Salesforce, Inc. (NYSE:CRM) Q3 2024 Earnings Call Transcript

Salesforce, Inc. (NYSE:CRM) Q3 2024 Earnings Call Transcript November 29, 2023

Salesforce, Inc. beats earnings expectations. Reported EPS is $2.11, expectations were $2.06.

Operator: Welcome to Salesforce’s Fiscal 2024 Third Quarter Results Conference Call. After managements prepared remarks, we will open the floor to questions. [Operator Instructions] I would now like to hand the conference over to your speaker, Mike Spencer, Executive Vice President of Investor Relations. Sir, you may begin.

Michael Spencer: Thank you. Good afternoon, and thanks for joining us today on fiscal 2024 third 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 Marc Benioff, Chair and CEO; Amy Weaver, President and Chief Financial Officer; and Brian Millham, President and Chief Operating Officer. As a reminder, our commentary today will include non-GAAP measures. Reconciliations between our GAAP 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 risks, uncertainties and assumptions, which could change. Should any of these risks materialize or should our assumptions prove to be incorrect, actual company results could differ materially 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 SEC filings, including our most recent report on Forms 10-K, 10-Q 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 Marc.

Marc Benioff: All right. Hey, Mike. Thanks so much, and thanks for all your hard work this year. It’s been an incredible year. And also, I just really appreciate everyone being here on the call today. And hope you all had a great Thanksgiving, and I hope you’re all preparing a fantastic holiday for yourself coming up. I know it’s been an incredible year for so many of the folks on this call, and I’d just encourage all of my folks to try to take a couple of days off and do a little digital detox. And I hope you get a chance to do that as well as we come into the season. We’re obviously super excited about these results. We’ve delivered in this unbelievable quarter and in this unbelievable year. And this double-digit revenue growth, delivering non-GAAP margin exceeding 30%, this is really exciting for us.

And when we look at these numbers, when we think about having an $8.7 billion quarter, 31.2% margin in the quarter, and then talking about this year at 34.8% fiscal year ’24, amazing with 30.5% margin growth, whether it’s 800%, 900%, 1,000% increase from year-over-year, these numbers all exceed what we thought we were able to do. And I’ll tell you, okay, we really did this in partnership with all of you. I’m just going to come back to that a couple of times to give you the gratitude and thanks that you deserve for everything you’ve been doing to help us have an unbelievably great year. But I’ll tell you, it’s more than just a great year. It’s also a huge year of transformation. I think everyone on the call knows that. It’s exactly a year ago, as you remember, or maybe I’d like to forget, exactly how crazy that year got, and it was a really unusual year.

But we knew we had to change. We knew there had to be transformation. We knew there were things that had to get done. And we look that we were going to have to restructure our business for the short and long term. We talked about that in each of the last several calls. We knew we had to focus on increasing profitability, productivity, operational excellence across the board. We knew that. We knew that we had to really double down on our core, deliver some strong relationships with you, our investors. And then I’ll just keep coming back to that, that you’ve been just such great partners in making all of this happen. And I’ll tell you that we have to stay focused on continuing to be this number one AI CRM, which we’ve been doing. You’re going to hear about that today and really finding these incredible growth factors for the company.

You know what, people have been asking me why am I so excited about this quarter? And Brian is going to hit on this as well, and Amy is going to hit on this as well. The three things that keep coming back to me are, number one, that we have 80% growth in deals more than $1 million. That is far exceeding our expectations, that we were able to pull together all of these different clouds into this kind of what we call a cocktail. The customers were wanting to buy Tableau, Slack, MuleSoft, the Data Cloud, Sales Cloud, the Service Cloud, all that we’re able to build these big transactions. And there’s no question that, that kind of fell off last year, now to see that come back. That is just really exciting. Brian’s going to talk about that. Number two, we have a great new product.

And everyone knows here at Dreamforce, Data Cloud. You can see in the quarter 1,000 new Data Cloud customers. That is number two thing. I am really excited about that. I literally just got off the plane from Tokyo. You probably all saw me yesterday at Salesforce World Tour. Tokyo was incredible. Everyone is very excited about Salesforce in Japan, now the second largest software company in Japan. Incredible what has happened over there in the market. I met with hundreds of customers while I was there. I spoke to some of the CEOs of the largest companies in Japan. It was an incredible week. It was the Momiji season, which is the fall season with incredible fall leaves, beautiful over there. And I’ll tell you, everyone wants to talk about Data Cloud.

