Results at a glance
- Period
- FY2027Q2
- Revenue
- $11.3B (11,345 MUSD)
- Net income
- $3.5B (3,526 MUSD)
- Net margin
- 31.1%
From the Salesforce Open LedgerView the live ledger
Salesforce closed the quarter ended July 31, 2026 with $11.3 billion of revenue (+11%), including a stated $456 million Informatica contribution, while GAAP diluted EPS more than doubled to $4.29 (+119%). The same balance sheet absorbed two capital-structure events in one print: goodwill and acquired intangibles from Informatica, and a $25 billion accelerated share repurchase whose final settlement is expected in October. The public Beancount ledger below asserts both sides — Assets:NonCurrent:Goodwill at $59.3 billion and Equity:CommonStockAndAPIC net of $55.0 billion of treasury stock — so the acquisition and the buyback are auditable in the same plain-text books.
The Headline Numbers
Salesforce's fiscal year ends January 31. Q2 FY2027 is the three months ended July 31, 2026. GAAP figures below are from the August 26, 2026 press release (Form 8-K Exhibit 99.1) and the Form 10-Q for the same period; annual history is from the FY2022–FY2026 Forms 10-K (SEC XBRL companyfacts CIK 0001108524).
| Metric | Q2 FY2027 | Q2 FY2026 | YoY Change |
|---|---|---|---|
| Total revenue | $11,345M | $10,236M | +11% |
| Subscription and support | $10,820M | $9,690M | +12% |
| Professional services and other | $525M | $546M | −4% |
| Informatica contribution (stated) | $456M | — | — |
| Gross profit | $8,696M | $7,994M | +9% |
| Income from operations | $2,331M | $2,332M | flat |
| Gains on strategic investments, net | $2,613M | $6M | — |
| Net income | $3,526M | $1,887M | +87% |
| Diluted EPS | $4.29 | $1.96 | +119% |
| Operating cash flow | $1,269M | $740M | +71% |
| cRPO | $33.5B | — | +14% Y/Y CC |
| RPO | $66.3B | — | +11% |
| Total assets (period-end) | $109,620M | — | −$2,685M vs Jan 31 |
| Stockholders' equity | $38,378M | — | −$20,764M vs Jan 31 |
Revenue grew 11% while operating income was essentially unchanged at $2.33 billion. The EPS and net-income doubling is not an operating-margin story. It is a financing-and-investments story: $2.61 billion of strategic-investment gains (including unrealized gains on the Anthropic stake, per the 10-Q discussion) and a share count cut by the ASR (approximately 103 million shares initially delivered). Operating cash flow still accelerated — $1.3 billion, up 71% — so the cash engine did move with the top line even as GAAP operating profit flatlined.
Revenue Deep Dive
Subscription and support is the company. Professional services shrank slightly and remains a mid-single-digit attach:
| Component | Q2 FY2027 | Share | YoY |
|---|---|---|---|
| Subscription and support | $10,820M | 95% | +12% |
| Professional services and other | $525M | 5% | −4% |
| Total | $11,345M | 100% | +11% |
Within subscription, Salesforce now reports two service-offering buckets (reclassified in Q1 FY2027):
| Subscription offering | Q2 FY2027 | Q2 FY2026 | YoY (as reported) |
|---|---|---|---|
| Agentforce Apps | $7,193M | $6,682M | +8% |
| Data 360, Headless Platform, and Other | $3,618M | $3,008M | +20% |
| Hedging gains | $9M | $0M | — |
| Total subscription and support | $10,820M | $9,690M | +12% |
Constant-currency subscription growth was 11% for Agentforce Apps and 20% for Data 360 / Headless / Other (total subscription CC growth 11%). Informatica sits inside the second bucket; the release attributes $440 million of subscription and $456 million of total revenue to Informatica in the quarter. That is a stated contribution, not an organic-growth estimate — the ledger does not invent a stripped organic run-rate the company did not publish.
Geography stayed Americas-heavy:
| Region | Q2 FY2027 | Share | YoY |
|---|---|---|---|
| Americas | $7,404M | 65% | +10% |
| Europe | $2,764M | 24% | +14% |
| Asia Pacific | $1,168M | 10% | +9% |
Management signal scan
Primary source: Salesforce press release / Exhibit 99.1, August 26, 2026 (period ended July 31, 2026).
