Salesforce Q1 Revenue Up 13% to $11.1B; $25B Buyback Raises Interest Costs
CRM•Salesforce reported Q1 FY27 revenue of $11.1 billion, up 13% year over year, with adjusted EPS of $3.88 versus a $3.12 estimate, driven by $3.4 billion in Agentforce and Data 360 ARR (up over 200%). The company borrowed $25 billion for an accelerated share repurchase, raising quarterly interest expense to $317 million and cutting free cash flow growth guidance to 4–5%.
1. Q1 FY27 Earnings Highlights
Salesforce delivered $11.1 billion in revenue for Q1 FY27, marking a 13% year-over-year increase, and reported adjusted EPS of $3.88 versus the $3.12 consensus. Revenue was bolstered by a $444 million contribution from the recent Informatica acquisition and continued strength in subscription bookings.
2. Debt-Funded Buyback and Cash-Flow Impact
The company executed a $25 billion accelerated share repurchase, returning $27.5 billion to shareholders this quarter but increasing quarterly interest expense from $68 million to $317 million. As a result, full-year free cash flow growth guidance was lowered to 4–5%, down from 9–10% in the prior quarter.
3. AI-Driven ARR Growth Pillars
AI consumption led to $3.4 billion in Agentforce and Data 360 ARR, up over 200% year over year, while Public Sector ARR surpassed $2 billion (up 23%) and Slack’s Model Context Protocol reached 1 million active users within six weeks. These metrics highlight Salesforce’s shift from seat-based licensing to outcome-based pricing via Agentic Work Units.
4. Analyst Reactions and Stock Outlook
Following the results, Barclays cut its price target by 6.3% to $236 and Jefferies held at $250, citing concerns over debt levels, while Roth Capital maintained a $325 target. Options market activity has tilted bearish, with the put-call ratio rising to 0.76, reflecting caution ahead of any sustained revenue acceleration in H2 FY27.