And that is really exciting to have an incredible driver for future growth. And the third thing is, these Einstein GPT Copilots that we’ve delivered. These Einstein GPT Copilots, this is a product we didn’t really even have an imagination around a year ago. Of course, we had Einstein. Of course, we could see the incredible growth of Einstein. I mean now, Einstein with predictive and generative combined, is doing 1 trillion transactions a week, that’s amazing. But more amazing is that 17% of the Fortune 100 are now Einstein GPT Copilot customers. And this is a product that is just coming to market. Everyone is so excited about buying this product. So when you see these larger deals, when you see Data Cloud, when you see these Einstein GPT Copilots going into place, that is why we are excited about our growth and why we’re excited about this quarter.

And then you look at the financial metrics. The $1.5 billion in cash flow, up about 1,000%. That is another reason why we’re excited about the quarter. So let me get into the script a little bit, and let me talk to kind of give you the structured messages and then turn this over to Brian. So number one, we are the number one AI CRM. If that isn’t clear already, we’re leading the industry through the unprecedented AI innovation cycle. It’s unlike anything I’ve seen and most of the people that I talk to all over the world feel the same way. We’re the only platform that are bringing CRM and data and AI and trust together for our customers in a way that enables them across every industry to be more successful, faster, be more productive, more efficient.

We’re the number one by market share for the tenth year in a row based on latest IDC software tracker. We’re the number one enterprise apps company now. That’s amazing. And Data Cloud, this hyperscale, this real-time customer data platform that is performing incredibly well for us, it’s the foundation of every AI transaction, but it’s the foundation of every large deal that we did this quarter. That is what is so exciting. And in just our third quarter, Data Cloud has ingested an astonishing 6.4 trillion records, 6.4 trillion records. That’s 140% year-over-year increase. It triggered 1.4 trillion activations, a 220% increase year-over-year. This is a monster product. I could not be more excited. And it’s the perfect time, we didn’t really understand that it was going to line up so well with this generative AI revolution.

It’s a product we’ve been working on for a couple of years. Just the timing of it has been incredible because listen, if you don’t have your data together, in a company, you’re not going to deliver AI. It’s not like companies are going to run their AI off of Reddit or off of some kind of big public data set. They have to have their data set together to make AI work for them, and that is why the Data Cloud is so powerful for them. Now as I’ve said before, this AI revolution is going to be a trust revolution. It’s not just about CRM, data or AI. It’s also about trust. And I think the trust layer and the way that we’ve architected our platform so that our customers are not basically taking — getting taken advantage of these next-generation large language models, these foundation models, they are so hungry for all of this data, and they want our customers’ data so that they can grow.

We’re not going to let them have it. We’re going to separate ourselves from those models through a trust layer so customers can be protected. This is going to be so important for the future of how Salesforce architects itself with artificial intelligence. Now revenue in the quarter was $8.7 billion. Not too many software executives get to say it so I think I’ll say it twice, actually. Revenue for the quarter was $8.7 billion, up 11% year-over-year, incredible. Third largest enterprise software company now by revenue, also incredible. And companies standardizing on Salesforce as their core technology platform, doing these multi-cloud deals with us. Getting that growth, as I said, that incredible stat that Brian is going to come back to, the 80% growth in deals of more than $1 million, so exciting.

Nine of the top 10 deals included six or more clouds. Think about that. Nine out of our top 10 deals included six or more clouds. So that we have amazing clouds, Sales Cloud, Service Cloud, Marketing Cloud, Platform, our Commerce Cloud, Slack, Tableau, MuleSoft, but think about it, how they’re bringing all of those things together, Data Cloud, they’re bringing it all together into a cocktail. That’s amazing. And by the way, those cocktails are going to be a Christmas cocktail soon. And in Q3, we once again showed our commitment to increasing our margins. Non-GAAP operating margin for the quarter was 31.2%, up 850 basis points year-over-year, following an increase of 1,000 basis points in the previous two quarters. It kind of is a sentence that you don’t really expect ever read as a CEO, so that was kind of amazing.

