Good morning. Good morning, everyone. Welcome to Dreamforce 2019. I'm John Cummings. I'm the Senior Vice President here at Salesforce in charge of Investor Relations.
So on behalf of the entire Investor Relations team, I want to welcome you. We have a lot of content to go through today. And so, I really wanted just to dive into it. And we appreciate you coming in a little earlier than we might normally start to talk about an important topic of environmental, social and governance issues. And as I've been speaking to investors over the past several years, this is an area of growing interest to many of you.
And so what we wanted to do today is bring up the owners of the areas where ESG intersects with Salesforce. And ESG and Salesforce is interesting insofar as for us, it's part of our culture, it's part of our values. And we spent our entire Analyst Day last year, a good chunk of it, talking about how we view values, how they are part of our business strategy and how they are woven into really much everything we do. And so I thought I'd start this morning by just doing a very high level introduction of ESG at Salesforce and then bring up some panelists who can lead a discussion today. And so let me just dive into that.
If this will work. There we go.
Terrific. Okay. So I wanted to start here because ESG as a topic is evolving across companies, and there's multiple reasons for that. First of all, most is we're finding that consumers at some level are also these values that the company upholds across these areas are important to multi stakeholders. And you've heard our CEOs out talking about their views on stakeholder theory and where that how that drives business values.
But 1st and foremost, consumers are willing to pay more from a company who is socially responsible. We have employees value these issues, so they're more likely to work and join companies that uphold these values. And then certainly, more millennials are taking these values seriously and how they with the influence on the company and its community and the planet. And for Salesforce, you've heard us talk about this where values create values. And these values of trust, customer success, innovation and equality are woven into everything we do.
And we know and certainly at a SaaS company, trust our ability to deliver that service, keep data private and ensure that we are behaving in the most ethical manner is critical to the success of the company in the long term: Customer success, innovation and equality, and these are all represented actually by the panelists who will be speaking to you today. And we know that at the highest level businesses today can be the greatest platforms for change in society. And we whether that's in terms of public education and Salesforce is very active in our communities, in the schools that we support, topics of equal pay and being a leader in ensuring that there's equal pay for equal work, and Amy and Tony can speak to that today, and equal rights. And equality and respect are critical for the company and its future. And so these values are instrumental in guiding us as a company.
And it's not just our values, but it's also the values of the United Nations. And we are part of this effort along with the United Nations and their goal to make significant changes in areas of hunger, for example, or in poverty and eradicating some of these issues around the world. And Suzanne DeBianca,
who was the former
President of both Salesforce Foundation and salesforce.org is with us today. And she leads a number of our sustainability issues, can speak to across this intersection of SDGs. And so all this sort of leads to the framework of both the E and the S and the G. So let me just touch on those. First, in environment.
So whether it's issues of setting 100% renewable energy goals and how that renewable energy will power sales force over the next several years, whether it's how we think about deploying CapEx for creating the most sustainable infrastructure and buildings for our employees and reducing the impact on the society and the communities around us. But environment is an important initiative for Salesforce as is areas across social. And we've talked over the years about our 111 philosophy, where the company donates 1% of its time, 1% of equity and 1% of product to the communities in order to basically put our money where our mouth is as it relates to these important issues in making change in society. And social, again, is this is this path to equality, whether it's inclusive business practices, equality groups, Tony Profit is here today, our Chief Equality Officer. Prior to joining Salesforce, Tony was with Microsoft and held operational roles at HP and Carrier and really is a champion for creating these equality groups inside the company, these affinity groups.
And Tony can speak more to that today. And making sure that we're elevating underrepresented voices. And then, of course, Paula Goldman is here. She's our Chief Officer of Ethical and Humane Use of Technology and also ensuring that the technology that we deliver is being used for the purposes that support our values as a company. And so finally, we'll talk about governance today and how the policies that we create and the governance structure that we create is we're always leading edge here and bleeding edge.
And that the policies that will uphold these sort of these other core values, whether it's ethical policies, how the Board and the governance structure of the company is set up to ensure that ESG is being reported out to and has the attention at the highest levels inside the company, but overall to ensure that the company is operating with the highest levels of integrity. So we report out on this in multiple different avenues each year through the proxy, through our SEC filings on 8 ks and 10 ks, 10 Q and most importantly through our stakeholder impact report. And this is a very comprehensive report that we put out each year on our efforts to advance these goals across ES and G. So with that, let me invite up to the stage our panelists today. KT Rabin, who is the former CEO of Glass Lewis, one of the most important proxy advisory firms and analyst firms in the country.
Kei T. Was with Glass Lewis for 14 years and CEO there for 12 Amy Weaver, our President and General Counsel and Suzanne DeBianca, who is our Chief Impact Officer and really leads sustainability at Salesforce And Tony Profit, I mentioned, our Chief Quality Officer at Salesforce and Paul Goldman, our Office of Chief Ethical and Humane Use of Technology. So if you would all come join me on stage and we'll get started. Thanks. Come on up and I'll leave you to it.
Thank you.
Thank you. Thank you, KT. Thank you so much.
Can you guys hear me okay? The mic is working. John, thank you for providing the background that sets the stage for today's discussion. Before I launch into my questions and hopefully kick off a good dialogue amongst the 4 people sitting here next to me, I'd like to briefly provide some context for this discussion today. Glass Lewis recently published its 2019 proxy season review, featuring an analysis of ESG developments and investor voting trends.
While issues related to climate change remain high on the stewardship and risk oversight agenda for investors and issuers alike. There was a sharp decline in the number of environmental shareholder proposals submitted to vote at annual meetings this year. They were down by roughly a third over last year and down 60% since 2017. This is due largely to a reduction in climate related proposals as there has been a substantial increase in reporting by companies on climate issues. This year, in place of climate resolutions, there was an increased focus on human capital management.
And as I'm sure everyone in this room knows, Salesforce is not only a global thought leader in this area, but really walks the walk as you will hear more about today. Although shareholder activism continues to make headlines and ESG matters are now top of mind at all types of shareholders, even the quant. The number of shareholder proposals going to vote overall is also declining. This disconnect between growing interest in shareholder rights and activism and the declining number of shareholder proposals going to vote is a trend that's been developing since at least 2011. In many cases, this trend can be attributed to more engagement between shareholders and their portfolio companies on ESG matters.
Essentially, what's happening is that the dialogue between companies and investors is preempting the somewhat antagonistic, I guess, shareholder proposal process. The dialogue has led to a better understanding of shareholder expectations and improved ESG policies, practices and disclosure at companies. Salesforce really does stand out among companies in this respect. In 2019, Salesforce received an outperformed rating on all three components of the Sustainalytics ESG rating, which we Glass Lewis features in its reports for every company that's covered by Sustainalytics. Further, Salesforce continued to demonstrate responsiveness shareholder concerns about compensation design and included a proposal on its AGM ballot to eliminate super majority voting requirements following last year's related shareholder proposal.
Similar to what Salesforce did in 2018 following the 2017 shareholder proposal for the right to call it special meeting if the 15% shareholder support threshold was reached. So I'm really looking forward to today's discussion. Indeed, I suspect that our panelists could speak for hours, if not all day, on their areas of expertise. But I'd like to kick off the conversation by asking Tony to talk about his role as Chief Equality Officer. Salesforce really is in a league of its own.
As I said earlier, when it comes to practicing what it preaches regarding equality, in particular when it comes to pay equity. How do you see your role in driving the business of Salesforce as a platform for change?
Great. Well, thank you, KT, and I'd add my welcome to everyone. Welcome to Dreamforce. And so I see my role as being a partner to the other leaders at Salesforce and to all of my colleagues at the company to make sure that we're building an amazing place to work, place where everyone feels seen and valued and heard. And so some of the ways that that is manifest an important one was evil pay.
And these practices predate me. I'm not the creator of this innovation was the idea of just auditing the pay of everyone on the planet that works for the company for parity and equity based on gender to make sure that you're being paid the same if you're doing the same work in the same location. And to date, we've invested more than $10,000,000 in that important investment and making sure that everyone feels equal for the equal value for the work that they're doing. So it can be manifested in many ways. It could be something as simple as as you walk across Dreamforce seeing gender neutral bathrooms or even in the I noticed in the building here, making sure that we have those sort of accommodations.
So that regardless of your gender identity, you feel comfortable being in the sales force space and being part of this community. Another way that it's manifested through we talked earlier John mentioned our equality groups and other companies might call them employee resource groups. We think this is also an important practice to make sure people feel that their identity is recognized and celebrated. We have 12 of those. Some of them are maybe typical of other companies like employee resource groups for black folks or the women's network or Latinx folks and some of them less so where we have an inequality group relatively new one that's called Faith Force.
And the beginnings of that were you think about your identity and I challenge each of you to think of your own identify as a Black male heterosexual cisgendered person. But if you ask someone else in that litany they might put their faith first. And so, yes, the question will can they be their authentic self at work and the answer unequivocally has to be yes. So about 2 years ago, we founded Faith Force just it's an interfaith group just to make sure that people of faith feel like likewise their identity is recognized and they feel that they can be their authentic self at work as well. The last thing I would 2 things I would leave you here with here is the spirit of this that's woven through this is a spirit of humility.
There's no pretense at Salesforce that we have all the answers. We'll have challenges along the way and we just work to be humble and acknowledge those places where we have challenges and we have work to do. John talked about transparency. There's another platform of transparency that's very important to us. Last week, we released our annual representation update.
So literally, you can go on your laptop or smart device and go to salesforce.com/equality and you can see our latest representation data. We put it out there not in any point of celebration because you'll see we have a tremendous amount of work to do, but to be transparent and to be accountable to all of our stakeholders. So some of the headlines from those data that you will see at salesforce.com/equality are that the current representation of the company globally is 33% of the employees that work for the company worldwide are women. Last year at approximately this time that was 31.6%. So we improved 140 basis points.
So you can see a tremendous amount of data out there. We have one new practice. I'll close with this that I'll highlight this year is that we actually set a target for the U. S. Representation.
And the target is for representation of women, underrepresented minorities, think about that as Black, Hispanic or Latinx, 2 or more races, indigenous folks and also inclusive of LGBTQI plus also veterans and also people with disabilities. So currently, we're at 43.9% of the people that work for Salesforce in the U. S. Are in that group collectively. And our target for the year 2023 is to be at 50% in the U.
S.
Thanks, Tony. I mean, I think it's interesting you bring up, you mentioned before you launched into the statistics that accountability is really important and you see this as sort of you're on a path. You don't have you're not going to be perfect. They're going to learn things over time. Part of what you need to do in order to learn things is to track what you're doing.
And I we were very fortunate. The reason I'm here today is that Keith Locke did a solid for us last year by coming to the Women in Governance Conference and speaking about pay equity at Salesforce. And one of the things that he talked about was just the big data project. So trying to collect the right data, develop the right sort of metrics for evaluating that data. So can you talk a little bit about this and how also because in this room you got people who do nothing but set targets and look at how they achieve those targets and where they don't and where they exceed.
So tell me a little bit about how what that process is and sort of how you set, if you will, targets and evaluate your
management decisions. And so for the leaders of large organizations at Salesforce, every month they get actually it's a live dashboard, but they get an updated scorecard. And so what's on the scorecard? How many women work for you today? How many women work for you a year ago today 30 days ago?
In the last 30 days, how many women did you hire? How many did you promote? Or how many are treated? And in
the U. S. And the U.
S. Only, they also get the same data for underrepresented folks and people of color. And there's a second scorecard for executive ranks, PP plus because we want the entire organization right up to the Board to look like society. So they get a second scorecard, same litany. How many women, how many do you hire, how many do you promote, how many are treated, same in the U.
S, U. S. Only for underrepresented minorities and people of color. And so that empowers our leaders to have the data to make informed decisions to make sure they're working hard to find the best talent and to make sure that they're making great hiring and promotion decisions.
Thank you. I'm going to come back to you on something else later, but I'm going to jump over to Suzanne. As EDP of Corporate Relations and Chief Impact Officer at Salesforce, what role do you and your team play in driving change in the business? How do you fit into this mix?
Sure. And so thank you for having us and for showing up early on the Wednesday of June 4th to hear about some of this work that we're doing in this area. And I'll just and I'll come to the data question with Tony because I think it's both relevant and important to this group, but overall. So I do a couple of things. I was the founder of dotorg and the foundation.
I'm an original gangster of the company. I've been here 19 years. And a couple of years ago, I sort of saw that we were doing so much more than philanthropy and that there wasn't all that many of us that could represent well. Incredible work was happening with diversity. Incredible work was happening with sustainability and workforce development and the governance group within legal and all sort of across the company, but there was not really a great place that we had an umbrella narrative, an umbrella scorecard, an umbrella message.
And so part of what I do is sort of I'm the kind of umbrella collector of all this data across the company and then reporting out against it. So the stakeholder management report, what we do in the 10 ks and the proxy, Julie is sitting here on the front row, leads all the reporting efforts. So that's part of one thing I do is aggregate, right? I aggregate great work happening all over the company because we really believe in the distributed model. If the distributed model creates ownership throughout the company, which is why we have the culture we have.
So we don't want to centralize, we want to but we need to get clear on our sort of message. Second thing is, I deep dive in sustainability and climate. I think that is the most important issue of our time as it relates to the SDGs. It underlines some of the other goals, so we keep dived there. I run some of the workforce development goals.
So for
those of you who are because we're all really steeped in all this terminology that SDG, you
want to explain that? Sustainable Development Goals. United Nations put together a set of targets. It's actually a second set of targets after something called that Millennium Development Goals of which they actually had some really good outcomes on some of the social issues. So they have a new set of 17.
You see them all over the Dreamforce campus. So we're really lined up in a focused way against 6 of them. But we work sort of across with a lot of our customers in all areas. And then the last thing I'll just highlight on is, I run-in partnership with the ventures team and impact investment portfolio. And we're very focused on looking for entrepreneurs in environment, edtech, workforce development and diversity and inclusion.
So that's a fun time.
Is that sort of like a pipeline potentially for things that you're going to potentially acquire that Salesforce might end up acquiring? It's not
about acquisition than it is about being intentional about where we're investing our funds. It was sort of a hypothesis we have. We said if we have if we bring intentionality in the sort of capital markets, we've never done that before through corporate venture. And we find great deals given all our criteria, and it's been like a resounding success. So that's
been a fun part of it. Last year sales force, this is also for you, received the 2018 Finance For the Future award for communicating integrated thinking. What did Salesforce do to win this award? And if it isn't obvious based on the answer to the first part of my question, why should this award matter to shareholders?
Yes. I think first of all, that's we have an incredible finance organization in this company. I mean, they drove that. You heard John Cummins talk about it. I mean, this is part of our distributed model.
Mark Hawkins is the Head of our EarthForce Ohana Group. He really led this effort sort of across the business within our long range plan and other areas. And I think part of why we won in partnership with this just incredible team who owns and drives for these initiatives is that we were able to build something back to the data called the Sustainability Cloud, which we launched. And that's going to be really exciting, but it's basically investor grade data. We needed it.
Our sustainability team was if you look at to Tony's point on transparency, we keep acquiring companies. So we keep making progress and then sort of stepping back a little because of the acquisitions and making progress. So the same is true. You'll see our energy usage is increasing, and we're doing all these things to decrease it, but that's because of our acquisition strategy. So we need to stay really in front of that.
And if you can't measure it, you can't manage it. And so it's a transparent reporting system that we've now sort packaged and make available for all of our other customers. And even when it continues to increase, we continue to offset and bring it down. So that's what the tool
is all about. And then one more thing, Mission 2020 and the step up declaration project, what is that? What's Salesforce's role in that?
So that was created by a woman by the name of Christiana Figueroas, who is one of the architects of the Paris Agreement. And it really came about after we our country pulled out of the Paris Agreement. And we sort of saw a lack at the federal level for real climate policy, that she saw the opportunity, we saw the opportunity that businesses had to go faster. So we made science based targets to bring our emissions down. Again, it's partly why we put this tool in place so that other customers and people that join that initiative could measure their data more effectively.
And it's a coalition now of over 50 companies who have made science based targets. And we don't have a lot of time. And so we need companies to go faster. Great. So
I have a question for Paula. Earlier this year, you were appointed as the 1st Chief Ethical and Humane Use Officer at Salesforce. Please explain to me what this role is and what's involved?
Sure. Absolutely. So I don't think
you're on mute, switch.
First of all, I have to say that a large part of the reason I joined Salesforce was all the things that we have been discussing, right? And over the years and I came from the world of investing with an ESG and impact investing focus. And over the years, I knew people like Suzanne, for example, right? And I kept seeing a company that was willing to set the bar, to really set the standard in this space. And it has been incredible to watch that from the inside.
So Chief Ethical and Humane Use Officer, to our knowledge, the Office of Ethical and Humane Use is the first of its kind. So our remit is really threefold. So one is, essentially setting policy for how our products get used driven by ethics, right? Looking at the consequences of our products in the world. The second is infusing that into the day to day of how our products get designed.
And maybe taking a step back, this is a really interesting inflection point for tech right now. After decades of optimism, all of a sudden, the technology industry is kind of in the crosshairs, right? And if you look at the newspaper headlines, one after another, about people realizing how important technology is, how it's affecting our day to day, right? And it is incredibly important that companies are taking responsibility for how their products live in the world. And that's really the remit of this office.
And you I noted earlier that today is Paula's 300th day on the job, literally it is today. So what has been she's not so what were your successes, I guess, and the things that you've learned that you sort of maybe disappointments, I guess, but in your first 300 days? Maybe I would describe it as the challenges you didn't expect to be as challenging.
Well, I've learned a lot and it's been really quite incredible. One thing which I probably already touched on, which is just that watching decisions get made from the inside and really realizing how sincere people are, right? How much sales force means what we we mean what we say, right? And these commitments are borne out in detail in our everyday work, even when it's not visible. A second thing has been really interesting, right?
So in some sense, the Office of F1 Humane Use has to look at some very complex problems for which people of good faith could disagree. And watching the ability of a company that has the maturity to have those conversations, to face them and have them in good faith, right? And in some sense, what's been really interesting, one of my main learnings is that you could say the process is the product in this regard. People want to know, okay, so you came to a decision, how did it get made? Who is at the table?
And maybe that's one final thing I'll say, which is that I have the privilege of working within the Office of Equality, which has been a stroke of genius. One, because it embeds the ethical using right in the core value for Salesforce, but also because if you think about the role of technology in the world, really the key question is, is technology making the world a more equal place or a less equal place? And so to live that every day and to be asking ourselves, who is in the room for these decisions? Whose interests are being reflected in these decisions is really core. And I'll make
some more color. Maybe tell folks about
your counsel and how that works
and some of the listening things
that you've done.
For sure. Yes. So we have and this actually part of how I came on board. I was part I was an external tech ethics expert on our Ethical Use Advisory Council. And the council has both, as I mentioned, external folks.
It also has executives from across all functions of the company and frontline employees. Constellation of players, pretty unique. And that council meets when issues get prioritized for them to look at. And we go really in-depth with a set of questions about how an issue matches up to our values and to our ethically used principles. And just a ton of listening to stakeholders across the company and outside the civil society players and whatnot.
And I will also say, we're constantly trying to innovate on ways of listening, right? So whether it's a survey that goes out to all employees or confidential focus groups, office hours, on and on. And again, in a spirit of humility, we know we don't have all the answers. No one's done this before. And so but I really do believe that this will be par for the course.
In the same way that say 15, 20 years ago, it was not standard for tech companies to have large security organizations, right? But now you would not ship a product without red teaming for security vulnerabilities. I believe that ethical use is a similar thing that it will become just part of the course in the way that technology companies do business. Yes.
Thank you for asking that follow-up question. I'm going to jump over and ask Amy a question and then I'm actually going to come back to to, God, we could be here literally all day. I got so many follow-up questions. What is the Board's role, right? So we've heard from important employees of the company talking about what they're doing and their role in all of these initiatives.
What's the Board's role in overseeing ESG matters and being involved in some of these initiatives that are being discussed today?
Great. Well, thank you for that question. And we have several of our board members here today who can stand up and correct me if I get this wrong. But we have an amazing Board that is very, very active. And there are 2 committees in particular that most directly oversee the efforts that we've been talking about today.
The first is our nominating and governance committee. And like every public company, we have a Nominating and Governance Committee. And over the past few years, we've increasingly been going to the committee on issues around sustainability. And these are particularly issues in Suzanne's world and environmental issues. To the point where we actually kind of batted around the idea at the last meeting about whether we should be calling the committee, the ESG Committee or whether we would keep the name nominating in governance.
And the jury is still out on that decision. But it's been a very important role to see how critical that is to our company. The second area is about 2 years ago, we set up a privacy committee of the Board. And this is unusual. I'm not aware of any other public company that has a privacy committee.
But we felt the issues around privacy were so fundamental to Salesforce and so fundamental to our product and to our values that it was really important to establish this committee. Around the same time is when we started talking about ethical use. And that was another issue that I thought was very important that we were that the Board was seeing what we were doing, understanding what the processes were. And when we really looked at where does this ethical use provision fit within our committees, is this something that goes to audit, to comp, to nominating, we really decided that it fits the best with privacy. It fits the best with those committee members and with the spirit of what we were trying to do.
So we now have a privacy and ethical use Committee, and Tony or Paula presents to that every quarter. And it's been an incredible way of making sure we have the right processes in place, the right governance, but also a really good sounding board with 3 incredible board members to give us feedback on what they're thinking.
Great.
So I'm going to actually go around and ask each I'm not
sure who I'm going to target
this question with first. But like what do you think like in your respective areas, what are the medium? Well, no, I'm going to start short, medium and long term risks for success here. So I don't know who wants to take this question first?
Go down the line.
Go down the line, okay.
And I
want to say the things that put it in this category, there's a lot there's probably you probably have much longer list than we can talk about. So the things that wake you up in the middle of the night and you're, oh, shit. And I'm worrying about this until 4 o'clock in the morning. And the things that really excite you and also keep you awake.
Yes. And I'm going to keep it brief because my colleagues have many important things to say, but partly when I grab the mic first, it says actually I would really, really, really want to thank the investor community. And I want to ask you to continue to hold the bar really, really high and keep companies accountable on ESG issues, especially relating to climate. I think we've gotten a lot of pressure from the investment community in a really, really positive way. And again, we do have a lack of federal policy right now.
And we need you more than ever. So I just really, really want to say thank you and keep holding everybody's feet to the fire here. It's really important. So I'm just going to pick one thing, which is climate. And largely why I'm really thankful for this group of people, which is what keeps me up at night is the timeframe that we have to deal with this issue and our trajectory as a planet.
And so we're not going to hit the emissions reduction targets pretty clear. So we have to but we have to continue to stay committed to bringing them down to making companies make real commitments about not only being net 0, but becoming like net positive where they're we need to be off the grid as corporations. Cities need to cities are going fast also. But so I think what and it's why we built this tool because we not only needed it to be able to provide this investor grade data to you, but we know that because we're trying to hold other people accountable, they also need tools. So I think what keeps me up is the timeframe.
What I'm really excited about is the momentum and that the investor community is engaging, that our customers are engaging through the RFP process, that we are collaborating in a way we had Apple, Tim Cook from Apple yesterday, and I was speaking with his sustainability. But we are coordinating and collaborating on climate in an unprecedented way. And I'm really, really excited to see that happen in the industry.
I'm going to pick both a challenge and an opportunity. Okay. Challenge and I spoke to this already is that how do you scale listening, scale trust, right? And in some sense, success is really that folks of all perspective inside outside the company still really heard in a decision making process.
So how
do you scale that? And I will say that will be an enduring set of things that we will innovate on. And then an opportunity is, I think I have been super excited to see how we've embedded Ethical Use into our products. So for example, we have an Ethical AI practice and have released a number of features this year that help our customers navigate technology responsibly. So for example, we have a feature that came out this year called protected field, which helps people say
Sorry, what's it again? Protected field. Protected field.
So people it helps customers say, look, I've got some sensitive data categories. I may or may not want these categories to influence a decision. So let's say we have a customer will have a category of data that is about zip code. The feature will have a little pop up that says, hey, did you know zip code can be correlated with race? Do you want to protect that category in your decision making or not, right?
And we've seen this enormously positive response from our customers about those types of guardrails that we can build into our product. And I just am super excited about the future of that type of work because it is it's good for everyone. It's good for us. It's good for our customers. It's good for the world.
I'd frame this as a priority, not a risk per se. I think it goes across all the focal lengths of short, medium and long term. We underline, we underscore that we really are working to build a workplace where you don't have to check your identity at the door and you can really be your authentic self. And we're doing this in the context and this applies to literally everyone in the room and every organization represented in the room where folks are showing up for work based on their identity in a world that's increasingly polar and divisive. And we all see it.
We all see the headlines crossing and the tension. And it's not a U. S.-centric thing. We see that in many countries around the world. So the challenge is how do you let folks show up and have their authentic identity and be themselves in a world that's increasingly divisive.
So that's really at the forefront of how we think about things
and trying
to create places where folks can have to Paul's earlier point, where people aren't always going to agree, but having places where people can have a constructive dialogue, a respectful dialogue, where they can build empathy between and among themselves without necessarily trying to mandate certain dogma and on certain things. So I think that's really priority that we have and an opportunity for us and I think for all organizations around the world.
So I always freeze when someone asks what keeps me up at night. As general counsel, everything Everything does. Okay. That's my job to worry. In this area, I think what probably concerns me the most and this is not specific to Salesforce is that there's so much talk and so much energy right now around the ESGs and also around stakeholder theory.
And my big worry would be that we let this be a fad, that this is something that comes with those and that companies throw around us as marketing without really having substance behind it. And I think that's why it's so important for there to be transparency about the process, transparency at the numbers and transparency to the shareholder community, which is why we put so much in our 10 ks. And we started doing that about 3 years ago. We were one of the first companies to start putting a lot of our information right into filed documents. And there was some debate on whether to do that, but it's been fun to see other companies follow in our footsteps on that.
And I hope to see that adopted by more companies going forward. Yes.
It's as the former CEO of Glass Lewis, you'd hear from company we would hear from companies all the time that we're struggling because they've also got a very diverse shareholder base who has a very diverse set of ideas about what it is that you need to be reporting to them and how you need to be reporting it and how do you would somehow figure out you have to put a stake in the ground, you have to decide this is what we're going to do. And I will advise you as wearing putting on my CEO of Glass Lewis hat for a minute to say that you should not let what you have to say get in the way of what you should say. And you need to figure out how to communicate your story in a way that you think makes sense instead of trying to sort of come up because what ends up happening is that you sometimes and Crystal Milo over here, I'm going to point her out is one of our Directors of Research at Glass Lewis at U. S. Companies.
And there'd be moments when companies were trying to figure out what to do and they would end up vomiting disclosure. That's what it was like, right. It was trying to put all the stuff in there to meet the needs of everybody. So it sounds to me like you guys are doing what needs to get done in order to I mean, you're figuring out the way you think is the right way to communicate. But obviously, how is your engagement program with your shareholders developed?
Because I mean, it's not just your CFO and your CEOs talking to portfolio managers and analysts, people in this room, but people other folks within the institutional investor community within those institutional investors that are responsible for ESG matters, proxy voting, etcetera. So how has your communications program, I don't know who and are you are all 4 of you in some form or fashion involved with some of these conversations?
Well, in terms of directly communicating with our stakeholders, 2 of the key people, John Cummings, obviously, is our lead on this. He also works very closely with Sarah Dodds, who is Executive Vice President on my team and really leads our corporate governance function, who actually really should be sitting here today, that was under the weather. So Sarah and John, Neet, I and John, you're going to have to correct me if I get the numbers wrong, but I think with shareholders representing more than half our shareholding base every year. And that's on issues related to compensation as well as and going forward.
Great. Well, I kind of want to think it's we should probably try to open up to the audience and see if anybody has any questions. Unless anybody has any sort of final thought, I think I've pulled a lot out of you, it's really interesting. Questions? I don't know how we're going to handle that.
Is there somebody got a mic? Mic is coming your way.
Thank you for posting this balance. It's really interesting and it definitely should be part of the conversation with more and more investors and something we're hearing more demand for our investors. So it's very helpful context for us. One of the tricky things to me and I think this is mostly for Paula is kind of where you draw the dividing line on ethical use and sort of what's the proper use of the technology. And we're starting to get to that question more and more of like who do you want to cut off from using your technology?
And there are certain lines that are very obvious like we don't want terrorists using it. That's very easy to draw that line. But tobacco companies, that's a little bit harder and firearms companies are a little bit harder and financial services companies like Morgan Stanley, like maybe, I don't know. So how do you guys think about that slippery slope of when you start drawing lines like what makes you the arbiter of like who's a good ethical company, who's not a good ethical company?
Great question. So a couple of thoughts. One is that so when I got when I came on board, we did an exercise, right? And we said, okay, where are what are our core values as a company? What are the key principles for ethical use?
We actually surveyed our employees and put them in rank order according to how our employees cared about them. And then did a large amount of comparative analysis, forward looking analysis, are the key issues that like really line up against that? And I guess I would say one more thing there, which is also a key aspect of that is how intimately involved is our technology in an issue. And when you do that analysis, what comes out the other end is a small set of key issues, right? And Amy mentioned, for example, privacy, which is very obvious for us as given that you think about what our technology does in the world, it's stuff like that, that we're focused on, right?
So I think that's really the core answer to your question, but it's obviously a very good question and we proceed very carefully with this work. I guess maybe actually one more thing to say, which is that I'm also very heartened by the fact that it is not just companies like Salesforce trained to do this alone. It's very, very important that there is a set of shared standards around this activity. And so for example, we are really very active in the partnership for AI, which is trying to set standards around, for example, the explainability of technology of AI and how a company responsibly does that. We worked with the World Economic Forum this year and sent a fellow, someone from Amy's team actually, to pioneer a community around ethics and technology.
And it's through that that I think a set of shared standards rather than having a company each company on its own set these standards. That's I think how we will see most success here.
Yes. It's definitely going to be challenging as government dials back on good governing that the companies will have to step in and sort of fill the breach and figure out because otherwise, once again, you're going to have a whole bunch of different standards and so leveraging each other. So and I wanted to ask anybody that asked the question, what firm are you from and what's your role in that firm? Thank you. Any other questions?
There's somebody here with a hand up.
Thanks. Kirk will turn to Evercore. This one might be for Suzanne. As more companies start giving more disclosure on environmental resources and things like that, is there an arbitrator of that in terms of how good is the data that we're getting back around all these companies? I mean, if we start trying to measure companies on really the impact they're having.
