What Salesforce’s Q2 Says About Enterprise Software In The AI Era

AI’s threat to enterprise software, cloud’s room for growth and companies jumping into new markets were some of the big topics discussed on Salesforce’s earnings call

Artificial intelligence’s threat to enterprise software. Cloud’s room for growth. And the AI era enabling companies to jump into new markets.

These were some of the big topics discussed on Salesforce’s quarterly earnings call last week, which covered the three months ended July 31.

Marc Benioff, co-founder and CEO of the San Francisco-based AI and enterprise application company, discussed how Salesforce and its partner ecosystem are evolving in the AI era during the call, with Salesforce beating revenue expectations during the second quarter of its 2026 fiscal year.

The company’s stock took a hit after the quarterly earnings report, however, due in part to Salesforce largely maintaining its revenue forecast instead of taking it up as its AI products grow in use.

Salesforce Second Quarter

Salesforce reported $10.24 billion in revenue for the quarter, more than the $10.14 billion Wall Street expected, and said to expect between $10.24 billion and $10.29 billion in revenue in the third fiscal quarter. Wall Street wanted to hear a more definitive amount close to $10.29 billion, according to a Wednesday report by KeyBanc.

“The guidance for the year is inching up but is not yet giving investors the look of a transformed company,” according to the investment firm.

On top of that, Salesforce’s revenue beat appeared due largely to currency exchange, one-time term licenses and the timing of revenue from professional services, raising questions around whether the vendor and its partners can outperform again next quarter.

Read on for what channel partners should take away from Salesforce’s most recent quarterly earnings results.

Will AI Kill SaaS?

One of the main topics discussed on Wednesday’s call was whether AI and AI agents actually spell doom for Software as a Service, with AI potentially allowing organizations to build their own enterprise applications, AI possibly removing the need for humans to interact with a variety of apps and instead interact with a chatbot, and organizations spending less money on seats when agents instead of humans access the SaaS apps.

Microsoft Chairman and CEO Satya Nadella, whose company rivals Salesforce in the CRM software space the latter popularized, has spoken in multiple media interviews about how AI agents can spin up their own apps.

“That will mean a pretty radical change if you all you thought was, ‘Hey I’m the system of record or system of engagement or what have you and it’s just about workflows on top of my data and that’s the scope,” Nadella said in an interview in May with Forward Future. “That’s just not going to persist. … SaaS applications we build may have to radically change in order to adapt themselves for this future.”

Benioff has not held back in his view that AI killing enterprise apps is a “strange narrative” and “nonsense,” with AI instead extending and transforming enterprise software and applications.

“This is not a company in crisis,” Benioff said on the earnings call. “This is a company that is accelerating and doing things in new ways.”

Investment firm Bernstein was critical about parts of Salesforce’s business in a report Thursday but largely agreed with Benioff that AI eating enterprise software is “incorrect” and “overblown.”

The firm’s report said that the expected adoption ramping speed for AI is too high near term and maybe too low long term. Plus, Salesforce could offset losses to traditional business through agentic AI gains.

Organizations will use agents and agentic AI platforms where the data resides—sales agents in the CRM tool, for example, according to the firm’s report. And while enterprises may look to AI to eliminate support jobs and non-quota-carrying sales positions, enterprises may still look to hire quota-carrying salespeople and other positions not replaced by AI, the report said. Smaller organizations with employees filling multiple roles will find fewer people they can cut. And Salesforce works with both enterprises and smaller organizations.

AI Enabling Market Expansion

Salesforce continued a public tit for tat with ServiceNow on the call, with Benioff promising a look at Salesforce’s upcoming agentic IT service management product in October at the vendor’s annual Dreamforce conference.

ServiceNow executives, meanwhile, have said the vendor is growing in Salesforce’s flagship CRM market.

Rapid horizontal market expansion is a possible reflection of how fast companies can enter new markets in the AI era. As Melius Research said in a report in May, “Agentic AI is fueling the motivation to move faster horizontally to create capabilities to infringe on others’ turf” and “given agents work for you without interacting with your familiar interface, you can move fast horizontally to take share.”

Benioff suggested on the call that centering the interface for the upcoming IT service management (ITSM) product around Salesforce’s broadly used Slack collaboration application puts his company at an advantage. Slack serves about 1 million organizations compared with ServiceNow’s nearly 9,000. Investment firm William Blair said in its report Thursday that Slack should allow the Salesforce ITSM to reach midmarket and small-business customers.

Time will tell whether Salesforce has an easier job growing in ITSM compared with ServiceNow growing in CRM.

That downstream movement might be of interest to Salesforce’s ecosystem of 12,000 channel partners. During the call, Benioff said he has encouraged larger Salesforce systems integrator partners “to move their business down downstream to serve these companies that have single-digit-thousand” employees due to growth the Salesforce has seen in that base.

