$CRM Salesforce Q2 2024 Earnings Conference Call

welcome to salesforce's fiscal 2025 second quarter results conference call if you have a question today please press star one on your telephone keypad I would now like to hand the conference over to your speaker Mike Spencer Executive Vice President of Finance and strategy and investor relations sir you may begin good afternoon and thanks for joining us today on the fiscal 2025 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 benof chair and CEO Amy Weaver president and Chief Financial Officer and Brian Millan president and Chief Operating Officer as a reminder our commentary today will include non-gaap measures reconciliations between our Gap 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 risk uncertainties and assumptions which could change should any of these risks materialize or should our assumptions prove to be incorrect actual company results could materially differ 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 secc filings including the most recent report on forms 10K 10q 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 over to mark all right thanks so much Mike and thanks everyone for being on the call we got so many exciting things to talk about uh today and we're so excited to be with you and we're also getting really jacked for dream Force so uh looking forward to that and um we are uh just uh going to have a great call here so look a year ago on this call we talked about two amazing Transformations uh we were transforming Salesforce for as we were talking about the short and the long term which was really code words for really addressing our financials but really looking at this incredible AI uh opportunity and you know uh the now we look at a year later I just couldn't be more excited about how these two Transformations are driving the success of the company and really I don't think I've been more excited about the history of Salesforce and now the future of Salesforce and how well positioned we are for the future and you can see it in our numbers with strong performance across Revenue cash flow margin and crpo the numbers are you know beyond my expectation and the quarter you can see that it's pretty pretty awesome and you can also see them the incredible innov and our product and Engineering teams are delivering the success of our customers and we're going to talk about a whole different kind of Salesforce today a different kind of architecture and a product that we didn't even talk about on the last earnings call that is going to be fundamental to our future and a manifestation of our decade of AI leadership which is agent force now just in just a few weeks we're going to kick off dreamforce and I hope all of you are planning to be there the largest AI event in the world with more than 45,000 Trailblazers and S Frisco and this year dreamforce is really becoming agent force and I'll tell you it's a funny thing about agent force even um one of our very top Executives in engineering sent me a text last week and said hey should we be renaming the company from Salesforce to agent force because we're all getting so excited about agent force and I also told Mike that I really want to make sure all of you are there and to do what he can to put together an analyst briefing at dreamforce uh and I told him I pay for you know to have outstanding culinary chef and maybe we can bring in some great entertainment for all of you to encourage you all to come so I just gave him a huge budget uh to really motivate everyone because I think this is going to be a moment that everyone is going to have to see in person to understand what is going on and I I'm going to explain that in a second because we're going to show our new agent force agents and how we've reimagined Enterprise software for this new world of autonomous Ai and every customer I'm going to try to get every customer who comes to dreamforce to turn agents on while they're there so many of the customers of course already using our applications you know that okay and of course we're automating all our customer touch points that's our customer 360 and we've been talking now for the last couple years about how we've really built this phenomenal data Cloud that has really become you know I would say you know our our fastest growing most exciting product ever epep up until one that we're about to talk about which is to help our customers amalgamate all the data that they need to really get their AI act and orders that gets their data and metadata integrated and then Federate to other data sources and then this critical third tier which this is the first call that we've ever talked about it which is these agents and this idea that you're not just going to have sales agents and Service agents probably read heard maybe saw in CBC we're building the agents for workday and we're going to be building custom agents for so many of you as well with agent force because it is a development platform as well as this incredible capability to radically extend your sales and service organizations so when you arrive at the dreamforce campus you're going to see a big sign outside that says humans with agents Drive customer success together and that's because we now so strongly believe uh the future isn't about having a sales force or a service force or a marketing force or a Commerce Force or an analytics Force the future is about also having an agent force and while many customers today don't yet have agent forces but they do have sales forces or service forces I assure you that within a year we're all going to have agent forces and we're going to have them at scale and it's going to radically extend our companies and it's going to augment our employees and make us more productive it's going to turn us you know into these incredible margin and revenue machines it's going to be pretty awesome and the this is really the future a new future that we can really Envision and with this agent force platform we're making it easy to build these powerful autonomous agents for sales for service for marketing for Commerce automating the entire workflow on their own embedding agents in the flow of work and getting our customers to the agent future first and we this is our primary goal of our company right now this is my singular Focus so at dreamforce and on this call you're going to hear a lot of stories already of C customers and we're going to talk about the customers who have it customers like open table and Wy and and ADP and RBC and and so many others um who are deploying these agents and running them on top of our data cloud and our apps and in fact you're going to hear about I mean at dreamforce you're going to hear one of the very largest Healthcare companies in the world who's got 20 million uh consumers here in the United States who's resolving more than 90% of all patient inquiries with agent force and they're benchmarking us significantly higher than any other competing AI platform and that's based on some incredible AI breakthroughs that we have had at Salesforce and I just have to call out the quality of our research team our engineering team and our product team because the accuracy of our results the reduction of hallucinations and the level of capability of AI is unlike anything I think that any of us have ever seen and we've got some incredible new uh techniques uh especially incredible new augmented rag techniques that are delivering us the capability to deliver this accuracy with our for our customers in fact one of these very large media companies that we work with a lot of probably know who have everything you know every possible media asset well they're just resolving 90% of all of their employee and consumer uh issues with agent force pretty awesome so there's nothing more transformational than agents on the technology Horizon that I can see and Salesforce is going to be the first company at scale to deploy Enterprise agents and not just any Enterprise agents the highest quality most accurate agents in the world now all of this with our continued focus on trust with customer success with Innovation is driving the results that you see the today and in Q2 we've delivered 9.33 billion