Published
# Salesforce, Inc. (NYSE: CRM) — Narrative
Fiscal year ends January 31. Fiscal 2026 is the year ended January 31, 2026; the current
reporting period, the second quarter of fiscal 2027, is the three months ended July 31, 2026.
Fiscal-year labels therefore run roughly one year ahead of the calendar.
Sources: Annual Report on Form 10-K for fiscal 2026, filed March 2, 2026 (accession
0001108524-26-000060); Quarterly Report on Form 10-Q for the quarter ended July 31, 2026,
filed August 27, 2026 (accession 0001108524-26-000190); and Current Reports on Form 8-K
dated August 5, 2026 (accession 0001108524-26-000160) and August 26, 2026 (accession
0001108524-26-000187).
---
## Business
*From the fiscal 2026 Form 10-K, accession 0001108524-26-000060.*
Salesforce sells customer relationship management ("CRM") software to businesses worldwide,
predominantly on a subscription basis, through a direct sales force and indirectly through
partners. The company was founded in 1999 and had 83,334 employees at January 31, 2026. It
reports as **a single operating segment**, so no segment profitability breakdown exists.
**How it makes money.** Revenue comes from two sources: subscription and support, and
professional services and other. Subscription and support was approximately 95 percent of
total revenue in fiscal 2026. Subscription contracts typically run 12 to 36 months and are
generally invoiced annually in advance, with payment due within about 30 days; revenue is
recognised ratably over the contract term. A minority of subscription and support revenue —
around six percent in fiscal 2026 and fiscal 2025, and four to five percent in the fiscal 2027
periods — comes from term software licences, which are recognised at a point in time when the
software is made available and therefore make those offerings lumpier quarter to quarter.
Because revenue is recognised over the subscription term, a change in new or renewed business
in any one quarter shows up largely in later quarters rather than the current one.
Billings are heavily weighted to the fiscal fourth quarter, which the company describes as its
strongest quarter for new business and renewals; the fiscal first quarter is consequently its
largest collections and operating cash flow quarter, and the second or third quarter
historically its smallest.
**The product portfolio.** Salesforce frames its entire line-up around the "Agentforce 360
Platform," an AI layer it says is embedded across every application. The company's own
description of the components:
- **Agentforce Sales** — sales prospecting, engagement, analytics, performance, partner
management and revenue/orders, with AI agents alongside human sellers.
- **Agentforce Service** — customer, employee, IT and field service on one platform, with
agents routing cases, answering with company-grounded data, and summarising cases and work
orders.
- **Agentforce 360 Platform, Slack and Other** — low-code/no-code application, workflow and
agent building; a "Trust Layer" governing what agents may do with customer data; and
Hyperforce, the infrastructure layer offering local data residency.
- **Data 360** — the data engine that gives agents context, connecting enterprise data across
clouds and systems using zero-copy access, and unifying structured records with unstructured
content (emails, documents, conversations).
- **Informatica** — acquired in November 2025 (fiscal 2026 fourth quarter); an enterprise data
management platform covering data integration, quality, governance, master data and metadata
management, and catalog services across hybrid and multi-cloud environments.
- **Slack** — positioned as the conversational interface where people and agents work together,
now including "Slackbot," an out-of-the-box employee agent.
- **Agentforce** — the tooling to build, deploy, govern and observe autonomous agents,
connecting model reasoning to Salesforce metadata, workflows and MuleSoft APIs.
- **Agentforce Marketing and Agentforce Commerce** — campaign generation, segmentation,
personalisation; and connected commerce with agent-run tasks such as recommendations and
order lookup.
- **Agentforce Integration (MuleSoft) and Agentforce Analytics (Tableau)** — API management and
automation, plus visualisation and semantics that agents can act on.
- **Industries and Starter Suite** — vertical offerings for financial services, healthcare and
life sciences, manufacturing, automotive and government among others; and an all-in-one
bundle for small and medium businesses.
