Salesforce, Inc.

Welcome to the Salesforce fiscal 2023 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. 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.

Thank you, Emma. Good afternoon, everyone. Thanks for joining us today for our fiscal 2023 second quarter results conference call. Our press release, SEC filings, and a replay of today's call can be found on our IR website at www.salesforce.com backslash investor. With me on the call today is Mark Benioff, Chair and Co-CEO, Brett Taylor, Vice Chair and Co-CEO, And Amy Weaver, Chief Financial Officer. We'll also be joined by Brian Milam, President and Chief Operating Officer, who will be available for the Q&A portion of the call. 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 and press release. Some of our comments today may contain forward-looking statements that are subject to risks and uncertainties and assumptions which could change. Should any of these risks materialize or should assumptions prove to be incorrect, Actual company results could differ materially from these forward-looking statements. A description of these risks and uncertainties and assumptions and other factors that could affect our financial results is included in our SEC filings, including our most recent report, and forms 10-K, 10-Q, and other SEC filings. With that, let me hand the call to Mark.

Well, hey, thanks, Mike. And thank you, everyone, for being on the call today. You know, as you saw in the results for the quarter, we've delivered really strong revenue growth, profitability, and cash flow, showing yet again the resilience and durability of our business model in this economic environment. Revenue in the quarter was $7.7 billion of 22% year-over-year, or 26% growth in constant currency. We had a great quarter, but yet again, the dollar had an even stronger quarter, and we continue to see the impact on foreign exchange and currency fluctuation on our financials. For Q2, we saw approximately $250 million of headwind to revenue, which is roughly $50 million more than we assumed in our guide last quarter. And we now expect a total of $800 million foreign exchange headwind year over year for the full fiscal year. Operating margin within the quarter was 19.9%. And we delivered $334 million in operating cash flow. Our remaining performance obligation, or the total undelivered contract value that we have with our customers is really an incredible $41.6 billion. And this is revenue signed. It's not yet recognized. Now, turning to guidance, over the last few months, I've met with hundreds of CEOs, with economists, business leaders, political leaders, and other experts about their business and where they see this global economy heading. And I don't think it's going to surprise anyone. Everyone has got a slightly different answer. And it doesn't matter who you speak to. It could be a different geography, a different position. You know, everybody sees things just a slightly different way right now. But what we do know, and what I think everyone will agree on, is that digital transformation remains the number one priority for CEOs, and that every digital transformation begins and ends with the customer. That's what continues to drive our business forward, and it's why Salesforce is the number one CRM by market share globally, according to the IDC Software Tracker. Now, for those of you who have been on these calls with us, you know we've all been through a number of these economic cycles, And we've especially seen that over our last 23 years. And ones like this come around. We see customers becoming more measured in the way they buy. Sales cycles can get stretched. Deals are inspected by higher levels of management. And all of this we began to start to see in July. Nearly everyone I've talked to is taking a more measured approach to their business. We expect these trends to continue in the near term. And we've reflected this in our guidance. Given the significant impact of foreign exchange and buyers being more measured, we're revising our fiscal 23 revenue guidance to $30.9 billion to $31 billion, or about 17% growth year-over-year or 20% in constant currency. At the same time, we're maintaining our fiscal year 23 operating margin guide of 20.4% and expansion of 170 basis points year-over-year. This is further evidence that we remain deeply committed to consistent, disciplined, margin, cash flow, and revenue growth as part of our long-term plan to drive both top and bottom line performance. We have the right team, the right products, the right playbook for getting to $50 billion in revenue in fiscal year 26. You know, we always get questions about our M&A strategy and what company we're going to acquire next and what we're going to do next from the acquisition cycle. I think we get this question every single earnings call that we do like this. And it's always one of my favorite parts of the call. And I'm excited to tell you we have found a great cloud company, growing revenue for 73 consecutive quarters through every economic cycle. It's got great cash flow, number one market share, an incredible brand, one of the most admired companies in the world, great values, fantastic community of 17 million trailblazers, fantastic commitment to its community, runs across 90 countries, and that company is Salesforce. We're thrilled that our board of directors has authorized up to $10 billion in our first ever share repurchase. This reflects the confidence we have in our business and in our approach to generating shareholder value. Brett and Amy are going to expand in more detail about the broader capital allocation strategy in a moment. And you'll also hear about some amazing customer wins in the quarter. I'm especially proud of a major deal we closed in the quarter with the U.S. Department of Veterans Affairs, and it's one of our most meaningful partnerships. The VA is a relationship that we've been building for over six years, and now Salesforce is becoming the digital front door for our veterans and their families. We couldn't be more proud to do our part in helping those who have made sacrifices in serving the nation. You know, it's been an incredible year so far. Being able to connect with our customers in person again has been just amazing. We've done 63 marketing events so far this year, hosting over 250,000 trailblazers and counting. But not as more exciting on every level than Dreamforce. And we're hoping to see all of you as we celebrate our 20th Dreamforce, September 20th through the 22nd right here in San Francisco. It's a celebration of our trailblazers and we're going to expect 150,000 people to be here and register to attend. And we'll also be streaming the entire three days on Salesforce Plus and expect millions more to tune in. We have an amazing line of product announcements and innovations and speakers and giving back. It's going to be a big Dreamforce. It's going to be really the biggest Dreamforce ever, our 20th ever Dreamforce. And we're also going to be celebrating the impact Salesforce has had through our 1-1-1 philanthropic model, as we've now surpassed over a half a billion dollars in grants, 7 million hours of volunteerism, and more than 50,000 nonprofits using Salesforce for free. At Dreamforce, the amazing Red Hot Chili Peppers, that's Anthony and his entire band, flee everyone. They're going to be performing at our annual benefit concert with 100% of the proceeds going to our children's hospitals right here in San Francisco and in Oakland. So please, tell your friends, tell your firms, tell your vendors, tell everybody to get sponsorships to Dreamfest because it's going to be incredible. And of course, you're all invited to our Investor Day during... Dreamforce on September 21st. Amy, are they invested even if they don't do this Dreamfest sponsorship?