Salesforce, Inc.

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.

Good afternoon, and thanks for joining us today on our fiscal 2024 second quarter results conference call. Our press release, SEC filings, and a replay of today's call can be found on our website. Joining me on the call today is Mark Benioff, Chair and CEO, Amy Weaver, President and Chief Financial Officer, and Brian Milne, 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 materials and press release. Some of our comments today may contain forward-looking statements that 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 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 over to Mark.

All right. Hey, thanks so much, Mike, and really appreciate everyone being here today. We're obviously very excited about these results and getting out there with all of you. And thanks for being on this call. So listen, as we've shared with you over the last couple of earnings calls, Salesforce has really accelerated our transformation to profitable growth. I think that's super clear from the numbers, and I couldn't be more excited, especially on this huge top line beat and what our margin is looking like today. As you all know, over last year, we've been executing against these four key areas of our transformation. First, our restructuring for the short and long term. We've been talking about that since the fourth quarter call, and we're going to update you on that today. Second, we're reigniting our performance culture by focusing on productivity, operational excellence, and profitability and Brian is going to talk about that today. And third, we're prioritizing the core innovations to drive customer success and I can't wait to share with you at Dreamforce how we're taking our core platform to a whole new level, showing you some incredible new enhancements to our data cloud as well as new versions of Einstein and also fundamental extensions to our core platform, really showing how our core platform has been rebuilt so that we can take so many of these amazing acquisitions that we've made over the last decade and run them right inside the core. Our fourth priority is building even stronger relationships with our investors. That's all you. You know how important that is to us. We probably spent more time in the last six or nine months with our investors than we have maybe in the entire history of the company, and we've received just great feedback from all of you, and we're really making great progress there, and I want to especially thank Mike for everything that he's doing with all of you. And we're adding a fifth priority. And last quarter, we told you we're now driving our AI transformation. We're pioneering AI for both our customers and ourselves, leading the industry through this incredible new innovation cycle. And I couldn't be happier with Srini and David and the entire product and technology team for the incredible velocity of AI products that were released to customers this quarter and the huge impact that they're making in the market and showing how Salesforce is transforming from being not only the number one CRM, but to the number one AI CRM, and I just express my sincere gratitude to our entire T&P team. I couldn't be happier with the performance of our team delivered in the second quarter. The numbers basically speak for themselves. Our AI data CRM plus trust platform, well, it's propelled us to become the third largest enterprise software company by revenue in the world, and I think In Japan, we just became the second largest company, so congratulations to everyone at Salesforce and especially to our Japanese team. And with our industry-leading clouds in sales, service, marketing, commerce, our industry clouds powered by Data Cloud, Einstein, Flow, Tableau, Slack, MuleSoft, really all of these are integrated into one trusted metadata-driven platform. We're providing more capabilities to more customers than any other CRM vendor, and I can't wait to show all that, as I said, at Dreamforce. That's why Salesforce is the number one CRM by market share, based on the latest IDC software tracker, and now we are working hard to be the number one, as I said, AICRM. Our transformation drove our second quarter results, especially when it comes to our highest priority, as you can see, profitability, and look, we couldn't be happier to see these numbers It's incredible to see the margin acceleration in such a short period of time. We've exceeded our own expectations. I hope we've exceeded yours. In our second quarter, our non-GAAP operating margin rose to 31.6%. That's up over 1,000 basis points year over year. And this is the second quarter in a row our operating margin is up 1,000 or more points year over year. And as you're about to hear from Amy, we've maintained our disciplined approach to cost management while also investing in growth initiatives across our entire platform of offerings. And we're positioning Salesforce for the future and will continue to drive our margins and also while we're continuing to drive customer growth. Revenue in the second quarter was $8.6 billion. That's up 11% year over year and the same in constant currency. And during the quarter, we had great wins with JP Morgan, Bayer, FedEx, Maersk, as well as the Department of Veterans Affairs, and so many more you're going to hear about from Brian. Operating cash flow for Q2 was $808 million. Pretty incredible. That's up 142% year over year. Really very strong. And our remaining performance obligation ended the second quarter at $46.6 billion. That's an increase of 12% year over