Salesforce's Business Strategy | Earnings Call Webinar

Summary

In this engaging and informative webinar by Acumen Learning, listeners are introduced to the nuances of Salesforce's business and earnings strategies through a detailed examination of an earnings call. The session begins with interesting statistics about employee involvement in company strategy and transitions into insight-filled discussions about Salesforce's CEO, Mark Benioff, and the company's impressive growth. Key elements include the preparation, analysis, and application of earnings call insights. Attendees are encouraged to engage more with their company's financial disclosures and leverage these insights for career growth and business enhancement.

Highlights

• Over 150,000 Salesforce customers and a hefty number of partners engaged globally 🌍.
• Salesforce's strategic focus on AI is fueled by exciting transformations and innovations 🤖.
• Mark Benioff is a charismatic leader who knows how to fire up his teams and stakeholders 🔥.
• Listening to earnings calls helps align employee roles with company objectives 🎧.
• Earnings calls reveal essential metrics and plans, boosting shareholder confidence 📊.
• The webinar encourages an action-oriented approach to analyzing earnings calls, enhancing business understanding 🧐.

Key Takeaways

• Listening to earnings calls is crucial for employees to understand company strategy 📈.
• Salesforce's growth is impressive, with a strong focus on AI and CRM leadership 🤖.
• Mark Benioff's leadership style includes engaging anecdotes and strategic insights 🔍.
• Earnings calls provide vital information to shareholders, customers, and partners 📞.
• Applying earnings call insights can boost personal career and company growth 🚀.
• Knowing how to prepare for, analyze, and apply earnings calls is essential for business acumen 🧠.

Overview

In this webinar, Acumen Learning takes us on an insightful journey into Salesforce's business strategies as revealed through a recent earnings call. Attendees learn how the CEO, Mark Benioff, has shaped company culture and aligned Salesforce as a leader in the AI-powered CRM market. The session commences with compelling statistics on how most employees misunderstand their company's strategic direction, noting the importance of participating in financial disclosures.

Mark Benioff's story is one of innovation and strategic prowess. Listeners hear anecdotes about his time at Oracle, how he started Salesforce, and how he famously asked Larry Ellison to leave Salesforce's board due to potential conflicts of interest. The transcript reveals Salesforce's growth trajectory, its focus on becoming a leader in AI CRM, and the steps taken to remain at the forefront of technology and customer satisfaction.

The webinar emphasizes the importance of earnings calls as a tool for employees to connect with their company's strategic goals. It provides an easy-to-follow method to prepare for, analyze, and apply insights gathered from these calls. By leveraging this knowledge, employees can enhance their professional credibility and contribute significantly to their company's success. The session wraps up with practical advice on maintaining financial literacy and staying informed about industry trends.

Chapters

• 00:00 - 02:30: Introduction In the introduction, it is mentioned that 31% of the participants have attended the program this year. The speaker acknowledges those from previous sessions, including Dwight Turner, while also noting the presence of some who have never attended before.
• 02:30 - 06:00: Opening Polls and Earnings Call Discussion The chapter titled 'Opening Polls and Earnings Call Discussion' revolves around the concept of listener engagement with earnings calls. It initiates with a discussion about polling the audience regarding their recent experiences with listening to earnings calls, be it for their own company or any potential investment. The narrative highlights a common behavior observed during such calls, which is multitasking. The chapter explores this tendency among listeners and suggests an openness to conducting polls to gather insightful data on the subject.
• 06:00 - 12:30: Salesforce CEO and Company Overview The chapter discusses the common attitude of participants during earnings calls, where individuals tend to focus on information that directly benefits or harms them, often ignoring other parts of the conversation. It humorously notes that nobody would prefer a dentist appointment to attending these earnings calls. It also highlights that many people have frequently participated in earnings calls this year, with some revisiting the calls they attended previously.
• 12:30 - 18:00: Preparation for Earnings Call The chapter titled 'Preparation for Earnings Call' provides insights into an earnings call meeting. It begins with mentions of individuals noting that it's been a while since some have listened to an earnings call, indicating a potential gap in engagement. Technical suggestions are offered, such as using one's phone for audio for a better experience, showcasing efforts to improve accessibility and participation. The text also indicates that there are newcomers to the earnings call environment, thanking them for joining and acknowledging this might be their first call. This suggests an inclusivity in approach, welcoming those unfamiliar with the process and reinforcing the value of participation.
• 18:00 - 26:00: Five Business Drivers Overview The chapter begins with the statistic that 95% of employees do not understand their company's strategy and 90% do not understand key business metrics. The importance of addressing this lack of understanding is highlighted, and company earnings calls are proposed as a valuable resource for gaining insights into company strategy and important metrics.
• 26:00 - 37:00: Executive Alignment Activity The chapter discusses the importance of executive alignment in company strategy and communication, highlighting that only 10% of employees listen to company earnings calls. This lack of engagement is linked to employees' disconnect from understanding company strategy and relevance to their roles. The chapter introduces a scenario involving a CEO preparing for an earnings call, using Salesforce's CEO as a contextual example.
• 37:00 - 49:00: Navigating Financials Worksheet The chapter, 'Navigating Financials Worksheet', begins with an anecdote about Mark Benioff. While he was a student, Benioff was offered and accepted an intern position at Apple, thanks to a conversation with Apple's famous employee, Guy Kawasaki. This led to a career with the company that lasted for a considerable time. Remarkably, Benioff is noted as possibly the only person to have fired Larry Ellison, the founder and CEO of Oracle, during his time working with Ellison's team.
