Q1 2026 Salesforce Inc Earnings Call
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines again will be placed on music hold thank you for your patience.
[music].
Okay.
Yeah.
Okay.
Okay.
Okay.
Yeah.
[music].
Yes.
[noise] [music].
Okay.
Yeah.
Yeah.
Okay.
[music].
Uh huh.
Yes.
Yeah.
Yeah.
Uh huh.
[music].
Yeah.
Yes.
[music].
Yeah.
[music].
Speaker Change: Welcome to sales force first quarter fiscal 'twenty twenty-six Where's all its conference call all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad and if you'd like to withdraw.
Your question again press Star. One also this call is being recorded and I would now like to hand, the conference over to your Speaker, Mike Spencer Executive Vice President of Finance and strategy and Investor Relations. Sir you may begin.
Thank you good afternoon, and thanks for joining us today on our fiscal 2026 first 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, Chairman and CEO and Robin Washington, Chief Operating and Finance Officer. In addition, we also have Sri told Regatta and President.
Miguel Melano: Cheap engineering customer success Officer, Miguel Melano, President and Chief revenue officer, joining us for the Q&A portion of the call.
Miguel Melano: 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 or outcomes could differ materially from these forward looking statements a description of these risks and uncertainties and assumptions and other factors that could affect our financial results and outcomes.
Miguel Melano: He is included in our SEC filings, including our most recent report on forms 10-K, 10-Q, and any other SEC filings.
Miguel Melano: As required by law, we do not undertake any responsibility to update these forward looking statements. 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 and with that let me hand, the call to Mark.
Mark: Alright, hey, thanks, so much Mike really appreciate everything you're doing and before I get into all of these exciting highlights from the quarter Theres. So much to talk about I just want to say a few words about informatica and I'm sure everybody knows I Love Informatic I've been working with this company since.
Mark: Probably 2006, so a bit bossy, a former CEO last night sent me a photo of me and him together at their user conference I'm. So excited that we have signed this definitive agreement to acquire them for $8 billion, which upon closing kind of unite our number one AI CRM and of course, there number one.
Mark: M D and E Seattle, and bringing these things together why it couldn't be more excited about this acquisition.
Mark: Know that many people on the call know informatica, so well just like I do you.
Mark: You may not know everything that's happened with Informatica it'd followed very closely the way they've rewritten their product into the cloud, they're incredible engineering leadership, especially some of their incredible new engineering data engineering centers in what they've built is just awesome and I will tell you that theres just a few technology companies have just been more impressed.
Mark: In fact, we're a customer where a partner we're an investor in the Informatica, we really loved the company we love the people we've loved the leadership.
Mark: I have to say, we've probably spent the last 20 years discussing how to bring the companies together. We spent a lot of time not only what their new C O, but Matt who is fantastic, but with their engineering teams and I've been sent our group over to India to see what they were doing there and it all lender led really to this incredible moment so.
Mark: That's an awesome acquisition for us it is a transformational step it's a great price for the company.
Mark: This transaction and I think that Robin will get into this.
Mark: Because we've been very focused on staying you know really in our.
Mark: Acquisition framework, we spent a lot of time thinking about what is it going to take to buy a company of scale. How much are we really willing to spend are we willing to walk away like we did a year ago. When numbers are not right. We just wanted to be as disciplined as possible.
Mark: And look at the end of the day I know all of you already know this but this is a great price for a great company. It's got great multiples, it's accretive it's non dilutive, it's coming together in an incredible way.
Mark: This is a moment, where informatica, it's more important to our customers than ever before because of what's happening with AI and I think everyone, who is going through an AI transformation every business, including mine, we're going to talk about some great businesses that are going through transformations, whether its pepsi or for bell or or opened.
Mark: Table et cetera, but every AI transformation as a data transformation and you don't see it on the consumer side, because when you're using a consumer AI you have to remember that the dataset has kind of been pre fabricated for you that is the training data and everything is put together you know, it's an amalgamated dataset applied to.
Mark: This consumer AI model, that's not how an enterprise AI really works you have to have your enterprise data together to get the result that you want and when you look at these very high functioning agents and we will talk about you know one that we have a we have so many I mean, we've done now eight seven or 8000.
Mark: Agent Force deals I think we've got 4000 paid agent force customers as $100 million in agent force, a $1 billion and more than data cloud agent force a RR, but when you look at these companies that are doing it right.
Mark: They have got their data together and that is what is really the key this ability to unify our harmonized or activate all of the data across the entire enterprise and if you can imagine.
Mark: This idea that you wanted to deploy all of this incredible you know agenda data well.
Mark: You've got to get your data right and Informatica combined with Salesforce as data cloud combined with the tableau combined with other key assets. So we're going to bring to bear. This is what is creating this incredible data business. I mean, you know we have big goals for what how the best size and scale that that data business can get to Robin who will go through that in <unk>.
Mark: And we will really work hard to advance this submission of.
Mark: Informatica to make sure that our customers data.
Mark: Is incredible so anyway, let me turn it over to Robyn to give her perspective on at Informatica and then we'll get into the quarter. Thanks, Mark We're incredibly excited to welcome Informatica to sales force that's on closing.
Mark: And so M&A framework that Mark just spoke to is a key pillar of our capital allocation strategy and it's focused on three areas customer success and strategic fit acceleration and value. Our acquisition strategy is methodical, it's patient and its precise targeting transformative assets like inform it.
Mark: Informatica when the calculus.
Mark: <unk> to maximize customer success.
Speaker Change: You already heard from Mark on why this will be a critical complementary asset for accelerating our growth strategy and data and AI and apps I'm going to focus on value our third pillar.
Mark: We expect to achieve accretion on non-GAAP operating margin non-GAAP, EPS and free cash flow by year. Two post close we are laser focused on speed of integration by leveraging our focus on operational excellence and our M&A integration playbook. Our goal is to achieve accretion as quickly as possible.
Mark: <unk>, which is a significant evolution in our M&A strategy and in line with recent acquisitions.
Mark: And in line with our M&A framework, we prioritize non dilutive forms of consideration.
Mark: As a result of our durable free cash flow generation and strong balance sheet. This deal will be financed through a combination of cash and new debt, resulting in no share dilution.
Mark: This transaction is not expected to disrupt our capital return strategy inclusive of our share repurchase program and our dividend finally, we expect to close by early fiscal year 'twenty.
Speaker Change: We view this acquisition as a key enabler for Salesforce. This next phase of AI, driven growth and believe it will amplify our market differentiation and deliver sustained benefits for all sales force stakeholders now back to you Mark Alright, right on well Robyn. Thank you so much.
Speaker Change: You are doing a fantastic job as our new cocoa, so so great that you're here and.
Speaker Change: I'm looking forward to you all having the chance to interact with Robin on the call.
Speaker Change: Look at overall, let's just talk about this we are just extremely excited.
Speaker Change: To welcome Informatica and.
Speaker Change: Can't wait to close the deal.
Speaker Change: And.
Speaker Change: You know I think that this is going to be an absolutely incredible opportunity. So look let's move on to the quarter. We delivered $9 83 billion in Q1 revenue that was up 8% year over year subscription and support and 9% in constant currency with strong very strong growth in our small and mid.
Speaker Change: Market business, it really surprised us both of them achieved really strong double digit new bookings growth. We continue to deliver on these margin goals that we have we delivered 32, 3% non-GAAP margin in the quarter.
Speaker Change: And we delivered $6 billion in operating cash flow, we have 69 billion in <unk> up 13% year over year, and we had exceptional performance with <unk> growing 11% year over year in constant currency and were raising our fiscal year 2006 guidance by 400 million.
Speaker Change: To $41 3 billion at the high end of the range I mean, sometimes you have a quarter when everything is going right for you that means revenues going rate bookings is going right. You know you're you're kicking off the quarter. You know Q1 is always a high risk quarter, but even currency is moving in the right direction.