| Theme | Hit? | Verbatim |
|---|---|---|
| Robust demand | Yes | Marc Benioff: "We're seeing incredible demand for our AI and data products, with ARR about to cross $4 billion." |
| Robust demand / bookings | Yes | Robin Washington: "NNAOV growth is the strongest it's been in four years, keeping us on track for second-half organic revenue reacceleration." |
| New product ramps | Yes | "Agentforce and Data 360 annual recurring revenue ("ARR") reached nearly $3.9 billion, up over 210% Y/Y"; "Agentforce ARR exceeded $1.5 billion, up over 240% Y/Y." |
| Market expansion | Partial | "Bookings from Agentforce One Edition and Agentforce for Apps … more than doubled Q/Q"; Slack "delivered its fastest quarterly Net New Annual Order Value ("NNAOV") growth since acquisition." |
| Demand exceeding supply | No | Absent — Salesforce does not claim unmet demand or sold-out capacity. |
| Tight supply | No | Absent. |
| Sustained selling-price increases | No | Absent as a pricing-momentum claim. |
| Industry upcycle | No | Absent as an industry-cycle claim. |
The demand language is real and specific to AI / Agentforce / Data 360, and Washington's NNAOV comment is the closest thing to a second-half organic reacceleration guide. What the release does not say matters too: there is no "demand exceeds supply," no ASP / pricing-momentum paragraph, and no tight-supply framing. The Bull Case can cite Agentforce ARR; the Bear Case has to note that GAAP operating income did not expand with the AI narrative in this quarter.
Tie the quotes to the ledger. Recognized revenue is the income-statement credit on Income:Revenue (−11,345 MUSD). Deferred revenue / unearned revenue is the stock of billed-but-unrecognized contracts: $18,787M current at July 31, down from $24,317M at fiscal year-end (seasonal). Remaining performance obligation of $66.3 billion (cRPO $33.5 billion) is the off-balance-sheet promise book the release leads with — the commercial backlog that deferred revenue only partially captures.
The Margin Story
| Period | Revenue | Gross margin | Operating margin | Net margin |
|---|---|---|---|---|
| FY2022 | $26,492M | 73.5% | 2.1% | 5.5% |
| FY2023 | $31,352M | 73.3% | 3.3% | 0.7% |
| FY2024 | $34,857M | 75.5% | 14.4% | 11.9% |
| FY2025 | $37,895M | 77.2% | 19.0% | 16.4% |
| FY2026 | $41,525M | 77.7% | 20.1% | 18.0% |
| Q2 FY2027 | $11,345M | 76.7% | 20.5% | 31.1% |
Five years of annual history show the operating-margin climb from ~2% to ~20%. Q2's 20.5% GAAP operating margin fits that plateau — and sits well below the 31.1% net margin inflated by strategic-investment gains. Gross margin compressed about a point versus FY2026's full-year rate as Informatica and mix hit cost of revenues (subscription cost of revenue $2,021M versus $1,645M a year earlier). Interest expense jumped to $473M from $67M — the carry cost of the debt raised to fund the ASR — so the margin story under the net-income line is leverage and mark-to-market, not a second operating inflection.
No sustained-pricing quote appears in the release to attribute the mix. The mechanical drivers are visible in the ledger: higher cost of revenue, flat operating income, and a large Income:OtherNet credit from investment gains net of interest.
The One Big Question: Can One Balance Sheet Carry Informatica and a $25B ASR?
Two events moved the same statement in opposite directions.
Informatica (and related M&A). Goodwill rose from $57,941M at January 31, 2026 to $59,250M at July 31 — a $1.3 billion increase that the model books on Assets:NonCurrent:Goodwill. Intangible assets acquired through business combinations sit at $6,142M (down from $6,815M at year-end as amortization runs). The release states $456 million of acquired Informatica revenue in the quarter and guides Q3 with "slightly above 4pts Informatica contribution." Cash used in business combinations was $1.5 billion year-to-date. Pending Contentful and Fin deals are guided into FY2027 revenue but are not yet closed — the ledger does not pretend they are.
The $25 billion accelerated share repurchase. Treasury stock at cost rose from $32,228M to $55,022M. Additional paid-in capital fell from $68,835M to $66,029M. In the house chart those movements net into Equity:CommonStockAndAPIC at $11,008M (Common $1 + APIC $66,029 − Treasury $55,022), with a comment naming the ASR and its expected October final settlement. Noncurrent debt jumped to $39,288M from $10,439M after the senior notes and term loan that funded the program. Stockholders' equity compressed from $59,142M to $38,378M.
| Balance-sheet line (MUSD) | Jan 31, 2026 | Jul 31, 2026 | Δ |
|---|---|---|---|
| Goodwill | 57,941 | 59,250 | +1,309 |
| Intangible assets | 6,815 | 6,142 | −673 |
| Cash + marketable securities | 9,565 | 11,403 | +1,838 |
| Noncurrent debt | 10,439 | 39,288 | +28,849 |
| Treasury stock (at cost) | 32,228 | 55,022 | +22,794 |
| Total stockholders' equity | 59,142 | 38,378 | −20,764 |
The question is not whether either transaction "worked" in isolation. It is whether readers can see both on one reconciled sheet. An acquisition that adds goodwill while a buyback shrinks equity is exactly the kind of quarter where a pad/balance ledger earns its keep: every named total still ties to the filing.