year. Really amazing. Current remaining performance obligation, or what we call CRPO, ended at $24.1 billion. That's up 12% year-over-year and 11% in constant currency. Now, through the second quarter, we have returned, and this is amazing, $8 billion in share repurchases since we started the buyback program a year ago. So we've bought $8 billion of stock over the last 12 months. That is really awesome. Amy's going to talk more about that. And I know you realize we have a lot more to do there. Based on our performance and what we saw in the back half of the year, we're raising our fiscal 24 revenue guidance to $34.7 to $34.8 billion, or about 11% projected growth year over year. Last quarter, we raised our fiscal year 24 non-GAAP operating margin guidance to 28%, and we said that we expected to eclipse 30% in the first quarter of fiscal 25%. Well, as you've all seen these numbers, and now I'm happy to officially share, we are accelerating that target again, raising our fiscal year 24 non-GAAP operating margin 30%. An improvement of 750 basis points year over year. It's kind of amazing, but yes, we are saying that we're going to deliver 30% margin for this year, and that's an incredible goal. So while we thought we were going to do it next year, we're really going to do it this year. And it's an amazing achievement of our whole team. It certainly has been a lot of work. It's been difficult. In a lot of cases, it has been a struggle. But our teams are incredible. And what they have done has been nothing more miraculous and down to see not only the delivery of the 31 plus percent growth for this quarter, but now the 30 percent for the year. It's just awesome. It's just incredible. And I'm really excited to welcome back to Salesforce so many Boomerang employees. Boomerang employees are employees who were employees, but for one reason or another left the company, got recruited away, or went off to start their own companies or whatever. Well, a lot of these results have to do with not only our incredible employees that we've had in place, but a lot of folks have really felt the desire to come back and help us. And I just want to say thank you to all of them. It's been incredible to welcome them back. And the line is long out the door of people who have left Salesforce and want to come back to Salesforce. And we're welcoming all of them with open arms, especially across our sales engineering technology organization, improvement winners, incredible leaders who got taken out of Salesforce because they were doing incredible things that to watch them come back because they want to help us and achieve this next level of growth and capability and revenue and margin and technology and leadership. Well, I just want to especially start to thank some of those, including Miguel Milano, who's our new chief revenue officer, who's just returned to us from Salonis. And, of course, Ariel Kelman, our chief marketing officer, who was most recently at Oracle, and Kendall Collins, our chief business officer, and who's been now my chief of staff and was, of course, had so many main executive positions at Salesforce. But this is a long list, and I can't even continue it of how many people are coming back and What I love about this is that they're hitting the ground running. They make an immediate impact. They know the culture. They understand the products. They're able to execute with incredible agility. And so I've got the siren song out there for all of them to come back and to join us. Now, earlier this month, we welcomed Sebastian Niles to Salesforce as our chief legal officer. He's sitting here at the table right now making funny faces at me, and I wouldn't be happier. And I couldn't be happier. to have Sebastian as part of my executive leadership team. We met Sebastian this year. We did a lot of work with Wachtel. As a lot of you know, we won't go through the details. It's not necessary to go through that right now. Because the past is the past. But I'll tell you, one of the greatest things that happened during this amazing period of Salesforce was meeting Sebastian. And now to have him on the leadership team, I couldn't be more excited. And I'm thrilled to have him with us. So welcome, Sebastian. Thank you. okay thank you those are his opening comments ai data crm trust let me tell you we are at the dawn of an ai revolution and as i've said it's a new innovation cycle that is sparking a massive tech buying cycle over the coming years it's also a new tech investment cycle we've been involved in the earliest rounds of many of the top ai startups many of you seen that we are in there very early but i'll tell you this company has pioneered ai And not just in predictive, a lot of you have followed up the development and growth of Einstein, but also you've seen that, you know, we've published some of the first papers on prompt engineering and the beginnings of generative AI. And we took our deep learning roots and we really demonstrated the potential for generative AI. And now to see so many of these companies become so successful, I just saw open AI delivering a billion dollar revenue run rate. It's just awesome to see this growth and especially proud that they're right here in our hometown of San Francisco, which is becoming the number one AI city in the world. Very excited for our city. Now, through our $500 million generative AI fund, we're seeing the development of ethical AI with amazing companies like Anthropic, Cohere, Hugging Face, and so many others. And I just heard one of them just subleased our entire Slack building, but I'm not allowed to say who