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1,700 | COST | 1 | 2,025 | 2024-12-12 17:00:00 | Costco Wholesale Corporation | 92,817 | Ron Vachris: I think as far as new categories, you go back to caskets that we've started many years ago that we would never thought would have been a business for us, and we were able to find a way to deliver great member value and great quality. And that was such as the addition to gasoline we had many years ago in the company as well. Is that can we find something that does meet the needs of our members ensure we can deliver the right quality and the great price? So I think the tickets and precious metals was, again, great work by our buying teams. And finding new areas that we can deliver great quality. And great value to our members. And I see them working hard on the next categories that are gonna be coming for us. But that's part of the treasure hunt at Costco is that we're always keeping nimble and continue to change those categories that we can find new areas to improve the lives of our members.
Gary Millerchip: Maybe, Ron, just to add on that, Michael, to your question of, you know, I think we'd give a bit more credit in addition to Ron's point about it's great work by our merchants creating new and exciting items. We give a bit more credit, I think, to the impact they have on the business. Not necessarily because we see significant margin as you mentioned from them, but they're driving significant traffic to our website, and we do get a high proportion of cross-selling. When members are buying things like precious metals. So it's driving the ability to grow our digital business overall. I think we see it as something that also just creates a lot of awareness about e-commerce business as well. So as you know, we don't advertise, but it's identifying these exciting items that help drive traffic and awareness of what Costco offers. So and I think some of that is a factor in what helps with the continued growth in e-commerce just from a top-line perspective, but also the margin improvement that we talked about on the call. So I think, you know, we would look at it a little bit more broadly for sure. |
1,701 | COST | 1 | 2,025 | 2024-12-12 17:00:00 | Costco Wholesale Corporation | 92,817 | Michael Lasser: But just to clarify that second point, are you having to offset the margin impact from selling these traffic-driving items that don't carry a lot of margin, by requiring even better margins on the rest of the assortment?
Gary Millerchip: No. What we're seeing is we're driving a mix improvement overall because of the traffic that it's driving and the engagement with the website. And remember, of course, as well that there's very low SG&A costs associated with that product. So it also helps create leverage in the e-commerce model as well.
Ron Vachris: So yeah. So the answer is really no. We're not making more margin on those other items to offset that. We're just driving down our SG&A so we don't require more margin.
Michael Lasser: Thank you very much, and have a good holiday.
Ron Vachris: You as well. Thank you.
Operator: And your next question comes from the line of Chuck Grom with Gordon Haskett. Your line is open.
Chuck Grom: Hey. Thanks very much. Ron, can you talk about Costco's right to earn more wallet share with your more affluent higher-income shopper, particularly on the discretionary side of the business? And then, Gary, just on the margin bridge, can you just explain why the 2% rebate was favorable five basis points? Historically, it's almost always negative or, you know, neutral. Thank you.
Ron Vachris: Sure thing. Chuck, your question was why are we gaining more market share with our affluent customer? Is that what your question was?
Chuck Grom: Now do I my question is do you think you you've earned the right to earn more wallet share with that higher-income shopper?
Ron Vachris: Absolutely. I think we do. I think as we continue to find the brands, I mean, and deliver also with great quality Kirkland Signature, we'll continue to see that growth and that customer. We resonate that that is our member. That's who we cater our mixes to. And I think that we see great runway for us in the future. |
1,702 | COST | 1 | 2,025 | 2024-12-12 17:00:00 | Costco Wholesale Corporation | 92,817 | Gary Millerchip: And then, Chuck, on the second part of your question, so with the 2% rewards, think of it as that throughout the year, we're accruing what we believe is the right amount of redemption for the 2% reward. And generally speaking, we're gonna be conservative around that because we wanna make sure we're fully accrued. And then when we get into the first quarter each year, we're sort of truing up if you like what the actual spend was. So I'd almost think of the adjustment this quarter sort of offsetting the increases that we saw in the back half of last year. And so you have to net those out to say underlying, there is a gradual increase in the 2% spend it kinda nets off between quarter by quarter.
Chuck Grom: Okay. So it was essentially a true-up then.
Gary Millerchip: Right.
Chuck Grom: Okay. Great. Awesome. Thank you.
Operator: And your next question comes from the line of Kelly Bania with BMO Capital Markets. Your line is open.
Kelly Bania: Thanks for taking our questions, Ron and Gary. I was wondering if you could just talk a little bit about your partnerships with Instacart and Uber now that you've had Uber for quite some time. What you've learned? What is the pace of growth, and how that's adding to comps, and just general awareness among your membership base of the service there, particularly as you add new services, like you mentioned, the pharmacy, I guess, coming in and what something like that could do to the growth there. |
1,703 | COST | 1 | 2,025 | 2024-12-12 17:00:00 | Costco Wholesale Corporation | 92,817 | Ron Vachris: I guess I will start with that. Very strong partnerships with both organizations. We have closely looked at what the behaviors of the members were and found great mentality to our member shop frequency goes way up. And, you know, it changes the shopping habits. I think they'll use us more for fill-in between their big Costco brick and mortar shop to go into an Instacart or an Uber. And shop those directions. So I think that we're finding that it's the most cost-effective way to do some small non-food item deliveries as well. Where we would have otherwise shipped those via UPS or a carrier from a distribution center. Can now have those to a member within a few hours. So if you're looking for a blender, that will fit in the back of a Prius, we can get that to you in a couple of hours at a very low cost. So it's improving our e-commerce delivery speed and time to the member and convenience is there as well. So very happy with the partnership. Our head merchant works very closely with both of those organizations and we think it's a great service for our members.
Gary Millerchip: And I guess the only thing to add, Kelly, is the first part of your question, it continues to grow very strongly. So at least in line with the pace that we see in our digital business overall.
Ron Vachris: Slightly higher than our e-commerce business growth.
Operator: And your next question comes from the line of Chuck Sarankowski with Northcoast Research. Your line is open.
Chuck Sarankowski: Afternoon, everyone. Could you talk a little bit about labor relations and current negotiations with the Teamsters? Please. |
1,704 | COST | 1 | 2,025 | 2024-12-12 17:00:00 | Costco Wholesale Corporation | 92,817 | Ron Vachris: You know, I guess, Chuck, what I will say about that is that Costco, we will always take care of our employees as we always have done. That means that we're gonna focus on a fair and a timely process for getting to an agreement with the Teamsters. You know, we have a forty-year track record of dealing fairly with the Teamsters union, and really nothing has changed about that. So these are Costco employees. They're of great importance to us. And we're gonna do everything we can to take care of those employees as we do all of our employees.
Chuck Sarankowski: Great. Thank you.
Operator: And your next question comes from the line of Corey Tarlow with Jefferies. Your line is open.
Corey Tarlow: Hi. Good afternoon. Thanks for taking my question. I was wondering if you could talk a little bit about the international performance that you saw decelerated on a multiyear stack versus Q4. So just curious by region if there's anything to call out that changed versus prior quarters. Thank you.
Gary Millerchip: Yeah. Thanks for the question, Corey. I don't think there's anything we'd be particularly calling out. I mean, there's certainly some nuances sometimes between some of the international markets of when certain holidays fall and they would have had. I'll give you an example, which I wasn't familiar with before joining the company and having recent conversations. But in Taiwan, there's a big impact from the holiday season in the same way there is here around Black Friday. And so there are nuances like that that we see in individual markets that sometimes can affect the calendar. But overall, we've been pleased with the momentum that we've seen in the international businesses, and we continue to see strong growth relative to both our own internal expectations and then also as we look at the growth in those markets, how we continue to grow our share. So nothing I would call out as being unusual there. |
1,705 | COST | 1 | 2,025 | 2024-12-12 17:00:00 | Costco Wholesale Corporation | 92,817 | Operator: Thank you. And we have time for one more question. Your final question comes from Laura Champine with Loop Capital. Your line is open.
Laura Champine: Thanks for taking my question. It the follow-up on your digital business, which obviously is growing well, but how would senior management diagnose or grade your online presence from a look, feel, and function perspective relative to your competition? And related to that, this growth in members who are joining online, is that something you're driving, or is that just an output of the attractiveness of your online offer?
Gary Millerchip: Yeah. Thanks for the question. You know, I think again, I'll say we're probably our own toughest critic. I think when we look at our business overall, and we look at the growth over the last ten years, we've actually grown at a faster pace than the e-commerce sort of business in the US has grown in general. So in one respect, we're very pleased with the momentum and the growth that we've seen and continuing to see that higher engagement. But we're never satisfied. We believe there's more work we can do to keep improving the member experience. We made recent changes with things like search functionality and making inventory available through the mobile app, and those changes are certainly members are seeing the benefit of that and commenting positively on the changes that we're seeing. But we know that we're on a technology journey. We've sort of been building the foundations of that journey over the last few years, and the goal is to keep getting better and to keep enhancing the member experience. So I'd say we still believe there's more work to do, and we believe by doing that work, we can continue growing our digital business even more effectively. |
1,706 | COST | 1 | 2,025 | 2024-12-12 17:00:00 | Costco Wholesale Corporation | 92,817 | Ron Vachris: And I would add to that. We realize that we do have some opportunity. We definitely see that we can continue to improve. Gary is exactly right. We're doing the back of the end, back of the house work at this point. Speed, stability, making sure that all the foundational work is done so we can build on that. And then I think in short order, people will start seeing the front side of things that will come in. But I think Costco Logistics is a great example of the progress we've made. We are now able to pre-deploy things around the US and have deliveries made in four days which a couple of years ago would have taken us two weeks. We're seeing the distribution centers coming online. Starting to see the app usage go way up. Functionality is being added to that as well. So it's a journey. We're gonna start seeing some more forward-facing improvements in the next twelve months as we sort of start putting our logistics sides behind us, and we get those things taken care of as far as the e-commerce engagement with membership sign-ups, probably the biggest difference is that we have less executive members sign up online which do renew at a higher basis. And so and I think that big part the big part of that is that they don't have an employee to talk to when they're making that transaction. And don't understand all the benefits of the executive membership. So we're able to capture those later on. And but that's the first thing we see there is that at least we start engaging with them as a member, and then we will work on showing them the benefits of the executive membership down the road.
Laura Champine: Got it. Thank you.
Operator: And ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. You may now disconnect. |
1,707 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Operator: Welcome to Salesforce's Fiscal 2024 Fourth Quarter and Full Year Results Conference Call. Please note, today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker, Mike Spencer, Executive Vice President of Finance and Strategy and Investor Relations. Sir, you may begin.
Michael Spencer: Thank you. Good afternoon. Thanks for joining us today on our fiscal 2024 fourth 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 Benioff, Chair and CEO; Amy Weaver, President and Chief Financial Officer; and Brian Millham, President and Chief Operating Officer. As a reminder, our commentary today will include and -- 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. 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 could differ materially from these forward-looking statements. A description of these risks, uncertainties and assumptions, and other factors that could affect our financial results 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. And with that, let me hand the call over to Marc. |
1,708 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: All right. Hey. Thanks so much, Mike. And hey, thanks everyone for being on the call. Look, as you can see from these numbers, we've had just an incredible quarter, well, actually we've just had an incredible year here at Salesforce with strong performance across all of our key metrics, revenue, margin, EPS, cash flow and of course our CRPO. Look, it's been an extraordinary year of transformation for Salesforce, you'll know that you've all been there with us. You've been the support that we have needed during this year. Thank you to all of our shareholders, and thank you to all of our stakeholders. It’s been a year of incredible transformation for our industry with the emergence of this next generation of artificial intelligence as well. It's been really two unbelievable things happening at once. The total transformation of Salesforce and the total transformation of our industry. All right. Let's start with the transformation of Salesforce, okay? Look it was over a year ago, we said, Salesforce had to transform and you, many of you came to me, came to our whole team and you said, look, we're going to transform the whole company. We did it together. We could not have done it without you. We said we will restructure our business for the short and long term, we did that. We said we would place a laser focus on increasing productivity and operational excellence from across the board, we've done that. We said we were going to double down on innovation to make our core products even better, we've done that. And when you see what's coming in Trailhead DX next week, you're not going to believe it. Not just our next generation artificial intelligence, not just -- that was not just our prompt builder, not just our copilot, but this data cloud which I'm going to get to in a second are fastest, most exciting new product ever, fastest growing, most customer traction that I have ever seen. That has been incredible. So let's talk about all of this and let's talk also about how we have also strengthened our |
1,709 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | seen. That has been incredible. So let's talk about all of this and let's talk also about how we have also strengthened our relationships with our investors. Thank you, Mike, for everything you've done. And Amy, together with the management team, with our Board, we've really focused on you, the investor community. We've accomplished all of that together. We've completely transformed this company together and we're very grateful to each and every one of you. And that transformation, well, it has driven incredible results. You're seeing productivity is up, profitability is up, margins up, revenues up and you're going to see it again in our results for our quarter. You're going to be looking at these full year numbers with phenomenal cash flow, with incredible margin growth, well, margin growth that I've never seen in any software company over the last 12 months -- 18 months. It's completely unprecedented. And you can see the incredible speed and success of the transformation that we've undertaken. Now we believe that Salesforce not only needs to be a great software company for our customers, our employees, our communities, but also a great company for our shareholders as well. We've certainly seen that with the exceptional performance of our equity over the last few months. Now I'm thrilled that we're opening the door to another incredible part of our ongoing transformation today with the introduction of our first ever dividend. And that's amazing to say that word for the first time in 25 years in Salesforce history, our first ever dividend, which you're going to hear more about from Amy in a moment. And if this year has shown anything, if it's shown anything at all, it really shows that we've committed to serving all of our stakeholders. We closed out fiscal year '24 with $9.29 billion in revenue for the fourth quarter. That's up 11% year-over-year, 10% in constant currency. Pretty awesome at our size and scale, incredible. Eight of our top 10 deals in the quarter included six or more of our clouds, really |
1,710 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | awesome at our size and scale, incredible. Eight of our top 10 deals in the quarter included six or more of our clouds, really showing the depth and breadth of our product line and our portfolio. And all of our top 10 wins included sales, service and platform, and we're really focused on delivering that full cocktail of all of our clouds to all of our customers. And our deals greater than $10 million, well, they grew nearly 80% year-over-year in fiscal year '24. That was also amazing. Our customers just get so much more value and they can do so much more when they take the full advantage of our Einstein 1 platform. And I want to explain that to you because we have such a rich set of applications that when we're working with all of these employees through the whole company, and also the customers as well, we're filling our platform with the data and the metadata that our customers need to be successful. And there is no other time in the history of our industry that that rich data and metadata together in one place is so important, because that is what you're going to need to drive this artificial intelligence. And you're going to see that next week at Trailhead DX as we show you our copilot for our first time and prompt builder for the first time, and data cloud for the first time, and how it works together so that you can get the insights that you need. Now, this is all possible because we're delivering this Einstein 1 platform. But before I get to that, I just want to make this one last point. For the full year, we delivered $34.9 billion in revenue, up 11% year-over-year, one of the best performances of any enterprise software companies ever. With our continued disciplined approach to margin expansion, non-GAAP operating margin for fiscal '24 was also 30.5%, up 800 basis points year-over-year. We closed fiscal year '24 with operating cash flow reaching $10.2 billion, operating cash flow up 44% year-over-year. Major goal for the company this year, well risked, well done, highest cash flow in our company's |
1,711 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | flow up 44% year-over-year. Major goal for the company this year, well risked, well done, highest cash flow in our company's history. CRPO, our current remaining performance obligation was $27.6 billion, up 12% and 13% in constant currency year-over-year, fantastic display on CRPO. And total remaining performance obligation ended the fourth quarter at $56.9 billion, an increase of 17% year-over-year. Now let me just say this again, $57 billion in RPO amazing. For fiscal year '25, we expect free cash flow to grow between 23% to 26% for fiscal year '25, that is for fiscal year '25 we expect free cash flow to grow between 23% to 26%. And we're guiding revenue to $38 billion at the high end of our range 9% year-over-year, expecting to deliver fiscal year '25 in subscription and support revenue growth of above 10% year-over-year. In constant currency, we're going to get to that detail in a second. We're committed to delivering non-GAAP operating margin of 32.5%. All told, an unbelievable year, a transformation. From the financial metrics, we're going to get to the technology now. And before I move on, let me just say I've never seen anything like it over the last 25 years as CEO of Salesforce. The pace of change, the focus on productivity, profitability, the speed of innovation, the quality of the management team, people coming back to help us get it done, our boomerangs, our Ohana, thank you to everyone who's made this possible. Just look at where we are now. Salesforce is the world's number one AI CRM. Number one in sales, number one in service, number one in marketing, number one in data cloud. Incredible. And since the start of the pandemic in 2020, we've doubled the size of the company. That's amazing. We doubled the size of the company in scale since the pandemic started, which was about four years ago. That's incredible at our scale. We're the largest enterprise applications company in the world. We passed SAP. That was amazing. That was a huge accomplishment this year. But now we're the third largest |
