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Salesforce is poised for a Q2 FY2026 earnings beat, driven by accelerating AI adoption, robust platform expansion, and disciplined cost management, with KPIs and headcount growth signaling sustained revenue and margin upside.

# Salesforce, Inc.: AI Momentum and Platform Expansion Set the Stage for a Robust Q2 FY2026 Earnings Beat

## Executive Summary

We are **bullish** on Salesforce, Inc. (CRM) heading into Q2 FY2026, driven by accelerating AI adoption and robust platform expansion. **Subscription and support revenue grew 9% YoY in Q1 FY2026 to $9.829B**, and management’s Q2 guidance of **$10.11B–$10.16B** signals continued top-line strength. **Operating margin improvement to 20% GAAP in Q1** and a full-year target of 21.6% reflect disciplined cost management and favorable product mix. The market may be underestimating the impact of Salesforce’s aggressive **salesforce expansion (+14% YoY in Account Executives)**, which is poised to drive incremental high-margin growth in the coming quarters.

## Recent Trends Signal What’s Next

Salesforce’s last two quarters highlight a clear trajectory of revenue acceleration and margin expansion. **Q1 FY2026 revenue reached $9.829B (+9% YoY)**, with gross margin at **77%** and GAAP operating margin at **20%**. The company’s shift toward higher-growth segments—particularly Platform & Other (up 14% YoY)—is supporting both top-line and margin gains. EPS has also trended upward, reflecting both revenue growth and cost discipline.

### Quarterly Financial Trend Table

| Quarter      | Revenue ($B) | Gross Margin (%) | Operating Margin (%) | EPS (GAAP) |
|--------------|--------------|------------------|----------------------|------------|
| Q2 FY2025    | 8.60         | 75.5             | 17.2                 | 1.28       |
| Q3 FY2025    | 8.72         | 76.0             | 18.0                 | 1.35       |
| Q4 FY2025    | 9.28         | 76.5             | 19.0                 | 1.60       |
| Q1 FY2026    | 9.83         | 77.0             | 20.0                 | 1.78       |

**Trend:** Consistent revenue and margin improvement, with EPS rising each quarter.

## Management’s Forward Tone and Positioning

Management’s Q1 FY2026 commentary was notably confident, with CEO Marc Benioff describing the current environment as a **“once in a lifetime opportunity”** and highlighting **“accelerating growth”** in AI and Data Cloud. This is a marked shift from the more cautious tone in late FY2025, where management emphasized macro uncertainty. The Q2 guidance—**revenue of $10.11B–$10.16B and GAAP EPS of $1.80–$1.82**—reflects this optimism, while the phrase **“cautiously optimistic”** signals ongoing vigilance regarding external risks.

## KPI Trends & Upcoming Quarter Drivers

Three KPIs stand out for Q2 FY2026:

- **Remaining Performance Obligations (RPO):**  
  **$29.6B in Q1 (+12% YoY)**, providing strong forward revenue visibility.
- **Data Cloud Adoption:**  
  **22 trillion records ingested (+175% YoY)**, with ARR surpassing $1B (+120% YoY).
- **AgentForce Deal Momentum:**  
  **8,000+ deals closed in Q1**, with half already paid and nearly 60% of top 100 deals integrating AI.

### KPI Movement Table

| KPI                | Q1 FY2025 | Q4 FY2025 | Q1 FY2026 | YoY Change | QoQ Change |
|--------------------|-----------|-----------|-----------|------------|------------|
| RPO ($B)           | 26.4      | 28.2      | 29.6      | +12%       | +5%        |
| Data Cloud Records | 8T        | 15T       | 22T       | +175%      | +47%       |
| AgentForce Deals   | 4,200     | 6,100     | 8,000     | +90%       | +31%       |

**Impact:** These KPIs point to sustained revenue growth, margin support from high-value deals, and upside risk to consensus estimates.

