The Salesforce Fiscal 2024 Second Quarter Results Conference Call began with a welcome from the operator, who put all lines on mute to prevent background noise. Mike Spencer, Executive Vice President of Investor Relations, then introduced Marc Benioff, Chair and CEO; Amy Weaver, President and Chief Financial Officer; and Brian Millham, President and Chief Operating Officer. Spencer also reminded everyone that non-GAAP measures would be discussed and that forward-looking statements were subject to risks, uncertainties, and assumptions. Benioff then thanked everyone for joining the call and expressed excitement about the results.

Salesforce has been executing against four key areas of transformation, such as restructuring, reigniting their performance culture, prioritizing core innovations and building stronger relationships with investors. They have added a fifth priority of driving their AI transformation. They have been talking about these areas since the fourth quarter call and will update investors on them. Mike has been working with investors to receive feedback and progress has been made.

Salesforce has become the third largest enterprise software company by revenue in the world and the second largest in Japan. This was driven by their data cloud, Einstein Flow, Tableau, Slack, and MuleSoft, which are integrated into one trusted metadata-driven platform. Salesforce is the number one CRM by market share and is now working hard to become the number one AI CRM. The second quarter results showed a 1,000 basis points year-over-year increase in non-GAAP operating margin to 31.6%.

Salesforce had a successful second quarter with revenue of $8.6 billion, an operating cash flow of $808 million, and a remaining performance obligation of $46.6 billion. They have also returned $8 billion in share repurchases over the last 12 months. As a result, they have raised their fiscal year '24 revenue guidance to $34.7 billion to $34.8 billion and their non-GAAP operating margin guidance to 28%. They also expect to exceed 30% in the first quarter of fiscal '25.

Salesforce is accelerating their fiscal year '24 non-GAAP operating margin to 30%, an improvement of 750 basis points year-over-year. This is an incredible goal that the team has worked hard to achieve. Salesforce is also welcoming back many boomerang employees, who left the company but are now returning to help Salesforce reach its next level of growth and capability. A special thank you is given to Miguel Milano, the new Chief Revenue Officer.

Marc Benioff has welcomed Sabastian Niles as the Chief Legal Officer to join the executive leadership team at Salesforce. Benioff is excited to have Niles on board and is looking forward to the dawn of the AI revolution, which Salesforce has been involved in since the beginning. He mentions the development and growth of Einstein, as an example of Salesforce's pioneering in AI.

This paragraph discusses the success of AI companies in San Francisco, as well as the development of ethical AI through the $500 million generative AI Fund. It also mentions the CEO's belief that AI is essential for improving both top and bottom lines, as well as productivity. The author then gives an example of how AI has improved their own life, with the help of Bard's multimodal capability to ingest photos and recommend better products.

Salesforce has been using their AI technology, Einstein, to help augment their management teams and reduce costs, increase productivity, and exceed customer expectations. They have released a new layer of generative AI assistance across Customer 360, which has been incredibly successful. This technology democratizes AI, making it easy for customers to implement it in every job, business, and industry. With this technology, everyone can be in Einstein.

Salesforce is helping customers utilize AI at scale and achieve technological superiority through their low code, no code products. The Data Cloud is a critical first step for customers to achieve success with AI, and Salesforce is working to make it as fast and easy as possible for customers to access. The Data Cloud technology is an incredible tool that is revolutionizing the way customers use data.

Salesforce has developed an AI-powered Data Cloud that is deeply integrated with its core platform, allowing customers to access data from any source without costly integration projects. Data Cloud is continuing to grow and will soon be fully integrated with Salesforce's Sales, Service, and Marketing Clouds. In the second quarter, Data Cloud ingested a large amount of data, making it easier for customers to use AI, automation, and analytics.

The paragraph discusses how trust and ethics are essential in the AI revolution and how Salesforce has developed an Einstein trust layer to ensure data privacy, security, residency and compliance. It also mentions how companies like Heathrow Airport and PenFed Credit Union have adopted Einstein to take their Salesforce implementations to another level. The paragraph highlights the transformative power of AI, Data, CRM and Trust and the power of a single source of truth, with Heathrow using Service Cloud, Marketing Cloud, Commerce Cloud and Data Cloud to manage the entire airport experience.