Speaker Change: This was just a great quarter and that is why we were able to deliver this.
Speaker Change: Incredible raise so few enterprise software companies probably have ever deliver these kinds of numbers its kind of even a shock to me that we're delivering this $41 3 billion and guidance and we are now just very well positioned to take advantage of this multi trillion dollar.
Speaker Change: Opportunity in AI in enterprise software and digital labor and now in just two quarters. We are also.
Speaker Change: Just since we launched agent force.
Speaker Change: About that we now have more than 4000 paid deals as I mentioned more than 8000 in total across every industry. We've got 800 customers already in production with agent force, including Amazing companies like LG and that has been a success incredible success.
Speaker Change: Success story with incredible velocity in conversations and open table Finnair, Grupo Globo Palo Val.
Speaker Change: We've talked about so many of these we're going to talk about so many more and we have launched hundreds of prebuilt agent force templates for different industries role staffs, making it faster and easier for customers deploys enforced we're learning a lot about how to make agent successful productive.
Speaker Change: How to scale, how to tune our own organization and really get our customers already for this AI transformation in the enterprise led by agents now earlier. This month, we introduced our flex credits, it's the new consumption based pricing model.
Speaker Change: How we've tuned our pricing after a huge amount of customer feedback and next month, we're going to add fed ramp high authorization for agent force of the U S. Public sector can also experience. This incredible success. So no one else is delivering what we think digital labor is at this scale now of course agent Force does.
Speaker Change: Agenda augmentation for employees agent Force is also doing it.
Speaker Change: Directly to consumers I think that we are really delivering at this point, probably more agents had more conversations and more capability to more enterprises than any other vendor in the world I really see us as the number one agent platform already and it's only been a few months in fact, eight enforce reached more than 100.
Speaker Change: <unk> million dollars in iOS, it's much faster than any product in our history and we're not even fully deployed on all geographies currencies are languages and to that point I was in Japan last week and they are you know they can't wait to get agent for us running the Japanese which we're about to deliver for them. So the success of Asia for US is building on the <unk>.
Speaker Change: <unk> growth, we've seen in our data cloud data readiness as I mentioned with Informatica as critical for every company and in this quarter our data cloud just our data cloud.
Speaker Change: Surpassed 22 trillion records up 175% year over year, nearly 60% of our top 100 deals included investments in both data cloud and AI and we are still working really to be able to kind of communicate with every single one of our customers on the importance of data.
Speaker Change: And yet data cloud just remains this incredibly fast moving.
Speaker Change: Product, 50% of data clouds, Q1, new bookings came from existing customers.
Speaker Change: I think that's really important because it really speaks to the adoption of the product and the incredible usage by the customers who have it and even though agent force is only in its second quarter, 30% of its bookings also came from customers increasing their consumption. Another key point of these two products now these are early days, but.
Speaker Change: This flywheel of your AI agent flywheel, it's working data cloud and AI <unk> grew more than 120% year over year, and it's more than $1 billion part of our business that is amazing the pace of innovation has been incredible I've just never seen our company really any company move this fast.
Speaker Change: With the new technology, we've also witnessed how we pivoted the entire company around our vision for AI that is the idea that we have.
Speaker Change: These incredible apps.
Speaker Change: Every single one of these apps being rebuilt.
Speaker Change: Incredible AI Revolution, the data cloud itself.
Speaker Change: And not to mention of course.
Speaker Change: When you start to look at it you've got the agenda layer and don't forget about our metadata platform I'm going to get into that in a second but I just think it all played out just last week when we looked at the New York World Tour I know many of you are there and you can really feel the energy 10000 customers everyone looking at.
Speaker Change: Allergy that just a year ago did not exist and now they are on the very cost.
Speaker Change: Of of.
Speaker Change: Huge transformation for their enterprises now when I talk about agents and data and apps and meta data. That's what we really call are Adam framework. It's in our experience. This is now these four elements the app the data the agents and the metadata that makes salesforce unique that companies need to achieve the real promise of <unk>.
Speaker Change: Gentex AI and you could really see that also play out.
Speaker Change: When we got to our Tableau conference. This quarter. If you were in San Diego you saw tableau next.
Speaker Change: What you saw was the data firm that's the tab the tableau community kind of.
Speaker Change: Fully inspired because not only were they looking at tableau next this incredible new product, but what they saw was tableau tableau They love.
Speaker Change: And they also saw and <unk> and they saw a deeply integrated into our data cloud.
Speaker Change: And all running on our metadata platform, that's our Adam framework the agents the data the apps the metadata altogether Tableau next is a great example of where we're going with all of our technology in our company and customers are so excited slack is really another example.
Speaker Change: <unk> is of course, where I believe you are going to really begin and end every agent force conversation. It's the conversational interface for managing all of your work across App systems teams and service cloud sales cloud Tableau next any salesforce app can live inside slack, it's a very fluid natural user and <unk>.
Speaker Change: I know a lot of your on slack and with agent Force and Slack every employee has a digital teammate that can make notes for your meeting summarize your slack channels and you really see like AI, taking place on slack. When you look at slack recap, where you look at agents just coming right into your channels to talk to you in real time.
Speaker Change: And you can imagine how all of these new kinds of apps that are appearing in the marketplace, where AI and agents are all happening.
Speaker Change: This is his incredible agent use user interface.
Speaker Change: With slack so in this new agenda AI era every company is going to say that they have agents well I think every company does say that they have agents, but without these four parts of what we call Adam.
Speaker Change: Really the agents the data the apps the metadata framework, you're just not really able to deliver this complete experience for the enterprise, including delivering digital labor. That's why so many customers are achieving success now with agent force and so many of our new offerings that are huge.
Speaker Change: This incredible combination, let's talk about some customers.
Speaker Change: Scenarios using agent force to help manage customer service for 12 million passengers agent force is already having thousands of conversations a week within our customers and the airline is aiming to automate 80% of customer service queries.
Speaker Change: And reduced new Rep, Onboarding time by 25% with agent force, it's been an incredible success story and Thats not the only airline I think you remember we've talked about Singapore Air and we're talking to so many airlines about how they not only can use all of our customer 360 apps not just the data cloud not just our meta platform, but build this agenda.
Speaker Change: Capability around the airline this is going to be a huge opportunity for that entire industry, which is so customer service obsessed now I have to tell you about this great company solid Bella and for those of you who have ever been to Pal Abella Europe now I guess the analog would be.
Speaker Change: I am speaking from San Francisco, So I'll, just say, it's kind of the nordstrom's of Latin America in some way and this is a Latin American retail conglomerate. It's a great example of why agent forces winning here's this company that is pioneering agent for US just a couple of months ago, and Theyre Columbia business and then so successful.
Speaker Change: We're actually deploying it on whatsapp, which we hadn't really seen before and Theyre using whatsapp the customers are coming in they're coming in and then hey, What's my order what's going on in this what's my order use cases, the main thing that's driving Palo Bella and boom all of a sudden. They go you know what this is working so well we're going through all over Latin America and what was.
Speaker Change: Kind of I think a low six figure deal I mean, Magellan is going to have to come in here and tell me turned into like a $1 million deal overnight. What 300, yes remember it was 300 rate purchase Colombia had become a $1 billion now a familiar so that's a great example, and we will look at another one open table, we've been talking about this story for a while which is.
Speaker Change: Glenn is doing a great job deploying agent for us.
Speaker Change: He started with the restaurants than he did employees and now he is like doing the consumers and this is an incredible thing that open table has been so successful and I am so proud of Glenn and now we see Ramon doing the same thing at Pepsico, where he is trying to bring together.
Speaker Change: The beverage business in the snack business is kind of building a one pepsico vision with the data cloud I think uses 11 11 clouds right.
Speaker Change: All of them, except every single one and then delivering a whole adjourn tick layer around Pepsico is so incredible and another Latin America Latin American success as Grupo Globo, the Brazilian media conglomerate purchased agent force in Q4 and less than three months agent Force basically booth.
