Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Salesforce Inc (CRM, Financial) reported strong financial performance with $9.33 billion in revenue, up 8% year over year.
- The company achieved a record non-GAAP operating margin of 33.7%, up 210 basis points year over year.
- Salesforce Inc (CRM) continues to see growth in multi-cloud deals, accounting for close to 80% of new business in the quarter.
- The Data Cloud product is the fastest-growing organic product in the company's history, with a 130% year-over-year increase in paid customers.
- Salesforce Inc (CRM) is launching Agentforce, a new AI-driven platform, which has received positive feedback from pilot customers and is expected to drive future growth.
Negative Points
- The Americas region showed slower growth at 7% year over year, indicating a measured buying environment.
- The company faces challenges in certain industries such as travel, transportation, hospitality, manufacturing, automotive, and energy, which were more constrained.
- There is a potential risk of customer dissatisfaction with AI solutions, as mentioned with Microsoft's Copilot, which could impact Salesforce Inc (CRM)'s AI adoption.
- The transition of Amy Weaver, the CFO, could create uncertainty during the leadership change period.
- The company is still processing the loss of two board members, which could impact internal morale and strategic direction.
Q & A Highlights
Q: Can you help us understand how to build up the growth equation? Like where are you guys getting those points of growth? And when does Gen AI become a more material contributor there?
A: Marc Benioff (Chairman and CEO) - Growth is driven by three core factors: the transformation of our technology stack, verticalization of that stack, and international growth. Brian Millham (President and COO) - New innovations like Agentforce, Data Cloud, and AI enhance our core apps, driving efficiencies and reducing costs. Channel diversification and managing attrition more aggressively are also key strategies.
Q: With agents coming into the picture with productivity gains of 90% deflection rates, how does the pricing change to account for that?
A: Marc Benioff (Chairman and CEO) - Pricing will be on a consumption basis, approximately $2 per conversation. This model is similar to our Data Cloud's consumption credits, offering a high-margin opportunity.
Q: How quickly can existing customers get up and running with Agentforce? Is Data Cloud a prerequisite for driving value?
A: Marc Benioff (Chairman and CEO) - Customers can get started almost immediately. While Data Cloud enhances accuracy, it is not a prerequisite. The integrated platform allows for seamless deployment and high customer satisfaction.
Q: What does it take to get the Americas business back to double-digit growth?
A: Brian Millham (President and COO) - The measured buying environment has impacted growth, particularly in the transactional and SMB segments. However, new technology innovations and multi-cloud deals present significant opportunities for growth.
Q: How do you see the macro environment affecting Salesforce's growth, especially with potential rate reductions and post-election changes?
A: Marc Benioff (Chairman and CEO) - The macro environment is always a factor, but our focus remains on innovation and growth through new technologies like AI and Agentforce, which are expected to drive significant productivity and efficiency gains for our customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