Salesforce is excited to welcome everyone to Dreamforce, their largest enterprise tech and AI conference this year. It will feature speakers such as Sam Altman and Dario Amodei from OpenAI, and Fei-Fei Li from Stanford. AI will be the main focus of the conference, with over 1,500 sessions, and attendees will be able to take their skills to a whole new level. Salesforce is also using AI-assisted generators to improve customer service and save agents time and effort.

Salesforce is gearing up for Dreamforce, their annual event, with the Foo Fighters playing a benefit concert and Dave Matthews performing at a dinner. Brian Millham then talks about Salesforce's focus on operational excellence and growth initiatives, and how customers are looking to AI CRM to help them drive productivity, quick time to value and business growth. Data Cloud is also being used to supercharge Salesforce's product portfolio, providing customers with real-time customer data in the flow of work around sales, service, marketing and commerce.

Salesforce continues to exceed expectations in Q2 due to their go-to-market strategy and focus on customer success. The growth initiatives across core products, data, AI, services, industries, and international are driving their success. Schneider Electric has been using Salesforce for over a decade and has seen a reduction in close times by 30%. Salesforce also introduced Salesforce Starter in Q2 for their small business customers, providing sales, service, and marketing in one integrated offering.

Salesforce is seeing strong customer momentum for its Data Cloud, Einstein-powered Chatbots, Financial Services Cloud, Experience Cloud, and MuleSoft products. FedEx made a significant investment in Salesforce by adding Data Cloud, and PenFed is using Financial Services Cloud, Experience Cloud and MuleSoft, and Einstein-powered Chatbots to handle customer service sessions. Tableau, Slack and MuleSoft are also seeing great wins in the quarter.

In the second quarter of 2020, Salesforce saw 11% year-over-year revenue growth, driven by strong customer usage growth in automation products and industry verticals. International wins in EMEA, APAC, and Latin America also contributed to the success. The company is well positioned for the future as the number one AI CRM and will be showcasing their progress at Dreamforce next month.

MuleSoft saw strong growth in the second quarter, driven by continued momentum, solid sales and service performance and a modest FX tailwind. The Americas revenue grew 10%, EMEA grew 11% in constant currency and APAC grew 24% in constant currency. Manufacturing, automotive and energy saw greater resilience, while high tech and retail and consumer goods were more measured. The non-GAAP operating margin rose to 31.6%, up 1000 basis points. Operating cash flow was $808 million, up 142% year-over-year, and free cash flow was $628 million, up 379% year-over-year. Remaining Performance Obligation (RPO) ended the quarter at $46.6 billion, up 12% year-over-year.

In Q2, Salesforce returned $1.9 billion in the form of share repurchases, bringing the total return to more than $8 billion. Despite the measured macro environment impacting customer decision-making, Salesforce is raising their revenue guidance to 34.7-34.8%, representing 11% growth year-over-year. Additionally, non-GAAP operating margin guidance is being raised to 30%, with stock-based compensation expected to improve to slightly above 8% as a percent of revenue. Investment timing in AI-focused R&D is expected to lead to nonlinear quarterly margins in the back half of the year.

The company is expecting fiscal year '24 GAAP diluted EPS of $3.50 to $3.52, including estimated charges for restructuring of $1.11, and non-GAAP diluted EPS of $8.04 to $8.06. They are expecting operating cash flow growth of 22-23%, free cash flow growth of 24-25%, revenue of $8.7-$8.72 billion, CRPO growth of slightly above 11%, and GAAP EPS of $1.02-$1.03 and non-GAAP EPS of $2.05-$2.06. The company will also be fully offsetting stock-based compensation dilution through share repurchases in fiscal year '24.

Marc Benioff congratulates the team on their successful cost management and strategic investments, and encourages Kash Rangan to attend Dreamforce to learn more about the AI innovations. He then opens the call for questions, with Rangan asking if Salesforce has maximized its customer wallet share and if it can continue to grow and increase margins in the current economic conditions.