When you look at the data you have internally or you look at the data that you have versus other companies, is there a way to make sure that it's a level playing field so that we're judging companies equally on how they're doing? Because it seems like there's an emerging area, so there's not an audit there's not auditors out there necessarily, maybe there is. But this is we can look at E and Y and know that you will go through your books and understand that that's probably closure. But how
should we think about sort of the data
that we're getting around sort of environmental sustainability from companies?
That's a good question. Thanks.
Yes. Thanks. It's a good question and it's an emerging field because there are standards, but there are many. There is series, what are some of the other there? We mean business.
SaaS. SaaS.
So there are emerging sort of common standards, which is sort of how we build the tool to sort of align to those. They need to get more sophisticated over time. Again, like I keep coming back to this tool simply because we needed it because nothing was in existence, but it
was built in partnership with
E and Y. So it's auditable data. So what's really cool about that from our perspective is we can get enough enterprise customers on it and agree some level of anonymity at the macro level, we can begin to drive policy because we can see by industry and by geography where people are not performing well because there may be sort of a local issue with the city's renewable energy plan. So I think that when you think about looking at this data, you need to have it be auditable investor grade data and you need to go by the SaaS rules by series and but it continues to kind of emerge and it's imperfect. But the more the better is my view in this area.
The challenge for a lot
of this data, right, is that it's not standardized. It's companies that are responding to questionnaires. And some companies respond aspirationally and some companies respond telling the truth. And then there are ratings that are developed. And so some companies will be compared unfavorably because they answered the questions.
And also there's sort of open ended questions. So forget the aspirational versus the reality, also just 2 different people interpreting the same question differently. So then that comes into play with these ratings where they're not perfect. And I will give an anecdote. I was in New York and the Society of Corporate Secretaries was having its New York chapter meeting, which is only open to the corporate secretaries.
It's not the big conference where they invite everybody to come in. And somehow somebody knew that I was in New York and said, we need to talk to you about ESG ratings. Oh my God. And so a whole bunch of guys came down, a whole bunch of people came downstairs to say this stuff, we thought proxy advisors were bad, but the ratings are driving us nuts and blah, blah, blah, blah, blah. And I said, look, and it sounds like it's what Salesforce is doing.
This is a reality and this is early days and this stuff is going to evolve. I'm so happy I'm in the G business because G is really easy. It's mostly numbers. And the standards pretty much everybody has agreed on what independence needs and blah, blah, blah, blah, blah. But what you need to do is you need to get in the room, the people in this room need to get in the room with companies and figure out what makes sense and avoid trying to do everything.
If you keep trying to boil the ocean, you're not going to make anybody happy. But it will not be done unless the people in this room are sitting with the people in this room along with others in the same industry and they hash out and decide, forget all this other stuff, here's the standard, here's what we need to do.
And I think the last thing I would say, and I just as it relates to the long term component called sustainability, that's just look for the data that's not discretionary, open ended question, like what is energy usage, what is your corporate level, it's math. Yes. So just really look at what those kind of practical numbers and that's what we focus on with the solutions.
Question over there?
Hi, Caitlin Walsh with the Canada Pension Plan Investment Board. We've been doing some work as well around representation in terms of gender. And so we've had targets for our investment groups around increasing women, for example. And one thing that we run into is like what tools are you giving to managers to kind of make those decisions in the right way. So you don't get backlash like, oh, I'm only hiring a woman for this role.
And then that really undermines a lot of what the women that are at the firm feel like. And I think we're starting to get past that. But what are the tools that you give managers to allow them to widen the funnel or be bias language and job descriptions? So just curious what how you're accomplishing that?
So it's a great question. And so one of the things in this pursuit that we're doing in driving a quality as well as the core domain use is making sure that we're using our own platform. So if you go to if you just search for trailhead.comspaceequality, you'll see the way that you're if you're around this week, you're not you Trailhead is going to be ubiquitous and sorts of things we talk about, about how we do enablement. So it's part of how we do equality enablement at scale. So we have a trail called inclusive hiring.
And the purpose of this is if we have dozens of hub locations and dozens of functions, there could have been hundreds of ways for someone to get hired at Salesforce. But there really should only be one way. And that way should be you're hiring the most qualified person, but you're making sure that you're a bit explicit about what those qualifications are. And that qualification isn't necessarily a pedigree per se, but the qualification really of what are the competencies to do this job. And then in the interviewing process, you're making sure that the slate of folks that you're interviewing, you're striving that the slate of folks that you're interviewing is diverse and that the panel is diverse and that you're looking objectively at those qualifications versus subjective dealings of a cultural fit.
And so those are some of the tools. We do it in the coding area in a very objective way where we use a tool called Packer Rank, where rather than putting someone on a whiteboard and giving them a coding challenge, having a 3rd party tool that it does an objective assessment of the person's coding competency to make sure that you're getting the most qualified person versus the subjective in the room view of the person's coding capabilities. So those are some of the ways. And we're working putting that out there kind of open source, so people can both use it and critique it and add to them. So those are some of the ways that we're doing that.
Great question.
Any more questions?
I was waiting for Crystal.
Hello. Crystal Milo from Glass Lewis. You've spoken a little bit about the acquisitions that Salesforce has been making. How do you ensure that a lot of your ESG principles are either part of the acquisitions or transfer over as you incorporate those companies into sales?
Great question.
Sure. So great question. We've been very explicit. And one of the things that really came to light on equal pay is
the very first
year that we did our study. We did the study, announced that we needed to make payments of about $3,000,000 paid it off, but then realized, you know what, we can't do this just once. We need to do it every year. Well, we rebranded the study the 2nd year, and we were really dismayed to find out we needed to pay another $3,000,000 We're trying to figure out what went wrong. We thought we were on top of this.
Well, it was a number of factors. So one of the factors was that was a year where we had made a number of acquisitions. And it really came home to risk with us that when you acquire a company, you're acquiring its pay practices. So we started looking at that more seriously. Now that isn't going to stop us necessarily from buying a company, but it's going to let us know what that cost is going to do to us.
It's going to let us know how we are going to have to treat that going forward. Well, I think the same is true now for ESG. And if we are looking at companies for investments or for acquisition, we need to be looking at what their standards are and what their approach is in all of these areas, because it may take additional investment from us. It may influence the culture of the company, but we know that it's going to be important.
And I would add to
that we have a systematic approach as we integrate companies that are acquired. We call it day 1, it's not literally day 1, but figuratively day 1. We focus on cultural integration, collaboration with the team, a big part of this. Brent Hyder is in the back. He's our new Chief People Officer.
And so his team is an integral part of this of how you think about not just how do you integrate the platform and the systems in the go to market, but how do you integrate the cultures of the company and making sure that this new acquired these folks are culturally aligned with the way that we're thinking about the world.
Great question. Any more? Well, I think, oh, no, there's one more.
Thank you. Mark Murphy with JPMorgan. Since it's timely and happened yesterday, how do you view the interruptions at the keynote, which the mini protest would seem to be relating to the use of your software by border patrol? And what do you think your policy will be going forward on handling those events?
Sorry, is this a question about the event itself?
No. The interruption. I see. So
I guess a handful of things. So one is, I do think it's very important that we are open and actively listening to stakeholders of all kinds, right? And that's I think you saw that, right? You saw Mark say, let's give people a chance to speak, right? And I think that's the stance that has to carry across all of our work.
But I would also say, when it comes to controversial topics like that, we have to take a holistic view. And think about our work with the U. S. Government. We're working with the Veterans Administration.
We're working with the USDA. And we have to look across all of our work and think about how we're supporting institutions of democracy.
I'll just say,
I got an I don't know about this room, but I got incredible positive feedback from across the board about the position that we took on free speech. And I think that's just an example. If you look at our corporate values of trust and customer success and innovation and equality, I mean, we try to live them every day. And I think this kind of comes back to our value. And we believe in free speech and people have you need to hear every voice in the room, because it's important.
All right. I think that's it. I don't know whether John wants to come up here and make some closing remarks. We didn't plan it, but I know he can do it. Fine.
So, well, thank you. Thank you all so much. We really appreciate you coming to take the time to do this. As I said, it's important topic for us. It's important topic for many of you in the room.
And we look forward to kind of continuing a dialogue across all of these dimensions. I think in closing, the one comment I would just make is, this organization, these initiatives are woven throughout Salesforce. There's not one person who takes on the entire mantle of ESG. And these are all elevated at the highest levels in the company to Mark, to Keith, to members of the Board. And so we appreciate everything you do on these really important topics.
So with that, thank you so much. We have about a 30 minute break here before Mark comes on and we look forward to carrying on the Analyst Day then. So thank you so much.
Hello, and welcome to Analyst Day at Dreamforce 2019. My name is Evan Goldstein. I'm the Senior Vice President of Corporate Finance and Strategy, and I'm pleased to introduce today's event. We're going to start off here in a few minutes with a presentation and Q and A from Mark Hawkins and John Cummings, followed by Adam Selipsky, CEO of Tableau Keith Block Brett Taylor and then finally, we'll end the day with Marc Benioff. Before we get started to any of that, let's do some housekeeping items.
As you all know, in settings like these and in today's discussions, we may make forward looking projections. These forward looking projections are based on risks, uncertainties assumptions. These can be found in our Safe Harbor statement available on our website, www.salesforce.com/investor as well as in our filings with the SEC and our most recent Form 10 Q. Lastly, as you guys all have the slide deck up on your screens, as we've seen them, we have posted that deck with the SEC and will be posted on our website later today. And with that, please welcome Mark Hawkins, President and CFO.
Thank you, Evan. Appreciate it, buddy. Okay. Good morning to you. I hope day 1 of Dreamforce is going okay.
Yes? Good. I hope you like the main stage presentations and such. I hope day 2 goes better. We're really glad to have you here.
This is my 6th Dreamforce. I've really always enjoyed this moment to get a chance to interact with you. I get a chance to spend a lot of time with our customers and our partners, talk about product, talk about the future. And so thank you for first of all for spending the time with us, really a pleasure. I want you to know that our IR team and myself, we always have a tradition before we shape the Investor Day, which you've now all seen, which is always fun.
We go out and listen. We always try to listen to you non stop. But we have what's called a listening campaign to go out to our investors and understand on the current pulse of what's most on your mind. And then we try to address that and shape our agenda today. So I hope you'll find this interesting and we'll get in and elaborate and then there'll be some time for Q and A.
But as Evan pointed out, you're going to see the whole leadership team, a good chunk of our leadership team, I should say, and we're really honored to have you here. So let's jump into it. We got a lot of materials to cover. But the thing I want to talk to you about, 1st and foremost, has to do with the theme of today's presentation, which is sustaining growth at scale. And the theme really is all around doubling the company again by FY 2024.
We've done it before, we've done it before, we're going to do it again, and it's all about the growth playbook that we've used for the 1st 20 years to get us here and the values that we've used to get to this point and where we're going to go in the future. And we're going to go high level, and then we're going to go into detail, and and then obviously, we'll go into Q and A. That's the plan. So let's jump into it. When you look at the table of contents of the 20 years of growth, I like that because Chapter 1, I always think the theme is the first billion is the hardest, right?
And then we start to get momentum and then we stretch to the 20,000,000,000 dollars range as we exit Chapter 3 and it's all about the future. No matter how proud people are about the past, I talk to the company all the time about better, better never done, always be leaning forward and always be looking to do better and that's what we're all about here. So let's look into the future here. And the first thing I want to talk about is updating the guidance for this current fiscal year. We're going to talk about the earnings call here shortly, so that'll be fun when we get into that.
But right now, we wanted to update the guide. We thought it was very relevant to do at $17,000,000,000 at the high end. You can see that and we're pleased to be able to report that to you at this time. But let's take one step further forward because at this time of the year, we typically even though we're in the middle of the biggest quarter of the year, we typically give you our initial guide for the revenue of next year and that's in fact what we want to do. And there you go.
We have it at $20,900,000,000 at the high end. That's our plan. We're really pleased to be able to put that forward as the company continues to point toward our aspirational target of FYI 2024, which we have plans for. So let's get into that. And here we have the theme of the day, which is to double yet again and to go to $34,000,000,000 to $35,000,000,000 in FY 'twenty four.
And we're going to talk about the detailed roadmap on how to get there. But one of the things that I always say, when you think about this company in the 1st 20 years of the playbook, I really start with the message I said last year at the Investor Day, which is values drive value. And we can show, I would say even further, values drive value that drives competitive advantage, and that's what we talked about last year. But if you look at our values of trust, customer success, innovation and equality and how those have helped us since the inception of the company and to prioritize and to drive actions every single day in our company, that has been the cornerstone that has helped create the company that we are today. And you've seen a lot of companies that don't that are not obsessed with customer success or trust or innovation and you can see sometimes that's a problem for them.
This has been super helpful for us. At a high level, we want to reiterate that and you'll see as I go through the details of how those values become alive and our detailed plans. But let's talk about the discussion that we're going to have today. What we're going to cover is we're going to talk about the markets and some of the secular tailwinds. We'll talk about drivers.
We'll talk about strategies, particular strategies, innovation, both organic and inorganic. We know there's an interest in both. And then I'm going to have John come up and talk about margins and cash, which are 2 of my favorite topics. I told the entire company, growth is number 1, profit number 2, cash number 3, every employee in the company hears that repeatedly from me and from our leadership team and from the finance team. So around that, John is going to talk about that.
I'm going to come back and wrap up a little bit with some perspective about our 1st 20 years and our ambition as we go to FY 2024. With that noted, I think the best thing to do is look at secular tailwinds. Look, I know that the world and you know that the world's going digital, the economy is going digital, companies are going digital and where do they start? There's no question where they start. They start where you connect with the customer.
That is very clear. And with this secular tailwind from these 3rd party studies, it's also clear that the portion of the economy that's going to modernize as people want to prosper and survive in a digital economy, they're investing. We are the beneficiary because there is no company in the world, no company in the world that's better positioned in our market space to take advantage of the digital transformation than Salesforce, and you can see it in our numbers. But it also helps when we let values drive value because innovation is critical for us. We've been a pioneer since the beginning, since the beginning when we came up with the 1st SaaS app in the world and we have never looked back, better, better, never done, Always striving to go forward, always striving to define what is going to help our customer for them to connect with their customer a whole new way, so for them to get the Customer 360 vision and we've been racing toward the future.
The thing I want to call out is we've also been willing to invest in the future. We've deployed a substantial amount of capital to lay the groundwork to go tackle our FY 'twenty four target, and we are positioning ourselves for Chapter 4 and excited to be doing that as a first mover and a pioneer. And so for good reason because we're going into the most attractive enterprise software market and the most attractive portion of the enterprise software market, period, is our market. And you can see it's stratified, dollars 168,000,000,000 in our market TAM. That's up substantially from the prior year.
That's attractive. And you look at the growth rates and the stratification of that, and that's a great opportunity as we point ourselves to double yet again. And one of the things that we know when you go to tackle a market and you have values of customer success and innovation, you point them to the customer, you keep the customer in the center of everything you do and that's exactly what we do is we keep building all the way around they need. We listen and we're directed by what they need and we're passionate about that. And the customer is benefiting.
They are absolutely benefiting. Talk to them while you're here. And there's a reason why they're voting their dollars with Salesforce. And speaking of voting their dollars with Salesforce, one of the things I love is you always heard me say, if you have the facts, pound the facts if you don't pound the table. I love these facts.
This is 3rd party. This is how the market is taking shape. And this trend continues to persist that the dollars are being voted for sales force. We continue to competitively separate in a way because we're doing 2 things. We're driving innovation and we're driving it and focusing it on the customers.
Values drive value and competitive advantage, and we can see that. Well, that's part of the growth story as we go in the playbook and keep driving toward the future. But the other thing we know within these markets and when we talk to the customer, there's a lot of opportunity even after you initially serve the customer to keep building out around that Customer 360 vision. And when you look at this picture, what you see is the percent of customers that are on a multi cloud has been growing from 29% up to 40% on the customer side. And that's a really exciting thing because what you see to the far right hand side of the slide is there's a 20x multiple between the average spend of a single cloud and a multiple cloud customer.
So the more we drive them all the way around the Customer 360 vision, the opportunity for us to grow and grow is there in a huge TAM that is growing attractively. That's part of the playbook. But there's more than that. When we look at even the top of the pyramid of our company, the very top of the pyramid, one of the things, this slide is interesting because what you can see are these are the top 25 customers in each cloud. And you can study this a lot.
You guys have the slide, and I customers
in each cloud. And you can study this a lot.
You guys have the slide, and I point you back here. But what
you begin to realize, even at the top of the pyramid, the ability to sell them 2, 3, 4, 6 clouds is ever present, think about lowering the pyramid. This is a lot of room to run. That's what I look for in a growth company. I've been part of growth companies for 38 years. This is an opportunity for us to go forward and continue in our pursuit of doubling the company again.
So let's talk more about drivers and get right into it in terms of how we're managing the growth. When we look at the drivers, one driver that's important is our sales capacity, and we know the algorithms. And in case you guys are interested and some have said they are in the listening campaigns. We do correlation coefficients. We do math everywhere to try to understand how to optimize coverage.
What are the input output ratios? How do we really manage the company in a rigorous, rigorous way for growth? And we do that and we look at that. But sales capacity times productivity equals new business in our market. With a TAM like we have, with the room to run like we have, with the products that we have in a leadership position, this is great opportunity.
So you can see over time how we've been productivity has largely been flat bumps up and down a little bit here and there, but largely that is part of planning for growth. We know that, we're doing that and we're preparing for that. But it's more than that. We also don't take a monolithic view of the customer. We instead think about a coverage model that is very, very focused to a lot of different kinds of customers.
And we try to tailor and understand their unique requirements that they have for that particular buyer, that customer and how to be successful. And we try to tailor that, approach that. And of course, we get tremendous interaction now at the CEO level for obvious reason. The world's going digital. They know that it's a race against time to get digital to be a modern company.
And so but all up and down the line, you can pick them. We try to tailor that. That helps us grow. That helps us get market share. That helps us make the customer successful, which helps in the end to achieve our home plans.
Of course, land and expand has been famous in our company. And once we plant a seed with great products, world class products, we're able to progress. But I really think the math on this picture and the next picture are actually quite revealing around values driving value. There are 2 messages on this particular chart. The first one is at the top.
When you look at the really for our incremental annualized revenue, it's really been quite stable, the portion that's coming from installed base versus new logo. And that's awesome. We're getting that many new logos in terms of revenue at this scale is really tremendous in my mind. But then you take it down to the next point, which is the next three circles at the bottom. And when you look at the portion that's coming from the installed base, which is hugely valuable and why customer success is such a critical value for us.
You break that down and say, wait a minute, in our installed base, they're either buying new products, right? That's awesome. And you don't buy new products if you're dealing with somebody you're not happy with that hasn't delivered on the existing products or they're buying more of the existing products and you don't buy that unless you're happy with the way that's helping your company modernize. In both cases, customer success drives opportunity for us, and that's why we're maniacally focused on the customer. But if you net it out and you synthesize it, this is what kind of the payoff here, is you start to look and say if you take the 26% of our business that's coming from new logo from incremental annualized revenue and you take 50% of the 74% that's coming from the installed base, you have a whopping 63% net new products to the customer that are driving our incremental revenue.
Customer success, innovation, I think you can see how this all ties together and why we started at the high level framing, and that's happening. We think that's a very good sign across the board. And when our team executes on the playbook, we build RPO. And that is an exciting thing. And we build that.
And $25,000,000,000 is a big number, and that informs us also as we think about the future. But even our business model, even our business model is helping us in our pathway to our goal in FY 'twenty four. That's another positive attribute that the world is trying to emulate. Let's go deeper into our strategies. Let's go right into it with enterprise.
I think it's a great place to start. We have become a greater enterprise company and I have to just call out Keith's block. When Keith came, said we're moving up market and we talked to you guys about it. Well, here's the math on this on moving upmarket and we characterize this 58% enterprise in FY 'sixteen going to 67% upmarket, Great growth rate and a great 2.3x enterprise customers. But that's not my favorite stat on this chart.
My favorite stat is on the smallest part of ESMB, we're growing 18% over the same time frame. We're holding at the low end and pushing up market, and that's not easy to do. That's going to help us continue to grow. When you look at the full TAM of Enterprise, great opportunity as we go forward. We're becoming much more strategic with even the biggest accounts in the world.
And speaking of biggest accounts, let's talk about biggest accounts. We're accelerating growth in the largest accounts. What I love, I presented a lot of you guys in the same room in FY 'sixteen, we were super happy that our top 10 customers, the lowest one having $10,000,000 of run rate revenue per year. Well, I have three points to make on this picture. One is if you look at the lowest in the top ten for this year in Q2, you would have had to be more than 4 times as big to even make our top 10, number 1.
Number 2, if I look at the number 1 in FY 2016, it wouldn't have even made our top 10 list, number 2. But number 3, the thing that attracts me a lot is take a look at the industries. Take a look at the industries to the far right, and we're going to talk about that because industry really is exciting because of the attributes of industry and the incremental TAM that we're going to talk about. Let's look at it. I look at industry success.
It's helping us sustain growth. It's part of the playbook. It's part of the playbook that's taking us forward. The thing is there's a lot to like on this chart, but what catches my eye is the market share at the top means room to run, room to run for us to go ahead and pursue our goal. And I like the growth rates of these industries and you can picture them and that's why we're focused on the bigger ones.
But we're going to go deeper into this and look at the attributes of industry in a little bit here, but that I like. I also feel like when you look at the new growth by industries, there's a couple of points to be made here. This is the customer count for those that are greater than €10,000,000 in annual spend. 16 versus €20 has gone up 3x. We continue to elevate in terms of how we're dealing with the industry.
You can pick your favorite industries like services, financial services 4.6x, customer count or retail. I get pulled into financial services a lot, as you can imagine, to talk to the customer. But I want to point your eye to retail and consumer goods. How many people think there's a lot of disruption going on there? There's a lot of disruption in retail.
I think it's really telling that right in the middle of that disruption, they need to modernize on a digital economy more than ever. That's a really valuable point to know. And we are there to help them as they go through their own transformations that are mission critical for the viability of their companies. But here's what I like the best about industries. First of all, when you can go deeper and speak the language of the customer, when you can be more customer focused, which again is part of our ValueStrive value, when you can add more value and incremental functionality, you get reward.
This is $160,000,000,000 TAM independent of the €168,000,000 that I showed you. Those are literally additive. Number 1, if we can make progress, which we are. Number 2, for the new logos, when we sell our new products that are industry products, which we're relatively new at, as we've talked about over the years, 50% of those sales create new logo. That is a powerful stat for us.
Number 3, you get higher ASPs for all the reasons you would expect because you're adding more value. And number 4, and this is for our Financial Services Cloud, the attrition rate is less than 3%. Put that into unit economics and think about how that works. That is really valuable to us. We'll be a key part as we go to double the company again.
But there's more than just industries. Obviously, there's the ecosystem. It's that flywheel that helps amplify our growth and our momentum. We don't try to do it alone at Salesforce. We try to do it together with our partners, and we have the partners to do it with.
If you look at our SIs, you can see some of the best in the world. Two points I want to mention, they are growing their partnership certifications by 30%. They're investing in their people and our book of business by 30%. And they're all here, you can talk to them directly. There's a reason why.
They look at the market share that's public. They see who's competitively separating. They see the Magic Quadrant. They see whose products are being received the best by the customer. They see what's happening in the marketplace and they're betting their business and their book of business on working with us.
And we are super honored to partner with them on it. We have even though we have more than 1,000 partners, we have over 100 now that are industry focused, which is really helping us really tap into that opportunity. That can help with the flywheel of continuing to grow. But also ISVs are part of that ecosystem and that same flywheel. And when I look at this, you guys are well aware, we have the biggest business to business app exchange in the world.
We now have over 5,000 listings. And you can see the downloads and all that. But what is it really doing? Not only is it it's great for the ecosystem, it's extending the coverage for the customer. It's making them more successful.
It's pushing them around the Customer 360 vision wheel that they need to have. It lowers attrition when we have these AppExchange relationships. It's a good dynamic and it's a good part of the flywheel. International Business is also part of our success. It will help us sustain our success and growth over the long term.
You can see as our business has grown rapidly, you can see the whole notion of we were 29% of the business revenue, now it's 34% of the business revenue that will continue to grow. The nice part though is our Americas keeps growing at a revenue basis in a healthy way. So that's a good dynamic that's happening, but watch that figure continue to grow as we penetrate more and more because we're building out, we're investing internationally. And as a person who's lived internationally, it matters to make local investments. It matters to do empowerment.
When I look at that, you can take a lot of stats that you like, but we have some very world class leaders. Miguel Milano is in charge of EMEA, the President of EMEA, APAC in LATAM. You've got Koda san in Japan, and they have a number of other people working with them or for them. And they really are helping us dramatically in terms of building out our capability. These are world class CEOs as we scale up to the next level.
These are people with well established reputations that I think you're well versed on. And by the way, in the listening campaign, you asked us again, share more of the people, who's driving this, not just the Section 16s, we're trying to all through Dreamforce on main stage in these presentations to address your listening input. So that's another part of what's helping us prepare. But then you look at also Trailhead, which is very unique and it's a unique advantage and it's a unique part of the flywheel that's helping us. And I hope you saw MainStage with Keith and Mark and also Sheldon who got up there, there was a vet and talking about learning Trailhead.
Learning Trailhead, gamified learning capabilities and getting badged, creating a set of credentials that allowed him to get a great job, he's helping what in his job, he's helping the customer be successful with Salesforce. There is 1,500,000 learners that are helping their companies make Salesforce more successful and we're helping make them a hero. That is a unique advantage that I just want to call out. It's all about, again, values drive value, and that's certainly our community is helping us help our customer and it goes on and that's part of our playbook. But also our strategic technology partners, why do we do this?
It's for the sole reason to extend our ability to deliver our Salesforce 360 capability to our customer. Take innovation as a value, technology as a value, Drive it to customer success and we're going to win. That is a unique set of customer or a unique set of technological partners. That's a lot of wood behind the arrow to help us help our customer. And it's a rare company that you can find that has those alliances all at one time.
And that's where we're at at Salesforce. So that brings me to innovation. And I know there's a strong interest in innovation because I've talked to a lot of you. And so we'll get right into that. The thing that I want to look at is because we listen to the customer, we've applied maniacally our prioritization to deliver value.
There is nobody in our market space that has a better coverage than we do with technology. And we know that. We continue to drive harder based on customer input. And that's been created largely organically, but also somewhat inorganic. I want to break that down and talk to you a little bit and talk to you a little bit about the inorganic side of it.
So when you look at the organic, you can pick your favorite. I'm just going to pick one story. It's Sales Cloud. We changed the world literally by the creation of this capability, but we didn't stop. You cannot stop innovating when you start organically.
You need to constantly modernize and push hard to the future. You can see PRM, high velocity sales. I hope you liked the demo on that. That was really interesting yesterday. Sales intelligence, it goes on and on.
But in organic, you never stop. And we've made a lot, a lot of progress with organic innovations. But we also have the capability to take inorganic and blend that in with our organic and be even more competitive and have even more coverage for the customers. So let's take a look at inorganic. And you step back, I just want to stop at Service Cloud.
And some of you that tracked the company for a long time know that we bought Instranet. It was a seed of a seed, barely any revenue, an idea and is on the verge of being the biggest cloud, single cloud in our entire company. And so that was inorganic start of a seed. And what happens when you buy a company? The day you buy it and the day you close it, you begin to make it organic.
You start to innovate on it, you divert your resources technologically, your go to market resources, you begin to immediately make it organic to take it to another level. Service Cloud is one example of a great seed that blossomed. But we have a lot of examples that you can look at, Heroku, it goes on and on, but I just want to give you a sense of it. So let's look at the framework. People ask and say, Mark, could you frame this for us?
Just help us. How do we think about it? Here's how we think about it. We want to make sure you see that. We have it's always driven by the customer need, always.
We look at tech and talent as one category that we buy, Adjacencies or new markets and you can see by the pure math, we're looking at specific IP, tech and talent, tuck ins, those happen, they just kind of happen. There's future growth opportunity, very little kind of immaterial margin impact and we go. And that's been the math of the company in 20 plus years. That's the lion's share of everything that happens. Instranet being a great example, simple example to carry the idea forward.
Look at adjacencies, complements which help extend our organic innovation. Again, they all blend together. And so you have an example, we did 10 of them roughly, Steelbrick is a great example. Into the sales cloud, we already have a world class sales cloud. It's more functionality to help the customer.
They want that coverage capability. Great, we do it. We get a little bit of a tailwind from a growth and then short term, we get a little bit of a margin impact until we work through it, of which we'll talk about how we work through it. And then you deliver scale new offerings, which is very few. Tableau is a great example.
I couldn't be more happy that we can now have Tableau as part of our team and we'll be talking a lot about that. What's on my mind there are 2 things integration and innovation. And that's what we're excited about with that particular company. So we'll get in there, creates tailwinds on the growth until of course the 5th quarter and then you keep then you own it, but we start innovating from day 1. And on the headwinds, we obviously get some short term headwinds and some long term headwinds when we have to work through purchase accounting, which we'll show you.
So that's how we think about it. And but it's we think about it mostly about getting unique, world class great assets that are going to make our company stronger for the long term. They're going to make our competitive positioning stronger for the long term and they're going to satisfy our customer for the long term. And what's good for the customer is going to be good for the shareholder for the long term. And when you look at the assets here that we got, and we're going to talk about that a little bit more as well, but this is some of the significant assets that have really helped build this out as we deliver customer success.
You asked about names. You want more visibility. What I think is really important here is the culture, the entrepreneurial culture of Salesforce is powerful. When you look at these names, you look at the people here, some have been here for more than 10 years, Alex Daum. Some have been here less than like 6 months.
Adam Slutsky, we are so happy to have this kind of environment. These are world class folks. Talent is there for sure. But let's talk about the financial implications and how we look at this. And because people say, Mark, like how does this actually work?
Well, you can see the tailwinds. You can pick your favorite for sure, no problem. And you can also look at the headwinds. And I just want to be super transparent about how this actually works. You got purchase accounting.
And unlike some companies, we don't try to get it excluded from the impact on non GAAP operating margin. We take it all in. And we then you have the write down, and you can see how it writes down on average for a company that has revenue, which most of them don't as we showed you when we purchased them. When they have revenue, there's a write down of the RPO. And it's about 30% to 40% depending on the average contract duration that matters.
But it's just illustrative. It gives you a sense and then that tailwind or the headwind gradually dissipates over time. We get it. Transaction fees are very transitory. Integration fees don't take that long, but they're a little less transitory, but they go away.
And then we don't buy something if you're not going to invest it to deliver the value to the customer, integrate and innovate. And that's what we do, and that's how we built this company. And when I look
at this, I want to
show you the way I see this as a CFO of the company. When you look at this chart, I want to point your eyes to the left and look at where it says pre acquisition operating margin. I'm just talking about the couple of big ones. They're the other ones you can see how we kind of navigate through. We know that it has a short term impact on post acquisition operating margin because of the four items I talked about.
