Salesforce.com Inc (CRM)

“We're going to finish the year with 15% more capacity enabled.”

“We continue to see a meaningful opportunity to invest in ourselves and we are on track for a 50% step up. In share repurchases in the second half of this fiscal year.”

“Inclusive of Informatica, we expect CRPO growth of approximately 15% year over year in nominal, including a $500 million FX tailwind. Resulting in approximately 13% constant currency growth.”

“Organic CRPO growth for Q4 is expected to be approximately 11% year over year in nominal and 9% year over year in constant currency.”

“We expect capital expenditures to remain slightly below 2% of revenue resulting in free cash flow growth of approximately 13% to 14%.”

“We are raising our annual guidance on operating cash flow growth to approximately 13% to 14% growth as a result of our strong Q3 bookings performance.”

“And adjusting our GAAP operating margin to 20.3%.”

“As a result of the close timing of Informatica, we are maintaining our non-GAAP operating margin guidance. At 34.1%.”

“Before I turn to profitability, I want to highlight that with our current trajectory of net new AOV growth, we project to finish fiscal year 2026 with half two net new ALD growth ahead of half two ALV growth.”

“We anticipate a contribution of approximately 80 basis points from Informatica resulting in fiscal year 2026 revenue of $41.545 billion to $41.55 billion. Or approximately nine to 10% in nominal and approximately 9% in constant currency.”

“We are narrowing our fiscal year 2026 revenue guidance on an organic basis. To $41.15 billion to $41.25 billion Growth up approximately 9% in nominal, and 8% in constant currency.”

“Informatica will contribute approximately 80 basis points of additional growth. Resulting in total subscription and support growth of slightly under 10% year over year constant currency.”

“We are reiterating our fiscal year 2026 organic subscription and support growth guidance of approximately 9% year over year in constant currency.”

“And those numbers are gonna keep growing as customers put agent force to work across their business”

“and we expect to finish the year with nearly $15 billion in operating cash flow.”

“Consistent with our Investor Day outlook, we remain on track to reaccelerate revenue. In twelve to eighteen months.”

“Next year, pipeline open pipeline is again double digit healthy growth on open pipeline.”

“Informatica enhances our trusted data foundation. And it will be accretive within twelve months.”

“I think it's about a $10 billion business for us next year now.”

“More than 200 million agent force LLM calls in Q3 alone on on track to power another 2 billion over the next year”

“We are pleased to raise our non-GAAP operating margin 10 basis points to 34.1% for the year.”

“We are reiterating our subscription and support revenue growth of approximately 9% year over year in constant currency.”

“We're on track to close out fiscal 2026 as a record year.”

“As a reminder, while we have seen more normalized bookings growth recently, CRPO will continue to be impacted by the cumulative effect of the measured sales performance that started in Q2 fiscal year 2023.”

“We now expect CapEx of slightly below 2% of revenue.”

“On foreign exchange, we now expect a $300 million tailwind up $50 million since our last print.”

“Raising our guidance on the low end for revenue, raising on non-GAAP operating margin and cash flow, and we expect to finish with nearly $15 billion in operating cash flow.”

“And I think you know next year's gonna be bigger.”

“We're gonna grow our margin. We're gonna grow our cash flow. But we are gonna grow our revenue.”

“Our annual guidance on operating cash flow growth of 10% to 11% and free cash flow growth of 9% to 10% remains unchanged.”

“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.”

“We are reiterating our subscription and support revenue growth of approximately 9% year over year in constant currency.”

“And next month, we're gonna add FedRAMP high authorization for AgentForce of the US public sector.”

“So we are aiming at twenty two percent overall capacity growth. We're gonna be growing more on the low end of the market.”

“Driven by the momentum in data cloud and some contribution from AgentForce this year. This is partially offset by weakness in marketing and commerce and slower growth in our expiration base.”

“Enabling us to rebalance and redeploy five hundred customer support employees to higher impact data plus AI roles by year end. Driving fifty million in savings.”