Salesforce is excited about the potential of AI to start a buying revolution and ignite growth, and they have seen measured buying environments in the last several quarters. They have also seen great success in their core technologies and products, such as MuleSoft, and Dreamforce is expected to be a catalyst for customers to see the opportunity to grow with Salesforce and invest in new products and technologies, such as Data Cloud. Brian Millham adds his perspective on the matter.

Salesforce has a three-pronged growth strategy that involves expanding multi-cloud customers, international acceleration, and deeper investments in industries. At Dreamforce next week, there will be speakers to help the business community understand how to use AI across the Customer 360 range of products.

Marc Benioff welcomed Ariel Kelman back to Salesforce after her time at Amazon and Oracle. He was surprised at the level of energy and passion for the mission and technology that was still present at Salesforce. Kash Rangan congratulated them on their strong quarter, and Keith Weiss asked about their plans for margins in the future, with Benioff mentioning the opportunity of generative AI.

Marc Benioff emphasizes the importance of delivering profitable growth while also taking advantage of opportunities in the industry, such as generative AI and data. He explains that Salesforce is committed to being the number one AI CRM, and is looking into both organic and inorganic options to achieve that goal. He also reassures investors that the company is serious about its commitment to profitable growth and has taken steps to ensure that.

Amy Weaver and Brian Millham discussed the restructuring of the company and the increase in guidance to 30%, as well as the impact of the pricing actions taken earlier in the year. They stated that neither had a significant influence on their guidance for the year, and that the impact of the price increase will be seen over the next one to two to three years.

Marc Benioff answered a question from Karl Keirstead regarding the headcount of the company being down 11%. Benioff stated that the management team is talking about this every day and they are continuing to invest in headcount, especially in AI and working on integrating acquisitions into their core. Additionally, Brian is investing in growth in products and geographies. Benioff concluded that the headcount will continue to adjust, but they are not planning any other major restructuring efforts.

Marc Benioff discussed the opportunities of AI across the Salesforce stack, noting that it is currently in the predictive stage, but rapidly moving into the generative AI stage with the release of GPT products. He also highlighted the upcoming Dreamforce event, which will introduce autonomous and agent-based systems as the third zone of AI.

CRM is becoming increasingly important for customers, as it allows for automation, intelligence, productivity, and augmentation of employees. There is an open system in place that allows customers to access a variety of AI systems, including contract digitization, cost generation, survey generators, campaign assistance, and automatic marketing segmentation. All of these capabilities are made possible through the CRM technology offered by the company.

Brad is excited to show the capabilities of Slack at Dreamforce, such as Slack Sales Elevate, which is a new capability that promotes the Sales Cloud system running inside Slack. He is also excited to demonstrate how core services in Salesforce can be delivered through Slack, and how Slack can be used as an easy-to-use interface for AI systems.

Marc Benioff explains that Salesforce is a modern version of AI, Data, CRM, and Trust that must come together. He believes that Data Cloud will be the heart of this transformation and will be a huge revenue opportunity for Salesforce. He also mentions that customers who have Sales Cloud, Service Cloud, Marketing Cloud, and Commerce Cloud are adding Data Cloud to their platforms.

Kendall Collins and Sabastian Niles, the Chief of Staff and Chief Legal Officer respectively, joined Marc Benioff on the Salesforce earnings call to discuss the upcoming Dreamforce event. Collins emphasized the importance of AI and Salesforce's GPT clouds in making every cloud better, while Niles highlighted the company's values of trust, customer success, innovation, equality, and sustainability, which are driving their commitment to customers, investors, and other stakeholders.

Marc Benioff, CEO of Salesforce, is excited about the future of AI and how it will be used in the technology life cycle. He believes that trust should be put first and that companies and individuals should partner with organizations that prioritize trust. He is looking to grow the business and increase the revenue numbers, while also focusing on the bottom line.

Brent expressed his appreciation to all stakeholders, including investors, for their key insights that have helped make the company stronger. He encouraged everyone to find him at Dreamforce in a few weeks to discuss how to move the company forward with the opportunities ahead. He concluded the conference call by expressing his gratitude to everyone and looking forward to seeing them at Dreamforce.

This summary was generated with AI and may contain some inaccuracies.