1,712 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | in the world. We passed SAP. That was amazing. That was a huge accomplishment this year. But now we're the third largest enterprise software company in the world and the second largest in Japan. And to all of my Japan, Ohana, [indiscernible] for what you have done with the Japanese market is incredible. We're not stopping. Our management team and our extraordinary employees are focused every day to make our business as strong as it can be. Personally, I've never been more excited about the future of Salesforce. You're about to hear why. It's not just the incredible financial results, not just the unrivaled success of our customers, but it is the incredible door that has opened through artificial intelligence once again and the evolution of our entire technology platform. It's what our engineering and product teams have done in the last 12 months is nothing short of amazing. I am so grateful to their leadership and to David and Srini and to all of your employees. Thank you for what you have done for Salesforce. Your leadership, your vision, your insights, your creativity in rebuilding the platform so quickly, and data cloud for artificial intelligence, for Steve, what you have done for Jujhar, for my whole team, it's incredible. As I said, it's not only a remarkable year of transformation for Salesforce, it's been an amazing year of transformation for entire industry. As I talk to CEOs around the world, they tell me they want three things. You may have heard me say this already, but I'll say it again. One, they want more productivity and they're going to get that productivity through the fundamental augmentation of their employees through artificial intelligence. It's happening and it's empirical. Number two is they want higher value customer relationships, which is also going to happen through this AI and they want higher margins, which we are seeing empirically as well when they use this artificial intelligence and these next generation products. As we look at productivity, as we look at higher value customer |
1,713 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | artificial intelligence and these next generation products. As we look at productivity, as we look at higher value customer relationships, as we look at higher margins, how do our customers get these things? How are they achieving these goals? It is AI. It is why every CEO and company knows they need to make major investments in AI right now. And I believe this is the single most important moment in the history of the technology industry. It's giving companies an unprecedented level of intelligence that will allow them to connect with their customers in a whole new way. And with our Einstein 1 platform, we're helping out our customers transform for the AI future. Now, many of our customers have been inspired by OpenAI's GPT-4 I have, and cohere I have, and anthropic I have, and inflection I have. And also all the amazing models on hugging face and other AI models. All these things, amazing. And everyone has been wowed by what these AIs can do incredible things and a lot of party tricks, a lot of magical things. And then we also realize there's some other things too. Let's talk about the truth. The truth is that these AI models are all trained on amalgamated public data. You all understand that. You've all seen the New York Times lawsuit of OpenAI or others who are really going to tasks saying, this is all this amalgamated stolen public data, but all these publication (ph) used without permission and unlicensed, but amalgamated into these single consolidated data stores. Now, some of my people even say this is just stolen data, but all this public data has been amalgamated into what they call training sets. And these training sets then get turned into what we call inference, which is how the AI then is able to start to deliver its insights, but there's other things that it's providing besides insights. These AI models, well, they could be considered very confident liars, producing misinformation, hallucinations. Hallucinations are not a feature, okay? And I'm going to get to that point in a second, and I think |
1,714 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | hallucinations. Hallucinations are not a feature, okay? And I'm going to get to that point in a second, and I think you all understand it that already because at this point, we all have a high level of experience with AI, don't we? Everyone has had that experience. And there's a danger though, for companies, for enterprises, for our customers, that these are not trusted solutions. And let me point out why that is, especially for companies who are in regulated markets, why this is a big, big deal. These models don't know anything about the company's customer relationships, and in some cases are just making it up. Enterprises need to have the same capabilities that are captivating consumers those amazing things, but they need to have it with trust and they need to have it with security, and it's not easy. Look, we all read the story. Now, it just happened last week. An airline chat-bot. An airline chat Bot prompts by a passenger to book a flight with a 90 day refund window. It turns out the chat bot running on one of these big models, we won't have to use any brand names here. We all know who it was hallucinated the option, it did not exist. We all know what that's like. We've all had the experience. So here's the chat-bot, it hallucinates the option, it's working with the customers, it didn't exist. It did not exist. The airline said, oh, listen, that was just the chat-bot, it gets that way sometime. We're so sorry. You know what? That's just a separate technical entity, a separate legal entity, and the airline, we're not going to be hold liability for that. Well, guess what? That defense did not work in a court of law. The court of law said that that AI chatbot, that made up that incredible new policy for that company, well, that company was going to be held responsible, liable for that policy, that they were going to be held liable for the work of that chatbot, just as they would for a human employee. They were being held liable for a digital employee. The reality for every enterprise is that to deliver trusted |
1,715 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | human employee. They were being held liable for a digital employee. The reality for every enterprise is that to deliver trusted AI experiences, you need these three essential components now. You need that compelling user interface. There's no question a natural and effortless experience. And at Salesforce, we have some of the most intuitive user interfaces that deliver insights and intelligence across sales and service and marketing and commerce and industries, many of you are on Slack right now, many of you are on Tableau, many of you are on Mulesoft or one of our other products. Okay. And what else do you need? Number two, you need a world-class AI model. And now we know there's many, many models available. Just go to Hugging Face, which is a company that we're investor in, or look at all the other models. And by the way, not only are there thousands of models right now, but there are tens of thousands, hundreds of thousands of models coming. And all the models that are available today will be obsolete 12 months from now. So we have to have an open, extensible and trusted framework inside Salesforce to be receptacles for these models. That's why Einstein 1 is so important. Then you have to be able to use these AI models, the ones that Salesforce is developing or these public models on Hugging Face or other things or even bring your own model. Customers are even making their own models. Fantastic. Of course, we have great partnerships with OpenAI, with Anthropic, with Cohere, with many other AI models. This is the second key component. One is the UI, the second is the model. All right. Now for those of you who put like for example, Copilot on our phone, any one of the Copilots on the App Store, we have a compelling UI and we know underneath there, there is a compelling model. But third, we also know there's a huge data set there. But here we go. Now we're in the enterprise. In the enterprise, you need deep integration of data and metadata for the AI to understand and deliver the critical insights and |
1,716 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | the enterprise, you need deep integration of data and metadata for the AI to understand and deliver the critical insights and intelligence that customers need across their business, across sales, service, marketing, commerce, whatever it is, that deep integration of the data and metadata, that's not so easy. That's not just some amalgamated stolen public data set in the enterprise, that deep integration of data and metadata, oh, that's what Salesforce does. We are a deep integration of data and metadata. That is why it's very, very exciting. Yeah, I like to say, and I love NVIDIA, by the way. And what Jensen has done is amazing. And they are delivering very much in the era of the gold rush, the Levis jeans to the gold miners. But we all know where the gold is, the data. The gold is the data. And that's why we're so excited about Salesforce because we are one of the very largest repositories of enterprise data and metadata in the world for our customers. And customers are just starting to realize this right now and they try to stitch together a variety of AI tools and Copilots, and this and that, and whatever. I've had so many funny conversations with so many customers who come to me that they're experts in AI and they're this, and then I just say to them, but how are you going to deliver this experience? And then finally realize, oh, I need the deep integration with the data and the metadata. The reason why the metadata is so important is because it describes the data. That's why so many companies are turning to Salesforce for their AI transformation. Only Salesforce offers these critical layers of AI for our customers. The UI, the model and the deep integration of the data and the metadata and make the AI smart and intelligent and insightful and without the hallucinations and without all these -- all the other problems. For more than two decades, we've been trusted with our customers' data and metadata and we have a lot of it and a lot of you are our customers, so you'll understand what I'm saying. But many of |
1,717 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | data and metadata and we have a lot of it and a lot of you are our customers, so you'll understand what I'm saying. But many of our customers also have islands and thousands of systems of trap data. Now what I'm going to say is very simple. Trap data is all over the enterprise. Now what trap data can be is you might be using a great company like Snowflake, and I love Snowflake or Databricks or Microsoft or you might be using Amazon system or even something like Google. What these things -- BigQuery, all these various databases. But put your hand up if you're using Snowflake every day. Put your hand up if you're using one of these other systems. Put your hand up if you're using Salesforce sales cloud, service cloud, Tableau, Slack. We need to be able to, through our zero copy, automatically integrate into our Data Cloud, all of those systems and then seamlessly provide that data back into these amazing tools. And that is what we are doing because so many of our customers have islands of trapped data in all of these systems. But this AI is not going to work because it needs to have this seamless amalgamated data experience of data and metadata. And that's why our Data Cloud is like a rocket ship. The entire AI revolution is built on this foundation of data and it's why we're so excited about this incredible Data cloud. It's now deeply integrated into all of our apps, into our entire platform. It's self-service for all of our customers to turn on. It is our fastest-growing product ever. It's our total focus for fiscal year '25 with Salesforce Data Cloud. Salesforce can unlock this trap data and bring together all of their business and customer data into one place for AI all while keeping their data safe and secure and it's all running inside our Einstein Trust Layer and we've deployed it to all of our customers. We unleashed now the Copilot as well to all of our customers deeply built on our pilot, on our data and metadata. And while other copilots just sit and spin because they can't figure out what the data means |
1,718 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | pilot, on our data and metadata. And while other copilots just sit and spin because they can't figure out what the data means and if you haven't seen the demonstrations, you just see these Copilots spin. But when they use Salesforce, it all of a sudden becomes intelligent. And that is the core of the Einstein 1 platform. It's all of our apps, all of our AI capabilities, all of the customer data in one deeply integrated trusted metadata platform. And that's why we're seeing incredible demand for Data Cloud. Data Cloud brings it all together and we are so blessed to have Data Cloud in our company. And it's also why in Q4 25% of our deals already over $1 million have included Data Cloud. And we've recently added over 1,000 new customers to Data Cloud. We've never seen traction like this of a new product because you can just easily turn on the Data Cloud and it adds huge value to Sales Cloud, it adds huge value to Service Cloud, to Marketing Cloud, to the CDP. You've all seen the Gartner Magic quadrant that got published last week about the Data Cloud. Or if you haven't go to my Twitter feed and you'll see how amazing that MQ is. And it's the fastest-growing organic product in the history of Salesforce. This last quarter, more than 7 trillion records, 7 trillion records were ingested into Data Cloud, unbelievable. 7 trillion records ingested in Data Cloud with over 1 trillion activations driving customer engagement, lighting up all of those sales service marketing cloud users, all the platform, Tableau, it's all integrated into Data Cloud. And because Data Cloud and all of Einstein 1 is built on our metadata framework, as I just described, every customer app can securely access and understand the data and use any model, use any UI workflow, integrate with the platform. That means less complexity, more flexibility, faster innovation. But also we want to say goodbye to these hallucinations. We want to say goodbye to all of these crazy experiences that you're having with these bots that don't know what they're doing |
1,719 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | We want to say goodbye to all of these crazy experiences that you're having with these bots that don't know what they're doing because they have no data or metadata, okay? Or the data that they have metadata is like productivity data, or like the highest level data that's not deeply integrated data. So only Salesforce can do this. Only Salesforce has this vision of this kind of platform and only has -- we've been working on this for 25 years and we are not done. We are just starting because let me tell you now a story of how we're delivering a high-quality trusted AI for our customers. We all know the HR and payroll leader ADP and their incredible new CEO, Maria Black, amazing. ADP has been a great Sales Cloud customer for two decades. They've used Einstein for years. They were one of the first customers we ever have. We're so grateful to ADP, amazing. And work with so many of their great CEOs over the decades. And the company wanted to transform now customer service with AI to give their agents real time insights next best actions, auto generated case summaries, well, I have to say to you, it was a little bit embarrassing, Salesforce was not number one on their list. And I said to them, how can that be? We're the number one Service Cloud. We're number one in the MQ, we're number one in this. We're number one merchant. No, we're going to go evaluate this. We're going to look at all the different solutions. We're going to look at all the new AI models. We think we're just going to hook this model up to this and we're going to do that. And it sounded like a big Rube Goldberg invention. What was going to happen there? And so we had to go in and we just wanted to partner with them and say, all right, show us what you want to do. We're going to work with you. We're going to be trusted partners, let's go. But like a lot of our customers moving to AI, ADP realized it didn't have a comprehensive deeply integrated platform of data and metadata that could bring together all of this into a single source of truth. And then |
1,720 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | deeply integrated platform of data and metadata that could bring together all of this into a single source of truth. And then you get the incredible customer service, then you get the results that you're looking for. And it's deeply integrated with their sales systems, with marketing and custom applications. And ADP discovered only Salesforce can do this. We were able to show ADP how we could unlock trap data with Data Cloud, zero copy, drive intelligence, productivity, efficiency for their sales team with Einstein to levels unimagined just a year ago. We're now incredibly excited to work with all of our customers to take their AI to the next level with Einstein Copilot, which is going live tomorrow. Einstein Copilot, which if you haven't seen it, and if you haven't, please come to Trailhead DX next week. This is the first conversational AI assistant for the enterprise that's truly trusted. It's amazing. It can answer questions. It can summarize. It can create new content, dynamically automate tasks behalf of the user from this single consistent user experience embedded directly within our platform. But let me tell you the one thing that it can do that's more important than all of that. It is able to read across all the data and metadata in our platform to get that insight instantly. And you're going to see that. So the sales rep might ask the Einstein Copilot what lead I should focus on or what is the most important thing I need to do with this opportunity? And it may say, you need to resolve this customer's -- customer case because this escalation has been around for a week. Or you better go and answer that lead that came in on the marketing cloud before if you want to move this opportunity forward. Because it's reading across the entire data set, that is something that individual users cannot do but the copilot can do with access to customer data and the metadata in Salesforce, including all this real time data and website engagement and the ability to read through the data set. That's why Einstein Copilot |
1,721 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | all this real time data and website engagement and the ability to read through the data set. That's why Einstein Copilot has all the context to understand the question and surface believe that has the highest value and likelihood to convert. And it can also instantly generate the action plan with the best steps to close the deal, such as suggesting optimal meeting times on the lead contacts, known preferences, even drafting the email. If you haven't seen the video that I put on my Twitter feed last night, there's a five minute video that goes through all of these incredible things that it's able to do. There's never been an enterprise AI capability quite like it. It's amazing. All of us can understand the tasks that the Copilot is performing. And I bet a lot of people, even on this call, that a lot of other companies might say they can do this. But I assure you, without the deep integration of the data and the metadata across the entire platform, with the Copilot's deep integration of that data, they cannot do it. They cannot do it. I assure you they cannot because they don't have the data and the metadata, which is so critical to making an AI assistant so successful. And I encourage you to try the demos yourself to put our Copilot up against any other copilot. Because I'll tell you that I've seen enterprise Copilots from these other companies in actions and they just spin and spin and spin. And some have a different copilot for every app, some with different capabilities, restrictions grounding this Wizzywig builders on whatever. It's very cute. Very nice. Exciting. It's really cool for the first minute and then you realize, wait a minute, what data is available in this Copilot? Only a conversational UI can start to understand all these things if it has this access. Only after a conversational UI for canned queries or don't understand the customers to customize the Copilot, those are -- none of these things are going to work. I've used those Copilots from the competitors. I have not seen them work yet. Okay, |
