Okay, we're good. Yeah. Hey, I'm trying to make noise. Thank you. Maybe take your seats. I'm really happy to have Brian here today from Salesforce. Brian, do you remember the last time we were sitting here was two years ago, and all my questions were about getting your people back into the office?
That's right.
Efficiency gains, how the world has changed.
Yeah, we've actually done a pretty good job of getting people back in the office. In fact, getting over here was a little difficult 'cause the elevators are so slow 'cause so many people are in the office, so it's a good sign.
Oh, that's a really good sign. Yeah, yeah, yeah.
Yes.
You made it through all the music, so that was good.
Yes, the band you have outside.
Yeah.
Yes.
Just to get everyone grounded again, like, last week you had like Q3 results. They were kind of well received by the market. Share price kind of reacted well. Like, from your perspective, looking into the company and into the operations, like, how did the quarter play out for you?
Yeah.
Over the holidays.
It was a great quarter for us. We were thrilled to be able to announce a beat on revenue, cRPO, margin, free cash flow. A lot of the key metrics, almost all the key metrics we beat on. So thrilled with that. Also thrilled with the momentum we have around our AI story on Agentforce.
Yeah.
The demand that we're seeing from our customers right now is remarkable, something we haven't seen in quite some time, and so love the execution. I think you, you heard us say there wasn't, there isn't anything really showing up in our Q3 numbers related to Agentforce. So that means that the numbers were representative of sort of the execution in the quarter.
Yeah.
But certainly great momentum on the Agentforce opportunity ahead of us.
That's really nice. And if you think about the number one question beside kind of Gen AI that everyone has on their mind is like, is the world getting better out there?
Yeah.
And if I look at, you know, as you said, there wasn't Agentforce in there yet, but you still were good on CRPO, which kind of for me is the number, you know, the street is all looking at. Your guidance for Q4 was a little bit better. How did it feel in terms of like customer conversations, how the quarter came together in terms of like, does it, are there pockets of strength where you see it's kind of, it's changing a little bit compared to what we saw last two years?
Yeah, we had a long conversation internally about how we wanted to position this as part of our earnings script. We tried to be balanced in the way that we talked about it. Sort of normalized markets is sort of how we described it. In pockets, we're feeling strength. You know, some of the indicators that we have in our business, we look at every single quarter, actually every month, we look at what is the create and close velocity. When we talk about create and close, how many deals are being created and closed within a five-day period is the definition of it. When we see that velocity pick up, it's a good sign for us.
Yeah.
Our SMB business showed some strength, certainly in the Americas. So there's signs out there, some green shoots. You've probably heard us say that before, Raimo. We've got some green shoots in some of the areas. At the same time, we've got some areas that continue to struggle, certainly by industry. If you think about it in the Americas, our tech industry, the professional service industry, retail, these are some areas that we continue to feel headwind around. So on parts of our business, we feel good. The European markets have not been a big strength for us, but all in, we felt like it was a more normalized world that we're operating in versus sort of the downward trend that we've been feeling for quite some time.
Okay. Yeah. I mean, that's, we're all hoping, you know?
Yeah.
It's good to hear.
Yeah.
The,
Probably me more than you even.
Yeah, yeah, yeah, yeah. Well, we had a panel earlier today talking about IPOs next year and stuff, you know.
Yes.
So we're back now.
Progress.
If you think about, so changing gears, you mentioned Agentforce already. You've been with the company for kind of many, many years.
Yeah.
You know, and I don't want, we don't want to talk age and stuff, but like for many, many years, how does this feel compared to like previous cycles?
Yeah. I mean, on Agentforce specifically.
Yeah.
So I started the company back in 1999, and it feels similar in that it's brand new innovation. You know, we were bringing what now is defined as cloud computing to the market at the time. It was called software as a service and really trying to transform a business in a technology world. It has a similar feel to it right now. We had demand coming at us back then. People really wanted to understand what we were doing. The simplicity and ease of getting up and running was part of our value proposition back then, is a value proposition for us now. It's an exciting time for us. The innovation that we're seeing from our engineering organization I don't think has ever been higher. You know, I like to joke, we've been talking a lot about Agentforce.
