Salesforce's Benioff: 'This must be the year of Data Cloud'

Makes light of customer's AI bungle, as Q4 profits up 10%

Salesforce CEO and co-founder Marc Benioff made the case for his company being best positioned to deliver trusted enterprise artificial intelligence, his at times fiery language during a fourth-quarter earnings call contrasting with Salesforce forecasts of decelerating growth in the upcoming fiscal 2025.

During Wednesday's earnings call for the San Francisco-based provider of customer relationship management (CRM) software - where company executives reported results for the fiscal 2024 fourth quarter ending 31st January - Benioff pledged to "execute like hell" on the vendor's Data Cloud offering.

"We have the data lake, we have the repository, we have the warehouse, but now it has deeply, also, integrated into the AI," Benioff said. "That is why every customer must buy this product if they are going to achieve the nirvana that we can see for businesses … when you get data and AI working together. … Fiscal Year ‘25 needs to be one thing - the year of Data Cloud."

Salesforce Q4 earnings

Salesforce has more than 11,000 partners worldwide, according to the vendor.

Benioff also dedicated much of his time on the call to explaining why Salesforce stands out from the AI crowd because of its user interfaces with the company's Slack and Tableau offerings; the company's open, trusted receptacle framework for the best and latest models in Einstein One; and deep integration of data and metadata.

"That's not so easy," Benioff said. "That's not some amalgamated, stolen public dataset. In the enterprise, that deep integration of data and metadata - oh, that's what Salesforce does. ...The gold is data. And that's why we're so excited about Salesforce. Because we are one of the very largest repositories of enterprise data and metadata in the world for our customers. ... Only Salesforce can do this. Only Salesforce has the vision of this kind of platform. ... We have been working on this for 25 years and we are not done. We are just starting."

Untrusted AI offerings are a no-go for companies in regulated industries and AI hallucinations will cause problems for enterprise customer relationships. Benioff said AI models have proven to be "very competent liars, producing misinformation. Hallucinations. Hallucinations are not a feature."

While he said offerings from the likes of OpenAI, Cohere, Anthropic and HuggingFace have "inspired" and "wowed" customers, "the truth is these AI models are all trained on amalgamated public data ... much of it used without permission, unlicensed, but amalgamated into these single consolidated data stores. … "While other copilots just sit and spin because they can't figure out what the data means ... but when they use Salesforce, it all of a sudden becomes intelligent."

Benioff even encouraged analysts on the call to "text and email" him about AI offerings that are better than Salesforce's. "If you see anyone else being able to deliver on the promise of enterprise AI at the level of quality and scale and capabilities of Salesforce, I'll be very surprised," he said.

He praised AI, calling it "the single most important moment in the history of the technology industry."

"It's given companies an unprecedented level of intelligence that will allow them to connect with their customers in a whole new way," he said.

Decelerated growth expected

Despite Benioff's optimism around the AI opportunity for Salesforce, the vendor is forecasting revenue between $37.7 billion and $38 billion in fiscal 2025, an increase between 8% and 9% year-over-year, but a deceleration from the 11% year-over-year growth Salesforce reported for fiscal year 2024.

For all of fiscal 2024, Salesforce brought in $34.9 billion in revenue, according to the vendor.

Brian Millham, Salesforce president and chief operating officer, said the company did not include a lot of AI revenue in its fiscal 2025 guidance "because there is so much work that needs to happen now."

"We're going to start to see that show up further out in this fiscal year," he said.

Revenue from Salesforce Data Cloud, which connects all of a business's data to provide a 360-degree view of customers, is growing at about 90% year-over-year, Millham said. In the fourth quarter 25% of Salesforce's deals greater than $1 million included Data Cloud.

Benioff said that Data Cloud ingested more than 7 trillion records in the quarter and saw more than a trillion activations driving customer engagement.

"This should be an indicator of the demand that we're seeing for people to get ready for the AI transformation they want to put their company through," Millham said.

Salesforce also continues to see a "measured environment" for customer spending. "We are still having to ensure that we're doing the deep inspection and managing business very tightly in the way that we have over the past six, seven quarters in this environment," he said.

Salesforce Chief Financial Officer Amy Weaver said that she has not seen a shift in the buying behavior of elongated sales cycles, additional approvals and compressed deals over the last few years, but instead Salesforce is "executing much better" in terms of bookings growth, pipeline management and other measures.

Cloud cross-selling

On the call, Benioff acknowledged that the vendor needs to do a better job selling customers on more of its cloud products.