in Revenue up 8% year-over-year in nominal and 9% in constant currency subscription and support Revenue grew at 9% year over year and 10% in constant currency and for the 11th year in a row Salesforce ranked number one CRM provider uh by the IDC software tracker and of course sales verus the number one AI CRM and you know we'd like to say we're the third largest Enterprise software company but I was doing some calculations today and I'd like you guys to do the calculations I think we just became the second largest enterprise software company because we're not delivering infrastructure or hardware and we already passed Oracle uh in Japan as the second largest enterprise software company and I think we just did that if you look at our enterprise software um overall we're at the largest enterprise software company in the world so we continue to see growth in multicloud deals in fact multicloud deals accounted for close to 80% % of our new business in the quarter and we're just operating at this incredible scale uh delivering 25 trillion Einstein transactions across all of the clouds during the quarter that's 25 trillion and more than a trillion workflows are now managing 250 pedabytes of data for our customers we also continue to deliver on this incredible margin growth and so many of you have guided us through that incredible transformation so I just want to thank all of you for that for the second quarter our non-gaap operating margin was 33.7% that's up 210 basis points year-over-year and you can see the incredible transformation that we've gone through over the last 24 months in margin and cash flow which also was 892 million in the quarter up 10% year-over year so now let's turn to this financial guidance for the fiscal year 25 we continue to expect Revenue at 37.7 to 38 billion a growth of 8 to 9% year-over-year and uh subscription and support Revenue growth of approximately 10% year-over-year in constant currency and as you can see from our results we've remained committed to this very profitable growth at this incredible level of scale and we're raising our fiscal 25 non-gaap Opera margin to 32.8% a 230 basis point Improvement year-over-year and as I told you last quarter we're delivering incredible record cash flow this year and I'm pleased that we're also raising our operating cash flow guidance to 23 to 25% year over-year I'm also extremely ploud proud of our team's focus and determination deliver these great results and we're going to hear more in a second now as you know and as you probably can tell from my narrative already AI is not only my top of mind but I can tell you because I've met with hundreds of customers this quarter that it is the top of mind for every customer for every CEO for every CIO but I want to tell you before I get into this is that I think that there's a lot of misconceptions about AI with my customers I have been out there very disappointed with the huge amount of money that so many of these customers have wasted uh on AI they are trying to DIY their AI it's not so unlike when we first saw Cloud emerge or even other Technologies where they feel like have to roll their own build it themselves get in the weeds try to figure out and they're not going to do it better than we're going to do it we're a professional enterprise software company that's what we do and we do it with the trust and scale that they need and this idea that our customers are going to have to build their own models train their own models retrain their own models retrain them again and I'm meeting with these customers and they're so excited when they meet with me and they say oh I built this model and we're resolving 10% 20% 30% 40% of this and that and whatever and I'm like really well take a look at our models and our capability where you don't have to train or retrain anything and you're going to get more than 90% And then they say wait a minute how do you do that and this is a moment where every customer is needs to realize you don't need to DIY your AI you can use a platform like Salesforce to get the highest efficacy of artificial intelligence the best capability to a fully automate your company achieve all of your goals and you can do it with professional enterprise software and you know I've now met with all so many of these customers to really explain and to help them understand this T transform transformative power of AI and they've really you know I think you know we've all said okay we've never seen a technology evolve at such a rapid pace so look it at the last 18 months we're moving from this having these basic pre-programed chat Bots now we can really see where we're delivering these intelligent conversational capabilities these agents it's it's it's awesome and we've created outof thebox platform to deliver all of this for them so this could be service reply recommendations account summaries report generation you've seen in slack this kind of Auto summarization Recaps all of these amazing things the level of automation the amount of code that our team has written the transformation of our platform in last 18 months it's remarkable and customers love it because they can take the platform and then all this generative AI use case customize it for their own needs or configure it using our capability because they're doing that without writing a lot of code it's clicks not code deploy them in days not weeks they're doing this in months not years and you're getting immediate Roi and it's the stories are awesome and while customers have loved you know seeing the power of generative AI even like I was using generative AI last night to write some new ads you know for what we're going to do you know to kind of bring agent force across and it's so cool and so awesome but to have it right inside the platform makes it very real for our customers who have to manage and share all of their information to keep it trusted to keep it secure to be able to provide capabilities in a regulatory environment look this is they all want this huge breakr that's going to give them but more productivity augmentation of their employees and scale like I've been talking about but we're seeing that breakthrough occur because with our new agent force platform we're going to make a Quantum Le forward an AI and that's why I want you all at dreamforce because I want you to have your hands on this technology to really understand this this is not co-pilots so many customers are so disappointed in what they bought from Microsoft with co-pilots because they're not getting the accuracy and the response that they want Microsoft has disappointed so many customers with AI listen these agents are autonomous they're able to act with accuracy they're able to come right out of the box they're able to go right out of the platform and when you come to dreamforce You're Gonna you know I'm sure that you're going to get to San Francisco you're going to jump in a weo I think they've got like 500 Whos now in San Francisco it's pretty awesome I use it myself and you know what that's like agent force you know we're like a wayo for you know your for your customer information for automating your company that is it's autonomous it's going to get you to where you need to get to and yes we're still going to have humans in our companies but we're also going to have these agents so these agents don't require a conversational prompt to take action you can do Advanced planning reasoning with minimal human input in the example of this incredible health care company you know you're going to be able to say to the agent hey I want to look at my labs I I want to understand this oh looks like I need repeat Labs can you reschedule those for me uh looks like I need to see my doctor can you schedule that for me I also want to get an MRI I want to get this and the level of automation that we're going to be able to provide and unleash the productivity back into these organizations is awesome and why that's important for this Healthcare organization or for all of them that we're working with since the pandemic these doctors and nurses are just so burnt out and there's so much activity for them that we're just going to unleash that productivity back to them so let