Operating cash flow for the third quarter was $1.5 billion, up 389% year-over-year. Free cash flow was $1.4 billion, up 1,088% year-over-year. Percentages and absolute numbers are just mind blowing. And our remaining performance obligation ended the third quarter at $48.3 billion, which is an increase of, yes, 21% year-over-year. Pretty good. Okay. Now let’s move on to guidance. Based on our performance, we’re raising our fiscal year ’24 revenue guidance in constant currency to 34.8% at the high end of the range, 11% projected growth year-over-year. Last quarter was raised our fiscal year ’24 non-GAAP operating margin of 30% and now we’re accelerating again. And we think that we’re going to move this thing to 30.5% for the year. And Amy, I think you better beat that, okay?

So I mean, the acceleration on the margin this year has been pretty incredible as we all know. So if you go back and look at the last five quarters, you wouldn’t believe it. I don’t believe it. We delivered an improvement of 850 basis points year-over-year this quarter. I couldn’t be more proud of our entire team, how well they are doing. We just got our employee surveys back. The team, the morale is super high, so cohesive, brought back so many boomerangs, really reinforced our culture during this year as well. That’s been one of the major things that we have been doing. We’ve really been focused on building this number one AI CRM, rebuilding our product strategy. Really focused on, number two, is getting these sales executives be able to tell these stories of AI success.

And it’s incredible to be able to exactly explain to a customer what they can do to be successful. Through the third thing we’re really focused on is this idea of delivering new products and new technologies, and this UE+ product that we’ve now introduced in the market to see so many customers adopt that in the quarter, to see so much of it in our pipeline, UE+ and the incredible work of David Schmaier and his team has been just amazing there. And also our professional services team, delivering these great implementations and making sure our customers are successful. And the fifth thing I would say we’re focused on is this Ohana 2.0 culture, which is really takes shape in the middle of this year and really now evidence in this — you probably saw we just became a Great Place to Work again.

We’re on the top 10. We’re now number seven. And it’s amazing to see that recognition for this company is so well deserved. So where are we? Well, you’re seeing this high level of interest in Data Cloud and Einstein. It’s incredible what’s happened. I’ve been on the road pretty much nonstop especially over the last month. I’ve been in — throughout Europe. I’ve been now in Asia. I’ve been throughout the United States. And I just continue to see these same trends, which is customers are investing for the future and they’re investing and inspired by AI to give them more productivity. Look, they realize unemployment is just so low. Where are they going to hire more people? It’s so hard for them to hire, they’re going to have to get more productivity from their employees.

They’re going to do that through this great new technology, and we’re going to help them make that happen. Data Cloud was part of six of our top 10 deals in the quarter. We had more than 1,000 net new customers for Data Cloud. I’ve talked a little bit about the number of deals, the number of wins over $1 million in Data Cloud doubled, and the average ARR per win more than tripled compared to last quarter, pretty awesome. And we’ve now traded a self-service switch so that every EE and UE customer can just flip it on. And engineering has just done a great job getting every customer become a Data Cloud customer. Closed a lot of amazing deals in the quarter. Really excited about AWS. I know everyone has been talking about that, especially down at the conference this week at ReInvent and we couldn’t be more thrilled for our partnership with Andy Jassy, really excited.

Really excited about our relationship with American Cancer Society. They’ve been a customer for a long time. Doing incredible work now seeing them use the Data Cloud, even becoming even more productive, more efficient. Group Global, 30 million users now using Data Cloud, SiriusXM. Joe Inzerillo, great executive. We worked so closely with him at Disney. And one of the reasons that Disney has become wall-to-wall Salesforce. And nowadays at SiriusXM, he’s deployed a great, incredible deployment of Data Cloud, but our — actually our whole product line or so. Excited to work with Joe. And this is really, I think, going to continue on as we start to talk more about customers who are using Data Cloud. I was just in Houston and had a great dinner down there with all of our customers.

