Key Metrics
- Revenue: $9,325 million (10% yoy)
- Subscription and Support: $8,764 million (9% yoy nominal)
- Non-GAAP Operating Margin: 33.7% (up 210 basis points yoy)
- Remaining Performance Obligation:
- Current: $26.5 billion (10% yoy)
- Noncurrent: Not specified
- Unearned Revenue: Not specified
- Billings:
- Billings and Other: Not specified
- Contribution from Contract Asset: Not specified
- Cash from Operations: $892 million (10% yoy)
- Capex: Not specified
- Free Cash Flow: $755 million (20% yoy)
Forward guidance
- Revenue Guidance: For FY2025, Salesforce expects revenue between $37.7 billion and $38 billion, representing an 8% to 9% year-over-year growth.
- Subscription and Support Revenue Growth: Anticipated growth of approximately 10% year-over-year in constant currency.
- Non-GAAP Operating Margin: Raised guidance to 32.8% for FY2025, reflecting a 230 basis point improvement year-over-year.
- Operating Cash Flow Growth: Increased guidance to 23% to 25% year-over-year.
- GAAP Diluted EPS: Expected to be between $6.05 and $6.13 for FY2025.
- Non-GAAP Diluted EPS: Expected to be between $10.03 and $10.11 for FY2025.
- Q3 Revenue Guidance: Projected revenue of $9.31 billion to $9.36 billion, up 7% year-over-year.
Key takeaways
- Positives:
- Marc Benioff emphasized the transformative potential of AI, stating, "I don't think I've been more excited about the history of Salesforce and now the future of Salesforce," highlighting strong performance across revenue and cash flow.
- The introduction of Agentforce is seen as a game changer, with Benioff noting, "We're going to show our new Agentforce agents... a development platform as well as this incredible capability to radically extend your sales and service organizations."
- Data Cloud is experiencing rapid growth, with a 130% increase in paid customers year-over-year, indicating strong demand for integrated data solutions.
- Multi-cloud deals accounted for nearly 80% of new business, showcasing Salesforce's ability to cross-sell and deepen customer relationships.
- Non-GAAP operating margin improved to 33.7%, reflecting effective cost management and operational efficiency.
- Negatives:
- The Americas region's growth has slowed to 8%, with Amy Weaver attributing this to a "measured buying environment," suggesting potential challenges in customer spending.
- There are concerns about the impact of AI on workforce needs, with Benioff acknowledging, "I think there's a lot of misconceptions about AI with my customers," indicating a need for education on AI's role in enhancing productivity rather than reducing jobs.
- The professional services business is expected to remain a headwind to revenue, which could limit overall growth potential.
- The company anticipates a deceleration in license revenue growth in the latter half of the fiscal year, which may affect future earnings.
Peer Summary
- Microsoft Corp: Strong demand for AI-driven solutions is evident, with cloud revenue projected to grow 18-20% and Azure revenue expected to rise 31-32%. Satya Nadella stated, "AI-driven transformation is changing work," indicating a robust market sentiment towards AI integration in business processes.
- Oracle Corp: Cloud revenue is anticipated to grow 23-25%, with Safra Catz noting, "demand continued to outstrip supply," reflecting a competitive landscape where customer interest remains high. However, concerns about margin pressures were raised, suggesting potential challenges in profitability.
- Adobe Inc: Despite strong performance, there are apprehensions about future growth, with Narayen stating, "the sequential guidance for net new Digital Media ARR is the lowest ever," indicating potential volatility in revenue expectations amidst a competitive environment.
- HubSpot Inc: The company reported a 20% year-over-year revenue growth, but average subscription revenue per customer declined by 2%, highlighting pricing pressures. Bueker noted, "Our assumption is that it's going to be very much the same environment moving into Q4," indicating macroeconomic uncertainties.