the agent handle this you know simple task you know and let um the doctors and the nurses do what they're going to do best and that is going to be a powerful moment so this is going to be like uh you know having these you know trusted colleagues can handle these timec consuming tasks engaging with these you know whether it's in inbound lead or resolving this customer patient inquiry or whatever it is this is humans with agents driving customer success together and agent force agents can be set up in minutes easily scalable work around the clock any language um and by you know I by the beginning of next fiscal year we will have thousands of customers you know using this platform and we will have handheld them to make it successful for them deploy it the early trials have been remarkable to to see these customers have this success it has been just awesome and let me give you a great example Wy now it's back to school season Wy is a longstanding Salesforce customer it's one of our first deployments in the first agent force trial it's pretty awesome and you all know they make textbooks and it's back to school but maybe you don't know that Wy has to like surge their sales and service organization at back to school time whenever everyone's buying these textbooks well now they can use agents to do that search they don't have to go buy a bunch of gig workers and bring them in and that agent capacity is so exciting for them that you know what we saw with Wy was this is a quote from them we're seeing double digit percentage increase in customer satisfaction and deflection rate compared to older Technologies and in these early weeks of our busiest season so that was very reassuring to us that we have the right thing that's happening and wy's already seen 50% increase in case resolution that's with our first generation of agent force as I mentioned the second generation of agent force which we have with customers already including some of these amazing organizations like Royal Bank of Canada ADP and others there's 90% case resolution it is a awesome moment in in this Tech business open table is another super great story you all know they are managing 60,000 restaurants 160 million diners to support they're on agent force now they require that incredible scale to deliver top-notch customer service that's why they're using the product it's been awesome to get their results and and and it can be all kinds of questions resolving you know basic issues account reactivate act activations reservation management loyalty point expiration well agent force for service can easily answer all of these questions like when do my points expire or a DI ask Diner asks a followup question like what about in Mexico what about you know can I make this change that's where we're delivering those incredible moments for Open Table giving them this kind of productivity enhancement so in addition to this amazing capability agent force for service now agent force for sales you can imagine extending your Salesforce with sdrs bdrs who are agents that are going out and building pipeline for you and generating all kind of man and even really closing deals so this is going to drive sales Cloud growth it already is service Cloud growth it already is because customers are going to extend their sales and service organizations and become a lot more productive with these agents in the coming months we're going to release a agent force agents for other roles including industry specific agents Health agents as I mentioned medical answering all kinds of medical questions as I mentioned and we already have that in trial with this amazing Healthcare Company sorry one of the largest epic databases in the world and I just can't believe we're already resolving as I said 90% of these patient uh inquiries so um this marks a very significant advance in providing this reliable trusted AI you know we're really seeing a transformation of Salesforce look we're still going to automate all these human touch points we're still going to have our Commerce sites we're still going to have you know our analytics and visualization capability of managing or we're still going to have humans who are sales organizations service organizations but we are going to extend it all with this incredible agent capability now all of this type of performance from our agent force platform wouldn't be possible without data Cloud one of the reasons that our agents are so accurate is because the huge amount of data and metadata that we had and data is the foundation for every AI transformation and with data Cloud we're providing a high performance data Lake that brings together all our customer and business data federating data from external repositories through this credible zeroc copy Alliance so customers can use our data cloud and then Federate and connect to all their other data clouds and then we can bring it all together to deliver the super accurate AI That's why data cloud is absolutely our fastest and organic product in history it'll be the fastest product to a billion it's going to probably be the fastest product to 5 billion 10 billion and Q2 the number of paid da data Cloud customers grew 130% year-over-year and the number of customers spending more than a million dollars annually have already doubled in the second quarter alone and this is amazing data Cloud processed 2.3 quadrillion records with 110% platform consumption growth year over-year that is awesome just amazing the scale and capability and for again for customers who don't have that turned on yet and working at dreamforce we're going to focus on getting every customer on the data Cloud for the last 25 years Salesforce has been deeply committed to building the most capable sell CRM apps that help our customers connect with their customers in this whole new way we've automated every customer touch point and now we're bringing these apps data and agents together it's these three levels and this isn't three separate pieces of code or three different platforms or three different systems this is one platform we've Rewritten all of our Acquisitions all of our core modules our data cloud and our agents as one unified platform which is how we are delivering not only this incredible functionality but this high level of accuracy and capability and from this firsthand experience of meeting with these customers around the globe I can unequivocally tell you that building these agents without a complete integrated platform is like trying to assemble a plain mid-flight it's risky chaotic and it's not not likely to succeed I mean I just got back from a dream Force focus group where I met with one of the largest CI in the world is telling me how excited he was for the BDC part of his business he built this model and the accuracy rates and then I was like really let me show you what we're doing here and then he said to me why am I doing this why am I not just using your platform and I said good question so these customers are spending millions of dollars but are they really getting the results that they want it feels like this early days of cloud it's this early days of Social and mobile customers feel like they have to DIY it they don't need to they can make it all happen themselves and you can just see that to deliver this very high quality capability they can use a deeply integrated platform like Salesforce so with that um let me just move on to dreamforce and just say look I hope you're going to be able to come to dreamforce I'm going to try to encourage everyone to do it I've told Mike I really want all the analysts there I want everybody there all the investors there we're going to make try to give you the highest quality experience to encourage you to do that you'll be hearing the details from Mike on that shortly and you're not going to want to miss it but you're mostly not going to want to miss it because you're going to want to get your hands on this technology this is the first time that you're going to see how AI really is going to revolutionize these Enterprises now before I hand it off to Brian I just want to take a moment to thank Amy Weaver it has been an incredible 11 11 years for all of us who work with Amy she's been an