The operator welcomes listeners to the Salesforce's Fiscal 2024 Third Quarter Results Conference Call and introduces the speakers. The speakers include Marc Benioff, Chair and CEO; Amy Weaver, President and CFO; and Brian Millham, President and COO. The commentary will include non-GAAP measures and may contain forward-looking statements. The speakers remind listeners to refer to the SEC filings for a description of potential risks. Marc Benioff thanks everyone for joining the call and hopes they had a great Thanksgiving.

The speaker expresses gratitude for the successful year and encourages everyone to take a break from technology. They are excited about the double-digit revenue growth and exceeding their expectations. The success was achieved through partnership and transformation, which was necessary for the business to thrive. The focus was on increasing profitability, productivity, and operational excellence. The speaker thanks investors for their support and partnership.

In this paragraph, the speaker discusses three reasons why they are excited about the current quarter. These include 80% growth in deals over $1 million, the success of their new product, the Data Cloud, and the positive reception of their Einstein GPT Copilots. They also mention the success of their recent Salesforce World Tour in Japan and the potential for future growth with the Data Cloud.

Salesforce is experiencing unprecedented growth and success thanks to their AI innovation cycle and their leading position as the number one AI CRM. They are also the top enterprise apps company and their Data Cloud platform is performing exceptionally well, serving as the foundation for all AI transactions and large deals. This has resulted in a significant increase in cash flow, further solidifying Salesforce's position as a top player in the industry.

The Data Cloud has seen a significant increase in records and activations, making it a powerful tool for companies looking to implement AI. The timing of its release aligns perfectly with the AI revolution, and its trust layer ensures that customers' data is protected from large language models. In the third quarter, Salesforce saw a revenue of $8.7 billion, making it the third largest enterprise software company. Many companies are now choosing to standardize on Salesforce as their core technology platform.

The company has experienced an 80% growth in deals over $1 million, with nine out of the top 10 deals including six or more clouds. The company is committed to increasing margins and has shown significant improvement in operating and free cash flow. The company is also raising its fiscal year '24 revenue guidance and expects to achieve a non-GAAP operating margin of 30.5%. The CEO expresses disbelief at the company's margin acceleration over the past five quarters.

The company has seen a significant improvement in performance and morale, with a focus on building a top AI CRM and training sales executives to effectively communicate the benefits of AI. They are also introducing new products and technologies, such as UE+, and have a strong culture of teamwork and employee satisfaction. There is a high level of interest in Data Cloud and Einstein, with customers investing in AI for increased productivity. The CEO has been traveling extensively and has observed these trends globally.

The speaker discusses the low unemployment rate and the challenges companies face in hiring new employees. They mention the success of Data Cloud in helping companies increase productivity through technology. They also highlight some of the top deals and customers, including AWS, American Cancer Society, Group Global, and SiriusXM. The speaker also mentions a recent dinner with customers in Houston, where they enjoyed a performance by the Ortega family.

The speaker discusses the success of the company's restaurants and their partnership with Waste Management. They also mention their upcoming 25th anniversary and their focus on operational excellence and profitable growth. The non-GAAP operating margin has increased significantly and sales and marketing costs have decreased. The company is well positioned for continued growth and has seen revenue growth in the third quarter due to their product portfolio and multi-cloud deals.

In the third quarter, the company saw significant growth in their deals over $1 million, add-on products, and new partnerships. They also have a strong focus on customer satisfaction and operational efficiency, leading to a 30% increase in productivity. The company's partnership with AWS is expected to bring more opportunities for growth in the future.

Salesforce is focused on refining and expanding their big deal strategy, bundling products, and increasing efficiency. They have successfully implemented their own AI tools and applications, resulting in improved processes and customer engagement. They have also seen success with their products, as reflected in high levels of participation in events and a large volume of applications to join the company. Their growth initiatives in core products, data, AI, industries, and international markets have contributed to their strong performance in the quarter, with particular momentum in Data Cloud and Einstein. Customers are recognizing the value of their integrated solutions with AI and Data Cloud features.

