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Wednesday, May 31, 2023

    Key Takeaways From Salesforce’s Investor Meeting

    RBC Capital analysts provided their key takeaways from Salesforce, Inc. (NYSE:CRM) investor meeting, noting they came away more positive on the company, as it is working on truly transforming the business and emphasizing profitability.
    Salesforce noted “phase one” of the profitability journey is the 30% operating margin target (Q1/25) driven by the RIF and ongoing cost-cutting initiatives. Management also outlined an aspirational “phase two” path to potentially unlocking margins in-line with large-cap software peers, driven by more surgical go-to-market changes, deeper product integration, and more hiring in lower-cost areas (e.g. Hyderabad).
    Management acknowledges ongoing changes could lead to some disruption and lower morale, which coupled with macro, are growth headwinds. However, beyond the near-term, the growth drivers are mostly unchanged, including (1) International, where Salesforce is much less penetrated and can improve the GTM by putting more investment into the indirect/reseller channels, (2) Industry Cloud, with now 12 out-of-the-box solutions for specific verticals, which have seen strong performance recently (Industry Cloud has better margins and gross retention).


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