Operator

This conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. At this time, I would like to turn the call over to Mike Spencer, executive vice president of finance. Sir, you may begin.

Michael Spencer

Good afternoon, and thanks for joining us today on our fiscal 27 first 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 R. Benioff, Chair and CEO; Robin L. Washington, Chief Operating and Finance Officer. We also have Patrick Stokes, president and chief marketing officer; Miguel Milano, President and Chief Revenue Officer; Srinivas Tallapragada, President and Chief Engineering and Success Officer, joining us for the Q and 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 or 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. And with that, let me hand the call over to Marc.

Marc R. Benioff

Chair and CEO at Salesforce

All right. Fantastic. Thanks so much, Mike. I am so excited to be here with everybody. And great to do our second video earnings call with you. And it is really great — it is a gorgeous day in San Francisco, and we are going to have a great time here with you. We have even got a couple customers joining us, which we are really excited about. Well, I think as everybody can see, this was really an outstanding quarter for Salesforce. We have delivered record revenue, record deals, and just incredible cash flow. And, of course, I think we have also returned record levels — we are going to talk about that and how important that is, especially during this unusual time.

So we are going to come into that and also, by the way, we also mentioned we have some record token counts. I think we are going to talk about how we process 28.6 trillion tokens up 152% quarter over quarter. No greater example of the tremendous adoption of these new Agentic products by our customers. And how we have converted those into 3.8 billion Agentic work units. Agentic AI, well, it is the biggest growth opportunity for our customers, for us at Salesforce. And since we brought CRM into the cloud, we are just seeing tremendous new innovation every single day. And you can see it in our products. You can see it in our results. Salesforce has never been more essential to our customers.

Now let me tell you about these amazing Q1 numbers. Revenue was $11.13 billion, up 13% year over year nominal and 12% at constant currency. CRPO, $33.6 billion, up approximately 14% nominal and 13% in constant currency. And Q1 non GAAP operating margin of 34.8%, up 250 basis points. Again, hitting some record levels. GAAP operating margin of 21.1%, up 130 points. Pretty awesome. And we delivered $6.7 billion in operating cash flow.

Tens of thousands of businesses across every industry are building their agentic enterprise with Salesforce. OpenAI and Anthropic, Google — companies building the future of AI, all of them Salesforce customers, all of them Slack customers, building these incredible new capabilities with Agentforce. We secured a record 98 Q1 deals with over $1 million in new ACV in the quarter. Organizations like LVMH, Chobani, the US Air Force, which, by the way, just signed a new $72 million ELA with us during the quarter.

And we are seeing incredible demand for Agentforce with ARR now greater than $1 billion. And combined with Data 360 and Informatica Cloud, we have delivered $3.4 billion in AI and data ARR. 50% is Agentic and data 63 bookings, from existing customers expanding their commitment. And to date, we processed 28.6 trillion tokens, up 152% quarter over quarter. And converted them into 3.8 billion Agentic work units for our customers, up 111% quarter-over-quarter. Agentforce now powering every Customer 360 application, and it is changing how organizations operate across service, sales, marketing, commerce, and so much more.

Nowhere is this more evident than in customer service. With agent for service, humans and agents collaborate across every channel from first contact to first resolution across the trinity of channels, voice, website, apps. A great example you are going to hear in a moment: UCLA Health. Since we deployed agentforcehelp.salesforce.com and on 1-800-NO-SOFTWARE only 15 months ago, it has autonomously handled now 4 million inquiries. It is now double what human agents are handling. Every customer can turn this on now. So many customers are seeing incredible results with Agentforce service. Vivino, the world's largest wine company, supporting 74 million users with only 37 reps — it is possible because it is agent; Vivino autonomously handles order status lookups, account questions, more, autonomously slashing resolution time by 70%. McAfee has selected our new Agentforce ITSM product, or what we call Agentforce IT Service, to replace ServiceNow. They are using it for everything, ticket deflection, hardware provisioning, incident management. And Florida Prepaid, a college savings plan provider of more than 200 thousand accounts, is using Agentforce Voice to autonomously handle 75% of business hour calls and 100% of after hour calls.

And with Agentforce Sales, we are powering the entire revenue life cycle from first lead to closed deal. And as I said before, over 25 years, Salesforce generated tens of millions of leads we never called back. Another great example: cybersecurity leader Fortinet using Agent for Sales to power predictive lead scoring. Financial leader Agribank now built an AEC SDR agent that instantly qualifies leads on WhatsApp. And integrated Piper, their SDR agent, in the Salesforce, brought all those great Salesforce alumni back home — more than 700 customers are already using Piper. It is an incredible success. And we deployed Piper on salesforce.com, as I mentioned. It is engaging 50% of our traffic and qualifying thousands of leads and delivering 45% more pipeline than traditional web agents.

