Salesforce CEO Benioff touts earnings beat, AI opportunities

Salesforce (CRM) reported second quarter results that came in above analyst expectations on both earnings and revenue. The enterprise software giant also gave guidance for the full fiscal year that beat estimates, sending shares of the Dow (^DJI) component higher in after-hours trading.

Salesforce (CRM) Chair and CEO Marc Benioff speaking to Yahoo Finance Executive Editor Brian Sozzi saying "We delivered numbers that other software companies aren't reporting."

Third Bridge Analyst Charlie Miner said the beat on operating margins was key. "I think a lot of people are excited about right now is the beat on adjusted operating margin. Profitability has become fully the focus for Salesforce over the last six quarters, you can't miss there right now, especially when growth is decelerating into the single digits as it is only the second time in their company history the last two quarters that it's done."

In the earnings release, the company announced Amy Weaver will be stepping down as Chief Financial Officer. Benioff saying "Amy has been a phenomenal member of our management team, and I'm looking for a great CFO."

This post was written by Rachel Sherman.

Video Transcript

Sales force is back and they're back with an earnings beat.

Let's get right to salesforce, co founder, Chairman Ceo Mark Benioff.

Mark always get uh great to get some time with you, especially fresh off your earnings call, love your earnings call.

I mean, you're always kind of blasting on this thing.

And you had me thinking about agents, agent force.

I never heard of this before.

Didn't know what it was.

I think I got it.

But let me hear it from, from your voice.

What is this and, and set the table a little bit on how it might impact sales forces business, but it's a dramatic transformation and opportunity for really all of our customers.

And it, it's very simple, Brian, really, you know, for the last 25 years, what have we been doing?

We help our customers build and run their sales forces, their service forces, their marketing forces, their commerce forces, their analytics forces.

And now we're going to help them build their agent force and why this is important for our customers.

This is gonna, it's gonna give them a level of productivity and automation that they have never had before.

And number one, you just look at this great customer.

We have Wiley and all of us know Wiley, the textbook company, you know, lead their whole industry.

This is their moment right now back to school and Wiley is selling all these textbooks and usually what they have to do is search their customer service organization and their sales organization during back to school.

Of course, but instead what they can do is they can scale up using agent force.

And so of course, we're already running through all of our apps, all their customer touchpoints, sales service, marketing, commerce, all everything that they do.

It's on sales force and you know, our data cloud helping to amalgamate their data and federate to other data clouds.

But now this third layer that we're unleashing these agents and these agents can help resolve more than 90% of all of these customer inquiries.

That is the exciting moment for agent force.

And that is the exciting moment for all of our customers.

And its simplest for marketing is this, is this A I or or robots working with humans to drive better outcomes for businesses?

Well, that, that's a very good way to say it, you know, this is humans with agents driving customer success.

It's not so unlike, you know, when I hit the button today to come to the office, I just got in a way mo and the way o brought me to the office and that's in basically a robot or an agent just driving me autonomously to the office.

There was no human involved.

This is the extension of our businesses with these agents who can resolve these customer service inquiries for us.

Uh We're working with one of the largest health care companies in the world who has over 20 million patients and one of the largest epic databases, all their EMR and we're already resolving now, 90% of all of those patient inquiries with agent force.

That is very exciting.

Um That is, you know, a huge level of productivity for a health care organization.

These doctors and nurses are incredibly burnt out post pandemic.

They don't want to have to answer all your basic health care questions and instead you're going to be able to go right to an agent to get those things resolved.

This is a huge advancement in the ability to not only augment their employees but to deliver that capable capability of and productivity mark.

It's been a long day for me as I'm sure for you, but I wanna make sure I heard this right.

Um On the earnings call, you plan to have a billion of these agents out by the end of fiscal 2026 I just wanna make sure that's correct.

And number two, how are you pricing this?

Because to me, all this sounds like a higher margin opportunity, but maybe I'm thinking about it wrong.

Well, it's very simple, Brian, you know the way that we look at it and, you know, we don't have all the answers yet.

Of course.

But, you know, we look at one of the customers who's already deployed, you know, open table is using agent force and they have 100 and 60 million consumers are gonna need 100 and 60 agents to talk to all of them.