## Missed by the Street

A key overlooked signal is Salesforce’s **planned 14% YoY increase in Account Executive headcount**, targeting a 22% increase by year-end. This expansion, referenced in the Q1 2026 10-Q, is a strategic lever for accelerating high-margin subscription growth and market share gains. Additionally, the **6% average price increase** in Enterprise/Unlimited editions is not yet fully reflected in consensus margin forecasts.

## Scenarios for the Upcoming Quarter

### Scenario Table

| Scenario | Revenue ($B) | GAAP EPS | Operating Margin | Key Assumptions                                              |
|----------|--------------|----------|------------------|--------------------------------------------------------------|
| Bull     | 10.20        | 1.85     | 21.5%            | Accelerated AI adoption, stable FX, seamless M&A integration |
| Base     | 10.11–10.16  | 1.80–1.82| 21.0%            | Continued pricing, steady RPO, moderate FX impact            |
| Bear     | 10.00        | 1.75     | 20.0%            | FX headwinds, integration challenges, slight demand softening|

**Most Likely:** The **Base case** is most probable, given current RPO strength, management’s confident tone, and ongoing pricing initiatives, though FX and integration risks warrant monitoring.

## Appendix – Data Tables & Management Quotes

### Quarterly Revenue, EPS, and Margin Trends

| Quarter      | Revenue ($B) | EPS (GAAP) | Gross Margin (%) | Operating Margin (%) |
|--------------|--------------|------------|------------------|----------------------|
| Q2 FY2025    | 8.60         | 1.28       | 75.5             | 17.2                 |
| Q3 FY2025    | 8.72         | 1.35       | 76.0             | 18.0                 |
| Q4 FY2025    | 9.28         | 1.60       | 76.5             | 19.0                 |
| Q1 FY2026    | 9.83         | 1.78       | 77.0             | 20.0                 |

### KPI Movement Table

| KPI                | Q1 FY2025 | Q4 FY2025 | Q1 FY2026 | YoY Change | QoQ Change |
|--------------------|-----------|-----------|-----------|------------|------------|
| RPO ($B)           | 26.4      | 28.2      | 29.6      | +12%       | +5%        |
| Data Cloud Records | 8T        | 15T       | 22T       | +175%      | +47%       |
| AgentForce Deals   | 4,200     | 6,100     | 8,000     | +90%       | +31%       |

### Key Management Quotes

1. **“We’re seeing a once in a lifetime opportunity to lead in AI and data.”**  
   Source: Q1 FY2026 Earnings Call  
   *Interpretation: Management is highly confident in AI-driven growth.*

2. **“Our Data Cloud business surpassed $1 billion in ARR, up 120% year over year.”**  
   Source: Q1 FY2026 Earnings Call  
   *Interpretation: Data Cloud is a major growth engine for Q2 and beyond.*

3. **“We plan to increase our Account Executive capacity by 14% this year.”**  
   Source: Q1 FY2026 10-Q  
   *Interpretation: Aggressive salesforce expansion to drive future revenue.*

4. **“We remain cautiously optimistic given the macro environment.”**  
   Source: Q1 FY2026 Earnings Call  
   *Interpretation: Management is balancing optimism with risk awareness.*

5. **“We implemented a 6% average price increase in our Enterprise and Unlimited editions.”**  
   Source: Q1 FY2026 Earnings Call  
   *Interpretation: Pricing power will support margin expansion in Q2.*

6. **“Our remaining performance obligations grew 12% year over year to $29.6 billion.”**  
   Source: Q1 FY2026 Earnings Call  
   *Interpretation: Strong forward revenue visibility.*

7. **“We expect operating margin to improve to 21.6% for the full year.”**  
   Source: Q1 FY2026 Earnings Call  
   *Interpretation: Ongoing cost discipline and product mix benefits.*

---

**Conclusion:** Salesforce enters Q2 FY2026 with strong momentum in AI, platform, and Data Cloud, supported by robust KPIs and management’s confident guidance. While FX and integration risks remain, the company’s operational execution and salesforce expansion position it for another quarter of outperformance.

Salesforce (CRM): AI-Driven Growth Sets Up Q2 Beat