Also very excited about our new Agentforce Coworker, which we announced last week. Every single one of our Salesforce applications now comes with a built-in autonomous agent. No complex configuration. You just turn it on. It becomes your coworker, finding the answers, taking action, getting work done fast. To give you an idea of the impact the coworker will have: people search for information inside Salesforce 1 billion times a month. Coworker turned search into answers and answers into action. And one of our trailblazers, Andrew Russo, said, "there is no way this is real life right now." Agentforce coworker was able to pull together and navigate our complex sales and ERP data to answer questions that just yesterday would have been 60 minutes of swivel-chairing between screens and systems.

And I will tell you this quarter, we also announced Headless 360, again, making all of Salesforce accessible through our MCP clients, APIs, CLI prompts. Headless 360 brings together the humans, agents, and headless platforms so you can use Salesforce from any coding agent across any surface. It is gonna speed implementations, drive consumption, more actions, more workflow, more data, more intelligence, all compounding across Salesforce. We are meeting our customers where they are. Since launch in April, we have already processed 4.5 million MCP calls into our platform. Incredible.

And with Headless 360, Indeed is building and deploying Agentforce agents right from Cursor. And Just Eat Takeaway, one of the leading online food delivery platforms in Europe, is using Headless 360 already to bring agents into WhatsApp and other channels, engaging with 350 thousand partners across 15 countries.

So now let's talk about our favorite — Slack. Which every AI company in the Bay Area here are using to run their business, including OpenAI and Anthropic. Transforming our customers into an agentic enterprise, Slack was nearly half of our million-plus wins this quarter, up 80% year over year. It is a rocket ship to the moon. All of the AI companies run on Slack. All of our apps are Slack first. So now a service agent can summarize a case, update the record, escalate to a human right in Slack. And Slackbot is also an MCP client. So you can tell it to create a purchase order in NetSuite or update a project in Jira and it happens. No switching tools. We have seen 1 million users of Slack MCP in the first 6 weeks. And Slack AWUs grew nearly 350% quarter over quarter. In 2 years, there will be more agents using Slack than people.

Every one of those agents needs the context and the data and the insights directly from Slack. Every workflow needs the data. Every action needs the integration, and every customer needs to see what is happening across the entire business. We have the largest collection of trusted CRM context ever assembled between Data 360, Informatica, MuleSoft, Tableau to manage and deliver all that context so that any agent can reason, act, and deliver real outcomes. Informatica is an amazing acquisition. It performed incredibly well this quarter. It is doing the heavy lifting in data management that every customer needs to move from pilot to production. All of this is why we are the number 1 Agentic CRM.

[Customer segments with James Gank of PenFed Credit Union and Michael/Palma of UCLA Health were presented via video, discussing their Agentforce deployments.]

Robin L. Washington

Chief Operating and Finance Officer

Thanks a lot, Marc. Well, you have just heard the case for Salesforce as the number 1 agentic CRM. The financials behind it tell the same story. So let me start with the drivers behind the numbers, why our growth is durable, and how we are funding it with operational excellence. And I want to update you on our capital allocation strategy, which as Marc said, is driving long term shareholder value.

One framing note before I walk you through the quarter. This is our first quarter under the new FY 2027 revenue disclosure framework. As agents transform how we build, sell, and serve customers, our new framework reflects that Agentforce is now deeply embedded across every one of our applications. So please review our earnings deck for additional details on this.

So starting with our durable growth drivers. Sales, service, and Slack are at the core of the number 1 agentic CRM, collectively representing more than 60% of Q1 net new AOV. Agentforce ARR surpassed the $1 billion mark this quarter. Our largest applications, sales and service, saw year over year seat growth with humans and agents both expanding on the platform. Bookings for A1E and A4x, premium SKUs anchored in sales and service including the value from our Agentic capabilities, grew nearly 60% year over year. As customers adopt Agentforce, they expand across our platform. On average, our top 10 customers by Q1 AWU usage have increased their total Salesforce spend by 1.5x in the last year. And now with Informatica as part of Data 360, we are already unlocking synergies with revenue growth accelerating since the acquisition. This is the flywheel we laid out at our Investor Day and it is working.

Those signals show up in the headline numbers. Q1 revenue came in at $11.13 billion, up 12% in constant currency, ahead of our guide. The outperformance was driven by Informatica's on prem business and professional services timing. CRPO ended the quarter at $33.6 billion, up approximately 13% in constant currency, driven by continued momentum in Agentforce, Data 360, and Slack. Both metrics were partially offset by softness in commerce and in Tableau.

We are driving durable growth through operational excellence. We call our internal playbook "customer zero" — our own first customer, leveraging our products to run our business. It is how we are building a lean agentic enterprise and driving profitable growth, and it is keeping us on track for our FY30 Rule of 50 framework, while simultaneously reducing incidents and defects. Slackbot, which is embedded directly into the flow of work, is now our fastest adopted AI tool in Salesforce's history, driving 3.8 million hours of annualized productivity gains for our employees. It has become a daily driver of my own productivity as well.