Of course, it's really only one agent, of course, but it's manifested 100 and 60 million times so that you can make your restaurant reservations or resolve them or reschedule them or, you know, get to make good on a customer service issue, whatever it is.

And you know, that idea that all of those, you know, consumers who work with AD P or all those consumers that work with open table or so many of our customers that it, it'll rapidly get to a billion consumers that we're talking to.

And, and our goal basically is to, you know, monetize it probably by per conversation.

So maybe we're um you know, charging those customers a dollar or $2 per conversation, something like that.

So it's a consumption based product and that, that's an incredible new business model for sales force.

Do you think this, this should theoretically quiet?

I'm sure you'll talk more about this at dream for us in, in a couple weeks, but this should theoretically quiet what the street has been concerned, not just with sales force.

A lot of other companies in your space about monetizing A I because when you're, when I hear you say a dollar per conversation, that's real money.

And that adds up very quickly.

I think a lot of our customers have gotten so confused about artificial intelligence.

Of course, we have a decade of uh artificial intelligence innovation and sales force.

Some of the most important innovations in A I come out of our labs.

But this quarter, we delivered 25 trillion Einstein transactions and powered more than a trillion automated workflows and managed 250 petabytes of data for our customers.

Now, why this is important Brian and where we have to get our head around.

All of this is that a lot of customers have a false understanding of A I.

And they think they're having to build their own models and train their own models and retrain their own models and diy their A I do it themselves.

And this is not true and they can build this model fine tune this model, create this model, manage their data, manage their humans and manage their agents all in one platform sales force.

That is what is exciting about the future of the industry and technology.

And I think that for a lot of customers, I've seen a lot of science experiments.

I think Microsoft has misled so many customers that they have to do so much heavy lifting on the technology side.

And we're telling them it's you can do this in clicks, not code, you're not gonna have to do ha have a hyper scale or to retrain, you know, your models, you're gonna be able to do all these things right inside our platform.

And that is exciting for our customers.

They get real value from A I now and you won't be hearing these stories of uh these like Microsoft copilots that don't work or these, you know, A I hasn't delivered for the these customers or that we spend hundreds of billions of dollars of A I.

Where's the productivity you're gonna see it coming?

All right out of this one integrated platform, the apps or we call customer 360 the data cloud, the amalgamated data cloud that's Federated off through our zero copy alliance to all these other data sources.

And then this Agent Force platform.

This is the 123 about the future of automation of our customers at sales force.

Do you think, you know, you made that point in the conference call that Microsoft has disappointed so many on A I I mean, is copilot in these various chat bots?

Are they just gimmicky and they're not driving the productivity inside companies that a lot of companies are, are I guess trying to pitch the other companies.

Well, number one, I, I love so many of these models, you know, these consumer models that you know, I I uh use at home.

I'm sure you have the same experience, you know, write me a song, write me a movie script.

What about this?

It's like a new level of search in many ways.

But I also get a lot of hallucinations and inaccuracies.

And, you know, we have to deal directly with that in the enterprise or when we're dealing with a large healthcare company, you know, we want to have basically zero hallucinations and 100% accuracy.

That that's our goal and that that's going to require a lot of TCH NS and technology to kind of deliver that capability to that large health care organization.

Oh, we are actually doing that now.

They, they do not have the capability or um should they to build and deliver and create their own A I model to do that, it should all be integrated deeply with their patient information and to have a whole patient relationship management system and a whole health cloud if you will.

That, that is our goal.

That is what we're delivering for that health care organization or for a large bank, we're working on one of the largest banks in the world.

World Bank, Canada, a huge customer of ours already and to really be able to deliver agent force directly for them and deliver that very high level of accuracy but also in highly regulated environment.

They have to still comply with all those KYC in and, and, and government regulations of running a huge bank or financial services organization.

We can do all of that inside the platform and deliver that next generation capability of productivity uh for the bank by delivering the agents and automating the agents by delivering the data and deliver.

And yes, humans are not going away.

We're gonna need to have uh automation for all of those humans through those applications.

And of course, they have thousands of call center workers, they have thousands of sales people and actually in that case, tens of thousands and they're also gonna have um millions of agents mark.

