Salesforce's $8 Billion Informatica Acquisition: Bolstering AI and Data Capabilities Amid Strong Q1 Results

Why Salesforce's beat-and-raise quarter isn't quieting the stock's doubters

Salesforce on Wednesday reported better-than-expected quarterly results and provided guidance that, on its face, seemed strong. But the market response was muted, as investors discovered what was really driving the improved outlook. Revenue in its fiscal 2026 first quarter rose 8% year over year to $9.83 billion, topping expectations of $9.75 billion, according to LSEG. Adjusted earnings per share (EPS) in the three months ended April 30 totaled $2.58, beating the consensus estimate by 4 cents, LSEG data showed. On a year-over-year basis, adjusted EPS was up 6%. Salesforce's stock was volatile in extended trading Wednesday night, initially jumping about 5% before surrendering almost all of those gains. Shortly after its conference call with analysts concluded, the stock was up a little more than 1%. The enterprise software company came into the earnings release in need of a spark, having lost the momentum built last fall on the launch of its new AI offering Agentforce. Shares were down 18% year to date as of Wednesday's close, trailing both the S & P 500 , which was up 0.3%, and a popular software exchange-traded fund known as the IGV , which advanced around 3%. Salesforce crushed both the S & P 500 and IGV in the final four months of 2024 -- a period that included the unveiling of Agentforce in September and its general availability in late October. Its all-time closing high of $367.87 a share came on Dec. 4. CRM 1Y mountain CRM 1-year return Bottom line We had some reservations about Salesforce ahead of Wednesday's release, recognizing that an uncertain economic backdrop has previously pressured enterprise software spending. Our hope was that Salesforce's two AI products -- Data Cloud and the newer Agentforce -- would show additional traction with customers and suggest that revenue growth could return to double-digit percentages sooner than Wall Street expects. Keep in mind: When Salesforce reported earnings in late February, executives said they expected a "modest" contribution this year from Agentforce, a suite of tools to build so-called AI agents that can perform tasks without human intervention. Meanwhile, Data Cloud helps customers organize and unify their data, and it is basically seen as laying the groundwork for Agentforce adoption. Based on everything we heard Wednesday night, we're not ready to get super bullish on the stock. However, at current levels and valuation it would be unwise to jump off the train. There is momentum on AI and the long-term opportunity for Agentforce is still huge. For that reason, the stock should leave the station within the next couple of quarters. We're reiterating our buy-equivalent 1 rating, while lowering our price target to $350 a share from $400 to account for the skepticism in the marketplace around Salesforce's growth trajectory. Commentary The good news is that Wednesday's results showed progress on AI, with Salesforce saying that the combined annual recurring revenue (ARR) for Data Cloud and Agentforce is more than $1 billion, up from the $900 million provided in February. In an interview Wednesday on "Mad Money," CEO Marc Benioff told Jim Cramer that Agentforce, in particular, is now an "over $100 million ARR product." Additionally, nearly 60% of the company's largest 100 deals in the quarter included both Data Cloud and Agentforce. Salesforce also said it has closed more than 8,000 deals involving Agentforce since its launch, with half of those being paid deals. In February's earnings report, the company said those numbers were 3,000 paying customers and 2,000 non-paying trials. That is a clear sign that customer interest is growing. Benioff called out Pepsi and the Latin American department store chain Falabella as two customers using Agentforce. Considering the stock's underperformance, investors should theoretically be stoked that Salesforce's second-quarter revenue and earnings guidance came in above expectations, and that its full-year outlook also was increased for both of those important metrics. However, the reason investors' excitement may be more measured Wednesday night is that Salesforce is now seeing a benefit from the weaker U.S. dollar when the company was initially baking in foreign-exchange headwinds into its guidance. The U.S. dollar index, which measures the greenback against a basket of other currencies including the euro and Japanese yen, has fallen considerably since Salesforce reported in February, as President Donald Trump's evolving trade policy ripples through financial markets. That provides an on-paper benefit to Salesforce and other multinational companies as they convert the business they've done overseas in stronger currencies back into now-weaker dollars. But in general, it doesn't really say anything about a firm's underlying business, which is why investors may not reward a company benefiting from foreign exchange tailwinds. Indeed, on the call, CFO Robin Washington explained that the company now expects a $250 million tailwind to revenue from foreign exchange this fiscal year, up $400 million from its prior guidance. Accordingly, the high end of Salesforce's fiscal 2026 revenue outlook was raised by $400 million, to $41.3 billion. On a constant currency basis, which removes these foreign exchange fluctuations, the company still sees subscription and support revenue growth of roughly 9% this fiscal year. In his interview with Jim, Benioff acknowledged that Salesforce was benefiting from the weaker dollar, but he argued the actual business is improving, too. "Currency was working in our favor," Benioff told Jim. However, he continued, "Bookings are in working in our favor. Revenue is working in our favor. Everything is working in our favor. And sometimes, when everything is going well for you, it's all good. Sometimes everything is not going well, but right now, we are just going to have a great year." Salesforce Why we own it : Salesforce is a leading enterprise software tool for companies across all industries, helping employees to better communicate with colleagues internally and with their customers. The company's balance of margin expansion with the potential for faster topline growth -- aided by AI adoption -- should lead to strong earnings growth. Competitors : SAP , Microsoft , HubSpot Most recent buy : March 5, 2025 Initiation : June 15, 2018 There was another push-pull in Salesforce's results: Remaining performance obligation (RPO) in the quarter was better than expected, and the same goes for current RPO, or cRPO. RPO is the total value of contracted revenue, while cRPO measures the amount of contracted revenue expected to be recorded in the next 12 months. At the same time, as seen in the chart above, the performance of Salesforce's individual applications -- such as Sales Cloud and Service Cloud -- fell short of expectations. One of the narratives pushed by investors who are bearish on Salesforce is that its core business was being neglected at the expense of AI initiatives that will take time to materialize. Our pushback has been that the AI opportunity is so significant that Salesforce needs to pursue it aggressively. Encouragingly, Salesforce's integration and analytics segment, which houses Data Cloud and Agentforce, delivered stronger-than-projected revenues in the first quarter. So while Wednesday's results are unlikely to put this bear narrative to rest, the counter argument is in good shape over the long term. Commentary on Informatica As expected, Salesforce's $8 billion acquisition of Informatica, which was announced Tuesday, was a point of discussion on the call. Informatica makes data management and integration software -- basically, it's a collection of tools to help companies track and analyze the diverse types of data collected by the firm. While the amount of data that companies collect has exploded in recent years, it tends to be stored across multiple systems and in various formats -- a problem called "data fragmentation" within the industry. Informatica's software seeks to address this fragmentation. Benioff noted that this is particularly relevant as businesses look to adopt AI. In many cases, companies need to get their data cleaned up and organized in such a way that it can be fed into and utilized by AI applications. Data is the foundation of any AI application. Salesforce sees Informatica strengthening Data Cloud and its overall strategy on AI agents. Benioff called them complementary. "This is a great price for a great company. It's got great multiples. It's accretive. It's non-dilutive [to existing shareholders]. It's coming together in an incredible way. This is a moment where Informatica is more important to our customers than ever before because of AI," Benioff said on the call. Benioff and finance chief Washington both stressed that Salesforce was disciplined in evaluating the acquisition -- notable, given that one of the reasons that multiple activist investors targeted Salesforce beginning in late 2022 was concerns about its aggressive and expensive approach to M & A. Washington was asked by an analyst why Salesforce only expects the transaction to boost adjusted operating margins, EPS and free cash flow in the second year following its closing. That is expected to happen early in calendar 2026, meaning the benefits will show up in calendar 2027. "The framework that we've talked about when we look at deals, we assume: Can we get it accretive within two years, right? So, that's kind of our goal. Our desire is always to under promise and over deliver," she said. "I think with our playbook that we have in place, we're going to go fast as possible. We're really focused on accelerating integration. So, we'll see how that works out." Complete guidance breakdown As mentioned, Salesforce's second-quarter outlook came in better than expected, with the weaker U.S. dollar is now acting as a tailwind for its results. Here's a closer look at its Q2 guidance compared with Wall Street's expectations (GAAP stands for Generally Accepted Accounting Principles): Revenue in the range of $10.11 billion to $10.16 billion, which even at the low end exceeded the FactSet consensus of $10.02 billion. That would translate to year-over-year revenue growth of 8% to 9% on a GAAP basis, ahead of the 7.4% growth rate implied by the revenue estimate. On a constant currency basis, which excludes foreign exchange fluctuations, second-quarter revenue is projected to rise 7% to 8%, which would be more in line with expectations. Adjusted EPS in the rage of $2.76 to $2.78 a share, beating the $2.74 estimate, according to FactSet. Current remaining performance obligation (cRPO) growth of roughly 10% on a GAAP basis, or 9% on a constant-currency basis. The FactSet consensus called for 10% cRPO growth, though it's unclear that estimate is GAAP or currency neutral. For the full year, Salesforce upped its revenue forecast to $41 billion to $41.3 billion, compared with its initial guidance of $40.5 billion to $40.9 billion. The new range implies 8% to 9% growth, up by a percentage point on the high and low ends. Subscription and support revenue growth , in particular, is still seen rising roughly 9% year over year on a constant currency basis. Adjusted EPS is now projected to be $11.27 to $11.33, up from its prior range of $11.09 to $11.17. Operating margin is still projected to be 21.6% on a GAAP basis and 34% on an adjusted basis. Operating cash flow also was unchanged at approximately 10% to 11% growth. (Jim Cramer's Charitable Trust is long CRM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Salesforce posts strong results and bullish guidance as it looks forward to buying Informatica - SiliconANGLE

Salesforce posts strong results and bullish guidance as it looks forward to buying Informatica Salesforce Inc. delivered a solid earnings and revenue beat just one day after announcing a plan to acquire the data management software pioneer Informatica Inc. for $8 billion. The company also delivered strong guidance for the current quarter and raised its full-year earnings and revenue forecast. Yet investors were nonplussed, and its stock was more or less flat after-hours. In its first-quarter earnings report, the customer service software maker posted a profit before certain costs such as stock compensation of $2.58 per share, coming in ahead of the $2.54 analyst consensus estimate. Revenue for the period rose 7.5% to $9.83 billion, surpassing Wall Street's forecast of $9.75 billion. All told, Salesforce posted a net profit of $1.54 billion in the quarter, just slightly higher than the $1.53 billion profit it generated in the year-ago quarter. The report comes at a time of great uncertainty, with analysts still unsure