Salesforce grew revenue year over year in its fiscal Q1 ended April 30, but it fell shy of its Q4 2024 peak.
At the same time, Salesforce has been expanding its artificial intelligence (AI) suite and its corresponding large language models (LLMs). CEO Marc Benioff said in an earnings call with investors that web users create “hundreds of petabytes of data” each day that AI models can use for training and generating output. One petabyte is the same as 1 million gigabytes, which is also the same as 1,000 terabytes.
Benioff said Salesforce is now managing more than 250 petabytes of data for its customers. That will “be absolutely critical as they move into artificial intelligence,” he said.
“The one thing that every enterprise needs to make AI work is their customer data, as well as the metadata that describes the data, which provides the attributes and context the AI models need to generate accurate, relevant output,” Benioff said. “And customer data and metadata are the new gold for these enterprises.”
He said that growth in Salesforce data is giving momentum to Data Cloud, and that “it’s the first step to becoming an AI enterprise.”
In North America, 76 of the top 2000 online retailers use Salesforce as their ecommerce platform, according to Digital Commerce 360 data. In 2023, those 76 online retailers combined for more than $136.077 billion in web sales.
Salesforce had cut 10% of its staff in January 2023. The job cuts cost the company $1.4 billion to $2.1 billion. As much as $1 billion of that came in its fiscal fourth quarter.
AI continues to guide Salesforce revenue growth in Q1
The 11% growth rate matches the rate at which Salesforce revenue increased in its fiscal Q4 2024. Of its $9.13 billion in total revenue during Q1, Salesforce brought in $8.59 billion from subscriptions and support. That’s a 12% year-over-year increase.
Although revenue grew at the same rate in the last two quarters and exceeded $9 billion, this marked the second time since Q1 of fiscal 2021 that Salesforce revenue did not grow quarter over quarter. Gross profit grew to $6.91 billion in Q1 2024, from $6.12 billion in the year-ago period.
Chief financial officer Amy Weaver said revenue was at the lower end of Salesforce’s previous guidance because of “continuing pressures on professional services, some license revenue volatility and the continued measured buying environment.”
In the Americas, she said, Salesforce revenue grew 11% year over year. In Europe, the Middle East and Africa (EMEA), it grew 10%. In Asia-Pacific, it grew 14%. Weaver added that from an industry perspective, the public sector and financial services both performed well. She said retail and consumer goods “were more constrained.”
Benioff said Data Cloud was included in a quarter of Salesforce’s $1 million-plus deals in Q1. Additionally, Salesforce added more than 1,000 Data Cloud customers for the second straight quarter.
Einstein — Salesforce’s platform that allows users to connect their data, customer relationship management and more using artificial intelligence — is generating hundreds of billions of predictions per day, he said. That’s trillions per week, he added.
Salesforce Connections 2024
Salesforce recently announced new AI, Data Cloud and Commerce Cloud features at its Connections 2024 conference at McCormick Place in Chicago in late May. At the conference, president and chief marketing officer Ariel Kelman showed Salesforce’s new features during the main keynote. He highlighted the software company’s generative AI-powered copilots, including specific ones for merchants and marketers. Salesforce also announced Commerce Cloud updates for checkout, headless commerce, composable commerce and digital engagement.
Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s update.
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