it is, but I couldn't be more excited about that because we're really seeing downtown San Francisco become AI central. So every CEO I've met with this year across every industry believes that AI is essential to improving both their top and bottom line, but especially their productivity. AI is just augmenting what we can do every single day. I just think about myself. I've spent so much time on BARD. over the last week it's incredible i was just buying some flashlights and i couldn't figure out what flashlight i wanted to buy and i was on amazon trying to figure out what's the flashlight and so i took a picture of the amazon picture of what was happening on the app and i gave it to bard because bard has this multimodal capability to ingest the photo and then ingested the photo and it told me not to buy the flashlight that it was poor quality and it recommended one that was better for me and it was incredible to see that I was once again working with the next generation of artificial intelligence. And that is inspiring me and I think many of our customers and ultimately all of them believe they can grow their businesses by becoming more connected to their customers than ever before through AI and at the same time reduce costs, increase productivity, drive efficiency, and exceed customer expectations through AI. And I'll tell you, every single management team that we have here at Salesforce every week, we're using our Einstein AI to do exactly the same thing. You know, we go back, we're trying to augment ourselves using Einstein. So we'll say is, and we've been doing this now and super impressive. We'll say, okay, Brian, what do you think our number is? And we'll say, okay, that's very nice, Brian, but Einstein, what do you really think the number is? And then Einstein will say, I think Brian is sandbagging. And then the meeting continues. The reality is every company will undergo an AI transformation with the customer at the center. Because every AI transformation begins and ends with a customer, and that's why Salesforce is really well positioned with the future and with this incredible technology Einstein that we've invested so much in and grown and integrated into our core technology base. We're democratizing generative AI, making it very easy for our customers to implement every job, every business, and every industry. And I will just say that in the last few months, we've injected a new layer of generative AI AI assistance across all of the customer 360. And you can see it with our salespeople who are now using our Sales Cloud GPT, which has been incredible what we've released, you know, this quarter to all of our customers and here inside Salesforce. And then when we see that, you know, they all say to themselves, you know what, in this new world, everyone can now be an Einstein. But democratizing generative AI at scale for the biggest brands in the world requires more than that's just these large language models and deep learning algorithms and we all know that because a lot of our customers kind of think and they have tried and they go and they pull something off a hugging face this is amazing an amazing company we just invested in their new round and grab a model and put some data in it and nothing happens and then they don't understand in their policy and say hey what's happening here i thought that this ai was so amazing and it's like well you know, it takes a lot to actually get this intelligence to occur. And that's what I think that's, you know, the value that Salesforce is bringing is that we're really able to help our customers achieve this kind of technological superiority right out of the box just using our products in a low-code, no-code way. It's really this democratization of generative AI at scale. And that is really what we're trying to achieve, that at the heart of every one of these AI transformations, becomes our intelligent, integrated, and incredible Salesforce platform, and we're going to show all of that at Dreamforce. Our platform starts and ends now with our data cloud, and I just would like to call out the incredible data cloud team for what they've delivered. A lot of you have seen the release of the data cloud, this incredible genie technology that we started really showing off last Dreamforce, but what you can see with data cloud is that customers must get their data together if they want to achieve success with AI. This is the critical first step for every single customer. And we're going to see that this AI revolution is really a data revolution. And you're going to see a dream force that we're going to get this data cloud turned on as fast as we can and as easy as we can for every single one of our customers. This data cloud is incredible, what it's doing for our customers. It not only has AI built in, but it's real time, it's automated, it's integrated with the core platform. It's not some separate data cloud. It's an integrated part of our platform in our metadata, in our core code, like our sales cloud, like our service cloud, and as you're about to soon see, our new marketing cloud and commerce cloud, and of course, our core application development capabilities, all inside our data cloud. No CRM platform on the planet is better positioned than Salesforce to use this amazing Salesforce and business data to fuel AI-powered applications because of this architecture. It's very easy for our customers to set up and just go. And our data cloud is so deeply integrated as part of this core metadata architecture, it's allowing our customers to quickly action all of their data from any source without