• 49:00 - 53:00: Applying Earnings Call Insights The chapter titled 'Applying Earnings Call Insights' discusses the origins of Salesforce. It highlights how the founder of Salesforce, while working at Oracle, developed the idea for Salesforce during a sabbatical. It mentions the supportive role of Larry Ellison, Oracle's executive, who encouraged the founder and contributed $2 million to the startup fund. This narrative illustrates the significant influence of corporate support in the establishment of successful ventures.
• 53:00 - 56:00: Conclusion and Next Webinar Announcement Mark realized that Larry Ellison was beginning his own CRM project. When asked to step down from the board, Larry declined and suggested Mark fire him instead for more media attention. Despite the conflict, Larry retained his stock after leaving.

Salesforce's Business Strategy | Earnings Call Webinar Transcription

• 00:00 - 00:30 so we've got uh we've got 31% of the participants have attended the program this year awesome good to see you all I hope some of you uh are uh people that have attended one of my classes matter of fact Dwight uh Turner's on the line I know he's attended one of my classes if sorry if I'm missing some others out there uh let's see here we've got uh about 10% attended a session in 2023 we've got some others who attended session before 2023 and we've got some who have never attended I hope that
• 00:30 - 01:00 certainly today uh may have that opportunity and then let me open up another polling question for you here when was the last time that you actually listened to any earnings call uh whether it was your company whether it was an investment you were thinking about making uh when was the last time I guess I need to open that poll up that would help when was the last time you listened to an earnings call you know a lot of times we listen to an earnings call most people admit that they multitask during
• 01:00 - 01:30 an earnings call uh a lot of times we listen uh from the perspective of what's in it for me what's in it that's good for me what's in it that's bad for me and anything else we kind of tune out just a little bit uh let's see here we don't have anybody that would rather go to the dentist I guess that's a good thing uh let's see here we've got a lot of people that have listened to earning calls this year we've got a few people that listen listen to earning call last
• 01:30 - 02:00 year some say it's been a while since they've listened to an earning call that could be that could be a long time uh let's see here okay good thanks Kathy some uh so she mentions she's using her phone for audio seems to work better uh so if you're having any challenges out there let me encourage you to try that as well uh let's see here just a couple of others uh we've got a few people that have never listened to an earnings call thanks for joining today uh your first
• 02:00 - 02:30 earnings call congratulations uh so let me uh let me close those polling questions here we're going to get started here uh couple of interesting statistics to start off with 95% of employees don't understand their company's strategy and 90% of employees don't understand their uh company's important business metrics what better way to find those things out uh than listening to the company earnings calls
• 02:30 - 03:00 by the way only about 10% of employees actually listen to their company's earnings calls so that's a challenge and that's one of the the reasons why employees have a tendency to get checked out if you will because they don't understand their company strategy so it's hard to tie what they do back to the company business uh we're going to get into Salesforce now just imagine you're the CEO you're getting ready for an earnings call just a few interesting statistics about our CEO for Salesforce
• 03:00 - 03:30 Mark benof uh he was actually offered and accepted an intern job at Apple while he was going to school uh famous uh employee from Apple guy Kawasaki got into a conversation with him one day got offered the job and took it and stayed there for quite some time uh he may be the only person to ever fire Larry Ellison the founder and CEO for uh Oracle uh he actually went to work for
• 03:30 - 04:00 Oracle he actually started uh Salesforce while he was working at Oracle uh Larry they got to be good friends he was just a superstar employee at or Oracle and uh actually ended up taking a six-month sabatical and that was when he came up with the idea for Salesforce uh it was highly encouraged uh by Larry Ellison matter fact Larry contributed $2 million to the startup uh fund for uh Mark and uh actually ended
• 04:00 - 04:30 up on his board of directors and then all of a sudden guess what happened Mark noticed or realized came to the conclusion that Larry Ellison was actually starting his own CRM uh project and so he uh asked him to step down Larry said he wouldn't do it said it'd make a lot more sense if he would fire him and get a lot more Headlines by doing that so he ended up uh by the way he got to keep his uh stock if he got fired uh but uh they ended up parting
• 04:30 - 05:00 ways and and um Mark let him keep his stock anyway um came up with the idea for Salesforce co-founder Salesforce in February of 1999 they've got over 150,000 customers worldwide and over 50,000 employees and a number of Partners uh as well so you're the CEO of a company you're getting ready for your sales calls here's uh not your sales calls your earnings calls and here's some of the things CEOs have to think about what do you need your employees to
• 05:00 - 05:30 know right um this is a great time to let them know a lot of different things what do you need your customers to know with 150,000 customers customers I bet you a lot of customers listen to their earning calls and want to know how the company is doing what do you need your shareholders to know your shareholders want to make sure things are going in the right direction should they keep uh holding on to your stock or not they gave them at least one good reason to hold on to their stock Doc in this last
• 05:30 - 06:00 earnings call I'll mention that they gave him a lot of other reasons actually as well but one in particular what do you need your partners to know Zach Terry they want to know what you need to know uh here's my guarantee for you I make one promise in each one of my classes my guarantee is slightly different but if you listen to this call today if you follow what we're talking about in terms of the tool and the process it's going to help you build your credibility within your company it's going to help you build your career as well and it's also going to help you
• 06:00 - 06:30 build your company the company that you are with this is good stuff and that's why I was a customer first and that's why I joined the company a little over nine years ago so we're going to use three basic steps to look at this earnings call today we're going to prepare for it we're going to analyze it and then we're going to apply it you know when we think about an earnings call really if we just talked about all the different people that the CEO is talking to