And disciplined execution continues to underpin our responsible capital return strategy. Underscoring our confidence in the future, we commenced the largest ever $25 billion accelerated share repurchase, or ASR, representing half of our $50 billion share repurchase authorization. Combined with our buyback program, this reduced Q1 diluted share count 10% year over year. Our ASR alone decreased Q1 share count by 103 million shares, representing 11% of shares outstanding. And it increased our Q1 non GAAP earnings per share and GAAP earnings per share by $0.23 and $0.14 respectively.

Turning to our outlook for the year. Building on the momentum from the second half of last year, we expect first-half net new AOV growth to outpace AOV growth, and drive organic revenue reacceleration in the second half of FY 27. Before discussing the numbers, a few key assumptions in our guide. Our Q2 and FY27 revenue guidance reflect continued momentum in Agentforce, Data 360, and Slack, partially offset by ongoing weakness in marketing and commerce and increased softness in Tableau bookings and renewals. We also expect greater license revenue volatility with the addition of Informatica on prem revenue to our business.

Now, moving to the numbers. We are raising the midpoint of our FY 2027 revenue guidance to $45.9 billion to $46.2 billion. And we continue to expect subscription and support growth of 11% year over year in constant currency. We are reiterating our non GAAP operating margin guidance of 34.3%. And adjusting our GAAP operating margin guidance to 20.6%, largely driven by higher restructuring. Our recent debt issuance tied to the successful initial delivery of our ASR resulted in an approximately 5-point headwind to operating cash flow and free cash flow. As a result, we are updating our guidance for both metrics to grow 4% to 5% year over year.

We expect Q2 revenue of $11.27 billion to $11.35 billion, growth of approximately 10% in constant currency. Q2 CRPO growth is expected to be approximately 13% year over year in constant currency. Our guidance reflects the strength of our balanced portfolio and reinforces our confidence in our second half revenue acceleration, enabling us to achieve our FY 2030 framework. And looking ahead, the Headless 360 strategy that Marc walked through expands our addressable market into surfaces we have never previously monetized. That is the next leg of our path to FY30.

Michael Spencer

Back to you, Mike. Thank you, Robin. Operator, we would like to move to questions now. I will ask each participant to limit to 1 question in respect for others on the call. With that, operator, we will take the first question.

Operator

We will now begin Q&A. For today's session, we will be utilizing the raise hand feature. If you would like to ask a question, simply click on the raise hand button at the bottom of your screen. Once you have been called on, please unmute yourself and begin to ask your question. Please limit to 1 question. Thank you. We will now pause a moment to assemble the queue. Your first question will come from Brent Thill with Jefferies. Please go ahead.

Brent Thill (Jefferies)

Good afternoon, Marc. I am curious to get your thoughts on the transformation to an AI led story. The Agentforce numbers are great to see. But what else in terms of what you are most excited about, what are you seeing in the signals from the customer pipeline, in any other metrics that you are excited about that you can share with us that perhaps we cannot see. Thank you.

Marc R. Benioff

Well, that is why I thought it is so important that we move to this video concept for the earnings call and also that you get to hear directly from the customers. I think we are trying to pick out a couple customers every quarter that kind of represent all of our customers in transformation. The technology is really dramatically impacting how these customers are able to deliver their own results.

Now let me just give you my personal perspective. We are using it ourselves more than ever before. You see the service numbers. If you go to help.salesforce.com, we have delivered more than 4 million autonomous service transactions in a relatively short order. Even if you go to 1-800-NO-SOFTWARE and press into the service queue, you will notice it is all autonomous. You even authenticate in autonomously. The Agentforce will work with you. And then if at some point Agentforce says it cannot answer your question, it brings a human in directly into the flow to work with it in resolving your problem.

Also in the quarter, you saw we qualified huge numbers of leads autonomously. We have just really never been able to do that before. You saw we also have this kind of SDR sales agent going outbound as well. We are modeling this for all of our customers. Or even in how I am using Slack every day — I use Slackbot to give me insights into my business, to really look at everything that is happening with my core business.

From a technology perspective, the biggest thing that happened in the quarter from my perspective was that Agentforce is now available and replaces essentially Salesforce search. So for those of you who are Salesforce users — the millions of people who use Salesforce every day — the search bar is a critical part of how the application operates. Now Agentforce is that search bar. So you can not only search and aggregate and get insights into information throughout every single app we have, but also create agents, and those agents can appear in Slack and Microsoft Teams, in other applications, even in an app that is gonna run directly on your phone called Salesforce Coworker. That is the biggest exciting technology because that is going to be a technology that you are not gonna have to implement. You are not gonna have to rebuild things. All of a sudden, this agentic technology is directly enhancing every single one of our applications. From our financial services cloud to our health care cloud, every app we have.

