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Date

September 5, 2025

Category

Market Insights

Salesforce’s Q2 Earnings Show 120% Growth in Data and AI

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Salesforce has been a real “battleground” stock this year. While some investors see a technology stock that is at risk from AI disruption, others see a blue-chip software business that is rolling out AI solutions itself and trading at a relatively low valuation.

Recently, Salesforce posted its earnings for the second quarter1 of fiscal 2026 and they were generally very solid, suggesting that AI is not disrupting the business yet. Here’s a look at the key numbers and some takeaways from the Q2 earnings call.

Solid Revenue and Earnings Growth

For the quarter ended July 31, Salesforce posted revenue of $10.24 billion, up 10% year on year (9% in constant currency). This was ahead of the consensus estimate of $10.14 billion.

Non-GAAP earnings per share for the period came in at $2.91 versus $2.78 expected. This represented growth of 14% year on year.

In terms of profit margins, gross margin rose to 78% from 77% a year earlier. Meanwhile, non-GAAP operating margin climbed to 34.3% from 33.7%.

On the back of this performance, the company announced a $20 billion increase to its existing share repurchase program, bringing the total authorized amount to $50 billion. For reference, the company’s market cap is currently about $230 billion, so the group is buying back a significant amount of stock.

Strong AI and Data Growth

Zooming in on the company’s agentic AI (Agentforce) and data (Data Cloud) offering, growth here was strong with annual recurring revenue (ARR) amounting to over $1.2 billion, up 120% year on year. At the end of the quarter, the company had over 6,000 customers paying for Agentforce, up from 4,000 at the end of Q1. Interestingly, the company said that over 40% of Data Cloud and Agentforce Q2 bookings came from existing customer expansion. This suggests that customers are finding significant value in the company’s AI and data offering and are willing to deepen their relationships with the company.

Q3 and Full-Year Guidance

In terms of guidance, Salesforce said that for Q3, it is expecting revenue of $10.24 billion to $10.29 billion, up 8-9% year on year. For the year, it expects revenue of $41.1 billion to $41.3 billion, up 8.5-9% year on year. Earnings per share for the full year are expected to be between $11.33 and $11.37. That’s higher than analysts were expecting going into the print ($11.31). As for cash flow, the company is expecting to generate around $15 billion in operating cash flow for the year. That would represent growth of 12-13% year on year.

Takeaways from the Earnings Call

On the earnings call, a lot of focus was on AI. Analysts were keen to learn more about the growth of Agentforce and address concerns about the disruptive impact of AI on the company’s core business.

In relation to Agentforce, the company said that it continues to have a lot of success here, with a 60% quarter over quarter increase in customers going from pilot to production in Q2. Note that in August, the group announced new flexible payment options for Agentforce, including pay as you go, to lower the barrier to adoption and encourage experimentation. In terms of monetization, management stressed that it is still early in the adoption cycle, but that it is confident in its ability to monetize AI. Currently, it’s focused on capturing value for customers; it believes that this will unlock deeper value across its core products over time.

As for the threat from AI on the core business, CEO Marc Benioff said that he believes that AI is not going to eliminate software-as-a-service (SaaS). His view is that done properly – with high-quality data – AI can lead to a “fundamental extension” of SaaS. It’s worth noting that Benioff touched on a MIT statistic that 95% of AI pilot projects are failing. He said that Agentforce is different and that his customers are saying that they’re getting “phenomenal results” and that they have humans and agents working together to create a new level of customer success.

During the earnings call, management also discussed the company’s capital allocation strategy. This will entail making disciplined investments to fuel profitable growth while simultaneously returning capital to shareholders via share repurchases and dividends. It noted here that recently, it has been making strategic investments to accelerate its agentic AI roadmap, including the acquisitions of Convergence.ai, Bluebirds, and Regrello. These assets should help to unlock valuable new data and agentic capabilities for Salesforce’s customers.

Wall Street Analysts Remain Bullish

Since the Q2 earnings, several Wall Street firms have reiterated their “Buy” ratings on CRM stock. Goldman Sachs, which has a $3852 price target, is one such firm. It believes that artificial intelligence will become a “multi-year tailwind” for Salesforce rather than a disruption to its SaaS business. And it thinks the company could potentially scale to 35-40% operating margins over the next several years while maintaining approximately 10% subscription revenue growth.

Jefferies analyst Brent Thill also reiterated3 his “Buy” rating on CRM stock after the earnings report. His price target for the stock is currently $375. Thill noted that AI revenue is still small for Salesforce today, however, he believes that it will grow in the years ahead to become more material. He pointed out that while Salesforce is not growing as quickly as some other AI companies, the valuation on the software stock is at a 10-year low.

It’s worth noting that the average price target for CRM stock, according to LSEG, is currently $346. Given that this price target is significantly above the current share price, this could be a stock to watch over the next 12 months. Investors may get more information on the company’s AI offering during Dreamforce 2025. This takes place between October 14-16.

Footnotes:

1 Salesforce Reports Record Second Quarter Fiscal 2026 Results, as of September 3, 2025
2 Investing.com, Goldman Sachs reaffirms Buy rating on Salesforce stock amid AI optimism, as of September 4, 2025
3 Yahoo Finance, Salesforce is the ‘slowest growing’ in software, but still a Buy, as of September 3, 2025

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