about what kind of impact President Donald Trump's sweeping tariffs on goods imported into the U.S. might have on Salesforce's business. But in a conference call, Salesforce Chief Executive Marc Benioff (pictured) struck an optimistic tone, and was keen to point out the benefits that Informatica would bring to the company. The Informatica acquisition will be the company's most expensive since its $27.1 billion deal to buy Slack back in 2021. The purchase of Slack was the last in a string of expensive acquisitions made by the company back then, and it led to some activist investors pushing back, pressuring the company to reduce its spending at a time when revenue growth was slowing. Salesforce consequently made significant cuts, reducing its headcount by around 10% in January 2023 while Benioff announced later that year that the board of directors had disbanded its mergers and acquisitions committee. Around the same time, Salesforce also started paying a dividend to shareholders. Benioff's decision to buy Informatica suggests Salesforce is now back in business in terms of acquisitions, and the initial reaction to the deal has generally been favorable. Dave Vellante, chief analyst at theCUBE Research, noted that Salesforce is buying Informatica at a lower price than it was originally willing to pay. "Informatica did a good job when they went private in improving its margin profile -- so Salesforce will be able to make this acquisition accretive in the near future," he said. On a conference call with analysts today, Benioff revealed that he has been looking to bring Informatica into the company's fold for 20 years. He added that the companies most recently held talks over a merger last year, but walked away after failing to agree terms. Informatica was founded in 1993 and sells one of the industry's most popular ETL, or extract/transform/load, platforms. Companies use the software to move data between applications. One of the tasks that the platform can ease is the process of loading records from third-party systems into Salesforce. The company went public for the first time in 1999, only to go private again in 2015 when it was bought out by Permira Funds and Canada Pension. It returned to the public market again in 2021, and in its most recent earnings call earlier this month it reported revenue of $403.9 million, up 4% from a year before, with annualized cloud subscription revenue growing at 30% to $848 million. The addition of Informatica will give Salesforce much more credibility in terms of data integration and governance, Valoir analyst Rebecca Wettemann told SiliconANGLE. "It will make it easier for customers to plug in data from outside the Salesforce ecosystem and still get clean, AI-ready insights through Agentforce," she said. "With Informatica, Salesforce isn't just connecting data; it's making a stronger case that it can be the enterprise's trusted AI platform, not just a CRM giant. "Salesforce and Informatica have had a well-established partnership that enables their joint customers to synchronize data across various applications seamlessly," said SiliconANGLE founder and co-CEO John Furrier. "The collaboration, now acquisition, helps in integrating Salesforce with third-party applications using Informatica's robust data management platform. Benioff said there's a lot of potential for the acquisition in terms of artificial intelligence agents that require extensive amounts of data to operate. They'll need to clean up that data first, and Informatica can help with that, he added. "Look, Informatica is a small company," Benioff told analysts. "They don't have the distribution scale that we have. So that idea that we have the ability to really go out there and start to sell that product to all companies worldwide, to really show them that they need this, for this capability. Now, this is why I have this fever about growing." Not everyone was so enthusiastic about the deal, though. Howard Ma of Guggenheim Partners said in a note to clients that he saw a risk in terms of Salesforce's ability to properly integrate Informatica's software with its own platforms. "Salesforce has a long history of taking many years to integrate acquired companies (e.g., ExactTarget, DemandWare, MuleSoft, Tableau, Slack), some of which have never been fully integrated from a technology perspective," he said. In any case, Salesforce continues to make progress in terms of AI agents. During the quarter, it debuted its new AgentExchange marketplace, where developers can sell their agents to other companies. In addition, the company said its own Agentforce agents have helped it internally. Robin Washington, the company's president and chief operating and financial officer, said he was able to reassign 500 customer support staff after using agents to automate the work they used to perform, bringing in around $50 million in savings. The company didn't say much about Agentforce's actual contribution in terms of revenue, but according Wettemann, that's not entirely surprising, for it's still a new platform and is currently in "land-and-expand" mode. "Right now it's more about adoption than dollars, so Salesforce is bundling it to build stickiness and trust before going big on monetization," she pointed out. "Remember, it has only been available for a few months and not in all geographies. Expect real revenue impact to kick in in a few quarters, once usage scales and value-based pricing takes hold." For the current quarter, Salesforce is targeting earnings of between $2.76 and $2.78 per share on revenue of between $10.11 billion and $10.16 billion. That's better than Wall Street's targets of $2.73 in earnings and $10.1 billion in sales. The company bumped up its annual forecast too. It's now looking for earnings of $11.27 to $11.33 per share for the full year, with expected revenue of between $41 billion and $41.3 billion. That's up from a prior forecast of $11.09 to $11.17 in earnings and $40.5 billion to $40.9 billion in revenue. Analysts are modeling earnings of just $11.16 per share on sales of $40.82 billion. Washington reiterated guidance of 9% growth in subscription and support revenue, with some contribution from Agentforce. However, she admitted the company also sees some weakness in marketing and commerce software revenue, which could result in slower growth this year. In the year to date, Salesforce's stock is down 17%, while the S&P 500 Index has stayed flat.