**Revenue by offering.** In fiscal 2026 the company reported five offering lines (in millions):
Agentforce Service $9,818; Agentforce Sales $9,028; Agentforce 360 Platform, Slack and Other
$8,882; Agentforce Integration and Agentforce Analytics $6,232; and Agentforce Marketing and
Agentforce Commerce $5,428 — totalling $39,388 of subscription and support revenue. The
Platform/Slack/Other line grew fastest at 23 percent, aided by $388 million of Informatica
subscription revenue; Marketing and Commerce grew 3 percent.
Effective with the first quarter of fiscal 2027, Salesforce collapsed this disclosure into two
categories: **Agentforce Apps** (Sales, Service, Marketing, Commerce, Agentforce Apps Flex
Credits and Slack) and **Data 360, Headless Platform, and Other** (Data 360, Data 360 and
Platform Flex Credits, Headless Platform, Informatica, Agentforce MuleSoft, Agentforce Tableau
and Other). Prior periods were reclassified; total subscription and support revenue was
unaffected. The change removes the ability to track the old five lines going forward.
**Revenue by geography.** Fiscal 2026: Americas $27,193 million (65 percent), Europe $10,017
million, Asia Pacific $4,315 million. Geography is assigned by the region of the contracting
entity rather than the customer. About 93 percent of Americas revenue was attributed to the
United States. No customer accounted for more than ten percent of revenues in fiscal 2026,
2025 or 2024, and no country other than the U.S. exceeded ten percent of total revenue.
**Delivery model.** Services run on a multi-tenant architecture — one application instance
serving many customers in virtual isolation — delivered partly through third-party
Infrastructure-as-a-Service cloud platform providers and partly through infrastructure
Salesforce designs and operates inside third-party data centres.
**Growth strategy**, as management states it: expand within existing customers through
cross-sell and upsell; increase geographic reach; build industry-specific and new-category
products; leverage the partner ecosystem (ISVs, system integrators, the AppExchange
marketplace); and promote adoption to reduce attrition. Attrition — the reduction or loss of
annualised contract value, measured on a trailing twelve-month basis — was approximately eight
percent at January 31, 2026 (excluding Slack self-service and current-year acquisitions) and
approximately eight percent at July 31, 2026 (excluding Slack self-service, Informatica and
current-year acquisitions).
**Acquisitions and strategic investments** are explicit parts of the strategy. Management
states its goal is "to prioritize the use of our balance sheet, through cash and debt, to
complete acquisitions." Separately, Salesforce runs a strategic investment portfolio in
privately held and publicly traded companies — over 450 companies with a combined carrying
value of $7.6 billion at January 31, 2026, rising to $11.3 billion at July 31, 2026. This
portfolio has become a material driver of reported earnings (see Current quarter).
**Competition.** The 10-K names packaged business software vendors and on-premises enterprise
application vendors; AI-native companies and startups whose architectures are built on
generative AI and large language models and which "may bypass traditional business process
workflows or displace established user interfaces"; free or bundled software providers;
point-solution vendors in analytics, integration, marketing and e-commerce; productivity,
email and unified-communications providers moving into business software; and cloud
development platform companies — plus prospective customers who build internally.
---
## Risk factors
*Condensed from Item 1A of the fiscal 2026 Form 10-K (accession 0001108524-26-000060) and
Part II, Item 1A of the Q2 fiscal 2027 Form 10-Q (accession 0001108524-26-000190). Boilerplate
omitted.*
**Security and service reliability.** Salesforce stores and transmits customers' proprietary,
financial, health and other personal data. The filings state that its services and
infrastructure "have in the past and may in the future be breached or compromised," and that
the company and its customers are routinely targeted. Named vectors include social engineering,
ransomware and supply-chain attacks by criminal and state-sponsored actors, zero-day
exploitation, vulnerabilities introduced by acquisitions, and employee or contractor error. The
Q2 fiscal 2027 filing adds that frontier AI models may let attackers find unknown
vulnerabilities and automate multi-stage attack chains, compressing the time available to patch
and potentially forcing more frequent emergency remediation. Separately, defects and service
disruptions have occurred and could recur; the quarterly filing notes AI models are
probabilistic and that agent behaviour cannot be predicted with complete accuracy, so agentic AI
use "may result in unanticipated outcomes that disrupt our systems or those of our customers."
