Salesforce reported adjusted earnings per share, its non-GAAP measure, of $5.90 for its fiscal second quarter. That was up 103 percent from a year ago.
That headline is accurate. It is also a poor description of the operating quarter.
Salesforce disclosed that gains on strategic investments contributed $2.53 to non-GAAP earnings per share. The filing does not identify the investment, but CNBC reported that the gain came from Salesforce’s Anthropic stake.
The arithmetic is striking. Non-GAAP earnings per share increased by $2.99 from a year ago. The investment gain supplied $2.53 of that increase, or roughly 85 percent.
Remove the gain and this quarter’s non-GAAP earnings per share falls to approximately $3.37. That is still about 16 percent above last year’s $2.91, but Salesforce’s diluted share count declined by nearly 15 percent following its accelerated share repurchase. On an ex-gain basis, non-GAAP profit dollars were roughly flat and actually declined by about 1 percent.
The company had a good quarter. It did not have a quarter in which operating earnings doubled.
The operating quarter was solid, not spectacular
Salesforce reported revenue of $11.35 billion, up 11 percent year over year. Subscription and support revenue reached $10.82 billion, up 12 percent.
Those figures include Salesforce’s acquisition of Informatica, which contributed $456 million of total revenue and $440 million of subscription revenue during the quarter. Subtracting those disclosed acquisition dollars produces growth of approximately 6.4 percent for total revenue and 7.1 percent for subscription and support revenue.
That calculation is not a formal organic-growth measure. It isolates the Informatica dollars but does not adjust for currency or other acquisition effects. It nevertheless shows how much of the reported growth came from the acquired business.
Margins tell a similar story. Generally accepted accounting principles operating margin declined from 22.8 percent to 20.5 percent. Non-GAAP operating margin held roughly flat at 34.1 percent, compared with 34.3 percent a year ago.
Free cash flow rose 81 percent in the quarter to $1.10 billion, but the six-month comparison is more representative. First-half free cash flow increased about 11 percent to $7.65 billion. Salesforce maintained its full-year free-cash-flow growth outlook of approximately 4 to 5 percent.
None of this describes a weak business. It describes a mature software company growing at a high-single-digit underlying rate, protecting adjusted margins, and benefiting from an acquisition.
The best number was in the backlog
The cleanest bullish signal was current remaining performance obligation, which represents contracted revenue expected to be recognized within the next twelve months.
Current remaining performance obligation reached $33.5 billion and grew 14 percent year over year in constant currency. That growth rate has accelerated from 10 percent a year ago to 13 percent last quarter and 14 percent now. Salesforce also guided for approximately 14 percent growth again next quarter, excluding the pending acquisitions of Contentful and Fin.
Total remaining performance obligation reached $66.3 billion, up 11 percent. The current portion grew 14 percent while the longer-dated portion grew approximately 8 percent. That mix says near-term contracted demand is growing faster than the distant backlog.
The sequential decline from Salesforce’s January fiscal-year-end peak is seasonal and should not be mistaken for a year-over-year contraction. Both portions of the backlog remain higher than a year ago.
For investors looking for evidence that Salesforce’s core business may reaccelerate, the backlog is more important than the earnings-per-share headline. It is disclosed, comparable and forward-looking.
The guidance raise has three ingredients
Salesforce raised full-year revenue guidance to between $46.1 billion and $46.4 billion, representing growth of 11 to 12 percent.
Management supplied an unusually useful bridge. In constant currency, the guidance increased by $300 million. Approximately $100 million came from stronger organic expectations, while $200 million came from the pending Contentful and Fin acquisitions. A $100 million foreign-exchange headwind reduced the reported guidance increase to $200 million.
The raise is therefore positive, but two-thirds of the constant-currency increase is acquisition-driven.
Informatica is already doing meaningful work inside the outlook. Salesforce said the acquisition contributes slightly more than three percentage points of full-year growth and slightly more than four percentage points of third-quarter growth.
The third-quarter earnings guide is also revealing. Salesforce expects non-GAAP earnings per share of $3.42 to $3.44, close to this quarter’s estimated $3.37 excluding the strategic-investment gain. The company assumes no further change in the value of its investment portfolio because those gains and losses cannot be forecast.