Tracking a $110B company in plain text
Double-entry forces every dollar onto two accounts. For a company that closed Informatica and ran a $25B ASR in the same fiscal half, that discipline is the analysis: goodwill cannot rise without a funding story, and treasury stock cannot rise without an equity (or debt) counterpart.
We model every public company the same way — see how we model every company. Income is credited (negative in Beancount); expenses are debited (positive). The Q2 income statement as posted:
; Check: −11345 + 2649 + 1687 + 4678 + −2221 + 1026 + 3526 = 0 ✓
2026-07-31 * "Salesforce, Inc." "FY2027Q2 Income Statement"
Income:Revenue -11345 MUSD
Expenses:CostOfRevenue 2649 MUSD
Expenses:ResearchAndDevelopment 1687 MUSD
Expenses:SellingGeneralAdministrative 4678 MUSD
Income:OtherNet -2221 MUSD
Expenses:IncomeTax 1026 MUSD
Equity:Adjustments 3526 MUSD ; net income offset (RE set by balance assertion)The balance-sheet line that carries this quarter's story is goodwill — $47.9B → $59.3B across the five annuals plus Q2 — with the ASR visible as the collapse in net Equity:CommonStockAndAPIC from $36.6B at FY2026 year-end to $11.0B at July 31:
2026-07-30 pad Assets:NonCurrent:Goodwill Equity:Adjustments
2026-07-31 balance Assets:NonCurrent:Goodwill 59250 MUSD
2026-07-30 pad Equity:CommonStockAndAPIC Equity:Adjustments
2026-07-31 balance Equity:CommonStockAndAPIC -11008 MUSD ; Common 1 + APIC 66029 − Treasury 55022 ($25B ASR; October final settlement)The Multi-Year Arc
| Period | Revenue | Op. margin | Net income | Goodwill |
|---|---|---|---|---|
| FY2022 | $26,492M | 2.1% | $1,444M | $47,937M |
| FY2023 | $31,352M | 3.3% | $208M | $48,568M |
| FY2024 | $34,857M | 14.4% | $4,136M | $48,620M |
| FY2025 | $37,895M | 19.0% | $6,197M | $51,283M |
| FY2026 | $41,525M | 20.1% | $7,457M | $57,941M |
| Q2 FY2027 | $11,345M | 20.5% | $3,526M | $59,250M |
Revenue compounded from $26.5B to $41.5B over five fiscal years while operating margin went from a rounding error to a fifth of sales. Goodwill is the company-specific line: it was flat near $48–49B through FY2024, then stepped up with larger deals and again with Informatica into FY2026–Q2 FY2027. The compounding story is a software franchise that learned to print operating profit — and then chose to lever the balance sheet to buy back stock and buy data infrastructure at the same time.
The Verdict: Bull vs. Bear
Bull Case
- Agentforce + Data 360 ARR near $3.9B, up over 210% Y/Y; Agentforce ARR over $1.5B, up over 240% — the product ramp the release actually documents.
- cRPO $33.5B, up 14% Y/Y in constant currency; RPO $66.3B, up 11% — backlog still expands ahead of recognized revenue.
- Washington: NNAOV growth "the strongest it's been in four years," with a stated path to "second-half organic revenue reacceleration."
- Operating cash flow $1.3B in the quarter (+71%) and $8.0B year-to-date — cash conversion did not stall with flat operating income.
- FY27 revenue guidance raised to $46.1–$46.4B (11–12% Y/Y), with Informatica contribution made explicit rather than buried.
Bear Case
- GAAP operating income was flat YoY at $2.33B; the EPS double is investment gains and share-count math, not operating leverage in the quarter.
- Interest expense $473M (vs $67M) is the visible cost of ASR-related debt; final ASR settlement in October can still move share count and equity again.
- Gross margin slipped versus the FY2026 run-rate as Informatica and mix raised cost of revenue; organic growth is not separately stated beyond the contribution disclosure.
- Stockholders' equity fell $20.8B in six months — a deliberate capital-return choice that leaves less balance-sheet cushion if AI monetization slows.
- No "demand exceeds supply" or pricing-momentum language; the AI demand quotes are ARR / NNAOV, not a capacity or ASP print the income statement has fully absorbed.
Our Take
This is a capital-allocation quarter first and an AI quarter second. Agentforce ARR growth is real and large enough to matter, and the backlog metrics support Washington's reacceleration claim. But the income statement that investors celebrate — diluted EPS +119% — is dominated by $2.6B of strategic-investment gains on top of flat operating profit, while the balance sheet simultaneously records Informatica goodwill and a treasury-stock hole the size of a mid-cap software company. Model both in plain text. Believe the AI ramp when operating income and organic revenue (ex the stated Informatica dollars) confirm it — not when mark-to-market and buybacks do the celebrating alone.