**Third-party infrastructure dependence.** Delivery depends on third-party data centres and
cloud platform providers, and on large language models licensed from third parties. Those
inputs may cease to be available at reasonable prices or at all; the quarterly filing adds that
access to frontier models may be suddenly suspended or restricted by providers or governments
on safety or regulatory grounds. Data centre power, land and water constraints, and public or
governmental opposition to data centres, could limit capacity expansion.
**AI-specific exposure — commercial and regulatory.** The markets and monetisation strategies
for Agentforce and Data 360 are described as "relatively new and uncertain." Both are sold in
part on a consumption basis, and the company says it has limited experience setting optimal
pricing for consumption contracts and may see lower consumption than expected. AI outputs may
be inaccurate, biased or unsafe, or may implicate privacy, security or intellectual property
rights, including generation of copyrighted material. AI-specific legal frameworks named
include the EU AI Act, the Utah Artificial Intelligence Policy Act, Colorado's automated
decision-making law (SB 26-189), the Texas Responsible Artificial Intelligence Governance Act
and CCPA automated decision-making regulations. Intellectual property in AI-created works is
unsettled: if the position that copyright and patent protection is limited to human-created
works becomes widely accepted, protection may be limited or unavailable for AI-developed
inventions, and AI training or output may expose the company to infringement claims.
**Competition and technology pace.** The market is described as highly competitive, fragmented,
rapidly evolving and subject to low barriers to entry. Competitors may have greater resources
and larger installed bases, or may be smaller and more agile; and competitors may incorporate
AI more efficiently or achieve faster adoption. New AI offerings "may disrupt our service
offerings or transform workforce needs and negatively impact demand for our offerings."
**Renewals, attrition and forecasting.** Customers have no obligation to renew. They may renew
for fewer subscriptions, shorter terms, or lower-cost offerings. The quarterly filing adds
that the shift toward consumption-based and "AI-driven consumption" pricing makes attrition and
revenue harder to forecast. Because revenue is recognised over the subscription term,
deterioration in bookings is not visible in the current quarter's revenue.
**Acquisition integration and financing.** Acquisitions may fail to deliver expected benefits,
prove difficult to integrate, dilute stockholders, or require debt or equity financing on
unfavourable terms — with the Informatica credit agreements cited as the example. Acquisition
capability may also be impaired by trade tensions and heightened government scrutiny of
technology-sector acquisitions.
**Strategic investment portfolio volatility.** All investments carry a risk of partial or total
loss. Privately held securities are valued using significant unobservable inputs and management
judgment; carrying values change only on observable price changes for the same or a similar
security, or on impairment. The Q2 fiscal 2027 filing adds a concentration warning:
concentrations "in specific industry sectors, such as emerging technology and AI, or in one or
more specific companies, could increase our exposure to such volatility." Resulting gains or
losses "have been and could be material."
**Debt service and capital structure.** As of July 31, 2026 the company describes a substantial
level of outstanding debt, including senior notes, the $5.0 billion revolving credit facility
(undrawn) and the 2026 Term Loan Credit Agreement. It flags that indebtedness could impair
future financing, dedicate a substantial portion of operating cash flow to debt service, and
make the company more vulnerable to downturns; that credit rating downgrades could raise
refinancing costs; and that indenture and credit agreement covenants restrict it. The quarterly
filing adds that under the accelerated share repurchase agreements, stock price volatility may
oblige Salesforce to deliver additional shares or make a cash payment to the counterparty at
final settlement.