Speaker Change: <unk> global is retention rate by 22% driving revenue upgrades cross selling converting non subscribers, it's very cool and I guess one of the surprise stories is LG, who is a longtime salesforce customer known so many of the Ceos.
Speaker Change: <unk> company doing all kinds of great things in the energy marketplace, driven out of Europe, and now they're assisting 83% of their users with agent Force I think as you know.
Speaker Change: The number of conversations that are happening or some of the highest that we've seen it's really cool so and I've got other stories. We've you've heard me talk already about one 800 accounted smart sheet in so many other customers. This is just the beginning of what's going on with AI agent Force data cloud our metadata.
Speaker Change: Framework, we can go into it in Q&A, if you want and now I will turn it over to Robyn.
Robyn: Thank you Mark I've been in the coastal road for a little over 50 days now and have spent that time deeply listening to our shareholders employees and customers and what I've heard has been instrumental in shaping my top priorities for the year ahead, which are delivering customer success and accelerating AI adoption to drive growth driving.
Robyn: Operational excellence to maximize shareholder value and responsible capital allocation or how.
Robyn: Already making progress against these priorities first let me share a few details on how we're delivering customer success and accelerating AI adoption to drive growth.
Robyn: Our core clouds continue to be a cornerstone of our product portfolio with sales cloud service cloud and platform and nine of our top 10 wins.
Robyn: Half of our top 10 deals included six or more cloud with service cloud and nearly 80% of those deals.
Robyn: As customers adopt more clouds, they unlock the full power of our deeply unified platform with data cloud in Egypt for built into every one of our applications.
Robyn: This drives the flywheel of success as well as lower attrition as customers realize the benefits of our platform.
Robyn: It's early days, but the flywheel is already journey, 30% of Q1, Egypt <unk>, new bookings came from expansion deals from existing agent for its customers and as Mark just shared our customers continue to invest heavily in data cloud to prepare for their future.
Robyn: In Q1, we closed more than 30 net new annual bookings over $1 million that include both data and AI.
Robyn: Tableau was included in more than 70% of our deals over $1 million and new SaaS and nearly half of those deals. This underscores how important data into our customers like Fox Deloitte and bundling our ecosystem plays a critical role in driving customer success and growth. Our partners were included in seven.
Robyn: Of our top 10 deals at the corner today Salesforce is the fastest growing ISP on AWS marketplace, which can strengthen hundreds of transactions for us since launch, including two of our top five deals this quarter.
Robyn: Finally, our industry specific solutions continued to deliver significant value to customers like the U S Air Force and University of Chicago Medicine, nearly half of our top 100 deals included an industry cloud.
Robyn: Our life Sciences cloud had a strong quarter, we've seen incredible momentum with more than 40 global customers, including Pfizer and Takeda, which was a Q1 win for US Takeda will use the life Sciences cloud with agent force and data cloud to unify its data and deploy agents across medical.
Robyn: <unk> commercial and patient care operations, and we are continuing the momentum we unveiled a brand new next Gen mobile application for life Sciences cloud fulfill ramps just last week.
Robyn: As customers adopt more agents upgrade to premium editions and leverage our industry solutions, we see greater expansion in stronger customer retention with data and.
Robyn: And AI that value is accelerating driving.
Robyn: Even more impactful customer outcomes.
Robyn: As you all just heard we are innovating faster than ever.
Robyn: And this is a core part of how we will drive operational excellence to maximize shareholder value.
Robyn: And we are positioned better to leverage our own innovation to drive efficiency and profitability similar to what our products bring to our customers. Let me give you two great examples.
Robyn: Our sales agent in slack is transforming how our team sale.
Robyn: Our aes have already logged over 21000 interactions simplifying everyday sales activity saving our teams over 44000 hours annually.
Robyn: Are there data cloud is amplifying that impact cutting lead routing from 20 minutes to 19 seconds in slack.
Robyn: And customer support agent forces <unk> 750000 cases and is on track to surpass 1 million helped Porto requests this quarter cutting case volume by 7% year over year.
Robyn: As a result, we have reduced some of our hiring needs, enabling us to rebalance and redeploy 500 customer support employees to higher impact data plus AI rose by year end driving $50 million in savings.
Robyn: Knowing what's working for US helps our customers envision near future and I am excited to keep scaling. These efforts internally that is the power of Salesforce on sales force utilizing our own unified platform infused with data plus AI across our enterprise will drive sustained efficiencies and leverage.
Robyn: Across our P&L and we are just getting started.
Robyn: Now you've all seen the numbers, but let me provide a little more context on the quarter for the first quarter revenue was $9 eight 3 billion up 8% year over year in nominal and constant currency.
Robyn: Ascription and support revenues grew 9% in constant currency as a reminder, this incorporates a one point headwind from the leap year last February.
Robyn: Again, this quarter pricing and packaging continued to be a key lever for us most notably in sales and service.
Robyn: Q1 revenue attrition ended the quarter at slightly above 8% in line with recent trends.
Robyn: As we continue to focus on customer success, we are incentivizing, our new metric with our field reps net new ALC, which measures new and renewal performance. Together. This provides a clear view on overall business expansion and enables our teams to focus on overall health.
Robyn: The customer.
Robyn: Our business benefits from a balanced portfolio of products.
Robyn: And customers across geographies segments and industries from a geographic perspective, we saw strong new business growth in the UK, France, Canada, and Asia Pacific, particularly South Asia, while some pockets in EMEA remained constrained from a segment perspective as you heard from Marc.
Robyn: We saw strong performance in our small and mid market business this quarter and from an industry perspective in Q1, Comms and media and health and life Sciences performed well, while retail and consumer goods and public sector were more measured on operating expenses, we continue to focus our investments in sales and <unk>.
Robyn: Marketing and R&D to drive data and AI innovation, helping fuel customer 360, and future topline leverage turning to our balance sheet and cash flows.
Robyn: Meaning performance application, Indeed, Q1 at $60 9 billion up 13% year over year.
Robyn: Current remaining performance obligation or <unk> ended Q1 at 29 6 billion up 12% year on year in nominal and 11% in constant currency, which is better than expected driven by strong renewal performance.
Robyn: One operating cash flow was a healthy $6 5 billion up 4% year over year.
Robyn: And as we focus on responsible capital allocation, we are continuing to invest where it matters most to our business and customers, while maintaining a clear focus on efficiency and profitable growth to maximize shareholder value on capital return in Q1, we increased our dividend payout by 4%.
Robyn: And returned more than $3 billion in the form of share repurchases and dividends. This brings our total cash returns since the inception of our capital return program to more than 24 billion.
Robyn: Finally, let's cover guidance, we are pleased to raise fiscal year 'twenty six revenue guidance to 41 billion to $41 3 billion, an increase of $400 million on the high end driven by foreign exchange tailwind. This results in growth of approximately 8% to 9% year over year in nominal.
Robyn: And 8% in constant currency.
Robyn: On foreign exchange, we now expect a $250 million tailwind up $400 million since our last print we are reiterating our subscription and support revenue growth of approximately 9% year over year in constant currency driven by the momentum in data cloud and some contribution from agent force. This.
Robyn: Year.
Robyn: This is partially offset by weakness in marketing in commerce and slower growth in our exploration base.
Robyn: Our guidance reflects a consistent demand environment and it seems those trends continue of course, if the environment changes our results may be impacted.
Robyn: As we continue to drive operational excellence, we are pleased to reiterate our non-GAAP operating margins of 34% and GAAP of 21, 6% for the year building on the continuous improvement from the last few years, our annual guidance on operating cash flow growth of 10% to 11% and <unk>.
Robyn: Free cash flow growth of 9% to 10%. He means unchanged now turning to Q2 guidance revenue is expected to be $10 1 billion to $10 2 billion up 8% to 9% year over year in nominal and 7% to 8% in constant currency.
