💃 Salesforce 2023Q3 (FY2024Q3) Earnings Call 🕺

Good morning, Salesforce Nerds! Q3 Earnings are in and they are 💃fabulous🕺!

Another great quarter! High profit margins, respectable revenue growth, and some big sales wins.

Let’s get into The Good, The Bad, and the Eye Opening 👀 ⬇️

Agenda for today includes

• Salesforce 2023Q3 (FY2024Q3) Earnings Call

• Daily Principle

• All the Memes

Salesforce 2023Q3 (FY2024Q3) Earnings Call

Today we will discuss-

💃 The Good🕺

💃 The Bad 🕺

💃 The Eye Opening 🕺

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THE GOOD

📈 Revenue | $8.72 billion actual vs $8.72 billion expected, and an 11% YoY increase

📈 Earnings | $2.11 per share vs $2.06 expected

If you take the actual revenue numbers down to the last decimal, Salesforce technically had another Double Beat 🥊 - where the top (revenue) and bottom (profit) lines beat analyst expectations 🎉 .

📈 Operating Margin | 31.2%, another huge YoY increase, but with 32% last quarter, it’s good but not a surprise 🤷.

A focus on profit, led by Salesforce’s move to deeply cut 🔪 headcount early this year, continues to drive high margin.

And with the continued increase in revenue, Salesforce maintaining a very respectable >30% margin is a clear indicator that they are focusing on operational efficiency.

The inverse of that is they had minimal focus on efficiency in the first third of this decade, when they posted sub-20% margins!

Another interesting note on profit is a response to an analyst by CFO Amy Weaver about collections - sounds like Salesforce accounts receivable went hard on overdue customer invoices 😅!

Lots of good news on this call. Rapid fire, incoming-

🔥 80% growth in deals that are greater than $1 million. Microsoft can’t be happy about this….

🔥 1000 new Data Cloud customers.

🔥 Salesforce Starter drove 1000 new logos.

🔥 17% of F500 companies utilize Einstein co-pilot solutions 🤖.

🔥 9 of 10 of Salesforce’s largest deals consisted of 6 or more Clouds 😮.

🔥 8 of 10 had Mulesoft.

🔥 7 of 10 had Slack.

🔥 Lots of Unlimited Edition licenses sold. Was this driven by an internal sales initiative?

THE BAD

Let’s be clear, this was a good call 🙂. Very little negative was presented, so nitpicking abounds!

😬 “Ohana 2.0” - Marc touted this. He said employee satisfaction surveys had just come back and they were great…..buuuuuut who is gonna give negative reviews after Salesforce just cut 7000 people earlier this year? 🤐

😬 Margin expansion response - when asked about how Salesforce will continue to increase or maintain their 30% margins, the response was to be mindful of headcount and real estate plays. This is reasonable, not bad. Told you we had to nitpick! But if you’re looking for one of those cush tech jobs where you barely have to show up and make 6-digits, those days are gone…

😬 Market sentiment- another major nitpick, when asked how Salesforce was crushing F500 sales, Marc was very measured in his response. He noted that he’d discussed with the leadership team on how they’d respond to that question. He basically he said he wasn’t totally sure, and that it’d be premature to say that the market has turned for the better.

THE EYE OPENING

Data Cloud ☁️.

On one hand, it’s likely that Salesforce knew exactly the benefits that Data Cloud provides - a place for A LOT of customer data to live and be synthesized and utilized, by humans 🙋 and AI 🤖.

On the other, even Salesforce is surprised at the tremendous….opportunities that it is creating for their customers, and for Salesforce’s ability to leverage Data Cloud to continue engineering their AI solutions.

It is just a matter of time until revolutionary solutions surface. They may even already exist, they are certainly a work-in-progress, and the match has already been lit - you’re gonna see some interesting AI solutions, fed by Data Cloud, in the next few years.

Expect a dedicated ChaCha write up on this soon 😃!

Daily Principle

and now....Your Daily Memes