We get that. But then over time, we drive we keep driving our core business organically to be more efficient, operating margins organically to get better and better. And we also try to work and take the financials of the companies that we bought and make them better. And then we have a great asset. We take care of the customer and we make the financials better.
Well, how can you tell? I'll tell you mathematically how you can tell very, very simply. When you look at the non GAAP at the time of acquisition for ExactTarget at minus 6%, demand were at 3% and Mule at minus 9% non GAAP. We took on those businesses and yet from FY 'fourteen, we were at 8.9% non GAAP and the consensus has us for this year at 16.5%. So we're approaching doubling the operating margin while we're taking on dilutive assets and reshaping those.
Take a look at our gross margin and see what's happening on the scaling. It is happening. We're driving organically, but there are short term effects that we're looking at to build a long term value creation for our customers and for our shareholders, our stakeholders. That's what's happening. That's the way we look at it.
Just want to be super transparent because people ask us about that. But the other thing that's interesting is the track record. And people you can look at the small things and how they have blossomed, Instranet, Heroku, you can pick lots of them, Steelbrick, whatever. But you can also look at some of the 3 big ones. Tableau, look, we've been able to talk for about 10 days about an integration.
We'll talk more about that, I'm sure, throughout the day. But let's just look at ExactTarget. Revenue at time of acquisition $286,000,000 revenue today almost $1,500,000,000 But I want to make more points. We not only 5x ed it, we're growing with this model, very exciting. But I want to unpack that a little bit.
PowerDOT is a fast growing business, north of $300,000,000 nested in that. And with the point that I want to make to you, as we paid $2,500,000,000 for this business, it's generated 1 point almost $1,500,000,000 of revenue. But if you unpack Pardot alone that's growing north of $300,000,000 rapidly and you compare it to another asset that traded recently called Marketo at $4,500,000,000 we paid $2,500,000,000 in total for ExactTarget. I think you can see my point. That's penciling out really, really nicely.
And we are happy about these acquisitions. We're thankful. We look for unique assets that will make a difference with our customer, and they are over time. It takes time to build a great company. So we covered a lot of ground, but I think this is a great time to turn it over to John Cummings.
John is going to talk about cash and margins and then I'm going to come back and wrap it up and then we'll get into Q and A. Over to you, John.
Thanks, Mark.
Thanks so much. Thanks, Mark. So while Mark has spent the first part of his presentation talking about the growth and growth outlook for Salesforce, what I wanted to do is spend a little bit of time talking about margins and how we manage margins across the business. And to do that, I wanted to bring up something we showed you a couple of years ago, we finally refer to as a cube. And this is a visual representation of the individual businesses across sales force that make up our portfolio of products, where we sell those products and who we sell those products to from an end market perspective.
And the intersection of all these individual cubes, if you will, represent and make up the unit margins of the business and in aggregate, make up the unit margins of sales force. And so this is a whole portfolio of those margins. And so, you'll recall some of these key terms and expressions that we use to think about unit margins at Salesforce. We have 1 P and L, as you know. And so we look to unit margins to kind of help us think through the business and manage the business, starting with attrition, which defines the expected life of revenue recurring revenue over a period.
And the life time revenue, it defines that, the cumulative value of that dollar of recurring revenue over the expected life. And then how much it costs us to acquire that dollar of recurring revenue. And that's our cost of book represented by sales and marketing expenses. And finally, cost to serve, which is represented by our COGS, our gross margins, plus R and D and G and A. And those expressions go into the unit margin calculation.
And the unit margins, in and of themselves are effectively define the limit of profitability at 0 growth. And we've talked about this in prior years. But it also, just to refresh your recollection, establishes the relationship between growth and profitability, and that's defined at this upper expression and where the cost of book and cost to serve and attrition also influence the intercept at the y axis. And so this slope, again, is important because it defines that growth and margin relationship. And we have a portfolio of these relationships across the business.
And it's important to note that these slopes, this relationship changes over time. It's not static, right? And our goal is, as managers of the business, is to push this out, to maximize the potential value of both of those products, regions and end markets by influencing the inputs to the unit margins, and you see that here. And so what I wanted to do too today is just take you through a few of this and how these intercepts are actually working and where they live today and see that in relationship to one another because I think it really helps describe the economic relationships at Salesforce. And so let's start with the regions.
And in the regions, our largest single region today is in the Americas, and our unit margins there are about 40% today. Now you can compare that to a couple of other regions, in this case, in EMEA, growing a bit faster than both Japan APAC and the Americas with margins of about 43%. Now the margins are a bit higher because our attrition in EMEA happens to be a bit lower than the average. And in fact, there's also a bit higher cost of books, so offsetting that. Compare that to something like Japan APAC, a little bit higher attrition and a slightly lower cost of book.
So you see that affecting the unit margins. Taking a look at it by end market, you see, in small businesses, these margins today are about 35%. That's where we started the business, about 35% margins working up with the goal moving into the enterprise, and that's where we've been going, as Mark's been talking about in his presentation. And you can see the relationship to the economic margins in the enterprise, the higher economic margins, slightly higher cost of book, lower attrition, faster growth in that space. Similarly by product, right?
You see Sales Cloud here at about 44%, service at about 50%, lower attrition. We've talked in the past how our attrition in Sales Cloud, for example, is about half that of the company average. And if I take a finer cut of that and look into attrition in the enterprise for Service Cloud, it's about 2% to 3%. So outstanding stickiness and attrition characteristics in that business, a bit faster growth as you've seen in our results. And you compare that to something like marketing, which is a slightly higher churn rate and slightly higher cost of book given the compute intensity of messaging and the nature of that business.
But what I think is important is this, right? So if you put all these things together, you get a portfolio of these various unit margins and a portfolio of attrition. And again, this is what the company looks like today, right? And what's also important here is the growth from the slowest on the left to the fastest on the right. And intuitively, you can say with these high margin businesses and those growth rates because we've established that relationship between growth and margin, those are the businesses that are effectively providing the resources to go into these faster growing businesses, end markets and so forth.
And so again, this is what our business looks like today, but this is not static, as we've said. We can influence the inputs to the unit margins, which is what we work to do as managers. And in fact, if you look at where we were in FY 2018, we had about a 35% margin across the business. Today, that's about 40%. So we've improved that about 500 basis points over this period.
And the way we've worked to do that is, 1, work on customer success, making sure that you're creating more innovation and utility into the product to help lower attrition. And there's other mechanisms we can talk about that drives down attrition. I'll talk more about that in a minute. Also, we have some tailwinds from cost to serve. You've seen our gross margins improve across the business, and that's helped shape this line and push it out over this period.
And that's offset by some higher cost to book. Mark talked about our efforts and success moving upmarket into the enterprise, higher cost of book success moving to places like Europe, higher cost of book and in industries, slightly higher cost of book. But in all those cases, they are offset by
lower
churn rates, lower attrition. And that attrition is very critical to the overall input. So let's talk about that for a second. If you look at our churn rates over time, back to FY 'ten, you see them there at about 21%, down to less than 10% today. Now the mix will matter a lot in this equation, right, as we look at attritions across the portfolio.
And when we layer on certain businesses, take ExactTarget, for example, higher when we acquired them much higher attrition rate. So we've worked over time to bring that attrition rate down considerably, and that's influenced the way this shape of this input has worked over time. And just as a point of reference, back in FY 'ten, our unit margins for sales force were about 34%. And you see that here, and intuitively, you can take a look at that at 21% attrition rates. But this really is what things look like on the long term and at some level to the near term.
But what I know you're focused on is, well, John, tell me about your margins today. I get it, but we want to understand where you're going. And I think Mark expressed this just a few minutes ago in saying our goal every year is to improve the operating efficiencies of the company. But at the same time, we've been investing in across the business for the long term through inorganic innovation, through M and A, and you see that throughout this period of time. And Mark mentioned 8.9% trough margins here in this chart in FY 'fourteen, moving up to being potentially nearly doubling today.
But we've also invested over this period of time in sales capacity. Mark showed you that a little earlier, right? So these are the things that we're investing in for long term growth of the business. And we focus on that improvement in organic operating margins because of this. We know that if we can continue to improve op margins over and above the prior period, we can help drive and improve operating cash flow.
And I know I've talked to a few of you in the room even last night about our operating cash flow and operating cash flow growth because this is really what we're focused on from a shareholder value creation perspective is driving that. And then above and beyond that is focusing on how do we improve free cash flow. If you look at free cash flow, you can see that growing slightly faster than the operating cash flow over this period of time, and that's partly because we're getting some scale out of CapEx. So back in FY 2017, I think CapEx was about 5.5% today of revenue today, it's closer to 4%. So we'll continue to sort of focus on maximizing the efficiency of CapEx so we can continue to drive operating cash flow and free cash flow growth in this case.
But this is something I think we have already talked to a number of you already who've seen this slide. And it's really to think about what our operating margins could look like next year. And so we'll end this year, as Mark talked about, about 16.5% non GAAP operating margins. That's certainly what our guidance implies. And then we'll focus on driving operating margin improvement organically next year to the tune of right now targeting somewhere in the vicinity of 125 basis points to 150 basis points.
We have a little bit of tailwind from the acquisition of salesforce.org, which is not in the run rate of the business next year, offset by some of the purchase accounting adjustments Mark talked about. I think it's really important to know there is residual effects of this going forward. Not just in the 1st year, right, that carries forward and especially when you think about layering on successive M and A, that has an impact. And you see some of that playing out here. And then, of course, importantly, is the operating margin profile of the acquired companies that we're buying offset or increased and influenced also by the new investments in those business going forward.
So net net, we think we will continue to grow operating margins next year. That's our plan. We'll update you on this specific numbers when we give you our 4th quarter results at the end of February on and about the end of February. And of course, these numbers also assume no significant M and A, right? We've already talked about what that means for the business.
So this is our current thinking for the business. I hope that helps provide a little bit of context about where we've been with our unit margins, how we're improving that over time, relationship between growth and profit and sort of where are we thinking about margins for next year. So with that, I want to bring you back up, Mark, and you can take us home.
Great. Thank you, John. Okay, sir. Thank you. Nice job.
Okay, so let's summarize real quick and then I have a couple of key points and then we'll come up on stage and do some Q and A. But obviously, I hope you've got a sense of the market and the secular tailwinds. I hope you've got a sense of the drivers and how we think about it. The strategies, very specifically, the innovation and how we think about that organically and inorganically, including the moving parts with M and A. The margins, the cash, the unit economics, we want to be highly sharing the information and insights to frame this for you.
Now I want to get into the wrap up in the sense of just thinking about growth. And the start of the presentation with a discussion around our playbook and the chapters in the table of contents in the 1st 20 years. And I thought a lot about it, and as you know, I'm kind of maniacally obsessed around benchmarking nonstop, everything, cost, growth, balance sheets, everything, always. And I looked at the sequential pattern, which is uninterrupted through some pretty amazing different time periods, and that's quite a chart. And the values of our company have driven us to create a competitive advantage to deliver that.
And I thought, yes, values drive value, great, but how many people have delivered growth? And I started thinking like, how many people we talk about growth at scale at the magnitude that we're talking about and say, well, like, how many people have actually done this? So I had a 3rd party help me, a bank, and looked and said for U. S. Public securities with revenue more than 500,000,000, how many people have actually delivered and the key word is uninterrupted growth of 20% or more for 3 years in a row in the 78 companies.
I thought that gives me context about growth at scale, sustaining growth at scale that we're talking about that we did for the 1st 20 years we're working on as a company. And so I wondered about 5 years, and there are 42, of course, we're one of them. And then I wondered about, well, what about 10 years? And there's 9 of them that can scale up growth at 20% uninterrupted over that period of time, 9 years or 10 years including the great financial recession. I thought, what about 15 or 20 and there's 1?
And that's us. So when we think about the 1st 20 years of delivering sustainable growth at scale, it's because of our model, because of our growth playbook, because of our values that have got us to the stage and the execution of the team and our ecosystem and our partners and all the stuff I talked to you about. And that informs on what we're embarking on as we go forward. And this chart shows our ambition
to $34,000,000,000 to $35,000,000,000 at
the high end, but it's informed by the 1st 20 years of our playbook and our market position and the facts of where we're at, fastest to 5,000,000,000 in enterprise software, fastest ever to 10,000,000,000 dollars And I have to tell you, given the we all look on the chart like where were we as everybody in the audience when you start dealing with Salesforce. I know where I was. There's been a lot of change. But when I began to talk about when we were 5,000,000,000 dreaming to be 10,000,000,000, dollars seemed like a long ways away. And then when we were 10,000,000,000 dreaming to be 20,000,000,000 and we're just giving you the initial guide for more than that, It shows you the power of kind of where we're going as a team.
But that is our ambition to do yet again to set history in the software market, yet again stay focused on the customer, yet again stay focused on innovation and our values and deliver this. That's our intention. So thank you for listening. Really appreciate your time here. Thanks, guys.
John? So we'll just give us just a second. John and I will come up and we'll just start to deal with questions, yes? And only important appropriate to put the thank you slide there. Okay.
John, how are you doing?
I'm good.
You? I'm doing well, sir. Excellent. Okay. So we probably have mic runners and see lots of folks out there and but we had everybody in the front.
So by the way, we have the lights on our eyes, so bear with us. We'll try that.
Thanks. Kirk and Trent
at Recor ISI. Thanks for
all the information today. Maybe Mark, just for you, inorganic growth become a bigger part of the story, frankly, over the last few years. And I was just wondering if you could talk about how you think about that in terms of being able to continue to absorb bigger deals as you bring them in. There's how do you scale them out and still manage frankly, what you're trying to accomplish from a unit economic perspective. So can you just talk about how you think about that and maybe how that plays out in your longer term thought process in terms
of the guidance? Thanks. Sure.
No, I appreciate that. Kirk, and I think the first thing that I would say is this guidance is organic. With what the portfolio that we have today, I think, is the first thing that would call that out. The second point, though, that you talk about is just how do you deal with, like, for example, Tableau. We're right in the middle of this integration.
I think you guys all know November 1, we got the hold order separate. Order from the CMA was released. And so that's we're really happy about that. We really trust is our number one value. We want to work with CMA in every way appropriate and that process is that's a really good phase of where that process is at.
But we now have the chance to really deeply talk about integration And we're working very expeditiously. We have a team to work on that, Kirk. And we're looking at how do we just really get to the value that we want to deliver to the customer and the vision of innovation that we have. And I know Adam is here. I saw him step into the room.
He's going be speaking to you guys at length about that. So that's the number one thing I would say is this is organic in terms of our projections. We're going to do a great job with the M and A that we have to really make sure that it's on that good track record list next time we get up and show you of how we're progressing and really execute and deliver that value. But that's the way I'm thinking about it. John, would you add something?
Anything you want to? No. Okay. I'm good. There we go.
Hope that helps. And I'm going to
get a lot of hands,
so I'm going to let Mike Hunter's go over. We've got a ton of people out there.
Thank you.
Thanks, guys. Kash Rangan from BFA. Tremendous amount of detail here. I'm curious your thoughts on margin expansion. You suggested 125, 150 organic.
So it looks like correct me if I'm wrong, but I could extrapolate that to be somewhat linear over the next 3 years or so because you've been targeting the 20 ish organic growth rate. Is that right? And secondly, once you look past the timeframe and growth slows down, is the margin expansion going to be more nonlinear or should we expect nonlinear growth in the next 3 years as your clouds approach the magical contribution margin of 35%, 40%.
Right. Well, what I would say cash break question, what I would say when you look forward obviously we're going to talk about I mean officially we talk about operating margins in February, but I think we definitely get to the spirit of your question. At the levels of kind of growth that we're delivering today and the range that we've talked about for the last several years, I think 1 $25,000,000 to $150,000,000 organically is definitely the way that we're thinking about these levels of growth. Obviously, as we cross different bridges, we think there's another bridge across and we have to think about margins differently if there is a different bridge across. But in the foreseeable future, the way we think about it is at this kind of level of organic growth, I think 125 to 150 organically is where we think about it.
Yes. And I think the view from our side is that, look, we there's always room to create operating efficiencies to a certain point, and we want to make sure we're allocating appropriately across the portfolio as we kind of talked about. The unit margins are there. The market's there. The opportunity to grow is there.
It's not the time to be overly focused on margins given what we have in front of us. I know that's very important to all of you at some level, and we're going to continue to do that. But I think we're going to do it in a way that balances that growth and profitability within that opportunity we kind of define where we are today.
I totally agree. I think it's the unique market position we have, the unique market that we're in and then the additive nature of industries just makes this a very special time to take this company to the next level.
And just
one last thought is, in the out years that you're talking about, it will depend on the rate of growth, right? That's what we've kind of established there. So depending on what that rate of growth looks like, then that will really influence what that margin looks like.
For sure. Thank you, Kash. Other thoughts? I'm going to let we have a lot of
Keith Foxman from Bank of Montreal.
I wanted to follow on that. If I look at
you guys mentioned FY 'thirteen, but if I look at FY 'ten today, your operating margins are actually flat, about 16.5%. Now you've grown your operating dollars 12x. Right. And so to Kash to follow on from Kash's question is we think about the $35,000,000,000 target. Could you talk about at least about how you're trying to balance what may be acquisition influence versus the revenue target?
Because you said that's all organic. But I think investors are still trying to get a sense of the current run rate even if you do some M and A given that you're a much bigger base, can we at least directionally assume that percentage margins will continue to float up as you're a bigger company and able to absorb some potential M and A? And so just trying to balance those 2 out a little bit. But the follow on question is, you're just in the middle of integrating Tableau. Could we at least conclude that there might be some curating time or absorption time where you'd be more reluctant to go out and do some new bigger deals at least in the press as present as we think about the couple of quarters?
Is there some time of ingestion period here that you may want for Tableau?
So the first is, can we are we at a size and scale where we can absorb a lot of M and A, for example, as we think forward? And I think the answer to that is yes. And when I say that, what I mean by that is if you look at the chart that we kind of broke down, the vast, vast majority of M and A that happens, you never really feel just because we're planting a seed and it has immaterial financial impact. And then as things get bigger, even a little bit bigger, obviously, as we get bigger, the ability to absorb that has a less short term impact on us even if it's a great asset, great customer coverage and great for the company long term. I totally agree with you, Keith.
And then obviously, for the bigger ones, it has the math will again be compared to us being a much bigger target. So in theory, it'd be less proportional to us as a bigger company. I think that's very accurate in that way. And then the second one on Tableau integration, go a little bit more detail on that. I want to make sure we dial right into that question.
Do you need some time to ingest Tableau, I. E, you may not be going back to the market in the near term to go another big deal such as Tableau?
My number one focus for me personally as CFO is to integrate this great asset, deliver the value to the customer and allow us to do the innovation that this team has always imagined that is why we're so excited about this opportunity. So that's my number one goal to do that. Look, we have always as a company, as we've showed on the chart, high levels of kind of visibility, we've always M and A has been part of our past, largely tuck in. It will be part of our future, largely tuck in. But we're always in the mode where we're going to try to do what we need to do for the customer.
We're going to try to do what we need to do to build out the 360 and be really successful. But we I would I mean, my focus this year is to really help bring everything we can bring for Tableau. That's what I would say to you. And I think that hopefully, we're consistent with that. And any dialogue, John?
Yes.
I think the one thing I'd just add to that is Keith, when you think back to where we were in FY 'ten, right, we were largely a one product company. We were largely an Emera. We are vastly different company today. That has changed. We're vastly different TAM opportunity.
I mean, we've grown our TAM about $24,000,000,000 just year over year we showed you last year, right? So we've layered on the opportunity to grow for an extended period of time based on that. We invested into the portfolio. We invested into regions throughout that, into partnerships and really getting the company where we are today at scale. So I take the point of kind of where we are flat margins from that period of time, but the company is so vastly different.
It's you can't compare it even close on an apples to apples basis. And I think what we've built is something that's an opportunity to grow to sustain growth over a long period of time, and that's where we are. So you've seen what the ultimate shareholder value creation has been over that period of time.
Could it be higher? Could we
have been done more margin, margin expansion? Maybe, but it might have come into the expense of that growth. Now we're acutely aware of the desire for margin expansion or for profitability expansion. We're driving that into the business on an organic basis. That means we're creating a more efficient company every year certainly at the core level.
So I think we're well set up to sort of execute on the goals we shared with you today. And I think it's a point taken, but I think you have to put it all into context.
Yes. And I'll just add one last point just since you were elaborating a little bit on that. Remind you guys in FY 'ten, I think this is a super good reference point because if you remember what happened in our FY 'ten fiscal, it was basically 2,009 with the great financial recession. What happened is people started to slow hiring, and that was always a regret by people basically because taking the longer term, that will have short term margin increase. But we could have expanded even faster.
So I just want you to know since you referenced that reference point, we always look at that retroactive view is there could have been an even better outcome with a little different angle. And that's something just to put on the table. Yes, and please. You guys are keeping order of all the people that are raising hands because there's a lot of them.
Mark Murphy with JPMorgan.
Hey, Mark.
It's pretty remarkable that you've accelerated the growth in MuleSoft because it already had trajectory and scale. When you look back on that, what do you think what has surprised you? What has resonated? Is it the APIs, is
it the application network vision? And when
you look forward, do you think you can replicate that with Tableau such that the growth of Tableau would actually accelerate and trend ahead of the way you've guided the next couple of years?
Well, it's a great question. And we're like we're going to have a lot of discussion on Mule, I mean, I'm sure all throughout the week. But we obviously are very happy with the way Mule has MuleSoft has come on board, the way our customers have received it. And I think they really the way we see this kind of behind the curtain you guys is Brett Taylor went all over the world and asked people what was most important and they said the integration thing. We got MuleSoft, we brought it in and then all those customers that told us how important it was lined up because they needed help and they wanted to buy it.
And it's factor when I talk to you about values drive values. I mean, they the biggest the nicest part is the way the customer has actually followed up right away in terms of wanting us to work together with them. The customers are asking us to do more and more in the digital transformation, and that's really clear on customer and on data. Those two words, everything around it, they're asking us to help them more and more. So I think the nicest best outcome for me was just to watch the validation of them telling us how important it is and then them acting on it with sales from that standpoint.
And that would be from my vantage point. And as far as Tableau, again, Adam is going to be speaking on this, but I think we all know that Tableau was going through a model transition and they were doing it really well. And they have a very innovative product. And I'll let Adam speak to that. He's going to be on main stage about all that.
But we like the asset a lot. And obviously, it's been a dream come true for this to all come together for us.
Mark, I'll just add one something specific. I think different M and A, we can bring different value to the table on. And scale is obviously one of them for Salesforce. And there's 2 aspects I think of around MuleSoft. One is when we acquired them, one of the things that they had talked about publicly in some of their calls was their ability to hire, right?
So we invested into that and we brought the power of Salesforce and our ability to hire, attract and retain employees specifically for MuleSoft to bear. And we increased their selling capacity among other aspects of their workforce. And that was very critical to the success of that acquisition. We executed really well on it. The other piece is the go to market side, right?
And then, of course, bringing the brand presence and then the opportunity to know that you've got a long track record of R and D to support that business over the long haul and continue to develop the API framework day out. So there's different elements you can bring to each acquisition. So we're not I don't think prepared really to go deep into what that means for Tableau today, but you can that's just an example we might interpolate to and how big of how we could facilitate growth.
Derek Wood at Cowen. You guys showed a slide of, I think, percentage of revenue from enterprise moving from low 50% in fiscal 'sixteen to 67% in fiscal 'twenty. I suspect that, that drives up cost to book. I'm just curious, so we've probably seen cost to book going higher. I'm curious from here what you expect in terms of mix of business and the trend of cost to book.
Is the twothree enterprise kind of the right revenue level in terms of mix going forward? Or do you see that going higher?
Well, I think it's a great question, Derek. I think the opportunity in enterprise is big. It's very, very big. And the thing that John did a very nice job of is showing all the moving parts in economics even at a snapshot level because the cost of book is bigger, but the attrition is lower. And so that's helping on the attrition side as he called out.
Now we're taking on new businesses that typically have a curve where you bring them in and they go against you, but enterprise is certainly going for us in terms of helping in that way. So we like the unit economics a lot with enterprise, a lot, lot, and it's very sticky over the long play. But I think there's more room to run-in enterprise, a lot more room to run-in enterprise. So we factor all that into our business planning. And not only that, I think it's a profound question.
But even by GEO, we factor that into our financial planning.
Phil Winslow, Wells Fargo. Yes, just on the attrition slide, it's great to see that every year and you continue to make improvements on the attrition level and kind of building actually on the last question, obviously, there's some mix here, enterprise versus SMB, there's some mix that are very diverse with different products. And also just some new solutions like the data manager that's given away for free, but I'm sure has some correlation back to attrition. Where do you think attrition can go over the next few years here? I mean, you continue to make progress.
How do you think about where sort of the greatest piece of attrition going forward? And what are the levers that you have to pull?
Yes. I'll give it some thought, John. It's welcome to add in. I think certainly mix has an effect, as you called out, Phil, very aptly. And I think as Derek was touching on a little bit as well, to the extent that enterprise grows, that can help, and that will be a positive arrow, if you will.
And then to the extent that you have new businesses like we brought on new businesses, they have a different signature. And what we find with new businesses, typically not every business, but what we find on a lot of new businesses, they were just like Salesforce. They start with a higher attrition. And as we have time to work them through our customer success group, we that attrition kind of comes down, and we're able to improve that. So you've got a number of different moving parts, Phil.
You've got the enterprise, non enterprise mix in one direction. You have other businesses that we brought on board that are growing and have a different signature that we need to bring down over time. And it's kind of like there's almost like a learning curve that we see It's been true for us and it's been true for acquired businesses. And some of those forces will help us. But I don't want to guide attrition, but I certainly feel it's in a good space and I like the way it's been trending, all mix included, John.
Feel free to
Yes. And I think as we talked about, I think it's that it's a portfolio of attrition, right? We showed that. You can see it by product. There's attrition rates by region and by segment.
And so you've got those three dimensions of attrition and then the rates of growth will influence that. I think overall and getting back to where we can go, where we can go to the enterprise, we talked about there's a lot of room at the top even to expand into, even within the top 25 if you want to think about it that way. But we also have other correlations, more multi plot product, lower attrition, more AppExchange usage, more attrition. If you think about it, more utility overall, marginal utility will drive improvements in attrition. That's where the role of innovation in this is, making sure the customer is satisfied.
So there's multi dimensions to it, but I think it will move slowly over time. But I think we think with that mix where we are today in any case, we could continue to see improvements there.
Great question. Thank you.
Hi, Jen Lowe from UBS. I have, I guess, a 2 parter, but first, you talked about the improvement in unit economics from 35% to 40%. Obviously, a lot of puts and takes there, but can that continue to move higher over the next couple of years?
And if so, what's sort
of the key driver? And then secondly, looking at the 125 basis points to 150 basis points of organic expansion, does that presume that you continue to advance the unit economics? Or is that if you hold it 40% that's sort of what we would see and any improvement would be on top of that?
Do you want me to go ahead and get the full answer? Yes.
So I think, again, I the unit margins can move slowly over time. It depends on that input. So it could be what's the macro look like? How does that influence attrition, for example? How are we doing as it relates to productivity?
How are we doing on our ability to hire and create a very productive sales force in very short order. We influence that cost of book, for example. And then how are we doing with our infrastructure and delivery to make sure our cost to serve is in check over the scaling process. So all those are going to influence. I wouldn't necessarily want to guide it out.
But our goal is to make improvements across those dimensions. As it relates to the 125 basis points to 150 basis points of near term, if you will, of margin, that is going to affect the where we lie on the growth margin continuum. We will not have necessarily it depends on how the input if that improvements that we're driving for the $125,000,000 $150,000,000 influence the cost above cost to serve the calculus. So if we do that, then yes. And if we can continue to push the line out, then that will have a relationship.
But part of that goal is they're sort of interrelated and the Intercept will wherever your current margin is, will fall whatever on the slope of the line is between those that growth margin relationship. So I mean, I don't know what else to say about that.
The one thing the only other thing I would add to you and it just struck me that would help you because people ask us like how do we run the company, give us more information on how we even do that. And I Sam Chung is here who runs our entire FNS, 14 year veteran, super experienced. Evan Goldstein, who you met and teed up, 8, 9 year veteran, runs our FP and A. But we literally, when we do our long range plan, just so you guys know, we do cost to book, cost to serve for the entire company. And so one of the things as we provide more and more rigor to the company in terms of how to understand, think about that when you have unit economics.
You want people to manage attrition or lower it. That's good for customers and good for us. We want people to constantly be improving in cost to serve and driving that even into our long range plans. And you get Brett Taylor and people like that that were literally aware of that and have targets and are looking at that. And you have cost of book with our sales leaders who are mindful of the need to be better, better, never done and literally factoring that into our long range plan.
But I just want you to understand, when John gets up there and looks at things, we are looking at that operationally with every plan that we put together. And I thought that might be another little insight that might help you there, okay? And I know I see Keith up here a bunch of folks in the front line, Karl, a bunch of folks.
Keith Weiss, Morgan Stanley. Thank you for all the detail. It looks like large enterprises and large enterprise motion has been a significant growth driver for you guys on a going forward basis. The 2 thirds of the revenue coming from enterprises over 1,000,000 dollars The ones that of course, I'm going to focus on the one that you didn't give. The ones that you did talk about was how many customers you have over 1,000,000 right now.
Can we get that number number 1? And number 2, how far do you think that could go? Like how many customers could potentially get over 1,000,000? Or do we have to start focusing on doing more with
what we have? Well, first of all, we've shared that stat in the past. So I think that's great input, Keith, as far as sharing that. We like that number. When I look at the size of the TAM and I look at the opportunity in the marketplace, the world's going digital, companies are going digital and they're starting in the back office.
I think the opportunity there is very large to grow that number for years years to go from my vantage point. So we haven't forecasted that number, but we obviously have been very pleased with that number and how that has been progressing. And John, we should just take that as endpoint.
I'll give it to you next year.
Yes. It'll be bigger. But now what And
I think we showed something like 2.3x. I'm happy to show you what the numbers were.
Yes. We've been making progress for sure on that. So thank you for that and we'll look at that. I know there's a
Mark and Karl.
Yes, always.
Karl Keirstead of Deutsche Bank. I have a question maybe for you, Mark, about the 20% growth CAGR. Obviously, an amazing number given your scale. But it's the same number that you guided to last year despite the addition of Tableau. So ostensibly, Tableau is not accretive to your revenue growth rate.