In other words, management’s own outlook points investors back toward an operating earnings run rate near $3.40, not the reported $5.90.
The AI products are real, but the measurements are moving
Salesforce said Agentforce annual recurring revenue exceeded $1.5 billion and grew more than 240 percent. The company also disclosed that it changed the definition this quarter to include Slackbot and Headless 360, so the growth rate is not directly comparable with the prior-year base.
The combined annual recurring revenue of Agentforce and Data 360 approached $3.9 billion, up more than 210 percent. Those numbers demonstrate commercial activity, but the changed definition makes the precise growth rate less useful than it appears.
Slackbot provides the cleaner product signal. Salesforce reported one million active users, up more than 150 percent quarter over quarter, while premium Slack upgrades tripled. Management also said only about 5 percent of eligible sales and service seats have moved to the higher-end editions that include Agentforce capabilities.
That creates a credible bull case. Adoption is growing from a small base, and the remaining seat-upgrade opportunity is large if customers continue to see value.
Salesforce and Anthropic also announced Claudeforce, which connects Claude’s reasoning to Salesforce data, permissions and workflows. The partnership reinforces Salesforce’s argument that frontier models need enterprise systems of record rather than replacing them.
It also creates an unusual financial loop. Anthropic is a strategic partner, product supplier and customer. According to CNBC, it is also the investment responsible for most of this quarter’s earnings-per-share increase.
Investors should evaluate the product relationship on adoption and revenue, not on the paper gain Salesforce recorded on its stake.
The buyback changed the earnings profile and the balance sheet
Salesforce’s $25 billion accelerated share repurchase materially reduced the share count and improved per-share comparisons. It also changed the company’s capital structure.
During the first six months of the fiscal year, Salesforce received approximately $24.84 billion of net proceeds from new debt and spent $27.33 billion repurchasing stock. Total debt increased from approximately $14.44 billion in January to $39.29 billion in July.
Quarterly interest expense increased from $67 million a year ago to $473 million. Stockholders’ equity declined from $59.14 billion in January to $38.38 billion in July, largely reflecting the repurchase.
The repurchase may prove to have been well timed. Management said on the earnings call that it expects the transaction to retire at least 14 percent of outstanding shares, with final settlement expected in October.
But the financial effect should be described plainly. Salesforce exchanged balance-sheet flexibility for a lower share count. Future earnings-per-share growth will benefit from that smaller denominator while future profit absorbs a much higher interest bill.
What investors should watch next
The next quarter needs to answer four questions.
First, can current remaining performance obligation hold near 14 percent growth without help from the pending acquisitions?
Second, does underlying revenue growth improve after removing Informatica’s contribution?
Third, will Salesforce keep the Agentforce definition stable enough for investors to measure genuine adoption?
Fourth, can the company convert Slackbot usage and premium-edition upgrades into disclosed revenue growth without sacrificing margins?
Those indicators will say more about Salesforce’s AI transition than another quarter of company-defined activity metrics.
Bottom Line
Salesforce’s 103 percent increase in non-GAAP earnings per share was not an operating-profit surge. A $2.53 strategic-investment gain supplied roughly 85 percent of the year-over-year increase.
The core quarter was respectable: 11 percent reported revenue growth, approximately 6 to 7 percent after isolating Informatica’s disclosed contribution, and roughly flat ex-gain non-GAAP profit dollars.
The strongest bullish evidence is current remaining performance obligation growth accelerating to 14 percent in constant currency, with management guiding for that pace to hold next quarter before pending acquisitions.
Slackbot adoption and the Claudeforce partnership make the AI opportunity credible, but redefined annual-recurring-revenue metrics and a small premium-edition base make the size of that opportunity difficult to measure.
The accelerated repurchase lowered the share count but raised total debt to approximately $39.3 billion and increased quarterly interest expense to $473 million. Future per-share growth should be evaluated alongside that added leverage.
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Primary source: Salesforce Q2 fiscal 2027 earnings release and financial tables. Anthropic attribution: CNBC earnings coverage. Product partnership: Salesforce and Anthropic Claudeforce announcement. Call-derived statements are based on the earnings call and contemporaneous transcript coverage.
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