1,722 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | -- none of these things are going to work. I've used those Copilots from the competitors. I have not seen them work yet. Okay, the thinking icon, the spinning, it goes on and on and on and on. Einstein Copilot, you're going to see. You're going to have your hands on it. Now it's been released into the wild to our customers, to all of you, this is fundamentally different kind of AI. Just like Einstein was a different AI, which became the democratization of AI, which is why Einstein does a trillion transactions a week. Einstein's the only Copilot with the ability to truly understand what's going on with your customer relationships. It's one conversational AI assistant deeply connected to trusted customer data and metadata. It's one integrated system for all of our customers across any role or industry. And it's why we call it Einstein 1. It's one platform, one integrated system. That is what you need to get AI to work. Next week, at our Trailhead DX conference in San Francisco, I hope you're all coming, it's going to be amazing. On March 6 and 7, you're going to see how we're bringing even more AI innovation to our customers. So be prepared to be amazed by Einstein Copilot builder, prompt builder, model builder, and so much more that we're doing to help our customers, make every employee more productive and transform every customer experience. And I hope you're going to join us in person or you can join us online at Salesforce Plus. And with closing, I just want to thank all of you once again for everything that you've done for us for the last year. We're so grateful to each and every one of you and to our entire management team, all our Ohana and all of our customers as well. We're so grateful as we look forward now to our 25th anniversary in March 8, I've never been more excited. You can hear why? Not just the fundamental transformation of the company, but also the fundamental transformation of the product line and the product vision as we move into this incredible new, intelligent world that we're all seeing |
1,723 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | of the product line and the product vision as we move into this incredible new, intelligent world that we're all seeing with AI. So thank you. I'm now turning over to Brian, who was employee number 13, our Chief Operating Officer. He's done a phenomenal job this year. Without him and without Amy, without our whole management team, it would not be possible. I just want to thank again everyone who's been a huge part of everything. And I'll turn it over to you. Brian, here we go. |
1,724 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Brian Millham: Well, thank you Marc. I really appreciate it. I couldn't be more proud to be part of Salesforce the past 25 years, especially this past year as we took on a pivotal business transformation while delivering incredible innovation for our customers and returns for our shareholders. Our continued focus on operational excellence, high performance and new growth initiatives helped deliver strong results in the fiscal year and remains our focus going forward. At FY ‘24, we've laid the foundation for success through strategic restructuring, streamlining our go-to-market approach, deeper inspection and continued operational excellence. As part of our transformation, we also refined and scaled our big deal motion and introduced new product bundles to give our customers comprehensive solutions on a unified, trusted platform. And we're unlocking customer spend with new channels like AWS Marketplace and driving sea level relevance through strategic collaboration with McKinsey. The adjustments we made are paying off. As Marc mentioned, our deals greater than $10 million in FY ‘24 grew substantially 78% year-over-year and we closed 86,000 multi-cloud deals. Our pricing and packaging strategy is driving higher sales and delivering more value for companies of all sizes in the industries. Since launching in April, we've added 3,000 new logos through self-service with Salesforce starter, a solution for our small businesses that include sales, service and marketing. With AI and Data Cloud built in. We're excited by the momentum we're seeing in UE plus bundle, which is now called Einstein 1 edition. It's providing substantial returns for our customers and for Salesforce. In fact, we continue to see significant average sales price uplift from existing customers who upgrade to Einstein 1 edition. It's also attracting new customers to Salesforce. 15% of the companies that purchased our Einstein 1 edition and FY 24 were net new logos. As you heard from Mark, with our Einstein one platform including Data Cloud and Einstein |
1,725 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | edition and FY 24 were net new logos. As you heard from Mark, with our Einstein one platform including Data Cloud and Einstein Copilot, we're rapidly infusing conversational AI across our entire product portfolio. Einstein is a huge differentiator for us as the industry transforms -- excuse me, in this AI revolution. It's the fastest and safest way to unlock an organization's data to create better customer experiences, augment employees with AI, and drive productivity and improve margins and profitability. Every AI strategy starts with data. As Marc said, Data Cloud has strong momentum. Data Cloud is approaching $400 million in ARR, growing at nearly 90% year-over-year. And in Q4, 25% of our deals greater than $1 million, included Data Cloud. Customers like Xerox and London Stock Exchange and Dyken turned to Data Cloud in Q4 to build their trusted data foundations and unlock their trap data within Salesforce. And we're excited about our future, we just were named, as Mark mentioned, the leader in the inaugural February 2024 Gartner Magic Quadrant for customer data platforms. I met with dozen a CEOs and business leaders over the past few months, and they're all focused on fueling growth and strengthening customer relationships within their current budgets and workforce, and they see AI as the tool to augment their people and drive more productivity. Companies like ADP and Intel, McLaren and Sonos are investing in Einstein 1 to become AI first organizations. In FY24, we closed 1,300 Einstein deals as more customers are leveraging our generative and predictive AI capabilities. Take Schneider and Electric. They wanted to standardize and simplify customer care across their 3000 support agents speaking 15 different languages around the world instead of talking to customers, service agents were spending way too much time searching for answers across different systems and summarizing cases. Dealing with 7 million cases per year leads to time-consuming interactions for their support agents. Now, Einstein will |
1,726 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | cases. Dealing with 7 million cases per year leads to time-consuming interactions for their support agents. Now, Einstein will automatically create email replies that agents can use to respond and summarize their cases with the power of Einstein lunch Center electric support teams are already seeing a 15% increase in case efficiencies. And it's not just their service agents, their sales teams are also seeing incredible benefits from our AI capabilities. We're just at the beginning of a new innovation cycle that will spark a massive software buying cycle over the coming years, and Salesforce is leading the way. We continue to see strong demand for our data products as customers lay the foundation for AI. Specifically, Mulesoft is helping companies such as Rosignal and TK Elevator in North America bring together their data from any source, a critical step to prepare for AI. Mulesoft was in eight of our top ten deals in the quarter and executed a record 319 billion workflows, automated workflows every month, up 100% year over-year. Tableau was in 20 of our top 25 deals in the quarter and is fully integrated to Data Cloud. Wins in the quarter include customers like IHG, Heathrow Airport and Brazilian fintech stone. Tableau Pulse, a phenomenal new product that's just been released, generally available last week, actually already has 2,000 customers. Powered by Data Cloud and Einstein, Tableau Pulse automatically delivers personalized AI powered insights in both a natural language and visual format. We're also excited about the innovation coming from Slack, which was included in nearly half of our top 50 deals in the quarter. We just launched Slack AI with features like AI search channel recaps and thread summaries to meet the enormous demand for embedded AI in the flow of work from customers like Australian Post and OpenAI. It's amazing to see what Slack has accomplished in a decade and frankly it's just the beginning. We have a great vision for the future of Slack as a conversational interface for any application. |
1,727 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | it's just the beginning. We have a great vision for the future of Slack as a conversational interface for any application. Our specialized industry products continue to fuel our growth, chosen in the quarter by customers like Japan Post Insurance, TPG Telecom and USDA. Collectively, our industry businesses finished the year at $4.8 billion ARR, up more than 20% year-over-year. We saw strong growth internationally with wins at Volvo and Genpac, Hitachi and Bochikario. India continues to be a bright spot for us, growing new business at 35% year-over year and we continue to invest in the region to meet the needs of customers including Bajaj finance. I had the great opportunity to meet with their CEO Rajiv Jane in January and a top priority for him was using Einstein to deliver predictive and generative AI across their entire lending business which they run on Salesforce. In Q4, Bajaj became the second largest Data Cloud customer globally, building their AI foundation on the Einstein 1 platform. I want to close by acknowledging that our success is only possible because our phenomenal employees, incredible partners, trailblazers, shareholders and amazing customers who have trusted us for 25 years. As we proved in FY 24, when we focus on something as a company we deliver results. And FY25 that focus is on profitable growth. And with that, I'll turn it over to you Amy |
1,728 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Amy Weaver: Great. Thanks, Brian. Let me join Marc and Brian on saying what a year it has been for Salesforce. At this time last year we laid out our accelerated transformation plan and I am incredibly proud of the significant progress we made this year against that plan. Throughout fiscal 2024 we delivered, we've on increasing profitability, revenue, productivity and operational excellence. Q4 represents another quarter of strong execution and continued discipline across the business. Now let's turn to the results. For the fourth quarter, revenue was 9.3 billion, up 11% year-over-year and 10% in constant currency. The growth was primarily driven by resilient sales and service performance as well as strength in Yolsoft and Tableau. And for the full year revenue was 34.9 billion, up 11% year-over-year in both nominal and constant currency. From a geographic perspective, in Q4, the Americas revenue grew 9%, EMEA grew 14% or 11% in constant currency, and APAC grew 14% or 19% in constant currency. We saw strong new business growth in LatAm, India and Canada, while parts of EMEA remained constrained. From an industry perspective, in Q4, public sector and travel transportation and hospitality both performed well, while retail and consumer goods and high tech were generally more measured. Our multicloud momentum also continued. In Q4, eight of our top 10 deals included six or more clouds, and more than half of our top 100 wins included six or more clouds. As you've already heard, AI starts with data and we are seeing strong momentum in Data Cloud. In Q4, more than half of our top 25 wins included Data Cloud. Q4 revenue attrition ended the quarter at slightly above 8%, generally in line with recent quarters. In Q4, our non-GAAP operating margin was 31.4%, up 220 basis points year-over-year. And for the full year, in line with our guidance, we delivered non-GAAP operating margin of 30.5%, up 800 basis points year-over-year and GAAP operating margin ended the year at 14.4%, up 1110 basis points year-over-year. Q4 |
1,729 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | up 800 basis points year-over-year and GAAP operating margin ended the year at 14.4%, up 1110 basis points year-over-year. Q4 operating cash flow was $3.4 billion, up 22% year-over-year. Q4 free cash flow was $3.3 billion, up 27% year-over-year. And for the full year, operating cash flow was a record $10.2 billion, up 44% year-over-year. Full year free cash flow was $9.5 billion, up 50% year-over-year. Now turning to remaining performance obligation, RPO, which represents all future revenue under contract, ended Q4 at an incredible $56 billion, up 17% year-over-year. Current remaining performance obligation, or CRPO, ended at $27.6 billion, up 12% year-over-year and 13% in constant currency, particularly driven by strong execution on early renewals. We also benefited from new business performance and timing of license revenue from Mulesoft and Tableau. As expected, this was partially offset by a 1 point headwind from professional services, which we had noted last quarter. Now let's turn to guidance. Starting with full fiscal year '25. On revenue, we expect $37.7 billion to $38 billion, growth of 8% to 9% year-over-year. A few items to note on our revenue guide. Our expectations incorporate a $100 million FX headwind year-over-year or a 30 basis points impact. We also expect our professional services business to remain under pressure in FY25 and expect it will be a headwind to revenue. Within our revenue guidance, subscription and support revenue growth is expected to be slightly above 10% year-over-year in constant currency. Now, as a reminder, our top line expectations include the impact from the measured buying environment that began back in fiscal year '23. This takes time to flow through our subscription revenue stream due to the like effect of bookings to revenue recognition. That said, we continue to execute well in the measured buying environment. Over the past two quarters, I'm happy to say that we've seen improved bookings growth. And as you heard from Marc, we're incredibly well-positioned to build on |
1,730 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | happy to say that we've seen improved bookings growth. And as you heard from Marc, we're incredibly well-positioned to build on our success and bring our customers into this new AI era. Now, turning to attrition. Starting in fiscal '25, we are including Slack invoice in the metric. Despite expecting a modest headwind, we expect attrition to remain consistent at slightly above 8%. On margins, we continue to drive operational excellence, productivity and efficiency. And for fiscal year '25, we expect a non-GAAP operating margin of 32.5% representing a 200 basis point improvement year-over-year, while still making key investments in growth opportunities, notably AI, data and our core businesses. Stock-based compensation is expected to be below 8% as a percent of revenue as we continue to take a disciplined approach to our equity-based programs. As a result, for the fiscal year '25, I am pleased that our GAAP operating margin guidance for the first time is expected to surpass 20% at 20.4%, representing a 600 basis point improvement year-over-year. We expect fiscal year '25 GAAP diluted EPS $6.07 to $6.15. Non-GAAP diluted EPS is expected to be $9.68 to $9.76. As a result of our focus on profitable growth and continued transformation, we are seeing a market improvement in our cash flow outcomes. We expect fiscal year '25 operating cash flow growth of approximately 21% to 24%, which includes a 10 point year-over-year headwind from cash taxes. CapEx for the fiscal year is expected to be slightly below 2% of revenue. This results in free cash flow growth of approximately 23% to 26% for the fiscal year. Now to guidance for Q1. On revenue, we expect $9.12 billion to $9.17 billion, up 11% year-over-year in nominal and 12% in constant currency. This includes a tailwind from the timing of license revenue in Mulesoft and Tableau. Additionally, Q1 has a one point benefit from an extra day of revenue recognition given the leap year, which has no impact on our full year revenue or CRPO. CRPO growth for Q1 is expected to be 11% |
1,731 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | recognition given the leap year, which has no impact on our full year revenue or CRPO. CRPO growth for Q1 is expected to be 11% year-over-year in nominal and 12% in constant currency. For Q1, we expect GAAP EPS of $1.42 to $1.44 and non-GAAP EPS of $2.37 to $2.39. Now to capital return. We are deeply committed to driving free cash flow and return to our shareholders while investing in new organic growth initiatives. In Q4, we returned $1.7 billion in the form of share repurchases, bringing the total returns in FY24 to $7.7 billion, or more than 80% of fiscal year free cash flow, which more than fully offset dilution from our stock-based compensation. Since the inception of our repurchase program, we have now returned $11.7 billion to shareholders with an average purchase price of $182 per share. And I'm incredibly excited to announce our first ever dividend. We are enhancing our capital return strategy reflective of the confidence we have in the future of our business and our ability to drive long term cash flow. Our Board has approved the initiation of a quarterly dividend starting at $0.40, more details of this dividend are available in our press release. Additionally, the Board has approved a $10 billion increase to our share repurchase plan, bringing the total authorization to $30 billion. Based on our progress to date, the remaining balance in the program is approximately $18 billion. In closing, I want to echo Marc and Brian, and this has been an extraordinary year. I'm very proud of the progress we have made throughout the company. We are executing with discipline while also investing for our future. I want to personally thank our employees who have worked so hard this past year and thank our shareholders for their continued support over this past transformational year. Now, Mike, I think we better open up the call for questions. |
1,732 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Michael Spencer: Thanks, Amy. Brandon (ph), we're ready to take questions.
Operator: [Operator Instructions] Your first question comes from the line of Brent Thill with Jefferies. Please go ahead.
Brent Thill: Marc, last quarter you had said that you're starting to see some green shoots, and we're not ready to say you completely turned the corner. But I'm just curious if you could give everyone an update in terms of just what you're seeing from customer behavior and ultimately how you think that plays out through the year. Thank you. |
1,733 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: It's a great question. And I think Amy will go back and say it was really this kind of moment in the middle of fiscal year, whatever, it was '23, where we started to see this kind of weird behavior. And then I would say starting last quarter, like you said, we saw these green shoots, and now I would really say it was kind of a 180, that -- it's really that AI, every customer realizes, number one, they've got to start a major investment cycle if they're going to remain competitive. Every customer is trying to achieve more productivity. I think we all know what that means. We certainly do. We've had to achieve more productivity ourselves over the last year, and they -- that is really about, in many cases, augmenting your employees. A lot of you've heard my Gucci story, there's so many stories, there's going to be so many more stories where these tools all of a sudden will really start to deliver much more productivity, better customer relationships and higher margins. CEOs get that. I think that is driving the 180. Obviously, we're also in the third phase of the pandemic. The first phase, we all went through together, it was horrible. It was my first pandemic. I had never been through anything like it. And then all of a sudden we were in the post-pandemic where we were in this crazy interest rate and inflation burn. Now we're in the third phase post, post-pandemic. And in post, post-pandemic, things are just better. Not just because we're going through this technology surge, but because all this other stuff is behind us and we're in a new normal and people know, hey, we need to invest to grow. We need to invest in technology to grow. And that, I think, is really driving the 180 for our customers, for ourselves. I think for a lot of you, we can all see it in the equity markets that it's not the equity markets that we had in 2021. So we are in a new place and we are ready to deliver. You're going to have -- you could be the judge yourself. When we get to Trailhead DX, I hope that you're all going to -- |
1,734 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | You're going to have -- you could be the judge yourself. When we get to Trailhead DX, I hope that you're all going to -- most of you have my text and email, text and email me and tell me what you think. Because if you see anyone else being able to deliver on the promise of enterprise AI at the level of quality and scale and capability of Salesforce, I'll be very surprised. And this is driving through different geographies, through different product portfolios. Green shoots. Brian, I want you to come in here and talk about these green sheets. But really, the 180 that we're seeing. |
1,735 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Brian Millham: Yeah, I really appreciate it. And we are seeing tremendous demand for Data Cloud and for AI. I do think, Brent, that we are still operating in a measured environment and we are still having to ensure that we're doing the deep inspection and managing the business very tightly in the way that we have over the past six quarters, seven quarters in this environment. The green shoots around Data Cloud, around Mulesoft, regional performance that we've seen have been really outstanding in Canada and LatAm and Spain. I mentioned the India performance on the call. Our focus on industries is really paying big dividends. So we are seeing parts of our business really accelerate, but there certainly are some -- still some measured environments out there that we have to continue to take into account the way that we manage this business.
