+ Strength in MuleSoft and core products drive growth. 1Q24 revenue grew 11.3% YoY (13% in constant currency) to US$8.2bn, 1% above the top end of company guidance, driven by higher subscription sales. Salesforce witnessed continued strength in its core products with Sales Cloud and Service Cloud revenues growing 13% YoY in constant currency to US$1.8bn and US$2.0bn, respectively. Within Data Cloud, MuleSoft revenues grew by 26% YoY, while Tableau grew by 12% YoY. Total remaining performance obligations (RPO), which represent future revenue under contract, grew by 11% YoY to US$46.7bn. The current portion of RPO (cRPO), which the company expects to be recognized in the next 12 months, increased by 12% YoY to US$24.1bn. This was driven by the strength of its Customer 360 platform, multi-cloud adoption trends, and low customer attrition rate of 8%.
+ Improvement in margins. In 1Q24, Salesforce reported adj. operating margin of 27.6% compared with 17.6% in 1Q23. This was mainly driven by continued focus on operational discipline, driving cost controls through job cuts, real estate consolidation, and lower travel and entertainment expenses.
– CAPEX spending jumps. In 1Q24, Salesforce’s CAPEX increased by 36% YoY to US$243mn. The extra spending is towards the introduction and rollout of generative AI-driven product enhancements. During the quarter, Salesforce launched Einstein GPT, which is designed to help salespersons and customer-service agents to perform their duties more efficiently, including generation of personalized emails to send to customers. For FY24e, CAPEX is expected to be about US$865mn (2.5% of total revenue).