💃 Salesforce 2023Q2 (FY2024Q2) Earnings Call 🕺

Good morning, Salesforce Nerds! Q2 Earnings have spoken, and they are full of margarine 🧈.

*ahem, cough cough

MARGIN!

32% margin, in fact, which is crazy impressive for a company the size of Salesforce ($210BB market cap on 8/29 market close)!

Let’s get into The Good, The Bad, and the Ugly ⬇️

Agenda for today includes

• Salesforce 2023Q2 (FY2024Q2) Earnings Call

• Daily Principle

• All the Memes

Salesforce 2023Q2 (FY2024Q2) Earnings Call

Today we will discuss-

💃 The Good🕺

💃 The Bad 🕺

💃 The Ugly 🕺

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THE GOOD

📈 Revenue | $8.60 billion actual vs $8.53 billion expected, and an 11% YoY increase

📈 Earnings | $2.12 per share vs $1.90 expected

That’s another double beat 🥊 (when Revenue and Profit actuals both exceed analyst’s expectations), for those keeping score at home!

📈 Operating Margin | 32%, a whopping 12% YoY increase 🤩

And the delicious margins 😋.

Salesforce President and CFO, Amy Weaver, advised 30% should be the floor, going forward 😳 .

Remember, (lack of) margins were a major pain point for activist investors, who, depending on your perspective, are responsible for injecting some accountability into the company.

For reference- Apple, Google, and Meta are all in the 20% range. They are at least 4x larger, too. So, a good baseline to measure against as Salesforce continues their growth.

Will Salesforce maintain their 30% floor, like Amy says? Perhaps. SaaS companies are expected to have dreamy margins 😍!

Overall, a fine earnings quarter for Salesforce. Especially in creating efficiencies that led to a major jump in operating margin 🤑!

THE BAD

Salesforce advised customers are still unsure about the eventual direction of the market 😢.

This lack of confidence came in the form of longer sales cycles, including more bureaucracy in the deal making.

And long term, while Salesforce is growing, they are growing at a slower rate.

See Marc’s post, then the comment in regards to the diminishing marginal returns ⬇️

But let’s be clear, Salesforce is a very healthy company. Just because they’re not experiencing Nvidia-like growth is no cause for concern for Salesforce professionals 🙂.

THE UGLY (NOT REALLY…)

Not necessarily ugly, just some observations and thinking out loud-

📜 The call was largely scripted, which is very normal. But Marc tends to go off on wild tangential storytellings that are highly entertaining. There wasn’t much of that here, just a random AI flashlight anecdote…

🫤 Still no succession talk (how did the analysts NOT BRING THIS UP?!). And Marc was the least enthused on this call compared to the last 6 earnings calls. He has Dreamforce hosting duties next month, and then the sprint to the end of the year that will be here before we know it 😅.

☁️ Data Cloud is Salesforce’s fastest growing organic product, and is positioned as a major key to successful AI implementations.

⚡️ Tableau and Mulesoft received multiple shoutouts for their contributions to the top line. That’s good to hear- 2 great products that seem to finally gaining some market traction 💪!

🤖 🤖 🤖 It’s all AI Updates below this line 🤖 🤖 🤖 

🤖 Slack is the favored messaging tool for all major AI companies - OpenAI, Anthropic, Hugging Face - and these companies are using it operationally and to augment their AI solutions.

🤖 Marc is very proud of the level that AI has been integrated into the legacy solutions, “into the metadata,” per Marc. That’s deep…

🤖 Dreamforce- be prepared to have AI rammed down your throats 😬.

🤖 PenFed’s Service Cloud and Einstein Chatbot are receiving 40,000 customer service sessions per month. 20% of these are being resolved by the chatbot. Of course, much of the chatbot config was done by an amazing Salesforce professional. But you can see the potential of a fully-AI-powered service bot.

🤣 We know, Marc. We know…..

Daily Principle

and now....Your Daily Memes