amazing leader across many different parts of our organization is a deeply valued member of our Ohana she's been a fantastic partner to me personally and over the last few years in particular Amy has spearheaded our financial transformation resulting in an unprecedented margin expansion increase operational excellence Financial discipline continued strategic Investments and Salesforce today is better position than ever with phenomenal platform for growth and luckily for us you know Amy is you know basically you know going through this amazing transformation with us and now getting ready to go to the next level in our own career and she will step down at the end of the fiscal year at at the end of February March or and then she will stay with us I think until May of 27 to help on board the new CFO and and um you know let me just rip on this for just a second you know I've had the opportunity to work with so many great uh Executives at Salesforce and you know Amy is our fifth CFO I think all of you know that we've had some great leaders and we've been fortunate to build our company with some great folks you know um I remember Andy Steve cak breed you know Graham um Mark and then Amy has been just incredible how she's taken the financials to another level it's been awesome to work with her when she originally came to the company 11 years ago you know she came in as our general counsel I think there's been a handful of General counsels who've been able to make the transformation I always felt that Amy could do it I have to say it was my idea that Amy should move from general counsel to be in CFO she has exceeded my expectations and we've hired hydr con struggles and our good friend Jeff Sanders to run a search we're reviewing inter internal candidates and external candidates uh we're going to do a comprehensive search Amy is going to lead that with me we're going to find another world class person to be our six CFO which will be awesome and um and uh if you have people that you know that you're interested in h this position it's a great job right Amy it's a fantastic pay as well too doesn't it it's just fine and uh good job satisfaction overall get all these great events to go to so anyway let sure folks know they can contact Jeff and we're looking for that worldclass executive to become CFO number six and um we couldn't be more grateful to you Amy for everything you do for us every single day for all that you do in the middle of the pandemic when we couldn't even meet in person you took over a CFO you led us through the pandemic you exited the pandemic now you're helping us to execute this AI transformation which is so exciting and we couldn't be more thrilled so congratulations Amy and um thank you so much for everything again for everything that you have done for the company and for me personally and uh with a huge sense of gratitude I'm going to turn it over to you Brian well thank you Mark and certainly hard to follow that I wanna it really is all of that particularly the Amy part I want to Echo your comments on Amy an unbelievable leader who's been an amazing partner to me an example and role model to so many uh our company U I'm just so glad that we have more time with Amy as we work on this transition I want to start by thanking the team for the strong executions we continue to operate at tremendous scale and sophistication as a result show in the quarter we continue to execute on our core growth pillars with strong momentum in multicloud deals International expansion industry Solutions Salesforce ecosystem and data and AI Innovations across all of our clouds as you heard from Mark we're innovating faster than ever our new agent force platform which will be generally available in October as a game Cher for our customers and a huge opportunity for us going forward the feedback I've heard from the pilot customers like Wy and open table and fossil has been overwhelmingly positive agent force is deeply integrated platform combining our core metadata framework in data cloud and Einstein and extending the power of our customer 360 apps in ways that we didn't think possible a year ago reducing cost scaling workforces and dramatically improving customer and employee experiences all without the headaches of complex costly model training or DIY ai ai projects we're already accelerating this move from AI hype to AI reality for thousands of customers with amazing capabilities across our entire AI product portfolio new bookings for these products more than doubled quarter over quarter we signed 1,500 AI deals in Q2 alone some of the world's largest brands are using AI Solutions including Alliant Bombardier and CMA CGM Bombardier the maker of some of the world's top performing aircrafts is enabling sales reps to sell smarter by consolidating need to know information on prospects in advance of meetings and providing recommendations on how to best engage with them through the Einstein co-pilot and promp Builder the next steps for these companies of course will be deploying agents to drive even more Automation and productivity with AI Technologies advancing so rapidly it's been really challenging for our customers to keep Pace each of our customers is certainly at a different stage of their AI Journey they're relying on Salesforce as their trusted advisor their partner with them to uh in this new world where humans and ai ai are working together to help our customers navigate this new world we just launched a new team called Salesforce CTO these are deeply technical individuals who work alongside our customers to help them create and execute a plan for every stage of their AI journey to become agent first companies we're continuing our own AI Journey internally as a customer zero of all of our products with great results we we now have 35,000 employees using Einstein as a trusted AI assistant helping them work smarter and close deals faster and since we launch slack AI in February our employees have created more than 500,000 channels Channel summaries uh saving nearly three million hours of work we'll of course deploy uh agent force agents soon in a variety of different roles and tasks to augment automate and deliver productivity and unmatched experiences for all employees and customers at scale Echo Mark saids about data Cloud it continues to be uh highly strategic for our customers as they build foundations for infusing AI across their Enterprises American Family Insurance with millions of policy holders Nationwide is using data Cloud to consolidate data from multiple sources through our zeroc copy partner Network creating a 360 degree view of the customers enabling quick segmentation and activating lead data including their real-time web interactions the Adco group expanded their data cloud in in the quarter a great example of a company leveraging its Gold Mine of data to gain a unified view of its customers connecting all this data means that 27,000 Adco employees using Salesforce will have seamless access to key information including Financial metrics and job fulfillment status to help AO improve their job fill rate ratio and reduce their cost to serve in all my conversations with CEOs this quarter it's clear that we've never been more relevant especially as companies transition to become AI Enterprises that's why customers continue to trust Salesforce across their most critical touch points with their customers leaving the strong multicloud deals in the quarter as Mark said nearly 80% of our new business in the quarter was driven by multicloud deals companies like Windam hotel and result uh resorts are all in on Salesforce they're using us for sales cloud and service Cloud marketing cloud data Cloud Einstein and moft to transform its guest experience into a seamless endend Journey built in a single interface Windam utilizes data Cloud to UniFi profiles of 165 million guest records many of which were d duplicates across many sources like Amazon red shift and the saber reservation system as well as sales Cloud marketing cloud and service Cloud moft allows women to unlock business critical data from various platforms and onboard future franchises faster and with Einstein generated recommended uh service replies