Marc Benioff: Amy, I think you should come in here and also talk about how you've seen the transformation of the business and the green shoots that you see happening or kind of the 180s that I’m talking about.
Amy Weaver: Sure. It's been an incredible couple of years. Yeah, Marc. As you mentioned, going back to really beginning of July in fiscal year '23, where we suddenly saw this measured buying environment, the elongated sales cycles, the additional approvals, the compressed deals. And over the last few years, what I've really seen is not so much a shift in the buying behavior, but a shift in our ability to execute in it. And I think we've seen that over the last couple of quarters in particular, that we are just executing much better in this. I do think that there is a lot of excitement to come on AI and data, and we'll see how that plays out this year.
Michael Spencer: Thanks, Brent. Brandon, we'll take the next question now.
Operator: Your next question comes from Keith Weiss with Morgan Stanley. Please go ahead. |
1,736 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Operator: Your next question comes from Keith Weiss with Morgan Stanley. Please go ahead.
Keith Weiss: Excellent. Thank you guys for taking the question. And congratulations on another really nice quarter. A question just on sort of buying cycles and sort of the timing for this AI goodness to kind of come into the numbers. And maybe it's a question for Brian. How should we think about how customers are ingesting this? Right, how are they purchasing the Einstein platform? Does it start with Data Cloud and then they move into more of the application functionality? And then importantly, how should investors think about when this could potentially impact numbers? And then when this will become material enough to see the inflection in kind of revenue growth? And then maybe one for Amy, another 200 basis points of operating margin expansion in the guide. Super impressive. Can you give us some indications of where that's coming from, where there are the additional areas of leverage that you're seeing in the business? |
1,737 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Brian Millham: First of all, Keith, thank you. I really appreciate the question. You kind of nailed it in your question. We're seeing our customers with tremendous desire to take advantage of AI capabilities to drive the efficiencies in their business, to drive higher margins and productivity. But it all starts with data. And so you saw some of the numbers that we put out in my comments. Data Cloud approaching $400 billion and growing 90% year-over-year. This should be an indicator of the demand that we're seeing for people to get ready for the AI transformation they want to put their company through. And so we're really excited about the opportunity ahead, but every customer I talk to says I've got trap data. I don't have a great data strategy. My architecture is off. And that's why we're seeing such great performance on our Data Cloud products. On the AI front, I think we're going to start to see that show up further out in this fiscal year. We don't have a lot of it factored into our guide right now, to be candid, just because there's so much work that needs to happen now, the demand is heavy. And as we just launched this Copilot product this -- yesterday, just announced it and launch it tomorrow, as you'll see next week at TDX, enormous demand for it. And we think we have a massive opportunity to go faster here. So big upside, but not a lot factored in here. And I'm going to flip it over to Amy to talk a little bit about some of that. |
1,738 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Amy Weaver: Sure. So just following up, Brian, on the comments, in terms of the new products, in Data Cloud, we're already seeing this great traction, which is certainly factored in. Some of the GenAI, it's still early, and given that the adoption curve at really our size and scale as a $38 billion company, we're not factoring in material contribution from these new products into our FY25 revenue guidance at this time. Turning on OP margin. Yes. Really happy to see another 200 basis points this year as a commitment. This year, we are just seeing amazing leverage from many of the hard decisions we made last year. They're continuing to flow through and really benefiting the business. A few things I would call out a lot of discipline around headcount over the past year. We are starting to grow in some areas at this point, but it's really investing into our most productive areas, AI, data. And we're doing that in cost effective ways, really trying to leverage areas that have high, high talent pools and low costs. We're also looking at things like top line, how are we doing with our product and pricing? What are we doing in terms of go to market efficiencies? Brian has been great this past year in making changes and driving productivity. I think you'll see additional changes coming, additional benefits coming from all of those areas.
Michael Spencer: Thanks, Keith. Brandon, we'll take our next question, please.
Operator: Your next question comes from Kash Rangan with Goldman Sachs. Please go ahead. |
1,739 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Operator: Your next question comes from Kash Rangan with Goldman Sachs. Please go ahead.
Kash Rangan: Hi. Thank you very much. Marc, as you talked -- you talk to a lot of CEOs across all the breadth of industries. What are they saying about the -- their business and their propensity to spend real dollars in Data Cloud with Salesforce? And if that comes true, could the company re accelerate top line? One for you, Amy. You seem to sound confident that leading indicators are rebounding. What are those leading indicators? We can't quantify, at least qualitatively, can you talk about the leading indicators? And how much of a lag is there between those indicators and how they show up in revenue? Thank you so much and congrats. |
1,740 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: Well, Kash, this is basically what every software company wants. You want a new killer app. Sometimes you can get it through organic innovation. Sometimes you get it through inorganic innovation. We got lucky. We've done it with organic innovation, with Data Cloud. I think Data Cloud is everything that we want at this moment for a few different reasons. First of all, yes, it's an incredible new cloud and we've seen what that kind of can do for Salesforce when we had Sales Cloud to Service Cloud to Marketing Cloud to platform. And of course, we also had these other clouds that we picked up inorganically, commerce, Tableau, Slack, etc. But this incredible new organic cloud, the difference with this cloud and the difference between what's ever happened with Salesforce before, this cloud makes every other cloud better. So the hot new, exciting version of Sales Cloud, the hottest new feature in Sales Cloud, what's going to transform the tens of thousands of Sales Cloud customers that we have out there that we've been working on building for the last two and a half decades is Data Cloud. And Service Cloud -- the new version of Service Cloud is the Service Cloud plus Data Cloud. And Marketing Cloud read the gartner MQ. We vanquished all of the other competitors completely with this product because it's so deeply integrated with what we're doing already and everything else in marketing. And the platform is extended with Data Cloud. And if you have this other data infrastructure in your company, any of the big queries and the redshifts and the snowflakes, I went through all this. It's made better with Data Cloud because it unleashes that trap data to your users. This is a compelling reason to use Data Cloud all by itself. But that would be if we were not in the greatest transformation of our industry with artificial intelligence, where we so badly need this data. We -- yes, we always love to have another data lake. We would have loved to have a data lake integrated with sales cloud many years ago. Okay, we |
1,741 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | love to have another data lake. We would have loved to have a data lake integrated with sales cloud many years ago. Okay, we have that. But why is it more important right now? Yes, we have the data lake, we have the repository, we have the warehouse, but now it has deeply also integrated into the AI. That is why every customer must buy this product if they are going to achieve the nirvana that we can see for businesses, the trinity that we talked about, productivity, customer relationships, margins when you get data and AI working together. We can do it. This is our message to our salespeople, to our partners, to all of you. This is an incredible moment. That is why we have to execute like hell this year. Fiscal year '25 needs to be one thing, the year of Data Cloud. |
1,742 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Amy Weaver: Okay. Great. And Kash, thanks for the question about leading indicators. I think first you obviously heard the excitement about Data Cloud. And if you didn't...
Marc Benioff: I can go through it again. I'll do it one more time.
Amy Weaver: [Multiple Speakers] Let's just start with that, I'm looking at a leading indicator. So specifically there are a number of things that we look at that tend to be leading indicators that things may not be as good. Now that would be something like create and close SMB, self-served. I've talked a lot about those over the past few years, but I do feel very good about some things I'm seeing right now. It is the execution from our team and we've really seen this over the past two quarters and that's really led to improved bookings growth. We've seen AE productivity that is up. Brian talked a lot about that last quarter. It was fantastic. We look at our pipeline for indications of going forward. That said, as we've talked about, our top line expectations do include the lagging impact from the measured buying environment that began a couple of years ago. It's just going to take time for that to work through our system, but I am seeing some nice indicators that give me a lot of hope.
Michael Spencer: Thanks, Kash. Brandon, we'll take the next question.
Operator: Your next question comes from Karl Keirstead with UBS. Please go ahead.
Karl Keirstead: Okay. Great. Maybe a two-parter for Brian. Two elements of the business that I think you have responsibility for. One is around pricing and bundling, and you mentioned Einstein 1. Just curious, when will that be a needle mover for revenues? How much of that uplift are you baking into the guide this year? And then also on the pro services side, typically not a focus area for anybody on this call, but down 9% in the quarter was obviously an inflection down. What's happening with that? Is that tight discretionary spend or is that Salesforce consciously pushing more work to your SI partners? Thanks on both. |
1,743 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: So before you hit that, I want you to hit the service. But before you do that, when you think AI and you think obviously we all know what ACV is, I think it's basically a term that we created. Now it's industry wide, AOV, CSM. Brian, you created that. ACV this year, we obviously have huge goals internally. Okay? A material part of this ACV needs to be Data Cloud. This is important. This is the AI number. This is everything that AI, Einstein 1, the artificial intelligence, Data Cloud, we have to bring this all together. That's why we call it Einstein 1. Look at the Einstein 1 SKU. Look at what we call UE plus. That is where you're going to see the material ACV traction. That is our focus intention. Of course, we don't know what's going to really happen, but when we got all of our -- we did a huge kickoff last week in Vegas. We brought 5,000 of our top executives, most 80% for sales. We had 70,000 online. We had one message to them, Data Cloud. Number one, Data Cloud. Number one, AI become a great storyteller about these stories. Number two. Number three, sell UE Plus, sell Einstein 1. Number four, deliver the customer success. Number five, our incredible new Ohana 2.0 culture. These are the five things we're doing this year. So it's deeply integrated with that, and this absolutely must be part of everything we're doing. But when you think AI, think Data Cloud. Brian? |
1,744 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Brian Millham: Thanks, Marc. Karl, back to your question, on pricing and bundling, we're excited about the progress we've made here. UE plus is a good example of what we're seeing, good acceleration. It's not the only thing we're doing in pricing and packaging. Obviously we did a price increase last year and seeing some benefits to that. Certainly, we're simplifying the way that we are putting quotes in the market, fewer SKUs, making it easier for our sellers to get out there. In terms of materiality in the short term, you're not going to really see it show up. We did it in the second half of last year. And so while we've seen great progress and there's a lot of promise for it in terms of this year's revenue guide, not a huge factor in our growth numbers this year, you will see it start to show up in year two and three as we roll through the renewals, the uplift, etc., and some of the incremental pricing changes that we're going to do. On ProServe, a good question. I think the big issue, and it's really been felt across the entire professional services industry, a bit of headwinds on customers willingness to do massive transformation. We really felt that during the pandemic that customers were coming to us and saying, I want to make a multiyear commitment to your services and spend significant amount of money, these very large transactions and services. Now our customers are saying, hey, let me take a smaller bite at the apple. Let me start smaller, get to time to value faster, let me get the benefits of the technology sooner. And so while the demand remains high, it's just smaller transactions that are getting done vis-a-vis last year and the year before that. So the tough compares on large deals, smaller transactions. For us, in a lot of ways, very good. Let's get our customers proving out the technology, let's go faster, but having an impact on our professional services business right now.
Michael Spencer: Great. Thanks, Karl. Brandon, let's go to the next question. |
1,745 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Michael Spencer: Great. Thanks, Karl. Brandon, let's go to the next question.
Operator: Your next question comes from Mark Murphy with JPMorgan. Please go ahead.
Mark Murphy: Thank you very much. For Amy and Brian, the gross margin and sales efficiency metrics are quite strong this quarter. And so I'm curious, just from a standpoint of eating your own dog food or drinking your own champagne, have you been able to realize any benefit from deploying either service GPT or sales GPT internally to save time for your own customer support agents or your own sales teams? I'm just wondering, if you -- are they suddenly becoming more productive or able to do more with less already?
Brian Millham: Yeah, Mark. Thank you. We are a big believer on sales on Salesforce. We are deploying our own AI technology internally. Our sales teams are using it. Absolutely, we are seeing benefits right now. But the biggest benefit we've seen actually has been in our support operation with case summaries. Our ability to get -- to tap into knowledge bases faster to get knowledge surfaced within the flow of work. And so it absolutely is part of our margin expansion strategy going forward, which is how do we leverage our own AI to drive more efficiencies in our business to augment the work that's being done in sales and in service and in marketing and even into our commerce efforts as well. So we're excited about the future there as well is leveraging our own technology to drive those efficiencies. Amy, I don't know if you have anything else to add to that.
Amy Weaver: No, I think that was great, Brian. We have to be customer number one and use it. And I'm excited that we are. Lots of opportunities for us.
Michael Spencer: Thanks, Mark. Brandon, we'll take the next question.
Operator: Your next question comes from Kirk Materne with Evercore ISI. Please go ahead. |
1,746 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Operator: Your next question comes from Kirk Materne with Evercore ISI. Please go ahead.
Kirk Materne: Yeah. Thanks very much. I'll echo the congrats on a great fiscal year. I don't know if Brian or Marc wants to take this one, but we realize AI is applicable to every industry. But I was just kind of curious, are there any industries that you believe are farther along in terms of taking advantage of AI where there frankly could be a domino effect due to the competitive advantage one customer could get over another if they don't start down this path? |
1,747 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: A very good question, and an unknown. I mean, this is the future. Look, does anybody really know what is going to happen? I mean, we saw Minority Report war games, it was written by our futurist Peter Schwartz at Salesforce. Many decades ago, we've seen the movies, her terminator. Is this our future? Do we really know what's going to happen? Look, at the end of the day, we all know that everything is underway with AI. The future is unfolding between our eyes. And we all remember the Minority Report scene when Tom Cruise walks into the gap store and the hall store turns into a highly personalized experience. And the digital sales agents and the human sales agents all start talking. We got this Jeans last time, you need to buy the new jeans this time. Listen, if I go into the gap store right now, and I love the gap, amazing new CEO, San Francisco company, fantastic, incredible, worked with him at Mattel. But the store has not yet transformed into the Tom cruise scene. We know that, okay? But great products, great brand, great company, great lineage, great founders. Okay? We are on the verge of something huge happening for all of our customers. We have to be driving that. We think we have the solution. This is going to happen. We also need to be guiding it with the right values. We all know that. We have to have the right core values. I went to this AI safety summit. Not enough focus on values. The values -- not just the woke values that we're seeing in these filters, which are horrible, but the values of trust. And that story I told you on the script, when I saw that last week, I'm like, I'm putting this in the script that this company, which is a great company and a customer of ours, but did not use our technology, went out there and used some kind of rogue AI that they picked off the Internet. Some engineer just hobbled it, hooked it up, and then it started just spewing these hallucinations and falsehoods around their loyalty program, and the courts are holding them liable. Good. Let every CEO wake |
1,748 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | hallucinations and falsehoods around their loyalty program, and the courts are holding them liable. Good. Let every CEO wake up and realize, we are on the verge of one of the greatest transformations in the history of technology. But trust must be our highest value. And that is why at Salesforce, we are going to lead this not just with great technology like you see, but also and I just put on my Twitter feed, I hope you see at the top of my Twitter feed the results for the quarter. But please watch the five minute video that's on the Twitter feed so you can understand coming into Trailhead DX. What we are delivering with AI? A trust based AI for enterprises built on our data and metadata. This is what's truly important. |
1,749 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Michael Spencer: Great. Thanks. Brandon, we'll take our last question now.
Operator: Your final question comes from Brad Zelnick with Deutsche Bank. Please go ahead.