So I want to ask you why not. I suppose one explanation is that you're being awfully conservative about the revenue synergies from Tableau, and so you're not seeing it. But perhaps you could address that.
Well, I guess the first thing I
would say again, thank you, Karl, for the question. The first thing I would say is, obviously, it's early days with Tableau. We've had about 10 days to be able to actually talk in a free and unconstrained way. A little bit more, I think it was November 1 was the day that we were allowed to get more complete on what we're going to do. But we love the asset.
And I just think with all things looked at, we think it's an appropriate guide. And I tried to show, again, the 20% perspective of who's delivering 20%, let alone 20% at scale like we are. And we feel really good about that. I think it's an appropriate number. But we will have more time with Tableau.
Really glad Adam's here, really glad the team is here, and you're going to be hearing a lot more from us on Tableau over the long play. That's what I would say. And I just I would call it appropriate at this stage. That's the way I feel about it, Carl.
Okay. Thank you.
You bet.
Mark Mirdler, Sanford Bernstein. First, let me say, I really appreciate all the data you supply. I suspect it's going
to take everyone some time to fully digest that. Normally, I
don't ask 2 questions, but I'm going to ask 2 questions. I apologize.
The first is the company has driven over many years to expand your offerings, increase sales to larger organizations. You've done that successfully. And yet the annual sales productivity on that chart hasn't increased. In fact, if I'm reading that graphic correctly, it's gone down. Can you explain some of the drivers?
And then a follow-up. Sure.
So the first thing is, I would say is, think about it over a long period of time, Mark, is kind of bumping along in a pretty stable level over a fairly long period of time. And in the same way that we talk about mix between products, also there's mix between geos. So there's different cost of books even in different geos where it might not surprise you that in the Americas we get even more productivity and scale in a more established way. And so I would just throw out to you to consider geo mixes, all kinds of it's not just customer buying preference mixes that are things to think about. But overall, in aggregate, we're very happy with where the overall picture is sitting in aggregate over a longer period of time, all things that we're aware of.
Yes. And I think the one thing I'd just add to that is we work to we know the growth for the company as Mark showed on the chart is not going to be driven by productivity. We look to productivity, yes, you want to you sort of manage to a productivity that's kind of flat to up over time, right? But then at the same time, you're layering on a lot of new sales capacity and new that you need to enable very quickly. So the rate of that you're acquiring this sales capacity will influence that productivity pretty significantly.
Mark talked about this tripling over that period of time. And that rate of growth is faster than the top line rate. So you see that it's pretty significant, certainly faster than the overall total company growth rate of employees. So it's to Mark's point, we work to improve productivity or keep it flat so you can make sure that you're driving that right the right kind of trajectory of your acquiring talent and enabling them.
The other thing is just to reiterate John's point, even the linearity of the timing when you hire can impact the ramping, which can impact that's your point. And just these things are the vagaries. But when it's in a general zip code, that's the important part to
us.
That's very helpful and I do appreciate. As a follow-up, what are the conditions under which you're going to report unit economics anywhere close to or you're going to report margins that are close to the unit economics numbers you just gave?
At 0 growth. So
I hope not anytime That's the short answer. And by the way, that's a number, as you said, we're improving it. So it's a target that keeps moving out. That's what we're really working on. And it depends on what that slope of growth rate is in the near term.
And do the math on that. I know you guys get this, but when you improve cost to serve like cost to compute and other things that is obviously very important to that math as it should be in subscription economics which is well established by the industry.
Again, thank you. I really appreciate
Tom Roderick with
Stifel. You got a question
earlier, Mark, on integration of Tableau. You go back to the exact target deal $2,500,000,000 a long time ago. And that one was even a little tricky to integrate that back in the day. And so now you're talking about a $16,000,000,000 plus acquisition. Can you talk about the challenges that you're facing and how you're kind of working through that with integration specifically.
Compare that with Tableau today as to what it looked like back in exact target states or some of
the other ones? And specifically,
if you can kind of speak to how you're managing sales overlays and product and go to market strategies and how many more people you need now to do that?
Yes. Tom, great question. And what I would say to you very And we literally have had since November 1, I guess, it
got officially
And we literally have had since November 1, I guess it got officially announced like November 2 or some day, whatever it was when it was. But effectively, the we have already a SWAT team. We have a team in our organization. We have a formal organization that works on that nonstop. We know all of what works.
We've had all the lessons learned. We have an incredible Tableau team that we've really the cultures are so connected. It's I had a chance to go up to meet with the Tableau team and just we with the communications are happening, the organizational structures happening to our M and A team coordination and we're ready to go. We will have growth playbooks. We will have every aspect of how do you think about every aspect of a division of a company coming together and that's all being created right now.
But we I can't really get ahead of my skis and tell you a ton more than that only because of something I've never been through in my entire career, which was the whole CMA experience. That release has been done. We're pleased about it. And that's what
I would say. I mean,
I wish I could tell you more. It's kind of a unique experience for us. But we feel maybe it hits the spirit of your question, Tom, about it's a bigger M and We're a much bigger company. We have more resources. We have more ability.
We have seasoned veterans that know how to handle this. And we have a great company that we're working together with Tableau. So yes, these are not like part time jobs for people. This is like a full time organization that's working to execute this and do the playbooks. And I also want to get to the last spirit of your question.
We also do a critique of what we do well and what we didn't do well with every single M and A, and we talk about it openly. In fact, we have members of we have the Head of the M and A Committee of the Board sitting right behind you, Maynard Webb. And so You just put
a target on this.
Yes. No. So they'll probably all come talk to you about Maynard. But as you can imagine, Maynard wants to know and we do a report out on how we're progressing with M and A, every M and A against the targets that we have. And so it's about transparency.
It's about accountability. It's about excellence and execution. And it's about better, better, never done constantly learning. But I think that process might be really important to share with you. But we're you ever had a team that's like been all fired up and ready to go and ready to go and people say stand hold, stand hold.
Finally, the gate open and people are rushing through it. And you're going to hear a lot more about this in the future. Okay? Thank you for asking, Tom.
And this is our last question.
Hi, Girish Pappu from Tencorp. Could you talk about a couple of things that you didn't talk about? Really appreciate the growth vision, but you didn't you don't address often per share.
So if you can
just talk about how you think about that as you think about it. And second, GAAP margin?
Yes, sure. Happy to talk about both of those per share. Obviously, we care a ton about. We think about share dilution, both in the basis of stock based comp and any other dilution that can happen that's obviously important to us, and it's in the equation that we look at in any kind of situation as we manage the company. So it's a metric we look at, we benchmark and we're paying attention to and trying to be really thoughtful of.
And we want per share metrics, obviously, to improve over time, I think, is the first thing. And then GAAP margins, of course, you could see also have been improving. And at the same time in the current year with a major M and A, it's not going to shock anybody. And obviously, the same, there's headwinds that have even an effect on the GAAP side of the equation and that's having the same, not the same, but it's having an effect in that way when we need to push through that. But the thing that I think about is we want all of our financial metrics to be getting better over time, notwithstanding that we'll make investments that are going to build for the long term.
So I hope that helps in that respect, but these are certainly on our mind.
Great. That was the last question. So thank you all very much for spending the last hour on my gosh, on 20, and we're heading towards an hour and a half with us. We have a break right now. Anna, what should we come back on in 20 minutes?
No one, anyone? 20 minutes. Is that right? Yes.
Matt,
can you remind us? Sorry? Going to keep going. We're still going. We got Tableau now.
Okay, great. So we're just going to run right into that.
Let's do it.
Okay, terrific. Great. So up next we have
Adam Selipsky of Tableau. So we'll get them set up.
Very good. Thanks,
guys.
Perfect. Good morning, afternoon. We're right on the cusp. So I guess still late morning. I see a lot of familiar faces and names out there.
A lot of folks who have worked with Tableau for a number of years. So nice to see all of you again and nice to see the rest of you that we haven't seen before. I'm Adam. I've been the CEO of Tableau for a little bit over 3 years. Before that, I spent 11 years helping to start up and run AWS.
I ran most of the noncore product development teams worldwide there. And this morning, we're going to I'm joined by our Chief Product Officer, Francois, who will be up here as well. And we're going to try and do a few things. We're going to talk about what we see the kind of nature of the opportunity in analytics to be. We're going to talk more detail about who Tableau is, how we approach that.
Francois is going to take us into more detail and actually give you a tour of Tableau. And then we'll try hard to save time for some questions if you folks have them. So with no further ado, why don't we dive in. I'm not going to talk a lot today just about the integration with Salesforce. Happy to address it at a high level, especially in Q and A.
But as Mark said, there's probably more that we don't know at this stage we do know. But again, happy to address any questions there. Incredibly excited to be here at Dreamforce. Personally, it's my first one. It's amazing to see this kind of excitement and energy and, of course, just the scale of this amazing event.
And it's fantastic opportunity just from a business perspective for Tableau. And obviously, given the prominence with which Tableau is being featured is just, I think, one example of the synergy between the companies. It's not something we probably would likely to have as an independent company. So we really appreciate that. Just a quick note.
When Mark and I started talking many months ago, it became very quickly apparent to us that there really was this fantastic commonality of culture. There were so many things. It was almost eerie, almost down to the words we use. So I'm sure you folks know that Salesforce talks a lot about Ohana, family. And we have a big thing, which you'll see in our T shirts and hashtags, which is datafam.
So we have our data family. They've got Ohana. I talk constantly internally to the point of probably of nausea, some people on the team about a relentless customer focus. Salesforce has one of its 4 core values, only 4, customer success. I'll stop there, but there's just a lot of commonality and values.
We both believe in being citizens of our user communities, citizens of the world community, citizens of our local geographic communities, and we've each done a lot in that regard. So I think that's kind of important scaffolding, if you will, for the relationship and gives me a lot of confidence and gave me a lot of confidence and made me personally feel like this could be a great combination because of that commonality of how we behave and how we think.
And
thank you. Brought IT support and formed by Chief Product Officer. He plays the tuba, too. So I'll just touch on this briefly, but we do think that we Tableau can add a lot to the Salesforce Customer 360. Obviously, you're all very familiar with the digital transformations that Salesforce customers are going through, and they have a lot of data from a lot of different sources sitting in a lot of different Salesforce applications and systems.
And MuleSoft is an important piece in kind of getting even more data and being able to suck in data from different places and integrate it. And Tableau is going to be a big marquee place for people to analyze it. And so we think that can really help accelerate the digital transformation journeys of sales force customers. And we hope to be an enhancement to that Customer 360. Nothing awkward about that.
So obviously, Salesforce has already thought of the word analytics. It's just not a new concept and has had several assets. So I just want to talk at a high level very briefly about how we view that. So there are a number of customers using Einstein Analytics, and we really think about that as being for embedded CRM. So if you're inside of a Salesforce environment, you want embedded CRM happening right there, Einstein has been really optimized for that.
And again, a lot of customers use that. Salesforce also acquired Datorama, and that's really focused on marketing intelligence, particularly integrating different marketing assets from different places, putting them all in one place, allowing kind of predictive analysis to be done with them and great people and great technologies. And now Salesforce customers have very easy access to Tableau. They've already had access to Tableau. We share many of the same customers, but we think and customers are telling us it's going to be even easier now.
And Tableau is really enterprise wide, wall to wall analytics, any use case, any department, any industry, any data source, the complete world of analytics. We'll talk in a moment about what the world of analytics looks like. But that's how we see it for right now. Obviously, we'll all be working together as combined teams going forward, and we'll figure out what kind of path is best for customers and how we make it really easy for them to understand what they should be using when. But this is kind of the initial statement we've made now with just kind of given the level of conversations that Mark Hawkins indicated that we've been able to have to date.
So Tableau has a simple and singular mission, as I said yesterday, for those who are there. We help people see and understand data. Those of you who we've worked with over the past few years know this very well. We repeat it all the time. We don't apologize for that.
We're going to keep on repeating it all the time. I guarantee that there are thousands of people at Tableau who come to work each day knowing this and because of this. And for some people, that's for some employees, that's government agencies. For some, it's nonprofits operating in Africa. For some, it's really geeky analysts.
For some, it's big enterprises. So it means something different to different people, but it's an incredible we're a very mission focused organization. This is an incredibly important and central part of what we're doing. And the reason why that's so important is because this sounds like a little maybe soft and squishy, but I always tell you what I think the truth is, and here's what I think the truth is. Our customers see this as a movement, not as a product.
And if you want to understand the heart of Tableau, that's probably the first place you need to start. I've honestly never seen such a passionate, just deeply loyal, completely excited, changed the world set of customers and partners as I've seen at Tableau. And it's because people understand that data is everywhere. The opportunity is huge. There's all sorts of incredible things that people can do with data if they can truly figure out how to not view static reports but how to have conversations with their data, how to be completely interactive.
And that's what we've been striving for. And customers are doing all sorts of incredible things. Fransal will actually dive in a little bit. But just to give you kind of a quick few representations of some things people are doing. So Coca Cola made this dashboard, which essentially looks at its Walmart distribution.
And the red indicates problem areas where they have had non optimized shelf space. And using this visualization, they actually went in and like fixed those distribution problems and recaptured tens of 1,000,000 of dollars of lost sales that they were incurring and fixed that problem. It's a really interesting retail example. The U. S, totally different case.
The U. S. Air Force had billions of rows of data. So just pause on that for a moment. Billions of rows of data, all to do with infrastructure and maintenance on infrastructure, everything from runways to control towers to housing for service members.
And using this visualization, they actually figured out like the optimal maintenance schedules and as a result of this program, are saving literally 100 of 1,000,000 of dollars of taxpayer money. So another really interesting and powerful example. And then you see it in all different sectors. So Alberta Health Services, a government agency in Alberta, Canada, is actually figuring out where to distribute and position lifesaving opioid overdose medication. And there are tens of thousands of people in Alberta suffering from opioid addiction and again, positioning these lifesaving medications in the optimal places to literally help save lives.
So Tableau really runs the full spectrum of use cases. This is just a super quick snapshot. And you do see it everywhere, in every industry, as I said, every use case. Analytics is really exploding everywhere. It is on the path to becoming ubiquitous, and that's at the heart of kind of the customer growth and the use case growth that we're seeing.
So I'm sure many of
you have your own versions of this graph. It doesn't really matter to me which one you use. They all are they all go up into the right sharply with acceleration. In this particular one, it shows by 2025, this astronomical increase in data. And this is important because a lot of people think that, that data revolution has happened, that, oh, yes, since 2000 or 2010 or even 20 15 that the data growth has occurred, and it's actually just getting started.
And I think for most companies, most organizations, one of 2 things is going to happen. They're either going to get buried in it or they're going to create huge opportunity out of it. And so either way, it's something they can't ignore. Now a less known prediction is that by the year 2025, if you look at the decade going up to 2025, that the amount of data in the world that's subject to analysis is going to grow 50x. So within all the data, it's not all going to be analyzed.
But a lot of it is, and that's going to go 50x. I mean, it really is astronomical. So just to kind of put a boundary around this problem. And so there's this huge availability of data and a huge either problem or opportunity depending on what organizations do about it. And so what that means is that ultimately, in the fullness of time, the real TAM for us is the, call it, 800,000,000 knowledge workers in the world.
It's probably over $1,000,000,000 This is a relatively conservative estimate. And it's everything from the visits that I put up a moment ago to pizza shop owners, to karaoke bars in London that use us, to the Brooklyn Public Library that uses us, to doctors at the Texas Children's Hospital that use us. It really is everywhere. Those are all knowledge workers, and they are all going to need to work with data. So am I the delusional Kool Aid drinking CEO?
Maybe, but that doesn't mean I'm not right. So let me tell you a story. I'm going to take you back in time. So it's 1986. Back to the future is hot.
PCs, of course, are the size of microwave ovens, and I was in college. So I was a I've forgotten either a sophomore or junior at Harvard, and I walked into a to check out a CS class. And the subject of the CS class was, if you're ready for it, something very complicated and advanced, Excel. Excel. You say this in a room full of developers and about half of them fall over in their chairs right now.
So this was a subject that was so new, kind of so geeky that it was the purview of a computer science class. I mean, that could just never happen now, right? But it shows you how people think about something that is new and not fully understood yet and what can happen to it over time. So if I'd said to you then in 1986, while that's pretty cool and it's in the CS class, yes, I think it's going to be on about 300,000,000 or 400,000,000 desktops worldwide, just give it a couple decades. That would have sounded crazy, right?
But as we know, that's happened. And people in this room probably know better than I do exactly how many copies of Excel are on desktop, but it's 100 of 1,000,000. So this shows you what can happen if a really powerful, potent solution to analytics comes along because this is kind of Analytics 1.0. I mean there's some things before it, VisiCalc and Lotus, etcetera, but in terms of total mainstream adoption, Analytics 1.0. So if you think of that as 1.0 and traditional BI as being 2.0 and then modern Analytics, intuitive, self-service, interactive, being Analytics 3.0, yes, that's what Tableau has revolutionized in terms of the BI industry.
That's why we built this world's leading analytics platform, and this is what we set out to give customers. And with that kind of an experience, that kind of interface, that kind of an opportunity to interact with their data, to have conversations with their data, as we like to say, We do think that I personally think that analytics will become ubiquitous and that it will be used by 100 of millions of knowledge skill, not analytics skill, not data skill, skill, not analytics skill, not data skill, it's of all technical skills. You see it in our academic program. So who's going to be using this stuff? Well, over 1,000,000 students and instructors have activated, not downloaded but actually activated Tableau in the classroom through the Tableau academic program.
And so what we're really doing is raising an entire generation of data native who's going to come into the workforce understanding data, understanding analytics and specifically understanding Tableau. We have a great example of the government of Singapore sponsored a nationwide analytics contest, sounds nice, for middle schoolers. That's one data point. It's one contest in one country that's not that large. But just think of that as a grain of sand and not kind of extrapolate what that beach could look like going forward.
And that's, I think, the nature of the opportunity. Okay. Just pivoting quickly, just in the interest of time. The 3 quick Tableau specific trends that I want to talk to you about that can help you understand what have we been up to the past 3 years, what's the transformation the company has gone through, where we put a ton of our effort. The first, as Mark mentioned, we have been going through this business model pivot.
And I'm happy to report that we have significant software companies, we have made the fastest pivot to subscription, we believe, of any significant software company in history. So in 8 quarters, we went from about 20% subscription to approximately 80%, less than 2 years. And earlier this year, we said that we were going to approach 90 percent by the end of this calendar year. We're still on track to do that. So we are essentially, give or take, a subscription company now.
The team has done an amazing job just rolling it out across the company. But the reason the team was able to do an amazing job and the reason why this happened so fast is because it's good for customers. So this is probably not a setting or a place where I need to explain why subscriptions are a good thing. But in a sense, I view it as a risk reduction program for customers. And if we make it easier for them to get on, less risk if they want to leave us.
If you believe in your software and you believe in your service, then you be willing to bet on yourself as opposed to any other competitor. And we like our odds, and that's what's driven this trend. Obviously, it has very significant implications for the financial model and the ARR, etcetera. 2, enterprise deployments at scale. So when I joined Tableau a bit over 3 years ago, I went on, on the road after about a month, went to some enterprises on the East Coast.
Next week, I went to some enterprises here in the Bay Area. And I'm very used to these trips. And I'm very used to, okay, you sit down, you kind of put on your helmet and get kind of told everything that's technically wrong with the product. And don't get me wrong, we have a lot of product work left to do ahead of us. But I was amazed.
I've never seen anything like it. People looked at me like I was a bit of an idiot and said, well, you know our users love your product, right? I said, Okay, great. I've been here a month. And they said, But we can't buy it.
You got to get out of the way. You got to
let us buy it.
And so part of that was subscription. Part of it was having kind of enterprise licensing at scale and thinking about the fact that 50,000 users is different than 5,000 users is different than 500 users. Part of it was really being able to support customers and building really robust vibrant 20 fourseven fast response customer support teams and programs, etcetera, etcetera. And then of course, in the product, security, governance, compliance, never mind analytics, you start with those three things before anybody cares what analytics features you actually have. If you're talking about large scale enterprise deployments, which have to go through IT, have to go through the CSAT.
And so the team has been working incredibly hard at this, and the results have been paying off. So we're seeing JPMorgan Chase, for example.
Thank you guys for being here.
45,000 employees deployed on Tableau across more than 500 different departments. Jaguar Land Rover, so that's U. S. Jaguar Land Rover in Europe not only uses us for its global dealer network to help them understand the profitability of options packages that they're selling, but the CEO saw Tableau and mandated that all senior level reporting, all Board level reporting be done in Tableau. They put iPads in the conference rooms.
Last time I checked in, after a few months, they had 7 out of the 10 divisions were now doing the reporting to him exclusively in Tableau, and it's just an And Woolworths, biggest retailer in Australia, And Woolworths, biggest retailer in Australia, just a few quarters ago, deployed Tableau at scale, now has tens of thousands of employees using Tableau and are really embracing, moving towards fully using their data. And what that means, what we see more and more as we get these large deployments is, yes, it's about technology, but it's not just about technology. I think so many of our competitors are focused on technology or they've got a whether they've got an operating system or a cloud platform business, whether they've got a search business, they're thinking about it in terms of something else, thinking about it in terms of some other technology or business. Whereas what we're seeing through 15 years of in-depth, frank conversations with our enterprise customers in particular, it's about building a data culture. It's about building a culture where facts are used and data is used to make decisions in ways that simply don't happen at many companies today.
And a lot of customers say, Hey, the technology, we'll figure it out. It's not always easy, but we will figure it out, but this is what we need help with. And so we've been putting incredibly deep thought into this, and I could not be more excited about the potential for us because of what the potential that we are going to help unlock for customers as they really understand how to get to a data culture. And specifically, as you kind of get beyond the hand waving, we've created specific road maps and methodologies and thought pieces and detailed assessment guides in multiple different areas. 3 of the big ones are, 1, proficiency, which is getting people skilled at, getting people to learn to speak the language of data, getting them to understand how to use a platform like Tableau.
2nd is agility, which means a few different things. It means the ability to physically scale the deployment to tens and tens of thousands of people or even over 100,000 people in an organization, which we're seeing now. It also means figuring out that balance, agility between access, you need to give lots of people access to lots of stuff, you can't predict where insight will come from, versus security and governance and making sure that sensitive data doesn't go places that it shouldn't. And we put a lot of thought and a lot of capabilities into the platform to enable that balance between those two things. And then 3rd of all, community, and we'll talk a little bit more about that later this hour.
But a lot of enterprises need to build internal communities. They're not necessarily having people travel to community events. They may have privacy concerns. And we're working really hard to help create supportive, collaborative, teaming internal environments around analytics and have a lot of best practices around that. So again, I can't stress enough how important I think this is going to be going forward.
3rd trend is just what we're seeing in terms of our SaaS offering. So we're all about flexibility and choice. As that pertains to deployment options, we have many, many customers who are still deploying on their own premises. And then we have a ton of customers, probably about onethree of our, give or take, of our server deployments are now in the public cloud, all public clouds, by the way, that are popular, AWS, Azure, Google, now Alibaba, too. And that remains a big growing trend.
And then we have customers who want a fully managed SaaS offering. So we have Tableau Online for that. Tableau Online has over 15,000 customer accounts. If you look at the end users, the subscriptions to Tableau Online, it's grown 100% year over year. So all three of these options are going to remain important to us, on prem, public cloud, SaaS, but I absolutely anticipate this continuing to grow strongly over time.
So I said it's not just about the technology, but of course, it is about the technology. Francois kind of walked through Tableau a little more deeply, but we have built a leading analytics platform. It really is centered around analytics that people love to use. We love data. Our customers love data.
We build analytics that people love. And it's and that spans every everyone meets everyone. So it spans from the data newbie to very sophisticated analysts and data scientist, and we make it both intuitive as well as very powerful. I talked about the fact that it's got to be a trusted integrated platform. We really talked about the term end to end.
So it goes from data prep to a whole bunch of rich analytics capabilities to sharing and collaboration. Customers have told us consistently, this is not a tool. This is now a mission critical enterprise platform. And it really has to span the full analytics gamut. And we're just going to continue building out the breadth and the depth of those capabilities that people need.
And that is how customers are telling us they're going to scale analytics and scale Tableau throughout the enterprise to multiple departments, multiple use cases, multiple industries, really irrespective of what data they have. Okay. But the best way to understand it, see it, so Francois Eisenstadt, our Chief Product Officer, is going to give us a little spin through.
Thank you, Adam. Good morning, everyone. For those of you that I don't know, I'm Tableau's Chief Product Officer. I've been at Tableau now for 9 years. Actually, I just crossed my 9 year mark this month.
And I joined the company when we were 100 employees, and it's just been amazing to see the growth and the scale that we've had. But I've been in the BI industry now for over 20 years, spent a decade at Microsoft in both the SQL Server team and the Office team. So a lot of the BI strategy back then, I was part of. And then I was at Cognos in the '90s prior to the acquisition from IBM. And it's just been exciting to see the impact that Tableau has had on our customers.
But ever since I've been at Tableau, at the heart of everything that we do is obviously our customers, but innovation is what we do. We're a customer focused organization, and we innovate rapidly because we believe that how we differentiate in the marketplace and how we continue to lead is through innovation and customer success. So we deliver new versions of Tableau every single quarter. And in fact, in the last year, we've delivered 4 version with over 200 new capabilities. This is really expanding the breadth and depth of the product from data connectivity, data preparation, data management, all the way down to powerful analytics that are intuitive, easy to use and scale by leveraging AI capabilities to go even further.
And that really is how we deliver analytics that people love to use. But all of that comes together in a complete end to end analytics platform. As Adam mentioned, that provides choice and flexibility of where to deploy, on premises, public cloud or SaaS, gives choice and flexibility in terms of data connectivity options. We can connect to over 85 different data sources out of the box and provides complete analytics that people can use on any data. And of course, they can embed Tableau anywhere.
They can embed it in Salesforce, in SharePoint portals. They can consume it on mobile, in desktop, anywhere they want. Now I thought I'd actually spend majority of the time just showing you Tableau and what's possible with it because oftentimes when we see the dashboards, they look cool, they're powerful, but you never necessarily know how easy it is to build one of these things. So let's go on the product. So first, just kind of grounding on Tableau.
I'll show you guys a couple of examples in where you can always get details on demand and interact completely with us. And this is what we call unlimited exploration where anywhere you click, you get feedback. Or here's an example of a dashboard that Boeing uses to look at traffic patterns that's going to cross from 2016 to 2,036. So they can plan aircraft production. They can look at network traffic.
They can look at staff. And you can really see how airline traffic is going to change over time. Or here's another example of a dashboard that was put in CNBC that's looking and tracking the Dow stocks across different decades. So we can see it from 2010, the great recession, great inflation, all that enables people to give interactive data driven stories. And we all have different kinds of data.
How many of you use Bloomberg? I assume about 100% of this room. Well, you can also analyze Bloomberg data directly in Tableau to have interactive analysis. And it's not fitting the screen. I apologize for that.
But this is doing liquidity assessment in Tableau. And you can see how the different asset classes are doing. I can go in and change my different risk profiles, add stress, and everything is interactive. So instead of building these complicated Excel spreadsheets that you're sending everywhere, imagine having direct connectivity to Bloomberg, being able to analyze it and share it easily. Well, you can do that in Tableau.
And if you think about the potential with Salesforce, now we're expanding the opportunities within Salesforce to not only just solve the customer, the sales, the marketing opportunities, But anywhere there's data, now we with Salesforce can start solving some of these use cases. And of course, data is also fun. Everything is data. And so here's an analysis of the top 100 songs from the Beatles, and we can see that Paul McCartney had a lot of songs in the top 100. John Lennon was a little bit more prolific.
George Harrison only had 2 and well, not much to say about Ringo. But this is all data. And all of these things are just built using Tableau. So we're going to build a dashboard together. And again, this dashboard could be connecting to any of the data sources that we have in Tableau, over 85 different data sources from SQL Server to Snowflake, Cloudera to Amazon Redshift, on premises in the cloud, Salesforce to ServiceNow, wherever our customers have data, we can connect to it and analyze it.
So here in this case, I'm looking at data for a micro lending organization called Kiva. So Kiva gives small loans to people all over the world. And there are 2 fundamental concepts in Tableau, dimensions and measures. So these are the words and the numbers in your data, okay? We do that automatically.
So if you know that basic concept and you know how to double click, you know how to use Tableau, okay? So once we do that, you guys are all certified to use Tableau. It's that simple. So let's look at funded amount. Double click, we can see $1,300,000,000 of funds.
If we want to break it down by gender, double click, boom, we can see that women are getting more loans than men. But maybe I just want to see the average. We can see that women are getting smaller loans on average than men, right? Three clicks, we got some quick insights into our data. And whatever your data is, a lot of data contains information about where things occurred, where sales transactions occurred, where inventory is.
So I can just double click on country, and Tableau will automatically visualize that on the map. We have powerful geospatial analytics in the product. We can bring this in and put funded amount on color. We can see that the Philippines here and Kenya are the countries that have the most loans given out by Kiva. And we can also animate this by time.
So here, I'm just going to animate it. From 2,005 when Kiva was funded, we can see the growth and the impact of Kiva all over the world, just animated. Imagine if this was your data or a customer's data. They can see it and understand it in ways they've never thought possible. Now I can go back in here.
And one of the things that you've seen is that I've never said, hey, create a pie chart or create a bar chart. I'm just having a conversation with my data. And Tableau automatically visualizes it for our customers automatically. And we have some powerful technology behind the scenes. So this is a feature we call Show Me.
But the heart of Tableau is this innovation that came out of Stanford, something called VizQL, stands for Visual Query Language. It enables the translation of intent into database queries, into visualizations. We do that automatically. So if I select different measures or dimensions, I'll choose funded amount, look at different options that show up in Show Me. I can see the sector name, funded date.
And we provide visual best practices out of the box. So you don't have to think about the right chart. We have psychologists on staff that know how people reason with data so we can visualize it. And of course, you can see it any way you want. You can see it as a table, a bar, tree map, just a line chart, just like that.
You cycle through your visualizations. You see it however way you want. I can break it down maybe just as a bar chart so I can see how each of my different sectors are behaving. And one of the powerful things with Tableau is to be able to shift perspectives. So as you see this data, maybe I want to see it differently.
So I'll just duplicate this, and I'll put it together as a tree map. And I'll put the sector on color so we can see that. Get rid of year, drill in. Now we see every sector, and I'll just put the activity name on label. Boom.
So we can see now agriculture over here being the top category, followed by I don't know my color. That was agriculture, colorblind, not very great in visualization, but there we go. And now if we want
to put it together in
a dashboard, creating a dashboard is just like everything else in Tableau. It's drag and drop. Just over time, we'll look at our tree map over here, and we'll make everything interactive. So if I want to see what's going on in Kenya, click, everything changes, focuses on that one country. If I want to see Philippines, for some reason my mouse is not responding, I can select it.