Second time lucky? Salesforce launches $8 billion takeover of Informatica with all roads leading back to Agentforce

Salesforce's long-rumored takeover of Informatica is on, complete with a price tag of $8 billion and an ambition to create "a unified architecture for agentic AI". Will it be a case of second time lucky after talks last year to push ahead with the deal fell apart? And what's changed now to enable it to go ahead? Let's start with what's been announced. Subject to the relevant approvals, Salesforce is going to acquire the Enterprise Data Management platform provider with the intention of integrating "rapidly" Informatica's technology stack -- including data integration, data quality, data governance, and unified metadata for Agentforce, as well as a single data pipeline with Master Data Management (MDM) on Data Cloud. Or in the words of Salesforce CEO Marc Benioff: Together, Salesforce and Informatica will create the most complete, agent-ready data platform in the industry. By uniting the power of Data Cloud, MuleSoft, and Tableau with Informatica's industry-leading, advanced data management capabilities, we will enable autonomous agents to deliver smarter, safer, and more scalable outcomes for every company, and significantly strengthen our position in the $150 billion-plus enterprise data market. According to the official blah blah: The planned acquisition will enhance Salesforce's trusted data foundation critical for deploying powerful and responsible agentic AI. The combination of Informatica's rich data catalog, data integration, governance, quality and privacy, metadata management, and Master Data Management services with the Salesforce platform will establish a unified architecture for agentic AI -- enabling AI agents to operate safely, responsibly, and at scale across the modern enterprise." As noted above, this is a second attempt to close a deal. Last year, so Silicon Valley scuttlebutt has it, Salesforce backed away from a takeover bid on the grounds of price. A figure of $11 billion was the most commonly-cited number being touted around, so today's $8 billion offer looks like a bargain by comparison. It's also considerably lower than the $27.7 billion paid for Slack in 2021 or the $15.7 billion that Tableau cost in 2019, but essentially not far off Mulesoft's 2018 price tag of $6.5 billion which would be roughly $8.3 billion today when adjusted for US inflation rates. But the very fact that Salesforce is spending such a sum is perhaps surprising in its own right given that activist investor pressure last year had prompted a mergers and acquisition (M&A) strategy re-think, including the disbanding the company's internal M&A committee. So what has triggered this return to acquisitive form? Well, it's not the revenue bump that Informatica would bring. Its Q1 GAAP total revenues were $404 million, an increase of 3.9% year-on-year, with maintenance revenue from legacy products of $103 million, representing over a quarter of that (26%). By comparison, when Salesforce turns in its latest quarterly numbers tomorrow, Wall Street is looking for revenues of around $9.75 billion. What has changed since last year is simple - Agentforce. The pivot around agentic AI last summer is clearly a major factor in Salesforce's strategic thinking. All roads lead to two things at present - Agentforce and Data Cloud, and an Informatica acquisition plays to both. As Benioff said back in February: We've never seen products grow at these levels, especially Agentforce. And Data Cloud and AI, Agentforce, this is now going to be incredible coming into fiscal year '26. That said, and leaving evangelic hyperbole to one side, the Agentforce revolution is going to take time to make a bottom line impact. Tomorrow's quarterly earnings will update this, but at the last financials results in February, revenue from AI and Data Cloud came in at a $900 million run rate, or $225 million during the quarter. Now, that's not to be sniffed at by any manner of means - particularly in relation to Agentforce which hasn't even been in the market for a year - but it does pale in to the overall $40 billion run rate for Salesforce as a whole. One of the last acts of former Salesforce CFO Amy Weaver earlier this year was to set Wall Street expectations around the speed of the agentic revolution, when she said: We are incredibly excited about the customer momentum we are seeing. However, the adoption cycle is still early as we focus on deployment with our customers. As a result, we are assuming a modest contribution to revenue in fiscal '26. We expect the momentum to build throughout the year, driving a more meaningful contribution in fiscal '27. In other words, it's a journey - and at a time when short termists on Wall Street are demanding with increasing shrillness that enterprise vendors 'show us the money' around AI. The Informatica announcement can be seen as another important stake in the ground of progressing towards that goal. It also fleshes out Agentforce's functionality and capabilities. Salesforce messaging around AI has been consistent around the criticality of having a solid and clean data foundation in place first. Informatica's tech stack entirely fits with that need for high levels of good governance and data quality, according to Informatica CEO Amit Walia: We believe data continues to be fragmented in poor quality and unruly with AI amplifying these challenges. Across enterprises, AI doesn't deliver value alone. It needs a strong data foundation. Organizations require relevant responsible and robust AI attainable through holistic, accurate, timely, accessible, governed, protected and democratized data. That's data management, and it is crucial for transforming data into these valuable attributes. Since 2018, when we launched the first version of Claire [Informatica AI engine], we have led AI-powered data management. We are now enhancing our capabilities by integrating AI agents into our IDMC (Intelligent Data Management Cloud) platform. Imagine autonomous AI agents managing processes like quality, discovery, governance, to name a few. Or in the words of Steve Fisher, Salesforce Chief Technology Officer: "Truly autonomous, trustworthy AI agents need the most comprehensive understanding of their data. The combination of Informatica's advanced catalogue and metadata capabilities with our Agentforce platform delivers exactly this. Imagine an AI agent that goes beyond simply seeing data points to understanding their full context -- origin, transformation, quality, and governance. To that end, again quoting from the official announcement, the objectives of Salesforce/Informatica tech integration will be five-fold: Achieving Data Clarity with Data Cloud: Informatica will strengthen Data Cloud's leadership as a Customer Data Platform (CDP), ensuring data from across the organization is not just unified but clear, trusted, and actionable. Elevating Agentforce: Combined, Informatica and Salesforce will provide a critical foundation for autonomous AI agents to interpret and act on complex enterprise data, building a true system of intelligence on a trusted system of understanding. Augmenting the Customer 360: Salesforce CRM applications will be enhanced, giving teams the confidence to deliver more personalized and effective customer experiences, backed by trusted data. Governed Understanding for MuleSoft: Informatica's advanced data quality, integration, cataloging, and governance will ensure data flowing through MuleSoft APIs is not just connected but also enriched, standardized, and trustworthy -- a reliable stream ready to fuel AI-powered decisions and actions across the enterprise. Context-Rich Insights for Tableau: Tableau users will benefit from richer, context-driven insights thanks to a more accessible and better-understood data landscape. So it all comes back to the data. Diginomica contributor Rebecca Wetteman, CEO of analyst firm Valoir, explains: Salesforce has made Data Cloud central to its AI strategy, and snapping up Informatica gives it a big boost in data integration, harmonization, and AI governance, plus more AI agent engineering expertise...Informatica brings real depth in MDM (Master Data Management) and multi-cloud integration, which will be critical as Salesforce pushes Agentforce and fends off new agentic AI rivals. It's another smart move in the company's build-and-buy playbook, just like Tableau, MuleSoft, and Slack. The deal also helps Salesforce make the case for non-CRM AI use cases and busts the myth that Agentforce only works if all your data lives in Salesforce. I was interested to hear that Wetteman also sees little issue in the functional overlap between Informatica and Mulesoft that many commentators are pointing to. She argues: Most customers buying them today are buying them for different things - and often buying Informatica when MuleSoft isn't enough from an ETL (Extract, Transform, Load), MDM, and data management perspective. Whether that's enough to fend of regulatory attention and possible objections remains to be seen. There's a way to go yet, with the deal due to close "early in Salesforce's fiscal year 2027". We'll presumably hear a lot more about Salesforce's thoughts and intentions when the quarterly earnings analyst call takes place Wednesday evening.