And I just think that the speed of innovation and the speed of change is what is awesome. And the rate of innovation far exceeds the ability of customer adoption. That is why bringing these customers in to help model for other customers what they can do is really mission critical right now.

Robin L. Washington

With that, looks like we have Keith up for the next question. Keith?

Keith Weiss (Morgan Stanley)

Excellent. Thank you guys for having me on the call, and congratulations on all the momentum behind Agentforce and those AWUs accelerating in the quarter. I think the investor debate right now is about the timing and how that translates into strength for the broader business. The question I wanted to ask was where you guys garner your confidence of a back half organic subscription revenue acceleration, because we have not seen outperformance in CRPO over the last 2 quarters. This quarter was spot in line with your guidance. Last quarter was as well. And it feels like the bookings trends are lagging a little bit. It feels like Tableau is dragging on the business a little bit, Commerce Cloud dragging on the business. So can you help us put those 2 sides of the debate — really strong KPIs from Agentforce, but the bookings not really looking to come through over the past 2 quarters — and how you sustain confidence in that back half acceleration?

Robin L. Washington

Yeah, Keith. Maybe I will start with the question and have Miguel and others chime in as well. So you are right. Overall, I would say Q1 and our Q2 guide show very strong CRPO. It is a leading indicator for us. But also keep in mind, we raised our overall guidance for the year. And the 2 metrics that we have talked about, going all the way back to October, is the acceleration of net new AOV greater than AOV. We saw that in the last half of FY26. And we also are seeing it and have huge confidence in it for the first half of 27. What that will lead to is a reacceleration of our core revenue growth in the second half of the year. And that is what I would really ask you to kind of hone into.

There is a lot of momentum that drives behind that. We have talked about our big deal motion. Miguel can talk about it more. Clearly, we have seen the success with Agentforce and Data 360. I would say that over 50% of those bookings came from existing customers refilling the tank. So we are definitely seeing good usage. Our pipeline is very strong. We have also seen an opportunity to expand our TAM. So I will let Miguel maybe go into a little bit more details, but I think not only about CRPO, I think about our commitment and confidence relative to reacceleration growth is really the driver of how we see our bookings going forward.

Miguel Milano

President and Chief Revenue Officer

And maybe thank you, Robin. Maybe to add a few other metrics under the hood a little bit. We feel very comfortable. We obviously like the headline numbers. But I also like, in particular, the strength of our core business. You alluded to the net new acceleration. We are confident on the reacceleration of our subscription and support business in constant currency, organically. By the way, in the H2, we also have another business we acquired, which is Informatica. Informatica was a business that was growing single digit, both on bookings and revenue. In just 2 quarters, we have significantly reaccelerated that bookings beyond anybody's expectation because data is king. Well, my daughters told me that says data is queen because I have 3 daughters. But on the booking front, and on the revenue front, we have seen a huge acceleration. Now in last quarter and this quarter, we are obviously subject to the timing of some of the on prem renewals, but we are in double digit growth.

I like a lot of things about our core business, which is very important. Alluded to big deals. Oh my god, Marc. 98 deals above $1 million of net new ACV. In combination, the top 10 deals — the annual incremental booking grew 60%. When you look at the TCV, which goes in the RPO, it added approximately $800 million, which is 2.5x the same 10 deals last year, the top 10 deals. 7 of the top 10 deals added new seats. That is right. This is the new way that we have to monetize AI.

We have 3 new ways — and then 1 more way that is coming up as you alluded to. The first one is we are upgrading the existing seats of our customers so that the users, human users, can use unlimited AI. And this is the A1E that increased 60% in the quarter, because there is a big uplift on those seats. Second, we are finding new pockets of seats. Now with our transformed clouds, our clouds are not the same. We transform individually every one of our clouds. Our sales cloud — I have been using sales cloud for 15 years. It is totally different. Now we have Identity, VDR. I can talk to my sales cloud. So there are pockets of users that could not afford buying us. Now they are buying — 7 of the top 10 deals included. And then the biggest way that we have to monetize AI is with customer facing use cases, by selling flex credits, putting fuel in the tank. 6 of the top 10 deals were ELAs, unlimited enterprise license agreements, where we threw in a bunch of flex credits and customers are deploying use case after use case, channel after channel. They are going deterministically. They are going to voice. Right. So I am very confident on the reacceleration in H2.

Robin L. Washington

That is — and we are very optimistic on the whole overall business. And maybe the last thing I would ask on CRPO, Keith, is remember it is also subject to renewal timing. And the more we get this flywheel growing and think about consumption, it is viewed as a leading indicator and how it is going to change relative to our revenue is something that is developing over time. So that is not a technical deal, it just comes shorter sales cycles.