I can select the whole continent if I wanted to, right? This could be an asset class. This could be a customer category. This could be individual transactions. We've done that all together.
So consider what we've done together in less than 5 minutes. We connected to some data, gotten different insights from our data by gender, by time, by geography, by sector. We put it all together in a dashboard, all with 0 coding, all with no SQL, no macros, nothing. It was just that simple. And this works on any data.
So just for fun, I'm going to do this with Salesforce. So I'm going to connect to Salesforce and show you how all of the Salesforce customers could use this. Now we'll authenticate to our data to our Salesforce instance. We provide lots of different connections. So I'll just take the opportunity table, drag that in.
Now we'll be able to analyze our opportunities. Now Tableau, as I don't know if I mentioned it, but we have a hybrid data strategy. So most of the BI tools force you to move the data to their cloud or to their platform. We leverage the data where it is, which means it's always live. It's optimized.
It leverages customer security credentials, but we can also accelerate it and load it in memory to make it really fast. And sometimes, the Internet is not your friend, but hopefully, that'll just take another second. Normally, it takes 10 seconds, but apparently, you guys are all on your Bloomberg terminals looking at the stock. So slowing down my Internet. All right, we'll cancel that.
But thankfully, it predownload it because I know this stuff can happen. So let's look at now our discount granted by amount, by account owner, so each of our sales reps, boom, we have our visualization. Every rep, every opportunity discount. And we can see that there's an outlier right here, Jeff Simmons. Seems to be discounting a lot.
That's somebody that we should have a conversation with. Is that somebody that we should fire, right, not following policy? Well, Tableau enables our customers to go beyond the what happened to the why it happened. We have some powerful AI capabilities. Yesterday, I showed Ask Data to do natural language processing in Tableau.
We have also introduced Explain Data, which provides powerful Bayesian models out of the box, that keeps people in the flow of analysis. So now with one click, just click this little light bulb icon on the upper right, Boom, we're going to look through every single dimension, every measure, every single row and pull out some possible explanations for what's going on. And they found out that, well, there's an outlier, right? It looked through and found the needle in the haystack. One opportunity where this rep discounted by 3,000 percent, either the customer got an amazing deal, it's great, or it's a data problem, but we were able to find that insight automatically.
And now I can go in and there are no dead ends in Tableau. I can just continue my analysis, see how Jeff would look like if we remove that data problem that we
had, put
it back in. That's where he is. In fact, Jeff was one of the better sales reps that we have. But we got that insight quickly. That's the power of Tableau.
So whether customers have data in Salesforce, IoT devices, SAP, anywhere, this empowers every single person to analyze their data at the speed of thought. Super passionate about what we can do together with Salesforce, but really the power to unlock data and analytics for every single one of our customers. So with that, back to you, Adam.
Thank
you. Thank you, sir. Excellent. Okay. So before we take the questions, the last thing I wanted to talk to you very quickly was this incredibly powerful and unusual thing, this organism, it's really an ecosystem, called the Tableau community.
And I alluded to this a little bit a few minutes ago, but I think it bears touching on. I've been kicking around for a few decades and have been specifically in Internet and software companies for the past couple of decades plus. And also some of you know me better than others. I'm not prone to hyperbole. But this is honestly the most unusual ecosystem community that I've ever seen in my career.
You go
to user groups and things and there's something called a Tableau Hugs and like people come up and hug you. And you'll see on Twitter things like, you will never pry Tableau out of my cold dead hands. And the thing which really kind of, to be honest with you, kind of surprised me was when I went to my first I was told I'd go to the 1st Tableau conference, and when I did, that people tell me how Tableau changed their lives. And I'm thinking, pretty unusual, it's software, right? And sure enough, at the first conference since then, people literally come up and say, Tableau has changed my life.
And I said, Well, what does that mean to you? That's great, but how? And you get everything from, Well, I was about to be out of a job, and now I'm the like Chief Tableau server administrator for 40,000 people at this large petrochemical company. 2, well, I spend 5 hours on a Sunday preparing these weekly reports for my boss, and now it takes 20 minutes and I spend the time with my daughter. These are real stories which have been told to me personally.
So that's, I think, why the passion gets engendered in the community because this platform is not just technology. This platform has the ability to transform people's lives and especially people who love data, it essentially sets them free. And you see this in all sorts of places. It turns out last week was the Tableau Conference. And at any other place in the world, I would tell you what a huge conference that was.
And it was big. We had almost 20,000 people there. It's incredible energy. It's vibrant. It's just like the annual gathering place for data people.
It's an amazing experience. And next October, if any of you want to go, we would welcome you. And it's just a leading example of how vibrant our data community, our analytics community is. You see it in a lot of other places, too. We've got Tableau user groups in over 500 of them in 65 different countries around the world, adding new ones all the time.
We just added Italy and Pakistan and South Africa as well as new ones in the U. S. To boot. A lot of attention being given to Tableau Public. It's just the largest free repository of analytics and data and visualizations in the world.
And if you're willing to share your data in public, you can upload for free your visualizations make your visualization in Tableau public. And so we have over 750,000 authors who have published over 2 1,000,000 visualizations, which have now been viewed 2,300,000,000 times. So it's an incredible community asset. It's a fiber and a place where people learn how to use Tableau. They share with each other.
The community created Makeover Monday where you can get your kind of semi professional, I'll call it, community driven to support for your visualizations, and it's an incredible opportunity. So I'll stop there, but I think that the community is honestly sort of Tableau's secret weapon. It's the one thing that you can spend money to hire developers. You can spend money to hire marketers. You can spend money to hire salespeople.
You can't spend money to build this type of a community. It is, in my estimation, a unique asset and one of the things which continues to power Tableau intrinsically to this day. So just to wrap up, we're again incredibly excited to be part of Salesforce. I think there are going to be amazing synergies both on the product side as well as on the field side with sales teams collaborating with each other. At the same time, sales force very much wants to run Tableau as sort of an independent subsidiary.
I and the whole management team and Board and laser focused on the future. Continue to stress our relentless customer focus, the focus on rapid innovation, the focus on acting with urgency that I've always stressed with our teams, and I plan to continue to do so. And so we really look forward to just accelerating our progress towards that 7 word mission even as we collaborate deeply and get synergies with Salesforce. So with that, we'd be very happy to take any questions. Am I going to call on people or somebody else
to? I can hand it out.
Okay, great.
Hey, Adam. Ryan Molchan from Barclays. Good to see you again.
You too.
The quick question, like if you think about like now that you're kind of part of Salesforce and you think about the richness of data that Salesforce has in their system, what would it do how does it help you to kind of move from like slightly more on premise to slightly more in cloud data? And would that not be like a nice first step to kind of do that greater transition towards more cloud?
Well, I think there are incredible opportunities with Salesforce data. I don't really think of it as the move from on premise to cloud. As Francois and I both already talked about, we're already in all three places: on premise, public cloud, SaaS, in a very significant way for all of that. And I think that's a big advantage we have because we're the only mainstream analytics solution that provides kind of 1st class citizen status for all those environments. And our sales teams already run their business and have for years by taking sales force data and analyzing it in Tableau.
That's how my sales teams run their business. So we're doing it today. But there is this wealth of data in all different sales force clouds. And I think that we are only going to have incredibly interesting and, I think, important opportunities to figure out how to integrate better and more deeply over time. I mean, you can imagine millions of Sales Cloud customers who are looking in Salesforce every month, every week, every day having access to some form of Tableau experience intrinsically natively.
I'm speculating now because as Mark said, we haven't had time to get into it. But personally, in my opinion, I think it would be foolish if we don't look for those tight integration opportunities. And because Salesforce is in the cloud, I think that will, of course, provide great cloud usage and cloud environments for Tableau.
Brett Greyson with Piper Jaffray. Adam, obviously, if you think about the history of Tableau, it started out as a departmental kind of product initially, obviously driving that data culture. But I think as of the June quarter, you had $29,000,000 customers. If I look at the SEC filings, your growth forecast was, I think, dollars 4,800,000,000 in calendar 2025, and then $9,000,000,000 in calendar 2030. The question is now that you're part of sales force, do you think you could accelerate the growth here?
And then 2, as you think about largely departmental business, is there any holes in the product that you need to kind of solve in order to go wall to wall? You talked about JPMorgan. But just walk us through what changes, what you're excited about? And historically departmental, how do you accelerate that wall to wall and growth trajectory outlined in the SEC filings?
Sure. Well, those are great questions, and I could spend the whole hour just on that question. There's a lot in there. Well, first, let me say I didn't exactly catch all of those numbers. I'm not commenting specifically on them, and we're clearly not giving out any guidance today.
But I will say, generally speaking, that we've seen rapid acceleration over the past several years of our larger deals, whether it's 100,000 plus deals and then the thing we focused on more recently, which is $1,000,000 plus customers. And for each year over the past several years, as we focused on that enterprise opportunity, we've seen that. And I certainly don't think that our combination of Salesforce will do anything but continue to make that grow rapidly. I'm very optimistic about the ability for
us to
collaborate to really drive growth in that number in terms of the large deployment. In terms of the second part of your question on the product, I talk about being vocally self critical all the time, personally as well as a company. And for my money, we have holes all over the platform. I think that's the way you get better and better. And part of it is our customers, it's kind of like cleaning a ship, right?
You go from one end to the other and you start back again. As we add capabilities, our customers have moved. They have become more sophisticated. They're using analytics more deeply. So I think one of the big things that customers keep telling us is you've got to expand the breadth of this platform.
We used to be only analytics, I mean, sort of only visualization. It's a big only. But as I was joining, the company had already been hearing, we spend 70% of our time doing data prep and 30% of the time doing analysis. I think that's terrific. I think it should be our personal vendetta to invert that ratio.
And so we built Tableau Prep, which is a powerful, very Tableau like visual direct interactive way of doing data preparation. We still have great data prep partners, and we still have customers who are going to want to use those, which is awesome. Love the ecosystem. But many customers want to use that as part of as an endogenous part of the Tableau platform. I give many other examples we're doing in the data management space all the way through to Ask Data and Explain Data that Francois talked about.
But I think we're going to have to continue to expand the platform. I think there will be a lot more kind of rich capabilities around data EZ despite the fact that Tableau is a vast and generational leap and ease of use and intuitiveness improvement over everything that came before, I personally believe the gap between that and where we need to be to truly make analytics ubiquitous, to truly get it to 100 of millions of knowledge workers is probably just as large as the gap we've already covered, And that motivates us to get up every day.
Yes. Terry Tillman from SunTrust. You painted a nice picture earlier about 800,000,000 knowledge workers and the explosive growth of data. So I assume greenfield is going to be a key part of the growth story going forward. But on the replacement cycle, maybe we could hear some perspective on what you see in terms of when you're replacing something and just the vibrancy of a replacement cycle?
Great. It's a great question, what I've been asking since the day I joined. I think there are a couple of different dimensions to this. You can kind of look at what some of the analysts call modern analytics, and there's some different players that cycle in and out of that. And some of them, I think their fortunes have kind of waned over the years.
And then we're not going to be the only winner in this space. So whether it's current competitors or somebody else that comes along, it's a huge enough market opportunity that I assume there'll be a couple of 3, 4 winners. And so it's not a, oh, if somebody else succeeds, then Tableau is sunk. Although we like our position, and we intend to be the winner. Then there's this whole question about traditional BI.
And again, I'm never sure exactly which numbers to believe precisely, but it doesn't really matter. The point is that traditional BI is a really big segment. It's probably arguably still bigger than modern analytics, but it doesn't really matter if it's slightly bigger, slightly smaller. Now it's shrinking, but it's very, very large. And when I started at Tableau a little bit over 3 years ago, I know I went out on those customer visits I talked about, I was starting to hear about future looking plans to replace BusinessObjects, Cognos, MicroStrategy, those legacy BI systems.
But it was still very early days. And I can tell you, it just took a couple of years. And now 3 plus years later, it's really it is happening. It is in full swing, but I will tell you it is still relatively early in that. So we're probably into but at the relatively early end of what I personally believe will be a several year, a multiyear transition out of a lot of those legacy traditional BI products and into Tableau.
And I would like to believe that it will provide a fair amount of wind at our backs. Now those systems were often complex and expensive to deploy, and therefore, some of them will be complex and expensive to remove. And so we have some work ahead of us. And it's not usually just a complete rip and replace. It's, okay, we got these 2 departments, and we'll get to these other 3 later on, and it's one use case by use case.
But customers are getting there, and I think that's definitely one of the positive things from a business model perspective that we have going for
us.
Hi, Adam. Steve Koenig with Wedbush.
Hi. Hi.
Curious if you could you talked a little bit about the ability to bring data together across the Salesforce clouds and the various products. Maybe could you just tell us a little bit more granularity on the discrete sources of revenue synergy longer term? And also maybe near term, as you're looking to begin planning your integration, aside from like the accounting write down, are there any headwinds to what you would have done stand alone, let's say?
Well, again, what I'm about to say, I will consider to be my own personal speculation because as Mark said, we've had since about November 1, and we've had Tableau Conference and Dreamforce in the middle of that. So we've all been just a tad distracted. But despite that, our integration teams have got back hard to work at it over the past couple of weeks. So I think kind of on a conceptual level, I can say a couple of things. I do believe, even though we don't have specific integration product plans and, therefore, I couldn't possibly talk about them, that there are incredible synergies on the product side.
I didn't even talk about MuleSoft yet today. So MuleSoft does an amazing job of sucking all of this data out of these dusty Cut costs and in the short term immediately raise margin. I think a lot of things have changed in the software industry in those days. The cloud has happened, agile methodologies have happened, and the way the companies develop product has changed. And you can pump out stuff so rapidly And using APIs and service contracts between modules and things like that, you don't have to worry about, oh, my God, we're on this parent company cycle, and going to be another 18 months before this X ships, and we can't ship any innovation until that.
We're already releasing 4x a year, which is pretty hefty rate of innovation, and we don't intend to slow down. Regarding just a quick note on the data sources. This is, as you guys have said, a fairly significant acquisition for Salesforce. And there's incredible overlap of the customer bases and lots of customers who Salesforce customers who either are using Tableau or should be using Tableau. But it's no secret that there's also a ton of customers who are doing other things, applications, which, at least in today's world, Salesforce is not attempting to address.
And there's huge value, large dollar amounts of value there. And Salesforce has been very clear with us that they want us to accelerate that non sales force part of the business, not hamper it or shut it down. So Francois talked about 85 different data sources. We want every data source to be a 1st class data source. If our customers get a whiff that we're not doing what's in their best interest, I hope they abandon us, they should, but that ain't going to happen, at at least not while we're here.
So we are laser focused on what our customers need and innovating on their behalf.
Thank you
so much.
Thank you.
Thank you
very much. Francois, thank you so much for taking the time. So we're going to break for lunch. We'll be back here in about an hour. Keith will be getting on stage right at 1:30.
So lunch is upstairs on the 4th floor and we'll see you back here in about an hour. Thanks so much.
Ladies and gentlemen, we will begin in about 5 minutes.
All right. So if everyone can take their seat, we'll get on with the afternoon's programming. I hope you all had a nice break at lunch, And we're going to continue the rest of the afternoon with a few Q and A sessions, starting with a question and answer session with Keith Block, our Co CEO. And so Keith's here. Keith, why don't you come on up and we'll get started.
You are shameless. In case, this is just
an opportunity now. We're just
opening Q and A.
Keith, make yourself comfortable, and we'll have some mic runners, and
we'll just get started.
Is there anything you'd like to say or just want to dive into the No.
Thanks for having us. Thanks for coming
to Dreamforce. Hope everybody's having
a good Dreamforce and a good week. So good to see you folks. Talk about whatever you want to talk about.
Hi, Curt Matternum of
Evercore. Thanks for joining us. Obviously, a lot of exciting things going on this week. One of the themes that continues to come up, I think, with you all is really what you as a company have done around the industry offerings, your partners from an industry I was just kind of curious, you've given us some idea historically that about 40%, I think of the sales force was aligned from an industry perspective. Could you just give
us maybe an update on
how that's going? And then as you think about the industries that are out there, maybe just some thoughts on the ones you think that are really at maybe a tipping point? I mean, there's a lot discussion about health care right now in terms of seeing things from a patient's point of view. So I was just kind of curious if you could maybe add a little color in terms of how that broader strategy is going.
Yes. Good seeing you. Thanks for the question. So on the industry strategy, I still think we're at the tip of the iceberg. We're making good progress.
Obviously, we've announced some industry clouds with CPG cloud as an example. So we continue to innovate organically, and our partners continue to build industry industry products. So that will continue to be a strategic thrust for us. I've said this in front of this audience before, depending on how you want to look at it, there's 25 different industries. Every industry has a micro vertical.
So there's a lot of room to run. And our field organization continues every year to march down that journey of for the specialization in these industries. I mean, it is so important to speak the language of the customer. It's really an imperative to any customer facing organization in any industry. You really need to understand what the business problem is and where they're going.
And I think it's particularly important when you think about this wave of digital transformation that is how to embrace how to embrace that technology. How do you apply that to a specific industry solution? So I'm very bullish on the future of this. And I really like the results. I think these guys took you through a presentation about how we're doing with industries and how we're doing in the enterprise, and those numbers kind of bear
out.
Terry Tillman, SunTrust Bank. Question on MuleSoft. I think a lot of us have heard about the success and the strength of that business before and after the acquisition. But I'm just curious like some examples of where you've seen surprises in terms of just the uplift or the synergies or the pull through of your other cloud products with MuleSoft? Well, MuleSoft has been the most successful acquisition we've ever done.
And you've seen the numbers in terms of how we've been able to accelerate that business. And I think that's pretty rare. A lot of different companies have
a different philosophy in terms of
how they integrate companies once they're acquired. And ours is really growth, and that's on behalf of the customer. I think what surprised me a little, to be perfectly candid with you, is we always knew how important MuleSoft would be to this whole notion of digital transformation, especially as we kind of enter this world of how important it is to have the 3 60 degree view of the customer, the importance of data. And MuleSoft has become so strategic to that conversation. I mean, it literally is in every single conversation.
We knew that when we acquired MuleSoft that it was a great asset that had a loyal following, it was a strong product, it had good culture as a company and great leadership and talent, but it really is part of every conversation. And it's not just one way leverage. There are companies, customers who are MuleSoft customers where we did not have a relationship or we did not have a strategic relationship. And I can think of 1 in particular that's an international customer, one of the largest banks in the world, where Salesforce was essentially not present from an installation perspective, from a customer perspective. And now I think fast forward, in 15 months, 18 months, we're having meetings that we never had in that bank.
They're buying the Salesforce core technology. So that, I think, was another big surprise. But it's been a home run. It's been a great asset, and I think our customers are really, really happy. We couldn't be more thrilled, honestly.
My question is around the health of your customer and any changes you're seeing in spending behavior Cisco and Workday said there are a few bumps in the road. Microsoft says pretty smooth sailing. Just at a high level, any changes that you're seeing that are notable?
This wave of digital transformation is real, and there's uncertainty out there. There's a lot of debate about the macro environment. And I'm not an economist. I mean what I can tell you is what I hear from when I talk to customers. I think that manufacturers are certainly filling the pinch.
That's no surprise. You've all seen that in the press with the issues that we're seeing with China and the trade wars. But look, that being said, the digital transformation is an imperative, okay? Even if you're feeling some sort of economic pinch because of trade wars or something else, it's a disruptor be disruptive world, and you've got to embrace that digital transformation. Every CEO has to get in the game.
If they don't have a digital strategy, it's not going to be a good outcome for them. And that's why I think these projects are still at the top of the priority list. So it really hasn't affected our business because it's such a priority. It's I mean, the word I would use is imperative. Actually, Kirk, I want to go back to something you said because I didn't answer the second part of your question.
The all industries are going through this transformation. There are laggards. But one where we see significant, significant opportunity is the government. And we're all in on the government for a variety of reasons, not the least of which is that we want to make sure the governments are providing a high level of service to the citizens, But that's a big, big area for transformation.
Hey, Keith. Kash from MBFA. How are you? Congratulations on the other dream force. Curious as you feel the to Brent's question is expanding on that, as you feel the pulse of the customer appetite, how does it feel halfway through Dreamforce?
And should we feel really good about your Q4? I'm not asking anything about Q3. Should we feel really good about Q4, seasonally strong quarter for sales force. And also when you look at Tableau, for the first time, the companies that are in acquisition is relatively horizontal. It's not a new domain like marketing or e commerce.
How do you feel how quickly do you think not to put words in my head though, how quickly are we likely to realize synergies from a distribution standpoint? I would think that practically every Salesforce sales person should be able to sell Tableau right away after that, but maybe I'm being stupidly optimistic.
Well, you're not stupid. And I'm sure that John Cummings and Mark Hawkins can answer your first part of your question. But we think it's a great dream for us. I think our customers are really enjoying it. I think the partners are enjoying it.
You all talk to people, so you can kind of garner the enthusiasm that I think people feel in the conference. We're super excited about Tableau. There's a lot of opportunity there. I think Adam came and spoke to you earlier. If you think about the most obvious opportunity is the attach into the installed base.
And a lot of companies, a lot of CEOs, which is kind of interesting, a lot of CEOs that I've had a conversation with will say, By the way, I'm a Tableau customer. By the way, I'm a Tableau customer. So it's clearly on the mind of senior executives, and I think they're very, very excited about it. Think about how we accelerated MuleSoft. And just think about the possibilities of that playbook applied to Tableau.
And also think about the market where they have typically played in a very strong way, which is kind of that mid market segment, kind of from a community viral up perspective. But think about the strength of our enterprise go to market motion and what we could do there. And that gets us pretty excited. Unfortunately, we had to deal with this issue with the CMA, and we understand that. But we're excited about moving, so it'll be good.
Thanks. Walter Pritchard over here from Citi. A question for you, not a financial question directly, but Mark Hawkins showed us some slides with Marketing Cloud sort of margin potential lower on account of higher attrition. And I'm wondering, I mean, you've had that product line for a while. Is there something inherent about that product that will never allow us to get attrition rates down to where the rest of the portfolio is?
And I'm just curious as you're selling it, are selling in a more tactical way that causes that churn intentionally? Just curious your perspective on that because the rest of the economics of the business look very consistent.
Yes. Look, certain clouds are going to be stickier and more mission critical than others. I mean, that's just the nature of the business. If you go to any software company and look at their portfolio, broadly speaking, some of them will be deeper and more mission critical. Look at Service Cloud.
Service Cloud or service in general as a business function is as mission critical, if not more than any other. So that's why you see such low attrition rates on that product. Marketing Cloud is a very creative, dynamic product, and we continue to improve it over time. It primarily serves a B2C world, which is a little bit different than a B2B world. I mean, if you think classically of 2 different types of market motions, B2B tends to be longer term.
B2C would be up and down, more volatile type. So there's a couple of factors that go into it. But long term, we like the unit economics of Marketing Cloud.
Keith Weiss from Morgan Stanley. Thanks for joining us this afternoon. Two part question. Part 1, in terms of the unit economics, John was taking us through, If the positives were a better retention rate and cost to serve coming lower, the headwinds was cost to book going up. Can you talk to us about to what extent is that just fundamentally because we're going to more vertically oriented sales as a product portfolio, that number is going to continue to sort of be a headwind just because of the complexity of the sales you're doing versus we did a lot of acquisitions and that really impacts the cost of sales because these guys aren't as efficient as they could be over time and that will work out over time.
So that's part 1. And then part 2, from the customers' perspective, you guys have a huge portfolio today. And we hear from the customers, we hear from the partners. There's just a lot to digest and a lot to in order to understand. How do you help with that side of the equation?
How do you help your customers and your partners get a better grasp or a better handle on all of what Salesforce has to offer? Or do people just have to start specializing and deal with the fact that we're a really big company now?
Okay. That's 3 questions kind of, but you did that beautifully. So the answer to part 1 is yes and yes. So the there's a different motion and a different cost of sale and selling to the enterprise. And the unit economics as you move from a generic enterprise model to a vertical model, will improve, okay, just because you are more specialized.
So the time to enable a field organization, the time to educate a customer should go down naturally over time, which means the unit economics go down. And on the second part of your question, tell me that one again, sorry. Okay. Because our portfolio is so broad. We have become, certainly in the last 6 years, more strategic and more relevant to customers, period, not just because of our portfolio but because of strategic relationships and the level at which we're engaging.
Every day is a CEO engagement, which I think is something we enjoy that I don't think any other technology company really enjoys that. And it goes back to that whole notion of digital transformation. So the opportunity for us is as we continue to do well in the United States, as we think about the international market, is how do we make sure that we're educating our customers that we are not just about what our name sounds like, okay? Salesforce Automation, right? Salesforce.
And so that's where CEO level engagement is really important. So we continue to work on that. Mark and I and the rest of the executive team spend a tonne of time outside the United States meeting with other executives. We also increased or augmented our management team so that we can amplify that message internationally. I mean the team has done a fantastic job internationally over the last 6 years.
But for example, we made a couple of strategic hires with Gavin Patterson as the Chairman of EMEA, who's a former CEO of British Telecom, very connected, very credible, great executive. And now he is carrying the flag in EMEA. We hired JaneAnne Gaudia to run the U. K. She's got a brand of her own in the U.
K. And has access to senior executives there that can carry the flag. We hired Pip Marlowe in Australia to be the CEO of Australia and AMG Market. She was a great executive at Microsoft, so it's the same sort of thing. And that's one way to do it.
We continue we have a great we have enormous talent in the company. We have a great field organization. We continue to augment that. The other one is to connect our customers and let them have the dialogue. So for example, if we want to do something in the banking industry, it's an easy conversation to have Jess Staley from Barclays go talk to another CEO in banking or in the insurance industry to go have Michael Tipster talk from State Farm talk to another insurance executive.
And those are our trailblazers. We refer to those as trailblazers. I think a lot of people mistakenly think that when we say trailblazers, we're talking about admins. We're talking about people who are evangelizing on our behalf about the whole solution that we bring to the table at all levels of a company in every industry, and that is a force multiplier for us. So great questions.
You bet.
Bram Mitchell from Barclays.
Yes, good timing.
Staying on that subject of digital transformation, like what do you see in terms of how customers go about this? Like I know like Barclays were very big, but if you guys on that journey, like how is it going to buy like 1 cloud or are they buying more clouds and hence you're kind of going to see bigger and bigger deals? And then the second part is like what role are the system integrators just playing? Sincerely, if you look at your Oracle data or SAP, the eyes were very, very important to kind of drive this as well. So where are they at this point?
Yes. So you're actually a great example. You have an excellent CEO, and he is your Chief Transformation Officer. I mean one thing I will give Jess a lot of credit for is that since day 1, he's really been interested in driving this, and he understands the importance of technology. He has an appreciation for technology.
And I think that is a secret sauce ingredient for digital transformation. And that can start anywhere from 1 cloud or it could be several clouds together. It depends on the culture of the company. It depends on their skill set, their appetite to digest the technology, the pace at which they want to go, their vision for where they want to go. So it's there's no one size fits all, the answer, to be perfectly candid.
And there really are 3 pieces of digital transformation that you have to consider. One is the technology transformation. So there are many different types of technologies you can use in transformation today. There is the infrastructure layer, the movement to the public cloud. There is the application layer.
There's artificial intelligence. So you kind of have to once you know what your vision is, you kind of have to sift through what are the technologies that you're going to use to drive your digital transformation and what your goals are and how you're going to measure them. The second one is a business model transformation. So how can I use this technology to change the way that I do business? How do I get closer to my customers?
How do I provide my customers with a consistent experience and a rewarding experience so that they want to buy more from me so that I can provide them higher levels of service. This is the sort of thing that Jess is trying to accomplish with Barclays or you saw in the keynote, if you attended the keynote, what Titsford's trying to do with State Farm in the insurance industry. The 3rd piece is the cultural piece, which is really important because people have a tendency to think that it's all about the tech refresh or it's all about the business model change. But you can have great tech refresh. You can have great business model change.
But if you blow it on the 3rd piece, which is the cultural transformation, you've wasted your investment. And that is really, really important. So the cultural transformation is how do I absorb the technology? What does it mean to my workers? Their daily lives will change.
Is there an ethical use implication? I mean, there's a lot to that piece. So you have to really think strategically about all three of those. You have to have that Chief Transformation Officer. You have to understand where the vision is that you want to take the company, what type of transformation that you want to go through and then you can pick the journey and how much of that you want to digest.
The second part of your question, by the way, you're all very good at multipart questions, which is great, is the systems integrators. They are very, very healthy. They're growing. If you ask them the fastest growing practices of any size or significance, they're going to tell you it's a sales force practice. You saw the statistic about the sales force economy.
By 2025, IDC is projecting 4,200,000 new jobs. That's very, very real. And it's created a very healthy environment for the Accentures of the world and the CAPS and the PwCs and the IBMs and the Deloitte's. And I don't want to offend anybody if I missed anybody, but those are the bigs. Okay.
Keith, you're probably around 20,000 salespeople today, which is plus or minus probably where Oracle and SAP are. We have the guidance from Mark's team that the business will double over the next 4 years. Does sales headcount also have to double in the next 4 years?
No. That's my answer.
What's the ceiling and how do you think about it?
I don't think about it as a ceiling. I mean look, the market TAM for CRM is over $100,000,000,000 So there's a lot of opportunity in every industry, in every segment, whether it's enterprise, the mid market, the SMB space. So obviously, as we continue to scale any organization in the company, it doesn't matter whether it's sales or not, and I know this is a hot topic for people in the room, is we will get better and we will improve, and there's more and more leverage points. So I don't think about Oracle or SAP and their sales organizations. I think they're different companies with different cultures and different relationships with their customers and different opportunities.
So but we strive to be better every year, for sure.
Keith, Derek Wood at Cowen. You guys recently announced a partnership with Microsoft. I think you're moving the Marketing Cloud to their cloud infrastructure, some integration with their Teams product. So Microsoft, it seems like a friend and a foe a little bit. So I guess first part, what's incremental for you guys in terms of this new partnership?
And then anything to highlight in terms of how you're competing, Dynamics and Power BI are 2 competitive products in your markets. How do you feel like you're competing there?
Well, this sort of cooperation model is nothing new. It's been this way for a very, very long time, certainly in the technology space. I don't think it's unique to the technology It's probably unique in the automotive space, too, or pick your industry. But look, at the end of the day, we listen to our customers. And our customers do not want to be forced to choose.
They want to have choice. They want to have they want an open relationship between their technology providers. And so in that regard, this new partnership with Microsoft, it's good for the customer. I have always felt if you take care of the customer, everything else falls into the place. So I think it's a good thing.
