‘There was a false narrative that somehow the core is in jeopardy because of these large language models,’ Salesforce CEO and co-founder Marc Benioff says.
Salesforce CEO and co-founder Marc Benioff continues to assert that growing demand for artificial intelligence and agentic AI will have a multiplier effect on Salesforce’s core cloud-based products–and that concerns of AI destroying his software-as-a-service business are overblown.
“There was a false narrative that somehow the core is in jeopardy because of these large language models,” Benioff said Wednesday on his company’s latest quarterly earnings call.
Instead, the San Francisco-based enterprise applications vendor has been adding new value across its product portfolio through agentic capabilities. Salesforce is at the forefront for customers looking for tools to turn their organizations into “agentic enterprises” leveraging the cutting-edge technology to grow revenue, reduce costs and improve customer experiences, the CEO said.
“We’ve created this,” he said. “We’re envisioning this. We’re defining what the future is with this.”
[RELATED: Informatica CEO Walia Sees Consumer AI, Enterprise AI On Separate Journeys]
Salesforce Q3 Results
Salesforce covered its third fiscal quarter, ended Oct. 31, on Wednesday’s call. Although executives with the vendor highlighted the ways it engages and supports customers directly, Salesforce President and Chief Engineering and Customer Success Officer Srini Tallapragada said that the vendor is working with the likes of Accenture, Deloitte, PwC and other system integrators and partners to meet AI demand.
Salesforce has more than 16,000 partners worldwide.
“In a lot of places, we are co-selling (with partners),” Tallapragada said. “This together is what it takes to generate the agentic enterprise.”
AI Vs. SaaS
Agentic enterprises represent a new paradigm and new revenue opportunity for Salesforce, President and Chief Revenue Officer Miguel Milano said on the call. That presumably also means more opportunities for Salesforce partners.
“Customers will use Salesforce in a totally different way,” he said. “They will use Salesforce to be the platform for digital labor, for sales, for service, for marketing. And the impact on the way we can monetize those relationships is exponential. It’s not linear growth.”
Salesforce agentic products can multiply monetization opportunities with customers fourfold, Milano said. He’s seen average order value (AOV) increase up to fivefold with some customers that are investing in becoming agentic. Customers can get up to 10 times more value from agentic Salesforce products.
“We just want to get every single one of our 150,000, 200,000 customers through the agentic enterprise journey,” Milano said. “For each of them, there is going to be a multiplier effect.”
To meet demand, Salesforce has increased its internal account executive seller capacity by 20 percent this year so far and should finish the year with 15 percent more capacity already enabled or ramped, a process that can take six to 12 months, Milano said.
“I see the pipelines growing,” he said. “The top of the funnel is growing. We’ve never seen a pipe gen(eration) quarter like we did in Q3.”
The contextual data Salesforce has amassed over the years on the different needs of sales representatives in finance compared to reps in telecommunications or pharmaceuticals gives the vendor an edge over its AI rivals, Tallapragada said on the call. The vendor has also come to market with agent evaluation and auditing, compliance and local data residency tools agentic enterprises need.
Benioff estimated that Salesforce’s data foundation business that leverages Informatica, Data 360 (the former Data Cloud) and MuleSoft should reach about $10 billion in business next year.
“This is a very significant software business,” the CEO said. “It’s key for every one of our customers to move to this data foundation, and we are still at the beginning of that journey with so many of our customers.”
ITSM, Life Sciences Updates
Benioff said that the company is starting to see success in two new markets it expanded into recently–IT service management (ITSM) and life sciences software.
Salesforce’s ITSM offer is meant to rival products by ServiceNow is selling with customers, Benioff said on the call.
“We’ve got all kinds of customers who’ve bought products from these competitors (and) never deployed them,” Benioff said, without mentioning ServiceNow by name. “Guess what? We are going to deliver some incredible capabilities.”