Robyn: CRP our growth.
Robyn: For Q2 is expected to be 10% year over year in nominal including a 300 million FX tailwind, resulting in 9% constant currency growth as a reminder, while we have seen more normalized bookings growth recently <unk> will continue to be materially impacted by the accumulate.
Robyn: If a stack of the measured sales performance that starting in Q2 fiscal year 'twenty, three and our slower exploration base in closing, we're starting FY 'twenty six strong with a trusted deeply unified platform. The most technical leadership team in our history and a solid foundation.
Robyn: To accelerate efficiency and growth.
Robyn: Truly have a once in a lifetime opportunity to lead our customers in this digital labor Revolution with data cloud agent for us and our customer 360 apps are.
Robyn: Deeply unified within our metadata platform.
Speaker Change: And lastly, a huge thank you to our employees our customers our partners and our shareholders for the warm welcome and it's an exciting time to be in this new role at Salesforce with that Mike, Let's open up the call for questions.
Speaker Change: Great. Thanks, Robyn Christa will take the first question now please.
Speaker Change: Your first question comes from Keith Weiss with Morgan Stanley. Please go ahead.
Keith Weiss: Excellent. Thank you guys for taking my question and congratulations on great start too.
Speaker Change: The fiscal year.
Speaker Change: Okay.
Robyn: This is a question for all of you guys.
Robyn: The excitement around <unk> data cloud is palpable and how you guys speak about it and you hear a lot about it when we talk to customers and when we talk to channel partners as well.
Speaker Change: People want a lot of investors are wondering is the transmission mechanism of when does this become a bigger driver for the overall growth rates at Salesforce, 10% is good but we'd like to see acceleration against that we'd like to see you guys getting back to more if I could growth footing can you talk to us about some of the puts and takes of that I'm sure. There's some timing issues.
Speaker Change: Involved Robin you talked about a week X prepays, but when can we really see the trajectory of sales force start to tick up from here.
Speaker Change: Well I really excited about that question because obviously, we want to have growth. We also want to have good solid balanced execution as well and this is I think a big commitment of the company that we are going to.
Speaker Change: First and foremost we're going to maintain our margin framework, we're going to maintain our cash flow framework you heard about the very disciplined approach to M&A and so before I go into my pitch on growth I would really want to make sure that everybody heard what I, just said that I am committed to all of those things, but I am also deeply committed to growth and growth is.
Speaker Change: Really where we're at right now and you can see why growth is so important because we are in a moment in time, where every company is coming to us, saying, how do I go forward and how do I deliver this incredible at Gentex Revolution now what that means for US is a number of things that we all have to put into place one thing.
Speaker Change: As we need to know that we kind of have our I would say kind of a margin transformation behind us the cash flow transformation behind us the buyback transformation behind us the dividend transformation behind us and also I would say we have the acquisition transformation behind us because we saw the acquisition yesterday and also the acquisition last year.
Speaker Change: I have one but now there is one more huge transformation that is really underway and it's really driven by this agenda.
Speaker Change: AI moment and that is the growth transformation and our approach to that is going to be really.
Speaker Change: Focused first and foremost is on distribution and Mcgill Milan is here as the Chief revenue Officer, who works directly for me. We also have the table screening, our Chief Engineering Officer, and Sebastian our Chief legal officer and of course, Robyn and all of US together are deeply committed to continuing the incredible success of the company now.
Speaker Change: How would we even accelerate growth at this level well.
Speaker Change: Way, we would do it is we've really identified that there is a lot of growth happening already in the company one of the big areas of growth that is already happening is in small and medium business. Another area that happened in the first quarter is in the mid market and we even saw a lot of science for incredible growth and a lot of our geographic regions.
Speaker Change: Like Japan, and others and in our core technologies.
Speaker Change: Like we mentioned with data cloud NII when we start to put all of these pieces together, that's where we also decided to now higher.
Speaker Change: Another one to 2000 more salespeople because there are a lot of parts of our business that need investment to grow and we are doing that as well, but I wanted to get back we're still going to maintain that margin framework. So while we're making these huge investments while we are scaling distribution again, while we're doing all these things that have been kind of.
Speaker Change: On pause I would say for the last three years for a lot of good reasons.
Miguel Melano: Now we are really saying, okay. We can actually do some things in these key areas that are growing we can supercharge them and Miguel do you want to just speak to some of the growth initiatives that you have underway and some of the things that you're especially excited about not only performance in the quarter, but how you see over the next one to two years from a growth opportunity for the company.
Speaker Change: And how we're going to rapidly move from where we are this year at 41 and into these higher higher revenue levels, hopefully in the $50 $60, but while maintaining the margin and cash flow disciplines that we have now picked up as a core competency.
Speaker Change: Absolutely Mark Keith. Thank you for the question. Good question, obviously growth is our obsession.
Speaker Change: I I shared the very positive sentiment that both mark and rubbing already sharing this call.
Speaker Change: I don't think we've been we've ever been in a better position in this business.
Speaker Change: I can tell you there is some qualitative comments that we've made about item our framework our deeply unified platform that flywheel. It's incredible is starting to happen is great to be into markets that are seminal that day.
Speaker Change: Activation market and also the identity market.
Speaker Change: Anything is coming together and it's reinforcing the power of our applications by the way, we're bringing data public sector very soon but I think I'm also excited about some hard facts and go to market that are non disputable.
Speaker Change: The expanded capacity and Mike referred to today, we have 13000 days by the way we've not only had a record number of aes in the history of the company. This is 14% growth year on year to date at the end of the quarter can be 19% growth at the end of the year to be 22% growth, but also we've been extremely diligent.
Speaker Change: Over the last two years to put this capacity in the areas of higher productivity and higher growth.
Speaker Change: We also have very strong pipeline open pipeline and also great pipe gain momentum at the loyalty all into double digit growth.
Speaker Change: So as Mike referred earlier in his comment we have an incredibly well oiled run great machine I mean.
Speaker Change: Run rate is nearly 60% of our business and the small and medium business is approaching 50% and that is humming is growing in the mid high teens of course, we are well known for how we are able to structure and create big deals and that motion is strengthening.
Speaker Change: Pricing and packaging is also helping mark a lot.
Speaker Change: It's making our customers, we're making it much easier for our customers to simplify their relationship with us and to and to own our fully unified platform also increasing ASP per seat.
Speaker Change: Overall I couldnt be more excited I joined the company as you know 2011, the momentum it's incredible AWS marketplace just to mention that I think is incredible the partnership with <unk>, we transact at $2 billion of basis through them hundreds of transactions and each tripling year on year right now I've never felt a strong side Phil.
Speaker Change: And the future of the company.
Speaker Change: Because.
Speaker Change: I really want to get into this to one more level, because obviously I'm completely in sympathy with this but number one is obviously you came into the company. In 2011. We had asked you had been recruiting for many years you had Oracle you know running a huge part of their business and then before that you had mckinsey as well then.
Speaker Change: Unfortunately left Salesforce I think four years ago or five years ago to become the Chief revenue officer of another company. We won't go into that but then we patiently recruited you back and we got you back what is it two years ago now.
Speaker Change: And now you've been here for two years you are now working directly for me as the CRO or 15 core distribution unit leaders all our reporting directly to you.
Speaker Change: What was your biggest surprise in Q1, what was it when you look back you obviously had a great quarter, what was it that Q1, where you're like Wow that was a huge surprise I should be investing more here here and here. Because these are these are our growth levers I really didn't realize we didn't have.
Speaker Change: I mean, obviously, it's a leading question the answer Mark.
Speaker Change: I have to say I was shocked to see the momentum that we were enjoying in the lines of the market small medium and mid market. In fact, we that made us really rethink the exercise of capacity allocation and we realize that we had allocated enough growth in some of the areas, but not across the 50 new use.
Speaker Change: So even within Q2, we are reallocating capacity.