“This transaction is not expected to disrupt our capital return strategy, inclusive of our share repurchase program and our dividend.”

“The framework that we've talked about when we look at deals, we assume can we get it accretive within two years. Right? So that's kind of our goal.”

“And we're not going to hire any new engineers this year. We're seeing 30% productivity increase on engineering and we're going to really continue to ride that up.”

“For Q1, we expect GAAP EPS of $1.49 to $1.51 and non-GAAP EPS of $2.53 to $2.55.”

“Non-GAAP diluted EPS is expected to be $11.09 to $11.17.”

“We expect fiscal year '26 GAAP diluted EPS of $6.95 to $7.03.”

“Stock-based compensation is expected to stay relatively flat year-over-year as a percent of revenue.”

“And I'd like to call out that from a pace perspective, we do expect a ramp in margins throughout the year.”

“And on attrition, we expect attrition to remain consistent, slightly above 8% for the full year.”

“Second, as we experienced in fiscal '25, we continue to expect our professional services business to be a headwind to growth this year, which is reflected in our guidance for total revenue.”

“And for Subscription and Support revenue, we expect growth of approximately 9% year-over-year in constant currency.”

“We expect to deliver fiscal year '26 subscription support revenue of 9% year-over-year in constant currency.”

“This is going to happen on December 17th. You'll see Agentforce 2.0 for the first time”

“For Q4, we expect GAAP EPS of $1.55 to $1.60 and non-GAAP EPS of $2.57 to $2.62.”

“Similar to Q3, we do not expect a material contribution to cRPO from Q4 Agentforce related bookings.”

“we continue to expect CapEx for the fiscal year to be slightly below 2% of revenue.”

“We expect fiscal year '25 GAAP diluted EPS of $6.15 to $6.20. Non-GAAP diluted EPS is expected to be $9.98 to $10.03.”

“As we said last quarter, stock-based compensation is still expected to be approximately 8.4% as a percent of revenue.”

“we expect attrition to remain consistent at slightly above 8% for the full year.”

“as we shared last quarter, our guidance incorporates deceleration in our license revenue growth in the back half of this year.”

“We continue to expect our professional services business to be a headwind to revenue growth.”

“For subscription and support revenue, we still expect approximately 10% growth year-over-year in constant currency.”

“Through our capital return program, we continue to expect to more than fully offset dilution from our FY'25 stock-based compensation.”

“Initiatives like this and many others means Salesforce will become a new lever for productivity, growth, and efficiency for Salesforce, which should save millions of hours and free up hundreds of millions of dollars to reinvest into our strategic growth initiatives.”

“To capture this increased demand for Agentforce, we're hiring 1,400 AEs globally in our fourth quarter”

“I think you've all heard that we're trying to hire 1,000, 2,000 more salespeople because we see not only maximized our productivity of our current Salesforce over the last couple of years, but we just need to grow and expand to reflect this incredible distribution opportunity.”

“we expect that our own transformation with Agentforce on help.salesforce.com and in many other areas of our company is going to deflect between a quarter and a half of our annual case volume and in optimistic cases, probably much, much more of that.”

“We now expect CapEx for the fiscal year to be slightly below 2% of revenue.”

“Stock based compensation is now expected to be 8.4% as a percent of revenue.”

“And we expect attrition to remain generally consistent at slightly above 8% for the full year.”

“For subscription and support revenue, we still expect approximately 10% growth year-over-year in constant currency.”

“We continue to expect our professional services business to be a headwind to revenue and we expect deceleration in our license revenue growth in the back half of the year.”

“On revenue, we are holding our guidance of $37.7 billion to $38 billion, growth of approximately 8% to 9% year-over-year.”

“It will be the fastest product to $1 billion -- it's going to probably be the fastest product of $5 billion, $10 billion.”

“In the coming months, we're going to release Agentforce agents for other roles, including industry specific agents, health agents, as I mentioned, medical answering all kinds of medical questions as I mentioned, and we already have that in trial”

“First, on the buying environment, we are assuming that the conditions we've been experiencing over the past few years persist.”