**Privacy, data transfer and sector regulation.** GDPR, the CCPA and a growing list of state and
national regimes (including India's Digital Personal Data Protection Act 2023) impose
obligations on Salesforce as both controller and processor. EU-to-U.S. transfers remain
uncertain following the CJEU's invalidation of Privacy Shield; it is uncertain whether the
EU-U.S. Data Privacy Framework will withstand challenge. Data localisation requirements are
spreading. Sector rules — for example DORA in EU financial services — may restrict customers'
ability to adopt cloud services. A GDPR/Dutch Telecommunications Act proceeding brought by the
Privacy Collective remains pending before the Dutch Supreme Court.
**Litigation.** Salesforce is subject to securities class action and derivative litigation
inherited with Slack, and to a large and growing set of actions relating to a former customer
affiliated with Backpage.com, in which plaintiffs allege the company's CRM software facilitated
sex trafficking. Many of those actions have been stayed under 18 U.S.C. § 1595(b) pending final
adjudication of criminal proceedings involving Backpage. The company states it intends to defend
vigorously, that it cannot reasonably estimate possible losses in excess of amounts accrued,
and that in management's opinion resolution of all current matters is not expected to have a
material adverse impact on its financial statements.
**Tax.** Effective tax rates may fluctuate with domestic and foreign earnings mix and discrete
items. The One Big Beautiful Bill Act could subject the company to Corporate Alternative Minimum
Tax; its immediate deduction for domestic R&D favourably affects operating cash flow. On the
OECD's Pillar Two 15 percent minimum tax, a January 2026 "side-by-side safe harbor" would, if
elected, exempt U.S.-parented groups from certain provisions, but does not relieve foreign
subsidiaries from jurisdiction-specific minimum taxes and must still be adopted into local law.
**Other named risks.** Currency exposure to the Euro, Sterling, Yen, Canadian and Australian
dollars, Indian Rupee and Brazilian Real; longer, costlier sales cycles and pricing pressure
with large enterprise and government customers; government contracting and procurement rules;
export controls and sanctions; loss of key management or AI-experienced engineers; disruption
from periodic sales-organisation changes; scaling strain, including the enterprise resource
planning system implemented in the second quarter of fiscal 2026; weakened global economic
conditions and their effect on IT spending; and quarterly result and share price volatility.
---
## Management's discussion — fiscal 2026 (year ended January 31, 2026)
*From Item 7 of the fiscal 2026 Form 10-K, accession 0001108524-26-000060.*
**Headline results.** Revenue was $41.5 billion, up ten percent year over year, of which
foreign currency contributed approximately one percentage point. Subscription and support
revenue was $39,388 million, up ten percent; professional services and other revenue was
$2,137 million, down four percent, which management attributes to less demand for larger,
multi-year transformation engagements — a trend it says may continue in the near term.
Management states the subscription increase was volume-driven, from new customers, upgrades and
additional subscriptions, and that "pricing was not a significant driver."
Income from operations was $8.3 billion against $7.2 billion, lifting operating margin to
approximately 20 percent from approximately 19 percent. Diluted net income per share was $7.80
versus $6.36. Cash provided by operations was $15.0 billion, up 15 percent. Total cash, cash
equivalents and marketable securities were $9.6 billion at year end, against accounts
receivable of $14.3 billion.
**Backlog.** Total remaining performance obligation was approximately $72.4 billion at January
31, 2026, up 14 percent; current remaining performance obligation — the portion expected to be
recognised within twelve months — was approximately $35.1 billion, up 16 percent. Currency
flattered the current figure by about three percentage points. Roughly $2.2 billion of the
total related to Informatica.
**Cost and expense drivers.** Cost of revenues rose in absolute dollars on employee costs
(including stock-based compensation) and service delivery, partly offset by lower purchased
intangible amortisation; as a percentage of revenue it fell one point as revenue outgrew cost.
Research and development, sales and marketing, and general and administrative expenses each
rose in absolute dollars, principally on employee-related and stock-based compensation costs,
and each was flat as a percentage of revenue. Sales and marketing also carried higher purchased
intangible amortisation from Informatica. Restructuring charges were $586 million, mostly
employee transitions, severance and benefits plus data centre exits; management said it did not
expect significant additional charges in the near term. Looking forward, management guided that
R&D would remain roughly constant as a share of revenue while sales and marketing and general
and administrative "may decrease as a percentage of revenues over time."