We had some phenomenal local country music performance at the dinner as well. The Ortega family did a great job cooking for us. Their restaurants are probably our favorite when we get on the road. But I’ll tell you, Waste Management and Jim Fish, who I saw when I was in Houston, great executive, love working with Jim. Here is a great company, North America’s leading environmental sustaining solutions provider. Now most of the folks on the call are probably customers. And wow, they just have done an incredible implementation and now doing a great job implementing all the AI solutions as well. Well, there’s a lot more to talk about there. We’ve got so much going on and March 8 is going to be a big day for Salesforce. We’re going to turn 25 years old.

It’s hard to believe. At the same time, we’ve completely rebuilt the company and so well positioned for the AI revolution. And we’re lucky to have a great management team, and we’ve got them sitting here at the table. Of course, we’ve got Mike Spencer here who is doing a great job running FP&A and IR. We have Sabastian, our new Chief Legal Officer; Amy, our new CFO. But Brian, why don’t you take it from here and tell us what happened during the quarter?

Brian Millham: Yeah, I really appreciate it, Marc. Thank you so much. I’m very pleased with the quarter, and it’s really a testament to our laser focus on operational excellence, high performance and profitable growth initiatives. We’re seeing the results of our full-scale transformation of our company. In Q3, our non-GAAP operating margin is up an amazing 850 basis points year-over-year. And we reduced GAAP sales and marketing costs as a percentage of revenue by 6 full points. And we’ve matured our pricing and packaging to drive growth and simplify the buying experience. As Marc said, we’re well positioned to continue to drive profitable growth as we head into the largest quarter, our largest quarter and into next fiscal year.

Despite the continued measured buying environment, we grew revenues in Q3, driven primarily by the strength of our product portfolio and multi-cloud transformational deals. In fact, the average size of our deals greater than $1 million, as Marc said, was up 80% year-over-year, doubling our net new business in this segment. And for the third consecutive quarter, we saw add-on products like sales performance management, digital service and sales productivity grow ARR nearly 40%. As customers look for quick time-to-value solutions and productivity gains, we saw traction with our new Salesforce Starter offering with nearly 1,000 new logos added this quarter. As the number one AI CRM, companies in every industry and geography like Fujitsu, Southwest Airlines, NZ Bank are turning to us as their trusted adviser to help them transform their business for the AI future.

We’re seeing amazing energy across our ecosystem with our partners, GSIs and ISVs who are looking to do — build more opportunities with us around our AI offerings. And we’ve established new partnerships with global management consulting companies like Bain & McKinsey. And as Marc mentioned, we’re expanding our existing relationship with AWS. It marks a significant milestone in the evolution of our global partnership with Amazon, deepening the integrations between AWS and Salesforce products. We’re bringing together the number one AI CRM and a leading public cloud provider to deliver an open integrated data and AI platform to make it easy to find, buy and manage Salesforce products to the AWS Marketplace. Before I get into the product momentum, I want to share some operational highlights.

We continue to effectively manage our expenses, as you’ve seen, and is reflected in our improved non-GAAP operating margin, which exceeded 31%. Today, our execution, inspection and understanding of our customers buying and approval process is better than ever. Our focus on high performance is a driver of growth is paying huge dividends in Q3. We saw more than a 30% increase in AE productivity year-over-year. We’re also refining and scaling our big deal motion and further bundling products to drive higher sales and simplify the buying experience for our customers. And we’re doing all this while becoming more effective and efficient. I’ve been impressed with how quickly we deployed our own trusted generative AI tools and applications internally.

We’ve launched Sales, GPT and Slack Sales, Elevate internally, and our global support team is live with Service GPT, and we’re seeing incredible results. We’ve streamlined our quoting process with automation, eliminating over 200,000 manual approvals so far this year. And since the introduction in September, our AI-driven chatbot has autonomously resolved thousands of employee-related queries without the need for human involvement. We’re seeing great success with our products and so our customers, which is clearly reflected in the high-level engagement and participation we’re seeing in our events. In addition to Dreamforce, we hosted 80% of our top customers for the quarter. We also held an amazing 450 customer events in our offices with nearly $2 billion in pipeline.