“My goal is that by the end of fiscal year '26 that we will have a billion agents.”

“All in, based on what we're seeing at this time, we continue to believe that we will be within the range we guided.”

“So you're absolutely right. The changes, while impactful in Q1, are short term and we expect to see productivity gains from them going forward.”

“For Q2, we expect GAAP EPS of $1.31 to $1.33 and non-GAAP EPS of $2.34 to $2.36.”

“This results in free cash flow growth of approximately 23% to 26% for the fiscal year.”

“We also continue to expect CapEx for the fiscal year to be slightly below 2% of revenue.”

“And we continue to expect fiscal year '25 operating cash flow growth to be approximately 21% to 24% inclusive of cash tax payment headwinds.”

“As a result, for fiscal year '25, GAAP operating margin guidance is expected to be approximately 20%, representing 550 basis points of improvement year-over-year.”

“We continue to expect fiscal year '25 non-GAAP operating margin of 32.5%, representing a 200 basis point improvement year-over-year, following the significant increase last year.”

“As a reminder, starting in fiscal '25, we include Slack invoice in the metric, which we expect to create a modest headwind.”

“And we expect attrition to remain generally consistent at slightly above 8% for the full year.”

“As a result, on revenue, we are maintaining our guidance range of between $37.7 billion to $38 billion, growth of 8% to 9% year-over-year.”

“We also continue to expect our professional services business to be a headwind to revenue with deal compression and customers delaying or slowing projects.”

“On FX, our revenue guidance continues to incorporate a $100 million FX headwind year-over-year or about a 30 basis points impact.”

“On the buying environment, we are assuming that the conditions we saw in Q1 continue throughout our fiscal year.”

“In terms of materiality in the short term, you're not going to really see it show up. We did it in the second half of last year. And so while we've seen great progress and there's a lot of promise for it in terms of this year's revenue guide, not a huge factor in our growth numbers this year, you will see it start to show up in year two and three as we roll through the renewals, the uplift, etc., and some of the incremental pricing changes that we're going to do.”

“On the AI front, I think we're going to start to see that show up further out in this fiscal year.”

“Our expectations incorporate a $100 million FX headwind year-over-year or a 30 basis points impact.”

“We also expect our professional services business to remain under pressure in FY25 and expect it will be a headwind to revenue.”

“For Q1, we expect GAAP EPS of $1.42 to $1.44 and non-GAAP EPS of $2.37 to $2.39.”

“CapEx for the fiscal year is expected to be slightly below 2% of revenue.”

“For the fiscal year '25, we expect a non-GAAP operating margin of 32.5% representing a 200 basis point improvement year-over-year, while still making key investments in growth opportunities, notably AI, data and our core businesses.”

“As I've said before, we view this as a floor, not a ceiling on our success, and we intend to continue our focus on operating margin.”

“As we mentioned last quarter, we do not anticipate a material impact from pricing in the guide this year.”

“Before moving to guidance, I want to reiterate that we continue to assume a consistent measured customer buying environment.”

“For Q4, we expect GAAP EPS of $1.26 to $1.27 and non-GAAP EPS of $2.25 to $2.26.”

“In fact, as a result of our ongoing share repurchases, for the first time in company history, we expect the full year's ending share count to decrease year-over-year.”

“And as we focus on shareholder return and disciplined capital allocation, we continue to expect to fully offset our stock-based compensation dilution through our share repurchases in fiscal year '24.”

“CapEx for the fiscal year is expected to be slightly below 2.5% of revenue.”

“Non-GAAP diluted EPS is now expected to be $8.18 to $8.19.”

“As a result of these updates, we now expect fiscal year '24 GAAP diluted EPS of $3.99 to $4, including estimated charges for the restructuring of $0.91.”

“We also remain focused on stock-based compensation, which is now expected to be approximately 8% as a percent of revenue.”

