Salesforce, Inc. (CRM) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presented a mixed outlook. Financial performance was strong, with revenue and margin growth, but was offset by risks from the Informatica acquisition and competitive pressures. The Q&A highlighted growth in small and medium markets, yet uncertainties were noted in customer behavior and macroeconomic factors. Shareholder returns were positive, but the market might be cautious due to acquisition risks and unclear guidance on AI adoption. Overall, the sentiment remains balanced, leading to a neutral stock price prediction.
Key Financial Performance
Revenue $9.83 billion, up 8% year-over-year. Strong growth in small and medium market business contributed to this increase.
Subscription and Support Revenue Grew 9% in constant currency. This growth was supported by strong performance in the small and mid-market segments.
Non-GAAP Operating Margin 32.3% in the quarter. Continued focus on margin goals helped maintain this level.
Operating Cash Flow $6.5 billion, up 4% year-over-year. Healthy cash flow generation contributed to this increase.
Remaining Performance Obligation (RPO) $60.9 billion, up 13% year-over-year. Strong renewal performance drove this growth.
Current Remaining Performance Obligation (CRPO) $29.6 billion, up 12% year-over-year in nominal and 11% in constant currency. Better than expected performance driven by strong renewals.
Dividend Payout Increased by 4%. This reflects the company's commitment to returning value to shareholders.
Share Repurchases and Dividends Returned more than $3 billion in Q1. This brings total cash return since inception of the program to over $24 billion.
Free Cash Flow Growth Expected growth of 9% to 10% for the year. This reflects the company's focus on maintaining efficiency and profitable growth.
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Operating Highlights
Acquisition of Informatica: Salesforce has signed a definitive agreement to acquire Informatica for $8 billion, aiming to enhance its AI CRM capabilities by integrating Informatica's AI, MDM, and ETL technologies.
Agentforce: Agentforce has achieved over $100 million in annual operating value (AOV) and has more than 4,000 paid customers, with significant growth in various industries.
Flex Credits: Introduced a new consumption-based pricing model called Flex Credits, responding to customer feedback.
Tableau Next: Launched Tableau Next, integrating an agentic layer with Data Cloud, enhancing user experience.
Revenue Growth: Salesforce reported Q1 revenue of $9.83 billion, an 8% year-over-year increase, with a raised fiscal year 2026 guidance to $41.3 billion.
Data Cloud Growth: Data Cloud surpassed 22 trillion records, growing 175% year-over-year, with 50% of new bookings from existing customers.
International Expansion: Strong new business growth observed in the U.K., France, Canada, and Asia Pacific, particularly South Asia.
Operational Efficiency: Salesforce's operational cash flow reached $6.5 billion, with a focus on integrating Informatica to enhance operational excellence.
Cost Savings: Agentforce has handled 750,000 cases, reducing hiring needs and enabling the redeployment of 500 customer support employees, driving $50 million in savings.
M&A Strategy: Salesforce's acquisition strategy is methodical, focusing on transformative assets like Informatica to maximize customer success and accelerate growth.
AI-Driven Growth: Salesforce is pivoting towards AI-driven growth, with a focus on integrating AI across its applications and enhancing customer experiences.
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Risk or Challenges
Acquisition Risks: The acquisition of Informatica for $8 billion poses risks related to integration speed and effectiveness, as well as potential disruptions to existing operations and capital return strategies.
Market Competition: Salesforce faces competitive pressures in the AI and enterprise software market, which could impact its growth and market share.
Regulatory Issues: There are potential regulatory challenges associated with the acquisition and ongoing operations, which could affect compliance and operational flexibility.
Economic Factors: Economic uncertainties may impact customer spending and demand for Salesforce's products, particularly in the small and mid-market segments.
Supply Chain Challenges: The company may encounter supply chain challenges that could affect the delivery and implementation of its services and products.
Currency Fluctuations: Currency fluctuations present a risk to revenue and profitability, particularly as the company operates in multiple international markets.
Customer Retention: The company reported a revenue attrition rate slightly above 8%, indicating challenges in customer retention that could affect future revenue growth.
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Guidance & Outlook
Acquisition of Informatica: Salesforce has signed a definitive agreement to acquire Informatica for $8 billion, which is expected to enhance Salesforce's AI capabilities and data management offerings.
M&A Framework: Salesforce's acquisition strategy focuses on customer success, strategic fit, acceleration, and value, aiming for non-GAAP operating margin accretion by year 2 post-close.
Agentforce Growth: Agentforce has achieved over $100 million in annual operating value (AOV) and has more than 4,000 paid customers, indicating strong market adoption.
Data Cloud Expansion: Data Cloud surpassed 22 trillion records, growing 175% year-over-year, with significant adoption among existing customers.
Fiscal Year 2026 Revenue Guidance: Salesforce raised its fiscal year 2026 revenue guidance to $41.3 billion, an increase of $400 million at the high end, reflecting strong performance and favorable foreign exchange.
Operating Margin Guidance: Salesforce reiterated its non-GAAP operating margin guidance of 34% and GAAP of 21.6% for the year.
Operating Cash Flow Growth Guidance: Salesforce maintains its annual guidance for operating cash flow growth of 10% to 11% and free cash flow growth of 9% to 10%.
Q2 Revenue Guidance: For Q2, Salesforce expects revenue between $10.1 billion and $10.2 billion, representing an 8% to 9% year-over-year increase.
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Shareholder Return Plan
Dividend Increase: In Q1, Salesforce increased its dividend payout by 4%.
Share Repurchases: Returned more than $3 billion in the form of share repurchases and dividends in Q1.
Total Cash Return: Total cash return since the inception of the capital return program exceeds $24 billion.
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Key Q&A
Q:When can we really see the trajectory of Salesforce start to tick up from here?
A:We are committed to growth while maintaining our margin and cash flow frameworks. We see growth in small and medium businesses, mid-market, and geographic regions like Japan. We are hiring 1,000 to 2,000 more salespeople to support this growth.
Q:Have you seen any uncertainty in your customer behavior due to macro and tariff uncertainties?
A:We have a balanced portfolio and strong momentum with data and AI. We have factored in headwinds but feel confident in our guidance.
Q:How will the combined portfolio of Tableau and Informatica change the game for you around agent and the whole company?
A:Tableau is now deeply integrated into our data cloud and core functionality, enhancing our agentic layer and data strategy.
Q:What are some leading indicators that suggest this is a big cycle coming for Salesforce?
A:We have 8,000 customers for Agentforce, with many having dense scale deployments. The integration of Agentforce with other clouds is a significant indicator of growth.
Q:What is holding the enterprise back from adopting generative AI?
A:Enterprise data sets are highly controlled and secured, which limits the ability to fully leverage generative AI. Informatica's acquisition is critical for harmonizing data.
Q:When do you expect Informatica to be accretive?
A:We expect Informatica to close in early fiscal year '27 and be accretive within two years.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific timeline for growth acceleration and the exact factors holding back enterprise adoption of generative AI.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI enterprise
AI transformation
ARR
Air
America
Brad
CRPO
Customer
Finance
Global
Informatica
Life Sciences
OpenTable
PepsiCo
QA
Srini Tallapragada
Tallapragada President
acquisition
airline
app
asset
booking
capital allocation
conference
consumer
currency
customer success
deal industry
employee
end
enterprise agent
excellence
flywheel
framework
outcome
return
role
shareholder value
tailwind
team
user
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Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