the costly integration project necessary with standalone data warehouses, And data lakes, they've been forced to buy and create more islands of information and all of these independent systems and independent teams versus having one integrated data architecture. We're moving our customers from having islands of data to having a single source of truth for all of their data. This is our greatest dream. With data cloud and powerful technologies like Einstein Flow, Lightning, Tableau, MuleSoft, Slack, Our customers, they can easily supercharge every application and customer experience with AI automation and analytics at scale. Data Cloud continues to be our fastest growing organic product. You're going to see the new version at Dreamforce that's fully integrated with our Sales Cloud and Service Cloud and, of course, already our Marketing Cloud and other key things. And this kind of new second version of Data Cloud that's coming will be fully released to the customers. And as I said, our goal is is for every customer just to be able to easily turn it on just in the second quarter data cloud ingested and this is amazing over six trillion records it ingested six trillion records and triggered more than one trillion activations to drive customer engagement and we've always put trust at the center of everything that's going on in our platform and that has never been important More important, I would say, especially now, not only with Data Cloud, but in this AI revolution, because this AI revolution is a trust revolution. Everything Einstein does is also delivered with trust and especially ethics at the center. And I especially want to call out the incredible work of our Office of Ethical and Humane Use, pioneering the use of ethics and technology. If you didn't read their incredible article in HBR this quarter, it was awesome. and they are doing incredible work really saying that it's not just about ai it's not just about data but it's also about trust and ethics and that's why we developed this einstein trust layer this is completely unique in the industry it enables our customers to maintain their data privacy security residency and compliance goals and i can tell you we're already at this early stage seeing momentum with these amazing einstein innovations companies like heathrow airport and PenFed Credit Union really adopted Einstein and took their Salesforce implementations to another level in the quarter. Heathrow is a great example of transformative power of AI, data, CRM, and trust, and the power of a single source of truth. They have 70 million passengers who pass through their terminal annually. I'm sure many of you have been one of those passengers. I have as well. Heathrow is operating at tremendous scale. managing the entire airport experience with the service cloud, marketing cloud, commerce cloud. But now Heathrow, they've added data cloud also, giving them a single source of truth for every customer interaction and setting them up to pioneer the AI revolution. And with Einstein, Heathrow's service agents now have this AI-assisted generating replies to service inquiries, case deflection, writing case summaries, all the relevant data and business context, Coming from data cloud, we're doing so much incredible and exciting innovative work in service with data cloud and with our service cloud and AI is going to show us a whole new vision for the future of service and what our service cloud can do for customers, not only with delivering high quality customer service, but delivering incredible new levels of productivity. This is saving their agents huge amounts of time and effort. This is the power of Salesforce. I've never been more excited about the future of our industry, the power future of our company the potential to help all of our customers and also especially our team the quality of our team especially fueled by all these amazing new boomerangs and you're going to see it all at Dreamforce Dreamforce is right around the corner September 12th through 14th right here in San Francisco I'm looking forward to welcoming each and every one of you to Dreamforce I'm right now at the top of Salesforce tower in San Francisco we're going to bring you up here we'll bring you through Moscone and We'll show you our incredible downtown. And I'll tell you, this isn't just the largest enterprise tech conference this year. It's going to be the world's largest AI conference and the largest gathering of AI experts. We'll have many of the world's top AI thinkers, including Sam Altman and his amazing OpenAI company. Incredible what he's doing. Anthropic CEO Dario Amodi, who's one of his alumni who left OpenAI to start Anthropic. Amazing company. Stanford Fei-Fei Li, amazing researcher and visionary leader of AI and presenting some of the 1500 Dreamforce conference sessions. It's really awesome what we're going to see here with AI and Dreamforce. And we're going to take everyone's skills to a whole other level. And we'll also share a vision for the future of CRM, the next generation of data cloud in Einstein. And we're also going to have the Foo Fighters. They're going to play our Dreamforce Benefit concert. Dave Matthews is going to play my dinner the night before. Hopefully we're going to see him at the conference in some incredible ways. And we can't wait to get you all here and to show you what's happening in Salesforce, what's happening in AI, what's happening in San Francisco. And it's going to be an amazing event, and we're just a few days away. And now let me turn it over to Brian. Thanks, Mark, particularly for the sandbagging comment.