Salesforce kicks off FY2026 with strong Q1 and raised guidance

Overview

Salesforce opened FY2026 with a solid performance in Q1, reporting steady revenue growth and strong margin improvement driven by disciplined cost management, innovation in AI, and continued demand for its integrated CRM platform.

CEO Marc Benioff commented: “We delivered strong Q1 results and are raising our guidance by $400 million to $41.3 billion at the high end of the range. We’ve built a deeply unified enterprise AI platform—with agents, data, apps, and a metadata platform—that is unmatched in the industry. With Agentforce, Data Cloud, our Customer 360 apps, Tableau, and Slack all built on one trusted, unified foundation, companies of every size can build a digital labor force—boosting productivity, reducing costs, and accelerating growth. And, with our agreement to acquire Informatica, we will bring together the industry’s leading AI CRM and AI-powered MDM and ETL platform to create the most complete, intelligent AI and data platform for the enterprise.”

Q1 FY2026 vs. Q1 FY2025:

• Total revenue recorded a value of $9.8bn (+8% YoY), exceeding prior guidance.
  • Subscription & support revenue was $9.3bn (+9% YoY), while Professional services and other revenues declined to $532m (-3% YoY).
• Total operating expenses increased to $5.6bn (+7% YoY), with R&D expenses of $1.5bn (+7% YoY), Sales and Marketing expenses of $3.4bn (+6% YoY) and General and Administrative expenses of $697m (+8% YoY).
• GAAP operating margin stood at 19.8% (vs. 18.7% in Q1 FY2025), while non-GAAP operating margin hit 32.3% (vs. 32.1% in Q1 FY2025).
• GAAP net income was $1.5bn (flat YoY), while non-GAAP net income reached $2.5bn (+4% YoY).
• GAAP diluted EPS recorded a value of $1.59 (compared to $1.56 in Q1 FY2025), while non-GAAP diluted EPS was $2.58 (compared to $2.44 in Q1 FY2025).
• Operating cash flow grew to $6.5bn (+4% YoY), with free cash flow of $6.3bn (+4% YoY).
• Data Cloud and AI Annual Recurring Revenue (ARR) surpassed $1bn, growing over 120% YoY. Nearly 60% of top 100 Q1 deals included AI and Data Cloud.
• Agentforce processed over 750k requests, reducing case volume by 7% YoY.
• Salesforce ingested 22tn records into Data Cloud, up 175% YoY.
• The company returned $3.1bn to shareholders, $2.7bn via share repurchases and $402m in dividend payments.
• Cash & Equivalents increased to $10.9bn (+24% YoY).

Salesforce raised its full-year FY2026 guidance, now expecting revenue between $41.0bn and $41.3bn, representing 8-9% year-over-year growth. The company reaffirmed its GAAP operating margin at 21.6% and non-GAAP margin at 34.0%. Full-year GAAP EPS is forecasted between $7.15 and $7.21, while non-GAAP EPS is projected to range from $11.27 to $11.33. Operating cash flow is expected to grow 10-11% year-over-year, with free cash flow anticipated to increase 9-10%. For Q2 FY2026, Salesforce forecasts revenue between $10.11bn and $10.16bn, GAAP EPS of $1.80-$1.82, and non-GAAP EPS of $2.76-$2.78. The company also expects current remaining performance obligation (cRPO) growth of approximately 10% year-over-year.

After an initial positive reaction to the financial results, with a +4.5% increase in the post-market after the increase in forecasts for the next period, CRM stock closed down in the next trading session, by approximately -3.3%. Despite an improved fundamental outlook, the rejection from the SMA 50 area signals a lack of conviction from buyers. To validate a new uptrend, the price must return and hold above $270-$275, while critical technical support is in the $255-$257 area. RSI below 50 confirms the predominance of selling pressure, but also offers some opportunities for buyers if it stabilizes around the 40 area.

Author: Ionuț-Adrian Lazar