Key highlights from Salesforce.com, Inc. (CRM) Q2 2024 Earnings Concall
Management Update:
- CRM said it has invested heavily in AI and has integrated AI into its core technology platform. CRM is transforming itself to being the number one AI CRM.
- CRM saw excellent usage growth in its automation products, including Slack, which now launches nearly 8 million workflows weekly, a 71% increase year-over-year.
- For the third consecutive quarter, eight of CRM’s industry clouds grew at ARR above 50%.
- CRM continues to expect to fully offset its stock-based compensation dilution through its share repurchases in FY24.
Q&A Highlights:
- Kash Rangan with Goldman Sachs asked if CRM has room to grow its customer wallet share, even as it maintains its strong margin performance. Marc Benioff CEO said that CRM is excited about the growth potential of AI and is investing heavily in new AI products and technologies. The company expects AI to ignite a buying revolution and drive growth in the future.
- Keith Weiss of Morgan Stanley enquired how investors should balance CRM’s strong margin performance with its investment in generative AI. Marc Benioff CEO clarified that CRM is committed to profitable growth, but is also excited about the opportunities in generative AI and other areas. The company will balance these two priorities by making investments that are both profitable and strategic.
- Kirk Materne from Evercore asked about the impact of CRM’s pricing actions on its revenue and guidance for 2H. Amy Weaver CFO answered that the pricing uplift and the new opportunities around AI have not had a significant impact on CRM’s guidance for this year. Amy added that the impact of the price increase will be felt over the next 1-3 years.
- Karl Keirstead at UBS queried if CRM has right-sized its headcount at 70,000 employees and if the company expects its growth rate to bottom out at 11% this year. Marc Benioff CEO said that CRM is continuing to grow its headcount, but is also facing attrition. The company added that it is not planning any further major restructuring efforts.
- Brad Sills with Bank of America Securities enquired where CRM is seeing the most opportunity for AI across its sales, service, marketing, commerce, and core products. Marc Benioff CEO answered that CRM is at the forefront of AI innovation. The company is investing heavily in AI and is seeing early success with its GPT products. CRM believes that AI will play a major role in the future of CRM and is committed to helping customers adopt AI-powered solutions.
- Brad Zelnick of Deutsche Bank asked how generative AI is impacting the opportunity for Data Cloud and why CRM is well positioned as the partner of choice. Marc Benioff CEO replied that CRM is excited to announce that Data Cloud will be the heart of its modern CRM platform. The company will showcase Data Cloud and other innovative products at Dreamforce on Sept. 12-16.
- Brent Thill from Jefferies asked if CRM can reaccelerate its CRPO growth to 15-20% with AI built into the model. Marc Benioff CEO said that CRM is focused on both growing the top line and the bottom line. The company is grateful to investors for their insights and support, and is excited about the future of CRM with AI.