We released that product, at the end of October, and in seven days we closed 200 deals in Agentforce and have continued to see that momentum into our fourth quarter. That velocity is unique. It's very different than what we felt before. So, this is a very exciting time. And when you see the customers reacting so positively to it.
Yeah.
It gives you a lot of hope for where we're going to take this into the future.
And if you think about it, like you, as you said, you only came out in October. That's a 1.0 kind of release in a way.
That's right.
Like, how do we think about like the evolution of Agentforce and what more it can bring to the table to make it even more broad and applicable?
Yeah. We announced, I think next week, is it next Tuesday, we're going to launch, what is it, seven, eight weeks later, we're going to launch 2.0 of Agentforce with incremental capabilities, more integrated into Slack, some agents in Slack, our CRM capabilities, analytics integrated. But importantly, going deeper on Atlas, which is our reasoning engine that makes these agents that much more powerful. The ability to take action on behalf of your company and engage with customers in unique ways and in an autonomous way is what we're going to be announcing next week. So tune in. It's going to be great. But also the velocity, you know, we've prided ourselves on three upgrades a year for 25 years. This is like, you know, measured in weeks. The velocity is really incredible.
We feel that urgency, by the way. We really feel like we need to be moving quickly at this opportunity.
Yeah.
And that's why we're moving so quickly to meet the opportunity ahead.
It's like, is there another big one in February coming?
Yeah.
Like at the moment, it's like.
Yes.
We're going to have like a, is it a free?
It's hard for us to keep up.
Yeah.
I'm sure it's hard for all of you to keep up. Yes.
Yeah. I hope, I hope we're not invited to all of them, you know? Like.
Yes.
You'll be invited.
It doesn't mean you have to come, you know?
Yeah, yeah, but talking more broadly, like when a couple of weeks ago and I you know we kind of tried you know we had a big report out talking about like GenTech AI and the opportunity there.
Yeah.
Yeah, we put out a number and we, you know, like, we can debate how we came up with the number and what the number is, but how do you think about the opportunity?
Yeah. It's interesting. As we've talked through this over time and we thought about, hey, this is, Agentforce is an incredible extension of our core technology, the Customer 360. Our customers can add this into their existing infrastructure and see these great benefits. We hadn't quite grokked the size of the opportunity ahead of us, and really over the last three or four weeks, have pivoted slightly based on feedback from our customers, frankly, that we've entered the labor market. You know, we're going to provide digital labor to our customers now.
Mm-hmm.
When you start to look at this through the lens of just software, okay, that we kind of know the size of that measured in billions. When you start to think about what the opportunity is for labor offset.
Uh-huh.
And I can talk about it in just a second in two ways. Labor offset, you measure in TAM and in the form of trillions. You know, that is kind of the opportunity that we're contemplating out there. There's a lot of execution between now and getting to those, the trillion opportunity, but it is a very exciting opportunity. And there's two ways to sort of think about it. So we talked to CEOs and CFOs. They say, hey, this is great. I can take some cost out of my business in the call center, for example, which is fine. We also can have it from a growth perspective.
Hey, over the next five years, we're going to grow at, call it 8% if you're, if you're a customer of ours and we're engaging with them and they're doing the math and said, well, if I don't have to add more people because I have agents and I'm growing at 8% on top line and my cost of people is flat.
Mm-hmm.
That's a pretty good proposition, and people can do the math very quickly on why they should be investing in Agentforce.
Yeah. And then if you think about like the initial ones look like it's more in the Service Cloud. Do you think that's kind of the predominant one or do you, you know, as the product gets broader?
Because of the urgency issue and us feeling like we needed to get outbound and really get to our customers very quickly, we started with our largest cloud. Service Cloud is where we've,
Yeah.
We've made tremendous inroads and a ton of success with our customers. It's sort of natural to think, hey, agents in a call center, how do I deflect more calls? How do I answer more inquiries from my customers through chat or any channel, frankly? But what's been interesting in the engagement with our customers has been that they are looking at this very differently. Hey, what workflows can I automate with agents?
Yeah.
