Strong Net New AOV and Agentforce Usage Growth Improve Visibility into Salesforce's Second-Half Reacceleration

Overview

The report evaluates Salesforce's F2Q27 results, subsequent guidance, and progress in AI monetization. Deutsche Bank believes that cRPO, net new AOV, Slack bookings, and Agentforce usage metrics collectively provide the clearest evidence to date that the company's organic revenue growth may have bottomed and that a second-half reacceleration is becoming more visible. However, scaled AI monetization, weakness in certain product lines, and whether the reacceleration can extend into FY28 remain to be validated.

Core views

The most important development in F2Q was the clear improvement in leading growth indicators. Constant-currency cRPO grew approximately 14% year over year, 1 percentage point above prior guidance of approximately 13% and also above Deutsche Bank's 13% expectation. The institution estimates that organic constant-currency growth within this figure was approximately 10%, a slight acceleration from F1Q. Strong bookings and customer attrition near historical lows drove the strongest net new AOV growth in four years. Net new AOV growth in the first half significantly outpaced overall AOV growth, while Slack recorded its fastest quarterly net new AOV performance since being acquired. Together, these indicators support management's planned reacceleration in organic revenue in the second half of FY27. Revenue performance for the quarter was generally solid, although results continued to diverge across businesses. Total revenue was USD 11.345 billion, up 10.8% year over year and near the upper end of the USD 11.270 billion to USD 11.350 billion guidance range. Subscription revenue was USD 10.820 billion, up 11.7% year over year. Organic subscription revenue grew 6.8% year over year in constant currency, slowing as expected from 7.6% in F1Q. Agentforce Apps revenue grew 7% year over year in constant currency, unchanged from the prior quarter, while growth in Data 360, Platform & Other increased from 21% in the prior quarter to 23%. By comparison, term license revenue declined 15% year over year versus 5% growth in the prior quarter, despite facing an approximately 7-percentage-point tougher comparison this quarter. Agentforce Marketing and Commerce revenue declined 2%, compared with a 1% decline in the prior quarter, and the report expects this portfolio to remain a drag on overall company growth in FY27. Growth in Integration and Analytics also slowed from 3% to 1%, and management believes it is still too early to determine whether the improvement in the Marketing business is sustainable. On AI, the report believes F2Q provided substantive evidence that Salesforce's existing customer base can be enhanced by AI rather than weakened by frontier models. Agentforce ARR exceeded USD 1.5 billion, up from USD 1.2 billion in F1Q and growing more than 240% year over year. Beginning in F2Q, this metric includes Slackbot and Headless 360 AI products. AWU, a measure of actual consumption, increased 97% quarter over quarter to 3.2 billion. The number of accounts deploying agents in production increased 70% quarter over quarter, bookings for premium Agentforce SKUs more than doubled quarter over quarter, and bookings for Agentforce One Edition and Agentforce for Apps also more than doubled quarter over quarter. Half of Agentforce bookings came from customers replenishing consumed credits, indicating that some deployments have generated recurring revenue as customers actually use the products. Salesforce deepened its partnership with Anthropic and launched Claudeforce. The report believes this helps position the company's data, applications, and governance capabilities as a trusted foundation for customers using frontier models rather than as something directly displaced by those models. These AI data points have not yet fully resolved the issue of monetization at scale. Headless mode and outcome-based pricing remain at an early stage, so the current evidence does more to refute concerns that AI will weaken the value of core applications than to demonstrate a mature, long-term monetization opportunity at scale. The report believes investor discussion is shifting from whether growth will reaccelerate in the second half to the magnitude and duration of that acceleration and whether it can extend into FY28. A broader valuation rerating may still require sustained acceleration in organic growth and scaled Agentforce monetization. Profitability was not sacrificed as growth expectations improved. F2Q non-GAAP operating margin was 34.1%, down 20 basis points year over year but above Deutsche Bank's and the market's expectation of 33.7%. FY27 non-GAAP operating margin guidance was maintained at 34.3%, implying approximately 20 basis points of year-over-year expansion. Guidance for year-over-year growth in operating cash flow and free cash flow was also maintained at 4% to 5%. This leads the report to conclude that a growth reacceleration and the established profitability framework can currently coexist. The company raised its FY27 total revenue guidance to USD 46.1 billion to USD 46.4 billion, representing year-over-year growth of 11% to 12% and constant-currency growth of 11%. Nominal guidance was raised by USD 200 million and constant-currency guidance by USD 300 million, including USD 100 million of organic growth and USD 200 million from the pending acquisitions of Contentful and Fin. The guidance also includes a contribution of slightly more than 3 percentage points from Informatica. FY27 subscription and support revenue growth guidance in constant currency was increased from approximately 11% to just under 12%, and management continues to expect organic revenue growth to reaccelerate in the second half of FY27. F3Q guidance further supports this view. Constant-currency cRPO growth guidance was approximately 14% year over year, above Deutsche Bank's and the market's expectation of approximately 13%. The institution estimates organic constant-currency growth of approximately 10%, also above the prior expectation of 9%. Revenue guidance was USD 11.42 billion to USD 11.50 billion, representing 11% to 12% year-over-year growth on both a nominal and constant-currency basis, favorably positioned relative to the market expectation of USD 11.42 billion. This guidance includes a contribution of slightly more than 4 percentage points from Informatica, implying organic constant-currency revenue growth of approximately 7% to 8%. Deutsche Bank estimates organic constant-currency growth in subscription and support revenue of approximately 7.1%. F3Q non-GAAP earnings per share guidance was USD 3.42 to USD 3.44, above the market expectation of USD 3.39. The institution estimates that this corresponds to a non-GAAP operating margin of approximately 34.9%, versus the market expectation of approximately 34.5%. Deutsche Bank raised its FY27 revenue and operating profit forecasts from USD 46.11 billion and USD 15.79 billion to USD 46.26 billion and USD 15.85 billion, respectively. The institution uses a DCF valuation and raised its target price from USD 255 to USD 275. The model applies a 9.5% WACC, a 4% terminal risk-free rate, a 5.75% equity risk premium, and a GDP growth-based perpetual growth rate of 3%. Based on improving leading growth indicators, deepening AI usage, and a stable margin framework, the institution reiterated its Buy rating while emphasizing that further rerating still depends on the continued realization of accelerating organic growth and Agentforce monetization.