Miguel Milano

And by the way, the last huge — there is 1 more thing to come, which is Headless 360. It is going to bring our number 1 agentic CRM to every surface, meeting customers where they are. And we are gonna work together with our customers and with our partners to find the right ways to — in a fair way — monetize those new interactions and those new users that are accessing our platform.

Robin L. Washington

So you have heard it straight from our CRO. We are very confident, right, relative to reacceleration of our bookings, as well as our revenue for the second half of FY 27. Thank you, Keith.

Operator

Gabriela, welcome. We will take your question now.

Gabriela Borges (Goldman Sachs)

Good afternoon. Thanks so much, Miguel. You ticked me up perfectly on headless here. Marc and team, I would love to spend a little bit of time on your headless strategy. And more specifically how it intersects with the build versus buy debate. On the one hand, Robin was talking about how it expands the opportunity in the surface area for Salesforce. On the other hand, talk to us about how you protect your downside from potentially enabling value abstraction out of Salesforce — perhaps customers want to build things more in house, or perhaps it enables competitors or value obstruction. So talk to us a little bit about your monetization strategy and how do you protect yourself to the downside. Thank you.

Marc R. Benioff

Well, you are right. Headless is probably the most exciting of the quarter. And I would love for Patrick to come in. And Patrick is our chief marketing officer. Patrick, do you want to give us a little bit of an insight into our headless strategy?

Patrick Stokes

Chief Marketing Officer

I would love to. We were just backstage for this, and we said, what did we say about headless at the last earnings call? And I realized we did not. We were still getting ready to launch it at TDX. It is just at TDX in March when we launched this. And I think what is so exciting about Headless is 2 things. One, it is having a real impact on making it easier to implement with Salesforce. So building out with Salesforce has now become easier than ever because we have seen these coding agents, Claude and Codex from OpenAI. As you use these things, what you realize is you need to be able to connect the underlying APIs, which you do through this layer that is called MCP. And if you can connect those into the coding agents, it makes it faster than ever to implement and deploy Salesforce. And I think we are seeing that show up in the numbers. Just this quarter alone, Agentforce customers in production grew by 50%. So I think we are starting to see a little bit of that impact as not just our customers, but also our global SIs. Implementing Data 360, implementing Agent, implementing Service. All of this now becomes really just a conversation.

Marc R. Benioff

So that is one end. But the other end is really what we heard from Miguel, which is this is really changing how people get value and consume Salesforce.

Patrick Stokes

In my experience, we are not seeing people take this capability and the coding agents, for example, and try to build all of this stuff themselves. What they want to do is they want to take this capability and they want to use Salesforce in different ways and get more value out of it. So rather than logging in to this discrete application and this application and this application to get an answer to one question that might span multiple applications or multiple sources of information, you can now just take these MCP servers and plug them into any tool that you want. They are inside our application, of course, with Agentforce Coworker as Marc described right up at that search bar. If you are a Slack customer, you can get to it right with Slackbot. That is really a headless experience as well. But if you want to plug these into ChatGPT and Claude, you can do that as well.

Srinivas Tallapragada

President and Chief Engineering and Success Officer

And all of this just results in more and more value being pulled — being delivered from the Salesforce platform. I will just add to that. Even though we just announced it, it has been less than a month. I think Salesforce historically has been very open, and we got more than a trillion API calls on our core platform just in this quarter. We have seen on a headless MCP tool calls have been more than 1.5 million. So what people are using is they are using it not only in Salesforce, where they do with coworker and our regular UIs, they are also able to use it in their flow of work. Similarly, we announced the headless MCP server for Slack; Slack has done 30.1 thousand tool calls. So what we are finding is there is a latent demand where people want to use Salesforce in their flow of work, but they need a trusted infrastructure. They need an operational data store to run it at scale, with all the compliance, with all the sharing and security models, with all the permissioning. So they will continue to use that while getting value. And like as Miguel said, what we want to do is it is a new way to capture value wherever the work is happening. That is the conversation we are having with our customers. So I think it is a new monetization area for us.

Marc R. Benioff

Well, let's get down to 1 more level of detail. You know, this was the quarter where we used the word headless for the first time at Trailhead DX. I used it in the tweet. The tweet went really viral. It was a surprise to me, I will be honest, because, you know, of course, we had always been first on APIs — in XML, in SOAP, in REST, and now in CLI and MCP. But the system was always built to be API first. It has always done massive amounts of transactions and complex transactions. And now we even have a new API, which is our whole user interface, basically, spinning out of the platform as an API. So in all cases, the platform has always been API first. All the applications have been API first. But when we announced headless, everybody's like, oh, they have lobbed the top off of it, or they have cut the applications off. They kind of got confused, in my opinion.