And as we close out the year, we have a New York City world tour coming up in December 14. I hope you all can join us in person. And if you can’t, we hope you join us on Salesforce+. We continue to hire selectively across key growth areas, especially in data cloud and AI, and we’ve seen the highest demand to join Salesforce in our history with the largest volume of applications in any quarter ever. Our growth initiatives across our core products, data, AI, industries and international drove our strong performance in the quarter. And as Marc outlined, we’re seeing strong momentum in Data Cloud and Einstein. Importantly, we’re already seeing high demand for our new premium UE+ bundle as customers recognize the value of our integrated solutions with Einstein AI functionality and Data Cloud built in.

And our existing customers increased their spend with us by more than 70% when they upgraded to UE+. Industry clouds continue to be a tailwind to our growth, chosen by customers like Humana and U.S. Agency for internal development and RBC Wealth Management U.S. For the first time this quarter, nine of 13 Industry Clouds grew ARR above 50%. We’re seeing continued MuleSoft growth, which was in eight of our top 10 deals this quarter and delivered an amazing 140 billion automated flows, up 142% year-over-year. And Tableau, which is fully integrated to the Data Cloud, continues to help customers like Rubrik, Canara Bank and U.S. Navy see and understand their data and make data-driven decisions. In the quarter, we did continue to see the macro trends affect our business, in particular, our professional services business, our create and close sales motion and our Slack self-service business.

Despite those headwinds, Slack was included in seven of our top 10 deals. Every day this quarter, there were 700 million Slack messages sent and 2.75 million workflows ran on the Slack platform. We recently announced Denise Dresser as the new CEO of Slack, and I’ve had the chance to work with Denise for a dozen years and could not be more thrilled for her, and importantly, for the Slack business. Before I hand it off to Amy, I want to share some key number and highlights on how we deliver for our customers during Cyber Week. Commerce Cloud powered nearly 50 million orders on digital storefronts across Cyber Week with 100% uptime. Einstein powered more than 49 billion product recommendations, and over 53 billion marketing messages were sent via the Marketing Cloud.

In addition, Service Cloud helped our customers field and resolve 3.7 billion cases. This clearly demonstrates the scale and reliability of our number one AI CRM platform. So in closing, we’re heading into Q4 with a ton of energy and ambition, guiding our customers through a new innovation cycle with an unwavering commitment to their success. I, like Marc, am extremely proud of the team with the changes that we’ve made not just in Q3 but over the last year. And as I said earlier, we’re well positioned for Q4 and as we head into fiscal year ’25. And with that, I’ll turn it over to you, Amy.

Amy Weaver: Great. Thanks, Brian. Q3 represents another strong quarter of strong execution and discipline. As you heard from both Marc and Brian, we’ve transformed the company over the past 12 months to drive consistent, profitable growth. And we are pioneering the next wave of innovation with data, AI, CRM and trust. Now let’s get right to the results. For the third quarter, revenue was $8.7 billion, up 11% year-over-year and 10% in constant currency. This represents a $40 million beat in constant currency. The growth was primarily driven by continued MuleSoft momentum and resilient sales and service performance. From a geographic perspective, the Americas revenue grew 9%, EMEA grew 14% or 10% in constant currency, and APAC grew 18% or 21% in constant currency.

We saw strong new business growth in India, Brazil and Japan, while parts of EMEA were more constrained. From an industry perspective, public sector performed very well while high tech and general continues to be more measured. And as Brian mentioned, our multi-cloud momentum continues. In Q3, nine of our top 10 deals included six or more clouds. Q3 revenue attrition remained strong and ended the quarter again at approximately 8%. In Q3, our non-GAAP operating margin was 31.2%, up 850 basis points year-over-year. Our strong margin outperformance was driven by our continued disciplined investment strategy. Q3 operating cash flow was $1.5 billion, up 389% year-over-year. Q3 free cash flow was $1.4 billion, up 1,088% year-over-year. This upside in cash flow was driven primarily by strong collections as well as lower cash outflow that results to higher margins just discussed.