**Non-operating items.** Net gains on strategic investments were $1.0 billion, driven by $1.5
billion of unrealised gains on privately held equity investments partly offset by $496 million
of impairments; management notes $1.2 billion of the unrealised gains came from **a single
privately held investment**. Other income declined on lower investment income from lower
interest rates, and management flagged that interest expense would rise on the Informatica
borrowings.
**Tax.** A $2.1 billion provision on $9.5 billion of pre-tax income. The effective rate rose
year over year on lower benefits from the foreign-derived intangible income deduction and from
stock-based compensation. The OBBBA had an immaterial effect on the fiscal 2026 provision.
**Acquisitions.** Salesforce completed two deals in fiscal 2026. **Regrello Corp.**, an
AI-native business process automation developer, closed in October 2025 for $818 million of
consideration (primarily $815 million cash), producing $704 million of goodwill and about $140
million of developed-technology intangibles. **Informatica, Inc.** closed in November 2025 for
approximately $9.6 billion of consideration — $9,538 million cash, $62 million for a
pre-existing relationship and $36 million of assumed equity awards. The preliminary purchase
price allocation recorded $5,257 million of goodwill and $3,818 million of intangible assets
(developed technology — Cloud $1,350 million over seven years; developed technology — Other
$270 million over three years; customer relationships $1,840 million over ten years; trade
names $79 million; backlog $279 million), against $1,405 million of acquired cash, $651 million
of assumed unearned revenue and a $443 million deferred tax liability. None of the goodwill is
deductible for U.S. tax purposes. Informatica contributed $399 million of revenue and $24
million of pre-tax income from acquisition date to year end. On a pro forma basis as if the
deal had closed at the start of fiscal 2025, fiscal 2026 revenue would have been $42,853
million and net income $7,382 million. The auditor identified valuation of the Informatica
customer-relationship and developed-technology intangibles ($3.5 billion combined) as a
critical audit matter. Management's assessment of internal control over financial reporting
excluded Informatica and Regrello, which together represented approximately one percent of
consolidated total assets and net assets and under one percent of revenues and operating
expenses.
**Cash flows.** Operating cash flow of $15.0 billion comprised $7.5 billion of net income plus
$3.6 billion of depreciation and amortisation and $3.5 billion of stock-based compensation,
helped by a $2.9 billion increase in unearned revenue and $1.0 billion in payables and accrued
liabilities, and offset by $2.2 billion of accounts receivable growth and $2.8 billion of costs
capitalised to obtain revenue contracts. Investing outflows of $8.6 billion were mostly $9.3
billion for acquisitions (including $8.1 billion net for Informatica) and $1.8 billion net of
strategic investment activity, less $3.0 billion of net marketable securities inflows; capital
expenditure was $594 million. Financing outflows of $8.1 billion reflected $12.6 billion of
share repurchases and $1.6 billion of dividends, offset by $6.0 billion drawn under the
Informatica credit agreements and $1.0 billion from equity plans.
**Capital structure at year end.** Senior unsecured notes with a carrying value of $8.4 billion,
maturing between April 2028 and July 2061, plus the full $6.0 billion drawn under the
Informatica credit agreements. The $5.0 billion revolving credit facility, maturing October
2029, was undrawn. Salesforce repurchased approximately 50 million shares for approximately
$12.7 billion in fiscal 2026 (against 30 million for $7.8 billion in fiscal 2025) and paid
approximately $1.6 billion of dividends and dividend equivalents.
**Commitments.** Noncancellable minimum lease payments of approximately $3.6 billion, and other
contractual commitments — chiefly with infrastructure service providers — of approximately
$16.7 billion, of which $3.7 billion fell due within twelve months.
