Salesforce, Inc. (CRM) Q3 2026 Earnings Call Transcript

Agentforce: Agentforce revenue reached $540 million, growing 330% year-over-year. It has processed over 3.2 trillion tokens and is now integrated into all Salesforce apps, transforming them into platforms for reasoning, learning, and collaboration. Agentforce is Salesforce's fastest-growing product ever, with 18,500 deals closed since its launch, including 9,500 paid transactions.

Slackbot: Slackbot, a new employee agent framework integrated into Slack, is being used by all Salesforce employees. It provides context-aware insights and actions by leveraging customer data and large language models. It is positioned as a key tool for employee productivity.

Agentforce IT Service: Launched as a new IT service management product, it has already shown significant cost savings for customers, such as PenFed, which projects a 30% reduction in operational expenses and $2 million in savings.

Life Sciences Cloud: Life Sciences Cloud bookings tripled year-over-year, with notable wins including Haleon and Novartis. It is gaining traction against competitors like Veeva.

Global Expansion: Agentforce adoption is growing globally, with significant traction in markets like Japan, the U.K., and the U.S. Over 50% of new Agentforce bookings came from existing customers expanding their investments.

Public Sector: Salesforce is expanding its presence in the public sector, with notable wins like the IRS and the U.K.'s first AI police officer, Bobby. The IRS has automated up to 98% of manual activities, significantly reducing case processing times.

Revenue Growth: Q3 revenue was $10.26 billion, up 9% year-over-year. Operating cash flow reached $2.3 billion, up 17% year-over-year, with free cash flow up 22%.

Operational Efficiency: Agentforce and Data 360 adoption have accelerated deployment times by 33%. The company is reallocating resources to high-growth areas and leveraging internal tools like Agentforce to improve lead generation and customer support.

Informatica Acquisition: Salesforce completed the acquisition of Informatica three months ahead of schedule. This acquisition strengthens its data capabilities, integrating with Data 360 and MuleSoft to create a $10 billion data business.

AI and Data Strategy: Salesforce is focusing on harmonization, integration, and federation of data to enhance AI capabilities. It is leveraging large language models and deterministic precision to reduce costs and improve AI reliability.

Market Conditions: Weaknesses in marketing and commerce sectors, as well as on-prem dynamics for MuleSoft and Tableau, are impacting growth.

Geographic Performance: Constrained growth in Asia Pacific, particularly in Australia and India, compared to stronger performance in North America and EMEA.

Economic Uncertainty: Attrition rate of approximately 8% remains a concern, reflecting potential customer churn.

Competitive Pressures: Salesforce is facing competition in the Life Sciences sector, particularly from Veeva, which has led to market share battles.

Operational Challenges: The faster-than-anticipated mix shift to cloud for Tableau and on-prem revenue timing in Tableau and MuleSoft creates less predictability in revenue.

Regulatory and Public Sector Risks: Dependence on government contracts, such as with the IRS and other public sector agencies, could pose risks if these relationships or projects face challenges.

Strategic Execution Risks: The integration of Informatica and its alignment with Salesforce's broader strategy could pose challenges, despite being ahead of schedule.

Revenue Guidance: Fiscal year 2026 revenue guidance is narrowed to $41.15 billion to $41.25 billion on an organic basis, reflecting approximately 9% growth in nominal terms and 8% in constant currency. Including the Informatica acquisition, total revenue is expected to be $41.45 billion to $41.55 billion, representing 9% to 10% growth in nominal terms and approximately 9% in constant currency.

Subscription and Support Revenue: Fiscal year 2026 organic subscription and support growth guidance is approximately 9% year-over-year in constant currency. Including Informatica, this growth is expected to be slightly under 10% year-over-year in constant currency.

Operating Margin: Non-GAAP operating margin guidance for fiscal year 2026 is maintained at 34.1%, while GAAP operating margin is adjusted to 20.3% due to the timing of the Informatica acquisition.

Operating Cash Flow: Operating cash flow growth guidance for fiscal year 2026 is raised to approximately 13% to 14%, with capital expenditures expected to remain slightly below 2% of revenue, resulting in free cash flow growth of approximately 13% to 14%.

Current Remaining Performance Obligation (cRPO): Organic cRPO growth for Q4 fiscal year 2026 is expected to be approximately 11% year-over-year in nominal terms and 9% in constant currency. Including Informatica, cRPO growth is projected at approximately 15% year-over-year in nominal terms and 13% in constant currency.

Agentforce and Data 360 ARR: Agentforce and Data 360 ARR is projected to grow 114% year-over-year, with Agentforce ARR specifically expected to grow 330% year-over-year.

Future Revenue Pipeline: The company anticipates a strong pipeline of future revenue as customers adopt AI-driven solutions like Agentforce and Data 360.

Capital Allocation: The company plans a 50% step-up in share repurchases in the second half of fiscal year 2026.

Share Repurchase Program: We also returned more than $4 billion to shareholders in Q3. We continue to see a meaningful opportunity to invest in ourselves, and we are on track for a 50% step-up in share repurchases in the second half of this fiscal year.