Salesforce Shares Gain 2% on Q3 Earnings Beat and FY26 Guidance Raise

Salesforce, Inc. CRM shares gained 2.1% during Wednesday’s extended trading session after the company reported better-than-expected bottom-line results for the third quarter of fiscal 2026 and raised guidance for the full fiscal.

Salesforce reported third-quarter fiscal 2026 non-GAAP earnings of $3.25 per share, which beat the Zacks Consensus Estimate by 14.04%. The bottom line improved 34.9% year over year.

Salesforce’s fiscal third-quarter revenues of $10.3 billion match the Zacks Consensus Estimate and increased 10% year over year. The growth in top and bottom lines reflected the benefits of CRM’s go-to-market strategy and sustained focus on customer success. The initiatives to integrate generative artificial intelligence (AI) into its offerings also boosted demand for Salesforce’s solutions during the reported quarter.

Salesforce’s Q3 Performance in Detail

Coming to CRM’s business segments, revenues from Subscription and Support (95% of total revenues) increased 9.5% year over year to $9.73 billion. Professional Services and Other (5% of total sales) revenues declined 5.7% to $533 million.

In the third quarter of fiscal 2026, Salesforce renamed its service offerings under the Subscription and Support segment to reference Agentforce. There were no changes in the allocation of revenues between these service offerings coming from this change. The renamed offerings are now called Agentforce Sales, Agentforce Service, Agentforce 360 Platform, Slack and Other, Agentforce Marketing and Agentforce Commerce, and Agentforce Integration and Agentforce Analytics.

Agentforce Sales revenues grew 8.4% year over year to $2.3 billion. Revenues from Agentforce Service increased 9% to $2.5 billion. Agentforce 360 Platform, Slack and Other revenues rose 19.5% to $2.18 billion. Agentforce Marketing and Agentforce Commerce were up 2% to $1.36 billion. The Agentforce Integration and Agentforce Analytics division recorded 6.1% year-over-year growth to $1.39 billion.

Revenues from the Americas (65% of total revenues) increased 8% year over year to $6.7 billion. Sales in EMEA (24%) grew 7% to $2.5 billion, while the Asia Pacific (11%) region’s revenues rose 11% to $1.1 billion.

Non-GAAP operating income was $3.64 billion, up 16.5% from the year-ago quarter’s $3.12 billion. Moreover, the non-GAAP operating margin expanded 240 bps to 35.5%.

Salesforce’s Balance Sheet & Other Details

Salesforce exited the fiscal third quarter with cash, cash equivalents and marketable securities of $11.32 billion, down from $15.37 billion at the end of the previous quarter. CRM generated an operating cash flow of $2.3 billion and a free cash flow of $2.2 billion.

As of Oct. 31, the current remaining performance obligation (cRPO) was $29.4 billion, up 11% year over year. The company returned $4.2 billion to shareholders, including $3.8 billion in share repurchases and $395 million in dividends.

Salesforce Updates Guidance for FY26

Buoyed by stronger-than-expected third-quarter performance, Salesforce raised its revenue guidance for fiscal 2026. For fiscal 2026, Salesforce now expects revenues in the range of $41.45-$41.55 billion, up 9-10% year over year compared with the prior guidance of $41.1-$41.3 billion. The Zacks Consensus Estimate for revenues is currently pegged at $41.21 billion.

Subscription and Support revenues are now expected to increase slightly below 10%, instead of the 9.5% growth expected earlier. The company now anticipates fiscal 2026 non-GAAP earnings per share in the range of $11.75-$11.77, slightly higher than the previous forecast of $11.33-$11.37. The Zacks Consensus Estimate for non-GAAP earnings is currently pegged at $11.36.

Non-GAAP operating margin is projected to expand to 34.1%, while GAAP operating margin is expected to be 20.3%. Salesforce raised its forecast for operating cash flow growth to 13-14% year over year from the previous guidance of 12-13%. The company expects free cash flow growth to be in the range of 13-14% year over year, up from the previous guidance of 12-13%.

Salesforce initiated guidance for the fourth quarter of fiscal 2026. It projects total sales between $11.13 billion and $11.23 billion, which indicates 11-12% growth from the year-ago level. The Zacks Consensus Estimate for revenues is currently pegged at $10.89 billion.

The company expects non-GAAP earnings per share in the band of $3.02-$3.04, while GAAP EPS is anticipated to be between $1.47 and $1.49. The cRPO growth is projected to be approximately 15% year over year. The Zacks Consensus Estimate for non-GAAP earnings is currently pegged at $3.01.

Salesforce’s Zacks Rank and Stocks to Consider

Currently, CRM carries a Zacks Rank #3 (Hold).

PROS Holdings PRO, Blackbaud BLKB and Open Text OTEX are some better-ranked stocks that investors can consider from the Zacks Computer – Software industry. PROS Holdings, Blackbaud and Open Text each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for PROS Holdings’ 2025 earnings has been revised upward by a penny to 67 cents per share over the past 60 days and suggests a year-over-year increase of 63.4%. PROS Holdings shares have risen 5.8% year to date.

The Zacks Consensus Estimate for Blackbaud’s 2025 earnings has been revised upward by a penny to $4.41 per share in the past 60 days, calling for a year-over-year rise of 8.4%. Blackbaud shares have plunged 16.5% year to date.

The Zacks Consensus Estimate for Open Text’s fiscal 2026 earnings has moved northward by 6 cents to $4.21 per share over the past 30 days and implies a year-over-year increase of 10.2%. Open Text shares have jumped 17.9% year to date.

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