Speaker Change: Low end of the market and the other thing that became very important and this goes back to Keith's question is I mean, it's great to be owning two segments. The data cloud and the data activation business and <unk> business that is growing triple digits.
Speaker Change: What if we could grow even faster I think the participation across my organization needs to be improve I mean, we won Idaho.
Speaker Change: My whole organization 13000 acre unit.
Speaker Change: You need to sell a data cloud deal in Q2, you need to sell and agent for deal in Q2, I think if we can grow that instead of triple digit high triple digit that would accelerate the growth of the company. When you really look at kind of.
Speaker Change: Distribution capacity expansion year over year by the time, we get to this end of this fiscal year, what's your dream in terms of what our total distribution capability. What is the percentage growth that youll have seen so.
Speaker Change: So we are aiming at 22% overall capacity growth, we're going to be growing more on the low end of the market.
Speaker Change: Small medium business in the mid market.
Speaker Change: But that's an incredibly healthy growth, we'd never I mean in the last two years, we've been flat most of the time and now to be able to come into <unk> with a 14% growth. These market segments. It's also distribution capacity expansion and one more question I have for you what are some of these geographic regions that are just blowing our MAU.
Speaker Change: In terms of data.
Speaker Change: And so the ability for our products and capabilities.
Speaker Change: I mean us as Robyn referred to we were likely because we run a highly diversified portfolio of businesses across across the industry, but also across geographies. We saw strong momentum in Canada. The wholesale to Asia is on fire. All APAC is on fire and even in Europe. There are great pockets of.
Speaker Change: Growth, France, and UK are delivered in the quarter and of course. There are there are other places where we've seen a more measure performance, but overall, we see demand across every deal I get asked many many times, okay do you see a different.
Speaker Change: Behavior under two these every geography every geography every account every segment every industry they need two things they need to activate their data and they need an agenda can layer on top of other applications I think data cloud and again are so powerful that now many companies are wondering why would I.
Speaker Change: Deploy any touch point any customers touch point on an app that is not a sales force out it doesn't make sense.
Speaker Change: Thank you so much thanks, Keith operator, we'll take next question now please.
Speaker Change: Your next question comes from the line of Brent deal with Jefferies. Please go ahead.
Speaker Change: Thanks, Robin just on the growth rate I'm, just curious given some of the background tariffs uncertainty have you seen any uncertainty in your customer behavior.
Speaker Change: <unk>, putting up double digit RPM backlog was what's good to see but what are your thoughts on what youre seeing in your pipeline.
Speaker Change: Yeah.
Speaker Change: Brent I'll re enter in a rate what Miguel said, we do have this overall balanced portfolio. So we were able to think about that relative to our guidance and the puts and takes of knowing what we know today. It's been helpful to US. We also have this strong momentum as you've heard us talk about with data and AI.
Speaker Change: We have a modest.
Speaker Change: Contribution from agent for us, but we see that to be Tpa continued.
Speaker Change: Needle mover.
Speaker Change: We think factored in the headwinds, but overall that plus the FX change gives us a lot of confidence in where we stand today. You also heard <unk> talk about the AE capacity that will ramp and be available for second half. So we feel really good. We're excited about our products. We're excited about our capacity and as you heard us talk about our options to grow.
Speaker Change: Are in line with what we believe its ability to deliver on our guidance.
Brent Deal: Thanks Brent.
Speaker Change: Crystal we'll take next question please.
Speaker Change: Your next question comes from the line of Raimo <unk> with Barclays. Please go ahead.
Speaker Change: Perfect.
Raimo: Highlights for me, if I look through the numbers this quarter.
Speaker Change: Strength in platform and Mark you talked about tableau can you talk a little bit about how thats combined portfolio of tableau.
Raimo: <unk> <unk> is kind of a quick one to change the game for you.
Raimo: And the <unk> company. Thank you.
Speaker Change: Well I think you've really onto something because.
Raimo: I'm going to ask training to come in here also.
Raimo: I think that number one with you were at the Tableau Conference you really saw this incredible tableau, but one of the things about this powerful about the tableau knowledge that they have the agenda layer not only is it integrated now deeply integrated into our data cloud, but it's deeply in greater a metadata platform.
Raimo: And it runs on hyper force and I will tell you that if you're using slack now youll see tableau is appearing within that if they're using our core applications tableau is now appearing within that.
Raimo: Tableau is now part and parcel with our core functionality and kind of the core components of every other part of Salesforce. So I'm Super excited about that we also went through a pretty big transformation on distribution with tableau, where our tableau.
Raimo: Sales leaders, who were basically what we call Prime account executives that they are kind of independent on the side running has their own kind of.
Raimo: Our sales organization. They are now deeply integrated into our distribution organization, where all of our salespeople are now selling tableau as a core part of our product line and those distribution leaders are now.
Raimo: Supporting them and what we call a kind of a co prime.
Raimo: Position, but I will tell you that this idea that tableau and the new tableau of really all of our products built on this Adam framework is really being led by <unk> as our Chief Engineering Officer screening also runs customer support. He also runs professional services and training also.
Raimo: Runs South Asia, which includes everywhere from Singapore, including Thailand, Malaysia, and all of the South Asian countries, and all of India, as well, including our Indian Engineering operations machining would you like to come in and kind of fill that in.
Raimo: Yes.
Speaker Change: Thank you Mark So I think I will just to frame the bigger point as you know agent force is everybody wants to do agents. This is a new thing every customer talk starts since ends with talking about agent force and Thats the additional labor.
Raimo: Labour platform for the enterprise.
Raimo: And is built on this deeply unified enterprise scale trusted open and metadata platform.
Raimo: But all agent force is tied to the data strategy and if you really think of data strategy.
Raimo: This is what.
Raimo: Data is very important unit placement activation data with zero copy Neusoft is very important.
Raimo: All year absent systems to manage those Apis, because that's what the agents need and then tableau tons all of those insights based on this Adam framework into action and Thats, where the energy East and of course Informatica will now accelerate we will.
Raimo: Help us to accelerate and expand our data strategy. So this this enterprise grade data platform with new soft data cloud tableau and in the future with Informatica Gibbs enterprises really clustered data platform, which is what is required to really make the promise.
Raimo: Of agent.
Raimo: True because that's what people want a trusted agent, which is scaling which they can trust which is.
Raimo: Really delivers the value and and the work we have been doing for the last three and a 40 years right from the database layer right from hyper Forbes then we got all the data layer rewriting everything in the Adam framework is what people are now seeing it and as Mark referred to when we get the Tableau conference.
Raimo: The data was really thrilled because now they see not just Denver's Fas just visualizing nuc and providing insights, but also as agent Blazers. They see this future where they can be part of building agents and bring it all together, so that's where how this all coming to visit.
Speaker Change: Great. Thanks, Carl Christian will take the next question. Please.
Speaker Change: Your next question comes from the line of Brad Sills with Bank of America. Please go ahead.
Speaker Change: Oh, great. Thank you so much.
Speaker Change: Certainly we're hearing the same success that you are describing in the agent force cycle amongst channel partners Mark I wanted to ask you question around some of the indicators that you are paying attention to that gives you. The comfort that this cycle is going to be material for the company as it simply these data cloud deals that youre seeing momentum there as customers load the data there.
Speaker Change: These pilot deals you referred to what are some of the leading indicators that you're looking to that suggests that this is a this is a big cycle coming thank you.
Speaker Change: Well, it's a great question I think we have just kind of get right back to the beginning which is you can kind of look at these earnings calls like a year ago, we weren't really to even I don't think the word agent was even on our earnings call a year ago, maybe it wasn't even on our earnings call nine months ago, but it started to appear and.
Speaker Change: We released the product end of October November December January February March April here in May.
Speaker Change: Just think about in a relatively short period of time I've never seen in my career over 45 years in enterprise software. This idea that we now have 8000 customers 4000 of whom are pain, many of them, who Howard den scale deployments, where this is working in months.