Brad Zelnick: Great. Thank you so much for taking the question. Listen, great to see the data cloud traction, the recognition of Gartner's magic quadrant. And Marc, I appreciate you taking us into why the architecture is different from general purpose data platforms and that it brings together the data and the metadata. But my question is a two-parter. A, it's clear Data Cloud is optimized for customer data and customer related apps. Can you take it beyond that? And then, B, how much of the customer base today is really viable to take Einstein 1 on and UE plus at a 50% higher list price point? And how far penetrated are we into that? Thank you. |
1,750 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: Well, I'm going to do the first part, and then I'm going to turn it over to Mike Spencer to do the second, because he not only runs IR, but he also runs FPNA. And he's been doing that analysis. So I know he was going to come in on this. Look, number one, this is a huge upsell opportunity for us. You probably know, I think not even 50% of our Sales Cloud users use Service Cloud. Not even 50% of our Service Cloud users use Sales Cloud. Maya Copa, that is on us. Okay. I wish I could say that all of our sales users are service users, our service users are sales users. But even ADP that I talked about in the script, who we've worked with for more than two decades, and I remember the first time I made a sales call there to extract Siebel from their infrastructure was not yet using us for service. So we have a lot of work to do to sell our existing clouds into our customers and also to upsell our existing customers and cross sell them with Data Cloud, with Einstein 1, with the full platform. We're rewriting our whole platform to be deeply integrated. We will no longer have all these separate acquired platforms. When we're done, we have one integrated platform, Einstein 1. One unified data and metadata platform. This is something I have deeply focused on in the last year to make sure it's clear to all of our engineers and are also financed that this must be funded, which it is. And then we will deliver this capability and then we will light up and give you these great success stories. Look, some companies operate at the highest level, the user and the productivity level. That's not where we are. Okay. Some companies, okay, they operate maybe at the model level. That's also not where we are. We are a data company. We operate at the data level. Yes. We're about customer success made possible by data. This is AI revolution, it's a data revolution. There's no question. You cannot have the AI without the data. That's why those AI companies stole all that consumer data, so they could have some semblance of those |
1,751 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | the AI without the data. That's why those AI companies stole all that consumer data, so they could have some semblance of those party tricks. For the enterprise, it's not going to fly. You've got to have these comprehensive data sets that are informed by the metadata. And Mike's now going to answer the second part and we'll wrap it up. Mike, go ahead. |
1,752 | CRM | 4 | 2,024 | 2024-02-28 17:00:00 | Salesforce, Inc. | 122,917 | Michael Spencer: Yeah. Brad. Thanks for the question. I think the way to think about the price uplift, moving to Einstein 1 edition used to be a limited edition plus. It's really about the value that we're providing to our customers. Because at the end of the day, our ability to get increased price is about the value that we're going to provide. And so as customers start to ramp up their abilities on AI, ramp up their learnings, and understand what it means for them economically, our ability to get price will be dictated by that. Early signs of that are pretty strong. We feel good about the progress we've seen. It's only been in market for four plus months now in FY24, but we're encouraged by what we're seeing. But at the end of the day, it's -- we're trying to make it as simple as we can for our customers to buy it. But it's going to be predicated on the value.
Brian Millham: I agree. And just one last comment, Brad. It's Brian. We want to be able to deliver data cloud and AI at all levels, in all segments. And you see that in our offering around Salesforce starter where we're building an AI and data cloud capabilities as part of that. So every segment of our customer base should be able to enjoy the power of AI and data cloud.
Michael Spencer: So thanks for the question, Brad. And we thank everyone for joining the call today. We look forward to seeing everyone over the coming weeks.
Brian Millham: Thanks all.
Operator: This will conclude today's conference call. Thank you for joining us. You may now disconnect. |
1,753 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Operator: Welcome to Salesforce's Fiscal 2024 Third Quarter Results Conference Call. After managements prepared remarks, we will open the floor to questions. [Operator Instructions] I would now like to hand the conference over to your speaker, Mike Spencer, Executive Vice President of Investor Relations. Sir, you may begin.
Michael Spencer: Thank you. Good afternoon, and thanks for joining us today on fiscal 2024 third 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 Benioff, Chair and CEO; Amy Weaver, President and Chief Financial Officer; and Brian Millham, President and Chief Operating Officer. 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. 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 could differ materially from these forward-looking statements. A description of these risks, uncertainties and assumptions and other factors that could affect our financial results 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. And with that, let me hand the call over to Marc. |
1,754 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: All right. Hey, Mike. Thanks so much, and thanks for all your hard work this year. It's been an incredible year. And also, I just really appreciate everyone being here on the call today. And hope you all had a great Thanksgiving, and I hope you're all preparing a fantastic holiday for yourself coming up. I know it's been an incredible year for so many of the folks on this call, and I'd just encourage all of my folks to try to take a couple of days off and do a little digital detox. And I hope you get a chance to do that as well as we come into the season. We're obviously super excited about these results. We've delivered in this unbelievable quarter and in this unbelievable year. And this double-digit revenue growth, delivering non-GAAP margin exceeding 30%, this is really exciting for us. And when we look at these numbers, when we think about having an $8.7 billion quarter, 31.2% margin in the quarter, and then talking about this year at 34.8% fiscal year '24, amazing with 30.5% margin growth, whether it's 800%, 900%, 1,000% increase from year-over-year, these numbers all exceed what we thought we were able to do. And I'll tell you, okay, we really did this in partnership with all of you. I'm just going to come back to that a couple of times to give you the gratitude and thanks that you deserve for everything you've been doing to help us have an unbelievably great year. But I'll tell you, it's more than just a great year. It's also a huge year of transformation. I think everyone on the call knows that. It's exactly a year ago, as you remember, or maybe I'd like to forget, exactly how crazy that year got, and it was a really unusual year. But we knew we had to change. We knew there had to be transformation. We knew there were things that had to get done. And we look that we were going to have to restructure our business for the short and long term. We talked about that in each of the last several calls. We knew we had to focus on increasing profitability, productivity, operational excellence across |
1,755 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | of the last several calls. We knew we had to focus on increasing profitability, productivity, operational excellence across the board. We knew that. We knew that we had to really double down on our core, deliver some strong relationships with you, our investors. And then I'll just keep coming back to that, that you've been just such great partners in making all of this happen. And I'll tell you that we have to stay focused on continuing to be this number one AI CRM, which we've been doing. You're going to hear about that today and really finding these incredible growth factors for the company. You know what, people have been asking me why am I so excited about this quarter? And Brian is going to hit on this as well, and Amy is going to hit on this as well. The three things that keep coming back to me are, number one, that we have 80% growth in deals more than $1 million. That is far exceeding our expectations, that we were able to pull together all of these different clouds into this kind of what we call a cocktail. The customers were wanting to buy Tableau, Slack, MuleSoft, the Data Cloud, Sales Cloud, the Service Cloud, all that we're able to build these big transactions. And there's no question that, that kind of fell off last year, now to see that come back. That is just really exciting. Brian's going to talk about that. Number two, we have a great new product. And everyone knows here at Dreamforce, Data Cloud. You can see in the quarter 1,000 new Data Cloud customers. That is number two thing. I am really excited about that. I literally just got off the plane from Tokyo. You probably all saw me yesterday at Salesforce World Tour. Tokyo was incredible. Everyone is very excited about Salesforce in Japan, now the second largest software company in Japan. Incredible what has happened over there in the market. I met with hundreds of customers while I was there. I spoke to some of the CEOs of the largest companies in Japan. It was an incredible week. It was the Momiji season, which is the fall season with |
1,756 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | the CEOs of the largest companies in Japan. It was an incredible week. It was the Momiji season, which is the fall season with incredible fall leaves, beautiful over there. And I'll tell you, everyone wants to talk about Data Cloud. And that is really exciting to have an incredible driver for future growth. And the third thing is, these Einstein GPT Copilots that we've delivered. These Einstein GPT Copilots, this is a product we didn't really even have an imagination around a year ago. Of course, we had Einstein. Of course, we could see the incredible growth of Einstein. I mean now, Einstein with predictive and generative combined, is doing 1 trillion transactions a week, that's amazing. But more amazing is that 17% of the Fortune 100 are now Einstein GPT Copilot customers. And this is a product that is just coming to market. Everyone is so excited about buying this product. So when you see these larger deals, when you see Data Cloud, when you see these Einstein GPT Copilots going into place, that is why we are excited about our growth and why we're excited about this quarter. And then you look at the financial metrics. The $1.5 billion in cash flow, up about 1,000%. That is another reason why we're excited about the quarter. So let me get into the script a little bit, and let me talk to kind of give you the structured messages and then turn this over to Brian. So number one, we are the number one AI CRM. If that isn't clear already, we're leading the industry through the unprecedented AI innovation cycle. It's unlike anything I've seen and most of the people that I talk to all over the world feel the same way. We're the only platform that are bringing CRM and data and AI and trust together for our customers in a way that enables them across every industry to be more successful, faster, be more productive, more efficient. We're the number one by market share for the tenth year in a row based on latest IDC software tracker. We're the number one enterprise apps company now. That's amazing. And Data Cloud, this |
1,757 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | based on latest IDC software tracker. We're the number one enterprise apps company now. That's amazing. And Data Cloud, this hyperscale, this real-time customer data platform that is performing incredibly well for us, it's the foundation of every AI transaction, but it's the foundation of every large deal that we did this quarter. That is what is so exciting. And in just our third quarter, Data Cloud has ingested an astonishing 6.4 trillion records, 6.4 trillion records. That's 140% year-over-year increase. It triggered 1.4 trillion activations, a 220% increase year-over-year. This is a monster product. I could not be more excited. And it's the perfect time, we didn't really understand that it was going to line up so well with this generative AI revolution. It's a product we've been working on for a couple of years. Just the timing of it has been incredible because listen, if you don't have your data together, in a company, you're not going to deliver AI. It's not like companies are going to run their AI off of Reddit or off of some kind of big public data set. They have to have their data set together to make AI work for them, and that is why the Data Cloud is so powerful for them. Now as I've said before, this AI revolution is going to be a trust revolution. It's not just about CRM, data or AI. It's also about trust. And I think the trust layer and the way that we've architected our platform so that our customers are not basically taking -- getting taken advantage of these next-generation large language models, these foundation models, they are so hungry for all of this data, and they want our customers' data so that they can grow. We're not going to let them have it. We're going to separate ourselves from those models through a trust layer so customers can be protected. This is going to be so important for the future of how Salesforce architects itself with artificial intelligence. Now revenue in the quarter was $8.7 billion. Not too many software executives get to say it so I think I'll say it twice, |
1,758 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Now revenue in the quarter was $8.7 billion. Not too many software executives get to say it so I think I'll say it twice, actually. Revenue for the quarter was $8.7 billion, up 11% year-over-year, incredible. Third largest enterprise software company now by revenue, also incredible. And companies standardizing on Salesforce as their core technology platform, doing these multi-cloud deals with us. Getting that growth, as I said, that incredible stat that Brian is going to come back to, the 80% growth in deals of more than $1 million, so exciting. Nine of the top 10 deals included six or more clouds. Think about that. Nine out of our top 10 deals included six or more clouds. So that we have amazing clouds, Sales Cloud, Service Cloud, Marketing Cloud, Platform, our Commerce Cloud, Slack, Tableau, MuleSoft, but think about it, how they're bringing all of those things together, Data Cloud, they're bringing it all together into a cocktail. That's amazing. And by the way, those cocktails are going to be a Christmas cocktail soon. And in Q3, we once again showed our commitment to increasing our margins. Non-GAAP operating margin for the quarter was 31.2%, up 850 basis points year-over-year, following an increase of 1,000 basis points in the previous two quarters. It kind of is a sentence that you don't really expect ever read as a CEO, so that was kind of amazing. Operating cash flow for the third quarter was $1.5 billion, up 389% year-over-year. Free cash flow was $1.4 billion, up 1,088% year-over-year. Percentages and absolute numbers are just mind blowing. And our remaining performance obligation ended the third quarter at $48.3 billion, which is an increase of, yes, 21% year-over-year. Pretty good. Okay. Now let's move on to guidance. Based on our performance, we're raising our fiscal year '24 revenue guidance in constant currency to 34.8% at the high end of the range, 11% projected growth year-over-year. Last quarter was raised our fiscal year '24 non-GAAP operating margin of 30% and now we're accelerating again. |
1,759 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | year-over-year. Last quarter was raised our fiscal year '24 non-GAAP operating margin of 30% and now we're accelerating again. And we think that we're going to move this thing to 30.5% for the year. And Amy, I think you better beat that, okay? So I mean, the acceleration on the margin this year has been pretty incredible as we all know. So if you go back and look at the last five quarters, you wouldn't believe it. I don't believe it. We delivered an improvement of 850 basis points year-over-year this quarter. I couldn't be more proud of our entire team, how well they are doing. We just got our employee surveys back. The team, the morale is super high, so cohesive, brought back so many boomerangs, really reinforced our culture during this year as well. That's been one of the major things that we have been doing. We've really been focused on building this number one AI CRM, rebuilding our product strategy. Really focused on, number two, is getting these sales executives be able to tell these stories of AI success. And it's incredible to be able to exactly explain to a customer what they can do to be successful. Through the third thing we're really focused on is this idea of delivering new products and new technologies, and this UE+ product that we've now introduced in the market to see so many customers adopt that in the quarter, to see so much of it in our pipeline, UE+ and the incredible work of David Schmaier and his team has been just amazing there. And also our professional services team, delivering these great implementations and making sure our customers are successful. And the fifth thing I would say we're focused on is this Ohana 2.0 culture, which is really takes shape in the middle of this year and really now evidence in this -- you probably saw we just became a Great Place to Work again. We're on the top 10. We're now number seven. And it's amazing to see that recognition for this company is so well deserved. So where are we? Well, you're seeing this high level of interest in Data Cloud and Einstein. |
1,760 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | this company is so well deserved. So where are we? Well, you're seeing this high level of interest in Data Cloud and Einstein. It's incredible what's happened. I've been on the road pretty much nonstop especially over the last month. I've been in -- throughout Europe. I've been now in Asia. I've been throughout the United States. And I just continue to see these same trends, which is customers are investing for the future and they're investing and inspired by AI to give them more productivity. Look, they realize unemployment is just so low. Where are they going to hire more people? It's so hard for them to hire, they're going to have to get more productivity from their employees. They're going to do that through this great new technology, and we're going to help them make that happen. Data Cloud was part of six of our top 10 deals in the quarter. We had more than 1,000 net new customers for Data Cloud. I've talked a little bit about the number of deals, the number of wins over $1 million in Data Cloud doubled, and the average ARR per win more than tripled compared to last quarter, pretty awesome. And we've now traded a self-service switch so that every EE and UE customer can just flip it on. And engineering has just done a great job getting every customer become a Data Cloud customer. Closed a lot of amazing deals in the quarter. Really excited about AWS. I know everyone has been talking about that, especially down at the conference this week at ReInvent and we couldn't be more thrilled for our partnership with Andy Jassy, really excited. Really excited about our relationship with American Cancer Society. They've been a customer for a long time. Doing incredible work now seeing them use the Data Cloud, even becoming even more productive, more efficient. Group Global, 30 million users now using Data Cloud, SiriusXM. Joe Inzerillo, great executive. We worked so closely with him at Disney. And one of the reasons that Disney has become wall-to-wall Salesforce. And nowadays at SiriusXM, he's deployed a great, |