• 06:30 - 07:00 and so we need to understand we need to think through it and it's really an opportunity for us to align with the executives doing the earnings call and therefore we should really have a to-do or an action plan coming out of this earning skull don't just listen to it we need to apply it as well so first of all we're going to we're going to start off on prepare and basically there's two different parts of an earning skull there's the prep preped remarks that's
• 07:00 - 07:30 what the executives talk about uh on the call usually that takes about the first third of the earnings call maybe third to half something like that and that is exactly what it sounds like the executives prepare for this call they don't go in there winging it they use their prepared remarks and I would suggest a lot of them are actually reading through those remarks now I loved Mark Ben off as he was doing the call he kind of he kind of went off uh script uh potentially a couple of times
• 07:30 - 08:00 because of his excitement for what was going on in the company uh so we've got the prepared remarks and then we've got the question and answer session so that's where the analysts get an opportunity to ask any questions that they may have of the executives now it's interesting it almost sounds like on these earnings calls that the executives and the analysts never talk to one another outside of these earning calls but they actually have some pretty good relationships with each other and uh they do talk in between but uh fresh
• 08:00 - 08:30 information so it gives them an opportunity to ask some questions as well um now uh things to do before the call number one is locate the call or the transcript all right so we got to know how do we find the call um what are we going to be listening to uh and so we can certainly do that one of the easiest ways to do that you all may have heard of this technology called Google before well that's usually how I find my
• 08:30 - 09:00 information and I just do a search for in this particular situation Salesforce investor relations so it doesn't necessarily take me to the main page of uh Salesforce but rather to the investor relations page and so when I click on that here's what it looks like and if I scroll down just a little bit now I've taken some screenshots obviously of this but when I scroll down just a little bit on that first page of investor relations this is what it gives me our and you can
• 09:00 - 09:30 see we could click on some of these things the earnings presentation so not only do they do their prepared remarks they usually have a presentation to go along with it uh earnings press release lots of information in there the webcast so this is where we'd want to click on if we wanted to listen to the earnings call A lot of times I'm busy I'm working I'm doing classes I don't have time to listen to the earnings calls themselves but I may go back and listen to the
• 09:30 - 10:00 webcast or find the transcript and read through that and I'll show you how I do that uh here in just a little bit uh and then the quarterly filings we have to file what's called a 10q on a quarterly basis with the Securities and Exchange Commission on an annual basis we file what's called a 10K now let me just get you all going just a little bit um have any of you all ever read a 10K before in the chat box anybody ever red at 10K
• 10:00 - 10:30 before a lot of NOS coming in that's almost like going to the dentist James says when I have to uh Bruce says yes heard of it but haven't read one well let me tell you um I don't necessarily recommend reading a 10K from front to back uh unless you're having some sleep issues that's a great way to put you to sleep uh read a couple of paragraphs there but there is a ton of great information
• 10:30 - 11:00 in a 10K I usually find the 10K I find the financial statements in there what are my questions associated with that and then I do just do a simple word or phrase search and that tells me helps me find a lot of information about my questions then I find a lot of other information that I'm curious about as well so this is a great place to get us started right here um and then also there's another place called seeking alpha.com not all companies put their
• 11:00 - 11:30 transcript on the earnings call and so um if uh or excuse me on the company website so this is a great place to find it if you can't find it on there so uh seeking alpha.com and I just did a search for CRM Salesforce I actually just did it for Salesforce and it gives us a lot of different information here's the transcripts the SEC filings what's happened with their stock over the last year or so uh so tremendous information
• 11:30 - 12:00 you can find there as well all right so we've located the caller the transcript usually it's the transcript for me every once in a while I get an opportunity to listen now we got to review our notes from past calls oh wait a minut what are you talking about past calls I I you know I don't I haven't listened to any past calls and even if I have I didn't take any notes because I I'm multitask uh during that time frame well we're going to get to those notes from past calls and how you might keep those notes here in just a
• 12:00 - 12:30 second um and then finally meet with your team it's great to listen to an AR skull with others because that way you can kind of bounce ideas off of each other hey what did you hear around this what did you hear around that what do we need to do as a result of this so meet with your teams uh if at all possible so we've done the prepare side of this thing now we're going to get into the analyze side of things uh as we do that I want to just give you a brief overview
• 12:30 - 13:00 of the five business drivers that we talk about um a and uh just kind of some of the things that we talk about in our class this will help set you up for the earning sculpt if there were several of you who have never attended one of our classes before and this is really the foundation for most everything that we do cash profit assets growth and people why these five business drivers well uh three of them as you can see are tied directly to our financial statements
• 13:00 - 13:30 cash to our statement of cash flows profit to our income statement assets to our balance sheet haven't met a CEO yet or maybe even more importantly a shareholder who wasn't interested in growth and of course it takes people to make it all happen so somebody fill in just quick review uh somebody fill in the blank for me cash is what those of you who have been to our classes you probably know the answer to this question those of you who haven't been to her class probably know the answer to this question yeah cash is King yeah
• 13:30 - 14:00 it's nice to have a cash cow right too uh Cindy uh yeah but cash is King we have got to have cash as an organization uh cash flow is King exactly we've got to have cash flow as well we talk about cash flow we talk about cash position in our classes the difference of those two typically mature companies focus more on cash flow but at the same time uh even mature companies will focus on cash position at times