Where do you fall?

You mentioned regulation?

Where do you fall on the California A I safety bill?

Well, I think you can see that this is a, you know, a very complex, uh um very complex uh uh situation with A I looking at A I safety.

It has to be the highest of everybody's um interest to make sure that these A I models do not get out of control.

I don't think they are today.

By the way, I don't think we're at that level with A I, I think A I is still at a very basic level.

And I think that these kinds of ideas are incredibly interesting and need to be fully evaluated and that it's worthwhile.

You know, I write and I, you know, I own Time magazine, you could see we wrote about this issue yesterday in these political issues.

I don't like to take a specific position because I agreed when I bought time that I would maintain a neutral stance, but you can read the article in time about this.

I thought it was incredibly well balanced and, and clear in, in yesterday's issue.

Lastly, uh of course, I can't uh go without mentioning the CFO transition.

Uh I've gotten to know Amy Weaver for a while.

A lot of praise for her on that earnings call.

She will be transitioning out of the CFO role, but staying on for some time to help pick the next CFO city put out a good note or flash this evening saying, you know, there might be some new investor concern that sales force is going to go back to investment mode.

Of course, Amy has driven a lot of margin expansion done, done a hell of a job at sales force.

What do you say to those concerned that um you know, margins might come off when Amy rolls out of that position?

Well, I'm deeply committed to this margin expansion.

I have some very big goals bigger than we've delivered already.

Big cash flow goals, big revenue goals.

I've laid those out.

Amy is a critical part of our management team, but it's a much larger structure.

She's been a phenomenal member of that team for 11 years.

She was our general counsel.

I encouraged her to become the CFO and take on these goals and I look, I'm looking for a great new CFO.

I have hired hydrogen struggles Jeff Sanders is leading the search.

I'm looking for somebody great to take all these metrics to another level.

And it's extremely exciting and I believe that we're going to, you know, deliver even better financial metrics in the future.

You can see in this quarter, the numbers are just remarkable.

I mean, we beat on cash flow revenue margin.

Crpo all ahead of expectations delivered 9.33 billion in revenues.

I don't think any enterprise software company has ever done that.

Cash flow is over 892 million 10% year over year.

We also expanded our operating margin targets for the year, but for the quarter, we delivered 33.7%.

That is incredible.

And uh that was up, by the way, 210 basis points year every year.

That's a record high for sales force.

I have a lot of confidence.

We'll continue to grow and expand our financial metrics and continue to innovate.

And we will bring in another world class executive, whether it's an internal candidate or an external candidate.

And I'm confident in hydro struggles process uh to do that with us and we've done that over 25 years and Amy will continue to be a part of the management team uh going forward if she's gonna finish up the fiscal year and then help us on board the new CFO and Mark.

Of course, just real quickly, Ashley, we're not gonna have enough time to give this the time that I would like.

But I know this earnings call came with a heavy heart for you.

Uh, losing two key board members, maybe you could share a quick story from, uh, each one of them, how they help grow sales force because I, I know they meant a lot to you and the company.

Well, Brian, I would prefer not to cry on air because it's definitely been one of the saddest moments of my life the last two or three weeks where two of our board members have passed away.

And I think everyone knows uh these incredible people who were monumental in our industry, who were created huge parts of our industry.

Um incredible leaders, um credible friends of mine, uh Sandy Robertson and Susan Wasicki.

Um people know their work, whether it was the Robertson Stevens Bank or youtube.

Um but they may not know that they were also great fathers and mothers.

Um They were tremendous friends and confidants, Consigli Aus and I miss them every single day.

And I'm so glad that I have the opportunity to send my blessings, my condolences to their family members.

Um And uh every single day I think about them right now.

And so, uh I love both of them so very much.

Well said we'll leave it there.

Uh Mark Mark Benioff, co founder, chairman and CEO of sales sales force.

Always great to get some time with you.

We'll see in a few weeks over a dream force.

Looking forward to it, Brian, I can't wait to see a dream force and I hope we can sit down and have another great conversation.

I'd appreciate that Mark.

Thanks so much.

We'll talk to you soon.