Now turning to remaining performance obligations, RPO, which represents all future revenue under contract, ended Q3 at $48.3 billion, up 21% year-over-year. Current remaining performance obligation, or CRPO, ended at $23.9 billion, up 14% year-over-year and 13% in constant currency. This was ahead of expectations, primarily driven by strong early renewal performance as well as a large customer win in the quarter. This was partially offset by a 1 point headwind from professional services that we had cautioned about last quarter. Finally, we continue to deliver on our capital return commitment. In Q3, we returned another $1.9 billion in the form of share repurchases. And to date, we have exceeded our initial authorization of $10 billion in just over five quarters.

Before moving to guidance, I want to reiterate that we continue to assume a consistent measured customer buying environment. Let’s start with full year fiscal year ’24. On revenue, we are narrowing our guidance range to $34.75 billion to $34.8 billion, representing 11% growth year-over-year in nominal. We are now expecting a $50 million FX headwind, which implies a modest raise in constant currency. On margins, we have made incredible progress on profitability and productivity this year. For fiscal year ’24, we are very pleased to raise non-GAAP operating margin guidance again to 30.5%, representing an 800 basis point improvement year-over-year. We also remain focused on stock-based compensation, which is now expected to be approximately 8% as a percent of revenue.

As a result of these updates, we now expect fiscal year ’24 GAAP diluted EPS of $3.99 to $4, including estimated charges for the restructuring of $0.91. Non-GAAP diluted EPS is now expected to be $8.18 to $8.19. We are raising our fiscal year ’24 operating cash flow growth guidance to approximately 30% to 33%, and this continues to include a 14- to 16-point headwind from restructuring. The upside in our cash flow guidance is driven by strong collections to date and our continued expense discipline. CapEx for the fiscal year is expected to be slightly below 2.5% of revenue. This results in free cash flow growth of approximately 33% to 36% for the fiscal year. And as we focus on shareholder return and disciplined capital allocation, we continue to expect to fully offset our stock-based compensation dilution through our share repurchases in fiscal year ’24.

In fact, as a result of our ongoing share repurchases, for the first time in company history, we expect the full year’s ending share count to decrease year-over-year. Now to guidance for Q4. On revenue, we expect $9.18 billion to $9.23 billion, growth of 10% in both nominal and constant currency. CRPO growth for Q4 is expected to be 10% year-over-year in nominal and 11% in constant currency. Similar to this past quarter, we expect professional services headwinds of 1 point to CRPO growth. For Q4, we expect GAAP EPS of $1.26 to $1.27 and non-GAAP EPS of $2.25 to $2.26. As we look forward to our largest quarter of the year, we remain focused on strong execution and our disciplined investment strategy. In closing, I want to echo both Marc and Brian.

This was a great quarter, but even more than that, this has been an extraordinary year of transformation. I want to thank our shareholders for their continued support, and I particularly want to thank our employees for their incredible work throughout the past year. Now Mike, let’s open up the call for questions.

Michael Spencer: Thanks, Amy. Operator, we’ll move to questions now. Out of courtesy for others on the call, we ask that each person participating only ask one question. And with that, operator, we’ll take the first question.

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Q&A Session

Operator: Our first question comes from the line of Kirk Materne with Evercore ISI. Please go ahead.

Kirk Materne: Yes. Thanks very much and congrats on a nice quarter in a tough market environment. This — I don’t know if Marc or Brian wants to take this one, but MuleSoft growth against a pretty tough comp really does stand out a little bit in this quarter. And I was just wondering, if you could talk about if we should view that as a harbinger of more interest in the broader Data Cloud offering? And whether the interest in MuleSoft is also sort of a harbinger of just more interest in AI as people try to get their data estates in order to get ready for this coming AI wave? Thanks.

Marc Benioff: I’m going to have Brian really give you the detail, but what I’ll tell you is, you’re seeing something that we have been seeing and calling out for the last few quarters, but we probably have not been able to illuminate it to the level that you see now in the numbers, which is that every customer and every customer transformation and every customer AI transformation is going to begin and end with data. And for us to achieve that goal, those customers are going to have to get to another level of excellence with their data. And at the heart and soul of that for many of these customers is becoming MuleSoft. So in addition to Einstein, in addition to Data Cloud, in addition to our Copilot technology that we called out, it’s been a lot about MuleSoft this year.