average call times have been reduced and Service agents can focus on higher priority work slack continues support form well with winds at Citadel converge ICT and Geico for the quarter 82 of the fortune 100 now use slack connect every week to better connect with their customers and their Partners in Q2 slack summarized 420 million slack messages and customers have built 13,000 AI apps across their organizations in the last 12 months with slack slack is the con conversational interface where humans and agents can come together Tableau and moft had solid quarters with Tableau wins at the department of interior and RBC Wealth Management and chewy and moft wins at VH us Foods in East Carolina University moving on to our international business five of our top 10 deals came from our International Teams with wins at Ferrari seui house and Commonwealth of uh Australia we saw particular strength in Japan India and Canada we have strong momentum in our industry's business as well and we continue to help our customers save time and money with industry specific Solutions more than half of our top 100 deals included one of our industry clouds in the quarter and we continue to innovate on our industry AI capabilities at dreamforce we're excited to share our new AI uh toolkit uh industry tool kit which features more than a 100 readyto use customizable AI powered actions all of these actions can be applied to build industry specific agents with agent force Salesforce Partners continue to drive our growth by helping us drive success at scale improving time to value and amplifying our growth in new ways our continued focus on go to market Channel diversification is working well and in fact in the quarter three of our top 10 deals Clos through the AWS Marketplace as Mark mentioned we're just at the beginning of building an agent force ecosystem with companies able to build agents on our platform for their Workforce and use cases and we're excited to have workday as our first agent force partner in closing I want to thank the team again I'm really pleased with the execution in Q2 dreamforce is just around the corner and I can't wait to welcome all of you either in person or virtually to see for yourself how humans and agents are working together to create new levels of customer success and the next generation of CRM now over to you Amy great Mark Brian thank you so much for all of the kind words um it has been such a privilege to work with both of you Mike uh the entire team of hardworking dedicated and compassionate employees at Salesforce Mark special thanks to you for your confidence in me and everything you saw and I will never forget you calling me more than four years ago for the CFO role um I have rarely been so surprised in my life but it has it's been extraordinary and I also want to thank all of you our investment community and in particular our shareholders for your continued support of Salesforce it's been a pleasure working with you on our transformation Journey over the last few years since my first day as CFO my focus has been on transforming our business to deliver profitable growth and disciplined Capital allocation in that time I am so proud of what we accomplished and I look forward to cheering Salesforce on for years to come so moving to the quarter I want to Echo Brian and thank the team for their dedication and very strong execution in Q2 our focus on profitable growth in our disciplined investment strategy led to strong results Q2 Revenue was 9.33 billion up 8% year-over-year in nominal and 9% in constant currency ahead of expectations driven primarily by resilience in our core products licens revenue outperformance and a better than expected Professional Services subscription and support Revenue grew 9% year-over-year in nominal and 10% in constant currency as a reminder q1 had benefited from the timing of licensed Revenue in the leap year resulting in a quarter over quarter headwind to Q2 Revenue growth from a geographic perspective the America's Revenue grew 7% or 8% in constant currency Amia grew 11% % in both nominal and constant currency and Apex grew 9% or 16% in constant currency we saw strong new business growth in Japan India and Canada while the US and parts of AMA remains constrained from an industry perspective in Q2 public sector hls and comms and media performed well while travel transportation and hospitality and Manufacturing automotive and energy were more constrained our subscription support Revenue was driven by another quarter of double-digit constant currency growth in both sales cloud and service Cloud primarily driven by growth in arpu due to premium mix shift and pricing discipline and as you've heard from Brian multicloud continues to be a powerful growth lover for us in Q2 around 16,000 customers added a new cloud and more than 4,500 of those customers added two or more cloud and we continue to see strong momentum in data Cloud which remains one of our fast fastest growing organic Innovations in Q2 our number of paid customers grow 130% year-over-year and the number of customers spending more than $1 million annually nearly doubled Q2 Revenue attrition ended the quarter at around 8% in line with recent quarters We are continuing to drive leverage across our business with Q2 non-gaap operating margin of 33.7% a record up more than 200 basis points year-over-year driven by Topline outperformance and expense discipline and we are driving strong cash flow due to our profitable growth trajectory Q2 operating cash flow was 892 million up 10% year-over-year Q2 free cash flow was 765 million up 20% year every year turning to remaining per performance obligation RPO which represents all future Revenue under contract RPO ended Q2 at 53.5 billion up 15% year-over-year current RPO or crpo ended at 26.5 billion up 10% year-over-year in nominal currency this includes a $300 million FX headwind which results in slightly above 11% year-over-year growth in constant currency thepo outperformance was driven largely by bookings execution as well as early renewal favorability on Capital return I'm happy to say that in Q2 we executed $4.3 billion in share repurchases and issued nearly 400 million in dividends this brings our total return to shareholders in the quarter to 4.7 billion a record high quarterly return as a result we now expect to more than fully offset solution from FID 25 stock-based compensation now let's turn to guidance starting with the full fiscal year 25 on Revenue we are holding our guidance of 37.7 to 38 billion growth of approximately 8 to 9% year-over-year a few items to note on our Revenue guide first on the buying environment we are assuming that the conditions we've been experiencing over the past few years persist on FX our Revenue guidance in continues to incorporate a $100 million FX headwind year-over-year or 30 basis points impact we continue to expect our Professional Services business to be a headwind to revenue and we expect deceleration in our licensed Revenue growth in the back half of the Year this is due to the tough compare from very strong performance last year and the volatility of licensed Revenue recognition for sub subscription and support Revenue we still expect approximately 10% growth year-over-year in constant currency and we expect attrition to remain generally consistent as slightly above 8% for the full year now turning to profitability and cash flow on margins as a result of our strong Q2 performance we are raising our 25 non-gap operating margin to 32.8% representing a 230 basis points Improvement year-over-year this incorporates intentional Investments and growth opportunities notably Ai and agent force data and our core businesses stock based compensation is now expected to be 88.4% as a as a percent of Revenue the modest increase from our prior guidance is primarily a result of a mechanical ESP reset as a result for fiscal year 25 Gap operating margin guidance is now expected to be slightly below 20% representing 530 basis points of improvement year-over-year which includes a slight increase in restructuring charges from our ongoing cost transformation we expect fiscal year 25 Gap deleted EPS of $65 to $613 non-gaap deluded EPS is