Salesforce, Inc.

Welcome to Salesforce fiscal 2023 fourth quarter and full year results conference call. All lines have a place on mute. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press the star one. We ask today that you limit yourself to one question. Thank you. I would like to hand over to the conference to your speaker, Mike Spencer, Executive Vice President of Investor Relations. Sir, you may begin.

Good afternoon. Thanks for joining us today on our fiscal 2023 fourth quarter results conference call. Our press release, SEC filings, and a replay of today's call can be found on our website. With me on the call today is Mark Benioff, Chair and CEO, Amy Weaver, President and Chief Finance Officer, and Brian Millen, 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 and press release. Some of our comments today may contain forward-looking statements and 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 to Mark.

Thanks, Mike, and hey, thanks to all of you for joining the call. As you can see from our results, we had another strong quarter. Improving profitability is our highest priority, and that really showed up this quarter. Our goal is to make Salesforce the largest and most profitable software company in the world, and that is what we are doing. Six months ago in September at our Dreamforce Investor Day, we shared with you our comprehensive transformation plan, the new day for profitable growth. But things have changed. As we entered our fourth quarter, we recognized that we needed to radically accelerate the transformation plan timeframe. We needed to press the hyperspace button and bring the two-year goals forward quickly. and exceed them. Now, we immediately put into place an accelerated transformation plan in four areas, short-term and long-term restructuring of the company, improving profitability and productivity, prioritizing our core innovations, and a deeper and even stronger relationship with our shareholders, you. In fact, that's where we started. The very first thing we did when I became sole CEO three months ago was Amy and I promoted Mike Spencer, our head of IR, to our leadership team, so we're all in much more communication with all of you. We're now moving aggressively across all four fronts of our transformation. First, we're reigniting our performance culture and doubling down on our accountable management of our sales organization, as you're about to hear from Brian. As you know, beginning in January, we also initiated a headcount reduction and we're significantly consolidating our real estate footprint Second, we're more closely scrutinizing every dollar of investment and resource and very focused on driving operational excellence and automation across the business. Third, our amazing engineering team is focused on integrating our acquisitions and prioritizing our core innovations that are driving customer success. And finally, as we set in motion longer term structural improvements, we're working with Bain on a comprehensive operating and go-to-market review. To ensure a high degree of accountability, our board is forming a new business transformation committee, which I have joined, and we have fully disbanded our M&A committee as well to reflect our new focus. We also dramatically stepped up our communication feedback loop with our investment community, and I hope you all are feeling that. For the past several months, all of us at Salesforce, including me, all of our board members, including our lead independent director, Robin Washington, and our senior management team, have spent a lot of time listening to and working with all of our investors. As I said, we've hit that hyperspace button since we last talked to you a quarter ago, and I'm thrilled with the progress we've made. Changes that used to take months are happening in weeks. Changes that used to take weeks are happening in days. And changes that used to take days are happening in hours. Powered by this transformation, we delivered another strong quarter. Our team really delivered on both the top and bottom line, exceeding our expectations. As I said, improving our profitability is our highest priority. And in Q4, we accelerated operating margin to a new record high. Non-GAAP operating margin for fiscal 23 was 22.5%, significantly above our forecast, an improvement of almost four points year over year. Revenue was $8.38 billion, up 14% year-over-year, or 17% in constant currency, which is above what we forecast to deliver for the quarter. And for the full year, we delivered $31.4 billion in revenue, up 18% year-over-year, or 22% in constant currency. It's one of the best performances of any enterprise software company our size. And it's amazing that Salesforce is now over $30 billion in revenue. We closed fiscal year 23 with operating cash flow reaching 7.1 billion, up 19% year over year, the highest cash flow in our company's history, and one of the highest cash flows of any enterprise software company our size ever. I also want to call out the great progress we have made with MuleSoft and Tableau. As you know, we've been focused over the past few quarters on reigniting MuleSoft sales growth, and this quarter was evidence that those efforts are paying off beautifully. MuleSoft was included in seven of our top 10 deals in the quarter. And Tableau was included in every one of our top 10 deals. These acquired products are integral to our customer 360 and enabling our customers to use our data product line to achieve a new level of excellence in managing their customer relationships and its critical data. In short, our transformation has been radically accelerated. As you can see, Our performance is significantly up already. Our productivity is also up. Our profitability is up. And we are not done. Now we're putting into place the next phase of our transformation to profitable growth. We just rolled out our new business plan, which we call the V2 Mom, in partnership with our employees worldwide. Everyone in the company is now aligned around our highest priorities and our aspirations. I'm excited to announce that looking forward to fiscal year 24, We expect a non-GAAP operating margin of approximately 27%, an additional acceleration of 4.5 points year-over-year. And for fiscal year 24 revenue, we're guiding to $34.7 billion at the high end of the range, over 10% projected year-over-year growth. But that's not all. We're also looking at our overall share count. And as we focus on reducing dilution, We've already returned $4 billion of the original $10 billion authorization in our share repurchase plan that we announced in August. And our board has now approved a substantial increase in that share repurchase plan from $10 billion to $20 billion. This will allow us to fully offset dilution from stock-based compensation. We're also thrilled to welcome three new members to our board. Mason