“We're going to see the impact of our price increase really hit the customer base over the next one to two to three years.”

“I certainly expect that to abate, especially as customers begin to adopt these new AI technologies and understand they need to invest and grow to be able to achieve this kind of next level of productivity.”

“as we focus on shareholder return and disciplined capital allocation, we continue to expect to fully offset our stock-based compensation dilution through our share repurchases in fiscal year '24.”

“For Q3, we expect GAAP EPS of $1.02 to $1.03. And non-GAAP EPS of $2.05 to $2.06.”

“While we expect bookings growth to begin to normalize, CRPO will continue to be materially impacted by the cumulative effect of the previous five quarters of measured sales performance.”

“CapEx for the fiscal year is expected to be slightly below 2.5% of revenue.”

“We expect an even greater cash tax headwind next fiscal year as we draw down our remaining tax credit carryforward.”

“As a reminder, we expect to see an increase in our cash taxes in fiscal year '24 as we draw down our remaining net operating losses.”

“As a result, we expect nonlinear quarterly margins in the back half of this year, driven by investment timing, specifically in AI-focused R&D.”

“I don't know if we can call this as a bottom exactly yet or if it's -- but we're not planning any other major restructuring efforts in the company today, like what we saw earlier this year, we hope that, that is one and done and behind us.”

“I'm proud of our progress and remain confident in our trajectory as we progress towards our 30% non-GAAP operating margin target in Q1 2025.”

“and we remain confident that we'll hit 30% non-GAAP operating margins in the first quarter of fiscal year 2025.”

“You'll see benefits to our margin in outer years beyond FY 2024.”

“And as we focus on shareholder return and disciplined capital allocation, we continue to expect to fully offset our stock based compensation dilution through our share repurchases in fiscal year 2024.”

“For Q2, we expect GAAP EPS of $0.79 to $0.80 and non-GAAP EPS of $1.89 to $1.90.”

“CapEx for the fiscal year is expected to be slightly below 2.5% of revenue.”

“We also remain focused on stock based compensation and continue to expect it to improve this year to below 9% as a percent of revenue.”

“On revenue, we are holding our guidance of 34.5 billion to 34.7 billion, representing over 10% growth year-over-year in both nominal and constant currency.”

“We expect these factors to persist, which is incorporated in our guidance.”

“And we don't think that the impact of some of the changes that we're making, the architecture of the organization is going to have an impact on our growth next year.”

“For Q1, we expect GAAP EPS of $0.24 to $0.25 and non-GAAP EPS of $1.60 to $1.61.”

“CapEx for the fiscal year is expected to be slightly below 2.5% of revenue.”

“On attrition, starting in FY '24, we are including MuleSoft and Tableau in the metric. As a result, attrition is expected to be slightly above 7.5%.”

“Now for fiscal year '24, we are pleased to share that we expect non-GAAP operating margin of 27%, representing a 4.5 point improvement year-over-year and exceeding our goal by 2 years.”

“Our guidance assumes these trends persist with no material improvement or deterioration.”

“We're raising our fiscal year 2023 non-GAAP operating margin guidance from 20.4% to 20.7%, an expansion of 200 basis points year-over-year, and I expect a lot more, especially with this increased focus we have on expanding our operating margin.”

“And as our business grows, we will continue to target returning on average 30% to 40% of free cash flow annually to our shareholders.”

“We now expect CapEx to be approximately 2.5% of revenue for the fiscal year.”

“We now expect our fiscal 2023 operating cash flow guidance to be approximately 16%, which is at the lower end of our previous guidance, driven by lower billings.”

“For the full year, we expect GAAP EPS of $0.55 to $0.57 and non-GAAP EPS of $4.92 to $4.94.”

“For Q4, we expect GAAP EPS of $0.23 to $0.25 and non-GAAP EPS of $1.35 to $1.37.”

“Even with the many successes in the quarter, we expect this increasingly challenging buying environment to continue next year.”

“And it's even an expected incremental $100 million of foreign exchange headwind just since last quarter.”

