The enterprise software maker reported strong Q2 earnings that topped estimates but its stock price fell 5% on weak Q3 revenue guidance.
Salesforce (CRM) posted strong second-quarter results for fiscal 2026, which came in above Wall Street expectations. The company reported a 10% year-on-year revenue increase to $10.24 billion, reinforcing its position as a leading player in the AI-driven enterprise software sector.
The San Francisco-based firm revealed adjusted earnings per share of $2.91, rising from $2.56 last year and beating analyst estimates. Bosses also confirmed the company had delivered its tenth straight quarter of operating margin expansion.
During Q2 2026, Salesforce logged several notable achievements including a 120% increase in Data Cloud and AI annual recurring revenue. It also closed more than 12,500 deals since launching its agentic AI platform Agentforce, with 6,000 already paid.
Despite the mostly encouraging financial report, Salesforce issued weak revenue guidance for the third quarter that missed analyst expectations. The software firm’s projections were between $10.24 billion and $10.29 billion, compared to estimates towards the higher end of that range limit.
Salesforce shares fell more than 5% after the announcement, as investors reacted cautiously to the outlook. So far this year, CRM stock has dropped 23% year-to-date. This places among the world’s worst-performing large-cap technology companies.
How did the Salesforce CEO respond?
Marc Benioff, Salesforce co-founder and CEO, responded positively to the Q2 earnings beat. He specifically mentioned customers such as Pfizer, Marriott and the US Army, who he described as “transforming into agentic enterprises where humans and AI agents work side by side.”
He added, “We delivered an outstanding quarter to close out the first half of the year, with strong performance across revenue, margin, cash flow, and cRPO – and we remain on track for fiscal 2026 to be a record year with nearly $15 billion in operating cash flow.”
Salesforce is operating in a challenging marketplace and is experiencing slower growth in its expiration base. Sales of its marketing and commerce products have slowed. The company has fallen out of favour on Wall Street after an extended stretch of disappointing, mostly single-digit revenue growth.
How will Salesforce reassure its shareholders?
Salesforce has moved to reassure shareholders by boosting its share buyback programme by $20 billion, raising the total to $50 billion. This demonstrates internal confidence in its long-term growth prospects and a commitment to returning value to investors despite market volatility.
The company also raised its full-year revenue guidance to between $41 billion and $41.3 billion. It also maintained strong operating cash flow expectations of nearly $15 billion. Furthermore, management is taking steps to improve efficiency during a period of organisational restructuring, with non-GAAP operating margins reaching 34.3% in the quarter.
Added to this, Salesforce recently announced its intention to acquire Informatica for $8 billion. This marks a significant enhancement to its data management capabilities. It also revealed plans to raise some product prices, which may strengthen revenue growth heading into the next fiscal year.
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