, and half of all Agentforce deals are now paid. This shows Salesforce is monetizing AI at scale, a crucial point of investor focus.

   

3. Margin Discipline Amid Expansion
   Salesforce delivered 19.8% GAAP and 32.3% non-GAAP operating margin in Q1, proving its margin expansion strategy is holding even as AI and cloud investments grow.

4. Guidance Reliability
   The company not only exceeded Q1 expectations but raised its full-year revenue outlook by $400M, signaling confidence in execution and demand visibility.

5. Informatica Acquisition and Integration Risk
   While the deal won’t close until FY27, management reiterated it would not impact FY26 guidance, a subtle reassurance to those watching integration risk.

“Salesforce Stock Could Jump If Margin Gains Hold as AI Sales Ramp.”

The company delivered proof this quarter that it can scale AI offerings without margin erosion—a critical Wall Street litmus test. If subsequent quarters show similar operating leverage, investors could re-rate the stock higher even in a slower revenue environment.

Salesforce (CRM) delivered a standout Q1 FY26 performance, beating expectations across all key metrics and affirming its position as a top player in enterprise AI and cloud software. The company reported revenue of $9.8 billion, up 8% year-over-year, driven by robust subscription and support revenue of $9.3 billion (also up 8%). Importantly, the company’s current remaining performance obligation (cRPO) jumped 12% year-over-year, a bullish forward-looking signal that demand remains strong.

CEO Marc Benioff highlighted the power of Salesforce’s unified AI platform, calling out products like Agentforce, Data Cloud, and Slack as core pieces of a new “digital labor force” strategy. The company now counts over 8,000 Agentforce deals, with more than half being paid deployments. Data Cloud has reached over $1 billion in ARR, growing more than 120% year-over-year, and ingesting a massive 22 trillion records this quarter alone.

Salesforce also raised its full-year revenue guidance by $400 million to $41.3 billion, and maintained its non-GAAP operating margin target of 34%—reaffirming its dual focus on growth and profitability. The quarter also delivered $6.5 billion in operating cash flow, up 4% year-over-year, with $3.1 billion returned to shareholders through repurchases and dividends.

Salesforce has a mostly solid earnings track record, but the last few quarters have delivered a mix of cautious top-line guidance and strong bottom-line execution. In Q4 FY25, Salesforce reported $9.29 billion in revenue (up 11% YoY) and non-GAAP EPS of $2.29, both beating expectations. Yet, FY26 revenue guidance of $37.7–$38.0 billion came in slightly light, which muted the stock’s response.

Before that, Q3 saw EPS of $2.11 vs. estimates of $2.06, and revenue was also a modest beat. While margins have consistently impressed — helped by operating discipline and reduced M&A — the Street has been quick to temper enthusiasm when forward revenue visibility weakens. CRM tends to trade flat to down on results that beat EPS but fail to excite on top-line acceleration. The lesson? To spark upside, Salesforce needs to show reacceleration or new AI monetization drivers — not just cost control.

Investor sentiment toward Salesforce remains mixed. The stock is still down more than 16% year-to-date, even as margins have hit all-time highs and AI momentum is building. Analysts appear cautiously optimistic — 18 out of 23 rate the stock a Buy — but the average price target of $361 implies that a meaningful re-rating would require new growth drivers. Morningstar’s $315 fair value estimate adds further weight to the idea that CRM is fairly valued unless execution improves.

Right now, the market seems to be pricing in steady but unspectacular top-line growth, mid-30% margins, and modest AI contribution. That means Salesforce could rally if it shows faster-than-expected ramp in Agentforce or Data Cloud ARR, or a material acceleration in current RPO, which would imply stronger near-term pipeline health. A beat-and-raise on EPS isn’t enough — what would truly shift sentiment is evidence that AI-led bundles are expanding deal size, not just being adopted.

Salesforce stock could surge if the company proves that its AI and Data Cloud ARR — which hit $900 million last quarter — is accelerating beyond early adoption into true enterprise-scale monetization. A sequential ARR jump or commentary linking AI usage directly to expanded deal value could re-ignite excitement around Salesforce’s GenAI strategy. Investors will also be looking for double-digit subscription revenue growth, particularly in core clouds like Sales and Data Cloud, to validate multicloud expansion across enterprise verticals.

Another potential upside trigger: strong current RPO growth. If this short-term demand proxy rebounds from last quarter’s 9% pace, it will suggest improving sales velocity despite macro caution. And if Salesforce maintains or expands its 33%+ operating margin while continuing to deliver robust free cash flow, the narrative of a leaner, AI-leveraged Salesforce gets much stronger. A wave of large, multi-cloud deals with high attach rates — especially with industry bundles — would round out a bullish earnings release.

1. Subscription Revenue Durability

Recurring revenue from Subscription and Support grew 10% in FY25 and will be a key signal of customer retention amid tightening IT budgets.

2. AI Monetization Through Agentforce & Data Cloud

Salesforce claims $900M in ARR tied to AI and Data Cloud — but investors need evidence of revenue uplift, not just platform usage.

3. Free Cash Flow Leverage

With FY25 FCF up 31% YoY to $12.4B, the question is whether this margin expansion is sustainable as investment in AI accelerates.

4. RPO and Deal Composition

Large multicloud deals are expanding, but slowing current RPO could signal macro softness or sales cycle elongation.

5. Platform Integration Payoff

Investors want to see measurable returns from prior acquisitions (Slack, MuleSoft, Tableau) and cross-cloud bundling.