Salesforce Reports Strong Q2 Earnings: Stock Falls on Weak Forecast

Salesforce stock dropped by nearly 7% after hours as the company revealed its Q2 earnings yesterday, with third-quarter revenue forecast below Wall Street estimates.

The cloud giant boasted a second-quarter revenue of $10.2B, which beat expectations of $10.14B and is up 10% year-over-year (Y/Y) and 9% in constant currency (CC). It also revealed Q2 subscription & support revenue of $9.7B – an increase of 11% Y/Y and 9% in CC.

Annual recurring revenue (ARR) for ‘Data Cloud and AI’ was more than $1.2B, up 120% Y/Y, and Salesforce boasted that it has closed more than 12,500 deals since launching Agentforce, of which more than 6,000 are paid.

But Salesforce forecast Q3 revenue below Wall Street estimates, perhaps signaling lagging monetization for Agentforce. For Q3, Salesforce sees revenue between $10.24B and $10.29B, with the midpoint coming below analysts’ average estimate of $10.29B, according to data compiled by LSEG, reports Reuters. 

On an adjusted basis, Salesforce expects earnings per share between $2.84 and $2.86, with the midpoint in line with analysts’ estimates.

The company announced a $20B increase to its existing share buyback program, but this was apparently not enough to allay investors’ concerns, sending CRM shares down by nearly 7% in extended trading.

Salesforce Q2 Results in Full

On Wednesday, September 3, Salesforce announced the following results for its second quarter fiscal year 2026, ending July 31, 2025:

• Q2 revenue of $10.2B, up 10% Y/Y and 9% in CC.
• Q2 subscription & support revenue of $9.7B, up 11% Y/Y and 9% in CC.
• Current remaining performance obligation of $29.4B, up 11% Y/Y and 10% in CC.
• Q2 GAAP operating margin of 22.8% and non-GAAP operating margin of 34.3%.
• Returned $2.6B to shareholders, including $2.2B in share repurchases and $399M in dividends.
• A $20B billion increase to Salesforce’s existing share repurchase program was announced, bringing the total authorized to $50B.

Founder and CEO of Salesforce, Marc Benioff, said: “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. 

“These results reflect the success of our customers – like Pfizer, Marriott, and the U.S. Army – who are transforming into agentic enterprises, where humans and AI agents work side by side to reimagine workflows, accelerate productivity, and deliver customer success.”

His comments come following recent remarks he made on a podcast that Salesforce has used AI agents to replace around 4,000 customer support division employees.

Robin Washington, President and Chief Operating and Financial Officer at Salesforce, said: “Our second quarter results highlight our ability to drive profitable growth while helping our customers and ourselves become agentic enterprises.

“We exceeded all our financial targets while achieving our tenth consecutive quarter of operating margin expansion, delivering strong returns and maximizing value for our customers and shareholders.”

Business highlights revealed include: 

• Data Cloud and AI annual recurring revenue over $1.2B, up 120% Y/Y.
• Salesforce closed more than 12,500 deals since launching Agentforce, of which more than 6,000 are paid.
• Over 40% of Data Cloud and Agentforce Q2 bookings came from existing customer expansion.
• In Q2, closed over 60 deals greater than $1M that include both Data Cloud and AI.
• Service and Platform were in all Q2 Top 10 Deals.
• Agentforce has handled over 1.4M requests on help.salesforce.com.

The cloud giant also issued the following guidance: 

• Third quarter FY26 revenue guidance of $10.24B to $10.29B, up 8% – 9% Y/Y and 8% in CC.
• Raises low end of full year FY26 revenue guidance to $41.1B to $41.3B, up 8.5% – 9% Y/Y and 8% in CC.
• Updates full year FY26 GAAP operating margin guidance to 21.2%, and raises non-GAAP operating margin guidance to 34.1%.
• Raises full year FY26 operating cash flow growth guidance to approximately 12% to 13% Y/Y.

But, broadly speaking, investors seem to be on the heels of cloud firms to show returns on the billions poured into AI, while an uncertain macro environment and volatile customer spending weigh on growth prospects. 

Melissa Otto, head of research at S&P Global’s Visible Alpha, said: “Investors may feel a sense of frustration, especially as they contemplate the timeline for adequate returns on AI investments.”

Rebecca Wettemann, CEO of industry analyst firm Valoir, said: “As Salesforce brings more acquisitions into the fold, it will be able to offer even more intelligent agentic capabilities to customers.”

Final Thoughts 

At a glance, the earnings results seem largely positive for Salesforce, but it seems investors do not wholly agree – at least at the moment. 

Last year, Marc Benioff said that “everything needs to become about Agentforce”, and their artificial intelligence suite was “the only thing that really matters today”.

Taking him at his word, it seems that Melissa Otto’s comments about investors possibly feeling frustrated as they think about adequate returns on AI investments may have some truth to it.