"Not even 50% of our Sales Cloud users use Service Cloud," he said. "Not even 50% of our Service Cloud users use Sales Cloud. Mea culpa. That is on us."

One helpful effort in this area is to more deeply integrate native products and acquired ones - including Slack and Tableau - Benioff said.

As for more measures of Salesforce's progress, executives on the call said that deals greater than $10 million in fiscal year 2024 grew 78% year-over-year. In the fourth quarter, eight of the vendor's top 10 deals and more than half of its top 100 wins included six or more clouds.

Professional services headwinds

Perhaps of particular interest to Salesforce solution providers, the vendor saw demand for professional services and other revenues decline 9% year-over-year in the fourth quarter, coming in at $540 million. For the entire fiscal year, professional services and other revenues were flat year-over-year, coming in at $2.32 billion.

Millham explained that he has seen customers less willing to do massive transformations, instead making multi-year commitments.

"Our customers are saying, ‘Hey, let me take a bite or smaller bite at the apple. Let me start smaller, get to time-to-value faster. Let me get the benefits of the technology sooner.' And so while the demand remains high, it's just smaller transactions that are getting done vis-à-vis last year and the year before that. So tough compares on large deals," he said.

Benioff's enterprise AI nightmare

Although Benioff didn't explicitly name the airline, he highlighted a nightmare AI scenario experienced by Air Canada, which was recently ordered by Canada's Civil Resolution Tribunal to honor a discount a chatbot promised a customer by mistake.

"This company - which is a great company and a customer of ours but did not use our technology - went out there and used some kind of rogue AI that they picked off the internet," Benioff said. "Some engineer just hobbled it, hooked it up, and then it started just spewing these hallucinations and falsehoods around their loyalty programme. And the courts are holding them liable? Good. Let every CEO wake up and realise - we are on the verge of one of the greatest transformations in the history of technology. But trust must be our highest value."

Benioff told analysts on the call that he is "deeply focused" on creating a single, unified data and metadata platform so that customers can get the best AI insights once they have adopted the technology.

Salesforce will operate at the data level of AI as opposed to the user and the productivity level and the model level.

"You cannot have the AI without the data," he said. "That's why those AI companies stole all that consumer data so they can have some semblance of these party tricks. For the enterprise, that's not going to fly. You've got to have these comprehensive datasets that are informed by the metadata."

Salesforce Q4 in detail

Salesforce reported $9.29 billion in revenue the fiscal fourth quarter, up 10% year-over-year ignoring foreign exchange. Stronger MuleSoft and Tableau performance helped, Weaver said on the call. The public sector and travel, transportation and hospitality sector performed well. High tech, retail and consumer goods were more measured sectors.

Subscription and support revenues in the quarter were $8.75 billion, up 12% year-over-year. The vendor's current remaining performance obligation (cRPO) was $27.6 billion, up 13% year-over-year ignoring foreign exchange. Total RPO was $56.9 billion, up 17% year-over-year.

Operations generated $3.4 billion in cash, up 22% year-over-year. Free cash flow grew 27% year-over-year, coming in at $3.26 billion.

MuleSoft was in eight of the top 10 deals in the quarter and executed a record 319 billion automated workflows every month, up 100% year-over-year. Tableau was in 20 of the top 25 deals in the quarter. Tableau Pulse, released earlier in the month, has 2,000 customers.

Slack was included in nearly half of Salesforce's top 50 deals in the quarter.

Salesforce fiscal years 2024, 2025

For all of fiscal 2024, Salesforce reported $34.9 billion in revenue, up 11% year-over-year. Strong performance in Latin America, India and Canada helped, Weaver said.

Subscription and support revenue grew 12% year-over-year, coming in at $32.54 billion.

The vendor had operating cash flow of $10.2 billion, up 44% year-over-year. Operations generated $10.23 billion in cash for the fiscal year, up 44% year-over-year. Free cash flow was up 50% year-over-year, coming in at $9.5 billion.

Salesforce predicts that in fiscal 2025, it will bring in between $37.7 billion and $38 billion of revenue, an increase of between 8% and 9% year-over-year.

The vendor expects subscription and support revenue to grow 10% year-over-year. It also expects operating cash flow growth between 21% and 24% year-over-year.

Salesforce's industries business finished the year at $4.8 billion in annual recurring revenue, up more than 20% year-over-year. In fiscal year 2024, Salesforce closed 1,300 Einstein deals, Millham said.

Salesforce's stock traded at about $295 a share after hours, down $4.77 or 1.59% from the $299.77 close on Wednesday.

This article first appeared on CRN.