Analysis framework

The report first assesses future revenue momentum using cRPO, net new AOV, customer attrition, and Slack bookings, and then breaks down quarterly revenue performance by product line. It subsequently examines AI adoption and signs of recurring revenue through Agentforce ARR, actual consumption, production accounts, and bookings for credit replenishment. The institution then cross-validates these operating signals against FY27 and F3Q revenue and margin guidance, revises its revenue and operating profit forecasts, and finally updates its target price using a DCF.

Methodology notes

• Valuation MethodDCF Discounted Cash Flow

  DCF discounted cash flow valuation

  Deutsche Bank discounts future cash flows to present value based on required risk returns, deriving a target price of USD 275. The model applies a 9.5% WACC, a 4% terminal risk-free rate, a 5.75% equity risk premium, and a 3% perpetual growth rate.

• (Out-of-Vocabulary Method)

  Analysis of cRPO and net new AOV as leading indicators

  The report uses constant-currency cRPO, net new AOV, bookings, and customer attrition to assess contractual momentum that has not yet fully converted into revenue and thereby determine whether organic revenue can reaccelerate in the second half of FY27.

• (Out-of-Vocabulary Method)

  Organic and constant-currency growth decomposition

  The report separates foreign-exchange effects and acquisition contributions from Informatica, Contentful, and Fin from the organic business to identify the portion of total revenue growth generated by the core business itself.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Salesforce (CRM.US)

  F2Q leading growth indicators and Agentforce adoption data improved, prompting Deutsche Bank to reiterate its Buy rating and raise its target price.

  Strengths

  Constant-currency cRPO exceeded expectations, net new AOV recorded its strongest growth in four years, Slack performance improved, and Agentforce ARR and actual usage grew rapidly, while margins also exceeded expectations.

  Weaknesses

  Term license revenue was volatile and declined year over year, Marketing and Commerce and Integration and Analytics performed weakly, and scaled AI monetization remains at an early stage.

  Comparison

  F2Q constant-currency cRPO was approximately 14%, above guidance and expectations of approximately 13%; F2Q operating margin was 34.1%, above the 33.7% expectation.

  Risks

  The overall pace of IT spending, competition from platform players and disruptive innovators, and market readiness for and the pace of adoption of generative AI.

Key data

• F2Q Total RevenueUSD 11.345 billionUp 10.8% year over year, near the upper end of the USD 11.270 billion to USD 11.350 billion guidance range
• F2Q Subscription RevenueUSD 10.820 billionUp 11.7% year over year
• F2Q Constant-Currency cRPO GrowthApproximately 14%Year-over-year growth, approximately 1 percentage point above prior guidance and institutional expectations
• F2Q Organic Subscription Revenue Growth6.8%Year-over-year growth in constant currency, versus 7.6% in F1Q
• Agentforce ARRMore than USD 1.5 billionUSD 1.2 billion in F1Q, up more than 240% year over year
• Agentforce AWU3.2 billionUp 97% quarter over quarter, reflecting actual consumption
• Production Agent AccountsUp 70% quarter over quarterReflects the expanding scope of Agentforce deployments
• F2Q Non-GAAP Operating Margin34.1%Down 20 basis points year over year, above the 33.7% expectation
• FY27 Total Revenue GuidanceUSD 46.1 billion to USD 46.4 billionUp 11% to 12% year over year, with 11% constant-currency growth
• FY27 Non-GAAP Operating Margin Guidance34.3%Maintained, implying approximately 20 basis points of year-over-year expansion
• F3Q Revenue GuidanceUSD 11.42 billion to USD 11.50 billionUp 11% to 12% year over year on both a nominal and constant-currency basis
• F3Q Non-GAAP EPS GuidanceUSD 3.42 to USD 3.44Above the market expectation of USD 3.39
• FY27 Revenue ForecastUSD 46.26 billionPreviously USD 46.11 billion
• FY27 Operating Profit ForecastUSD 15.85 billionPreviously USD 15.79 billion
• Target PriceUSD 275Previously USD 255, raised by 8%

Impact & implications

The report believes that bookings, net new AOV, Slack performance, and F3Q cRPO guidance improve visibility into a reacceleration in organic revenue in the second half of FY27, while Agentforce consumption growth, production deployments, and credit-replenishment bookings indicate that AI may expand the value of existing customers. Unchanged margin guidance also suggests that improving growth has not yet disrupted the profitability framework. However, a further valuation rerating still requires sustained acceleration in organic growth and proof that Agentforce can achieve scaled, sustainable monetization.

Risks

• The overall pace of IT spending may be weaker than assumed in the report.
• Platform competitors and disruptive innovators may intensify competition.
• Market readiness for and the pace of adoption of generative AI may fall short of expectations.

What to watch

• Monitor the magnitude and sustainability of the acceleration in organic revenue in the second half of FY27 and whether it can extend into FY28.
• Monitor Dreamforce for further clarification regarding the evolution of Salesforce's AI monetization strategy and the sustainability of growth.
• Monitor whether Agentforce's headless mode and outcome-based pricing can progress from the early stage to scaled monetization.
• Monitor whether the improvement in the Marketing business can be sustained and whether growth in Integration and Analytics can recover.