Salesforce has announced its Q2 fiscal 2024 results, with $8.6bn in total revenue and a steadfast commitment to usher customers into a new era of AI.
Results showed an increase in total revenue by 11 percent Year-on-Year (YoY) and 11 percent in Constant Currency (CC). The period for Q2 fiscal 2024 ended July 31, 2023 and also saw subscription and support revenues of $8.01bn, an increase of 12 percent YoY. Professional services and other revenues increased 3 percent YoY to $0.60bn.
The second quarter non-GAAP operating margin for Salesforce Q2 2024 was 31.6 percent, compared to a GAAP operating margin of 17.2 percent that was impacted negatively by 50 bps due to restructuring.
Second quarter GAAP diluted EPS was $1.28, and non-GAAP diluted EPS was $2.12. Losses on the company’s strategic investments negatively impacted GAAP diluted EPS by $0.02 based on a US tax rate of 25 percent and non-GAAP diluted EPS by $0.02 based on a non-GAAP tax rate of 23.5 percent. Restructuring also negatively impacted Q2 GAAP diluted EPS by $0.05.
Cash generated from operations for the second quarter was $0.81bn, an increase of 142 percent YoY. Free cash flow was $0.63 bn, an increase of 379 percent YoY. Restructuring again negatively impacted second quarter operating cash flow growth by 16,600 bps.
The remaining performance obligation ended the second quarter at $46.6bn, an increase of 12 percent YoY. Current remaining performance obligation ended at $24.1bn, an increase of 12 percent YoY, and 11 percent CC.
Amy Weaver, president and CFO of Salesforce said: “We continue to execute against our profitable growth framework, delivering 17.2 percent GAAP operating margin and 31.6 percent non-GAAP operating margin — exceeding our target three quarters early.
“We are accelerating our transformation and continue to drive strong shareholder value.”
The new era of AI
In the earnings call, Salesforce highlighted its AI innovations as a key explanation for its Q2 revenue spike and rise in its Q3 revenue guidance.
Its latest products and innovations, namely Einstein, Data Cloud, MuleSoft, Slack and Tableau, are all integrated on one unified platform, and stand as a beacon to usher its customers into the new era of AI.
Marc Benioff, chair and CEO, Salesforce, said: “Our transformation drove our strong second quarter results, delivering revenue of $8.6 bn and record GAAP and non-GAAP operating margins.”
As of August 30, 2023, the company has additionally initiated its third quarter GAAP and non-GAAP diluted EPS guidance, current remaining performance obligation growth guidance and revenue guidance. Salesforce has raised its full-year FY24 revenue guidance, GAAP and non-GAAP diluted EPS guidance, GAAP and non-GAAP operating margin guidance and operating cash flow growth guidance.
Responding to the raised guidance, Benioff added: “Based on our performance and what we see in the back half of the year, we’re raising our fiscal year ‘24 revenue, operating margin and operating cash flow growth guidance. As the #1 AI CRM, with industry-leading clouds, Einstein, Data Cloud, MuleSoft, Slack and Tableau, all integrated on one trusted, unified platform, we’re leading our customers into the new AI era.”