You know, what are the use cases I can apply, not just in Service Cloud, but across Sales, across Marketing, across Commerce, or frankly, all the employee interactions, your partner interactions. And so we very quickly moved from, yes, this is great to be in Service Cloud, but this is a platform that can extend across any workflow in your business. And, and, and our customers, frankly, have taken us there. You know, we announced this at Dreamforce. The conversations were very rich of, hey, could I apply this to an agent for HR?
Mm-hmm.
Questions come in about benefits. Of course you can do that, right? And so that's the exciting opportunity that while we are starting and we've had the urgency around Service Cloud, it can be applied across the entire platform and frankly, it can open up new TAMs and employment in other areas.
So then it's more. It's almost like a platform play in a.
That's exactly right.
In one agent?
That's exactly right.
Yeah, yeah, yeah, yeah. Okay, so that's much broader than, yeah.
Yep.
And then actually it gets me to your next question. How do you think about the monetization or pricing of this one?
Yeah.
Obviously, like, you know, you came up with that $2 per conversation and that was great, but like every conversation is different. So I'm not quite sure that's kind of the long-term kind of solution here, but like how do you think about that?
Yeah. It's a really great question and something that we've spent a lot of time on in the last several months. How do we want to position the pricing conversations was very applicable to the Service Cloud opportunity, and as we thought about the urgency in getting out there, how do we get this in the market? Every call center, every person that runs a call center owns or knows what the metrics are around, you know, cost per call, number of conversations. So it was very applicable in that scenario, but as I just said, as we get to a more broad platform play, conversations don't really work. Even in the sales side, if I'm qualifying leads faster with an SDR agent, well, that conversation doesn't quite apply in that. So we're going to introduce some new pricing that will be more ubiquitous.
It will be across the platform, Universal Credits, and people can consume them across the entire, any workflow.
Yeah.
Will be used, so we'll move away, probably still have conversations in some capacity, but we want to talk more about the number of workflows or actions that are taken on the platform versus being specific to Service Cloud.
Yeah. Yeah. It's too narrow.
That's right.
Yeah. Yeah. Okay. And then, if you think about it, on the call, you talked a little bit about Agentforce actually, you know, pulling in other things and, like, you know, other products from you or you have like broader discussions with your clients. I mean, starting points probably Data Cloud, I would think, but then maybe, yeah, maybe we start with there, but then also maybe talk a little bit about our solutions there.
Yeah. We like to say that Data Cloud is critically important to any AI strategy you have, whether you're using Agentforce or our core technology, Einstein, or you're doing predictive. The more information, the more data you have about your customers, the better the insights you're going to get on these platforms. And so, while slightly less sexy than Agentforce, Data Cloud is a huge success for us and continues to be a driver.
Yeah.
For us as we think about, hey, how do we grow into the next fiscal year and beyond? People recognize you got to harmonize the data, you got to get it into a single spot, and you need to surface it in the flow of work. And this is where I think some of the stumbles have happened for other companies where it doesn't have relevance if you're just running some ubiquitous copilot. You got to have it in the flow of work. If you're a seller, you want to see it surface there, or your customers engaging with you about a particular buy, just to have some random engagement doesn't make a lot of sense. And so in the flow of work is absolutely critical. And so what we're seeing is, you saw the numbers on sales and service in the quarter, quite resilient.
We're very proud of the fact we're able to continue to drive good growth for those core products. It's because people are saying, hey, I need to continue to grow my business. I need to continue to support my customers, but I also need that data in the flow of work. I need to see where the insights are coming.
Yeah.
from the customers. So we like to think of that as an extension of our core technology and bringing all of those clouds along, which is great news for us as we think about all the Customer 360 apps that we have installed in our customers.
And then the other thing is like, and it's kind of something that even you guys haven't really talked about, like, that comes up in a lot of conversations that I have with AI companies that they all talk about MuleSoft because MuleSoft opens up, you know, the whole estate and.
That's right.
You know, it brings up all the APIs, et cetera. Is that not like the secret M&A deal that you did that is like it's going to give you legs for the next 10, 20 years?
Let's just talk about data moving around organizations, period. I didn't bring up MuleSoft, but it's a great one. It's making Mule that much more critical to.
Yeah.
To all of our customers as well as we think about moving data from other parts of the business. We also signed many, many partners in a Zero Copy Alliance. So many customers don't want to move their data fully in, but they want to take snapshots and they leverage the data within Data Cloud and then surface it as part of Agentforce.
