Salesforce, Inc. 2027 Q2 Earnings Call

Good afternoon, and thanks for joining us today on the fiscal 2027 second quarter results conference call. Our press release, SEC filings, and a replay of today's call can be found on our website. Joining me on the call today is Marc Benioff, Chair, CEO, and Co-founder, and Robin Washington, Chief Operating and Financial Officer. We also have Patrick Stokes, President, Applications and Marketing, and Miguel Milano, President and Chief Operating Officer, joining us for the Q&A portion of the call. Some of our comments today may contain forward-looking statements that are subject to risks, uncertainties, and assumptions which could change. Should any of these risks materialize or should our assumptions prove to be incorrect, actual company results or outcomes could differ materially from these forward-looking statements.

A description of these risks, uncertainties and assumptions and other factors that could affect our financial results or outcomes is included in our SEC filings, including our most recent report on forms 10-K, 10-Q, and any other SEC filings. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. As a reminder, our commentary today will include non-GAAP measures. Reconciliations between our GAAP and non-GAAP results and guidance can be found in our earnings materials and press release. Before turning to our prepared remarks, Marc and Dario just announced Claudeforce a few minutes ago live on CNBC.

Let's roll the clip. This is really the best of both worlds.

This is the number one AI in the world, Anthropic, and the number one CRM, Salesforce, coming together for the first time in an incredibly powerful way to build a new product called Claudeforce. It's really a first in the industry, Jim. We've never seen anything like it. It's completely exciting. I think that this is the way all enterprise systems are going to run in the future.

We found that this combination product that we've built together is the most useful thing in accelerating it. Within Anthropic, for a long time, we've been accelerating the research teams within Claude. This is the first time that we've really been able to incredibly accelerate our go-to-market efforts within Claude, and we want that for all the other enterprises, and me and Marc want to bring it together to everyone. We've already worked with Salesforce in a number of ways. We're big users of Salesforce. Salesforce is big users of Claude Code, of Cowork, of other tools. We've put products like Claude Tag in Slack already, which is a part of Salesforce. Now this combination is a way to gain something that's one plus one equals three, something that's bigger than the sum of its parts.

My chief commercial officer was just demoing this for me with some of the internal stuff we do within Anthropic just half an hour ago, where he asked, "What are the biggest accounts that Anthropic is trying to close now? Give me a list of the biggest accounts. Talk me through the risks of each one." All the data, all the information comes from being managed in Salesforce. The conversation, the interaction, that comes through Claude. You can see how these two things can be more than the sum of their parts.

Why this is exciting is it's a perfect complement. Anthropic builds this amazing model, and now the model has this incredible user interface, Cowork. When you take Cowork, then you are able to put it right on top of Salesforce, it is able to bring the data, the applications, the semantics, the agents themselves, and build complete applications, a total user interface, to let you get all the value out of Salesforce that has been trapped. Customers have put hundreds of billions of USD into Salesforce. There is a huge amount of value that can be unleashed through this combination.

With that, let me hand the call to Mark.

Well, thanks so much. I am really excited to have the call, and it was great to be on CNBC with Dario announcing Cloudforce. We are going to get into that in more details as well. Before I get into all of that, I really want to start here at the beginning and talk about the SaaSpocalypse. I think you can see from the results, net new AOV growth, it is the strongest in 4 years. Skeptics really said that seats would decline, and also that Agentforce sales and service and Slack all seats grew year-over-year. Skeptics said customers would leave, but attrition was near its lowest level ever. Skeptics said pricing power would erode, and A1E and A4X bookings more than doubled quarter-over-quarter. Contract length terms improved across all segments in new business and renewals.

Agent, agentic use of the platform, it surged 6X, sixfold, via Model Context Protocol calls and Claude calls. Apps are not dying. In fact, they are growing. Nine of the 10 AI companies, like you just heard from Anthropic, that standardized on Salesforce, use Salesforce and Slack. Their spend is up 435% year over year. Frontier models depend on CRM. They make sure that it works, that it all comes together. They do not replace them. Let me start from the beginning of my script and actually read my prepared remarks for you so you can really understand our vision for the future of where Salesforce is now, where we are going, and we cannot wait to get all of you to Dreamforce because we have some incredible things to show you. Look, we are here in Salesforce Tower in San Francisco.

I want to welcome all of you, and I am thrilled to share the tremendous progress we have made and the momentum we are seeing across the business. As everyone can see, we just had one of the best quarters ever, and we outperformed on all of our key metrics. As I just went through in all these key metrics in these key areas, this nonsense of this SaaSpocalypse, I think it is time for it to stop. That is why I am so excited about Claudeforce as well. It really shows how we are bringing together the world's number one AI and the number one CRM. It is really the best of both worlds. We are combining Claude's extraordinary intelligence and reasoning with Salesforce's trusted data and applications and workflows and business rules and governance. While Claude might have been, for example, for developers, now it is also for knowledge workers.

When you do that, you get something the world has never seen. This is a dynamic, deeply personalized interface that thinks, reasons, and acts. It is a truly game-changing experience for our customers, and I am going to get into the highlights from the quarter. Before I do, I want to just tell you one quick story, and I am going to get into more details on this. I just spent two months in Europe, and I had an exhaustive schedule. I will not go through all the detail, but I have never met with more customers in my life. I was with one of our very largest, probably our largest customer in Switzerland, and I was sitting there with them, and we went through and they spent maybe, I do not know, they spent more than $1 billion for sure with Salesforce. They spend about $100 million a year with us.

I am talking with them and it is a great meeting. It is three hours. Then at the end we are like, "Now I want to show you this thing. We haven't shown it to anybody yet," and we show them Claudeforce because the head of all of our operating units have been using Claudeforce to run their businesses inside Salesforce this quarter. It is one of the reasons why we are getting such great performance. All of a sudden, literally, I could see the customer's mouth just dropped open because it was astonishing. They were seeing that we were able to reveal this value that had been trapped in their systems, okay, right into this dynamic user interface. They were not having to hire all these FDEs and all this stuff to get it going.

It was building these apps on the fly for them using the foundation that they had spent 2 decades building with Salesforce. Now, I want to get back to the quarter. We had record revenue and EPS, strong margin performance, CRPO accelerated, it was up about 14%. Look, we generated $1.1 billion in free cash flow. That was up 81% year-over-year. I am going to come back to that in just one second. Our AI business, just incredible momentum. Agentforce ARR, it hit $1.5 billion. Our ARR for AI and data is about to cross $4 billion. Really helps, I guess, that we have 15,000 pure account executives, huh, Miguel? The number of accounts with agents in production grew 70% over last quarter. We had great wins with Deutsche Telekom, met with them when I was in Europe. FIFA, met with them. NTT Data, I met with them.