1,761 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Disney. And one of the reasons that Disney has become wall-to-wall Salesforce. And nowadays at SiriusXM, he's deployed a great, incredible deployment of Data Cloud, but our -- actually our whole product line or so. Excited to work with Joe. And this is really, I think, going to continue on as we start to talk more about customers who are using Data Cloud. I was just in Houston and had a great dinner down there with all of our customers. We had some phenomenal local country music performance at the dinner as well. The Ortega family did a great job cooking for us. Their restaurants are probably our favorite when we get on the road. But I'll tell you, Waste Management and Jim Fish, who I saw when I was in Houston, great executive, love working with Jim. Here is a great company, North America's leading environmental sustaining solutions provider. Now most of the folks on the call are probably customers. And wow, they just have done an incredible implementation and now doing a great job implementing all the AI solutions as well. Well, there's a lot more to talk about there. We've got so much going on and March 8 is going to be a big day for Salesforce. We're going to turn 25 years old. It's hard to believe. At the same time, we've completely rebuilt the company and so well positioned for the AI revolution. And we're lucky to have a great management team, and we've got them sitting here at the table. Of course, we've got Mike Spencer here who is doing a great job running FP&A and IR. We have Sabastian, our new Chief Legal Officer; Amy, our new CFO. But Brian, why don't you take it from here and tell us what happened during the quarter? |
1,762 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Brian Millham: Yeah, I really appreciate it, Marc. Thank you so much. I'm very pleased with the quarter, and it's really a testament to our laser focus on operational excellence, high performance and profitable growth initiatives. We're seeing the results of our full-scale transformation of our company. In Q3, our non-GAAP operating margin is up an amazing 850 basis points year-over-year. And we reduced GAAP sales and marketing costs as a percentage of revenue by 6 full points. And we've matured our pricing and packaging to drive growth and simplify the buying experience. As Marc said, we're well positioned to continue to drive profitable growth as we head into the largest quarter, our largest quarter and into next fiscal year. Despite the continued measured buying environment, we grew revenues in Q3, driven primarily by the strength of our product portfolio and multi-cloud transformational deals. In fact, the average size of our deals greater than $1 million, as Marc said, was up 80% year-over-year, doubling our net new business in this segment. And for the third consecutive quarter, we saw add-on products like sales performance management, digital service and sales productivity grow ARR nearly 40%. As customers look for quick time-to-value solutions and productivity gains, we saw traction with our new Salesforce Starter offering with nearly 1,000 new logos added this quarter. As the number one AI CRM, companies in every industry and geography like Fujitsu, Southwest Airlines, NZ Bank are turning to us as their trusted adviser to help them transform their business for the AI future. We're seeing amazing energy across our ecosystem with our partners, GSIs and ISVs who are looking to do -- build more opportunities with us around our AI offerings. And we've established new partnerships with global management consulting companies like Bain & McKinsey. And as Marc mentioned, we're expanding our existing relationship with AWS. It marks a significant milestone in the evolution of our global partnership with Amazon, |
1,763 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | our existing relationship with AWS. It marks a significant milestone in the evolution of our global partnership with Amazon, deepening the integrations between AWS and Salesforce products. We're bringing together the number one AI CRM and a leading public cloud provider to deliver an open integrated data and AI platform to make it easy to find, buy and manage Salesforce products to the AWS Marketplace. Before I get into the product momentum, I want to share some operational highlights. We continue to effectively manage our expenses, as you've seen, and is reflected in our improved non-GAAP operating margin, which exceeded 31%. Today, our execution, inspection and understanding of our customers buying and approval process is better than ever. Our focus on high performance is a driver of growth is paying huge dividends in Q3. We saw more than a 30% increase in AE productivity year-over-year. We're also refining and scaling our big deal motion and further bundling products to drive higher sales and simplify the buying experience for our customers. And we're doing all this while becoming more effective and efficient. I've been impressed with how quickly we deployed our own trusted generative AI tools and applications internally. We've launched Sales, GPT and Slack Sales, Elevate internally, and our global support team is live with Service GPT, and we're seeing incredible results. We've streamlined our quoting process with automation, eliminating over 200,000 manual approvals so far this year. And since the introduction in September, our AI-driven chatbot has autonomously resolved thousands of employee-related queries without the need for human involvement. We're seeing great success with our products and so our customers, which is clearly reflected in the high-level engagement and participation we're seeing in our events. In addition to Dreamforce, we hosted 80% of our top customers for the quarter. We also held an amazing 450 customer events in our offices with nearly $2 billion in pipeline. And as we close out the |
1,764 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | quarter. We also held an amazing 450 customer events in our offices with nearly $2 billion in pipeline. And as we close out the year, we have a New York City world tour coming up in December 14. I hope you all can join us in person. And if you can't, we hope you join us on Salesforce+. We continue to hire selectively across key growth areas, especially in data cloud and AI, and we've seen the highest demand to join Salesforce in our history with the largest volume of applications in any quarter ever. Our growth initiatives across our core products, data, AI, industries and international drove our strong performance in the quarter. And as Marc outlined, we're seeing strong momentum in Data Cloud and Einstein. Importantly, we're already seeing high demand for our new premium UE+ bundle as customers recognize the value of our integrated solutions with Einstein AI functionality and Data Cloud built in. And our existing customers increased their spend with us by more than 70% when they upgraded to UE+. Industry clouds continue to be a tailwind to our growth, chosen by customers like Humana and U.S. Agency for internal development and RBC Wealth Management U.S. For the first time this quarter, nine of 13 Industry Clouds grew ARR above 50%. We're seeing continued MuleSoft growth, which was in eight of our top 10 deals this quarter and delivered an amazing 140 billion automated flows, up 142% year-over-year. And Tableau, which is fully integrated to the Data Cloud, continues to help customers like Rubrik, Canara Bank and U.S. Navy see and understand their data and make data-driven decisions. In the quarter, we did continue to see the macro trends affect our business, in particular, our professional services business, our create and close sales motion and our Slack self-service business. Despite those headwinds, Slack was included in seven of our top 10 deals. Every day this quarter, there were 700 million Slack messages sent and 2.75 million workflows ran on the Slack platform. We recently announced Denise Dresser as |
1,765 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | 700 million Slack messages sent and 2.75 million workflows ran on the Slack platform. We recently announced Denise Dresser as the new CEO of Slack, and I've had the chance to work with Denise for a dozen years and could not be more thrilled for her, and importantly, for the Slack business. Before I hand it off to Amy, I want to share some key number and highlights on how we deliver for our customers during Cyber Week. Commerce Cloud powered nearly 50 million orders on digital storefronts across Cyber Week with 100% uptime. Einstein powered more than 49 billion product recommendations, and over 53 billion marketing messages were sent via the Marketing Cloud. In addition, Service Cloud helped our customers field and resolve 3.7 billion cases. This clearly demonstrates the scale and reliability of our number one AI CRM platform. So in closing, we're heading into Q4 with a ton of energy and ambition, guiding our customers through a new innovation cycle with an unwavering commitment to their success. I, like Marc, am extremely proud of the team with the changes that we've made not just in Q3 but over the last year. And as I said earlier, we're well positioned for Q4 and as we head into fiscal year '25. And with that, I'll turn it over to you, Amy. |
1,766 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Amy Weaver: Great. Thanks, Brian. Q3 represents another strong quarter of strong execution and discipline. As you heard from both Marc and Brian, we've transformed the company over the past 12 months to drive consistent, profitable growth. And we are pioneering the next wave of innovation with data, AI, CRM and trust. Now let's get right to the results. For the third quarter, revenue was $8.7 billion, up 11% year-over-year and 10% in constant currency. This represents a $40 million beat in constant currency. The growth was primarily driven by continued MuleSoft momentum and resilient sales and service performance. From a geographic perspective, the Americas revenue grew 9%, EMEA grew 14% or 10% in constant currency, and APAC grew 18% or 21% in constant currency. We saw strong new business growth in India, Brazil and Japan, while parts of EMEA were more constrained. From an industry perspective, public sector performed very well while high tech and general continues to be more measured. And as Brian mentioned, our multi-cloud momentum continues. In Q3, nine of our top 10 deals included six or more clouds. Q3 revenue attrition remained strong and ended the quarter again at approximately 8%. In Q3, our non-GAAP operating margin was 31.2%, up 850 basis points year-over-year. Our strong margin outperformance was driven by our continued disciplined investment strategy. Q3 operating cash flow was $1.5 billion, up 389% year-over-year. Q3 free cash flow was $1.4 billion, up 1,088% year-over-year. This upside in cash flow was driven primarily by strong collections as well as lower cash outflow that results to higher margins just discussed. Now turning to remaining performance obligations, RPO, which represents all future revenue under contract, ended Q3 at $48.3 billion, up 21% year-over-year. Current remaining performance obligation, or CRPO, ended at $23.9 billion, up 14% year-over-year and 13% in constant currency. This was ahead of expectations, primarily driven by strong early renewal performance as well as a large |
1,767 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | in constant currency. This was ahead of expectations, primarily driven by strong early renewal performance as well as a large customer win in the quarter. This was partially offset by a 1 point headwind from professional services that we had cautioned about last quarter. Finally, we continue to deliver on our capital return commitment. In Q3, we returned another $1.9 billion in the form of share repurchases. And to date, we have exceeded our initial authorization of $10 billion in just over five quarters. Before moving to guidance, I want to reiterate that we continue to assume a consistent measured customer buying environment. Let's start with full year fiscal year '24. On revenue, we are narrowing our guidance range to $34.75 billion to $34.8 billion, representing 11% growth year-over-year in nominal. We are now expecting a $50 million FX headwind, which implies a modest raise in constant currency. On margins, we have made incredible progress on profitability and productivity this year. For fiscal year '24, we are very pleased to raise non-GAAP operating margin guidance again to 30.5%, representing an 800 basis point improvement year-over-year. We also remain focused on stock-based compensation, which is now expected to be approximately 8% as a percent of revenue. As a result of these updates, we now expect fiscal year '24 GAAP diluted EPS of $3.99 to $4, including estimated charges for the restructuring of $0.91. Non-GAAP diluted EPS is now expected to be $8.18 to $8.19. We are raising our fiscal year '24 operating cash flow growth guidance to approximately 30% to 33%, and this continues to include a 14- to 16-point headwind from restructuring. The upside in our cash flow guidance is driven by strong collections to date and our continued expense discipline. CapEx for the fiscal year is expected to be slightly below 2.5% of revenue. This results in free cash flow growth of approximately 33% to 36% for the fiscal year. And as we focus on shareholder return and disciplined capital allocation, we continue to |
1,768 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | 33% to 36% for the fiscal year. And as we focus on shareholder return and disciplined capital allocation, we continue to expect to fully offset our stock-based compensation dilution through our share repurchases in fiscal year '24. In fact, as a result of our ongoing share repurchases, for the first time in company history, we expect the full year's ending share count to decrease year-over-year. Now to guidance for Q4. On revenue, we expect $9.18 billion to $9.23 billion, growth of 10% in both nominal and constant currency. CRPO growth for Q4 is expected to be 10% year-over-year in nominal and 11% in constant currency. Similar to this past quarter, we expect professional services headwinds of 1 point to CRPO growth. For Q4, we expect GAAP EPS of $1.26 to $1.27 and non-GAAP EPS of $2.25 to $2.26. As we look forward to our largest quarter of the year, we remain focused on strong execution and our disciplined investment strategy. In closing, I want to echo both Marc and Brian. This was a great quarter, but even more than that, this has been an extraordinary year of transformation. I want to thank our shareholders for their continued support, and I particularly want to thank our employees for their incredible work throughout the past year. Now Mike, let's open up the call for questions. |
1,769 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Michael Spencer: Thanks, Amy. Operator, we'll move to questions now. Out of courtesy for others on the call, we ask that each person participating only ask one question. And with that, operator, we'll take the first question.
Operator: Our first question comes from the line of Kirk Materne with Evercore ISI. Please go ahead.
Kirk Materne: Yes. Thanks very much and congrats on a nice quarter in a tough market environment. This -- I don't know if Marc or Brian wants to take this one, but MuleSoft growth against a pretty tough comp really does stand out a little bit in this quarter. And I was just wondering, if you could talk about if we should view that as a harbinger of more interest in the broader Data Cloud offering? And whether the interest in MuleSoft is also sort of a harbinger of just more interest in AI as people try to get their data estates in order to get ready for this coming AI wave? Thanks.
Marc Benioff: I'm going to have Brian really give you the detail, but what I'll tell you is, you're seeing something that we have been seeing and calling out for the last few quarters, but we probably have not been able to illuminate it to the level that you see now in the numbers, which is that every customer and every customer transformation and every customer AI transformation is going to begin and end with data. And for us to achieve that goal, those customers are going to have to get to another level of excellence with their data. And at the heart and soul of that for many of these customers is becoming MuleSoft. So in addition to Einstein, in addition to Data Cloud, in addition to our Copilot technology that we called out, it's been a lot about MuleSoft this year. And we think that, that trend is going to continue and it's very exciting, and that we're very well positioned with this completely unique product that is helping our customers bring all their data together for their AI transformations. Brian? |
1,770 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Brian Millham: Kirk, thanks for the question. I think you nailed it. It's exactly what's happening out there. The data is becoming such an important asset for our customers that they want to bring it all together and they want to leverage our MuleSoft technology to do it. And so, it's really an exciting opportunity. As we stated, it was eight of our 10 top deals in the quarter. And you can see the amount of data flowing through MuleSoft as an indicator for how important the data is 142% up year-over-year on automated flows on the platform. I'd be remiss if I also didn't call out the leader there and Eric Eyken-Sluyters, who's done an incredible job in leading the sales organization as well. And so, I think you nailed it in your question. This is a really important critical product for us and for our customers as we think about scaling to the future.
Michael Spencer: Thanks, Kirk. Operator, we will take next question, please.
Operator: Your next question comes from the line of Raimo Lenschow with Barclays. Please go ahead. Raimo, your line might be unmute.
Raimo Lenschow: Sorry. Never learn that. Congrats from me as well. The -- Brian, you talked about the sales productivity, and that was a big theme this year and the 30% increase is very impressive. Where are we on that journey in terms of like, first of all, how did you achieve that? Because that's a very big number in the software industry, but like where are we on that journey in terms of going forward? Thank you. |
1,771 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Brian Millham: Thanks for the question and obviously, a big focus for us. We've talked about it on previous calls with all of you. It's a never ending journey, obviously, and we want to continue to drive productivity for our account executives. We talked about a very large deal in the quarter that helped drive that productivity. But all-in, we saw a very nice increase in our productivity, really focused on a couple of things. One, we leaned in enablement for all of our sellers out there to ensure that they really understand this broad portfolio of products and are able to go out and talk to our customers about it. Deeply understanding our buying process. This was some of an area early in maybe last year where we stumbled a bit, not understanding the buying process of our customers, deep inspection of our business, both pipelines and cycles that we're in and driving. Really being oriented to value as we talk to our customers about the solutions that we can provide to them. What is the ROI our customers going to see from the investments they're making in Salesforce, ensuring that we really understand that before we put proposals in front of them. And finally, I think there's -- I couldn't be prouder of the inspection that we're getting across the board. We have a new sales leader in Miguel Milano, who's brought a new discipline to the way that we're looking at the pipelines, not only in the existing quarters but in future quarters going forward. And so the discipline that we’ve driven across the board is driving these great results from a productivity perspective at the front. Thank you for the question.
Michael Spencer: Thanks, Raimo. Operator, we will take next question, please.
Operator: Your next question comes from the line of Keith Weiss with Morgan Stanley. Please go ahead. |
1,772 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Operator: Your next question comes from the line of Keith Weiss with Morgan Stanley. Please go ahead.
Keith Weiss: Excellent. Thank you, guys for taking the question and a very nice quarter. I wanted to ask about the 17% of the Fortune 500 that are the Einstein GPT Copilot customers. Really impressive figure. Really early in a technology cycle, because a lot of what we're hearing is a lot of exploration out there, a lot of people trying to figure out what to do with these tools, not a lot of buying. So can you give us a little bit of color on kind of what's driving that adoption and what's enabled you guys to get such good adoption so quickly? And maybe if I could sneak one in for Amy as well. Great margin expansion this year, but there's a lot of stuff you guys need to be investing against with this technology cycle. Should we expect to see further margin expansion as we head into FY '25? Thank you, guys.
Amy Weaver: Great. Do you want me to take this first?
Marc Benioff: Yes. |
1,773 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Amy Weaver: Great. Do you want me to take this first?
Marc Benioff: Yes.