In the past quarter, Salesforce has seen significant growth in their existing customers' spending, particularly in their industry cloud offerings. They have also seen continued growth in MuleSoft and Tableau, which are integrated into their Data Cloud. However, the macro trends have affected their professional services, create and close sales, and Slack self-service businesses. Despite this, Slack was included in seven of their top 10 deals. During Cyber Week, Commerce Cloud, Einstein, Marketing Cloud, and Service Cloud all had impressive numbers, showcasing the reliability and scale of their AI CRM platform.

The company is entering Q4 with a lot of energy and ambition, and they are committed to guiding their customers through a new innovation cycle. The team is proud of the changes made in Q3 and over the past year. The company has transformed and is well positioned for the future. The third quarter showed strong execution and discipline, with revenue up 11% year-over-year. The growth was driven by MuleSoft and resilient sales and service performance. The company saw growth in all geographic regions and strong new business growth in India, Brazil, and Japan. Public sector performed well, while high tech and general were more measured. Multi-cloud momentum continues, with nine of the top 10 deals including six or more clouds. Revenue attrition remained strong at 8%. The non-GAAP operating margin was up 850 basis points year-over-year, driven by disciplined investment. Operating cash flow and free cash flow also showed significant growth year-over-year.

In the third quarter, the company saw an increase in cash flow due to strong collections and lower cash outflow, resulting in higher margins. The remaining performance obligations also saw growth, with RPO ending at $48.3 billion and CRPO at $23.9 billion. The company also exceeded their capital return commitment by returning $1.9 billion through share repurchases. For fiscal year '24, the company has narrowed their revenue guidance range to $34.75 billion to $34.8 billion, with an expected 11% growth year-over-year. They have also raised their non-GAAP operating margin guidance to 30.5% and expect stock-based compensation to be approximately 8% of revenue. As a result, GAAP diluted EPS is expected to be $3.99 to $4, while non-GAAP diluted EPS is expected to be $8.18 to $8.19.

The company has raised their fiscal year '24 operating cash flow growth guidance to 30-33%, with a 14-16 point headwind from restructuring. This is due to strong collections and expense discipline. CapEx is expected to be slightly below 2.5% of revenue, resulting in a free cash flow growth of 33-36%. The company expects to fully offset stock-based compensation dilution through share repurchases, resulting in a decrease in the ending share count for the first time in company history. Q4 guidance includes expected revenue and CRPO growth of 10% and 11% respectively, with professional services headwinds of 1 point. GAAP EPS is expected to be $1.26-$1.27 and non-GAAP EPS is expected to be $2.25-$2.26. The company remains focused on strong execution and disciplined investment strategy. The speaker thanks shareholders and employees for their support and hard work throughout the past year. The call is now open for questions.

Kirk Materne from Evercore ISI congratulates the company on a good quarter despite a tough market environment. He asks if the strong growth of MuleSoft is a sign of increased interest in the Data Cloud offering and AI, to which Marc Benioff and Brian Millham confirm that data is becoming a crucial asset for customers and MuleSoft is helping them bring it all together for their AI transformations.

The company is excited about their recent success, with eight of their top ten deals coming from MuleSoft. The amount of data flowing through MuleSoft has increased significantly, and the sales organization, led by Eric Eyken-Sluyters, has done an incredible job. Sales productivity has increased by 30%, and the company is constantly working to improve it. They attribute their success to a focus on enablement and understanding their buying process.

The company experienced some difficulties understanding the buying process of customers and the value they seek from Salesforce solutions. However, with a new sales leader, they have improved their discipline and are seeing great results. The company has also achieved a high adoption rate for their Einstein GPT Copilot technology. The analyst also asked about margin expansion and if it will continue in the future.

Amy Weaver and Brian Millham discuss the company's strong margin expansion over the past three years, with a focus on maintaining and further increasing margins. They mention strategic investments in AI and Data Cloud, as well as being careful and disciplined with headcount and location decisions. They also highlight the importance of simplifying go-to-market strategies and exploring new channels, such as the AWS Marketplace.