• 14:00 - 14:30 maybe when they're making an acquisition co uh everybody focused on cash position uh 2008 when uh the economic crisis happened uh Banks weren't lending money anymore so in 2020 uh people were scared to death the banks weren't going to lend money anymore and so they started cashing in all their credit lines so they'd have extra cash available just in case um we also talk about different ways that companies use cash we talk about the
• 14:30 - 15:00 three sources of cash cash from operating activities which is cash flows uh we talk about cash from investing activities and cash from financing activities so lots of different things that we talk about as it relates to uses of cash sources and uses of cash um now let me just ask a quick question does anybody remember and I'm I'm going to forgive you if you don't but does anybody remember the six levers
• 15:00 - 15:30 that impact cash that's a lot six levers that impact cash I'll give you just a couple of seconds type something in the in the chat box otherwise I'll give you a quick reminder there I think if I got you started there you go thanks Mike accounts receivable absolutely uh oh there you go increasing Revenue reducing expenses accounts payable that's exactly right so accounts
• 15:30 - 16:00 receivable we want to collect on our on our invoices quicker accounts payable we want to pay our vendors slower as a general rule don't want to upset the relationship with those vendors by the way when you get the invoice from acuan learning we we'd appreciate if you'd send it as soon as you get it no just joking can't preach that stuff and then ask for you to do something else working capital is a part of cash certainly uh and uh but it is not necess necessarily one of the six leaders that we're
• 16:00 - 16:30 talking about but those working capital is impacted by accounts receivable accounts payables and inventory as well so I give you credit on that one Scott uh yeah so I think yeah you all got them all nice job oh and then uh uh Capital expenditures uh there you go uh or overhead of course we're all overhead too right Tom so uh that plays into it as well in terms of profit we've got three basic profit metrics we've got
• 16:30 - 17:00 gross profit we've got operating income and we've got net income I'll add a couple more to that uh eida a lot of companies talk about eida but not all of them and then also earnings per share so basic uh we had six levers for cash and profit it's basically two we can uh um we can increase sales and we can either sell more which uh Salesforce did this year or we can increase prices or or we can reduce expenses they did a lot of
• 17:00 - 17:30 that too uh this year so that would impact profit uh assets uh in our classes we talk about balancing out asset strength versus asset utilization okay uh and companies have lots of different assets uh a lot of companies have a lot of assets not everybody does of course growth we talk about organic growth and inorganic growth uh let me ask you all real quick organic growth of course comes from within inorganic growth comes from
• 17:30 - 18:00 mergers and Acquisitions if you become CEO tomorrow of your company which one of those are you going to focus on organic or inorganic it depends is the best answer for any complex Financial question that you might ever get that's right uh a couple of others are saying organic couple are saying both inorganic is faster yeah we tend to think about organic as slower but cheaper inorganic as faster but cost us more too uh
• 18:00 - 18:30 exactly and then people of course make it all happen primarily we're talking about employees and customers are the people that uh uh get the primary attention but there's a lot of uh other people that have an impact on a company as well all right we're going to get started uh yeah kelvin's been talking long enough about the review and getting us set up here the first thing we're going to do as part of this exercise or this process is what we call an
• 18:30 - 19:00 executive alignment activity here's where we want to know uh what the executives think about these five business drivers you can see here cash profit assets growth and people um and then in this workbook we've got definitions for these Five drivers you can see here cash position is the balance in a company's bank accounts cash on hand cash equivalent certificates of deposit Etc ET Etc now
• 19:00 - 19:30 more importantly I think is examples of cash so when we read company or executive uh communication whether it be the letter to the shareholders or the transcript from the earnings call we want to identify where they talk about cash and all the other drivers but they may not mention those specific words so you can see here are some other examples sources and uses dividends or distributions is a good example of cash stock BuyBacks we
• 19:30 - 20:00 use cash to do stock BuyBacks debt issuing stock uh Capital expenditures the vesting of assets mergers and Acquisitions a number of different things that would play Into Cash somebody mentioned working capital just a second ago uh that certainly plays into it as well and then we've got other examples for profit assets growth and people and then four questions we want to answer so we want to find out how many times they mention each one of these drivers and then which driver seem
• 20:00 - 20:30 to get the most attention and why question number one so that we can just narrow that down and you'll see I did the heavy lifting for you on this one I'm going to ask you all to to help participate next time uh what are the two or three main points the executives were trying to make okay two or three main points what are the goals Trends and objectives going forward what key questions or concerns were raised by the analyst Community this is one of my favorite parts right here I'm kind of curious what those analysts want to know
• 20:30 - 21:00 uh and why are they asking those questions and what are the themes the the common themes that kind of come out of those questions so we're going to we're going to start off on our uh executive linan activity of giving you a couple of different statements here so I want you to help me out uh let's just read this first part of Mark Ben off's I we've got two sentences here we're going to work on this first sentence first I want you to help me identify which one one of these drivers he is talking about
• 21:00 - 21:30 okay uh we've just had an incredible year at Salesforce with strong performance across all of our key metrics Revenue margin earnings per share cash flow and of course our CP uh crpo continuing Revenue performance obligations uh yes talking a little bit about cash right certainly cash flow he's talking about profit Revenue margin EPS all of that talks about profit uh yeah he you know John that's a great
• 21:30 - 22:00 point he implies growth right he never says growth but certainly we had an incredible year at Salesforce with strong performance across all these metrics so yeah that sounds like a growth to me so growth cash and Profit just in that one sentence now it's been an incredible year of transformation thank you to all of our shareholders and thank you to all of our stakeholders which driver is he talking about there that's an easy one isn't it yeah people all across the board