---
## Current quarter — second quarter of fiscal 2027 (three months ended July 31, 2026)
*From the Form 10-Q, accession 0001108524-26-000190, and the earnings release furnished as
Exhibit 99.1 to the Form 8-K dated August 26, 2026, accession 0001108524-26-000187. Figures
below are for the discrete three-month period unless stated as six-month or year-to-date.*
**Revenue.** Total revenue was $11,345 million, up 11 percent from $10,236 million. Subscription
and support was $10,820 million, up 12 percent; professional services and other was $525
million, down four percent on the same weakness in large multi-year transformation engagements.
Informatica contributed approximately $456 million of total revenue in the quarter. Currency had
a minimal effect on quarterly revenue. Under the new two-line presentation, **Agentforce Apps**
was $7,193 million, up 8 percent and 67 percent of subscription revenue, while **Data 360,
Headless Platform, and Other** was $3,618 million, up 20 percent and 33 percent — the growth is
concentrated in the data and platform line, which is where Informatica sits. By geography:
Americas $7,404 million (up 10 percent), Europe $2,764 million (up 14 percent), Asia Pacific
$1,168 million (up 9 percent).
For the six months ended July 31, 2026, revenue was $22,478 million, up 12 percent, with
Informatica contributing approximately $900 million.
**Operating results were essentially unchanged year over year.** Income from operations was
$2,331 million against $2,332 million a year earlier — a GAAP operating margin of 20.5 percent.
Cost of revenues rose to 23 percent of revenue from 22 percent, on service delivery spending
including hosting services and generative AI technologies, and on acquired intangible
amortisation. Research and development rose about one point as a share of revenue on the same
drivers; sales and marketing was flat as a share of revenue, though in dollar terms it was still
the largest increase of any expense line; general and administrative fell about one point as
revenue outgrew it. Restructuring charges were $94 million in the quarter and
$174 million for the six months. Amortisation of acquired intangibles was $522 million in the
quarter, against $380 million a year earlier.
**Net income nearly doubled on a non-operating item.** Net income was $3,526 million against
$1,887 million, and diluted earnings per share $4.29 against $1.96. The increase is not
operational. Net gains on strategic investments were **$2,613 million**, against $6 million a
year earlier — driven by $2.9 billion of unrealised gains on privately held equity investments
less $285 million of impairments, and **including $2.7 billion related to the company's
investment in Anthropic**. Salesforce states in its earnings release that strategic-investment
gains added $2.43 to quarterly diluted EPS at a U.S. tax rate of 23.5 percent (and $2.87 to
six-month diluted EPS). Working against that, interest expense rose to $473 million from $67
million on the March 2026 debt offering, and other income fell to $81 million from $135 million.
The tax provision was $1,026 million; the six-month effective rate was 23 percent, up from 22
percent, primarily on stock-based compensation.
At July 31, 2026 the strategic investment portfolio carried $11.3 billion across more than 450
companies, of which **Anthropic alone was approximately $5.1 billion**. The five largest
privately held positions totalled $7.0 billion; a ten percent fall in the enterprise value of
those companies would reduce portfolio carrying value by roughly $641 million. This is now a
materially concentrated, mark-to-market-driven source of reported earnings.
**Capital structure was transformed in the first half.** In March 2026 Salesforce issued $25.0
billion aggregate principal of unsecured senior notes with maturities from 2028 to 2066 and
coupons ranging from 4.50 percent to 6.70 percent, raising $24.8 billion net of discounts and
issuance costs. It separately entered a $6.0 billion five-year term loan maturing March 2031 and
used it to refinance the $4.0 billion 364-day and $2.0 billion three-year Informatica credit
agreements — a non-cash transaction excluded from the cash flow statement. Total debt carrying
value rose from $14,439 million at January 31, 2026 to $39,288 million at July 31, 2026
($39,500 million principal). The estimated fair value of outstanding senior notes rose to $30.8
billion from $6.7 billion. The $5.0 billion revolver remained undrawn, and the company was in
compliance with all covenants.