Mm-hmm.
And so we've got a great capability and alliance of partners that with Databricks and Snowflake and other that will allow us to access that data. But it's also not just structured data. It's unstructured data that is so important to our customers. And we announced in the quarter, an acquisition of Zoomin that allows us to bring in more and more unstructured data. Slack's a great example, a great acquisition we did a while ago. We have a ton of data in Slack that now can be brought into Data Cloud with Zoomin.
Okay.
And so, structured and unstructured data. And then we also announced. It's a, maybe an exclamation point on the importance of data, Own Company, which is a company that allows you to better manage your data with compliance and regulatory backup, those types of things. And so, data is obviously a big strategy for us as we think about Salesforce for the future.
And then you mentioned the strength in the Sales Cloud or the resilience in Sales Cloud Service Cloud. Like, how do you think that will kind of play out for you? You know, is there because you're the kind of end-to-end provider, you kind of see more customers doing that stuff with you or, like, you know, how does it impact the other product, like the standard products from you guys?
Yeah. I think there's been some questions that have come up and I assume you're asking this about, hey, do you see some offset with Agentforce with some of the.
I didn't want to ask it that way, but yeah.
Yeah. I know what you're asking. I'm going to go there. We do feel that, certainly it's something we consider and hey, is this a risk as we go forward that agents offset some of the, some of the great work we've done in sales, service, marketing, et cetera.
Yeah.
But what we found is the net for us is going to be far more positive. The benefit and value associated with labor offset is going to far exceed the loss of a license. And we've proven it out with several deals we've done.
Yeah.
restructuring deals with our customers who are saying, "Hey, I'm going to go all in on Agentforce," but we have not seen, as evidenced by the quarter and the interactions we're having with our customers, big degradation, but we're keeping an eye on it.
Then I wanted to go back to your mid-earlier point around the 200 customers you signed in the last five to six quarters, which is crazy. Like, how is how do you think about the sales motion now at the moment because it's so hot? You're kind of more order takers than outselling there or like where are we on that kind of?
Yeah. I love that you think we're order takers. That's great. We're sitting back, taking in the orders, but it's actually sounds like my boss, and so it's a different motion for us actually.
Okay.
As we think about a consumption world, it's very different than going out and selling a customer 500 licenses of sales cloud or service cloud. We're convincing them that Agentforce is the future. They're buying Agentforce from us, but we'll monetize it through a consumption model going forward. New capabilities that we have on PayGo, giving people insights into how they're using the product, term commits like AWS where they make a commitment to usage over time, but you got to burn through that during the term of the agreement. So we think this is additive to a model that we've had forever, which is named license plus this consumption model will really drive some growth going forward.
But it is new motions and how we dedicate resources to ensure the consumption's happening, how we really think about, hey, are the customers getting success from this platform and then how we are driving getting the meters running even faster for Agentforce and Data Cloud, frankly, is a big opportunity for us.
Yeah. Yeah. But it's also like a little, like, where are you on that educating your people around that?
It's, you know, we have, we have thousands of sellers out there.
Yeah.
Lots of SEs, lots of success people that we dedicate. We've done a lot of enablement over the last six months to ensure people are oriented this way. We're also looking as we start the new year in February, how do we design the right comp plans to incent the right behaviors? How do we hire the right people with incentives to go do this work? And so we don't want to take the person who's been selling for 10 years and then try to turn them completely to a different seller going forward without creating some incentive to go do that both through comp and some new, some new people. As an example, consumption leads is a role we've never had in the company and we're hiring those people now to make sure that we've got the right focus on success.
Yeah. And look, I mean, there's a couple of good examples in the industry where people try to do consumption, but then.
Yep.
You have to fine-tune, et cetera.
Exactly.
Yeah.
Exactly right.
I want to switch gears a little bit, and I'm asking you the question because actually because you're not a technical person, so it kind of helps us. One of the things why this is kind of possible now in my view, and I don't know, maybe I'm wrong and you can correct me, is you guys have been on the multi-year journey towards more, you know, kind of standardizing products and moved to AWS. I think it's Hyperforce. How important is that and where are we on that journey?