The speaker discusses the company's focus on leveraging their real estate portfolio and technology, as well as their excitement about culture and structural changes that will lead to margin expansion. They also mention the early adoption of AI technology by Fortune 500 companies, but note the need for data cleaning before fully utilizing it. The speaker then answers a question about optimizations and seat-based SaaS licenses, stating that hyperscalers are reporting a decrease in optimizations and increased scrutiny on these types of licenses.

Marc Benioff discusses the impact of AI on productivity for customers, using his recent experience in Tokyo as an example. He highlights the success of Louis Vuitton, a customer who uses AI to enhance their customer experience and increase sales. In contrast, he mentions another store that is not a customer and lacks the automation and productivity that AI brings.

The speaker discusses the success of companies like Louis Vuitton and Kering Group and their use of Salesforce products. They also mention being inspired by the CEO of Seibu and their use of Salesforce for loyalty management. Another example is given of Toyota using Salesforce to automate their dealerships and connect their cars to the Data Cloud. The focus for companies in this current environment is on productivity, automation, and time to value.

The CFO and CEO discuss the company's focus on cost control and measured customer buying behavior in the current market. They mention seeing positive trends in areas like SMB and professional services, and are excited about helping customers achieve their goals. They also mention a recent increase in deals over $1 million and attribute it to a combination of factors such as a new management team and potential green shoots in the market. However, they are cautious about predicting the future and do not want to give the impression that the current environment is completely behind them.

The speaker shares their experience of traveling to different locations and meeting with customers. They mention that while there are some positive signs of recovery from the pandemic, they are still cautious about declaring a complete return to normalcy. They also note that there is a lot of excitement about AI among customers, but there is also confusion about its capabilities. The speaker sees this as an opportunity to educate customers about the potential and limitations of AI in the enterprise.

The speaker discusses their experiences at the Wynn Hotel and Disneyland, where customers are excited about using Salesforce and other products. They also mention Disney's use of Salesforce and Slack to enhance their operations and the potential for AI to further improve the customer experience. They praise Disney CEO Bob Iger's vision for the company and highlight the rapid growth and advancement of AI technology in the past year. The speaker emphasizes the importance of trust and responsible use of AI in the CRM and data industries.

Salesforce has recently made changes to their pricing, which have been well received by customers. The company is still working on improving their AI capabilities and making it safe for customers to use. While it is not quite at the level of the movie Minority Report, it is getting closer. Some customers are eager for more automation based on their customer record, similar to the scene in the movie where Tom Cruise walks into a Gap store. The company has seen early renewals from customers wanting to take advantage of the new pricing, which may have been a factor in their 11% constant currency guidance for the fourth quarter.

The company is focused on the success of their Data Cloud, which has been well received by customers and is expected to have a big impact in the next three years. The team responsible for executing on this is well integrated across different product groups and includes data scientists, which are a rare commodity. The company initially thought they were just building a CDP, but it has evolved into a larger opportunity.

Salesforce realized that all of their clouds need a Data Cloud, including Sales Cloud, Service Cloud, Marketing Cloud, Slack, and Tableau. The Data Cloud will become the heart and soul of the product and will be the engine for all of Salesforce's apps. It has the capability to manage trillions of transactions and will be key to AI working for enterprises. Other companies' Copilots may not have access to enough data, which can be frustrating for enterprises. Salesforce's Copilot can tap into broad consumer databases and help with tasks like rewriting emails or condensing them.

The speaker discusses the potential of AI in various situations, such as writing emails and providing value to customers. They mention the impact of the Data Cloud and the upcoming demonstrations at Dreamforce. They also mention the role of open source development in advancing AI technology. The speaker predicts that in the next few years, AI will continue to evolve and bring about new possibilities that were previously unimaginable.

The speaker discusses the impact of open source models on technology development and predicts that it will accelerate innovation and remove restrictions on customers. They compare it to the development of mobile operating systems, which has been constrained by a few companies, while open source technology is being developed by thousands of companies and teams. This is leading to unprecedented rates of innovation and could potentially lead to discomfort in the industry. The speaker concludes by wishing everyone a happy holiday season.

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