Multiple Battlefronts

Alongside ServiceNow seeking to challenge Salesforce through expansion into a new market, the CRM giant also faces heated rivalries in multiple areas of its business.

Microsoft has taken an aggressive approach in AI through its Copilot offers and in its Dynamics CRM business, Bernstein’s Thursday report said. While Salesforce has data to train GenAI models, Microsoft has strong functionality, better integration with its Office 365 productivity suite, lower pricing and brought AI agents to market before Salesforce, according to the firm.

“Agentic AI is still in its early days, and we believe consumption-driven monetization at AgentForce will take longer and be smaller than most expect,” according to Bernstein.

Multiple investment firms voiced concern with HubSpot competing with Salesforce for smaller businesses. Bernstein singled out Oracle and SAP for attacking the sales automation market through bundles including their cloud ERP products.

The investment firm predicts more battles ahead for Salesforce’s Data Cloud product, which is key to unlocking AI insight.

“Everyone is building some form of a data cloud, and competition is going to be strong,” according to the firm. “AI is relatively early, and no one really knows the best monetization strategy or how the high level of competition will impact how much can be charged. Agentic AI is even earlier in its maturation, so growth is going to be at roughly this rate going forward.”

Salesforce’s AI Growth

Turning to whether Salesforce saw growth as an AI player during the quarter, the vendor shared plenty of numbers to show its increasing influence.

Its Data Cloud and AI annual recurring revenue repeated 120 percent growth year on year from the second fiscal quarter and surpassed $1.2 billion in revenue scale. Salesforce saw a 60 percent quarter-on-quarter increase in pilot conversions and closed 12,500 Agentforce deals, up from 8,000 in the first quarter. About 6,000 of those deals were paid, up from 4,000 the prior quarter, according to Morgan Stanley’s Thursday report.

The investment firm said that Salesforce is well-positioned for the agentic AI era due in part to its products providing the determinative application workflows alongside data grounding, governance and security.

Still, Agentforce could have shown greater growth during the quarter, KeyBanc argued in its Wednesday report. “We will need to see these metrics compound to the multiples and given the loose definition of a paying Agentforce customer, we maintain that this could be possible.”

Salesforce growing the number of AI pilots from 20 in the first quarter to 120, growing Data Cloud revenue from $1 billion in the first quarter to $1.2 billion and reporting an 11 percent growth to backlog before AI and Agentforce’s contribution all suggest reacceleration in the second half of the year, Bank of America said in a report Thursday. The firm predicts about 12 percent backlog growth in the 2027 fiscal year.

As various AI vendors experiment with different business models for monetizing AI, Salesforce CFO Robin Washington revealed that the vendor’s flex credits for Agentforce have helped with adoption, with 80 percent of Agentforce second-quarter bookings credited to the credits.

The statistic implies that “pricing complexity may be alleviating for stronger usage,” KeyBanc said in a report Wednesday.

In its report Thursday, Bernstein said that going against Salesforce is the investment firm’s belief that more complex agentic AI use cases are still about two years away and that building agents will require Salesforce to increase sales and engineering staff faster than the short-term revenue growth.

Salesforce’s Core Business Growth

Growing parts of Salesforce’s cloud business seemed to cast doubt on near-term “death of software” fears, with core cloud growth during the quarter of 8 percent year on year.

Data Cloud represents a $7 billion business and more than doubled its customer growth year on year, according to Wedbush’s Thursday report.

Sales Cloud and Service Cloud showed the same growth, an improvement over a 200-basis-point slowdown in the first quarter, according to KeyBanc. Sales and Service Clouds decelerated 200 and 300 basis points, respectively.

Tableau and Mulesoft growth helped Salesforce beat Wall Street expectations, notable when Tableau previously hurt growth, according to Bernstein.

But the investment firm was critical of Salesforce’s overall growth, saying that it has decelerated over the years and stalled at about 8 percent over the past few quarters. “We are concerned that Salesforce is a mature business in a mature market,” according to Bernstein.

This most recent quarter, Marketing Cloud and Commerce Cloud grew 3 percent year on year, a deceleration from 4 percent the prior quarter. Bernstein said it believes Marketing Cloud faces intensifying competition and slowed spending.

The biggest growth driver for Sales Cloud and Service Cloud is price increases and upgrades, not seat growth, according to the firm. Bernstein went so far as to say it views the CRM market reaching the end of its rapid growth phase. “Even in the best conditions, 70% of the CRM market had transitioned to the Cloud,” according to Bernstein.

Although Wedbush called Salesforce a likely long-term winner in the AI revolution with Agentforce, “we need to see improved execution moving forward from its core business while balancing aggressive investments into its data and AI strategies,” according to the investment firm’s Thursday report.