Patrick Stokes

They do not understand that all of our apps are rendered dynamically with metadata — it is a metadata driven platform. So Patrick, you are the marketing officer — why did that confusion come from for people? Why do they think headless means that there is no more application or Salesforce app? Well, probably from the name headless, which does seem to imply that. But that term, obviously, if you are in the technology world, it has been a term that has been used in technology for quite some time to imply that the UI is not directly linked to the underlying capabilities or services that are underneath it — in this case, APIs. And, yeah, Salesforce has always been open. I think what people got so excited about here is this idea that we were endorsing this way of working. We were basically saying, hey, we want you to take the value of Salesforce and the value that you get from our apps — from sales, from service, from commerce, and marketing — and we want you to be able to work however you want to work, whether that is in Slack or whether that is in Claude or whether that is directly in the app. That is what this capability really enables.

Marc R. Benioff

And if you are building today... You got it down to the inside baseball. So can you just explain it?

Patrick Stokes

So what that means is when you are a builder, when you are out there building something — and this is especially true today because there is now an ocean of builders that have been created as a result of this coding agent boom — when you go to build something for your business, you are, at some point, likely going to want to connect to Salesforce. That is what we see. And it does not matter what platform you are doing it on. You can be building something on a competitive platform to Salesforce, or on Google or AWS or one of our partners, but at some point, you are going to want to connect into Salesforce. And that is why those APIs have always been hugely, hugely used. But when you are building with an agent, you need a slightly different type of API. That is what we call MCP. And so by really putting those MCP servers out and saying, yes, this is how we want people to build, I think it was a big surprise and a big move in the right direction, and it also creates, I think, a real monetizable for us.

Miguel Milano

Because the fact that we announced Headless at TDX, it made people think that this was just for builders. And that now they can take our CRM apart — which they can also, by the way. But I think the big breakthrough was not with the builder workers, but with the knowledge workers. It is more about how you work. Let me give you 2 concrete examples. I met 100 customers basically face to face, 1 on 1 since the beginning of the year. And let me give you 2 examples. Adecco — a great customer across the board. They use pretty much every cloud. They went into Data Cloud and Agentforce last year. They did a big commitment in Q1, the beginning of Q1. They are basically designing ELA wall to wall. They have amazing recruiter agents going there — millions of transactions. Moving into voice. When we announced Headless, they called us. They are like, wait a minute. Are you saying that now these agents that we are building outside of Agentforce can also leverage Salesforce? And we said, exactly. We did it for that. So now there are going to be a lot of new agents that are gonna be accessing our platform. That is example number 1.

Example number 2 is Anthropic. Anthropic is one of our biggest users of CRM, of Sales Cloud, and obviously Slack. Their usage through Q1 has exploded, fivefold, because now they are using Sales Cloud from a headless perspective. And they are approaching this from Copilot, from other applications, from Slack. They are hitting Sales Cloud. So Sales Cloud has become more prominent and more strategic for them than ever. Because of headless. These are 2 extreme examples. But this is every single conversation that I have with a customer. Their smiles are big because of Headless.

Robin L. Washington

Oh, thank you, Gabriela. Hope you felt the energy on that question. Operator, we will go to the next question, please.

Operator

Your next question will come from Brad Zelnick with Deutsche Bank.

Brad Zelnick (Deutsche Bank)

Thanks so much for having me, and nice to see everybody. Marc, the AWU and token consumption metrics are some of the biggest and fastest growing in software and seems to validate that customers are using and deriving value from the product. Can you help us translate the usage metrics to revenue — the Agentforce ARR is impressive, but the usage suggests much faster adoption. And just as a related follow-up, the gross margins show no degradation despite surging token demand. Can you just help us understand how you are able to do that? Thanks.

Marc R. Benioff

Yeah. There is a lot of different points there. I am not sure exactly where I want to go, but we are talking about the agentic enterprise, and first and foremost, obviously, Salesforce is a large scaled company in software, with many of the largest, 83 thousand employees. For the last couple years, we have not been loading up a lot more engineers with Srinivas. So Srini's here at the table. He has got, what, about 15 thousand engineers. And you have had the 15 thousand engineers for about 2 years. It has been mostly flat, right? And I would say that the reason it has been mostly flat is because we have been using AI to create more efficiency for our engineers. And especially this year, now with these new coding agents, we are seeing even more dramatic capabilities. So that is a key part of our margin story — we are not hiring more engineers. We are not hiring more G&A. We are mostly only in 1 area — you can see headcount has grown, but it is mostly growing in Miguel's area, in sales.

Because I think we all realize that the one thing that we are doing here with you, selling and communicating, agents are not exactly doing that. They can qualify, okay. They can provide service. But in sales, we still scale because there are so many different parts of the market that we have to get to. So that will be a critical part of explaining our company, but at the same time, expanding our margins.