• 22:00 - 22:30 shareholders and stakeholders all about people now uh couple more uh statements for us here we closed out fiscal 24 now their year ends at the end of January 2024 so there's really only one month and 2000 in their fiscal year 24 so they call it fiscal 24 even though there's only one month uh my friends from Nissan uh are on the line too they their year ends March 31st of every year but they
• 22:30 - 23:00 counted and for them they ended uh because most of the year was in 2023 they call it fiscal year 2023 so different ways that people do that we closed out fiscal 24 with 9.3 billion do in Revenue up 11% year-over-year our deals greater than $10 million well uh they grew nearly 80% year-over-year in fiscal 24 so that's uh phenomenal uh statement there deals
• 23:00 - 23:30 greater than $10 million grew nearly 80% year-over-year which uh which driver is he talking about there growth definitely yep our our uh Revenue was up last year deals greater than $10 million were up last year nearly 80% uh got some profit in there as well yeah whenever you see the word Revenue think about profit on that because we just said uh from from a profit standpoint increasing Revenue impacts
• 23:30 - 24:00 our profit and our cash uh but a lot of times we'll see that related more to profit than to U cash uh let's see here then just look at where we are now Salesforce is the world's number one AI CRM artificial intelligence CRM number one in sales number one in service number one in marketing number one in data cloud and since the start of the pandemic we doubled the size of the company that's a amazing and it is amazing uh what drivers do you think
• 24:00 - 24:30 he's talking about here growth absolutely absolutely sales again goes back toward profit service I think of people there uh and I would even suggest that uh data Cloud might be assets there you go yeah somebody said assets thank you okay uh yeah so you all are catching on great now this is Amy Weaver she is the SE president and CFO of Salesforce she says a couple of
• 24:30 - 25:00 things as well uh matter of fact I'm just going to go ahead and lead the witness for you on this one just a little bit uh to she talks a lot about cash here uh what I want you to do is see what other drivers that she talks about because she does now to Capital return which that could be cash or assets uh we are deeply committed to driving free cash flow now free cash flow is cash flow minus capex or Capital EXP expenditures capex is typically
• 25:00 - 25:30 going to be property planting equipment uh to driving uh so we subtract capex from cash flow and that gives us our free cash flow it kind of helps us know when we invest a lot of uh into our Capital expenditures what do we have left to be able to do the things we need to do want to do and have to do uh pay dividends pay down debt uh buyback shares uh pay to uh any pay our employees any number of things that we might need to do there so driving free
• 25:30 - 26:00 cash flow and return to our shareholders while investing in new organic organic growth initiatives in fiscal 24 we did $7.7 billion in share BuyBacks or more than 80% of fiscal year free cash flow Additionally the board has approved a $10 billion increase to our share repurchase plan bringing total authorization to $30 billion uh let's see here so talked a little bit
• 26:00 - 26:30 uh yeah uh new organic growth initiatives technology could be uh definitely for Salesforce could be part of that uh cash growth assets cash people growth people cash growth assets yeah exactly uh uh does share buyback classifies assets that's a great question uh we spend cash to buy shares back now we're buying those from shareholders okay uh and when we buy
• 26:30 - 27:00 those shares back we actually uh retire those shares and so that actually goes in as a negative to our Equity rather than our assets so we sold those shares initially um and we got the cash for that which would be an asset a lot of those shares we spent that cash u a lot uh since we actually got that cash so it would be considered what cash when we first sell those uh stocks but when we
• 27:00 - 27:30 buy them back they actually go into the equity section yeah Cathy makes a great point when we buy back shares and retire those shares that helps us increase our earnings per share it also helps us uh if we're paying dividends to increase dividends more often because we're we're paying out on fewer uh shares of stock so hopefully if you have more questions about that let me know i' be happy to go into more detail there uh all right let's see here oh one
• 27:30 - 28:00 last statement here and this is I mentioned earlier there's one thing that they said in the earnings call that would get the shareholders excited uh Amy also announced that U uh course Market also said it too but incredibly excited to announce our first ever dividend 40 cents per quarter uh is going to start uh this particular year so if you are a shareholder in Salesforce you ought to be pretty excited about that um all
• 28:00 - 28:30 right now um here is the results that I got as a result of reading the uh uh is that uh question why is that related to the dividend kingle yet why did they decide to pay dividends now it's been 25 years uh they didn't necessarily say why other than their cash flow flows and their future earnings opportunities are looking like
• 28:30 - 29:00 they are at a point now where uh they chose to pay a dividend at this particular Point typically companies will pay a dividend to reward their shareholders after 25 years it's probably a pretty good time to start rewarding some of those shareholders um great question so here's the numbers that I found so I've got the uh Executives comments over here on the left and the analyst questions and the
• 29:00 - 29:30 responses from the executives over here on the right and then the total uh over here on the far right for um how many times I saw each one of these drivers part of mine is kind of covered up under here for cash but I I I can tell you that we got a total of only about 29 uh mentions of cash which is a lot by the way uh but it was all in good uh good ways uh usually when uh will not ask a whole lot of questions
• 29:30 - 30:00 about cash if there's really no reason to be concerned about cash so this was all good mentions about cash but you can see here pretty close numbers in terms of profit assets growth in people I mean we could almost call this a four-way tie on this but I focused on profit since it was the number one growth was number three and then we'll see some mentions of assets and people uh as well as we go through this so um so what were the U Which
• 30:00 - 30:30 business drivers seem to get the most attention and why uh here's what I came up with profit and growth now a lot of times I like to separate these two drivers out and just talk about what was mentioned about each one but there's such a tie here between both of these drivers that I thought I would mention uh everything related to both so strong performance across all key metrics we've already kind of heard about this uh incredible margin growth uh as Mark said well margin