We waited 20 years for this! Salesforce CEO Marc Benioff on an Informatica long game as growth re-emerges as a corporate priority

We might have thought, as noted yesterday, that Salesforce has waited a year to pick up Informatica as its latest acquisition, but according to Marc Benioff, it's required far more patience than that - the best part of two decades worth, in fact. According to the Salesforce CEO: I've been working with this company since probably 2006...You may not know everything that's happened with Informatica. I've followed it very closely, the way they've re-written their product into the cloud, their incredible engineering leadership, especially some of their incredible new data engineering centers, and what they've built is just awesome. And I'll tell you that there's few technology companies I've just been more impressed with. In fact, we're a customer, we're a partner, we're an investor in Informatica. We really love the company, we love the people, we've loved the leadership. And I have to say, we've probably spent the last 20 years discussing how to bring the companies together. That being so, he's finally got his wish - regulators permitting - and it's only cost $8 billion for the privilege. Now, that 'only' might be thought to be doing quite a lot of heavy lifting there, but it's important that the deal is seen as good value after investor agitation last year caused Salesforce to pull back substantially from its previously highly-acquisitive tendencies. But of Informatica, Benioff insists there's nothing here to scare the activist horses: It's a great price for the company, this transaction...We've been very focused on staying really in our acquisition framework. We spent a lot of time thinking about, what is it going to take to buy a company of scale? How much are we really willing to spend? Are we willing to walk away like we did a year ago when the numbers are not right. We just want to be as disciplined as possible. At the end of the day, this is a great price for a great company. It's got great multiples, it's accretive, it's non-dilutive, it's coming together in an incredible way. Getting these points home to Wall Street is clearly seen as a top priority as Benioff is quick to emphasise: We want to have growth. We also want to have good, solid, balanced execution as well. This a big commitment of the company, that we are going to, first and foremost, maintain our margin framework. We're going to maintain our cash flow framework...I really want to make sure that everybody heard what I just said, that I'm committed to all of those things, but I'm also deeply committed to growth. The current rise of AI and agentic tech into the mainstream makes Informatica's tech stack all the more essential as organizations need to get their data houses in good order. Benioff argues: Every AI transformation is a data transformation. You don't see it on the consumer side because, when you're using a consumer AI, you have to remember that the data set has been pre-fabricated for you. That is, the training data and everything is put together[so] it's an amalgamated data set applied to this consumer AI model. That's not how an enterprise AI really works, [where] you have to have your enterprise data together to get the result that you want. As we discussed yesterday, from Salesforce's point of view, all roads in 2025 lead to Agentforce and to Data Cloud. As per updated information on the back of the latest quarterly earnings report, Agentforce now accounts for $100 million in Annual Recurring Revenue (ARR) for Salesforce, with some 8,000 deals put in place since it launched in October, although only half of them are, to date, being paid for. Exploration and adoption rates are growing very quickly, but it will be a while yet before there's a significant impact on the bottom line. But more than 60% of the Top 100 deals signed in the firm's most recent quarter involved AI and Data Cloud, with the combination of the two now boasting an ARR of $1 billion. Half of of Data Cloud's new bookings are coming from existing customers, while 30% of Agentforce bookings are from customers increasing their consumption. For Q1 fiscal '26, total revenues were $9.8 billion, up eight percent year-on-year, of which subscription and support revenues accounted for $9.3 billion. Net income was essentially flat year-on-year at $1.541 billion against $1.533 billion for the comparable year ago quarter. Breaking down revenue by cloud, Sales Cloud generated $2.1 billion and Service Cloud $2.3 billion, both up seven percent year-on-year. Platform & Other revenue was up 14% to $2.0 billion, with Integration & Analytics up 10% on $1.5 billion, and Marketing & Commerce coming in at $1.3 billion, up four percent. More than half of the quarter's Top 10 deals included six or more clouds with Sales Cloud and Service cloud in nearly 80% of those deals. This idea that we now have 8000 [Agentforce] customers, 4000 of whom are paying, many of them who have done scaled deployments where this is working in months, it just makes no sense, actually, to me. As the dust settled after the Informatica takeover announcement the previous day, Salesforce's post-earnings analyst call was inevitably going to be dominated by this development as well as the expected focus on Agentforce momentum and Data Cloud's adoption rates. What did surprise me, in a good way, was the bullish - defiant? - commentary from Benioff and Salesforce's new Chief Operating and Finance Officer (COFO) Robin Washington about what might be dubbed as an unabashed commitment to growth alongside the overhauled fiscal discipline that has characterised the past year or so. In Benioff's words: We kind of have the margin transformation behind us, the cash flow transformation behind us, the buyback transformation behind us, the dividend transformation behind us, and also, I would say we have the acquisition transformation behind us, because we saw the acquisition yesterday, and also the acquisition last year of [data management specialist] Own. But now there's one more huge transformation that is underway, and it's really driven by this agentic AI moment, and that is the growth transformation, and our approach to that is going to be really focused. The oveall conclusion:

Salesforce Q1 Earnings: Benioff Says Informatica Deal A Win For 'Data Transformation'