Relative to competition with any particular firm, we see everybody. Competition is good. It's good for the customer. It's good for us. It's a creative force for us as we think about innovation.
But I think we've got some pretty compelling products out there that seem to be doing all right.
Thank you. This is Brent Bracelin with Piper Jaffray. My question is really around Customer 360. How should investors think about the monetization opportunity of 360? I think there's real value to the customer there.
But what's the playbook to monetize it? Should we think about it as broader MuleSoft adoption largely? Or is there a multi cloud attach that can Regency benefit from? What is the potential uplift for our customers today that goes all in on Customer 360? What could that look like, 1 year, 2 years from now?
Yes. So I started in this industry in 1984. And in 1984, we were talking about the 360 degree view of the customer, okay? So this is a bit of a Holy Grail. And a lot of companies have talked about it.
Customers have wanted it. Partners have wanted it. And we're going to give it to them. And it is a very, very powerful force. Understanding as much as you possibly can to give a better experience, to grow your company, to get closer to your customer, that is everything to any company.
That is a lifeblood. That is survival. That is your future. So if we're able to give customers a platform where they can give those rich experiences that it can be consistent, that they can provide valuable insights, that they could grow their product lines, where they can engender loyalty with our customer base. Every CEO in the world wants that, okay?
They really don't want point solutions. They really want a simple platform that can bring all those things to bear. And the beauty of that is if you look at our customer base, which is more and more going multi cloud, they all don't have every single cloud that we create. And the vision of the 360 brings all those clouds together. So you can think about that is the way to monetize this.
It's not a 3 60 degree product line. It is the components, the building blocks that go underneath the concept and the vision of the 360 that really resonates with our customer base. Holy
So it feels like a lot of people are getting into each other's knitting in terms of like Adobe is getting its marketing portion, Service Cloud is heading up a little bit now. So over time, what do you think this industry looks like big ticket 5, 10 years from now? And what are the implications on the margin structure?
Well,
I think cloud adoption, generally speaking, is in a very early stage. I mean this is another wave of very broadly, this is another wave of computing. And I'm going to keep using these words, and we all use them, and we kind of throw them around. But this whole digital transformation thing super real. And new technologies show up in the 4th Industrial Revolution.
So we're just we're at the beginning. We talk about it like it's been around for years, but we're really at the beginning. And you think about a Fortune 500 company and you're doing an enterprise wide transformation. That means the entire company doing a complete remake or do over and not just a tech refresh but the opportunity to change business models. And I think people make the mistake of thinking that this is just a tech refresh.
It's not. A tech refresh is not going to get you where you need to go. You need the business model transformation. So there's clearly a ton of opportunity, and this is going to take a long time. And going back to an earlier question from the gentleman for Barclays, depending on the company, the culture, the leadership, they will digest it at the pace that they can absorb it.
But this race is far from being over for sure.
Greg Monocco from Mizuho. Thanks for joining us, Keith. So I wanted to get back to government because you called it out as a particularly significant opportunity. And agencies naturally will sort of tend to move at their own pace with respect to cloud. But how would you assess just on a global basis, how would you assess the readiness of global government to move forward in terms of buying into the sales force vision and product portfolio?
And how do you and how significantly do you think that will evolve over the next 2 to 3 years?
It's major. The government is the biggest laggard in terms of transformation by far. A big focus for us has been the United States with some success in other parts of the world, let's just say, the U. K. And Commonwealth countries, okay?
Last year, we promoted Dave Ray to run Global Sector for us globally. And the reason why we did this is because I wanted to project our success in the United States all over the world. Dave has been staffing up hiring some great senior executives in EMEA, in Asia Pac, in Japan to take advantage of that opportunity. But I just met with the Veterans Administration this morning, and it is incredible what we're doing with these people. And it's one that we I personally, but I know as a company, we feel very, very strongly about any organization that is servicing our veterans.
And they desperately need technology to provide the highest levels of service to those veterans because they deserve it. There are tens of thousands of homeless people in the United States who are veterans. And anything that we can do to help the Veterans Administration serve those folks, we're all over it. But it's not just the Veterans Administration, it's the USDA, it's DoD, it's every element of the government. And there is so much opportunity.
And not only is it a great financial opportunity, I think as citizens, it's kind of a moral opportunity as well or obligation.
Keith, Mark Murphy with JPMorgan. Mark, how are you? Good, good. So the vertical focus has become so critical to your growth and to your retention. I'm curious just how much of the verticalization do you want to have Salesforce do itself versus handing it off to another provider, for instance, Veeva or Velocity, how do you keep that balance optimal so that you're capitalizing economically while also being able to move quickly and
cover a lot of ground?
I mean, for instance, if Velocity ends up with 5, 6, 7 verticals that are the size of EVA, Is that is it taking it too far?
No. I mean one of the if you go back to the 3 growth pillars, one being the ecosystem and the importance of the ecosystem, whether it's the SIs or ISVs, Velocity is a company that has deep, deep particular set of industries like telecommunications. They're very strong in telco. And that's not an area that we have a lot of domain expertise. So we're happy to have companies like Velocity drive that because when you sell a Velocity license, you're also selling a Salesforce license.
So that's a natural reach. Like no company can be all things to all people, and you certainly don't want to be predatory with your partners. So I remember the early conversations with the folks over at Velocity, and they've done a terrific job. And we applaud their leadership and what they're doing with customers. They're joint customers with us.
I was in New York a couple of weeks ago, and I did the life insurance tour. They do a lot of business with life insurance companies. So we want that reach. Ncino is another company that has done very, very well on banking. You mentioned Veeva, which has done a terrific job in Life Sciences, specifically Pharmaceuticals.
So we're looking for those type of companies to expand the ecosystem, and we're also going to build some of these organically. I mean we've had wild success with Financial Services Cloud and Health Cloud in just a couple of years. I'll
ask another one. Has your view on sort of international changed maybe over the last 5 years? I think when you started, I think you just started putting data centers in places like France and Germany.
Yes.
It's actually growing faster than with the Americas right now. Do you feel we're at a point where doubling down on sort of investments in those regions makes sense just in terms of where you are? Meaning, do you feel like you have the people in place where you can really start putting a lot more people in the field and the embrace of cloud over there is now at a point where the return on that makes sense to
do that. So I was just
kind of curious how maybe that's changed over the last few years from your point of view?
Yes. The foundation has been poured, and it's a strong foundation. We've got some great people internationally. I mean I'm really proud of the team. But now we have an opportunity to I don't want to use the words double down because that will imply something to this community, reemphasize, reinforce, further commit to.
The international market is a great market. Regardless of what you may see, whether there's Brexit or stuff in the Continental of Europe, all these companies need to go through digital transformation period. We spent a lot of time in Europe. We spent a lot of time in Australia and Japan. Our executives spent a lot of time in Latin America.
There's a lot of opportunity there, a ton. It's worth the investment. One more comment on that.
You can't be in
the enterprise unless you service global multinationals. So you can't service a global multinational unless you're there, and that's what we're doing.
Hi, it's Teddy from CI Investment. Just have two questions. First one is in terms of digital transformation, it's definitely a very huge topic for enterprises. I guess my question is that for salesforce.com, let's say in the next 5 years, what would be the focus is? And is there any boundaries because you made lots of acquisitions in analytics, in other areas beyond CRM.
I guess my question is that what's the boundary in terms of playing in the digital transformation for the enterprises? And I guess the second one is for governments. Can you give us some example how you help the government to make that transformation? So
I think if you look historically, I'm going to separate CRM transformation or CRM related transformation from other transformation, okay? And then I mean I would look at the other transformation 2 ways. Other transformation is infrastructure, right? I'm moving to the public cloud. I'm moving my workloads.
I'm going to AWS or GCP or Azure. Companies know how to do that. They've been doing tech refreshes and movements in infrastructure for a long time. It's a different technology, but the principles and the concepts are not that different than the way that they've always been. The other part of that is kind of the back office transformation.
I think this group of technologists has seen the playbook for ERP transformation based on the movement on Y2K, okay? And if you remember that, if you give me something, it's almost 20 years ago, I can't believe it. But 20 years ago, everybody had to redo their ERP, right? We had to redo the ERP, whether it's Y2K or something else. But if you think about transformation now associated with ERP movement to the cloud, is that going to really change a company?
Is that really going to move the needle? Is there really going to be a new supply chain optimization because of some innovation in ERP cloud?
Is there a
new way of closing your books? I don't know. I don't see that as major transformation. What I do see as major transformation is growth. Show me a CEO who doesn't want to grow.
Show me a CEO who doesn't want to get closer to their customer. Show me a CEO who doesn't want to have a better experience for their consumer or their end customer, whether you're a B2B company, a B2C company or a B2B2C company, it doesn't matter, okay? Every CEO wants growth. A lot of companies have kind of cut their way to prosperity, and it's time to grow. It's time to embrace new technologies.
It's time to change your business model. So this transformation is very real. And I hear it every single day. Marc Benioff hears it every single day. Our executive team, Mark Hawkins, hears it from his peer group every single day.
That's exciting. It's new. And it's going to go for a very long time. There's a lot of opportunity there. As far as helping the government, that's a loaded question.
There are so many use cases in every branch of the government of where they could benefit from, yes, a tech refresh type of transformation because they've got legacy systems. I mean, there's still COBOL programmers out there. I don't know how many of you have ever programmed in COBOL, but I bet you not many. One person. Yes, you're a Salesforce employee, right?
Yes. So there's a lot of opportunity on the tech refresh, tech transformation. But I think Citizens, because everybody walks around with a mobile phone now, have a higher expectation of services they're going to get from their government. And it really is it starts with an education process. There's a willingness to do it.
There may not be an understanding of how to do it, and that's where companies like Salesforce have to really step up and advise. And we're trying to do that. And we've done some great stuff, as I said before, with the Veterans Administration and USDA, and we're proud of it. So I think there's
a lot more for us to do. Keith, Tom Roderick with Stifel.
A bit of a tactical question for
you here in thinking about the integration with Tableau. And I know it's too early to really talk about what you're going to do and probably wouldn't tell us
right now anyway. But Go ahead and ask your question,
yes. But I'd love to hear the learnings from MuleSoft. That one went very, very well. And what can you take away? What have you taken away in terms of the right playbook terms of how long you double comp sales reps?
How long do you introduce the product to the core sales team and build sales plays into it. Can you just talk about what went right and what you learned from that that
you can put into motion here? Well, everything went right. Look at the results, man. The first of all, there's many things that we consider when we do an acquisition, right? So obviously, we evaluate the technology and what does it mean as a natural adjacency.
And MuleSoft, while not obvious to all, including me, I've said this publicly, it is a natural adjacency just because it can accelerate the pace of a digital transformation. It's a no brainer. Plus, we live in a world of data. And what way to a better way to expose the data than Anypoint as a platform? So when we acquire a company, we evaluate the technology, we evaluate the leadership, we evaluate the alignment and culture because culture you have a great company with great technology, but if the culture of the organization that you're acquiring doesn't line up, it's hard to absorb, really hard.
And that creates friction inside and outside. MuleSoft had a great cultural alignment. And by the way, Tableau does. I mean, Adam's awesome. He's a great leader.
Their culture is very similar to ours. They do a lot of things that are very similar from a business practice perspective. And the way that they treat their community, their visys, if you've heard that expression, the people who a community that comes together to share and exchange their visual apps. So those are some of the lessons learned as we think about other acquisitions. I mean, we've done 2 majors in the last couple of years, if you include those 2.
And there's a playbook around you bring a company in and you want to accelerate. You don't want to leave them off in an island. You want to make sure that the playbook and the way that we can explain the leverage points of the customer are there, that it becomes obvious to the customer facing organizations, how do you position the product enough so that you can bring in your partner from MuleSoft, you can bring in your partner from Tableau? The incentive systems are in place. So there's a lot of things that you have to think about from an integration perspective.
You want to try and make it as seamless as possible for the customer because the customer is dealing with 1 company and now they're dealing with 2 companies and how do you bring them together from a contracting perspective, from a messaging perspective, from a look and feel perspective. There's a lot that goes into it. But look, at the end of the day, you want to get off to a fast start, you want to accelerate it and you want to take the customer position. You always have to go with the customer position in, not your position as a company out, right? Otherwise, you're going to suboptimize the results.
And the team did a great job with MuleSoft, and I'm confident they'll do a great job with Tableau.
Thank you. Karl Keirstead at Deutsche Bank.
Hi, Karl. How are you?
I'd like to ask
you about how you view pricing as a growth driver. And the spirit of the question is, I think as you and your team have done a great job selling more customers, their dollar spend with Salesforce is getting relatively large now. And we do hear from customers that, boy, I love the company, I love the product, but damn, it's getting expensive. So I'm just wondering, when you hear that, how are you thinking about dealing with that, those kind of comments? And does it make you want to sort of pull back on the use of price as a growth driver and on the PxQ equation, focus a little bit more on the Q?
Love your thoughts on that.
Well, I can tell you that we don't sit around at the executive team and say, How do we use price as a driver? I know some companies do that. And I think when you start getting into that mode, you're not thinking about what's best for your customer. So we like to focus on value and what do we do as a company to make sure that we're driving value and success for that customer. And amazingly, when you get a customer who is betting their business on Salesforce and they go through this great transformation and they're getting all sorts of value and the results are there, they don't talk about pricing.
They talk about value. So we have this great organization called CSG run by a long time Salesforce veteran, Brian Millam. And he is going through a transformation of CSG right now. There's 3 buckets that Brian is responsible for. He's got the classic success business or excuse me, the support business, which is kind of a break fix, which you'd expect.
The second piece of transformation that he's going through is the success business. We have these people that are called customer success managers, and he's reskilling and upskilling the role of those people. And this is an army of people that is dedicated to driving adoption in our installed base. And so they are assigned out to our customers with all sorts of process and methodologies and rigor and tools to drive that value because we recognize the importance of value. I mean value is everything, okay, other than trust, right?
If you think about customer success, it's all about value. And the 3rd piece of this is our services business. We recently recruited Lori Steele, who is a senior executive at IBM. She was kind of the inner circle at IBM, longtime consultant, great executive, and she is focused on transforming our projects business and our advisor Again, both of those groups are focused on value. So our goal here is to make sure that we have every customer is happy.
It's part of our culture. 50,000 employees wake up and they say, What can I do to make a customer successful? And that's who we are. So I think at the end of the day, if customers are achieving their goals because they're getting the value out of the technology from us that they expected, you don't really get into the pricing stuff. But we don't want to be the company that uses it as a growth lever.
That's that was my last company.
Keith, customers say
they love Salesforce
because it's so will vertical SaaS companies be able to reach the Holy Grail before horizontals?
That's a great question. I don't know
if one will outpace the other. If the Holy Grail is a 3 60 degree view of the customer, you can make an argument that there would be a faster acceleration on the vertical side just because it's a specific industry with a specific business problem as opposed to something more horizontal, which may be trying to solve many things. But I think that both are going to get there in their own way at their own
I'm going to pose this question on behalf of my friend who is not here, Brad Zelnick, who Brad feel better, he's listening. Of course, he didn't ask this question. But my question is on Lightning. We hear consistently every year that Lightning adoption is still not where it needs to be in. If you switch over to Lightning, there's a whole host of benefits to be gained.
You could take advantage of a
lot of the functionality that Einstein has to offer.
So I'm curious, what is the company doing to increase adoption of Lightning?
So there's a whole bunch of things that we're doing, and Brett Taylor is in the back of the room, so he can answer this question as well. But look, we have the CSG organization. As I said, we have these CSMs, thousands of CSMs who sit out there in our installed base, and they're working on driving adoption so that people are getting the value out of Lightning. Number 2 is educating our partners. So as our partners are advising their clients, they're talking about the virtues of Lightning and why people should move to Lightning.
Number 3 is trailblazer. Our trailblazers our trailblazing community, our SysAdmins, our awesome MVPs, who are, again, just like our partners, evangelizing why it's important to move to Lightning. So we've got this incredibly powerful community of people who are out there telling our story. And then of course, we have Trailhead to educate people on why it's important to adopt Lightning. So there's kind of 4 levers there, 4 thrusts.
I would probably debate with you whether or not customers are successfully moving to Lightning. I think they are. But again, Brett's here, and he can answer that question for you.
Hi, Keith. It's Keith Bachman from Bank of Montreal. We're actually rolling out lightning throughout the firm as
we
speak. Can you go talk to him, please? I thought it was your question. It was Brad's, right? Let's talk to Brad's.
Now it's Brad's question. All right. Good. I wanted to talk to you. Mark Hawkins showed a slide that indicate about 3 quarters or 75 percent of your revenues are being generated by your installed base, 25% are being generated by new logos.
How do you see that mix changing? And secondarily, within assuming that installed base continues to grow, what are the risks and opportunities to make sure you're appropriately nurturing that installed base for things like mix, new products and cross sell opportunities?
So first of all, I think 75%, 25% is a great mix. I mean, if any company is doing 25 percent at our size and scale, if you're doing 25% new logos every year, that's pretty good. Like I would benchmark that against any company of our size and scale for sure and even smaller companies that are newer in the market. I think that's pretty good. That's a great stat.
And obviously, look, once you have an installed base customer, if you make them successful initially, you can continue to layer in new products. It kind of goes back to this gentleman's question over here about the Holy Grail of 360. If we start with Sales Cloud, then we can move into Service Cloud. We can move into Marketing Cloud. Depending on what the transformation is, it may be Commerce, it may be Platform, it may be Einstein.
So it could be Tableau, it could be MuleSoft. I mean, you see the product slides, wherever it might be. We have a product rich portfolio. So there's a lot of opportunity to monetize that installed base and, yes, drive success for our customers. So if you've got these two motions where we're moving into the installed base, we're making driving success, it gives us the right to sell the next product and to improve the life of that customer, right?
And the lifetime economics of that installed base selling is very attractive. Hunting for new logos is a different it's a different motion. It's a different playbook. It's a different methodology. It's going to have different lifetime economics initially.
But once you get in, watch that grow. And that's no different than what we've been doing for 20 years. But now we're doing it all over the world, and we're doing it in large companies, not just small- and medium sized companies.
Any more questions? Let me take one more. Okay. I'm going to call it.
Keith, thank you. Thank you
very much. Enjoy Dreamforce. Thank you for your support.
So we're going to take about a 30 minute break. We'll be back here at 3. So you can catch up on some e mail or come have a conversation with any member of the IR team. Very quickly though, before we step out of the room, Matt, please, could you come up here for a second? And Valmik Desai and Alex Mann.
I just wanted to these are 3 new members of the Investor Relations team, and many of you may have met them over the course of today or last night. And I just wanted to call them out for a second very briefly so you get familiar with them. Matt is an 11 year veteran here of Salesforce. He's been comes to us from our M and A Finance team. He's worked on every transaction we've been involved with since Radian6.
So he brings a wealth of knowledge in that process to us. Alex Spahn here to my right, a 6 year veteran of sales force, has been involved at different aspects of our FP and A group, served some time in London working for us there and Valmec Desai's been with Salesforce for about 3 years now and joins us from the accounting team and was very much involved with a number of aspects of our 606 implementation and deferred commissions. So it's a great team. They're great guys. And so if you have any questions, feel free to reach out to any member of the team.
And I just wanted to embarrass them like this. So they're standing here awkwardly. Anyway, we'll see you all back here in about half an hour, and we'll carry on with a conversation with Bret Taylor and then with Mark.
Ladies and gentlemen, we are about to begin the next session. So please make your way to the seats. We are about to begin. So, okay, we're back.
So I'm very pleased to welcome onto the stage Brett Taylor. Brett is our Chief Product Officer and now a 4 year veteran?
3. 3, okay.
Yes, 3.
Excellent. Well, big impact in 3 years. So this is really an opportunity to have an open dialogue with investors. And so I'm just going to open it up, unless you had something
No, I just want to thank you all for being here. I think I'm between you and Marc Benioff, so pretty easy position to be in. I'll be just as colorful.
I'll be the judge of that. Okay.
There's a question back there.
Walter Pritchard from Citi. So I think we've seen various disclosures, one about how many clouds customers have and the message there is it's pretty under penetrated. And yet I think we hear on the other side, like you even read Gartner and Gartner says, your clouds aren't integrated well. And that's like one of the cons of doing business with Salesforce. And I'm wondering from your perspective, how much is that holding back multi cloud adoption, just the technical integration pieces that I think customers are starting to expect as they look at your broader vision?
And are there sort of milestones as you look out over the next 12 or 18 or 24 months that you think will start to change that in the eyes of customers, at least what people are seeing, perceiving and Gartner's writing about and so forth?
Yes, that's a great question. So first of all, making sure that Salesforce's value proposition is not simply a single cloud, but that entire Customer 360 value proposition is really the central part of our strategy. So for those of you, I assume most of you saw the keynote yesterday, we really talked about 2 things, Customer 360 and data. And one of the key components of that Customer 360 capability was this new idea in this Customer 360 system of truth, single source of truth. And that capability is essentially the ability to sort of broker data between all of our clouds and it's available at no additional cost to our customers.
The idea behind it is that we want to make sure customers can very easily create that single source of truth between their sales, service, commerce and marketing, and all of their custom applications. And we want to make sure that as customers, maybe they came into a relationship with us through a single RFP for a single point solution. When they're going to that next decision to say, let's say they bought customer service and they're deciding what email marketing platform to choose because we have this Customer 360 capability, because the data is integrated between our clouds. It means that we're competing on an equal footing. We're competing with the portfolio of products rather than just one individual product.
Your question about what's the biggest barrier to multi cloud adoption, is it the technology, the other things? Certainly technology plays a part in all of it. And I think we're doing a much better job than we have in the past and making sure all of our clouds work seamlessly together. I think one thing I hear from a lot of customers though is there's also organizational silos that they need to break down to really realize this vision of a Customer 360. So in the banking world, as one example, a lot of large banks have grown in silos of say, a commercial banking business unit, credit card business unit, and an investment banking unit.
And typically, those the autonomy given to those business units to grow runs counter to the idea of creating sort of a customer centric business model that sees one customer who might interact with all three of those parts of the bank. That's really the vision when we come with something like a financial services cloud. We talked about unified banking. That's our value proposition is to say, how do you build a customer centric business that spans the entire bank. So you get more cross sell and upsell opportunities.
When we go into, I work with a lot of our largest banks and the barriers there are technological barriers, which is why we've invested in so much in technologies like MuleSoft to help overcome those. However, there's a lot of organizational barriers as well. And I think when you talk to large enterprises about digital transformation, there's a lot of cultural barriers to that as well as technological barriers. So it's really interesting, particularly where we have CEO level engagement with our customers. We'll bring in capabilities like Trailhead along with our capabilities like Service Cloud and Marketing Cloud because we're coming in saying, we're going to help you come up with a technology vision for digital transformation and we're going to make an enablement platform for you as well.
So you can bring all your employees along that as well. Hard to quantify where the most friction is, but I think it is really important as you talk to our customers, you will see both. The marketing department and the contact center tend to be different departments. And we're trying to say a vision that really spans those and that's going to be both an organizational concern and a technological concern.
Thanks. Hey, Ramelanchoe from Barclays. On that note, like if you think about Customer 360, is that going to be ultimately like one big data pool that you have? Or do you have metadata that you're kind of spending across your different clouds? Like how do you get that integration going?
Yes, that's a wonderful question. It will be a mix. Certainly, metadata is an integral part of it to make sure you know where your customer data lives. And from that, you'll get a lot of capabilities. One is that single source of truth to your customer data.
You also get great capabilities like when a new privacy law comes into effect like GDPR, CCPA, you'll have a map of where your customer data lives, which will really enable organizations to be more agile in the face of what I think is an increasing balkanization of a lot of regulatory regimes around the world. So when we're pitching Customer 360 or a customer base, it's about that incredible value of the customer experiences you can build. It's also around trust and security. And then it's also giving our customers the capabilities in the face of regulatory changes to be more agile, which I think is, particularly for multinational customers, increasingly a differentiator for the Salesforce Customer 360. There will be some data copying as well.
That's not sufficient for all applications, particularly in the area of machine learning. You have to have all your data local in one area. So you'll find across our customer base is a mix where some of the Customer 360 capabilities is kind of mapping the metadata and making sure that data is synchronized across what might be intentionally separate pools of data. Maybe it's an emerging business unit in Latin America and a business unit in Europe where you just want one view of the customer, but they're fundamentally operating with different sales motions or service motions. And then there'll be some places where you really want to copy things all into one place because you want Einstein to be able to derive insights from that data.
There's not one answer in other words. And so based on the customers' applications, based on what they want to do with our Einstein technologies, we try to afford quite a bit of like architectural flexibility to enable them to kind of choose their path there. One of the things that sort of was under the radar that we announced this year at Dreamforce is Customer 360 Audiences. This is our customer data platform, which is a vital tool for marketers right now, kind of a system of record for marketers. That's one area where you're seeing a lot of essentially ETL copying data and so that audiences can be generated for marketers.
So it is, heterogeneous, I think is the short answer to your question. But we do recognize for a lot of these different applications, you'll see some data being copied in. It's tangential to the question you asked, but I did want to bring it up that one of the things that I'm really proud of that came through in this year's Dreamforce is our partnerships. So I would say like our partnerships with Amazon Web Services, our recently announced partnership with Microsoft to move some of our marketing cloud to Azure, our partnerships with Google, with IBM, with Cisco, and all the connectivity that was highlighted with MuleSoft, I think throughout every single demo you'll see in every single keynote. We're really trying to say that as a company, we're trying to solve one problem for you.
That's Customer 360. And we want an architecture that really coexists with your other technologies and your other infrastructure. I think that alone right now is differentiated in enterprise software. We get along with everybody and that's rare. And I think that's continue that will be an asset for us going forward.
And it certainly changes our conversations with CIOs because if they've invested in say a proprietary data lake or proprietary predictive platform, we now have an architectural blueprint that says here's how that works, but you still don't need to choose between us and that. You can still achieve a Customer 360 and integrate your proprietary systems inside of that.
Hey, thanks. Richard Davis, Canaccord. You guys have partnered, I think, with Automation Anywhere in the RPA space. And so the question I have is, do you need to partner with them on this? I mean, not that you wouldn't partner, but I mean, can you create that software yourself?
I mean, I got in trouble for calling it macro recorders, but how do you think
about that? You think about
that much broader vision. Exactly.
I get it. Yes. I got pased for that. But anyway,
how do you think about that and just that whole space? Thanks.
Yes. RPA is a super interesting space. Broadly, I view it as sort of an adjacent category to integration, which for us that really represents MuleSoft. And it's sort of at a different layer of the technology stack as you allude to. But if you look at where it's applied, it's applied in a lot of situations where you want to keep an employee, primarily an employee from doing what we call swivel chair integration, right?
Going to 1 or 2 or 3 or 10 different tools to get their job done. I think it demonstrates, I think, that while it is perhaps a less elegant solution for some things, it works. And, I think in the world of IT, if duct tape will work, duct tape wins. And we've seen that time and time again with technologies. It's like how much do you all do in Excel, right, that you probably shouldn't be doing Excel.
I'm looking at all of you in the room. I know it's true. And when all you have is a hammer, everything looks like a nail. So I think it's dangerous to be dismissed with that technology. I think we really view it as sort of demonstrating the demand for systems integration, across multiple systems.
So that's why we partnered with Automation Anywhere. We really love their platform, love their marketplace. And we have a lot of process automation technology in our portfolio already. We see that kind of integrating in the place with platforms like Automation Anywhere in many cases, maybe where there's a legacy system that for whatever reason our automation tools can't talk to, it's a really good way to close that gap. So like our strategy with Salesforce Ventures, we find something that our customers have told us is a great product that's adjacent to us and it gives us an opportunity to extend that partnership, learn more about the market, help that company integrate more with our existing product lines.
Hey, Brett, it's Kash. I really don't have any questions on my own, but Keith Block wanted me to ask you about lightning.
I didn't hear you.
Believe it or not, this question I'm about to read actually sounds very smart because it's from Brad Zelnick, who's listening to webcast. So I don't take credit for the call.
I should know Octave or Keith has been here. I feel like you're in and out.
So Brad's question is, you've been growing at a non present scale, but some would say the technology behind Salesforce to outcome is at least 20 years old. So how do you think about digital transforming the back office and the back end systems such as the big company down in Redwood Shores whose technology underpins a lot of what you guys do? Maybe that perception is not correct, but just help us through how you're doing this. Thanks.
It's a wonderful question and it's really important that we follow through on making sure that Salesforce as a platform is the best and most modern platform available to our customers. And it is there's been a lots of cautionary tales in the technology industries of companies who have sort of rested on their laurels and not reinvented themselves while trumpeting digital transformation to their customers. One of the things that really stood out to me this year that I'm really proud of is seeing the depth of innovation in each of our core clouds. So in our sales cloud, we announced call coaching, Einstein call coaching. This is really deep in the sort of infrastructure of our sales cloud using voice recognition to not only find important events and phone calls, but enable our customers to tell us what those events are.
So in the insurance company, we demonstrated we can automatically identify life events. And it's so sophisticated, you can even have someone say that my partner is expecting and it infers that there's a pregnancy life event. So it's very deep semantic, deep learning baked directly into our oldest products from 21 years ago. And that's the way I really view innovation, which is we have an amazing set of technology. A lot of the concepts that Parker invented 21 years ago, like our metadata driven model are incredible.
They're not going out of fashion anytime soon. But we need to augment those with very deep investments in each of our clouds. In Service Cloud, the thing I was I think you all saw, but to give my color commentary, the partnership with Amazon Connect to bring cloud telephony together with our service cloud, you get the real time call transcription from Amazon, but Einstein gets to make recommendations and suggestions on top of that. What this is doing for us is it's bringing Salesforce into high volume contact centers, providing real time recommendations to people handing a very, very high volume of calls. This is a market we weren't really in or at least not in that with that level of depth until right now.
And these are our 2 largest clouds. So one of the things that I think you all should look at and sort of holding me accountable for this is, is it innovation outside of the core? Is it innovation inside the core? And we really try to have a healthy balance and actually a huge percentage of our innovation was deeply inside of the core like Einstein Voice, like the call coaching capabilities of Sales Cloud, like Service Cloud Voice, which was that partnership with Amazon Connect, which is the magic is in that marriage of Einstein with that real time cloud telephony. So I definitely disagree with the quote you do read, but you should also talk to our customers because interesting, 100% of my conversations today have been about Sales Cloud and Service Cloud, because everyone wants the new innovation, right?
The idea that you can actually provide real time coaching to a telesales team at scale, no one else can do that. And so we really believe that we can innovate in our core And it's something that we're really investing in and it's not just about all the new shiny stuff outside of it, it's deep innovation in our core clouds.
