Salesforce's Q2 2026 Earnings Call: Contradictions Emerge on AI Transformation, AgentForce Growth, and M&A Strategy

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $10.24B, up 10% YOY (9% cc)
• Operating Margin: Non-GAAP operating margin 34.3%, up 60 bps (YOY); GAAP operating margin up 370 bps (YOY).

Guidance:

• FY26 revenue: $41.1B–$41.3B (+8.5–9% YOY; ~8% cc); FX tailwind ~$300M (+$50M vs prior).
• FY26 subscription & support growth: ~9% cc.
• FY26 non-GAAP operating margin: 34.1%; GAAP operating margin: 21.2% (includes restructuring).
• FY26 operating cash flow growth: 12–13%; free cash flow growth: 12–13%; CapEx slightly below 2% of revenue.
• Q3 revenue: $10.24B–$10.29B (+8–9% YOY; ~8% cc).
• Q3 CRPO growth: slightly above 10% nominal (~slightly above 9% cc), incl. ~$300M FX tailwind.
• Informatica not included in guidance; expected close late FY26 or early FY27.

Business Commentary:

* Revenue Growth and AI Integration: - Salesforce reported second quarter fiscal twenty twenty six revenue of $10,250,000,000, up 10% year over year and 9% in constant currency. - The growth was driven by strong execution and momentum in sales, particularly in deals over $1,000,000, which grew 26% year over year.

• Agent Force and Data Cloud Expansion:
• Salesforce's AI and data product line experienced 120% year-over-year growth, reflecting the adoption of Agent Force and Data Cloud.

• The expansion was due to the increasing number of customers deploying AI solutions, with 40% of Agent Force new bookings coming from existing customers extending their investments.

• Operational Efficiency and Cash Flow:

• The company achieved a non GAAP operating margin of 34.3%, marking a tenth consecutive quarter of expansion.

• This efficiency was attributed to the utilization of AI and agent capabilities, leading to improved operational excellence and higher cash flow, with operating cash flow expected to reach nearly $15,000,000,000.

• Strong Customer Adoption and Success Stories:

• Salesforce showcased successful deployments of Agent Force with customers like DIRECTV and Lululemon, saving significant time in customer interactions.
• The strong customer adoption and success stories were driven by the ability of Agent Force to automate and streamline processes, leading to improved customer satisfaction and operational efficiency.

Sentiment Analysis:

• Q2 revenue $10.24B, up 10% YOY; non-GAAP operating margin 34.3% (up 60 bps); CRPO $29.4B, up 11% YOY. Data Cloud & AI ARR reached $1.2B, up 120% YOY. Management raised FY26 revenue and margin outlook and expects nearly $15B in operating cash flow. Q3 revenue growth guided to 8–9%. Board approved an additional $20B share repurchase authorization.

Q&A:

• Question from Kash Rangan (Goldman Sachs): Has SaaS outlived its run amid AI-native apps and custom AI? And when do Data Cloud and AgentForce materially inflect the top line?
  Response: AI extends, not replaces, SaaS; Salesforce is leading with agents + Data Cloud, and monetization is building via a consumption model (flex credits), though still early.

• Question from Keith Weiss (Morgan Stanley): What drove the 60% increase in pilot-to-production conversions for AgentForce, and how do production deals differ?
  Response: Product hardening (determinism, observability/command center), deep Data Cloud integration, and faster implementations enabled reliable scale, speeding conversions with clear business value.

• Question from Brent Thill (Jefferies): How should we view the $20B buyback increase versus M&A priorities?
  Response: Balanced capital allocation: maintain strong cash flow to fund buybacks and dividends while executing disciplined, strategic M&A (e.g., Regrello; Informatica) to accelerate the agentic roadmap.

• Question from Kirk Materne (Evercore): Can the mid-market become a more durable growth driver given strong create-and-close activity and ITSM?
  Response: Yes; SMB/mid-market are growing fastest. Salesforce is adding AE capacity, going Slack-first/ITSM, and driving short-cycle create-and-close via AgentForce and Data Cloud.

• Question from Mark Murphy (JPMorgan): Why haven’t others matched your ~40% support headcount reduction, and how does repurposing roles boost growth?
  Response: Others lack clarity and are cautious; Salesforce is restructuring into an agentic enterprise, using agents + org change to cut costs and elevate sales/marketing productivity.

• Question from Raimo Lenschow (Barclays): With more AEs and agents, how confident are you in the growth outlook?
  Response: High confidence: bookings and pipeline are strengthening; broad seeding of AgentForce/Data Cloud drives recurring ‘refill the tank’ usage, supporting acceleration over the next few quarters.