"We are now just very well-positioned to take advantage of this multitrillion-dollar opportunity in AI and enterprise software and digital labor," Salesforce CEO Marc Benioff said. Salesforce CEO and co-founder Marc Benioff defended his pending purchase of data management vendor Informatica as a necessity for winning in the artificial intelligence market. "Every AI transformation is a data transformation," Benioff said. "When you look at these companies that are doing it right, they have got their data together. That is what is really the key-this ability to unify or harmonize or activate all the data across the entire enterprise." The CEO also said that Salesforce is on a sales force hiring spree while suggesting that more acquisitions could come-all while the company maintains margins and cash flow expectations. His comments came during the San Francisco-based enterprise applications vendor's Wednesday quarterly earnings call, covering the three months ended April 30. [RELATED: Salesforce To Buy Informatica: 5 Things To Know] During the call, Srini Tallapragada, Salesforce president and chief engineering officer, credited the vendor's partner base with customer success help and understanding demands around latency, local residency and auditability. "We are in a tight loop, not just with Salesforce, but also with a lot of our partners like Accenture, Deloitte," Tallapragada said. "We are in very early stages. We are super excited. We're obsessed about customer success. And the name of the game is mature the product, really focus on customer success." The vendor's channel chief revealed to CRN that efforts to grow Salesforce's partner ecosystem have resulted in reaching about 16,000 partners, 9,000 of them in consulting -- more than 30 percent growth in total partners and around 50 percent growth in consulting partners compared with last summer. Salesforce raised its expected full fiscal year revenue by $400 million. It now expects between $41 billion and $41.3 billion in revenue for the fiscal year, representing 8 percent growth year over year ignoring foreign exchange. The vendor maintained its full-year expectations for operating margin and operating cash flow growth. Salesforce executives also said to expect $10.11 billion to $10.16 billion in the second fiscal quarter, representing 7 percent to 8 percent growth year over year ignoring foreign exchange. The company reiterated that it doesn't expect the Informatica deal set to close early in its 2027 fiscal year to affect its 2026 revenue guidance. Benioff said that his company differentiates itself in the AI marketplace with the "ADAM" framework-agents, data, applications and metadata-which "companies need to achieve the real promise of agentic AI." "Every company does say that they have agents, but without these four parts ... you're just not really able to deliver this complete experience for the enterprise, including delivering digital labor," he said. Benioff continued his attacks on customer relationship management (CRM) software rival Microsoft, saying that the tech giant issued "a false prophecy" in its promises of how the Copilot AI tool would advance over the years. The error, according to Benioff, was in thinking consumer-grade AI of tools like ChatGPT, Google's Gemini and Anthropic's Claude could easily adapt to the needs of enterprises, calling those tools "packaged, highly controlled consumer experiences." "The enterprise has datasets that are highly controlled, highly governed and highly secured," Benioff said. "These datasets are everything from your customer dataset to your financial dataset to your HR data set. And the reality is that on all enterprise data is available to all users. ... (For example) you can't see all the employees' salary information." Benioff noted a "surprise" in "very strong growth" in the small and medium business (SMB) segment that many solution providers work in, with double-digit new bookings growth. Miguel Milano, Salesforce president and chief revenue officer, said that the company is investing in the lower end of the market. Salesforce plans to hire another 1,000 to 2,000 salespeople to grow the company. Salesforce has 13,000 account executives (AEs) today, a record number in the vendor's history and 14 percent growth year over year. The number should be up 19 percent by the end of the quarter and 22 percent by the end of the year. But Benioff pledged to maintain margins and cash flow despite the hiring. "Where we have not invested in distribution capability, we will invest aggressively-well, we already have," Benioff said. Benioff said the Informatica deal brings Salesforce the "No. 1 AI MDM and ETL" company, referring to the acquisition's capabilities in master data management and the extract, transform and load data integration process. Salesforce was already a customer, partner and investor in the company. "There's just few technology companies I've just been more impressed with," Benioff said. "We really love the company." Over the years, Informatica has rewritten the product for the cloud era and built new data engineering centers. Informatica has become "more important to our customers than ever before because of what's happened with AI," he said. Salesforce sees opportunities to bring in Informatica, Data Cloud, Tableau and other parts of its portfolio for better AI outcomes. The CEO confirmed that Salesforce "walked away" from buying Informatica a year ago because the numbers were "not right." The $8 billion Salesforce is expected to spend on the company is about 30 percent below the price that emerged during talks in 2024. "We just want to be as disciplined as possible," Benioff said. "This is a great price for a great company. ... We can see how it can radically extend what we have done. Complement it. It's incredibly additive. This ability to harmonize all of this data, it just is going to make everything better for our customers and give this platform that we have a lot more capability." Robin Washington, president and chief operating and financial officer, told analysts on the call that the deal fits Salesforce's acquisition strategy. She expects the company will achieve accretion in free cash flow plus operating margins and earnings per share (EPS) not using Generally Accepted Accounting Principles (GAAP) by year two. Benioff suggested more acquisitions akin to the size of the Own Co. deal announced late last year are on the horizon. Salesforce has done about 8,000 Agentforce deals across every industry, Benioff said on the call. The vendor has 4,000 paid Agentforce deals and $100 million in Agentforce annual recurring revenue (ARR). About 800 Salesforce customers are in production with Agentforce. Agentforce reached more than $100 million in annual order value (AOV), "much faster than any product in our history, and we're not even fully deployed on all geographies, currencies or languages," the CEO said. About 30 percent of Agentforce bookings also came from customers increasing their consumption, he said. Salesforce has launched hundreds of pre-built Agentforce templates. Next month, Agentforce will gain the most rigorous level of authorization under the Federal Risk and Authorization Management Program (FedRAMP) to allow more government organizations to use the tool. "No one else is delivering what we think digital labor is at this scale," he said. "We are really delivering, at this point, probably more agents and more conversations and more capability to more enterprises than any other vendor in the world. I really see us as the No. 1 agent platform already, and it's only been a few months." Agentforce has been proving a flywheel for Salesforce's other products, including Data Cloud, which saw an ARR of more than $1 billion when combined with AI, growing more than 120 percent year over year. Salesforce's Data Cloud surpassed 22 trillion records ingested, up 175 percent year over year. About 60 percent of Salesforce's top 100 deals included investments in both Data Cloud and AI. Half of Data Cloud's first fiscal quarter new bookings came from existing customers, Benioff said. "That's really important because it really speaks to the adoption of the product and the incredible usage by the customers who have it," he said. Milano said Agentforce deals in the quarter on average saw four other cloud products included. A third of the top 100 deals included Agentforce and Data Cloud. The top six deals-averaging $34 million of total contract value (TCV) each--had Data Cloud and Agentforce as anchors. Salesforce reported $9.8 billion in revenue for the first fiscal quarter, up 8 percent year over year. Salesforce transacted $2 billion of business through Amazon Web Services (AWS) across hundreds of transactions, tripling year over year, according to the vendor. Subscription and support revenue was $9.3 billion, up 9 percent year over year ignoring foreign exchange. Current remaining performance obligation (cRPO) was $29.6 billion, up 11 percent year over year. First fiscal quarter operating cash flow was $6.5 billion, up 4 percent year over year. Free cash flow was $6.3 billion, up 4 percent year over year. Salesforce's stock traded at about $280 a share Wednesday after market close, up about 1 percent.

Salesforce Q1 2026 Earnings Preview: 5 Things To Know

Salesforce should see about 10.4 percent cRPO (current remaining performance obligation) growth year over year, ignoring foreign exchange, according to a Bank of America report. Updates to Agentforce's performance, evolving pricing options for artificial intelligence, and another reported attempt to buy Informatica. These are some of the topics expected to come up during Salesforce's latest quarterly earnings report Wednesday. CEO and co-founder Marc Benioff and his team will cover earnings for the three months ended April 30. Salesforce should see about 10.4 percent growth year over year, ignoring foreign exchange, in its current remaining performance obligation, according to a Bank of America report in May. (Current remaining performance obligation measures the total value of contracted revenue yet to be recognized.) The firm expects second fiscal quarter cRPO growth to decelerate to about 9.5 percent-with new Salesforce Chief Operating and Financial Officer (COFO) Robin Washington potentially taking a conservative approach to the 2026 fiscal year. [RELATED: Salesforce, Citrix Parent Jockey For Informatica: Report] Still, the company sees any "weakness" in the results as temporary, calling Salesforce "ahead of the AI agent curve" with its Data Cloud product pulling in $900 million of annual recurring revenue (ARR) in the prior quarter, more than double year over year. Agentforce could add 1 to 2 percentage points of incremental growth over the next one or two years, grow Salesforce's total addressable market (TAM) and contribute to a durable growth rate in the low- or mid-teens, according to Bank of America. The vendor's channel chief revealed to CRN that efforts to grow Salesforce's partner ecosystem have resulted in reaching about 16,000 partners, 9,000 of them in consulting -- more than 30 percent growth in total partners and around 50 percent growth in consulting partners compared with last summer. Here's what you need to know ahead of Salesforce's quarterly earnings call Wednesday. Boding well for Salesforce's Wednesday report is "better than feared" first calendar quarter 2025 results from other software vendors, Morgan Stanley said in a report this month. That, plus most topline revenue growth for Salesforce comes from renewals over net-new customers. Major IT vendors-including Snowflake, IBM, ServiceNow and Microsoft-reported little demand impact so far from tariff negotiations, Elon Musk's Department of Government Efficiency (DOGE), and other economic considerations. But these factors "could create drags on demand at some point," according to the firm. Salesforce may face more difficult timing compared to other vendors, with global volatility growing in April as the vendor was closing its quarter. Multiple analyst reports pointed to channel partners seeing longer sales cycles and more cautious buying by customers due to economic uncertainty. Some partners "noted slow decision making and some pushing out of deal closures leading to modest downward revisions in the full-year outlook," according to Morgan Stanley. Nonprofit sector customers in particular see cautious spending due to cuts at the U.S. federal government and manufacturers hit by tariff uncertainty. Partners said they saw "modestly below expectations across the board," but assuming tariff negotiations eventually settle down, that "deal slippage" could show up in later quarters and boost Salesforce's financial outlook, according to Morgan Stanley. Salesforce executives on the call will likely have updates on how the Agentforce AI agent creation and deployment platform is performing with customers. In the lead up to the earnings call, Salesforce introduced a version of Agentforce for health care, financial services and other regulated industries. The vendor also revealed role-based governance and protocols to meet