The note proceeds funded an accelerated share repurchase. In March 2026 Salesforce paid $25.0
billion up front under accelerated share repurchase agreements and received an initial delivery
of approximately 103 million shares at an average price of $198.34, about 80 percent of the
total shares expected. It recorded $20.6 billion to treasury stock in the first quarter and a
$4.6 billion reduction to additional paid-in capital for the unsettled forward component. In
February 2026 the Board authorised $50.0 billion of repurchases, replacing the prior remaining
authorisation; $22.9 billion remained available at July 31, 2026. On the cash flow statement's
basis, repurchases of common stock were $27,332 million for the six months — $27,248 million in
the first quarter, which carried both the $25.0 billion accelerated repurchase up-front payment
and $2,145 million of open-market repurchases, and $84 million in the second quarter, none of
which represents shares purchased in the open market.
**Salesforce bought back no shares in the open market in the second quarter itself**, per the
open-market repurchase table in the 10-Q, which shows nil shares for the three months ended
July 31, 2026 against 11 million shares at an average $192.00 in the first quarter.
The combined effect: total stockholders' equity fell from $59,142 million at January 31, 2026 to
$38,378 million at July 31, 2026, and shares outstanding fell from 929 million to 823 million.
Weighted average diluted shares were 821 million for the quarter against 962 million a year
earlier — so the year-over-year EPS gain reflects a materially smaller share count as well as
the investment gains. Salesforce states the accelerated repurchase benefited six-month diluted
EPS by $0.57. Some 42 million shares relating to the unsettled ASR component were excluded from
diluted EPS as anti-dilutive.
**Backlog fell sequentially but grew year over year.** Remaining performance obligation was
$66.3 billion at July 31, 2026, down from $72.4 billion at January 31, 2026 but up 11 percent
year over year — the sequential decline reflects the fourth-quarter-weighted billing cycle.
Current remaining performance obligation was $33.5 billion, up 14 percent year over year and in
constant currency; the company describes this as an acceleration. Unearned revenue fell to
$18,787 million from $24,317 million at year end, again seasonal.
**Cash flow and liquidity.** Operating cash flow for the quarter was $1,269 million and free
cash flow (operating cash flow less capital expenditure of $171 million) $1,098 million; the
earnings release describes these as up 71 percent and 81 percent year over year respectively.
For the six months, operating cash flow was $7,970 million, up 10 percent, and financing
activities used $3,543 million net. Cash, cash equivalents and marketable securities were $11.4
billion at July 31, 2026; accounts receivable was $6.3 billion, reflecting collection of the
year-end billing peak. Dividends of $0.44 per share were declared in each of the first two
quarters of fiscal 2027, up from $0.416 per share a year earlier; payments of dividends and
dividend equivalents were $364 million in the second quarter and $729 million for the six
months. Expected future stock-based compensation on outstanding awards was $8.3 billion.
**Acquisitions.** In April 2026 Salesforce acquired **Qualified.com, Inc.**, an agentic AI
marketing solutions provider, for $1.2 billion of consideration (primarily $1.1 billion cash),
recording $954 million of goodwill and approximately $290 million of intangibles for developed
technology and customer relationships. Goodwill rose to $59,250 million at July 31, 2026 from
$57,941 million; acquired intangibles net fell to $6,142 million from $6,815 million as
amortisation outpaced additions. Two further transactions were signed but not closed as of the
quarter end and are covered under Subsequent events below.
**Company-reported operating metrics.** In its earnings release Salesforce reported combined
Agentforce and Data 360 annual recurring revenue of nearly $3.9 billion, up over 210 percent
year over year, and Agentforce ARR above $1.5 billion, up over 240 percent — noting that
effective in this quarter, Agentforce ARR was redefined to include its AI offerings, Slackbot
and Headless 360, which makes the growth rate not strictly comparable. It also reported 3.2
billion "Agentic Work Units" delivered in the quarter and 7.0 billion to date, Slack's fastest
quarterly net new annual order value growth since acquisition with Slackbot users up over 150
percent sequentially, and 104 trillion records ingested by Data 360 in the quarter. These are
company-defined measures not drawn from the financial statements and are not independently
verifiable from the filings. Management also cited "non-GAAP operating margin of 34.1 percent"
and non-GAAP diluted EPS of $5.90; the reconciling items are amortisation of purchased
intangibles, stock-based compensation, restructuring and acquisition-related costs.