Robin L. Washington

You know, we are trying to really communicate that level of token usage. Maybe we are one of the first to really get out and talk about — hey, not only do we have agents, but we have delivered 28.6 trillion tokens. I listened to some of their earnings calls, and I do not think that they are at that level of detail. We have even gone down into this $3.8 billion Agentic work units, where Patrick has really pioneered this idea of how to be able to communicate more effectively the level of depth that is really going on with our customers actually implementing this technology.

Marc R. Benioff

And that, I think, is also a critical thing — we are only a couple years into this agentic revolution, but we see all this adoption and usage in every other product that we have rolled out. You have never seen the level of scale and growth of a new product like we have seen with Agentforce. And I think as we get Agentforce Coworker live for all of our customers, and it is just the ability for the administrator to say, now it is available to these users — that experience that we had with Andrew Russo, this idea that all of a sudden we are about to add a massive amount of new functionality and capability into all of our apps overnight — you are gonna see these token numbers continue to expand and grow. Are we using more tokens internally? We are, for our own operations, like in engineering. Are we using them for our customers? We are. And then we are absorbing that into our margin structure. It is not that we are not spending a lot with OpenAI. We are. We are using their platform. We are using Codex, their coding tool. We are using Anthropic. We are using their platform and their coding tool. We are using both of these platforms. Both of these companies are our customers. We are very excited about how they are using it. We use their products as well. They use our products very aggressively, both of them, in Slack and Sales Cloud and Service Cloud across the board. So that is really what is happening.

Robin L. Washington

Brad, maybe to add to your monetization point, and you are right, AWU is something that we use to measure how work gets done with our customers and also internally, as customer zero. But our top 10 AWU customers spent more than 1.5x over this past year with us. So it is being monetized over time, you know, via consumption and just basically getting more value from our core platforms.

Marc R. Benioff

Look. We are not gonna give guidance on attrition on all these things. We never have. But, Miguel, you are talking about how attrition is falling in the second quarter. What is your vision around attrition and heads in accounts and agents and what is happening in these customers?

Miguel Milano

I mean, our focus has been net new AOV. We did a lot of work, to be honest with you, to focus and align everyone in the organization from product to back office to front office to professional services. Everybody is aligned on one metric, which is net new AOV, which is the difference between the new bookings and then the leakage, the attrition. And we managed to redirect — and we showed at the Investor Day how the curve was negative. At some point, the negative growth. Q1 was a very strong net new AOV quarter for you as well, right? So H2, what is that transformation — tell us why is that transformation happening? The important thing is we are focusing on customer success, which has always been a focus, but some of our incentives were not aligned internally. They have been aligned now pretty much from the second half of the year. We saw net AOV outpacing AOV growth. We are very confident that in H1, we are going to see continued net new AOV growth outpacing AOV growth. Obviously, that is both levers. We are obviously increasing the new bookings. And we are minimizing the pain of attrition. In some cases, we swap products to make sure that customers are happy using the product. So we are very confident on the net new AOV in H1 also being growing more than AOV and the reacceleration that we committed.

And listen, when you commit something 12 to 18 months in advance, I mean, we are good professionals, but we are not magicians. There was a probability that it could not have happened. But we were very firm. And I am very happy that we are executing as per plan. In fact, a little better than plan, because you raised the guidance. So thank you so much.

Robin L. Washington

Do you. Okay. Other thing I would bring up to your point, Brad, on margins again, going back to our FY30 — it is getting better because of the depth of our ability to leverage these tools to improve our productivity. Right? As we march to FY30 in that Rule of 50, it is a critical component of how we are going to get to Rule of 50 — as Miguel said, grow the top line, $63 billion-plus with Informatica, but also improve margins and operating profitability. So I said earlier, customer zero is number 1 for us, and it is going to help us reach our framework as the lean, agentic enterprise. Excellent. Okay, Brent. Let's move on to the next question.

Operator

Okay. With that, operator, we will take our last question now, please. Your last question will come from Kirk Materne with Evercore Partners.

Kirk Materne (Evercore)

Well, thanks very much for squeezing me in. I wanted to follow-up on Miguel. You had made a comment on one of your customers using Sales Cloud through Slack, and I wanted to dive in on Slack a little bit just as part of the broader headless strategy. Can you talk about Slack being potentially sort of a gate for broader agentic adoption in your customer base? What you are seeing now? How that sort of stacking up in your pipeline opportunities. It just seems like it is an unbelievable network effect product. And I was curious how that is having an impact, if at all right now, or you expect it to, on sort of broader agentic bookings as we go into the back half of the year. Thanks.

Marc R. Benioff

That is such a good question. I think each of these folks should address it. But, Miguel, why do not you start?