expected to be $103 to $101 as you have heard of emphasize over the last few quarters we are focused on driving continued free cash uh cash flow expansion as a result of our discipline Capital deployment we are raising fiscal year 25 operating cash flow growth to be approximately 23 to 25% inclusive of cash tax headlamps we now expect cap acts for the fiscal year to be slightly below 2% of Revenue this now results in free cash flow growth of approximately 25 to 27% for the fiscal year now to guidance for Q3 on Revenue we expect 9.31 billion to 9.36 billion up 7% year-over-year in nominal and constant currency crpo growth for Q3 is expected to be 9% year-over-year in nominal including a $100 million FX Tailwind this will result in approximately 8 and a half% constant currency growth this is inclusive of a one point quarter over quarter headwind from the very significant deal we closed in Q3 last year as a reminder while we have seen more normalized bookings growth recently the RPO will continue to be materially impacted by the cumulative effect of the previous two years of measured sales performance for Q3 we expect Gap EPS of $141 to $143 and non-gaap EPS of $242 to $244 in closing I am very pleased with our strong execution this quarter as we Contin continue to focus on profitable growth and optimizing free cash flow and I want to thank our employees and our shareholders for their continued support I hope you're able to participate in dreamforce and see our new agent force platform and all of the incredible Innovation happening at Salesforce whether in person or virtually so before we open up the calls for questions though I am going to send it back to Mark okay well thanks so much Amy and congratulations again on this amazing transition and the success and you know you're an awesome general counsel you're an even better CFO now we have Sebastian who's you know delivering the general councel capability sitting here at the table with us and um I can't wait to see who you're going to bring in as the next CFO so uh this next thing I wish I didn't have to say to all of you but uh I am going to because it's been I have a heavy heart I think all of you know that we lost two amazing board members uh this quarter with Sandy and Susan and um we are all still processing our grief we are all extremely sad um and um it's beyond anything that we have experienced as a company or as individuals to have to say goodbye to these two amazing people and our hearts and our spirits and our souls are with uh with them and also you know uh our condolences are with their families um amazing families amazing people they did so much for our company and uh they were not just great board members uh not just great leaders of our industry um but they were also great friends of the company but also personally they did so much for me so I'm so uh grateful for them and I miss them every single day and I'm sorry that I have to say this on the call because this is the least favorite part of what I do but I just want to tell everyone how much I love Sandy and Susan and and how uh much I miss them and I'm turnning it over to you Mike great thank you operator we'll take the first question please thank you that question comes from Keith's Wife Morgan Stanley excellent thank you guys for taking the question congratulations on a really solid quarter and Amy really heartbroken to see you going it's been great working with you uh over the past four years as CFO um done an amazing job in in the role uh two two part question um one on sort of the growth equation for Salesforce um a lot of excitement around the generative Ai and the new AI capabilities and an expanding portfolio there we're all really excited about there's a lot of other parts of the equation that are adding to growth whether it's industry clouds or International expansion or multioud Solutions so maybe a question for Brian can you help us understand how to build up the growth equation like where where are you guys getting those points of growth and when does gen become a more mature contributor there U and then the second question is around pricing um with with the agents coming into the picture with productivity gains uh 90% deflection rates um investors are going to worry about the number of seats being used coming down with those productivity gained how does the pricing change to account for that so sales for still get the value from these Solutions on a go forward basis thank you but let me let me open it up and then turn it over to Brian and um you know know because you know you are right like this is just a moment and it's an exciting moment and it is all about growth and it's all about Innovation and those are two of our Specialties here at Salesforce so I think when we think about growth you know for the last 25 years I'd say we're mostly focused on selling our apps you know and doing the services around those and uh we're going to continue to sell our apps and we are and you can see in the quarter we sold a lot of apps and not just selling our apps but also we're selling our um uh data Cloud as well and now we're selling our agents and not just you know as core platforms but also through our verticals which have been some of our highest performing capabilities in the company and you're also right that there are international regions uh that are growing at incredible rates and you know we see that in Asia uh and we also see that in other parts of the world as well where we continue to see like this double- digit growth and that has been very inspiring uh to us so it's really a combination of these three things The Total Transformation of the technology stack the verticalization of that stack and that International growth there three really core levels of growth in my mind I'm going to turn over to Brian to give you the detail and then number two on pricing when you think about um when you think about apps and you think about humans because humans use apps not in all cases so for example the data cloud is a consumption product the Commerce cloud is a consumption product of course um the email product marketing cloud is a consumption product Heroku is a consumption product so of course we've had nonhuman you know consumption-based products for quite a long time at Salesforce but in this idea of Agents you know when I'll just give you my own personal goal so you I'm not giving any guidance here you know my goal is that by the end fiscal year uh 206 that we will have a billion agents already in just looking at the number of consumers identified you know just in the trials that we have going on we have like a 100 million identified or more okay call it 200 million um but uh the funny thing is of course it's only one agent but you know let's just think it's like a manifestation of all these agents talking to all these consum and then when we look at pricing it will be on a consumption basis and when we think about that we think about saying to our customers and we have it's about $2 per conversation so that is kind of how we think about it that we're going to have a lot of Agents out there even though it's only one agent it's a very high margin opportunity as you can imagine and we're going to be reaching look you have to think about these agents are like this is the new website this is your new phone phone number this is how your customers are going to be connecting with you in this new way and we're going to be helping our customers to manage these conversations and it's probably a per conversational charge is a good way to look at it or you know we're selling additional consumption credits like we do with our data Cloud so it's a very exciting moment and um I'll turn it over to uh uh Brian as well yeah thanks for the question Keith um and I appreciate your knowledge of all of our so our growth strategies here around multicloud deals and international acceleration product and pricing I think it's important not to lose track of the fact that these new Innovations around agent force and data cloud and AI make all of our core apps that much better and even in the context of service Cloud that you're referencing here our customers are looking at their all-in cost of running a call