Hi there, Brett. Thanks for your time today. Just actually following up on something that you just said, 100% of your conversations today have been about Sales Cloud and Service Cloud. That very much squares with kind of what we've also heard more broadly in the presentations today. They showed the chart that you guys are advertising in San Francisco about sales force share of CRM dollars and that sort of thing.
My question is really about marketing and commerce, which arguably is a much more competitive space and one where you've got kind of competitors at the high end of the market and the low end of the market that are deadly serious about kind of owning that area and going up against you. How do you view those in the context of your broad product offerings? And what investments are you making to kind of make those work together with the Customer 360 Vision and the digital transformation themes that have been talked about?
Yes. So great question. The Louis Vuitton story we told in the keynote, I think captures a broad part of what our strategy is as it relates to both commerce and marketing and largely as it relates to B2C companies that we serve with our platform. And that's really providing a single view of the customer for all the digital interactions that large scale B2C companies provide. And I think we've made a ton of progress there, particularly in the area of retail, where I think we have a very, very differentiated product offering.
Some of the capabilities that are coming out this year, I think represent that strategy. The first is Customer 360 Order Management. So there's a glimpse of it on one of the slides, but we just unfortunately we have too many products to launch. We can't talk about them all in the keynote. That's really an integration between commerce and service, which is really a sweet spot for retailers, which is are all aspiring to have the same level of customer experience as Amazon.
Because it's interesting like your experience where the retailer doesn't end when click purchase, right? It's tracking that order. It's buy online, pick up in store. It's the return process. So with like Customer 360 Order Management, we're trying to come up with an integrated value proposition that really brings together our commerce value proposition with our service value proposition and kind of the order management is kind of the membrane between those two product experiences.
We're also really focusing on Einstein. That's one of the areas where we think in the area of marketing and commerce, our technology far exceeds the capabilities of our competitors. So for example, in our marketing cloud, we do billions of engagement predictions every single day to determine when and how to send the right email. We are announcing we announced this year a send time optimization. So based on the individual profile of a person and when they actually open their email, we'll send it at that time.
You can just turn these capabilities on. With our Commerce Cloud, you can turn on a capability will automatically personalize the listings on your storefront to the viewer. And it'll do sophisticated things like once you viewed an item, they'll personalize future page views. So if you view a men's coat and you search for shoes, it will show you men's shoes. Those types of capabilities are very, very sophisticated.
And for a say a commerce customer, one of the ones you brought up, it will raise your gross merchandising volume simply by turning something on, which is a very easy value proposition for our customers. So we're really focused on Einstein differentiation and we're focused on bringing together each both marketing and commerce together with the rest the Customer 360. So when we go to a B2C company, say it's a consumer packaged goods company is trying to go direct to consumer or a retail company that's trying to leverage their physical presence to also have a presence in the digital world. We're coming with a very broad value proposition. We're not selling a point solution around commerce or a point solution on marketing.
We're giving them a digital solution for their entire business. And it has worked out really well. Some of the customers I've heard mentioned earlier in the day, those are examples where we're really coming with like a broader digital transformation value proposition.
Brett, thank you for joining us. This is Keith Weiss from Morgan Stanley. A bit of a follow on from Brash's question. It's a combination of Brad and cash. On the like the You have
another question from Keith. That's good.
Going a little bit sort of like deeper into the infrastructure stack, I think what a lot of guys are wondering is, is there some point that Salesforce has to kind of you've worked with a lot of like the AWSs and GCPs and the Azures on different parts of the portfolio. Is there some point of where kind of the core service cloud and sales cloud has to get rebuilt onto one of those sort of global scaling sort of infrastructure providers as well? Or can you keep sort of innovating and keeping up the pace of innovation on the infrastructure layer with the current sort of co location, your own servers, your own database?
Well, we actually already do. So if you are a customer in Australia or Canada of Salesforce, you're already running on Amazon Web Services for our core cloud. And as you saw in our announcement, we're starting with Marketing Cloud on Azure. But as a company, we really, for a variety of reasons are trying to make sure that we support sort of multi substrate public cloud deployments, taking advantage of I think the incredible investment in the industry in these infrastructure layers. And we still have our own proprietary data centers as well.
We don't view that as a downside necessarily, but there's a lot of assets that we get. For example, in Australia and Canada, the time to deployment of those regions to get data locality is much faster when it's virtualized infrastructure versus us doing a data center build out. So now that we have these capabilities, we can deploy to AWS. We soon will be able to deploy it to Azure and Marketing Cloud. It gives us we can basically make a business decision around time to deployment, cost to serve, flexibility, agility, data locality, regulatory compliance, what is the best way to deliver our software to our customers.
So I'm really proud that we're multi strategy. We work with Google, we work with Amazon Web Services, we work with Azure, we work with IBM. We have a lot of flexibility now in sort of determining our future from an infrastructure standpoint. The way I would think about it is agility and intentionality. Now we're not bound to a decision made 20 years ago.
We have the ability to decide what's best for our business, what's best for our customers.
Mark Mirdler, Bernstein. I'm going to follow on the same trail a little bit. Salesforce announced expanded partnerships with most of the hyperscale cloud providers, maybe all of them at this point.
We love everybody.
How do you think about the trade off of meeting customer specific requirements for running on a DARE specific hyperscale cloud provider versus the cost to Salesforce and the limitations on using a specific hyperscale provider's unique technology and technology stack. What's the trade off in there with that?
It's a wonderful question. I don't know if we know the answer to that exactly. It's interesting because on one hand, I would say, we're not going to do anything for 1 customer. We try to build scalable multi tenant software. We've been that way since the beginning.
What's interesting though is there's not a lot of these hyperscale cloud providers as you said. So there comes a question if a customer says, hey, you're already running there, can I choose that? I think we're all trying to be very customer centric. So that's the short answer to your question. We also want to be scalable and multi tenant.
With those variations, I think we just want to listen to our customers and have them guide our decisions in that regard. And I think that over time it's interesting. I don't think we're entering a brave new world where between particularly Amazon Web Services and Azure, we're seeing such growth there. But I think that question is probably the first time that question would even make sense to ask. But we'll try to be very customer centric, while also being very scalable.
And that's sort of that's our philosophy on it.
Jen Lowe from UBS. Maybe just rounding out a little bit. With the partnership announced with Azure and Marketing Cloud, if I recall, I think the legacy ExactTarget had already been on Microsoft Cloud. So can you just be a little bit more granular around what sort of new in the announcement that was out recently versus the historical relationship between Microsoft?
The exact target was not on Microsoft's Cloud. So it's entirely new.
Brett, could you maybe frame for us the product synergy or the product vision synergies. So this is specifically a product question. Is it as simple as being the visualization layer on top of the data that MuleSoft integrates? Or is there sort of more to it than that?
Yes. I think there's a lot to it. So we've learned a lot from our experiences with Einstein Analytics and Datorama just about the power of helping our customers see and understand the data within Marketing Cloud, within their CRM. One of the trends that we talked about when we announced this acquisition that I want to bring back to and I'll bring it back to product synergies specifically. Every one of our customers is going through some sort of digital transformation.
And when customers are anchored on us, it's because that digital transformation is anchored around the customer experience. And we believe most should be. Why change technology for technology's sake? It should be about the customer. With these new digital interactions, take a CPG company that's going direct to consumer, they will have so much more data about their customers than they ever had before because they're going from an indirect relationship to a direct relationship.
They'll know what emails that person opened, what they browsed on in their mobile app or their storefront. They'll know all this behavioral data. And what I hear from the executives at all these companies is I have all this data now and it sounds great, but I'm not convinced my employees are actually using that data to make better decisions. And you'll hear this from a lot of people. It's like, what's the value of data like if you're not using it effectively?
And that data isn't just data inside of CRM, it's data across sort of the entire portfolio. It's data about supply chains. It's data it's empowering sort of everyone to sort of be a citizen data analyst, if you will. So we were really drew to Tableau for that reason. And it reminds me a lot of the MuleSoft synergies that we spoke about in that acquisition, which is MuleSoft is a lot more of it than integrating with Salesforce, right?
But when you think about a company going through a broad digital transformation, what the reason why I think we've been able to bring MuleSoft and accelerate that growth, we're going into C level discussions about digital transformation. We're saying MuleSoft is foundational to accelerate the pace with which you can digitally transform because you can integrate legacy systems and decouple that from the pace of innovation you need in your customer systems. What I think we can really achieve with Tableau is a similar product value proposition, which is here's your broad digital transformation and here's all the new data that every single one of your employees will have access to. And now we have a platform that will be able to see and understand that data in an agnostic way that touches every system on prem, in the cloud, proprietary systems like a Redshift data analysis thing on AWS. That's vitally important to our customers going through these transformations of which Salesforce is a key part of it.
But bringing together all these other systems to help people see and understand that data as well is incredibly valuable. Right now the teams are, since we're, as you mentioned, sort of really starting to able to talk about how we work together, really hoping to bring together a couple of things. One is all of our Einstein AI technologies, we'd love that to really benefit Tableau customers as well. We have a bunch of really sophisticated AI technologies. Similarly, Tableau has an amazing analyst friendly visualization capability.
How can we bring that to all of our Salesforce clouds as well? So we see a lot of opportunity to have the best of the technologies really benefit both customer bases. We can really accelerate innovation for both. So we're embedded CRM analytics,
Thanks. Kirk Materne with Evercore. Brett, can you talk a little bit about or actually just referred to it, which is you're now helping customers sort of analyze their data. Obviously, MuleSoft, you're helping customers integrate their data. How about Salesforce helping customers manage their data in more of a data warehousing sort of way.
I'm just kind of curious, obviously, you partner with a bunch of companies, but clearly, you broke the keynote dare say into a data segment. So this is not something that you're not really pushing out there. I mean this is actually an important part of the broader strategy right now. So I'm just kind of curious, curious, obviously you can partner in that layer of the stack, if you will. But I was just kind of curious about sort of maybe owning versus partnering in that specific layer?
Yes, it's an interesting question. We have a lot of customers using various technologies, whether it be Heroku and a proprietary sort of data set to some of our own clouds is effectively data lakes. And certainly Customer 360 Audiences, our CDP will be that for marketers. So we have a bunch of data store technologies that in various pockets of our customer base are used widely. What appeals to me though and our value proposition around sort of the customer's 360 single source of truth around MuleSoft and Tableau, so you got 3 of them together.
The ability to be agnostic to where that data lives is a really interesting differentiator. What it does is, typically if you imagine our engagement with the type of customer that someone like Keith would talk to kind of a CEO level engagement about their digital strategy. There's a lot of stakeholders in that discussion. There's people who have maybe a CIO has invested 4 years in a proprietary data lake, right. If that becomes the barrier to us transforming the rest of their experience, that's not a deal that we'll win.
And so we do need to have a strategy for our technologies everywhere, but the ability to come in and say, that's great, that data lake is awesome. We're going to help you plug that in to your CEO mandated digital strategy and we're going to transform the rest of your stuff using that as our anchor tenant rather than coming in being so prescriptive about if it's not in Salesforce, it doesn't exist. I don't think that's a winning strategy right now, particularly because I think almost every customer I talk to is doing some form of lift and shift into the public cloud. Most of the time the software is not changing very much to be perfectly honest with you. They call it a digital transformation.
It's like a digital forklift into someone else's data center. There's so much going on that we just can't like be so myopic about why we're in that conversation to say no to someone else's data. So I really like the position we're in. So we certainly will develop more data tools without question, but not at the expense of having that flexibility. And it's been really great.
I mean MuleSoft has actually impacted, I would say like the DNA of our company in that regard. I mean, I think we demoed SAP 4 times yesterday in the keynote. It's like that would not have happened a few years ago, right? And it's because we're going in and we're like, no, that's your ERP system. Great.
Let's integrate it into your customer experience. That is a very distinct value proposition. And I think that I really hope it's reflected in your conversations with our customers. We're trying to coexist with their other technology investments. And we consider that a significant differentiator, particularly with Tableau and MuleSoft, I think really representing that in a very authentic way to their customers.
It's influencing our brand as well that I think is really going to drive a lot more success for our customers.
It's Brent Thill with Jefferies. Adam Blitzer took over the Marketing Cloud recently. I'm just curious what you believe the next leg of this is underneath Adam's leadership? And if you could also talk a little bit about other competitors are talking about the CDP or new customer data platform. Adobe highlighted as they're probably their biggest architectural improvement in 2 years.
How you're differentiating and what's happening broadly in the Marketing Cloud?
It's a wonderful question. First of all, Adam is really funny. So we're going to bring a lot of humor to all of your discussions about Marketing Cloud. I encourage you to meet him. You'll crack up every time you talk to him.
But, so interesting part, Adam was the founder, one of the founders and COO of Pardot, which is our B2B marketing platform. So he has his heritage in marketing. He's kind of lived and breathed it. He was the GM of our sales cloud for the past few years, but actually sort of his brain was never left marketing. He's been very passionate about it.
So one of the first things I think will come from it is it really integrated B2B and B2C marketing value proposition. And if you think about examples we've given about companies that are B2B2C or doing both, like every CPG company in the world, to be able to say, we're going to bring the best of the best marketing technology, whether you're working with a partner, whether you're working with a reseller, whether you're going direct to consumer. I think that will be a very differentiated value in the marketplace. And I think you'll really help sort of realize that vision due to his background and his experience there. The other thing is with this Customer 360 Audiences, that's our CDP, that's our brand name for our CDP.
It's really bringing the power of the Customer 360 into our CDP value proposition. I think it's interesting CDP is one of those words a lot of vendors say having it means a lot of it. They're all different. You're like, I don't understand this is one product. What marketers really want is a single source of truth for their customer data.
So they can generate audiences from that, so they can do engagement on that, so they can track loyalty, all the things that a marketer would want to do. We're really trying to with our product offering really have an integrated value proposition. So all the signals that would feed to a CDP are coming from commerce. They're coming from sales. They're coming from all of your custom apps.
And that's why we're really using the Customer 360 branding as our value proposition. We're not launching a piece of infrastructure. We're launching a new capability that amplifies all the other customer touch points that are the sources of data for customer data platforms as they exist. We're really excited about it. I really like to think of that as a system of record for marketers, which they really haven't had.
We've been doing that for high touch sales and service for a really long time. So I think our heritage and being a system of record for sales and service, I think will really help us as we bring this to the marketing community.
Thanks. Derrick Wood at Cowen. A couple of questions on the analytics side. First I noticed that Wave branding, I think has more or less been dropped and that That's correct.
And analytics replaced the Wave brand.
And Wave, I think came out 5 years ago. It was before you were here. But I'm just curious what you think the challenge was in terms of building a product organically in the analytics market and driving up market share? And then second, now that you have Tableau, a lot of Tableau had been driven by Greenfield, but there's still a lot of legacy BI out there. So do you see an opportunity to accelerate displacing more legacy BI with Tableau?
Yes, good questions both sides. So I'd say analytics is an amazing set of technology, but the focus has really been analytics for CRM, because that's not that these technologies maybe can do more, but the reason why people come to us for analytics prior to Tableau is because they want to analyze the data around their Customer 360, around their customers. And so I think that there is a certain amount of brand permission you get from company to company that's data agnostic. And because Tableau started with an approach that is data agnostic, the architecture is really different as well. The architecture is really designed to be able to point at any data source and analyze it.
So we really approached a similar problem domain with very different sort of technological constraints, technological approaches because our product and go to market was so oriented around sales that it dictated sort of a product and technology strategy that produced a very different outcome. So I'm really excited to have both because I do think that some of those works we've done in predictive analytics suggesting outcomes really unique and to be able to bring that to all of Tableau's customer base is a tremendous opportunity. We're still figuring out what that looks like. But we've developed a lot of technology that are sort of adjacent to one another. And I'm really hopeful that both customer bases can really benefit from the combination of the 2.
Your approach about greenfield is right. It's analytics is like CRM in many ways actually very fragmented market despite having existed for many years. And the legacy of analytics is people being sent PDF reports and really a disintermediation of the person receiving the data and the person generating the report. Tableau's mission to help people see and understand data is this real mission of empowerment. That every report you get should be interactive and everyone can be an analyst.
And I think that vision, we were at Tableau Conference last week. I'm not sure if any of you were there encourage you to go next year. One of the things that Francois, their Chief Product Officer was talking about is they've actually provided a lot of features that the legacy analytics tools do like PDF report generation. So you don't need to choose that if you have a workflow that's dependent on kind of the workflows of legacy BI tools, you could still accomplish this with this modern platform and start to tiptoe your way into kind of the more empowering vision of Tableau, which is really about letting everyone kind of see and understand data, everyone have access to kind of the powers of analytics tools. I think there's a ton of opportunity there.
And I believe Tableau can be on every desktop of every computer of every company in the world. And I know it's a big vision, but I've drank in the Kool Aid pretty deeply. You saw Adam earlier. He's convincing guy. So that's our mission.
Just from a product perspective, as you talk with a lot of customers and you're going towards the holy grail of Customer 360, so are there verticals in each for each type of customer trying to do the same and they maybe understand and are more dedicated to a specific need of the customer whereas you have the scale and the horizontal benefits. How do you think of that competitively and playing out over a decade or 2?
Yes, it's a good question. First is there's 2 aspects to this. 1 is our industry strategy. So we've talked a lot about Financial Services Cloud. We've talked about Health Cloud.
We actually this month, maybe last month, sorry, it's very much a blur right now. But in the past couple of months, we've announced 2 new industry clouds, consumer goods and manufacturing. Those are all organic development, 2 new industry clouds. So we're really trying to make sure that we can be a company that provides horizontal CRM technology, Customer 360 technology and also provide vertical solutions on top of that as well. We're developing it in the right way.
They're developed on the platform. So all of the intellectual property that gets added to Sales Cloud and Service Cloud benefits our verticals as well. They're not separate products. It's built on top of sales and service. That's a really important thing to say because I think a lot of companies that have tried to do this have kind of taken the short and easy path, but then later end up with this fragmentation in their path, but then later end up with this fragmentation in their technology.
We're doing it the right way. The other part of it is our partnerships and our app exchange. So many amazing partners like Velocity are serving vertical customers, but they're doing so on our platform. And for me, that's a win. I celebrate the success of our AppExchange partners and we're not trying to compete with them.
We're trying to help them win. And so I really say our strategy is to be not just a set of products, we're a platform. So I don't really view us as a horizontal product. I view ourselves as a platform on which we and our partners can build vertical specific tools, all of which contribute to the Customer 360 and they're all mutually compatible with one another.
One of the things that Keith mentioned when he was up there an hour ago was kind of the opportunity in government, both an opportunity and a challenge, I guess, just because according to him, government is by far the laggard in kind of broad strategies of digital transformation. Given your specific angle kind of coming in looking at what the product offers a government agency or entity and what they really need, what their constraints are in terms of how they can buy it or data they have. What do you see as the biggest barriers that kind of a government buyer is still encountering? And how are you trying to help them get over those to increase adoption?
Yes, it's a wonderful question. First, we take a great deal of pride in trying to help our government service citizens better through better technology. I think what you said is right that for a variety of reasons, it's harder for both state, local governments and the federal government to adopt new technologies. And I think citizen engagement and the efficiency of our government could significantly improve if they have better technology at their disposal. So it's something that's a great business opportunity for us, but also something we take a great deal civic pride in being able to provide, particularly with our partnership with organizations like the Department of Veterans Affairs and a lot of organizations that have been underserved by technology to date.
I would say there's a couple of layers of it. At the lowest level of the stack is just making sure we meet all the regulatory requirements of all of our government agencies, state and local government. So that's really around how we treat our data, who operates our data centers, where our data is located. There's this you're probably familiar with sort of Amazon's gov cloud, things like that. So we're working across the board to make sure, are they allowed to our software?
And that's actually a huge investment. That's actually probably the most important thing. If you're looking at my R and D investment, I just want to make sure we reach sort of table stakes, just they're allowed to use our software. And the other part of it is understanding the unique needs of a lot of these organizations. I think we really feel optimistic about that.
If you look at what we've done with salesforce.org, where we've taken kind of this general purpose CRM and applied it to nonprofit fundraising. It's a very game street example where we take kind of our approach for the private sector and bring it into something like a nonprofit sector. We've seen a lot of success there with various government agencies to take broad CRM capabilities, customize it to their needs and really build a wonderful citizen engagement or efficiency solution on top of that. So we're far on this journey, but I think it's been a real I've learned more about this over the past couple of years than I've ever known before. And it's been a really exciting transformation to take with Keith and Dave Ray and his team.
I was just hoping you provide a little color on kind of the R and D portion of cost to serve. So to keep your attrition rates the same to manage your existing base, there's a certain level of sustained R and D that's required. And then obviously, there's kind of additional R and D to drive growth and future product, etcetera. So could you provide some color about how you think about those two buckets, maybe how you see that trending over the next 5 years? You mentioned what you're doing right now in sales and service and kind of how that plays into the unit economics that we were showing earlier today?
Yes. I mean, the way I think about it is just it's sort of a portfolio of technology that we're managing to produce the right outcome for our investors like you and our customers. And we want to make sure we maintain sensible cost to serve while also making sure that our products are the best in the market. And so we'll we try to have a healthy strategy of what actually it's really funny. Literally right after this, I'm going to a keynote called True to the Core.
This is all of our most passionate admins and developers that all be wearing like wizard hats. It's crazy. If any of you want to go instead of watching Mark, feel free to come with me. Probably no one is going to take me up on that. These are the people who care about sustained R and D is another way of putting it.
We've been having this feature request for 2 years. What are you bozos doing, right? So we need to make sure we're software as a service, so people can expect what we've released last year to continually improve every single year. We need to balance that though with longer term bets. And I really like to look at every cloud as a portfolio functionality.
For our sales cloud, you have the core of sales cloud, then you have things like CPQ, which is our quote to cash system. You have PRM, which is our partner relationship management system. You have a lot of our B2B marketing technologies baked there as well. What we're looking about is sort of like how much are we investing in the core? How much are we investing in sort of the adjacent innovation that's really going to drive growth in that cloud?
And are we making sure we're remaining true to the core, which is our phrase for our community, to make sure we don't lose sight of the fact that software as a service does get better every year. That's part of the value. But also making sure that we are delivering significant new functionality that will grow our investment from our installed base, but also make sure that we're all sort of adopting and sort of being the thought leader for the next new trend in each of our clouds.
Brad, could you talk a little bit about what you view as the next sort of big ancillary revenue opportunity? And I think if we look back at the last 10, 15 years, it seems like Phase 1 was adding sort of adjacent horizontal products. Phase 2 is sort of moving down the stack, if you will. Is there more to go on either of those? Do you need a payment solution?
Or do you need it sounds like you don't want to buy a data warehouse or build 1 necessarily? Or is this something totally different like moving from front office to back office? Where do you see sort of the most opportunity in white space?
Can't answer that specifically, but I'll describe our philosophy around this, because I think it is important to understand how we basically allocate our resources, how we approach M and A, things like that. So, we really look at sort of the total addressable market of the company and the markets that we're in. So every individual of our clouds largely sold to a single buyer within the company or a single department. And within each of those, we really try to look at sort of what are the adjacent spaces that we have partners in that we could be in that if we develop technology or acquire technology, we can make a more cohesive and complete value proposition to our customers. And then as a company, we look at, are there adjacent technologies that would benefit the Customer 360 in the whole portfolio?
So for the former, as an example, Customer 360 Order Management was the one example of that this year, where we saw this gap between commerce and customer service, where we really said, hey, we build this technology on our business workflow technology, which is called Flow, and we provide it built into our platform, we can provide a lot more value to our retail customers because they want order management to not be a back office function, but part of their customer experience. And no one was really focused on that. On the latter category, which is what could benefit the entire customer 360, MuleSoft was a great example of that. We saw the same pain point across a lot of our clouds. And we as a company decided to take a bigger bet there because we felt like this platform capability would really benefit the entire portfolio of clouds.
So we really try to look at both sides. We'll look by cloud, by buyer, by department. Those are all synonymous from my sense. And we'll look across the entire customer three 60 to try to find opportunities where we can provide a lot more values to our customers.
Given you spent some time at Facebook, I think you'll probably have a pretty good answer to this question. Zuckerberg talks about shopping as the biggest I
was just there will be some day where no one asked me Facebook questions, and it'll be a great day. Please continue.
Okay. So I'll ask another question on commerce. Doctor. Berg says it's one of his biggest drivers. Is there a technology integration or something that you can do to ride this tailwind in commerce that he's seen?
That's a great question. So, yes, I'm really excited about what's going on in social media and commerce. So I'll give you some of the you might know this already, but just for the rest of the room is maybe not plugged into commerce. You'll hear a lot about embedded commerce experiences now. So this is people on Instagram clicking a buy button.
There's people on Pinterest buying a product that they see directly in line. The technology requirements for that are broadly described by Veera, Chief Digital Officer, you'll describe this as headless commerce. What they mean by that is the head is the customer experience. And in this case, they don't want us to generate a storefront. They want us to provide all of Commerce Cloud as a set of APIs that they can use to handle that by request from Instagram.
And so the inventory management, the pricing, the orders, like all of the workflow around that. So this has been a big initiative. In fact, at the Commerce Cloud keynote, which I can't remember if it's today or tomorrow, you'll hear a lot about this. This is one of our big initiatives this year in Commerce, is try to be the number one headless commerce platform. And what's really powerful about this is every single one of our commerce customers wants multi channel commerce.
They want to be embedded in every social channel. They want to support it so you can buy it via chat applications in Asia, which is a very popular form of doing commerce, custom consumer applications. And some of the most sophisticated And some of the most sophisticated are even building custom consumer applications that are adjacent to their businesses. So there's a lot of shoe companies launching running apps. There's social running apps you can track everyone's running.
A lot of those are owned by shoe companies now, so they can essentially notice you're running shoes they're wearing out and suggest you buy new ones. So it's a really important part of our commerce strategy. It's one of our differentiators at this point is that we support again, what industry inside term is called headless commerce. We're really proud of the investments we've made there. And thank you for not asking me an awkward Facebook question.
Mark, you want to come on stage?
Yes. No. I'd just like to talk to you about Facebook. Do you have any comment?
Mark, do you have any analogies you want to make to make my life uncomfortable?
The former CTO of Facebook, would you like to comment on Facebook?
I don't feel psychologically safe in this conversation. This is what I have to deal with every day. It's amazing when you launch anything at this company. Well, thank you so much for having me. I think we have the big guns here now.
So thank you for having me.
Thanks so much,
Josh. Okay. Well,
so to finish up the day, we have our Chairman and Co CEO, Marc Benioff here for a conversation. And
can I help you with that?
You're going to stay down here? Yes. All right.
I like to be down with the people. Okay.
So without further ado, a man of the people.
All right.
So thanks, Mark. Thanks for spending the time with us.
So this is just an open
Q and A forum, and it's all of your opportunity to have some discussion with Mark.
All right. Thanks. Okay. Well, thank you everybody for coming to Dreamforce. We're very grateful to have you here.
It's extremely important to us that you have made the time and the commitment to be here. And we like to provide basically untethered access to you. We hope that you also have made good use of that in talking to customers, going to the different trade show venues down into Moscone North and South and over to West to see the different areas as we lay out our, not just the product strategies, but to see what customers are doing. Also many of our customers are presenting what they're doing. We have 2,700 sessions here, and we expect you to attend each and every one of those.
We also are very fortunate that we have had some great strategic partners join us and put it on the show. And I'm sure that you can see just if you go out and participate in it, the energy is amazing as well as just the huge velocity of people. It's hard to just walk around the show, which is what I've been doing. So I'm going to use this as just for time for you. I don't really have any comments.
If you have questions, I'm happy to answer them. If you want to sing a song, we have that opportunity right here. We can do a little Queen action for you. Just roll right into that and skip the Q and A. We could all do a sing along on Queen, you want.
There we go.
What's that?
You're not singing, I will sing.
No, I'm not singing. I will let you sing, though. I'll get a keyboard. I'll bring in the whole band.
Beautiful.
It's very fitting for my 'eighteen Dreamforce. So congratulations. It's been spectacular.
Thank you. Very good.
I had a question. I think the team laid out a brilliant strategy, right level of growth versus margin expansion. As you look at opportunities, you've been your track record with M and A has been so spot on.
What else would you
be looking at into the horizon over the next 4 to 5 years?
Well, let me just roll out my Q and A, my M and A roadmap. Can we put up the slides?
Rather, conceptually speaking,
one of
the things that we should be looking for when you make an announcement.
I forgot something. Sorry. I was going to go through all the companies I'm looking at and different I'll get your feedback on them.
A to Z. All right.
But I forgot the slides, I'm sorry.
So let's say let's anonymize whatever might be on that list. What are the things we should be looking at that you're going to be looking at as a co CEO that would be the best thing for your stakeholders, customers, employees and shareholders as you try to straddle that relevance? Thank you.
Well, I mean, I think the one thing is,
I mean, we've learned a lot about M and A over the years. When we started the company, I think it was very important that we stayed extremely focused. So obviously, on our board, Sandy Robertson, who is the number he's right there, number one investment banker of our industry of all time. I think more IPOs and more incredible deals and started obviously unbelievable bank, Roberts and Stephens and Francisco Partners and his mom involved. And then Sandy will say, hey, Mark, you should think about doing more deals.
And I'm like, Sandy, I'm focused, focused. It's all I want. I'm just doing SFA. That's it. But then, starting to listen to Sandy more and we did service.
We moved in with bought acquired Instinet and that opened up. When we got ready to do marketing, we no, no, stay, don't, it's fine. Don't go in, don't touch it. It's okay. You're fine.
Don't worry about anything. They're not going to tackle you either. Don't worry. The there is when we started to go into marketing, of course, we acquired this great company in Indianapolis, ExactTarget. I can't don't even remember how many years ago that is, but it's quite a few years ago.
What's that? 6 years ago. So then we started to learn because we're doing organic innovation and inorganic innovation, and it's a dance, it's both. So as we start to complete our Customer 360, which Brett just went through very beautifully, you can see now we have this kind of beautiful mosaic. It's like a mandala of all these things.
And Brett has had this huge breakthrough with the truth profile and this whole concept of building the SSOT in that he's able to integrate them all so nicely. So that has been just a tremendous, I would say, learning that Sandy was right. We needed to build that muscle to understand, to achieve our vision. We had to be able to acquire and integrate. But one of the things about acquisition that I've learned is that it's a pacing.
So you have to acquire, then you have to ingest it. It takes a while to bring these things in, to integrate them, to get the momentum, to get the velocity. And as an example of that, a year ago, we were just starting out with MuleSoft, right? And so like a lot of questions were like on MuleSoft, what about MuleSoft? How is MuleSoft working?