regulated industries' strict rules. Morgan Stanley said in a Thursday report that by pushing deeper into life sciences by partnering with system integrators, Salesforce "is building a credible case to be a formidable competitor" against the likes of Veeva Systems, a provider of applications for the pharmaceutical and life sciences industries. Customer data is still not in a state for agents to "do anything valuable," which has been the case for months, KeyBanc said in a report Wednesday. The firm found that real use cases have been forming in retail and customer service, but industries such as financial services still need data work. "Eventually, this data issue should turn the corner, and we want to be there for it, but we totally understand if you're reading this and wondering, 'When will you tell me something new?'" according to the report. Morgan Stanley, in a May report, struck a more positive tone on Agentforce, saying its product cycle is "accelerating Salesforce's 'at bats' to expand contract value with customers." Channel partners told the firm that despite "a more muted Q1 performance," Agentforce deals were "active and advancing, with customers realizing durable cost benefits," according to Morgan Stanley. About 20 percent of clients interact with Agentforce, still in initial pilots and proofs of concept (POCs). Once in production, Agentforce adoption lifted average contract value about 15 percent to 25 percent. Various vendors are experimenting with different pricing options for their AI products, with Salesforce no exception. Analysts on Wednesday's call may seek more information on Salesforce's pricing strategy and customer feedback-with a common customer concern being what happens to costs when agents act autonomously and execute potentially billable actions on their own. The vendor offers at least three ways to buy Agentforce, including $2 per conversation, a 10-cent "Flex Credit" per action option and, coming in the summer, an employee-facing agent with unlimited usage per user, per month. Salesforce has also said that customers can swap between credits and seats as they experiment with AI products and cost models. "Partners have indicated the total price does not seem to be the main hurdle to overcome for testing and adopting; rather, complexity around pricing, employee adoption, and tracking the right data seem to be a bottleneck," according to the Wednesday KeyBanc report. Morgan Stanley's May report saw the 10-cent Flex Credits as a positive that "should better align Agent pricing to outcomes completed and therefore value derived from the solution suite, which could accelerate broader adoption ahead." Salesforce rival Microsoft, in another example of an AI vendor introducing multiple payment options, plans to introduce in June a billing model for GitHub Copilot that incorporates "premium requests." Some of Microsoft's AI products remain per-license, and some are consumption-based. Leading up to the earnings call, Salesforce revealed an agreement to buy England-based AI agent startup Convergence.ai to boost Agentforce's capabilities and Bloomberg reported that Salesforce is trying yet again to buy data management tech developer Informatica. Salesforce didn't disclose the terms of the Convergence deal but said to expect a closing date in the second quarter of the 2026 fiscal year. Executives on the call may go deeper into the acquisition and Salesforce's M&A strategy. The deal reflects startup attitude toward Salesforce as "an excellent distribution network for that technology to proliferate" and scale, according to a KeyBanc report in May. Analysts could seek information on where Salesforce is investing in organic innovation compared to where the vendor feels better off buying. Salesforce's leadership team may also have updates on the integrations and sales performances of recent acquisitions-unstructured data management provider Zoomin and data protection and data management tools provider Own Co. Both deals closed in November. The vendor ended fiscal 2025 on Jan. 31 with $8.8 billion in cash and cash equivalents, according to Salesforce. Salesforce execs have discussed publicly efforts to increase customer purchases of products across the vendor's portfolio, an area where solution providers can help. Analysts may seek information on progress in that endeavor. Agentforce could see a ripple effect with customers buying Data Cloud to better aggregate structured and unstructured data from disparate sources combined with Salesforce's industry-focused products, according to multiple reports from analyst firms leading up to the call. Salesforce partners believe the Sales and Service clouds performed as expected during the quarter, according to Morgan Stanley. Marketing Cloud, Commerce Cloud, Tableau and MuleSoft showed more mixed performances during the quarter. Sales Cloud has seen total subscription growth between 9 percent and 10 percent and should generate about $7.9 billion in subscription revenue this fiscal year. Bank of America thinks the number could accelerate to 12 percent, according to a May report by the firm. Sales Cloud has about 25 percent share of the $39 billion customer relationship management (CRM) industry, which it should hold through at least 2027. The vendor sees competition including Microsoft Dynamics, HubSpot and Zoho gaining share, but Salesforce "will be able to sustain the leading position due to its product and platform strength," according to Bank of America. Salesforce might see more competition from ServiceNow in CRM, with ServiceNow CEO Bill McDermott saying on his most recent quarterly earnings call that CRM was in 16 of the vendor's top 20 deals of the quarter. In April, ServiceNow said it plans to boost its CRM offer with the acquisition of AI‑powered configure, price, quote (CPQ) tool provider Logik.ai. "We believe strongly that our massive capabilities have emboldened us to go after CRM in a differentiated way," McDermott said, according to a call transcript. Although Salesforce is the larger company with $35.7 billion in fiscal 2025 revenue, compared to ServiceNow's $10.6 billion for its fiscal year ended Dec. 31, Melius Research said in a May report not to underestimate the smaller vendor. "Agentic AI is fueling the motivation to move faster horizontally to create capabilities to infringe on others' turf," according to the report. "Given agents work for you without interacting with your familiar interface, you can move fast horizontally to take share."