Marc Benioff on Wednesday drew on his roots as a seasoned software salesman to shift the spotlight from his company’s weak sales forecasts during a roughly 30-minute earnings call, and touted the AI industry’s “stolen data” and accuracy issues. vehemently criticized the problem. problems and other critical issues.
“These models know nothing about a company’s customer relationships; in some cases, they’re just making it up,” Benioff exclaimed.
Not surprisingly, Benioff’s rhetorical feat of highlighting the ostensible comparative advantages of Salesforce’s AI products got the job done. By the end of the conference call, Salesforce stock had recovered to trade around 1%, having fallen another 4.5% in post-market trading. Exceeds the closing price. (Stocks fell back into the red late Wednesday, but the decline was still less severe than before Benioff’s comments.)
The demand for AI implementation among Salesforce customers is “very strong,” Chief Operating Officer Brian Milham said on the earnings call, but executives at Salesforce have said they are considering AI in the company’s revenue forecast for the current fiscal year. He admitted that he did not expect any growth.
Salesforce said it expects sales for the current fiscal year to be in the range of $37.7 billion to $38 billion, an increase of 8% to 9% from a year ago. As a result, Salesforce’s revenue growth continues to slow, with the recently ended fiscal year increasing 11% in fiscal 2024, 18% in fiscal 2023, and 25% in fiscal 2022.
Meanwhile, Salesforce has expanded its profit margins in recent years thanks to significant cost reductions in headcount and real estate. Operating margin for fiscal 2024 increased to 14.4% from 3.3% in the prior year, and Salesforce predicted operating margin for the current fiscal year of 20.4%. The company announced Wednesday that it will pay investors a quarterly cash dividend of 40 cents per share.
During the call, Benioff seemed happy to point out examples of companies, some of which were longtime Salesforce customers, who suffered high-profile AI incidents after using other companies’ products. Ta. Although he did not name names, he cited a recent court case involving Air Canada, in which the company was forced to comply with its refund policy after a customer service chatbot provided inaccurate airfare information to customers. There is.
“This company is a great company and a customer of ours, but instead of using our technology, they used some kind of rogue AI that they scavenged from the internet,” Benioff said during the call. Told. “Some engineer just pulled it off and plugged it in and started spewing illusions and falsehoods about the loyalty program, and the courts are holding them accountable. Good.”
This was one of several cautionary tales Benioff warned about, including the New York Times’ legal battle with OpenAI. “I wish all CEOs would wake up and realize that we are on the precipice of the greatest transformation in the history of technology, but our highest value must be trust,” Benioff said. Stated.
“Enterprises need deep integration of data and metadata so that AI can understand and provide the critical insights and intelligence that customers need across the business, including sales, service, marketing, and commerce. Data and tight integration of metadata. That’s not easy,” Benioff said. “This is not just a public data set that has been merged and stolen. In the enterprise, tight integration of data means data and metadata. Ah, that’s what Salesforce does.”
Benioff also singled out Nvidia CEO Jensen Huang, comparing the company’s AI chips to the “Levis jeans” essential to modern gold miners. But the real treasure trove is in the data, Benioff said, and with a portfolio of products that help businesses leverage all their internal data to support AI applications, he says Salesforce shines brightest in data. He said there is.
The message is: Play with other people’s clothes and pick up axes in AI Gold Rush. Salesforce has money.