Amy Weaver: Okay, Keith. Always looking for that margin expansion, always looking for a little bit more guidance, but really happy to address this. We've had fantastic margin expansion this year, I mean, up 800 basis points for the end of the year. If I look back over the last three years, we have gone from 17.7% three years ago to we'll be ending this year over 30% on operating margin, which I am just thrilled about. I think that we do have some room here. As I've said before, we view this as a floor, not a ceiling on our success, and we intend to continue our focus on operating margin. In terms of investments, it's all a matter of priorities. We cut deeply earlier this year, and we've really been using that to invest into the areas of the business that we see as most strategic going forward. And we've been very disciplined, especially around headcount as we've been doing that. Right now, I really see areas of investment in AI and Data Cloud. In distribution, we're looking at those success stories like MuleSoft and doubling down. But we're also being very careful on how we do that. We are questioning levels. We are questioning locations. We're making sure that we're maximizing really high-scale, lower-cost locations as well. So I feel like we've got the room to do this, and we have the opportunities to invest into our future as well as to manage our margin very efficiently. |
1,774 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Brian Millham: Yeah. I'll just add a little bit there, too, Amy. I think we have really a team focused on the margin expansion. We want to continue to simplify our go-to-market strategies, how we optimize our pricing and packaging going forward as well. We talked about some of the things that we're doing there. New channels to market. We're really excited about the AWS Marketplace as a new channel to market for us. Amy mentioned location strategies, how do we continue to look at our real estate portfolio as an opportunity, how do we leverage our own technology, sales force on Salesforce and using our own products to drive more efficiency and automation in our business. So lots of opportunity to continue to do this. I’m excited about the culture and structural change in the way that we’re thinking about margin expansion of the company, and I think you’ll continue to see that. So thank you, Keith. And then on the Fortune 500 that are using it, you’re right, it is early days. And as we said in the script, a lot of our customers are starting to trial and use this technology to see the benefits around productivity and cost takeout, leveraging the technology. But as we’ve also said, the data is an important aspect of this. And how do they clean up and harmonize their data first before they start to roll out these AI technologies broadly? How do you trust the output that you’re getting from your AI investments? And so what we found in conversations with our customers is an energy around and excitement around AI, but in a need to clean up the data first before they can really take advantage of this. And we’ll continue to see the expansion. The 17% is great. We want to continue to go faster there, and we’re going to work with our customers to go drive those outcomes.
Michael Spencer: Thanks, Keith. Operator, we will take next question, please.
Operator: Your next question comes from the line of Mark Murphy with JPMorgan. Please go ahead. |
1,775 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Operator: Your next question comes from the line of Mark Murphy with JPMorgan. Please go ahead.
Mark Murphy: Thank you and congrats on an amazing performance. Marc, part of the story of 2023 has been optimizations weighing on hyperscaler spend and then greater scrutiny on seat-based SaaS licenses. We are now starting to hear from hyperscalers that the optimizations are attenuating. Do you sense that a shift in mentality spilling over a little into the thought process, for example, for Sales Cloud seats or perhaps some excitement sparked by Sales GPT and freeing up some budget there on gen AI that maybe wasn't there six months ago? |
1,776 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: I think your number one thing that you're going to see is customers trying to achieve more productivity. This AI revolution is a productivity revolution, and it means that every customer is just a lot more augmented. When I was in Tokyo, obviously, the yen is very depressed. And of course, we see that in our financial results as well. They'd be so much higher if the yen was higher. But I had an opportunity to walk into a couple of our customers' retail stores, and one of them that I was extremely impressed with was Louis Vuitton. And when I walked into Louis Vuitton, they know exactly who I am. They have -- even in Tokyo, and I test this wherever I go in the world, lots of different customers, I had an incredible experience. They use this amazing app that they've built with our platform called ICON. They've done an incredible job. They have my full customer data and buying history. The sales executives are guided on how to work with me and what kind of products I'm interested in and what I want to buy. And it's a productivity revolution for them. They are able to get a lot more success with our technology. And I walked into another store which is not one of our customers, and I have to follow up still with the CEO because, wow, the customer experience was just Oracle. It was the exact opposite. They didn't know anything about me. They couldn't work with me at all. It took probably the salesperson 3 or 4 or 5 times as long to complete the transaction because they did not have the automation. The product revolution had not come to this company. So when I look at the companies that have had that great success, obviously, the entire Louis Vuitton group, obviously, the entire Kering Group, when I look at so many of the organizations that I had the opportunity to kind of touch, it's amazing. I guess I was also very inspired in Japan talking to Goto-san as the CEO of Seibu. He has an incredible hotel chain called Prince Hotels. And they're building a whole next-generation loyalty system based on |
1,777 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | He has an incredible hotel chain called Prince Hotels. And they're building a whole next-generation loyalty system based on Salesforce. They've had great success in using our product for marketing their hotels and having much higher levels of customer touch, both in B2B and B2C. But now they can take it to another level with the Data Cloud and provide a high-level loyalty management point system, something that's so important for their future growth. I had another opportunity to talk to Amazon is the Head of Technology at Toyota. His point was very simple, that we've fully automated all of the Toyota dealers in Japan. It's been an incredible success story. We have done that with Toyota Media Services as our partner, a company that we have an incredible relationship with. But now with Toyota, we have the ability to take our vision to a whole another level, making this connected car experience really go one step higher, connecting all the Toyota cars directly to our Data Cloud and the Data Cloud then having the ability to proactively deliver the customer information and interactivity as it hits different thresholds. These are the opportunities that I see going forward. It's about productivity. It's about automation. It's about doing it on a global basis for these companies. And ultimately, for them, it's about taking advantage of incredible new artificial intelligence technology that before was not possible. |
1,778 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Amy Weaver: Marc, if I could weigh on there as well. I think Marc stated it well. Companies are still really focused right now in this environment, on productivity, on automation, on time to value. You certainly see it from the CFO as my counterparts around the world. Real focus on every dollar that's being spent. We're now entering our sixth quarter of measured customer buying behavior and we're saying that this has been continuing recently. And that does reflect, particularly in areas like SMB, self-serve, create and close, you see this in professional services. But I'm also really excited about what we're seeing in terms of how we can step in and really help our customers get to their goals. Brian, I don’t know if you have anything to add.
A – Brian Millham: No, that’s great, Amy. Exactly what I was going to say, a lot of demand at the top of the funnel for us for new technologies like Data Cloud and like AI, but also seeing some headwinds, no doubt, from our more transactional business, as you stated. So Mark, thank you for the question.
Michael Spencer: Thanks, Mark. Operator, we will take next question, please.
Operator: Your next question comes from the line of Brent Thill with Jefferies. Please go ahead.
Brent Thill: Marc, really nice improvement in deals over $1 million, up 80% year-over-year. You've all alluded to this larger contract you landed. I'm just curious, do you feel like this is a new environment? Do you feel this is Miguel and the team having better gel in the field. What do you -- any more color there, if you could talk to you on the bigger deal front would be helpful. |
1,779 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: There's a lot of debate on the management team and putting together this call on how we're going to answer that question. We don't want to, in any way, give you indications that we see this environment going behind us. That said, we see a lot of green shoots. There's just a lot of opportunities. Customers are excited about -- and I think Japan, I would say, is very much a metaphor for me. When I was there about a year ago, for them, it was still the pandemic. Everyone, when I had lunch with my employees, they had to wear masks a year ago. So this was the first time when I felt like, kind of back to normal and the pandemic hangover is kind of ingested by the customers. I think that we're cautious about saying, oh, it's all green shoots, everything is going, we're back to normal. But at the same level, we are honest with you that we have a lot of green shoots and in products, in geographies. And you can see in this growth rate in large deals. So we're excited. I don't think we're willing to say to you on the call, hey, we've turned the corner. We want to but we're not sure because for a lot of customers, they still are measured in their buying environments. You know that. You talk to these customers. You talk to the channel partners. They're somewhat measured in their buying environments. But I would say people are a lot less measured than they were is one way to put it. There's definitely a reduction in the measured environment. And on a global basis, and like I said, in some of these customers in the last 30 days, I was in -- I can give you my direct experience. I was in San Francisco, Los Angeles, Las Vegas, Stuttgart, Germany, I was in Nice, Monaco. I visited with our customers throughout that area. And also, I went up to Amsterdam, to France. I had a large customer dinner in the U.K. in London. I went to the U.K. Safety Summit. I then came back and went to Japan. I think I see something very consistently, which is customers are extremely excited about AI everywhere we go. It could be government, |
1,780 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | I see something very consistently, which is customers are extremely excited about AI everywhere we go. It could be government, it could be commercial organizations. It could be technologists. Everyone is excited about AI. At the same time, there is a lot of confusion about what AI can and cannot do. And I think that's a huge opportunity for us to tell stories to our customers of what the success opportunities are in the enterprise with AI and also what the reality is for a lot of these customers. When I mentioned I was in Vegas. When I showed up in Vegas at the Wynn Hotel, the customers are -- they have our product in their hands, welcoming me. The whole team comes out because they're so excited because they used Salesforce, it's very flattering. When I got to Disneyland in Anaheim, which is something I have done 4 times this year, and obviously, they've become also one of our very largest customers in the world. Every Disney guy and they use Disney guys, which is a product. I highly recommend it to all the Disneylands, Disney Tokyo on Monday and in Disney Anaheim. Been talking to the Disney guys and they use Salesforce and Slack to make those tours happen. They use Salesforce call center now for Disney+. On the Disney store is Commerce Cloud. It's an incredible success story, but it's a huge opportunity for them to take another level of Disney where I certainly can see how all that information can get translated into AI. And that when I walk in the park, I'm expecting the Mandalorian to come up to me and say, "Hey, what did you think of the episode last night? It hasn't happened yet. I think we're all kind of on the cusp of delivering that full customer 360 for Disney." I think Bob Iger has been doing an incredible job in his vision for the future of the company with AI Assist extraordinary. And I can kind of go customer by customer, story by story. And this excitement, this energy, these ideas of innovation of AI were not in place a year ago. Because don't forget, a year ago, I don't think any of us have used |
1,781 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | ideas of innovation of AI were not in place a year ago. Because don't forget, a year ago, I don't think any of us have used ChatGPT or Bard or Anthropic or Cohere or Adapt or any of the new AI companies. None of us had really had our hands on or envisioned what it really meant to us or that we would have Copilots, and that those Copilots would give us the ability to do all kinds of next-generation capabilities. But a year later, it's a technology revolution. And we just want to make sure it's a trust revolution. We want to make sure it's about an AI and CRM and data revolution. I think we hit it right with the Data Cloud. We have -- we still have a lot of work, as everyone does in our industry, on AI and making it safe for our customers. This is going to be incredibly important. I think for a lot of customers, they realize that they'd like to just let this AI unleashed autonomously but it still hallucinates a huge amount and it also is quite toxic. So we're not quite ready for that revolution. But every day, it's getting a little better. And when I -- going through the streets of Tokyo, it's not quite the minority report, which is a movie that was partly written by our futurist, Peter Schwartz, but it's getting closer to that idea. And when I walked into some of these stores, there's definitely a lot more automation based on my customer record but not quite the level of automation that Tom Cruise felt when he walked into that Gap store, if you remember that scene, which was so amazing, which is very much front of mind for a lot of our customers because they want to have that capability and they want us to deliver that for them. |
1,782 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Michael Spencer: Thanks, Brent. Operator, we will take next question, please.
Operator: Your next question comes from the line of Karl Keirstead with UBS. Please go ahead.
Karl Keirstead: Okay. Great. Maybe I'll direct this to Amy and Brian. Salesforce obviously made a fairly significant pricing change early in the fourth quarter. And maybe, Brian, I'd love to get some color on the receptivity. And Amy in particular, is there a way you might frame the extent to which the price change may have impacted the guidance for 11% constant currency in the fourth quarter? And also, was that perhaps one of the drivers for the early renewals that you saw in 3Q as some customers maybe wanted to get in front of it? Thanks so much.
Brian Millham: Hey, Karl. Thanks for the question. Appreciate it. Price increases landed as well as the price increase can, I guess, with our customers out there. I think when we're delivering value to our customers and they're seeing benefits from our technology, we feel good about our ability to go execute against this. It's still early, honestly. We just introduced this a few months ago. And so we have seen certainly some benefits from it. But we'll see these benefits roll in over the next, really, three years as these contracts come up for renewal. And so yes, there's been receptivity to it but the big impact will be seen over the next three years. We're not going to see it in the near term, honestly, in our numbers. Amy, any comments?
Amy Weaver: Thanks, Brian. Karl, Brian pretty much summed it up. As we mentioned last quarter, we do not anticipate a material impact from pricing in the guide this year. That said, I have been very pleased by the execution and the discipline that we're showing around rolling this out. And an uplift really needs to roll for the full renewal installed base, which is going to take some time.
Michael Spencer: Thanks, Karl. Operator, we will take next question, please. |
1,783 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Michael Spencer: Thanks, Karl. Operator, we will take next question, please.
Operator: Your final question will come from the line of Brad Sills with Bank of America. Please go ahead.
Brad Sills: Wonderful. Thank so much. Great to see all the success here with Data Cloud. I'm not surprised we're hearing that in the channel. My question is really around the organization, the team that's responsible for executing on this and how they plug into the different product groups. Data scientists in this day and age are a rare commodity and you clearly are attracting that. So would love to get a sense for that organization, how it's evolved and how well integrated they are across the different product groups. Thank you. |
1,784 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: Well, I think that, that is very much a primary focus of the company, which is that when we started this Data Cloud, we thought we were just building a CDP. And a CDP looked like an exciting market opportunity. We're number one in enterprise marketing automation. That seems like a great opportunity. But the more we started working on this product, we realized, oh, every one of our clouds needs this Data Cloud. And so Sales Cloud needs a Data Cloud, Service Cloud needs a Data Cloud. Yes, Marketing Cloud needs a Data Cloud, called that CDP. And Slack needs a Data Cloud. Tableau also needs a Data Cloud. If you've seen any of my recent demonstrations and with these great Tableau customers in Japan, they all need Data Cloud on the back end of Tableau. And this idea that the Data Cloud will become the heart and soul of the product, be the engine of all of Salesforce's apps and say you can use our models, our AI models or you can bring your own models into the Data Cloud, which is a very cool feature. This idea that it also has this incredible level of capability. But the amount of data that it's already managing and the amount of data that it's already ingested, that is what is shocking to us. And I think that you're going to see as we get deeper and deeper into this so you can really see the level of data that we're handling, the trillions and trillions of transactions. This is going to be the key to the AI working for enterprises. Enterprises are going to want to deploy AI for productivity. I think I've made that case already on the call, but they're going to get frustrated when the Copilot that they are given from other companies don't have any data. They just have data grounded to maybe the application that's sitting in front of them, but it doesn't have a normalized data framework on -- integrated into the Copilot. So while I think Copilots on productivity applications are exciting because you can tap into these kind of broad consumer databases that we've been using. So as an example, the Copilot is |
1,785 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | because you can tap into these kind of broad consumer databases that we've been using. So as an example, the Copilot is I'm writing an e-mail. So now my -- I'm saying to the copilot, hey, now can you rewrite this email for me or some -- make this 50% shorter or put it into the words of William Shakespeare. That's all possible and sometimes it's a cool party trick. It's a whole different situation when we say, I want to write an e-mail to this customer about their contract renewal. And I want to write this e-mail, really references the huge value that they receive from our product and their log-in rates. And I also want to emphasize how the success of all the agreements that we have signed with them have impacted them, and that we're able to provide this rich data to the Copilot and through the prompt and the prompt engineering that is able to deliver tremendous value back to the customer. And this date, this customer value will only be provided by companies who have the data. And we are just very fortunate to be a company with a lot of data. And we're getting a lot more data than we've ever had. And a lot of that is coming from the Data Cloud because it's amplifying the capabilities of all the other data we have. So it's a very interesting moment for Salesforce. I think the demonstrations at Dreamforce were outstanding. The demonstrations that we'll deliver in our February release will be mind-boggling for our customers of what they will be able to get done. And I think that by the time we get to Dreamforce '25 or '24 in September '24, what we'll see is nothing that we could have possibly imagined just 24 months earlier before these breakthroughs in generative AI have really taken hold through the whole industry. No one company has a hold on this. I think it's pretty clear at this point that because of the way AI is built through open source, that these models are very much commodity models, and these responses are very much commodity responses. So we've always felt that way about AI for more than a decade. We |
1,786 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | and these responses are very much commodity responses. So we've always felt that way about AI for more than a decade. We said that its growth has really been amplified by open source development. Because these open source models now are as strong as commercial models are or proprietary models, I think that what we really can see is that, that is going to accelerate this through every customer. There's not going to be any kind of restrictions because of the proprietariness or the cost structures of these models. We're going to see this go much faster than any other technology. The reference point, as I've been using as I travel around, is really mobile operating systems. Mobile operating systems are very important, and we all have one on our desk or in our pocket right now. But really, the development of mobile operating systems has been quite constrained because they're really held mostly by two companies and two sets of engineering teams. That's not how this technology is being built. This technology is highly federated across thousands of companies and thousands of engineering teams who are sharing this technology. And because of that, you're ending up with a rate of innovation unlike anything we've seen in the history of our industry and is moving us into areas very quickly that could become uncomfortable. So this is an exciting moment. |
1,787 | CRM | 3 | 2,024 | 2023-11-29 17:00:00 | Salesforce, Inc. | 122,917 | Michael Spencer : Great. Thanks, Brad. With that, we'll conclude the call. We appreciate everyone joining the call and wish everyone a happy holiday season. Thank you.