Miguel Milano

So first of all, from a top line perspective, we will talk about how strategic Slack has become. Slack has become one of the favorite platforms and surfaces — in this case, specifically both the builders and the knowledge workers found in Slack the way — it is a multiplayer collaborative platform to access your applications, your work operating system. It is incredible what has happened on Slack, how we are leveraging it. By the way, great partnership with one of the labs, with Anthropic, to launch Slackbot is our personal assistant. It has increased productivity of the whole company around 3% more or less. So now I do everything, I ask everything, to an agent. That agent has access to all my applications, all my approvals, all my sharing models, all my conversations. And the business is booming. The bookings are booming, but also the net new AOV, that business is very impressive. And the key characteristic is when we talk about the MCP server tool calls on Slack, most of them were done by the builders building applications that needed that rich context that Slack provides. So huge growth, AOV top line growth, bookings growth, net new AOV, very little attrition.

Srinivas Tallapragada

Also on Slack, I think, is the best manifestation when we say agents and humans working together. You experience it in Slack. When you are in a channel and suddenly — in a lot of these, especially I see it now in my engineering channels, like half the time somebody puts a question or a request on a Slack channel, and the agent is listening and answering it. Developers do a PR request in Slack, and then suddenly the agent is picking it up and trying to do it. They want status reports. So I think Slack is where people can really understand the manifestation. And they are all asking questions as a human, and Slackbot is even a better way of articulating that in a packaged way. So that is what is driving the advanced use cases, because the developer community tends to try these tools. It is very embedded. They see this manifestation a lot more. Which is also the reason why some of our most advanced customers and labs and engineering organizations are using Slack MCP even more than we thought. And I think as it goes to the general population, in the knowledge worker, Slack will become even more prominent because people will say this is the way to work. And we always said Slack is the operating system of work. I think now people can really see it. And once they start using it once, it looks like magic, and that is why they say, oh, this is how it is always meant to be.

Patrick Stokes

Patrick, we are gonna give you the last word here. Yeah. I mean, I think it is all about the experience that Slack delivers. I mean, when you get in and you use a product and it just works, that is a moment for you, and you are gonna go back to that product. And I think that is exactly what Slack is. And it is more sophisticated really than it is ever been. You know, we started as this collaboration tool, but it has become so much more than that. It is not just a place where all of your institutional knowledge is. It now can make calls out to other tools. You can have agents working right in there side by side with humans. You know, you look at these coding projects and the incredible coding agents that have surfaced in the last 2 years. But the thing about coding is, like, that is not a single job, right? When you code, you are working with a team, and Slack is the only place where you can have that coding agent and the full team of all of your engineers and your developers all work towards that model.

Miguel Milano

Deals of support channels. It is there. Absolutely.

Patrick Stokes

And with Slack CRM, this is all we brought to life. So I think it is a natural place to work.

Marc R. Benioff

So I really see that is what is driving — number 1 is this. When we bought this company, it was doing less than $1 billion in revenue, and it was struggling. It was having problems. The management team was really not clear how they were competing against Microsoft. But I think coupling with our distribution capability, now adding the value of our core applications — and I think this key point that it drove nearly half of our million dollar wins this quarter, up 80% year over year. That means that Slack is really having its absolute moment. And I think the second thing that is really important is these Slack AWUs have grown 350% quarter over quarter. That is amazing. 350% quarter over quarter AWUs. In 2 years, there are going to be more agents using Slack than people. I mean, this is an incredible example of the future. And also how this product is more valuable, being used more, has more data, more capability, and, therefore, it is gonna have more intelligence and more value back to all of these customers as well.

Srinivas Tallapragada

Plus, all of these companies can create Slack communication between each other, as well. That work graph will become one of the richest work contexts in the enterprise. It is getting richer and richer. So we built — the community built 3 million custom apps on Slack in Q1. That is 8x quarter on quarter. I mean, there is a huge boom. Of those custom apps, there were 250 thousand that were AI agents that were built — third party AI agents — and that grew by more than double quarter on quarter, grew eightfold year-on-year. Everybody is working on Slack.

Marc R. Benioff

Well, I think that it is safe to say, and I am not giving guidance through what I am saying, but Sales is a $10 billion cloud already. Service is a $10 billion cloud already. Data is already a $10 billion cloud. I think when we see the growth rate that is happening in Slack, you saw the ACV was incredible in the first quarter. This is going to be fast-tracked from something we bought with less than $1 billion that I am sure we will be talking in short order about Slack being a $10 billion cloud. As well.

Alright. With that, I am gonna turn it back over to you, Michael.

Michael Spencer

Yeah. Thank you, and thank you everyone for joining us on the call. Just a quick reminder, we have our quarterly webinar on Friday. Very timely given the questions today. We are gonna talk about Slack, Slackbot, and our headless strategy in a deeper way with our product leadership. So please join us for that on Friday. You can find the information on our website. With that, we would like to thank everyone for joining us. We will be seeing everyone in the coming weeks. Thank you for joining. This concludes today's call, and you may now disconnect.

Source: Motley Fool earnings call transcript, published May 28, 2026 (call held May 27, 2026). Light editing for readability of an automated transcript; some customer-video segments summarized.