Morfitt, the CEO and Chief Investment Officer of Value Act Capital. Arnold Donald, the former President and Chief Executive Officer of Carnival Corporation, and Sachin Mehra, the Chief Financial Officer of MasterCard. Three amazing executives who have already made their mark on business, and I'm looking forward to them making their mark on Salesforce. We're incredibly happy that these phenomenal executives are joining us to help guide our next level of profitable growth. That makes five new board members we have brought on in just the past 16 months. another important of our accelerated transformation. I also want to say how grateful we are to our two outgoing board members, Sandy Robertson and Alan Hassenfeld, both of whom many of you know and who for the last two decades have given Salesforce and our industry incredible leadership, guidance, and service. Thank you so much, Alan and Sandy. We know that we have the right team the right strategy, and the right products to compete and complete this transformation, and we're continuing to build our future. I've never been more inspired by our engineering teams, and it's no wonder that we're ranked number one CRM by IDC for the ninth year in a row. We're delivering tremendous customer success and continue to gain market share in CRM. Our customer revenue attrition is at its lowest level in our 24-year history, This is a critical metric of all of our customer success. And we know every digital transformation begins and ends with the customer. We have an incredible vision for the future CRM, a fully integrated suite built on our new Genie Data Cloud and our next generation platform powered by real-time hyperscale data, AI, and automation. Our new Data Cloud is the most exciting innovation that we've developed since the original Salesforce clouds and our metadata platform, which we viewed as our first horizon and our second horizon for our technology. Clear? Our third horizon is our data cloud. In this new AI world that we are all now entering, nothing is more important for our customers than our new data cloud, which is rapidly becoming the intelligent heart of their customer engagement. Data Cloud becomes our most important cloud, augmenting every Salesforce cloud and making every part of our Customer 360 more automated, more intelligent, and more real time. We just launched Tableau plus Data Cloud, natively integrating Tableau with Data Cloud, so every customer can easily visualize, automate, explore, and act on their data in real time. And during the quarter, I was inspired by partnering with Jim Farley, the CEO of Ford, on Ford's deployment of Data Cloud. Jim and Ford, while they're leveraging Data Cloud to unify their customer data and deliver personalized real-time customer engagement and dealer focus. Starting with their amazing new Mach-E electric Mustang, an amazing car, Ford proactively updates customers about vehicle delivery through both email and SMS with our Marketing Cloud. I love getting my text, actually. It was amazing. Ford delivers dealers now with leads and intelligent insights to drive faster sales with our Sales Cloud. And their technicians, well, they're receiving the next best action and technical insights through our Service Cloud. All of this, all of it, it's driven by our Data Cloud, delivering intelligent, real-time, and automated customer engagement from within the Salesforce platform. I've also been very inspired by our work with Boston Scientific and their amazing CEO, Michael Mahoney. Our teams were able to use our data cloud to create a unified view of their customers in just five months. They were able to bring data from the front office and back office and all of their systems together. Boston Scientific's ability to create customer segments using our marketing cloud went from three to six months to nearly real time. And they could deliver next best action insights to their sales teams in the flow of work in Sales Cloud and used our Marketing Cloud to deliver personalized product recommendations on their website in real time. And Boston Scientific, as a regulated company, well, with Data Cloud, they're able to easily specify data retention policies for compliance. Now, as a longtime customer, I'll tell you, Boston Scientific and Michael, well, they've humbled me personally and really humbled all of us at Salesforce with their incredible innovations, their amazing leadership, and especially their use of our data cloud. This is only the beginning of what's possible as we build more native automation, intelligence, and real-time integration deeper into our data cloud and apps. And we're rebalancing our resources to be data cloud first inside our company. And next week at our Trailhead DX conference in San Francisco on March 7th and 8th, you'll see how we're bringing even more innovation to our platform with our new Einstein GPT technology, the world's first generative AI for CRM. A tremendous compliment to our data cloud and core Einstein AI platform. Einstein GPT will be integrated into all of our clouds as well as Tableau, MuleSoft, and Slack. And it is another way We're opening the door to use AI for our future and for all of our customers. As we have begun working with the rapidly expanding AI ecosystem in our industry, I've been really impressed with how companies like Anthropic, a leading provider of generative AI, are using Slack as their user interface for generative AI assistance. The relevance of Slack as an incredible enterprise productivity platform user interface and critical data set for these new AI systems, well, it's inspiring all kinds of new use cases. I couldn't be more excited about the future. To wrap it up, our transformation is happening now. We're making Salesforce one of the most profitable software companies in the world with one of the highest cash flows and one of the very largest as well. You can see from our numbers by this quarter why I'm so motivated, so inspired, and so confident that we can do even more faster than anyone realized. Now I'm happy to hand this over to Brian, our Chief Operating Officer, and with Amy, our my closest partner in accelerating the transformation. Many of you know Brian and have worked closely with him in as many global executive roles at Salesforce. Brian has now been with us for more than 23 years and is employee number lucky six, number 13, actually. It's lucky 13, Brian, that's you. No one has had more customer success than you at Salesforce, and I couldn't be more thrilled to have you as our COO. I'm really grateful for your leadership and the success that you're having with your team. And wow, what a great quarter you delivered. Brian, thank you for everything. In closing, I want to thank all of our Ohana, our employees, our customers, our partners, and all of our shareholders for another strong quarter. And now, Brian, over to you.