I mean, it's clearly important to us. All the new innovation that we're building is on public cloud.
Okay.
You know, we recognized some time ago, as we think about scale, we think about the volumes of data that we're managing, to continue to run first party is difficult for us at this scale. Why not leverage the great public cloud providers out there?
Sorry to interrupt you, but you were at Salesforce. Like if you can't run it on scale.
It's also like we're a software company building great applications.
Yeah.
You know, do you want to be in the game of also building infrastructure when others do it so well? And so our thought process was, let's partner deeply with, let's build a platform called Hyperforce, which allows us to run our technology on any public cloud platform. Obviously, we started first with AWS.
Mm-hmm.
And as we've gotten into Data Cloud that requires large amounts of compute and we think about Agentforce that will be consumption-based, it's been a huge lift for us. We also talk a little bit about how we want to continue to manage the other side, not just top line growth, but how do we manage the margins of the business? We've seen a lot of benefits from going faster with them. The economics of public cloud have worked out very well. And we want to offer our customers choice. We want to continue to go down this path of how do we provide applications that run certainly in first party, but also on multiple providers in the space. So, it continues to be a strategy for us that's worked very well. And we've migrated a lot of our customers already.
How, what does it mean for on the product side? Because like one of the criticisms that you guys got was like you had a good few acquisitions that were really kind of additive.
Uh-huh.
Are you bringing them into or like are you harmonizing that then to bring?
Yeah. Great question. It's one of our core strategies right now. And I give a gentleman who's a, we call him boomerang, someone who's with the company left and worked for eBay and a couple other companies came back. And when he got back, he said, "It's amazing to see all these acquisitions. They're very creative to your business, very, very much part of your Customer 360, but they're running on separate platforms.
Yeah.
How do we bring what we call back to core? How do we bring them all into a single platform? It's becoming more and more critical as you think about managing data across the entire product suite from sales to service to marketing to commerce, et cetera. You want it to be a single platform so you can leverage that same data across any customer interaction.
Yeah.
And so a lot of effort's gone in to bring our Commerce Cloud to core, our Marketing Cloud to core. And now, hopefully by June, we'll see Tableau on core as well.
Okay.
So, single platform across our entire portfolio, leveraging Data Cloud and Agentforce.
Yeah. Wow. Okay. That's a big project. Yeah. Yeah. Okay. Wow. And that's the thing, like you don't actually get credit for that. Like, and talk a little bit about, you mentioned there's a benefit on margins as well. Like it's, so despite you kind of, you know, having had space in AWS, that's still cheaper than you doing it yourself.
It is. I mean, we obviously when we looked at it, we in the, in the context of how do we manage margins for the business, we wanted to make sure that it was better than what we were doing internally.
Yeah.
We have a great partnership with them, and the economics have really worked out for us. It's been a great process for us, and they continue to be a great partner.
Yeah. And then, I wanted to go back to the very beginning of our conversation. When we were here two years ago, we talked a lot about efficiencies, et cetera. And obviously now we're all excited about Agentforce and recovery. Where are you on that efficiency journey and what's the DNA on the company now? Like to think about like profitable growth.
Yeah. And it's absolutely part of our DNA. You know, just because we have a hit new product doesn't mean that we ignore the commitments that we've made internally and externally as we think about sort of scaling this business going forward. We continue to do the work that we started two years ago.
Yeah.
How do we look at org health? How do we think about location strategies? Do we need to hire everybody in San Francisco or can we think about other locations that are cheaper where we can get really incredible labor like India and Mexico City?
Yeah.
How do we think about all the reseller channels that we can tap into? You know, we've been a largely direct organization. One of the benefits of being with AWS is we get to tap into their marketplace as an example where existing spend can be used with Salesforce because we're a partner with them. And so we're looking across the entire company to say, where can we get more efficiencies? How can we continue to get fuel, we call it, from the work that we're doing to go invest in scale going forward? But one of the maybe biggest levers we hadn't even thought about was Agentforce. You know, how can we leverage our own technology internally to drive efficiencies in the organization? And of course, we've started our own support organization.
Yeah.