Speaker Change: Just it makes no sense actually to me.
Speaker Change: Obviously most of these products and these technologies like data cloud or look at any of our core apps or high proportion or all of the things that screening is built.
Miguel Melano: Miguel has sold the company has put together these things take years not months not days night week. So.
Speaker Change: We're moving very very fast I think one of the most important things and I think Miguel can really speak to this and I'll have him do that at the end of this.
Speaker Change: When we sell an agent force, we're not just self dropping some box off and saying, Okay. We sold an agent force we're pulling off.
Speaker Change: All of our clouds in and I'm sure that you have.
Speaker Change: <unk> like for example in the example, I think of our Pepsi They have 11 of our clouds. So when we're pulling in agent force worth all the other products are coming along with it and obviously agent force and data cloud or <unk>.
Speaker Change: Absolutely deeply unified and connected but agent force and data cloud are deeply integrated and connected to every single one of our products. This is a huge transformation that we have created over just in the last two years. So two years ago. When we went through our huge financial transformation. We also decided may.
Speaker Change: <unk> aggressively to also go through a huge innovation transformation and we have rewritten all of our apps all of our data cloud and created an agenda layer and hyper force and brought it altogether as one unified platform and two years ago. It was just not there. It's one of the reasons why we feel very comfortable right now.
Speaker Change: Wiring informatica, because we can see how it can radically extend what we have done complemented its incredibly additive this ability to harmonize all of this data. It just is going to make everything better for our customers and give this platform that we have a lot more capability.
Speaker Change: Maybe a comment on the non Standalone nature of agent force as a reference we took all the deals all the agent force deals for the quarter on average.
Speaker Change: Or for other clouds on those deals.
Robyn Christa: Also as Robyn referred earlier.
Robyn Christa: A third of our top 100 deals, including both agent force and data cloud, but I look at the top six.
Robyn Christa: <unk>, which is on average $34 million of PCB.
Robyn Christa: On average on each of them.
Robyn Christa: On those six five of them have data cloud.
Robyn Christa: As an anchor and also agent as an anchor.
Robyn Christa: The one customer that didn't buy the top six data cloud is because they bought in Q4, a multimillion dollar deal in the tech out there said that data foundation before they went to adding more clouds and agent force.
Robyn Christa: On the top six an agent force.
Robyn Christa: On the top six deals fibrotic enforced the one that you didn't buy is the one that you're going to go very well.
Robyn Christa: We are negotiating now the extension to agent force, so it's kind of magic, but going back to breath.
Robyn Christa: Also question he was referring okay. What are you really focused on that.
Robyn Christa: The reality is right. We're not we're not focused that much on how many more agent force deals with data that that motion is on fire. We had three times more data cloud deals in in Q1 that we had the year before we have also.
Robyn Christa: And infinite numbers more revision foreseeably, because we didn't have any enforced last year. While we are focused on very much is on consumption. This is a new game by the way this consumption motion.
Robyn Christa: Motion is bringing the company really tied together from finance to a product with the Fisher with engineering and <unk>.
Robyn Christa: <unk> with engineering.
Robyn Christa: The whole company and go to market is really aligned together behind consumption.
Speaker Change: My role has changed totally when I sell my job starts.
Robyn Christa: And we have huge consumption, we have 22.
Robyn Christa: Trillion records ingest it eight.
Robyn Christa: Eight of them through.
Robyn Christa: Through zero coffee, which is a fantastic innovation and and as.
Speaker Change: Robyn referred earlier on agent force already 30 customers came back and refill the tank very exciting, but now that we're touching on the consumption topic ashwini.
Speaker Change: Helping a lot you come up with these initiatives.
Speaker Change: All forward deployed engineers can you elaborate a bit more on that yes. So I think in my new role as including customer success and professional services as Mark mentioned.
Robyn Christa: I am really obsessed with customer such as two things correct. When a new product comes in which is transforming so much.
Robyn Christa: Iteration that feedback loop between product engineering customer success go to market has to be very tight. So the way. We have done is we have created tanks to our customer zero initiative on support where the agent force is handling a lot of things. We used some of first of all we use some of those resources to create these forward deployment engineering team and.
Robyn Christa: We are working with a lot of customers hand in hand everyday that making changes every day to really get the consumption loop going and really get the product maturity.
Robyn Christa: Three types of customers, we have customers who are in the expansion phase. They got the first customer these are 30% additional ACB.
Robyn Christa: <unk> talked about and what are they asking their thing they got to fast customer line and they are the people, who said hey, I didn't like your conversation, but nominally really won't expand I need a better pricing strategies. This is what we listen and created this new action based pricing strategy.
Robyn Christa: We also have data confirms that saying, hey, I know I want to expand it more I wont Absorbability I wanted the improvement loop. So a lot of our product features we are adding to that.
Robyn Christa: Then we have customers in just in a pilot they got a fast violate dead now figuring out total eight gig.
Robyn Christa: My improve my data states that are becoming data has become very critical actually that is what also was driving some of our strategy almost every customer I talked to there's informatica that this is also tied to that why we are talking about data is very important.
Robyn Christa: They're asking things like setup and determination they want tools. So we created a testing centers how do you trade because these are all not predictive systems.
Robyn Christa: These are stochastic systems. It is not like Regulus. So you don't they have the models are changing so they need trust and then everybody at this as a broader level, which is enterprise. They want latency what happens if one of these module providers go down how do I do local residency how do they provide predictability I think theyre, taking all of these features and we.
Robyn Christa: These forward deployment teams deployed engineers, we call. They are in a tight loop not just with Salesforce, but also with a lot of our partners like Accenture Deloitte at all.
Robyn Christa: And neuro flash and customers like that and really improving it I think we added very early stages. We are super excited we're obsessed about customer success and the name of the game is to make sure the product daily focus on customer success and iterate the maturity and I think they are learning a lot of things and that's what we're doing almost.
Robyn Christa: Product features almost every day. This is a learning journey and we are learning.
Robyn Christa: Biggest scale.
Speaker Change: Of any vendor right now across every industry across every geography across every segment and this tight feedback loop is bearing parkland. Thank you Sidney thanks breath.
Crystal: Crystal we'll take the next question please.
Speaker Change: Your next question comes from Brad Zelnick with Deutsche Bank. Please go ahead.
Brad Zelnick: Great. Thanks, very much and I Echo my congrats Mark with AI and agent force advancing quicker than anything we've ever seen I have to imagine the use cases, you're seeing today versus even 90 days ago are blowing your way.
Speaker Change: What can you tell us about what lies on the leading edge in terms of applications impact and ROI of agent force and how data cloud fits into that thanks.
Speaker Change: Well Im really just have to look directly to these these stories with these customers and as I am.
Speaker Change: As I.
Speaker Change: Travel the world and I will tell you that again, we've talked about the speed at which agent force is gone, but its not just a U S phenomenon, it's an international phenomenon and as I mentioned last week I was in Japan, and one of our customers in Japan, Fujitsu is really doing some amazing things, but when I heard at the rate in <unk>.
Robyn Christa: <unk> and speed that they want to deploy the product and their vision in terms of how it can be all encompassing agenda laying around the entire company I really just could not believe it I would really sat with five of the largest Japanese companies and I think somehow.
Robyn Christa: Every company's imagination has been captured.
Robyn Christa: We have this idea that they can build an agenda layer around their company.
Robyn Christa: Of course, we won't been very focused for many years on the customer opportunity what we've been calling customer 360, we will deploy that so well in recent years. We've also been incredibly excited about what's happened with slack and how we've gone across the enterprise.
Robyn Christa: And then in addition to that we built this massive data business now.
Robyn Christa: Now Thats really three different businesses that we're in we're in a customer business. We're in the slab business, which is the enterprise wide business and we're in this incredible data business now of course, we're also doing that by vertical alright.
Robyn Christa: Alright, well when we look at that then going to combine that with this agenda.