• 30:30 - 31:00 growth that I've never seen in any software company over the last 12 to 18 months so he was pretty impressed by this margin growth a lot of that was related to operating margin in particular our deals greater than 10 million grew nearly 80% year-over-year for the full year we delivered almost $35 billion in Revenue up 11% year-over-year now remember Revenue we consider as part of profit helping Drive profit uh continued disciplined approach
• 31:00 - 31:30 to margin expansion okay profit growth margin expansion uh non-gaap operating margin was 30.5% up 800 basis points year-over-year and we're committing to 32% operating margin next year okay some people don't always know what basis points are 800 basis points is basically the same as 8% percentage points okay 100 basis points would be 1 percentage
• 31:30 - 32:00 Point 800 basis points equals 8 percentage points so that's he's saying that we were basically at 22.5% for non-gaap operating margin uh last year um so uh quite the increase there expect free cash flow to grow between 23 to 26% in fiscal 25 our guidance on revenue is 38 billion uh up %. yeah Gap is generally accepted uh
• 32:00 - 32:30 accounting procedures generally accepted accounting procedures so typically uh eidas is probably one of the more famous non-gaap margins uh that we think about and so this was a non-gaap margin not the Gap margin uh our guidance on Revenue 308 billion up 9% data Cloud one of the assets for um for Salesforce has strong momentum it's approach in 400 million in annual recurring revenue and
• 32:30 - 33:00 growing nearly 90% year-over-year CEOs are all focused on fueling growth and strengthening customer relationships and they see artificial intelligence as the tool to augment their people and drive more productivity a lot of talk about artificial intelligence a lot of talk about uh data Cloud uh in this uh closed 86,000 multicloud deals last year uh
• 33:00 - 33:30 that may mean a lot more to you than some um but 86,000 multicloud deals sounds like a big deal uh Salesforce added 3,000 new logos new customers through Salesforce starter a solution for small businesses that's fantastic uh I would love to see 3,000 new logos uh in any company uh what would the um uh I have I've got part of this that's uh
• 33:30 - 34:00 not showing up what were the um uh two or three main points the executive was trying to make sorry part of my top is is uh is covered up there uh excited about the transformation for Salesforce and excited about the transformation for the industry so that was one of the headlines there next generation of AI and they talked about how you know in a year a lot of this AI could be obsolete we've got new AI uh out there uh data Cloud fastest most
• 34:00 - 34:30 exciting ever uh new product ever fastest growing most customer traction strengthen relationship with the investors uh thanks to Amy Weaver gave her a lot of Kudos on that management team and the board of directors uh and certainly uh providing that uh dividend uh would help strengthen that relationship as well also buying back a lot of shares uh transformation has driven incredible results productivity is up profitability is up Margin is up revenue
• 34:30 - 35:00 is up and you're going to see it again in our results for our quarter he was talking about the the quarter when he's giving this presentation uh which was q1 uh for this year uh first ever dividend at 40 cents crpo current remaining performance obligation $ 57 billion at the end of the year so they basically got orders they still need to fill uh at 50 7 billion
• 35:00 - 35:30 um uh principles yeah sorry did I say practices principles yes generally accepted accounting principles uh largest Enterprise application uh applications company in the world uh and past sap and then secondly uh just Mark Ben off's excitement never been more excited uh he says and and you know if I'm Mark Ben off and I own probably 3% % of the shares at Salesforce one of the
• 35:30 - 36:00 things I'm excited about is the growth in the stock and a new dividend but he started off with and I love this he started off with customers our customers CEOs want more productivity higher value customer relationships and higher margins okay he's talked to a lot of CEOs he's learned what they want Salesforce is going to give it to them through nextg products through AI three essential components that their customers need compelling user interfaces that deliver insights and intelligence cross Sales and Service
• 36:00 - 36:30 some of the other brand names that you may be familiar with as well that uh are owned by um Salesforce slack Tableau soft mu soft and several others as well worldclass AI model have to be able to use these AI models and he kept talking about the gold is in the data the data and the metadata and Salesforce is one of the largest repositories of of uh inter entprise data and metadata in the world for our customers it's all about
• 36:30 - 37:00 the data and of course Ai and they feel like they have unlocked uh the secrets to that what are the goals Trends and objectives going forward artificial intelligence the Einstein one platform uh including data cloud and and co-pilot uh are rapidly infusing conversational AI across product portfolio uh Aiden Einstein one is huge differentiator in the industry uh and
• 37:00 - 37:30 then finally guidance uh gave a lot of detail about guidance more so than what a lot of companies do Revenue up 8 to 9% growth in the now current fiscal year and that includes some headwinds from foreign currency exchange and their Professional Services side of the business uh attrition slightly above 8% uh margins non-gaap operating margin margin of 32.5% now so 200 basis points
• 37:30 - 38:00 up year-over-year and uh still even with that 200 basis points up still planning to make some Investments and growth opportunities of course their core business related to that uh again margin Gap is expected uh to surpass gas uh G Gap even we've got non Gap here a gap margin is expected to surpass 20% up 600 basis points again uh tremendous improvements operating
• 38:00 - 38:30 cash flow up 21 to 24% uh just growing like crazy capex slightly below 2% of Revenue I see this number anywhere from zero uh to probably 5% it can go higher than that in a lot of different companies but that's probably a pretty good range and then free cash flow up 23 to 26% uh uh good question a lot of companies
• 38:30 - 39:00 actually report Gap and non-gaap numbers the way I I explain a lot of this is is um from a home ownership perspective my wife and I talk about how much cash we have all the time C how much cash we have or don't have and our as we as as I like to say I can kind of look out in my backyard right now it we would have more cash this last year if we hadn't put a fence up around our backyard and if we hadn't done a lot of landscaping in our