You know, how can we force ourselves through that same process of saying, hey, can we scale our business to our goals and continue to add more and more top line without having to add more support reps?
Yeah.
Or frankly, can we move some of our support reps to the sales side? Could they be great sales engineers for us or could they move to Srini's development org and become great developers for us? And so, maybe the biggest lever in margin accretion going forward could be Agentforce for our own deployments, our own use.
Just how did that feel like? Like, look, on our side, we were like, okay, so now Salesforce is looking at the costs and that was like, you know, 2023.
Yeah.
And now with, you know, we have the margins up a lot, so now we're going back to the old way. How did that change in your, when you talk to your team and to your people? Like how's the thinking evolved in terms of like being, you know, having that part of your core?
I mean, it's really an and for us. We think that we can do it both sides of it. You know, we talk about it and the investments. I'll give you an example. Like you've seen the margin expansion at Salesforce. It's pretty impressive two-year run.
Yeah.
You know, we needed to do it for obvious reasons and we wanted to make sure that we could go do it while we developed one of the most incredible technologies organically that we've ever come up with.
Yeah.
Right? And so we're still able to make investments in growth. You may have seen that we announced we're hiring 1,400 new account executives because we think the opportunity for Agentforce is so amazing. We're solving that within our budgets. Like we're, we have a sort of different mindset around, hey, we can do, we can do both sides of this equation. We can deliver top line and we can also deliver the, the margins for our, for our investors and stakeholders.
In the 1,400 extra, is that because your sales productivity is now out of place or is it because you have like slightly different sales?
It's both. I mean, I'm proud of the execution that we had.
Yeah.
I'm proud of the way that we're operating as a business, and we're doing a much better job of being strategic about where we're placing the bets. When we have high productivity in certain markets, we're going to fuel that growth with more account executives. We'll also look at other markets that aren't performing as well and say, hey, we're not going to invest there right now because they got to get their productivity up. And so we're much more strategic about the bets that we're making.
Yeah.
And we recognize, hey, we need more capacity for the future if we're going to grow this Agentforce opportunity. There's also a profile that's slightly different. If you're selling Sales Cloud to a head of sales, it's slightly different than selling Agentforce and Data Cloud to a CIO. And so we want to make sure we have the right skills and capabilities in the business to go meet this market opportunity.
Yeah. Okay. Last couple of minutes.
Yeah.
I just wanted to change gear a little bit again. How should we think about acquisitions? Like, you know, there was a history of acquisitions. You've been kind of a lot more kind of focused internally, and I guess like doing Agentforce, you kind of needed to do that as well. How do you think about this going forward?
I mean, I think we're always going to have an eye towards what will be strategic to us as a business or the things that we could add into our product portfolio that would benefit our customers and would be a growth accelerator for us. You know, we have a great team of people that look at this every day. It's part of their job. And we review it and say, hey, does this work? Does this not work? But we also have a very, you know, simple framework around how do we, how do we manage, what these acquisitions look like?
Mm-hmm.
You know, is this going to be strategic to our product portfolio? Is this sort of a separate market that we're trying to go after? We want to be very clear about our future. How are we going to support our customers? Is this an extension of what we're already doing or is this something completely separate? So strategically, we want to make sure we're in the flow of, hey, this is additive to what we already do, because it needs to drive growth. We also want to be thoughtful about the way it lands on our P&L. Like how dilutive is it? If it is, then if we have to use equity, what does that look like? How do we bring our customers along and our investors along in this, in this process to ensure that we have the right framework?
and then of course, you know, the key is how do we make sure that this thing gets to profitability as fast as it possibly can? So, we have maybe a more critical eye on the way we do acquisitions now. It's a big part of how we want to continue to scale the business. You've seen some of them that are smaller tuck-ins.
Yeah.
Some big impacts on our business. You know, we acquired a company, I guess it was a year ago. The leader of that, the CEO of that company now runs our entire AI strategy.
Wow.
And it's pretty awesome that we've been able to bring in some smaller, we call them tuck-in acquisitions.
Yeah. Yeah.
But they've had a huge impact on our business. And so, we'll still be part of the way that we operate. We'll still be, you know, a core strategy for us, but we have a critical eye on how we do them now.
Okay. Perfect. Hey, and.