Robyn Christa: And data capability, that's where I really think that you know that it.
Robyn Christa: It starts to come together and this is really powerful and very meaningful way.
Robyn Christa: And that that is.
Robyn Christa: What I see over and over and over again and.
Robyn Christa: I think another really good example is kind of really we kind of already got into it once before but I'll just mention it.
Robyn Christa: I was very surprised when I was seeing this demonstration of smart sheet and all of a sudden when we're using the product and its obviously for those of you know it's like a cloud version of Excel very popular I think is kind of like 13 million users a lot of you use it while you have the technology covered the company.
Robyn Christa: But all of a sudden right inside smart sheet itself agent forces arent now in place and the customer is able to not only get support but also to add additional users or changed key provisions with their licenses. This idea that agents are kind of starting to provision to become digital labor. This is exceeding my expectations.
Robyn Christa: And that is crosses industries, it's crossing geographies and as I said all of this is really just happening in only six months by the time, we get to Dream Force.
Robyn Christa: Which is still another six months ahead I expect another huge massive transformation.
Speaker Change: Turning to cut the code right now on what will be one of the main releases of green for us.
Speaker Change: When we look at what will come as the release after Dream Force.
Robyn Christa: Our technology, our product doesn't look at all like what it looked like just a few months ago.
Robyn Christa: So we're moving very very fast and I think that.
Robyn Christa: I really would say this hasnt really happened too many times in the last 30 40 years the rate of innovation far exceeds the rate of customer adoption the amount of technology with the value that we're able to deliver to a customer is just phenomenal which is why I have a real fever about expanding our distribution.
Robyn Christa: <unk>, especially in these markets geographies and segments that are just growing at incredible rates, but for a lot of reasons that have to do with our financial transformation in the last 24 to 36 months, we have not grown those distributions distribution in the segments that we're growing it.
Speaker Change: Isn't it wasn't a mistake that we are making it was very mindful. We knew that we were slowing down growth, but we were accelerating margin and cash flow now our challenge is very simple we're going to grow our margin, we're going to grow our cash flow, but we are going to grow our revenue and the way that we're going to do it is exactly what mcgough and training and Rob.
Speaker Change: And said, we're going to invest at scale into the markets that are growing very dramatically and we know where they are we're there we're seeing whether it's by geography or whether it's by market segment that is whether it's by key markets that have grown incredibly since the pandemic like Japan, or Latin America or even.
Speaker Change: Markets in the United States like the tech industry, Okay, but where we have not invested distribution capability, we will invest aggressively where we already have and then we will.
Speaker Change: Also.
Speaker Change: Build and create incredible new products and value for those segments as well and we will also acquire like we did last year was the one that's been by the way an incredible success story. So I think we have a good handle on one.
Speaker Change: How to deliver the numbers that all of our investors want and to deliver this incredible growth by focusing on geographies segments and product and technology capabilities, where the markets are really <unk>.
Speaker Change: Expanding.
Speaker Change: Thanks, Brad Christopher will go to the next question. Please.
Speaker Change: Your next question comes from Kash Rangan with Goldman Sachs. Please go ahead.
Speaker Change: Hi, yes, thank you very much mark and team a great start to the fiscal year I'll keep my question relatively brief since we're at towards the end of the call Mark One for you obviously agent forces. After a smashing success yard 4000 paid customers. When you look at consumer adoption of generative AI, you've got chat GPT at 500 million users the.
Robyn Christa: There seems to be off the charts. So what is holding the enterprise back what are your view of somebody that led the cloud cycle. What in your view are two or three maybe on blocks that you could bring to bear. So you could have a 100000 agent force customers.
Speaker Change: Versus the 4000 yesterday and one for Robin congratulations on taking over the new position.
Robyn Christa: I just wanted to clarify the time duration, when you're expecting to America.
Robyn Christa: Is that so you closed the deal early calendar 2006, and it is going to be accretive to calendar 'twenty seven and Thats. The case, why that long and why not sooner how could it be sooner. Thank you so much.
Speaker Change: Okay, well Kash I'm. So glad you answered the question or ask the question because I will tell you that.
Speaker Change: We've talked about this before we've answered this question before but I want to come back and hit it one more time.
Speaker Change: And then really kind of come in and really explain what it is our strategy is and also the huge progress that we've made but and then the incredible opportunity ahead for everybody number one when we all are using chat GPT or Gemini.
Speaker Change: Are you dot com or perplexity, our anthropic or any of these models are in open sales model are deep seek okay.
Speaker Change: All of these models.
Speaker Change: Mostly the same there within three to six months of innovation of each other we all know that and then all of these models are trained on mostly the same dataset because there's only so much data that they can be trained on now there is some synthetic data, but it doesn't mean very much to a lot of these models that's why by the way that these.
Speaker Change: Model still have not improved a lot of their accuracy on the consumer side and you can see those numbers. Those benchmarks are very clear. So what happens is you have these advances in these algorithms in our models or just algorithms and then you have these amalgamated datasets, which are kind of manufactured off of the Internet data and then all of a sudden you get.
Speaker Change: This kind of working model and it's kind of like Super search and we all have this experience is like prompt engineering right. The prompt and we get the answer and we used to search on Google and now are searching through one of these models. So it could be a model with Google has gemini or it could be another model like you mentioned chart GPT or it could be another model and profit et cetera or deep.
Speaker Change: Seek and Europe, you are searching you get the results. So why does that not boom and accelerated automatic accelerator for everything you can do in the enterprise and of course, we can all talk to Microsoft about that who came in and said that it would be.
Speaker Change: Two years ago or three years ago now with the co pilot and how that was going to supercharge everything and it turned out that that was a false prophecy because that's not how the enterprise works. The enterprise has datasets that are highly controlled highly governed and highly secured.
Speaker Change: And these datasets are everything from your can skew or customer dataset to your financial dataset to your HR dataset and the reality is that on all enterprise data is available to all users. Like for example, you were cash at Goldman Sachs. You can't see all the Goldman Sachs customer information, there's regulations around that you can't see all employee sat.
Speaker Change: Flurry information you don't have access to all the Goldman Sachs financial data. So when youre using these models, they're not just giving you access to all of this stuff are they cash now they have to be tightly controlled.
Speaker Change: If I am a Goldman Sachs customer and I want to come in and I want to ask about my account balance or information about.
Speaker Change: My who I am and what my portfolio looks like or what my opportunities are or even if I am a Goldman Sachs employee and I want information on the general information on benefits or how to enable myself or how to sell products more efficiently to customers all of those things could easily happen right now with the <unk> platform.
Speaker Change: However, there is a lot of things that could not happen as I kind of just amplified and that is kind of the constrained. So what is it going to take to get this transformation to happen, where we have a much bigger agenda wrapper around Goldman Sachs. Your company or around all companies will look at my company to start I think we.
Speaker Change: Done the best and maybe any tech company. We've done now that this quarter will pass through a million conversations and customer support it's a dramatic reduction in the amount of human beings, who have had to get involved to answer our customers' issues I don't think any other tech company at scale has delivered this capability.
Speaker Change: It is a proof point without any doubt that salesforce has been able to deliver on its vision of digital labor and.
Speaker Change: <unk> is number one customer zero salesforce, so we eat our own dog food and this is amazing by the way and compare that to other big Tech companies like Microsoft and others, who have tried to do that but they don't have this kind of the same velocity and capability. They havent had this kind of ability because they don't have.
Speaker Change: This approach now part of it is we're lucky because.
Speaker Change: We are built on our customers 360, we're built on our service cloud we're built on our sales cloud were built on our marketing cloud.
Speaker Change: When we look at those things then we can say at a high level take marketing cloud, while youre doing a trillion emails how do you take those are one way conversations how do you make those two way conversations that's the <unk> opportunity in today for our customers. They all want to get there. They all have the 100 to do that they all want to have.