**Guidance** (from the August 26, 2026 earnings release):
- Third quarter fiscal 2027 revenue of $11.42–$11.50 billion, up 11–12 percent year over year
and in constant currency, including slightly above four points of Informatica contribution;
GAAP diluted EPS of $1.81–$1.83 and non-GAAP diluted EPS of $3.42–$3.44; current remaining
performance obligation growth of approximately 14 percent.
- Full-year fiscal 2027 revenue raised to $46.1–$46.4 billion, up 11–12 percent (approximately
11 percent in constant currency) — a $200 million raise attributed to $100 million of organic
growth and $200 million from the pending Contentful and Fin acquisitions, less a $100 million
currency headwind. Subscription and support revenue growth of slightly above 12 percent.
- Full-year GAAP operating margin guidance of 20.1 percent (non-GAAP 34.3 percent); GAAP diluted
EPS of $10.21–$10.25 (non-GAAP $16.67–$16.71); operating cash flow and free cash flow growth
of approximately 4–5 percent; capital expenditure of approximately 1.5 percent of revenue.
- The guidance is **conditional on the closing of the Contentful and Fin acquisitions**, which
are incorporated into every metric except current remaining performance obligation. Guidance
share counts reflect the 103 million shares already delivered under the accelerated repurchase
but exclude any effect of its final settlement or further open-market buybacks. Projected EPS
assumes no change in the value of the strategic investment portfolio, which management notes
could be material either way.
---
## Subsequent events
The Q2 fiscal 2027 Form 10-Q (accession 0001108524-26-000190) contains no separate
subsequent-events note; the post-period-end and pending items disclosed by Salesforce are as
follows.
**Pending acquisitions, both expected to close in the third quarter of fiscal 2027.**
- **Contentful Global, Inc.** — agreement entered in May 2026 to acquire the provider of a
composable content platform for **approximately $1.5 billion in cash**, net of the value of
shares Salesforce already owns and subject to customary purchase price adjustments, and
conditional on regulatory approvals.
- **Intercom, Inc. ("Fin")** — agreement entered in June 2026 to acquire the customer agent
platform providing autonomous, end-to-end AI service agents for **approximately $3.6 billion
in cash**, subject to customary purchase price adjustments and regulatory approvals.
In the August 26, 2026 earnings release, Salesforce stated it now expects both transactions to
close independently "in the coming weeks," during the third quarter of fiscal 2027, and that
both are embedded in its raised full-year guidance.
**Accelerated share repurchase settlement.** Final settlement of the $25.0 billion accelerated
share repurchase agreements is expected in the third quarter of fiscal 2027; the earnings
release specifies October 2026. The number of additional shares to be delivered — or any cash
payment owed to the counterparties — depends on the volume-weighted average share price over
the term.
**Share repurchases.** Salesforce disclosed in the 10-Q that subsequent to July 31, 2026 it had
completed no additional repurchases under the Share Repurchase Program. $22.9 billion of the
$50.0 billion February 2026 authorisation remained available.
**Management change.** On August 5, 2026 (Form 8-K, accession 0001108524-26-000160) Salesforce
announced that **Srini Tallapragada** would step down as President and Chief Engineering and
Customer Success Officer effective August 6, 2026, transitioning to Special Advisor to the Chief
Executive Officer through August 6, 2027 to assist with the handover of his duties, product and
technology matters, business development and customer relationships. Under a transition
agreement, his cash compensation continues at his current salary rate plus annual bonus through
January 31, 2027 and is then calculated on a rate of $75,000 per year; previously granted equity
awards continue to vest through the transition period, which terminates automatically if he
accepts full-time paid work elsewhere.