salesforce(CRM) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Q3 revenue was $9.44 billion, up 8% year-over-year in nominal and constant currency [87] - Subscription and support revenue grew 9% year-over-year in nominal and constant currency [88] - Q3 non-GAAP operating margin was 33.1%, up 190 basis points year-over-year [92] - Q3 GAAP operating margin hit 20% for the first time in company history [92] - Q3 non-GAAP EPS was$ 2.41, inclusive of a $0.18 charge driven by mark-to-market adjustments [92] - Q3 operating cash flow was$ 2 billion, up 29% year-over-year [93] - Q3 free cash flow was $1.8 billion, up 30% year-over-year [93] - RPO ended Q3 at$ 53.1 billion, up 10% year-over-year [94] - Current RPO (cRPO) ended at $26.4 billion, an increase of slightly more than 10% year-over-year [94] Business Line Data and Key Metrics - Sales Cloud and Service Cloud achieved double-digit growth in Q3 [78] - Commerce Cloud powered close to 50 million orders during Cyber Week with nearly 100% uptime [79] - Marketing Cloud sent over 56 billion marketing messages [79] - Service Cloud helped customers field and resolve 3.8 billion cases [79] - Slack AI annual spend grew nearly 50% quarter-over-quarter [80] - Tableau and MuleSoft continued to be foundational with wins at Allegis, SiriusXM, Hitachi, Northwell Health, 3M, and CalOptima Health [81] Market Data and Key Metrics - Americas revenue grew 6% in nominal and constant currency [88] - EMEA grew 12% or 9% in constant currency [88] - APAC grew 16% or 14% in constant currency [88] - Strong new business growth in LatAm, Canada, and Australia [89] - Health and life sciences, manufacturing, and automotive and energy performed well, while retail and consumer goods were more measured [89] Company Strategy and Industry Competition - Salesforce is leading the way into a new horizon of digital labor with Agentforce [60] - Agentforce represents the next evolution of Salesforce, enabling AI agents to work alongside humans [15] - The company is uniquely positioned to become the leading enterprise AI platform and the source of a digital workforce [86] - Salesforce is integrating all apps on a single core platform with shared services for security, workflow, and user interfaces [49] - The company is rewriting all acquisitions into a common platform called "More Core" [50] Management Commentary on Operating Environment and Future Outlook - The company is excited about the opportunity ahead with Agentforce, which is reshaping the economics of business [86] - Salesforce is committed to building Agentforce with accountability, fairness, and transparency at the core [55] - The company expects jobs to evolve, roles to shift, and businesses to adapt as agents take on more of the workforce [56] - Entire industries are expected to emerge fueled by innovation and creativity using Agentforce [58] - The company is raising the low end of its full fiscal year '25 revenue guidance to$ 37.8 billion and maintaining the high end at $38 billion [97] Other Important Information - Agentforce went into production in the last week of Q3, delivering 200 deals [14] - The pipeline for future transactions is in the thousands [14] - Companies like FedEx, Adecco, Accenture, ACE Hardware, IBM, and RBC Wealth Management are building their digital labor forces on the Salesforce platform with Agentforce [24] - Salesforce is hiring 1,400 AEs globally in Q4 to capture increased demand for Agentforce [69] - The company executed$ 1.2 billion in share repurchases and paid nearly $400 million in dividends in Q3 [96] Q&A Session Question: Can you talk about the halo effect of Agentforce across product lines, particularly Data Cloud? [107] - The top 25 deals averaged more than five clouds each, indicating a complete agent-first approach [108] - Salesforce is the only company delivering a 360-degree view of customers, essential for an agent-first world [109] Question: What do the 200 Agentforce deals look like? Are they upsells? [112] - Initial Agentforce opportunities are with Service Cloud customers, but the platform extends to Sales Cloud, Marketing Cloud, Commerce Cloud, and Data Cloud [113][114] Question: How is the pricing discussion for Agentforce going with clients? [117] - Agentforce is priced at$ 2 per conversation, offering high value for customers [118] - Customers understand the cost of labor and see the value in deploying agents to manage interactions [120] Question: Can you talk more about the More Core initiative and its impact? [124] - More Core involves integrating all apps on a single platform, essential for AI functionality [125] - The initiative has led to increased productivity and engineering capabilities [125] Question: What has been the customer response to the new Foundations offering? [128] - Foundations allows customers to get a taste of Sales, Service, Marketing, Analytics, Data Cloud, and Slack [129] - The offering is part of the More Core initiative, making Salesforce functionality more accessible [129] Question: How far along are customers in having their data in order to get value from Agentforce? [132] - Customers with strong data architecture can turn on Data Cloud and leverage AI solutions in weeks or months [133] - Customers with siloed data may take up to six months to harmonize their data [133]