Speaker Change: This great success, but it takes some time for them to start to build their datasets and that is why the informatica acquisition is so important because they all need to not only translate their data to build their master data management, they need to harmonize their data they need to do all these things and we see that and we go into these <unk>.
Speaker Change: Customers are like let's go in there like we can do some but we cant do all in the reasonably kept to all is because their whole enterprise data set is not fully harmonized, which is why informatica. So critical now more than ever and look informatica as a small company. They don't have the distribution scale.
Speaker Change: Now that we have they have like a <unk>.
Speaker Change: I'm not going to tell you what the size of their distribution organization because it is probably covered under my NDA, but it is at its orders of magnitude less than Salesforce I will tell you that so that idea that we have the ability to really go out there and start to sell that product to all companies worldwide to really show them that they need.
Speaker Change: This for this capability now this is why I have this fever about growing like Miguel said, our distribution organization by more than 20%. This year, because we held back for the last 36 months.
Speaker Change: And we've never done that in our history, but we did it because the financial transformation that we wanted to go through so we've done that but it just now is just coinciding perfectly with this technology transformation that we're going through which indeed is a data transformation and that is what's going on so when we ask the question Mike.
Mike Spencer: You said well chat GPT Gemini.
Speaker Change: Anthropic well.
Speaker Change: Deep seek well you know per proxy well you know you don't comment.
Speaker Change: But these are packaged highly controlled consumer experiences this is not what.
Speaker Change: What you have and you understand the enterprise experience very well cash because your top enterprise analysts, but Goldman Sachs. That's not how it is going to roll and when we work with Goldman Sachs, where we work with another bank like we've already told us.
Speaker Change: We've already deployed a lot of banks.
Speaker Change: This idea that we can do this but it does require.
Speaker Change: Very.
Speaker Change: Significant and critical.
Speaker Change: The governance, the security reliability availability capability of an enterprise.
Speaker Change: Any like Salesforce.
Speaker Change: The proof point is here me.
Speaker Change: Helped out Salesforce dot com and we are going to do that for all companies, but we're going to do it.
Speaker Change: Through slack, we're going to do it through tableau, we're going to do it and how we're going to do with every product we have and we're going to do it with through an agenda layer through a data layer through an app layer and through a metadata layer and we're going to bring these four things together and dramatically transform every every company, we do business with whether they are small medium larger.
Speaker Change: Extra large just like mango went through.
Speaker Change: Yes, Kash to your other question timing of close of Informatica as well as client accretion.
Speaker Change: Subject to regulatory approval, we expect that it's going to close beginning of our fiscal year 2007, which is February of next year from February 26.
Speaker Change: The framework that we've talked about when we look at deals we are seeing can we get it accretive within two years right. So that's kind of our goal our desire is always to under promise and over deliver I think with our playbook that we have in place we're going to go fastest possible, we're really focused on accelerating integrate.
Speaker Change: So we'll see how that works out, but overall that framework is that two year period that I provided to accretion.
Speaker Change: Thanks, Kash Crystal we will take our last question now please.
Speaker Change: Your last question comes from Mark Murphy with Jpmorgan. Please go ahead.
Speaker Change: Thank you Mark the CEO of Anthropic recently commented that AI could wipe out 50% of entry level white collar jobs and drive unemployment a lot higher unfortunately, and since you've been very astute and very ahead of the curve.
Speaker Change: The commoditization of Llm's and you've been very outspoken on the topic of digital labor.
Speaker Change: I'm curious just to get your thoughts on that concept and.
Speaker Change: How do you think salesforce can help companies navigate whatever.
Speaker Change: Just coming our way wall walls, maintaining a human touch or human oversight that might be required.
Speaker Change: Yeah.
Speaker Change: Well I think it's a great question and I think we all believe in the division of digital Labor and I think I've laid out the case will help that salesforce dot com and given you the metrics and so those employees, though are really getting I would say.
Speaker Change: Repositioned in our company and other areas that is we really have we have so much opportunity I can't hire as many people as I want right now so I'm hiring I'm very excited I'm trying to grow distribution as I mentioned I am deploying I have four deployed engineers I'm trying to hire I am counting.
Speaker Change: <unk> I'm trying to hire I am doing I have a lot of opportunity throughout the world and that is you know.
Speaker Change: Held back by Wow, there isn't a lot of people to hire it's actually surprising so that is kind of the interesting.
Speaker Change: Point and we've all read this paper for example, AI 2027, which is two years away.
Speaker Change: And when I talked to a lot of my friends, who are like Oh. This is this is my vision exactly what's going to happen and I'm like the self replicating rocket ships are not quite here yet I don't know if you've read this book.
Speaker Change: We are Legion, where Bob, but it's kind of a phenomenon here in Silicon Valley that all these Ceos are reading. This one book, saying, yes. This is exactly what's going to happen what is kind of what yielded Sam Altman tweet last week.
Speaker Change: And we're not exactly at that point, where.
Speaker Change: The computer is completely contests has.
Speaker Change: As human consciousness and.
Speaker Change: To the point, where it's running its own manufacturing facilities, creating its own rocket ships and launching itself.
Speaker Change: Under the planet and to that point, where arent exactly even to that point, yet where all these white collar.
Speaker Change: Jobs are just suddenly disappearing because I think that we realize why.
Speaker Change: I can do some things while this is very exciting in the enterprise, we all know it cannot do everything.
Speaker Change: And it doesn't have the accuracy yet because it's built on a word model and word models are inherently not 100% accurate because of the way that the computer science works, where it's as you. All know this word that where this where it had been therefore this other word and there is this kind of matrix between this word and all the other words.
Speaker Change: But when you look at it the mathematics don't work out to be 100% accurate. It's in the math is the who.
Speaker Change: Hallucinate Hallucinogens, which is why people say oh, the hallucinogenic or a feature.
Speaker Change: It's not going away with that model, we're going to have to have other models, we're going to have to come in the future world models or multi sensory models or other things, but AI is a continuum and we're not totally there yet and in terms of the amount of the.
Speaker Change: White collar jobs that are going to disappear and you're all experts at this point in the current generation of AI Youre using it every day, we're all using it it doesn't matter.
Speaker Change: Who I speak to probably all of your children. All of your family members are using it and you can see how it's impacted like people are smarter they get their medical labs. They ask what do you think about this but then when you call your doctor, sometimes the Doctor goes well actually that's not completely true.
Speaker Change: And we're kind of at this point, where it's very good on some things, but not for everything and because of that even in the enterprise while theres a lot of things that we can do it at this press release or write me this speech or whatever but the reality is youre, probably still going to want to get in there and work on it and I think we all know.
Speaker Change: So look we're at an exciting moment in AI and maybe we're moving into this world, where there's going to be.
Speaker Change: These AI profits and obviously I'm a huge fan of Darius has great amazing person incredible company wonderful, but some of these comments I think are.
Speaker Change: Alarmist and get a little aggressive in the current in the current form of AI today, not that it's not a great company by the way Salesforce is a huge investor and anthropic loved the company loved Oreo, we have embedded into slack itself slack does it to recap in a lot of this little magical things that happen like talking to you.
Speaker Change: And your channels, but it's not at that point.
Speaker Change: And Thats kind of why I've said like copilot as kind of the new <unk> and a lot of ways. Because you can do some things, but it's kind of got overhyped and we need to show you. What you really can do how you really can transform your enterprise how the magic is really can happen and by the way if you haven't used tableau next.
Speaker Change: This is the Best example, where youre using tableau, we all know tableau, we loved it we use it for 20 years, but now there is an agent there with you and that it's on a data cloud and it's integrated with slack and all these other things, it's amazing and that amazing part is what we're going to do more of and.
Speaker Change: But we're not ready to like I think take the action Vittorio suggested I hope that answered your question.
Speaker Change: Thanks, Mark Thanks for the question and thank you everyone for joining the call today, and we look forward to seeing everyone over the coming weeks.
Speaker Change: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.