And we think that, that trend is going to continue and it’s very exciting, and that we’re very well positioned with this completely unique product that is helping our customers bring all their data together for their AI transformations. Brian?

Brian Millham: Kirk, thanks for the question. I think you nailed it. It’s exactly what’s happening out there. The data is becoming such an important asset for our customers that they want to bring it all together and they want to leverage our MuleSoft technology to do it. And so, it’s really an exciting opportunity. As we stated, it was eight of our 10 top deals in the quarter. And you can see the amount of data flowing through MuleSoft as an indicator for how important the data is 142% up year-over-year on automated flows on the platform. I’d be remiss if I also didn’t call out the leader there and Eric Eyken-Sluyters, who’s done an incredible job in leading the sales organization as well. And so, I think you nailed it in your question. This is a really important critical product for us and for our customers as we think about scaling to the future.

Michael Spencer: Thanks, Kirk. Operator, we will take next question, please.

Operator: Your next question comes from the line of Raimo Lenschow with Barclays. Please go ahead. Raimo, your line might be unmute.

Raimo Lenschow: Sorry. Never learn that. Congrats from me as well. The — Brian, you talked about the sales productivity, and that was a big theme this year and the 30% increase is very impressive. Where are we on that journey in terms of like, first of all, how did you achieve that? Because that’s a very big number in the software industry, but like where are we on that journey in terms of going forward? Thank you.

Brian Millham: Thanks for the question and obviously, a big focus for us. We’ve talked about it on previous calls with all of you. It’s a never ending journey, obviously, and we want to continue to drive productivity for our account executives. We talked about a very large deal in the quarter that helped drive that productivity. But all-in, we saw a very nice increase in our productivity, really focused on a couple of things. One, we leaned in enablement for all of our sellers out there to ensure that they really understand this broad portfolio of products and are able to go out and talk to our customers about it. Deeply understanding our buying process. This was some of an area early in maybe last year where we stumbled a bit, not understanding the buying process of our customers, deep inspection of our business, both pipelines and cycles that we’re in and driving.

Really being oriented to value as we talk to our customers about the solutions that we can provide to them. What is the ROI our customers going to see from the investments they’re making in Salesforce, ensuring that we really understand that before we put proposals in front of them. And finally, I think there’s — I couldn’t be prouder of the inspection that we’re getting across the board. We have a new sales leader in Miguel Milano, who’s brought a new discipline to the way that we’re looking at the pipelines, not only in the existing quarters but in future quarters going forward. And so the discipline that we’ve driven across the board is driving these great results from a productivity perspective at the front. Thank you for the question.

Michael Spencer: Thanks, Raimo. Operator, we will take next question, please.

Operator: Your next question comes from the line of Keith Weiss with Morgan Stanley. Please go ahead.

Keith Weiss: Excellent. Thank you, guys for taking the question and a very nice quarter. I wanted to ask about the 17% of the Fortune 500 that are the Einstein GPT Copilot customers. Really impressive figure. Really early in a technology cycle, because a lot of what we’re hearing is a lot of exploration out there, a lot of people trying to figure out what to do with these tools, not a lot of buying. So can you give us a little bit of color on kind of what’s driving that adoption and what’s enabled you guys to get such good adoption so quickly? And maybe if I could sneak one in for Amy as well. Great margin expansion this year, but there’s a lot of stuff you guys need to be investing against with this technology cycle. Should we expect to see further margin expansion as we head into FY ’25? Thank you, guys.

Amy Weaver: Great. Do you want me to take this first?

Marc Benioff: Yes.

Amy Weaver: Okay, Keith. Always looking for that margin expansion, always looking for a little bit more guidance, but really happy to address this. We’ve had fantastic margin expansion this year, I mean, up 800 basis points for the end of the year. If I look back over the last three years, we have gone from 17.7% three years ago to we’ll be ending this year over 30% on operating margin, which I am just thrilled about. I think that we do have some room here. As I’ve said before, we view this as a floor, not a ceiling on our success, and we intend to continue our focus on operating margin. In terms of investments, it’s all a matter of priorities. We cut deeply earlier this year, and we’ve really been using that to invest into the areas of the business that we see as most strategic going forward.