Brian Millham: Happy holidays, everyone. Thanks, everybody.
Amy Weaver: Bye, everyone. Thank you.
Operator: And that concludes today's call. Thank you all for joining. You may now disconnect. |
1,788 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | Operator: Welcome to Salesforce Fiscal 2024 Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would like to hand over the conference to your speaker, Mike Spencer, Executive Vice President of Investor Relations. Sir, you may begin.
Mike Spencer: Good afternoon and thanks for joining us today on our fiscal 2024 second 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 Benioff, Chair and CEO; Amy Weaver, President and Chief Financial Officer; and Brian Millham, President and Chief Operating Officer. 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. 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 could differ materially from these forward-looking statements. A description of these risks, uncertainties and assumptions and other factors that could affect our financial results is included in our SEC filings including our most recent report on Forms 10-K, 10-Q and other SEC filings. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. And with that, let me hand the call over to Marc. |
1,789 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: All right. Thanks so much, Mike, and really appreciate everyone being here today. We're obviously very excited about these results and getting out there with all of you, and thanks for being on this call. So, listen, as we've shared with you over the last couple of earnings calls, Salesforce has really accelerated our transformation to profitable growth. I think that's super clear from the numbers and I couldn't be more excited, especially on this huge top line beat and what our margin is looking like today. As you all know, over last year, we've been executing against these four key areas of our transformation. First, our restructuring for the short and long-term. We've been talking about that since the fourth quarter call and we're going to update you on that today. Second, we're reigniting our performance culture by focusing on productivity, operational excellence and profitability and Brian is going to talk about that today. And third, we're prioritizing the core innovations to drive customer success, and I can't wait to share with you at Dreamforce, how we're taking our core platform to a whole new level, showing you some incredible new enhancements to our data cloud as well as new versions of Einstein and also fundamental extensions to our core platform, really showing how our core platform has been rebuilt so that we can take so many of these amazing acquisitions that we've made over the last decade and run them right inside the core. Our fourth priority is building even stronger relationships with our investors. That's all of you. You know how important that is to us. We probably spent more time in the last six or nine months with our investors, and we have maybe in the entire history of the company. And we've received just great feedback from all of you and we're really making great progress there and I want to especially thank Mike for everything that he's doing with all of you. And we're adding a fifth priority. And last quarter, we told you we're now driving our AI transformation. We're |
1,790 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | all of you. And we're adding a fifth priority. And last quarter, we told you we're now driving our AI transformation. We're pioneering AI for both our customers and ourselves leading the industry through this incredible new innovation cycle and I couldn't be happier with Srini and David and the entire product and technology team for the incredible velocity of AI products that were released to customers this quarter and the huge impact that they're making in the market and showing how Salesforce is transforming from being not only the number one CRM, but to the number one AI CRM, and I just express my sincere gratitude to our entire T&P team. I couldn't be happy with the performance of our team delivered in the second quarter, and the numbers basically speak for themselves. Our AI data, CRM plus Trust platform, well, it's propelled us to become the third largest enterprise software company by revenue in the world. And I think in Japan, we just became the second largest company. So congratulations to everyone at Salesforce and especially to our Japanese team. And with our industry-leading cloud and sales service marketing commerce, our industry clouds powered by Data Cloud, Einstein Flow, Tableau, Slack, MuleSoft. Really, all of these are integrated into one trusted metadata-driven platform. We're providing more capabilities to more customers than any other CRM vendor, and I can't wait to show all that, as I said, at Dreamforce. That's why Salesforce is the number one CRM by market share based on the largest latest IDC Software Tracker. And now we are working hard to be the number one, as I said, AI CRM. Our transformation drove our second quarter results, especially when it comes to our highest priority, as you can see, profitability. And look, we couldn't be happier to see these numbers. It's incredible to see the margin acceleration in such a short period of time. We've exceeded our own expectations. I hope you've exceeded yours. In our second quarter, our non-GAAP operating margin rose to 31.6%. That's up over |
1,791 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | expectations. I hope you've exceeded yours. In our second quarter, our non-GAAP operating margin rose to 31.6%. That's up over 1,000 basis points year-over-year. And this is the second quarter in a row, our operating margin is up 1,000 or more points year-over-year. And as you're about to hear from Amy, we've maintained our disciplined approach to cost management while also investing in growth initiatives across our entire platform of offering and we're positioning Salesforce for the future and will continue to drive our margins and also while we're continuing to drive customer growth. Revenue in the second quarter was $8.6 billion. It adds up a 11% year-over-year and the same in constant currency. And during the quarter, we had great wins with JPMorgan, Bayer, FedEx, Maersk, as well as the Department of Veterans Affairs. And so many more you're going to hear about from Brian. Operating cash flow for Q2 was $808 million, pretty incredible. That's up 142% year-over-year, really, very strong. And our remaining performance obligation ended the second quarter at $46.6 billion, that's an increase of 12% year-over-year, really amazing. Current remaining performance obligation or what we call CRPO, ended at $24.1 billion. That's up 12% year-over-year and 11% and in constant currency. Now through the second quarter, we have returned and this is amazing, $8 billion in share repurchases since we started the buyback program a year ago. So we've bought $8 billion of stock over the last 12 months that is really awesome. Amy is going to talk more about that. And I think I know you realize we have a lot more to do there. Based on our performance and what we saw in the back half of the year, we're raising our fiscal '24 revenue guidance to $34.7 billion to $34.8 billion or about 11% projected growth year-over-year. Last quarter, we raised our fiscal year '24 non-GAAP operating margin guidance to 28% and we said that we expected to eclipse 30% in the first quarter of fiscal '25. Well, as you've all seen these numbers and now I'm |
1,792 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | we said that we expected to eclipse 30% in the first quarter of fiscal '25. Well, as you've all seen these numbers and now I'm happy to officially share, we are accelerating that target again, raising our fiscal year '24 non-GAAP operating margin, 30%, an improvement of 750 basis points year-over-year. It's kind of amazing, but, yes, we are saying that we're going to deliver 30% margin for this year. And that's an incredible goal. So while we thought we were going to do it next year, we're really going to do it this year. And it's an amazing achievement of our whole team. It certainly has been a lot of work. It's been difficult. In a lot of cases, it has been a struggle. But our teams are incredible. And what they have done has been nothing more miraculous and down to see, not only to the delivery of the 31% plus growth for this quarter, but 30% for the year. It's just awesome. It's just incredible. And I'm really excited to welcome back to Salesforce so many boomerang employees. Boomerang employees are employees who are employees, but for one reason or another, left the company, got recruited away or went off to start their own companies or ever. Well, a lot of these results have to do with not only our incredible employees that we've had in place. But a lot of folks have really felt the desire to come back and help us. And I just want to say thank you to all of them. It's been incredible to welcome them back. And the line is long out the door of people who have left Salesforce and want to come back to Salesforce and we're welcoming all of them with open arms, especially across our sales, engineering, technology organization, proven winners, incredible leaders who got taken out of Salesforce because they were doing incredible things. To watch them come back because they want to help us and achieve this next level of growth and capability and revenue and margin and in technology and leadership. Well, I just want to especially start to thank some of those, including Miguel Milano who's our new Chief Revenue |
1,793 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | leadership. Well, I just want to especially start to thank some of those, including Miguel Milano who's our new Chief Revenue Officer. He's just returned to us from Celonis and of course Ariel Kelman, our Chief Marketing Officer, who was most recently at Oracle and Kendall Collins, our Chief Business Officer, and he's been my -- now my Chief of Staff and was, of course, had so many executive positions at Salesforce. But this is a long list and I can't even continue it of how many people are coming back. And what I love about this is that they're hitting the ground running and they make an immediate impact. They know the culture, they understand the products, they're able to execute incredible agility. And so I've got the siren sound out there for all of them to come back and to join us. Now earlier this month, we welcomed Sabastian Niles to Salesforce, he's our Chief Legal Officer. He's sitting here at the table right now, making funny faces with me, and I wouldn't be happier. And I couldn't be happier to have Sabastian. As part of my executive leadership team, we met Sabastian this year. We did a lot of work with Wachtell, as lot of you know, we will go through the details. It's not necessarily to go through that right now. The past is the past. But I'll tell you one of the greatest things that happened during this amazing period of Salesforce was meeting Sabastian and now to have him on the leadership team. I couldn't be more excited and I'm thrilled to have him with us. So welcome Sabastian. |
1,794 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | Sabastian Niles: Thank you. |
1,795 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | Marc Benioff: Okay. Thank you. Those are his opening comments. AI, Data, CRM, Trust, let me tell you, we are at the dawn of an AI revolution. And as I've said, it's a new innovation cycle that is sparking amounts of tech buying cycle over the coming years. It's also a new tech investment cycle. We've been involved in the earliest rounds many of the top AI start-ups. Many of you have seen that, we are in there very early. But I'll tell you, this company has pioneered AI, and not just in predictive, a lot of you have followed up the development and growth of Einstein. But also, you've seen that we've published some of the first papers on prompt engineering and the beginnings of generative AI, and we took our deep learning routes, and we really demonstrated the potential for regenerative AI and now to see so many of these companies become so successful. I just saw OpenAI delivering $1 billion revenue run rate. It's just awesome to see this growth and especially proud that they're right here in our hometown of San Francisco, which is becoming the number one AI city in the world. Very excited for our city. Now through our $500 million generative AI Fund, we're seeing the development of ethical AI with amazing companies like Anthropic, Cohere, Hugging Face and some others, and I just heard one of them just subleased our entire Slack building, but I'm not allowed to say who it is, but I couldn't be more excited about that because we're really seeing downtown San Francisco become AI Central. So every CEO I've met with this year across every industry believes that AI is essential to improving both their top and bottom line, but especially their productivity AI is just augmenting what we can do every single day, just thinking about myself. I have spent so much time on Bard over the last week, it's incredible. I was just buying some flashlights and I couldn't figure out what flashlight I wanted to buy, and I was on Amazon trying to figure out what's the flashlight. And so I took a picture of the Amazon picture of what was |
1,796 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | buy, and I was on Amazon trying to figure out what's the flashlight. And so I took a picture of the Amazon picture of what was happening on the app, and I gave it to Bard because Bard has this multimodal capability to ingest the photo. And then ingested the photo, and it told me not to buy the flashlight, that it was poor quality and then recommended one that was better for me, and it was incredible to see that I was once again working with a next generation of artificial intelligence. And that is inspiring me and I think many of our customers and ultimately, all of them believe they can grow their businesses by becoming more connected to their customers than ever before through AI and at the same time, reduce cost, increase productivity, drive efficiency and exceed customer expectations through AI. And I'll tell you, every single management team that we have here at Salesforce every week, we're using our Einstein AI to do exactly the same thing. We go back, we're trying to augment ourselves using Einstein. So what we'll say is, and we've been doing this now and super impressive, we'll say, okay, Brian, what do you think our number is and we'll say, okay, that's very nice, Brian. But Einstein, what do you really think the number is? And then Einstein will say, I think Brian is sandbagging and then the meeting continues. The reality is every company will undergo an AI transformation with the customer at the center, because every AI transformation begins and ends with the customer, and that's why Salesforce is really well positioned with the future. And with this incredible technology, Einstein that we've invested so much and grown and integrated into our core technology base. We're democratizing generative AI, making it very easy for our customers to implement every job, every business in every industry. And I will just say that in the last few months, we've injected a new layer of generative AI assistance across all of the Customer 360. And you can see it with our salespeople who are now using our Sales Cloud |
1,797 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | AI assistance across all of the Customer 360. And you can see it with our salespeople who are now using our Sales Cloud GPT, which has been incredible, what we've released this quarter to all of our customers and here inside Salesforce. And then when we see that, they all say to themselves, you know what, in this new world, everyone can now be in Einstein. But democratizing generative AI at scale for the biggest brands in the world requires more than -- that's just these large language models and deep learning algorithms, and we all know that because a lot of our customers kind of think and they have tried and they go and they pull something off a Hugging Face, it is an amazing company. We just invested in their new round and grab a model and put some data in it and nothing happens. And then they don't understand and they call us and say, hey, what's happening here? I thought that this AI was so amazing and it's like, well, it takes a lot to actually get this intelligence to occur. And that's what I think that's the value that Salesforce is bringing is that we're really able to help our customers achieve this kind of technological superiority right out of the box just using our products in a low code, no code way. It's really just democratization of generative AI at scale. And that is really what we're trying to achieve that at the heart of every one of these AI transformations becomes our intelligent, integrated and incredible Salesforce platform, and we're going to show all of that at Dreamforce. Our platform starts and ends now with our Data Cloud, and I just would like to call out the incredible Data Cloud team for what they've delivered. A lot of you have seen the release of the Data Cloud, this incredible Genie technology that we started really showing off last Dreamforce, but what you can see with Data Cloud is that customers must get their data together if they want to achieve success with AI. This is the critical first step for every single customer. And we're going to see that this AI revolution is |
1,798 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | success with AI. This is the critical first step for every single customer. And we're going to see that this AI revolution is really a data revolution. And you're going to see at Dreamforce that we're going to get this data cloud turned on as fast as we can and as easiest as we can for every single one of our customers. This Data Cloud is incredible, what it's doing for our customers. It not only has AI built in, but it's real time, it's automated, it's integrated with the core platform. It's not some separate Data Cloud. It's an integrated part of our platform in our metadata, in our core code, like our Sales Cloud, like our Service Cloud and, as you're about to assume seeing our new Marketing Cloud and Commerce Cloud and of course, our core application development capabilities all inside our Data Cloud. No CRM platform on the planet is better positioned than Salesforce to use this amazing Salesforce and business data to fuel AI-powered applications because of this architecture. It's very easy for our customers to set up and just go. And our data cloud is so deeply integrated as part of this core metadata architecture. It's allowing our customers to quickly action all of their data from any source without the costly integration project necessary with stand-alone data warehouses and data lakes, they've been forced to buy and create more islands of information and all of these independent systems and independent teams versus having one integrated data architecture. We're moving our customers from having islands of data to having a single source of truth for all of their data. This is our greatest dream. With Data Cloud and powerful technologies like Einstein Flow, Lightning, Tableau, MuleSoft, Slack. Our customers, they can easily supercharge every application and customer experience with AI, automation and analytics at scale. Data Cloud continues to be our fastest-growing organic product. You're going to see the new version. At Dreamforce, it's fully integrated with our Sales Cloud and Service Cloud and of |
1,799 | CRM | 2 | 2,024 | 2023-08-30 17:00:00 | Salesforce, Inc. | 122,917 | You're going to see the new version. At Dreamforce, it's fully integrated with our Sales Cloud and Service Cloud and of course, already our Marketing Cloud and other key things in this kind of new second version of Data Cloud that's coming will be fully released to the customers. And as I said, our goal is for every customer just to be able to easily turn it on. Just in the second quarter, Data Cloud ingested, and this is amazing. Over six trillion records, it ingested six trillion records and triggered more than one trillion activations to drive customer engagement. And we've always put trust at the center of everything that's going on in our platform and that has never been important. More important, I would say, especially now, with not only with data cloud, but in this AI revolution because this AI revolution is a trust revolution. Everything Einstein does has also delivered with trust and especially ethics at the center and I especially want to call out the incredible work of our office of ethical and humane use, pioneering the use of ethics and technology. If you didn't read their incredible article in HBR this quarter. It was awesome. And they are doing incredible work really saying that it's not just about AI, it's not just about data, but it's also about trust and ethics. And that's why we developed this Einstein trust layer. This is completely unique in the industry. It enables our customers to maintain their data privacy, security, residency and compliance goals. And I can tell you, we're already at this early stage seen momentum with these amazing Einstein innovations. Companies like Heathrow Airport and PenFed Credit Union really adopted Einstein and took their Salesforce implementations to another level in the quarter. Heathrow is a great example of transformative power of AI, Data, CRM and Trust and the power of a single source of truth. They have 70 million passengers who pass through their terminal annually, I'm sure many of you have been one of those passengers I have as well, Heathrow is |
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