• 39:00 - 39:30 backyard so our cash is this but our adjusted cash if we hadn't done all that stuff would have been X okay uh in kind of the same way in terms of profit numbers capex is also referred to as capital expenditures typically that uh leans toward property plant property buildings land plant manufacturing uh and the equipment so that could be uh buildings it could be
• 39:30 - 40:00 um uh equipment it could be vehicles uh it could be Jets planes it uh Salesforce uh it's largely related to technology uh how do you interpret uh for company letting go of employees to reduce expense that's a great question um and and we do a little exercise uh in our classes we call it the 100 up and 100 down exercise and basically the question is which has
• 40:00 - 40:30 a greater impact on the bottom line net income is it by increasing sales by $100 million or is it decreasing expenses by $100 million um uh from Axel he says to everyone uh it's the latter it is it always I've never seen it come out um increasing sales by $100 million over reducing expenses not a fun thing
• 40:30 - 41:00 to do um to let people go right but sometimes if we're not and that happened uh with Salesforce there's been a couple of years in a row where there was some restructuring going on but if we're not meeting projections we have to make some tough decisions at times and uh sometimes that includes people and I've been I've been the one that's been let go and I've been the one who had to let others go and I can tell you not a fun situation either
• 41:00 - 41:30 way um let's see did I get through here yeah so uh thanks for the questions I appreciate those what are some of the key questions or concerns that were raised by the analist community I'm not going to go through these but I did just kind of come up with a list of of kind of the themes that were talked about I'll go ahead and kind of highlight some of these uh on the screen here but a lot of questions about customers you can see what were what are you seeing from customer Behavior Uh how are customers
• 41:30 - 42:00 ingesting this how are customers purchasing the Einstein platform does it start with data cloud and then move into more there was a couple of questions I really loved on here uh by the way uh customers investors margin it talked about um guidance uh for this fiscal year using your own product uh was talked about a couple of different times uh AI was certainly mentioned and then
• 42:00 - 42:30 pricing which kind of plays into profitability as well but couple of questions I really enjoyed um let's see here on guidance you're adding another 200 basis points of operating margin where is this coming from and it was really uh part of that included uh uh going back to your question son uh is we had smart headcount management and um uh certainly investing in some of the right things to help reduce some of those expenses as well um let's see here
• 42:30 - 43:00 [Music] uh I I like this question here on number 10 gross margin and sales efficiency are quite strong this quarter I'm curious from a standpoint of eating your own dog food or drinking your own champagne have you been able to realize any benefit from deploying either service GPT or sales GPT internally to save time for your own teams love the wording of that um and uh yes they do use their own
• 43:00 - 43:30 product and have seen some uh improvements uh in that the other one was on page uh or a page number eight pricing and bundling around Einstein one when will that move the needle for revenues and how much of that uplift are you baking into the guide for this year so love the love the language around those questions basically the answer to that question is very little if any was actually built into um the guidance for uh revenue for this particular year uh
• 43:30 - 44:00 so lots of different ideas customers certainly revolves around people uh investors people margin around profit uh guidance around cash profit and growth in many ways uh using your own product um uh assets and people by the way our CEO is is fantastic about um the people driver uh I would say that's probably one of our primary d ders and you can tell that he always thinks about the employees and
• 44:00 - 44:30 the customers uh when having to make some decisions about people uh so really respect and appreciate him uh uh using his own product as well all right let me share with you this uh this is a tool that we call navigating the financials worksheet uh uh you'll notice over here on the leftand side cash profit assets and growth uh so we've got two metrics associated with cash three associated with profit two associated with assets
• 44:30 - 45:00 and three associated with growth now what I've tried to do here is give you the uh key metric and the line item that you might be looking for as an example net profit margin well there's two line items that we need to find on our financial statements to get that number it's net income and its total revenue so over here we can tell where we can find uh those numbers uh which statement it's on by
• 45:00 - 45:30 the dots represented here you can see it's either going to be in the income statement the balance sheet or the statement of cash flows uh we can find these on the income statement uh over here is the uh results by the way you can see how to calculate this uh particular metric over here and we give you a place to put your numbers right here all right so cash and cash equivalents uh on the balance sheet let's take a look at our balance sheet here at uh so January 31st
• 45:30 - 46:00 2024 uh we've got $8.4 billion in cash and cash equivalents uh compared to7 billion last year so we're going to put that number right here $8.4 billion those numbers are in millions so we've got to add six zeros to those numbers um cash from operations let's take a look at the cash flow statement and find out how much we had in cash
• 46:00 - 46:30 from operations we again we find this in the cash flow statement and the first section here is operating activities so we're going to go down to the bottom of that net cash provided by operating activities 10 billion a little over 10 billion so we're going to put that in there next line item we want to find is total revenue income statement again so our total revenues now you got to be careful here uh a Salesforce actually generates Revenue in two different ways
• 46:30 - 47:00 so you want to make sure you get the total and that's 34.8 billion dollar so we'll put that there now net income same statement and we'll go down here to net income 4 billion a little over4 billion 4 b136 million now you can see I've gone ahead and filled out the rest of this sheet for Salesforce for fiscal year 24 we had about an 11.9% net profit margin so that's our net income divided by our total revenue our
• 47:00 - 47:30 equity ratio pretty high uh quite honestly uh don't see many companies that high in equity ratio at almost 60% our return on assets 4.1% we've got a lot of assets at Salesforce almost a hundred billion dollar in assets and only about $4 billion in net income uh in terms of growth our uh Revenue grew 11.2% our net income growth yes this
