REVENUEBeat +0.2%
EPSBeat +80.4%
Actuals vs. estimates
| Metric | Actual | Consensus | Surprise |
|---|---|---|---|
| RevenueTotal revenue | $11.35B | $11.33B | ▲ Beat +0.2% |
| EPS(provider-reported) | $5.90 | $3.27 | ▲ Beat +80.4% |
Revenue — API Ninjas revenue difference does not reconcile with local math
EPS — actual sourced from API Ninjas, not the company release
Verdict
- Revenue of $11.35bn beat the estimate by 0.2% and grew 11%; provider-reported EPS of $5.90 beat by 80.4%.
- CRPO of $33.5bn accelerated to 14% in constant currency, a point ahead of the guide, on strength in Slack, Agentforce and Data 360.
- Free cash flow of $1.1bn grew 81%, with non-GAAP operating margin of 34.1% against a GAAP operating margin of 20.5%.
- FY27 revenue guidance rose by $300m in constant currency to $46.1bn-$46.4bn, of which only $100m is organic.
Guidance & KPIs
| Item | New guidance | Prior guidance |
|---|---|---|
| FY2027 revenue | $46.1 billion-$46.4 billion | raised by $300 million in constant currency |
| FY2027 subscription and support growth | slightly above 12% year-over-year, slightly under 12% in constant currency | — |
| FY2027 non-GAAP operating margin | approximately 34.3% | approximately 34.3% (held) |
| FY2027 operating and free cash flow growth | approximately 4%-5% year-over-year | — |
| Q3 FY2027 revenue | $11.42 billion-$11.5 billion | — |
| Q3 FY2027 CRPO growth | approximately 14% year-over-year in constant currency | — |
Management commentary
- CFO Robin Washington walked through a $300m constant-currency raise composed of $100m organic and $200m from the anticipated Contentful and Fin closings.
- Non-GAAP operating margin guidance was held at approximately 34.3% while GAAP operating margin guidance was updated to approximately 20.1%.
- CEO Marc Benioff answered the platform-displacement case by relaying what customers tell him: "We only have three platforms. We have you, Salesforce, doing the front office."
- Management restated its commitment to organic revenue re-acceleration in the second half, saying Q3 is already math and Q4 nearly so.
- Salesforce's own help agent has passed 5 million customer conversations with 64% resolved autonomously.
Quality of earnings
- The $300m FY27 guidance raise splits $100m organic and $200m from anticipated Contentful and Fin closings, while the guide also absorbs a $100m currency headwind versus prior guidance.
- Non-GAAP operating margin of 34.1% sits 13.6 points above the 20.5% GAAP figure, the widest single adjustment in the quarter's presentation.
Gotchas & watch items
- Q3 CRPO growth of approximately 14% excludes Contentful and Fin because the deals have not closed, so the guide and the reported balance are not on the same basis.
- Licence revenue headwinds and volatility in integration and analytics offset Informatica and Data 360 growth within the platform line.
- The $25bn accelerated share repurchase is running at an average price of $176 per share and is expected to retire at least 14% of shares outstanding, flattering per-share growth.
- Full-year operating and free cash flow growth is still guided to only approximately 4%-5%, well short of the 81% free cash flow growth just posted.