center and when you bring a technology that allows you to scale and drive efficiencies and operating that call center and it's on our technology we're excited about those conversations because we think we get to monetize all of that incredible Innovation through the all-in cost there there a couple other things I think you should um you should know about certainly our Channel diversification as we think about scale and and international business you through resellers uh a big upside for us I believe is our AWS Marketplace as a driver going for and I mentioned in the in the comments earlier that um three of our our top 10 deals went through the market place so a big opportunity there and then maybe another one that we haven't talked as much about but is a big Focus for us as we get into the second half of this year and Beyond is how do we look at um managing our attrition more aggressively going forward as a way to drive growth um how do we make sure that we are uh uh driving more adoption more feature usage more value derived from our technology um to to uh to deliver more value to customers so that they get growth off of uh in efficiencies using our technology and so many inputs you know many of them but um uh as Mark said this is a new era and we're excited about the future and the value we can deliver to our customers thanks Keith operator we'll take next question please thank you next up is Cash Ranken Goldman Sachs uh Mark you made my heart feel heavy as well with Sandy uh you might know I used to work for Sandy a long time ago so prayers with you uh back to the back to the business congrats on the quarter Amy uh unbelievable I do not know anybody who is who was a chief legal officer and became a successful CFO and led the company through a transformation so you'll go down in history as a very unique person in that regard what one macro Thing Mark you've been through so many cycles before do you think rate reductions and uh post elections it might be more conducive selling environment at a at a high level and also the micro question with AI uh clearly that the debate is going to uh create so much productivity that we need few people clearly your ideas that we're going to float agents out there but how confident are you that based on everything that you've seen so far that the world might not need more seeds and that you don't have to be entirely dependent only on consumption that this might actually further penetration of seats and it might be about who is not using Ai and there are going to be losers versus people that are using AI so how how does this play out in your view and you've been through a cloud battle and all that so love your perspective thank you well thanks Cash and yes our hearts are with sy's family and uh with his wife Nancy and his daughters uh thank you for saying that so much um you know I think let let me just tell you two quick stories I kind of told you one already in the in the in the in the script which is we're working with this very large Health Care Organization and um you know it's been our lifelong dream to be able to do more with this with this company and they are a large epic user they have a huge EMR system we do a lot on patient relationship management which is you know just keeping in touch with their customers but this is different because what happens now is you know we all have this experience we go get our labs done you know they draw your blood you get your numbers and then you get a number and you're in Epic and it says oh um oh this is out of range or this isn't right or this seems higher or lower than it was before and I need to talk to my doctor right now and after the pandemic everyone's health anxiety is just a lot higher and doctors are just get a lot more C and nurses are just far more active than ever before and what happens is is these doctors and nurses are facing a lot of burnout you can talk to any major Healthcare organization and we work with them all so in this case this agent force is now resolving in this trial 90% more than 90% of these patient inquiries so you can imagine for these doctors and nurses not getting these calls how that is but agent force is more than that it's not just saying hey my cholesterol is high or this is happening or whatever it also you're saying what's my next step and it's I'm I would like to reschedule uh a doctor's appointment for you oh I want to get um labs redrawn for you in 30 days which is a common technique that a doctor will say is oh yeah that lab you know that may not be accurate let's just retest um or you know what this requires you to get a MRI or a CT scan and I've scheduled that for you and all of that is happening through the agent so you can imagine every healthc care company every hospital every organization in the world needing that and that's not what we do today exactly you know that's not exactly where our business is so this is a huge new opportunity for us to now come in and say yes we're going to do patient relationship management we have our health cloud and we're still going to help you know coordinate and communicate and connect with all your you know patients but now we're also helping to just dramatically improve the productivity of your organization another example is very large uh computer hardware companies doing a major acquisition and huge customer bars and they're reconceptualizing their whole business and they just want to be a very you know they want to just look at where do they want to be um uh in terms of how they're selling and servicing their customers in 5 years and I said to CEO it's spent a long time with this him I've known for a long time hey we're going to build you an agent first organization and you're going to be agent first in sales and agent first in service and we're going to turn you into a margin machine and that's the goals of this implementation and that is not a conversation that I've had you know with a a customer before exactly like that so yes we're going to continue to automate their whole organization but we have to not just build them A great sales force or service force or marketing force or Commerce Force analytics force or whatever we have to build them an agent force and that is you know we're going from today's 0% Market sharing agents and obviously our goal is to be the agent supplier to our customers which it has to be deeply integrated into our data and our apps because these agents at some point are going to say actually I want to pass you off to a human now to talk and complete this and there's a seamless automatic handshake between our agents and our apps because it's just one platform by the way so it's one database one platform seamless handshake it's one integrated system that's a pretty big thought and I think we can really take our customers capabilities to a whole new level this is just a part of Technology that's just never existed before so I'm excited about this cash I I have always been excited about our app and I have obviously been very excited about our data Cloud now I'm very excited about the agents and how it all wraps together and how it leverages our decade of AI experience and and and and how our team has executed on this opportunity has just been remarkable great thanks Cash uh operator what's take next question please absolutely next is Kur KK matern evercore isi hi yes thanks very much and I congrats on on a nice quarter and Amy uh thanks so much for all your efforts over the last four years it's it's been pleasure working with you um mark one of the questions I have for you is obviously one of the challenges with AI from an Enterprise perspective has been the complexity the security risks you you've brought this up before so how quickly can existing customers get up and running with agent force and is data Cloud a prerequisite for driving value or or is that just something that sort of you know takes it to another level thanks well it's a it's a great question and the sead scores on agent force right in this kind of uh you know trials have been extremely high I think four out of five and um and customers can get going almost immediately and we're going to prove that for them after enforce and uh then we're going