• 47:30 - 48:00 number is correct 1,888 per growth over last year uh we'll get to that here in just a second yeah exact it's a bigger W than it probably should be uh we had some large expenses last year uh that uh played into that just a little bit um matter of fact I probably need to pull that up because I need to explain that soon um so now uh here's our comparison to
• 48:00 - 48:30 and 1900 in terms of earnings per share growth so just comparing to last year cash up a little bit cash flow up a little bit total revenue up about $3.5 billion net income uh uh up so $28 million in net income last year now we actually did pretty good sales actually went up about 18% however we had some uh extra
• 48:30 - 49:00 expenses we had some restructuring expenses 828 million we were down about uh $1.4 billion in terms of some strategic Investments and then our taxes uh were about $364 million uh less than last year so uh all together along with some other marketing and sales extra dollar spent that was about a $4.4
• 49:00 - 49:30 billion extra that we had in 2023 compared to 2022 um all right I gotta I gotta move on uh sorry about that so uh net profit margin whenever you got low net income that's going to certainly Drive our net profit margin down our return on assets down Equity State about the same and you can see compared to 200 fiscal year 22 uh uh we we didn't do so well compared there but it was really some
• 49:30 - 50:00 extraordinary expenses I would suggest uh related to that now we could also compare this to uh quarter by quarter uh you can see again pretty good growth in Q4 uh uh especially compared to the year before we could also compare this um uh let's see here who is this Oracle uh Oracle since he went to work for Oracle
• 50:00 - 50:30 and Larry Allison thought we'd compare these two so Salesforce is a little Below in terms of cash a little more Below in terms of cash flow uh oracle's got about 15 billion uh on them in total revenues uh profit margin 177% versus 12% pretty close there interesting that Oracle has uh only about 1.2% Equity versus almost 60% Equity here different philosophies apparently in terms of how
• 50:30 - 51:00 they manage debt versus Equity uh return on assets slightly better you can see our growth rates at Salesforce were considerably higher may not be a fair comparison uh pretty strong growth rates at Oracle uh that year as well uh this is sap uh similar numbers in terms of cash more for uh Salesforce and cash flow uh similar numbers in terms of Revenue but uh as as Mark mentioned uh went ahead of
• 51:00 - 51:30 sap this year uh still sap had some pretty good profit margins similar Equity ratios um and then pretty good growth numbers here as well but not quite as good as what Salesforce was all right so we've analyzed now now we need to apply anybody ever hear this from your mom um to know and not to do is not to know uh you know we might as well have
• 51:30 - 52:00 never known it if we're not going to do so as I mentioned early on we need to apply this to our job and how do we align with the executives so whoops sorry about that uh so new insights love the excitement of the management team uh knowledge is power but we must apply our knowledge there you go I love it Kathy thank you love the excitement of the management team especially mark Ben off even after 25 years I mean he sounded like it was a brand new company
• 52:00 - 52:30 for him and they've already taken off um uh impressive results in fiscal year 24 uh relating to a lot of different things going to start paying dividends to shareholders for the first time may want to go buy well I can't say that uh I own some Sal sales for stock I can't recommend that you buy it uh but it might not be a bad idea uh no I'm joking I'm joking amazing transformation looking forward to uh watching future
• 52:30 - 53:00 results with their use of artificial intelligence and the Einstein one platform thousands of AI models right now but there are tens of thousands if not hundreds of thousands of models coming all models available today will be obsolete in a year so it's going to be interesting to see what happens but it certainly looks like they're uh they're sitting in a good place right now uh from a Salesforce perspective based on what I've learned what three actions I'm going to take I'm going to continue watching the transformation of
• 53:00 - 53:30 Salesforce probably pay a little bit more attention to it continue using this tool and process to follow the financial success of Salesforce uh and others as well and I need to learn a little bit more about AI certainly lots of stuff coming out about Ai and I need to I need to be in on that bandwagon a little bit more than what I am uh right now so highly recommend that you use this tool in this process to uh review any particular companies uh maybe you're going to review your own company using
• 53:30 - 54:00 this tool maybe it's a customer or a partner uh or maybe um a competitor or another Benchmark company so um now everybody help me out on this one things to do three things to do before the call locate the call or transcript number three is meet with your team what's number two anybody remember that prepare but even a little bit more than that Kathy Notes From The Past call exactly
• 54:00 - 54:30 review your notes from the past call so the more you do this the more notes you're going to have what's fun is when you hear analysts ask questions on the calls and you know the answer to the question because you've listened to every earning skull that your company has had um and uh so it it there is some repetition uh notes from pass call look up the trans Crypt and prepared remarks exactly exactly let me um so uh who are you going to who are you going to
• 54:30 - 55:00 analyze um by the way here's just some information that we've gathered from companies that we have worked with all right some of the results that they got out of taking our classes 84% improved the performance of their business or function 81% increased collaboration with others in the company 77% improved upward Communications that's important when You' got business Acumen and you can improve your upward Communications
• 55:00 - 55:30 again that goes back to improving your career 77% improved Employee Engagement 75% increased business focus and 84% improved teamwork so a lot of different things that companies people get out of our classes thanks for joining us today uh our next uh class is going to be on or excuse me our next webinar is going to be on May the 23rd I kind of went past it a little little quick right here we're going to be focusing on mandes uh in the next earnings call lab so if
• 55:30 - 56:00 you're interested in mandes or just want to hear more about this uh process and this Tool uh we'd love to have you join us again uh thank you all I'm going to stay on the line as long as you may have any questions or I love just uh seeing the notes coming through as we end here today we got pretty quick thanks for all the questions there uh that I love that it helps make for a more engaging class even when all we can do is ask questions
• 56:00 - 56:30 in the chat box uh thank you all uh Dwight look forward to seeing you soon as well thank you