Salesforce’s Life Sciences Cloud saw new bookings triple year over year and 120 new customers in the past few months, the CEO said. A former Salesforce partner, Veeva, is now competing with the vendor in this market.
“We’re taking market share from Veeva,” Benioff said. “They have not seen the losses yet that are coming.”
The Cost Of AI
Salesforce’s various ways for customers to pay for its AI tools is necessary “to meet customers where they are, where they want to be,” Milano said.
The CRO said that Salesforce’s Agentic Enterprise Licensing Agreement fixed-cost contracts are enticing some customers, with 16 AELAs sold in the third fiscal quarter and about 100 AELAs in the pipeline–with each AELA a multimillion-dollar deal.
Customers requested AELAs to avoid the trappings of paying by consumption, Milano said. “It gives the customer the flexibility that they need,” he said.
Seat-based offers also continue to entice other customers for their spending predictability. Seat-based offers for Agentforce and Data Cloud in the third fiscal quarter doubled year on year. And other customers have opted for Salesforce’s pay-per-conversation model as well.
Flex credits have also proven popular among existing Salesforce customers that have already invested in the company’s tools and have a fluctuating workforce, he said.
Salesforce isn’t alone in experimenting with different ways to charge customers for AI tools, with Microsoft also rolling out payment methods including licenses and consumption-based metering.
Salesforce Q3 In Depth
During the quarter, Salesforce’s current remaining performance obligation (cRPO) rose 11 percent year on year to $29.4 billion, according to the vendor. RPO came in at $59.5 billion, up 12 percent year on year.
Agentforce and Data 360 products saw nearly $1.4 billion in annual recurring revenue (ARR), more than double year on year. Salesforce revealed that it now has more than 9,500 paid Agentforce deals done–up 50 percent quarter on quarter–and that it has processed 3.2 trillion tokens. Agentforce has closed more than 18,500 deals since launch.
Agentforce ARR alone passed $500 million in the quarter, quadruple the amount a year prior. Agentforce accounts in production rose 70 percent quarter on quarter. Half of the bookings for Agentforce and Data 360 came from existing customer expansion.
Milano clarified that around three customers expanded with the AI products about two quarters ago, but in the third fiscal quarter, more than 300 customers expanded. “That’s an incredible testimony of the success that Agentforce is having in a very short time frame,” he said.
Data 360 ingested 32 trillion records, more than double year over year. It ingested 15 trillion records through Zero Copy, more than quadrupling year on year. It also more than quadrupled year on year in terms of unstructured data processed.
In October, token usage was nearly 540 billion, up 25 percent month over month, Benioff said on the call. “I just don’t think any other enterprise software company has stats quite like this,” he said. “This isn’t your Clippy (Microsoft’s paperclip virtual assistant that used to appear in Word). This is not your kind of a good AI demo. This is real enterprise adoption of agentic AI and capability at scale globally. And those numbers are going to keep growing as customers put Agentforce to work across their business.”
Subscription and support revenue grew 9 percent year on year ignoring foreign exchange, coming in at $9.7 billion. Revenue for the third quarter reached $10.3 billion, up 8 percent year on year.
Salesforce’s operating margin using Generally Accepted Accounting Principles was 21.3 percent. Without using GAAP, it was 35.5 percent. Operating cash flow for the quarter was $2.3 billion, up 17 percent year on year. Free cash flow was $2.2 billion, up 22 percent year on year.
Salesforce increased its full fiscal year 2026 revenue guidance to between $41.45 billion and $41.55 billion. That would mark an increase year on year of about 9 percent ignoring foreign exchange and it includes about 80 basis points from newly acquired Informatica. The vendor also increased its fiscal year 2026 operating cash flow growth expectation to about 14 percent year on year.
Salesforce expects GAAP operating margin for fiscal year 2026 to be 20.3 percent. The vendor maintained its non-GAAP margin expectation of 34.1 percent.
The vendor’s stock rose about 2 percent after market close Wednesday, trading at about $243 a share.