to go out there and we're going to you know we're going to through our world tours and all of our programs which are going to be know agent force tours we're going to go hand inand and work to implement tens of thousands of customers over the next six months and step one was building the platform um that is deeply integrated um while a data cloud makes it all a lot better you do not need data Cloud to make it work but we encourage it because you're just going to get so much better accuracy and you need this anyway and you know the new version of Tableau which we've already been showing which is awesome is built on data Cloud so you hit a button and fully visualizes everything so you know you have all your agents are working your sales people are working your service people are working you're sending out these emails you're conducting Commerce on your website you know and then you hit a button and boom Tableau visualizes all of it for you and it's all one integrated platform so that that's really our vision of where it's going and I think that that is very compelling for our customers you know when we bought these companies starting with a exact target and demand wear and and Tableau you know we didn't really really sure like even Slack are we going to really integrate rewrite do we really need to the Loosely coupled was working really well but now with the shift AI just became clear 18 months ago we need to hit the accelerator pedal and rewrite all these things onto the core platform because customers are going to get this incredible value by having one integrated system and it scales from small companies to extremely large companies and that is what I am super excited about and you we just brought all of our 500 top Executives together and we um showed all of our how we've changed all of our products and I think everyone was just stunned and I'm looking forward to showing that at dreamforce because I think customers will just be so motivated not only at the the quality of the new apps which are all AI driven but also that they're able to extend it with these incredible new capabilities which are indeed huge growth drivers for us going forwards and by the way also huge points of differentiation the last point is this these customers you know they're still going to build uh models but it's in our platform they're still going to fine-tune those models in our platform they're going to still use our um AI Studios and build their own prompts in our platform they're you you know all of it runs in our platform and that's how they deliver this incredible capability and if You' seen some of the architecture and graphics and how I've changed the architecture of the you know and how we talk about the the company it's really about in this one two three approach the apps the data and the Agents uh but it's all AIC Centric it's all and it's not you you're not going to have to DIY it and it just it is driving me a little crazy as you probably heard like when I meet with these customers and they think I need to build my own model I have to train my own model I have to retrain and they are spending a lot of money on this craziness and it's not working so it it is a disappointment that Microsoft has convinced so many customers and others too even some of these model companies who are just regulated at this point to be Commodities that you know that they have to be you know customized to stuff it's not true it it can be done in a platform approach and it's better easier lower cost and we're you know this this technology we will we'll we we are proving it and we'll show it and if you talk to these customers who've already deployed at the open tables the Wes the wums the you know the uh the the rbcs that there's a lot of customers don't want me to use their name so I'm cautious but they you know it's just very clear this is going to really dramatically make everything better great thanks kir uh Aubrey we'll take our last question now please thank you sir next or last question will come from Brent Bill Jeff re um I think everyone probably wants to understand kind of why now what what was the decision and maybe it it's just simply uh 11 great years and ready for the next chapter but I think everyone would love to hear your your perspective on your decision and for Brian I when you look at the America's business um you were running double digit growth it it went to one of the lowest levels we've seen our model around 8% and what does it take to get back to double digit growth um is our saturation issues is competitive give us a sense of kind of what you think is happening in the America's region so Brent I was not expecting that question but I happy to address it and again thank you for the the very nice uh comments Keith cash Kurt um and uh please um know how much I've enjoyed working with all of you and I will certainly be on the next earnings Callum possibly the one after that as we do our oh no you definitely will oh you're definitely all right we're not not moving that fast on the surge so we'll have plenty of time I forgot goodbyes at that point um in terms of my decision it has been an absolutely extraordinary 11 years I think a journey of um uh just a journey that anyone would be extraordinarily lucky to have the last four years have been amazing as CFO you know I really came in and I remember doing a listening tour with our our shareholders my first couple months and they told me the top two things on their minds were op margin and dilution and I set out to see what we could do on both of those and nearly four years later we've raised we've almost doubled operating margin it was 17% my first year we're going to do close to 33% this year we initiated a buyback program with close to 20 billion shares or not shares sorry dollars uh put back and this year we layered in a dividend program um we have dealt with all sorts of other incredible opportunities along the way I think it I've managed to pack in about four Decades of CFO experiences in four years uh this feels like the right time for me um really focused on a very smooth transition of finding the next CFO uh making sure to relax and recharge and looking at new adventures so thank you for the question and Brian over to you I got a tough transition from that um I Brent thanks for the question um first of all uh as you know Americas is the biggest business we have uh at Salesforce um and where we've had a ton of success for many many years uh I would not characterize that market is saturated and I would not say the competition is what's holding us back I think the measured buying environment is really what's impacted the largest business we have in particular the transactional business and SNB business is very large in that market and so it's going to feel uh the the measured buying environments weighted heavily in that market and so um I I would not position it that way uh that we're saturated at all in fact I think when you look at our new technology the new innovation that's coming the multicloud deals that we're bringing in a very happy customer base uh I think we have a huge opportunity to go turn that business around and get it back to double digit growth um and so uh big opportunity and love all the Innovation that's coming out of our product and development teams uh because our customers need it and they're looking for us to guide them into this future so uh thanks for the question and um uh very very much looking forward to seeing that that growth back at the double digits in the Americas yeah Sebastian now you've heard all these great things about a general counsel becoming CFO don't you think be you want to put your hat in the ring here I think we're GNA have some incredible internal Talent external candidates and really you know to get the right person who can really take Salesforce and our entire ecosystem especially all of our customers across every industry forward very good thank you thank you so much great thanks Brent thanks everyone for joining and we look forward to seeing you and speaking with you over the coming weeks thanks all once again everyone that does conclude today's conference thank you all for your participation you may now disconnect