“Now for this fiscal year, we're maintaining our revenue guidance of $30.9 billion to $31 billion, up 17% year-over-year or 20% in constant currency.”

“We feel great about that, both those integration and analytics as a category for accelerated growth in the second half. So no big concerns there at all.”

“I am pleased to hold our fiscal '23 non-GAAP operating margin guidance at 20.4%, an increase of 170 basis points year-over-year.”

“We're committed to our 20.4% operating margin this year”

“We are on track to have MuleSoft return to be in a tailwind for revenue growth in the back half of the year.”

“We have the right team, the right products, the right playbook for getting to $50 billion in revenue in fiscal year '26.”

“We expect CapEx to be slightly above 2% of revenue in fiscal '23, a nominal increase over last quarter's guide, reflecting the revised full year revenue guidance.”

“Our guidance continues to assume a $1.5 billion contribution from Slack.”

“We also expect the $380 million contribution from Slack.”

“We will continue to expand our free cash flow margin as we scale.”

“We expect these trends to continue in the near term, and we reflected this in our guidance.”

“Right now, large-scale M&A is not part of our current plans.”

“So I would say that for right now, we're not really looking at doing any major acquisitions. It's just not a part of our playbook right now.”

“For cash flow, our philosophy is that our OCF and FCF should increase faster than revenue as we're increasing our operating margin, which we are.”

“Moving to cash flow, we remain well on our way to drive another year of record cash flow generation, and we are reiterating our fiscal '23 operating cash flow guidance of approximately 21% to 22% growth year-over-year.”

“For operating margin, we're raising our fiscal '23 non-GAAP guidance by 40 basis points to 20.4%, an expansion of 170 basis points year-over-year.”

“We continue to expect CapEx of approximately 2% of revenue in fiscal '23, resulting in free cash flow growth of approximately 25% to 27% for the fiscal year.”

“As such, although we've seen FX headwinds to revenue, we don't currently anticipate a material impact to our operating margin for the full fiscal year.”

“And as Bret mentioned, MuleSoft's pipeline remains strong, and we still anticipate seeing the benefits from these changes in the back half of fiscal '23.”

“And to answer one of your other questions, we're seeing strong pipeline going into Q1. And we feel that, as I mentioned, across both our transactional business and large deals, pipelines remain very strong, and we don't see any demand pull forward.”

“We are also reiterating our fiscal '23 non-GAAP operating margin guidance of 20%, representing an expansion of 130 basis points year-over-year.”

“I don't see any material M&A in the near term.”

“That's why, as we said at our Investor Day, we don't have any plans for material M&A in the near term. Slack is our focus.”

“We do not expect an OCF headwind from Slack for the full year.”

“We expect 100 to 125 basis points of headwind from M&A.”

“To give you a sense of the impact on our business, our fiscal '23 revenue guidance reflects a year-over-year headwind of approximately $300 million from FX.”

“Our revenue guidance assumes a $75 million contribution in [fiscal '23] from Traction on Demand, which we anticipate will close by the end of this fiscal quarter.”

“Our guidance assumes a $1.5 billion contribution from Slack.”

“However, we do not anticipate seeing the full benefit of these changes until the back half of fiscal '23.”

“And you can see that in the forecast for the quarter now at over 20% operating margin with the $32.1 billion year.”

“And I'm confident we'll be able to work through these over the next quarter.”

“Well in a word, we started the fourth quarter really strong. And as I said in my comments, demand is strong across the piece. The pipe looks very good. Americas is particularly strong. And parts of Europe I think are performing equally well.”

“And yet we made, I don't think the Delta variant will be material to our business.”

“This guidance incorporates an expected revenue contribution of $530 million from Slack in the second half of fiscal 22, an increase of $30 million over our previous guide.”

“And as a reminder, we continue to expect cash flow seasonality to skew higher in Q1 and Q4.”

“So, I continue to see this being maintained during [Indiscernible] really strong demand environment across Salesforce in the second half.”