Now it's much clear to everybody. People don't have as much questions because we're like in it, soon it will be 2 years, okay. Now we're just starting with Tableau, all right. So that's where we're just kind of getting who are you, what's your name, decide, Mark, nice to meet you, what's the product, like people are just coming in and like for the first time, you can see and I really recommend like you can go down, we have the Tableau station in the Moscone South. We have Analytics Falls, which is the 3rd floor of Moscone West, just dedicated to the analytics products, which includes Tableau and Natorama and Einstein Analytics and Einstein.
And then there's also a whole Tableau set. What is it called? Does anybody know? It's called like Tableau Tavern or something. So that's like a separate, whole another separate on Tableau.
And customers are just starting and I was sitting down there with the customers and then listening to them, paying attention to what's going on, looking at that. And then, Parker or Brett, Brett ran a poll on Twitter today, I think. What thing are you most interested in, in Dreamforce or something? And then it came up like 50% or 60% or 70% Tableau, I think. I don't know completely if I remember that.
And I was like, woah, and that's because customers are learning and understanding, we're learning and and that's because customers are learning and understanding. We're learning and we're understanding. You guys are learning and understanding, right? You want to that's probably what you are I don't know what happened in the room, but my guess is you want to understand how it all comes together, And that's kind of the pacing. So it's a wave.
You basically you're looking at your strategy. You're figuring out where you want to go. Then you're making your move, okay. Sometimes it works out, by the way, sometimes it doesn't work out. You don't get the asset.
So we got the asset. Then once you get the asset, integrating the asset, focusing on it, getting everybody understanding it, enabling it, onboarding it and then having one team approach and getting the market. And part of that is being able to communicate the total strategy, and that's where we are. We're at the beginning of that. So we're still we are at the beginning of integrating our largest and most important acquisition ever.
Is that a fair answer to your question? We could do another song though. I can't sing. I wanted to get Queen, then we can all do it together. We only have Fleetwood Mac.
Do you do any Fleetwood Mac? You do Fleetwood Mac? No, I've got to get Queen. I've got
to do it. All right. Mark, it's Brent Thill with Jefferies. Just following up on cash's question. You spent $17,000,000,000 this year on M and A.
You have $17,000,000,000 of revenue. It's a lot. So I think a lot of your investors are asking, can you go through a digestion period and show that you can hit these targets without having to acquire for a short period of time?
Well, I think you have to. I really think that, I mean, it's impossible to act you can never say for sure. I don't really deal in absolutes. I'm dealing more in relatives. But the thing is, is that you can't do too much at once.
It doesn't really work. You have to pace it. Like I was saying, you have to integrate it. You have to take your time. I really like to we talk about we're taking a pause.
I think it would be nice if we could take a pause. This is a big asset. This is a big company. It's an amazing company. You can see how the customers are reacting.
It's awesome. They all love the combination. I went to their conference last week. I don't know if you went. It was also amazing.
I asked the audience how many people here have Salesforce, everybody's head goes up. It's a natural fit. It's a very beautiful marriage between 2 very, very, very solid companies with very good values. And I love also being in Seattle. I love the whole HQ2 concept up there and having the opportunity to be in San Francisco and Seattle.
So but I'm I have never been more excited about the company. I'm walking around the show. What I'm paying attention to is, number 1, how am I feeling while I'm going through the show? What is the energy? What is my personal experience?
Then I'm paying attention to how are the customers doing? What are they looking at? What are they interested in? What are the products? Do they understand the messaging that we put together?
Some of it I already know because I have been on the road for the last month basically nonstop with the customers and doing focus groups and 1 on 1 conversations with customers, trying to understand exactly where they are. Some of this technology that we're rolling out, it's hard to communicate with them exactly what we're doing, especially the truth profile, especially this idea that this SSOT is real, that it's part of the platform, the way that it works. I don't know if you saw the keynote or not, but the demos were very well received. That is where we are right now. And what I'm excited about for the future is strategic position that we are now with our customers.
What I am surprised with is the relationship we have with our customers has changed. If there is a material change in my mind, it is that we are the digital advisor to these CEOs. We between Keith and I and Brett and Mark and every other Amy, every Adam, every manager member of the management team, we our relationship with these C suite executives, the Board members who are coming here, The you'll see the CEOs who are coming here. You can see the increase of that year over year. You followed the company since it started.
You know exactly what has happened. But that we have this relationship with these companies is really unusual. And here's how I look at it. They ask us to be their partner, their trusted advisor. There's probably only a couple of companies in the industry that have this position.
That is really surprised me. And I would say that we're still trying to figure out what to do that gift. And also that we're able to then come in and do something with this, do something with Tableau is amazing. I'll give you an example in your industry. Heads of different companies, telecommunications companies and different kinds of organizations and then one CEO of a very large financial service company.
And I walk into the person's office and become a close friend of mine. And I've been advising him and his management team now, I'm going to say for maybe 5 or 6 or 7 years, okay. He said to me, look, there's 2 things we need to talk about. I'm like, all right, well, what do you want? 1, you have about 80% of our customer information now in your system and we're going to move to 100%.
Great, that sounds good. 2, Tableau. We're huge users. This is we're going to be able to do more, explain this to me. That is not a position that I expected to be in ever.
And I think that because of our delivery, that is we've been able to execute, and because of the trust that we have built with the customers and with our key stakeholders, It's this trust that we have at that level of these organizations, which is shocking. And that is our currency today. So as we acquire that trust gives us the ability then to fully, I would say monetize and extend and complement the assets. And it's been incredible. And we're investing in that trust and we want to do more with that trust and that remains our highest value.
And I think that, that is where every single member of the management team is. If you talk to Mark, compared to like when he how long have you been the CFO now? 5.5. Okay, long time. So he's been this but when he came in, now he's like the head of the sustainability CFOs and he has the World Economic Forum CEO.
But you all know him when he was at Autodesk, right? That's not what he was doing. He was not a trusted advisor to other CFOs and the automation of their businesses. Now part of that is that they're products, but part of it is who Salesforce has become and what he now represents as part of the management team. That is very much what I expect now from all of our management team members, our leaders.
That's why we're upgrading our managers worldwide. I've been walking around with our new Head of the UK, Ireland, Jane Ann Gadea, who is the CEO of Virgin Money. That's a major enhancement of our management team in country in the UK because those CEOs, many of them who are here, by the way, from that country, they want that direct advice. And this, I would say, is a material change from even like 5 years ago when Mark started, that's not where we were. So maybe it's all in the deal with Mark actually.
So it's very possible.
Did that answer your question?
Thanks very much. Kirk Materne with Evercore. Mark, to go along with that line of thinking around being a digital advisor and having high degrees of trust with your customers, Can you have that role if you don't have a point of view on social issues these days? John did a broader ESG panel this morning. And I'd be curious just how many of your conversations with large CEOs are not just about the products and what you're doing around digital transformation about them looking to Salesforce broadly as a leader around other topics.
And to me that seems like it's not why you did it, but it's a massive competitive advantage, I think.
Well, let's say there's definitely I think we're in a fortunate position. And it's obviously a fragile position, and we have to be careful with it. But we're advising other companies and CEOs in their values. That is a sensitive area when you're working with someone on values. And we get a lot of calls from other companies and their management teams to come in and present.
So even recently, just we launched the book just a few weeks ago, and I got a call from a friend of mine, who's the CEO of one of the largest companies in Germany. So I had to fly to Munich the day before I was on CBS This Morning because this CEO, I have a highly trusted relationship with. He is actually putting into place a lot of the things that I'm asking. He has a large multi 100000 person company. I have to go.
And I'm mentoring on and advising on and suggesting on the value system of the company and 2, by the way, it's highly related to our products and the Customer 360. And we're fortunate that in our industry, not all of our peers have trusted relationships with chief executives, okay. And that has been a transformational moment, and we're taking it as a serious opportunity, not that we can have an impact now not just on our industry, but on other industries. We already can see we're impacting our industry. Now we can impact other industries, and we're advising these C suites.
And it's an honor to be there and to help. And we get a lot of phone calls. And also, when people get into trouble, in many cases, we're the 1st call. I made a mistake. Here's my situation.
What should I do? How do I move forward? And that's a fragile place to be with somebody, and you have to be careful and sensitive. And then we're also, obviously, in their office and with their CIO, with their line of business leaders as well. Not very many companies are in that spot.
That is the unique spot of Salesforce. As a manifestation of that is this conference. If you go through this conference with that frame, go down into Moscone South, go into Moscone North, go through Moscone West, you'll see that these customers are getting educated or go on Trailhead even. That is our online system. They're getting educated not just in our product wheel and the products and this, but on all of the associated values associated with a next generation company.
So that's a huge part of what we're doing. By the way, that's why Tableau is a great fit for us. They have very comparable values to us. The focus on community, the focus on giving back that they and we can help them, introduce them to our customers. So that's a pleasure.
Like I say with Brett with the financial services example, that was a surprise to me. So I feel like this is a key part of who we are as a company, and we're very cautious and careful with how we are using it. I'm very grateful for it. I real it's a lot of trust that we have, and we're using that correctly. And also, it's not just me.
As you can see, Keith is with it, Mark is with it, Amy is with it and our Board members also. But we have a spot helping others to be successful in this world, and we want to do that and across country, across industry. Does it answer your question? Okay. Yes, right here in the front.
Derrick Wood at Cowen. So you're 3 years into launching Einstein and really your foray into machine learning, artificial intelligence. I think that there's generally still reluctance in terms of adopting the unknown of AI, at least for certain types of applications of the technology. But what's your assessment in terms of how adoption has progressed over the 1st 3 years of this effort? And then maybe looking over the next 3 years, how do you see that adoption curve trending?
All right. Well, Einstein is kind of amazing. So let me just tell you about like my experience, and then we'll kind of go out from there as little like ripple through the pond. So my experience is that every Monday, I have a management meeting, okay. And we go through the forecast managers and look at everything.
And I also get a summary from my Chief of Staff, Joe, who's here. And what I can have, which I did not have 3 years ago, is something that sounds like this. Well, is to communicate to customers, this is amazing. We're really, I think, much farther along than any other enterprise applications company in this area. And I don't know how many of you attended the Salesforce Research keynote yesterday that Richard Soacher did?
Did anybody? Okay. Well, you really one person. It was amazing, right? Yes.
So you should talk to her. What is your name? May. You should talk to May, because Richard Soacher, who is the Head of Salesforce Research, not the kind of research you guys are doing, don't worry, he's not a competitor of yours. He had a keynote.
He runs the most popular computer science course at Stanford, which is a college down the road here. And, he also is, runs our research team. And he showed all of the next generation of Einstein, including vision, voice, what else did you say though? What's that?
Control leverage model. Can you just Yes. They introduced a control leverage model, which can generate tax loan tax by automatically, yes.
And many other things.
Yes. Many other things like
So what
was your biggest surprise? Also OCR, you don't need to manually data entry. You just scan a copy of everything and would exactly convert to a table. Yes, a lot of things.
Thank you very much. So the thing is that he's so far out, okay. He was flying a drone outside of Santa Barbara using Einstein. It has Einstein with the vision. Shark is coming.
I have this on my Twitter feed. Kids are in their surf school here. Great white shark is here. The high side of the drone, they call the beach. There's a great white shark right next to the beach.
They had to evacuate the kids out of the school because of the shark. Amazing. Here's another thing where he's built a buoy in the water. He's able to sense whales basically that are potentially about to hit a ship. The ships are going faster.
And we also do this other thing called business applications. So it's way putting all the other stuff in like the OCR and all these other things. So the AI is moving way faster, I think, if you probably the keynote must be online. I would encourage you looking at it. And for customers, there's no way they can understand where this is.
This is way out there. And then our job is to make it easy. So our job is to make it declarative, so that you can put it into your apps and into your company with clicks and not code. Because yes, he has programmatic and API based things, but a lot of the stuff that we do like if you go see how you can build skills for the speaker, it's all declarative. Declarative meaning that I can declare it without programming versus programmatic, I have to code it over here.
There's far more people doing declarative than coding. That's why all of our products, we try to have a declarative capability. All right. Does that answer your question or did I go too far out? Okay.
But I think that it's amazing what's where we are, but there where we're going. Oh, one last thing. We showed in the keynote Richard got up in the keynote. I don't know if you're on the were you on the keynote yesterday? And then at the end, Richard got up and then he was talking to Einstein, but he was a consumer talking to Einstein.
So other companies have shown this, but they are maybe just doing AI or they're just whatever. We're showing it as an integrated system. It's the call center agent is the AI. So it was edgy. Yes, okay.
Walter Pritchard from Citi. You've done a great job of leveraging relationships with SIs and others like that. I think you've had a fairly interesting relationship over time with Microsoft. And we can sort of all follow the progression there, but most recently you sort of announced strengthening of that relationship. I'm wondering what you see out of them at this point in time now and how we should look at that relationship as potential to drive results in growth and so forth in your business?
And is it strategic or is it more tactical? It's a marriage.
It has good parts and bad parts. There's highs and lows. There's drama. I don't know if you're married or not, but I can give you the details on what it's like at some point. And it's a marriage.
I am very close to the CEO. I talk to him. I have him on tight text with him. We see each other on a regular basis. And it's also customer driven, that is customers want us to be able to work with them.
I follow them very closely. They follow us very closely. One thing I think that's extremely important for us, okay, is our relationships. So our relationships we view, they're eternal for us. Business is somewhat temporal.
We have tremendous relationships with Amazon, with Microsoft, with Google, with other companies too, you name it, Oracle. Let's just go right down the whole list. SAP, we're working with everybody. Our job is to work with everybody because our customers have all of this technology. There's no one here at this show that only has Salesforce.
As much as I would love that, that's not how it is. Everybody's got several products. Nobody has just one cloud. Nobody has just one SaaS application family. Nobody has one hyperscale product.
We have to work with everybody and Microsoft is a company that we're going to work with and there'll be other companies as well. We're open to partnerships basically with most companies. And if you go down to the trade show floor, you'll see almost all of those companies down there presenting the integrations. And we're always and we're looking for more things to do with others. And I would say a lot of it is customer
that we introduced. I don't know
if you saw that in the keynote. But that we introduced. I don't
know if you saw that
in the keynote. But there is another model, okay, that's proprietary, discrete, small number of companies. Customers just came to us and said, we want to be part of the model. We want to be part of the capability. Other companies coming to us help us innovate in this area, fine, we'll do it.
So that's Brett's innovation, the cloud information model, the integration with MuleSoft, the integration with the single source of truth. We have to be in partnership with others. I watch other companies' keynotes, by the way. It's a huge part of how I learn. I don't know if you guys you guys go to them probably.
I watch them. I'm very interested in the industry. I love watching other CEOs present and what their ideas are and what's going on. And one thing I think that I'm surprised that when I don't see more partnerships and I mentor, I can't remember who asked me about mentoring, but I mentor other tech CEOs and I'm like, why are you not including others as part of your programs and bringing them in and talking about what you're doing with others. But some people feel like they have to only talk about their world or they're going to it's their way or the highway.
It's not how it is.
That's not the way, at least not in the enterprise. Maybe in the consumer world, there's some of that. Like I have my phone, I don't really have anything else. So okay. But that's not how it is in the business software world.
The business software world is there are many types of flowers in my garden, and I need to be able to make it all look beautiful together.
Okay. Does that answer your question?
All right.
Okay.
Hi, Mark. Karl Keirstead of Deutsche Bank. I just wanted to ask you about the pace at which big enterprise are moving forward with their digital transformation projects. I think somebody asked you on a call a couple of quarters ago and not to put words in your mouth, but I think you described kind of 2018 as being this extraordinary year where it just felt like everybody was moving forward and maybe the environment felt a little more like 2017 like solid but not quite euphoric. I just wanted to get ask you for an update on how that pace of projects feels now, any change?
Well, I think you can kind of see it
at the show. There is this kind of velocity that everyone is moving to digital. And I can see it. I mean, we're in this strange economic time. We all know that.
My I have this friend, Angel Guerrera, he runs this thing in Paris called the OECD, and he dropped his forecast from 4% global growth to 3% global growth. Well, it seems like it's only a point, but it's a 25% reduction. And he's like, hey, if this trade war thing, work gets worked out, it'll go back up. And I'm like, I just had dinner with him. I was just in Paris.
And I'm like, that's what I think that's on all these CEOs' minds when I meet with them. We've probably been in front of 100 or 200 CEOs in the last 90 days. That's what's on people's minds. They're like, why, what am I doing, what is happening with trade? I think I said this on the earnings call or maybe I didn't.
Did I or did I not say this? Have I said this before? When you take get rid of the trade thing, it goes back to 4%. By the way, that's not what I think. That's what the OECD thinks.
So that's powerful. The fundamental opportunities are all there. And I think when it comes to digital though, everybody has that at the very top of their list of investment because that's where the growth
Mark, Mark Mertler Bernstein. Mark, following on just your previous comment, given your access to leaders in the industry and the global markets, I'd like
to get your thoughts on
the potential economic impact of some of the proposals we're hearing on corporate taxes or increased investment taxes of billionaires, etcetera, how do you think that's going to impact the overall software market or sales force itself?
Not much. I think mostly this is about this trade thing. I mean, at least that's from when I talk to people and like I said, my own independent validation when I talk to other leaders. And you can read this OECD report also. It's very consistent when I talk to lots of CEOs of lots of other industries.
You take that issue off the table, everybody straight ahead. Because that issue is on the table, then everybody has a question mark around in some part of their business. So that's all. And I think that it's very simple. But otherwise, they all want to move forward.
Thank you.
Chief Weiss from Morgan Stanley. Thank you, Mark for joining us today. Earlier in his presentation, Mr. Hawkins showed a pretty awesome slide with the revenue trajectory that Salesforce has seen in its 20 year history, outpacing all the other tech giants, Microsoft, SAP, Oracle. It's a very good slide.
It's a very good slide.
I have a picture of it. I'm going to hang
it on my wall. Right.
One of the things
that came to mind when I was looking at that slide is that was public companies. Someone else if we put AWL We
only had had that in our S1 in 2,004, we could have really gone somewhere. That would be quite difficult. Go back and talk handy about that.
One of the things I was thinking that if you put AWS on that slide, they're also seeing that type of trajectory and perhaps even faster than you guys and they've gone to that $35,000,000,000 plus, I think they're $45,000,000,000 in revenues already. I know they're a partner of yours, a lot of sales force is built on them. Do you have any fear that they're going to come up the stack and become more of a competitor start to build out more functionality, particularly in sort of commerce and front office and become a CRM competitor for you guys over time?
I think you could ask that question about every company. So not just them, look at all of them, they're all out there with that. But at end of the day, you really like we're talking about when you get to that buyer's office to line of business office, you have to have your value proposition. And I think where some of these companies have gone wrong is maybe they've gone over here or they've gone over there instead of focused on what they need to focus on. I think in some cases, and I'm sure there will be more competitors, there will be people will come out of different places.
But in terms of delivering our vision and what we're doing for companies, I don't see it. And that example of that company, that's a great company. But I think you know that also their persona non grata in certain industries, which they've created. And that's something that they're going to have to specifically deal with. They're a great partner of ours.
Thank you. Okay.
Hey, Mark. Phil Winslow, Wells Fargo. Got a question on Tableau. Obviously, I think we all know the power of Tableau Desktop. We've got some demos for that today.
My question is really on Tableau Server and Tableau Online, really in the context of the core Salesforce clouds, because actually I've got my Salesforce instance Wells Fargo open here. Can you see that potentially as a sort of a high volume channel for Tableau Server, Tableau Online, embedded analytics within these dashboards or even by industry vertical or somehow leveraging MuleSoft? How do we think about outside of the core desktop function, the synergies?
You want me to give you the honest answer? Sure. It's too early to tell you. I mean, what I can say is I am really listening to these customers right now. I don't really know.
I think we're very lucky to have the relationship with this company. I think it's a super high quality company. I love the company. I love the brand. I've gone down.
I've talked to a lot of the customers. I've talked a lot of not only to the mutual customers, but also customers who aren't our customers. There is a lot to learn still. We have you can see I don't know if they gave you a demonstration or did Adam present to you today? Okay.
It's impressive, right? And it's also impressive as part of our product line, as part of our family. And I think we're very fortunate. One of the things that I can tell you what customers love about Tableau, if that's interesting to you. When I my biggest surprise, if you were to like say, what's your biggest surprise about Tableau is 2 things.
One is how much their users love them, okay? And it's a huge surprise. And especially in your industry in financial services, it's crazy actually how many people have it and how end to end it is and enterprise wide it is. And the second thing about it that I don't understand and they maybe they don't even know, but how viral it is. It's a very viral product.
It's really spreads on its own. It's not because they have 10,000 salespeople. They don't have that, right? They somehow, it's the technology has spread it. It's amazing.
I'm very, very impressed with the company, the product, the distribution strategy. It's been very it's been great. And I but I'm we're still very much in a learning mode on how to say this is our optimization around it.
Hi, Mark. Girish Paku from Tencor. One specific question, one general one. The specific one on Tableau, I guess when you looked at the per share revenue dilution, were you thinking that, that was was that kind of a difficult thing to accept? Or were you thinking over 5 years, I know it's not dilutive, it's accretive?
And then the general question, I guess, when you started, the competitive dynamics were very clear. Your who you were going up against was very clear. Now when you think about the next 10 or 20 years, how do you think about the competitive landscape for Salesforce?
All right. So it might surprise you, but on the first question, that isn't really how I think, just so you understand. I look at the quality of the brand, the product, the relationship with the customers, the technology, the management team, the values, the pay equity scales, we look at everything. How do they treat others? Right away, we eliminate a lot of companies in the way we have a screen like this.
And but it only made Tableau more attractive. Everything else, I actually just love everything about the company. And there aren't that many assets like that and not at that scale and size. And like I said on the financial services example, there aren't very many CEOs I'm going to walk into and go, I need to talk to you about this company, but you bought this amazing, very important part of our company. So I think we're very fortunate to end up with them.
In terms of the competitive environment, it's changed. I mean, if you look at where we were 20 years ago, you can't compare. I mean, how many of you were software analysts 20 years ago when we started the company? So those people you can talk to, Brent and Kash and all these others, and it was a whole different ballgame. How we're still in it, I have no idea actually.
It's kind of amazing. No, seriously, isn't it? It is kind of amazing that we've done as well as we have. We've just been very fortunate. And that's why I have a lot of gratitude.
Who would have thought 21 years later, we're able to continue to be as successful as we are and have these relationships with these customers and transforming them and impacting them in a positive way. And that I don't know if the product presentation was optimistic or not or if you felt like, oh yes, this is something that's important to a lot of companies. But I have never been more excited about the company. I don't know how that can be 21 years later. So I have other friends of mine of other software companies, some that were started about when we started, some that were started before, some that were started after.
I think if you I would say, who's the most excited? It's me, at least in the apps area. Maybe in other areas, there's different people that I would say, oh, this is but in terms of we're an apps company. I mean, I think the Customer 360 vision is what all these customers, these big CPG companies and financial service companies and manufacturing companies and on and on and on, U. S.
Government and all these people and foreign governments, everybody needs this
capability. And that's what I look
at it. And I think that in regards back to the first question, it's hard to extend and complement what we're doing, but to find an asset like that is incredible. So I think we are fortunate to have it. Yes, thank you for the question. All right.
Well, thank you very much. Okay, we'll do one last question and then we'll wrap it up. It better be really positive upbeat.
Short pressure, I don't know.
Is this about Fleetwood Mac?
I asked you a question, you got mad at me.
Is it about Queen? I know. All right. So Fleetwood Mac, Queen, what is it going to be about?
Just give
it come on. I know you're very good. So come on.
Actually, I had
a question. You can make it super positive. You can spin it. Just make it positive. Just dig inside you.
Just dig it out. You got it in there.
Come on. You may be able
to stand up to do it.
Well, if I stand up, you won't be able to pick on
No, no, it's fine. I'm not going to pick on you.
It's okay.
So just in terms of the spending and as sales force has become so big with so many different product lines, how do you keep the sales or the operational spending efficiency and make sure that the ROI is correct on it? Because you can spend gobs of money. We want to make sure that it's being put to good use. That's the first question. And why don't we go?
Well, you got multiple questions. All right, that's good. So number let's do a Q and A. Number 1, I think it's all about the people at that point. You have to look into the eyes of your management team and say, are these the right people?
Is it the right structure? Is it the right process? Is it the right comp plans? What are your pipelines? Do you have the right coverage models?
I mean, that's really where it goes out. That's also where the AI actually starts to help the systems, the capabilities, all of those things. And do we have that team that can execute it? And also when you acquire these things, sometimes you end up with people that can extend the team. Some of those like Brett came in through an acquisition, Alex Dayon, key members of our management team came in through acquisition.
That's very Adam's awesome. So I think that number 1, I would say, is the people that's going to make the difference. And I think we I mean, you guys see every management team out there. You see everybody. I think we have the best management team in software.
I'm biased, but I actually think we have a world class. And I would say also most trusted team. Okay. What's your second one?
Yes,
but I didn't
really address the ROI question, but that's okay.
Okay. All right. Well, what I think
it does because the whole point is, can we deliver the results that we say that we're going to deliver? And are we actually delivering the growth and trajectory and the all the metrics associated with the business that we say that we're doing.
Okay. Secondly, I feel like you've done these acquisitions and the street hasn't necessarily appreciated all of them until maybe after the half, I can also.
Right. That's more I can.
No, no, I think it's more that the street doesn't like risk. So that an acquisition is risk. So as soon as you acquire something, then there's risk associated with it. The street likes to have this is my experience from working with it 21 years is that they like to know exactly what you're doing, have total confidence, have don't break anybody's model, keep it going, train on the track, that's it, end of story. No change.
But if you do something like an acquisition, then it's like, wait a minute, what was that? Who, what? Did what with who? When did they do it? And how was it done?
And then, oh, maybe we broke somebody's model, maybe there was a change, maybe it was somehow something happened, and then they're like, guys are really bugging me. And
it's kind of
a I get it. And then it gets, but at the end of the day, I have to be true to my vision for the customers, and I have to be true to the customer. What does the customer want? Does the customer want this? Are they going to get benefit from it?
Is there value? Does it make us more strategic with the customer? Does it give us a higher quality relationship, more trusted relationship with the customer? That's what's on my mind. And unfortunately, I'm sorry, I know I break model sometimes, things happen.
But from the customer you're my customer also, by the way. So I value you. You're a key stakeholder. My employees are key stakeholders. My partners are key stakeholders, my customers are key stakeholders, the analysts are key stakeholders, the investors, We have many stakeholders, okay?
You can go see the mural at the moment. I don't know if you're in there or not, but you should be because you're a key stakeholder. You're part of what we're thinking about. The reality is that when we're actually thinking about what is the right thing to do for the business, it's always customers always going to be first.
That actually wasn't my question.
I know.
But I just want to frame it.
Got it. So I guess the question is, we might have some misperceptions about Salesforce. And from your perspective, what are those misperceptions? And what are the misperceptions you might want to correct in this audience?
I don't think you have any misperceptions of Salesforce. By the way, if you did, we would not be doing our job. We were not then we wouldn't be as transparent as I think that we are. I think that we are open. I think John could probably fill in and say, here are some things that he thinks that are misperceptions as he has the day to day.
But I read the analyst reports. I mostly agree with them. I do. I actually think most of the analyst reports are right on. I read some of the ones that came out today based on what was revealed yesterday.
I like them. I'm not validating them or doing anything. What is the word that I'm looking for? I'm not confirming anybody's numbers.
No, no, that's not what I mean.
Like, I read like the text or the headlines, and mostly I'm like, yes. But I know that when we do something that's a little bit like not in Dreamforce last year, and it's upsetting. And by the way, you've read my book, a lot of action has happened in this room over the last decade or 2, right? Hasn't everyone been here for some action along the way? But if we're not honest and transparent with you and tell you exactly how we feel, then where actually are we?
So all I can do is be completely transparent with you, tell you exactly how I feel. I've never been more excited about the company. I'm very vested in the energy across the street. I'm looking at what the customers want. Other software companies have rolled into this convention center.
It's not the same feeling, right? It's not the same vibe. It's not the same action. That's what I look at. I'm looking at you guys see it, you're living it.
I don't go to all of it. I'm not in it as much as you are. I'm very happy where we are. I think we're like I said, number 1, do we have trust? That's number 1.
That's my number 1 question. 2, do we have customer success? Okay. Do we have innovation? And do we have a quality?
Those are the 4 things that are on my mind. And I think that when I get a question like this one or other specific things, that's where I have to really lean on John or Mark. It helped me because my vision is so informed by the customers in terms of what they're going, what they need, what they want and how we can be their trusted digital advisor. This is really what Salesforce wants. We want to be that trusted advisor and we've had to make some innovations organically and inorganically to get there.
But I wouldn't trade our position with anybody because when I go and talk to and by the way, validate me by doing this. Talk to the CEOs of your companies. Go and talk to your chief executives and ask them, what do you think about Salesforce? What do you think our relationship will be about Salesforce in the future for your companies in this room? And if their eyes don't shine brightly or feel like they're going to that they don't have a great relationship with us, then come and talk to me about that because that's really what we're organized around that idea.
The fundamental success and trust we have with each and every, stakeholder. Okay. Thank you.
All right.
Do you
want to fill in anything? Did I miss anything? I think you Amy, do you want to fill in Amy is over there. Thank you, everyone, for being here. I really appreciate it.
And
please, a
couple of things before we wrap it up. 1, please go to the trade show and the sessions and Moscone West and all of that. But 2, one other thing we have this year, which we've had now, this is the 5th year. We have these 2 or 3 dozen monastics who are teaching meditation and mindfulness. They also do a really strong class on ROI, investing.
But you can book appointment with them on the app, okay? They're doing some amazing classes. They have a whole teaching room. They've been here now. Last year, they came to took me aside and they said, we need to have an enhanced teaching environment because they have such so much demand here.
Not just from all of you, but from the rest of the customers too. You should check that out. It's pretty awesome. Anyway, and also doesn't this guy deserve a round of applause for a great day?
Thanks very much, Mark. Thanks for spending time with us. So I think that's a wrap at a very high level. Mark, I think you might have some other closing thoughts here as well, but
I do. Just I want to say, you guys, it's been a good day, a full day. Thank you for dedicating it. I said, I hope you had a good day 1 and I hope day 2 was better and I hope that in fact is the case. I want to call out John.
I want to call out Alex. I want to call out Matt and Vellek and Evan and a bunch of people that worked super hard to put this day together for you. And if
you could just give
them a round of applause, please. And on that note, let's call it a wrap and hope you guys enjoy Fleetwood Mac, those who can stay. Thanks so much for coming.