Salesforce (NYSE: CRM) lifts FY27 outlook after strong Q2
Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K
Rhea-AI Filing Summary
Salesforce, Inc. (CRM) reported a strong second quarter of fiscal 2027 for the period ended July 31, 2026, with revenue of $11.3 billion, up 11% year over year and in constant currency. Subscription and support revenue was $10.8 billion, up 12% year over year, including a $440 million contribution from Informatica.
Current remaining performance obligation was $33.5 billion, up 14% year over year, and total RPO was $66.3 billion, up 11% year over year, indicating solid future revenue visibility. GAAP operating margin was 20.5% and non-GAAP operating margin 34.1%. GAAP diluted EPS rose to $4.29 (up 119% year over year), while non-GAAP diluted EPS reached $5.90 (up 103% year over year), helped in part by $2.6 billion in gains on strategic investments. Operating cash flow was $1.3 billion, up 71% year over year, and free cash flow was $1.1 billion, up 81% year over year. The company returned $364 million in dividends and continued executing on its $25 billion accelerated share repurchase. Salesforce raised full-year FY27 revenue guidance to $46.1–$46.4 billion, implying 11%–12% growth, and maintained a non-GAAP operating margin guidance of 34.3%.
Positive
- Revenue grew 11% year over year to $11.3 billion, with subscription and support revenue up 12% year over year, showing broad-based top-line expansion.
- Profitability improved sharply, with GAAP diluted EPS at $4.29 (up 119% year over year) and non-GAAP diluted EPS at $5.90 (up 103% year over year).
- Current remaining performance obligation reached $33.5 billion, up 14% year over year, and total RPO was $66.3 billion, supporting visibility into future revenues.
- Operating cash flow of $1.3 billion and free cash flow of $1.1 billion grew 71% and 81% year over year, respectively, indicating stronger cash generation.
- Management raised full-year FY27 revenue guidance to $46.1–$46.4 billion, implying 11%–12% growth, and reiterated a strong non-GAAP operating margin target of 34.3%.
- AI-related offerings are scaling quickly, with Agentforce and Data 360 ARR nearly $3.9 billion, up over 210% year over year, and Agentforce ARR above $1.5 billion, up over 240% year over year.
Negative
- Interest expense increased markedly to $473 million in the quarter from $67 million a year earlier, reflecting a much higher debt burden.
- Total debt rose significantly, with noncurrent debt at $39.3 billion versus $10.4 billion at January 31, 2026, while treasury stock grew to $55.0 billion at cost, indicating heavy reliance on debt-funded buybacks.
- Total stockholders’ equity declined from $59.1 billion at January 31, 2026 to $38.4 billion at July 31, 2026, mainly due to share repurchases.
- A substantial portion of earnings improvement is tied to $2.6 billion in gains on strategic investments, which may be less predictable than operating drivers.
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