Hi, good morning, everyone.
Good morning. Good morning.
Good morning. My name is John Cummings. I'm the Senior Vice President here at Salesforce. And on behalf of myself, all Salesforce and the Investor Relations team, Andrew Zilli, Anna Saliba and Rose Salzwil, Welcome to Dreamforce. We're very excited.
Thank you. We're very excited to be here today. We have a great program, I think, for you today. The theme of our program today is really about growth. And many of you have had the opportunity to talk to me, David, Mark or other members of the management team over the last several months.
And what we heard from you is what's the durability of your growth look like, what your growth trajectory look like, what's the company look like in several years. And so that's really what we're going to talk about today. And when we
do that, we have a
whole set of folks here lined up to do that. So we'll kick off the program this morning with a conversation with our President and CFO, Mark Hawkins and our EVP and Deputy CFO, David Havlik, talk about our sort of financial profile today and where we're going. Then we'll have a series of executive Q and A with Alex Daon and his team on products. And then Keith will be here, our Chief Operating Officer and Vice Chairman. And then Parker Harris, Brett Taylor will talk about sort of our technology, underpinnings.
And then we'll wrap it up and Mark will be here this afternoon to do some Q and A with you all. We did you'll notice a slight change in our schedule today due to some timing shifts. Mark had to come a
little bit later. I really had
to relate to our announcement yesterday about Google and we'll talk more about this afternoon. And unfortunately, we had planned to have a panel of our Board of Directors to be able to address that. But some of them are here today and you'll see some of them coming and going and I'd like to introduce them. Craig Conway is here. Craig?
Our Lead Independent Director, Sandy Robertson is here today. Sandy, thank you very much for coming. And Maynard Webb as well is here today. So thank you very much, gentlemen, for joining us. And I think you'll see some other members of the Board here today.
It gives you an opportunity to give a flavor of of what's going on from a sort
of governance perspective and their views
on the company and managing sales force. So that's very good. So we'll get kicked off. And to do that, in forms like this, as you know, we may make forward looking statements. Some of these statements contain risks, uncertainties and assumptions and all those risks, uncertainties and assumptions can be found on our Investor Relations website.
So that's it. That's the housekeeping done. So with that, let me bring up Mark Hawkins to get us underway.
Thank you, John.
Okay. Thank you very much.
So how's it going for us so far? All right. Did you guys like Mark's speech last night? That was pretty good. And how many people listened to Michelle?
Few folks who had a pretty good representation. I literally a lot of you guys know I like to run. I literally sprinted over here. We had an opportunity to meet her right after. It's just neat to see the people that come to Dreamforce to talk about what's happening in the world.
We want to thank you for coming. This is our most fun time of the year. It's a chance to host with you and to share information and new information. David and I
have a lot of new information that
we're going to share. I look forward to doing that. I hope this will be very fruitful to you. This is my 4th dream for us, and it's just a wonderful event. But we want to thank you for spending the time and also thank you for your support.
We get a chance to interact with you throughout the year. It is really a privilege and a pleasure from that standpoint. Before we get started, I do want to acknowledge my team. You guys can imagine pulling these things off. David Havlik, John, Zuri, Rose, Anna, we have a great IR team.
I just want to thank all these guys. If you don't mind, just give them a round of applause. Our job is to serve you, and we know that and we take it really seriously. But as John talked about, durable growth is the theme for the entire presentation. It is mission 1 for our company, and we have been delivering proven durable growth for years years.
And I'm going to talk to you about the blueprint to talk about durable growth for the years ahead. And so on that note, I want to kind of tee up though before we get into that completely the top financial priorities that are on my mind and how we're managing the company financially. And really, there is a message here that we always think about, and this is something Mark talks about the whole leadership team, which is we're always taking the long term view, for share creation, wealth creation, running a great business, building a great franchise, but we also know it's important to our investors, we talk to you nonstop, that we need to deliver progress along the way year after year after year. And of course, we take that very seriously, and that's on our mind. But this is the bigger parameters of how we think about things.
There are 3 things we spend particularly
a lot of time on as a leadership team. The first thing is around durable growth execution. That's what we do to serve our customer, make them successful and then, as a result, grow with them. And that's something we'll talk a lot about in the pathway going forward. Got a lot of new information for you.
The second thing we talk about, and we know how important it is to everybody, is durable growth leverage. We need to have leverage. Every time we talk to you, we talk to you about the importance of not only growing but expanding our operating margin as well. And of course, we'll talk more about that I think also some of the dynamics of the model. And the third thing we talk about is just to make sure that we are absolutely optimizing and preserving this long term economics, which is north of 35% in terms of margin.
And we really need to make decisions that are going to optimize that long term asset. So these are the things we think about day in and day out, year in and year out, and I wanted to set that because it kind of sets the table, if you will, for the entire discussion today.
So with that, let's go in and look at
where we've been. And I would say when you see a slide like this, that immediately you start to think, okay, when did I start covering the stock? When did I start investing in the stock? When did I join the company? Whatever your reference point is, you kind of see where you're at.
Let me tell you where I see it for myself. I see I joined shortly after FY 'fourteen had been wrapped up. We're starting to steam into FY 'fifteen. And so I look at that FY 'fourteen as a bit of a marker. And I started to think about the guidance that we had for the current year, and we're racing toward the $10,400,000,000 at the high end of the guidance.
And during that journey, I guess, a 4th dream for us, we talked about each year, we would expand the operating margin. For 4 consecutive years, we've done just that. We've expanded the operating margin year after year after year, while doubling the company, tripling the free cash flow and positioning ourselves for the future. And by the way, when I guide in February for operating margin, you should expect the 5th consecutive year of operating margin increase as well. We'll get to that when we get to that.
But that's where we've been. And of course, we announced last night the $12,500,000,000 So there's a lot of things that have been changing in this period, and we have great opportunity in front of us. And that's our target, and that's our first view of the world for FY 'nineteen, and you've seen that. But the big news I want to talk to you about is not what's there. The big news I want to talk to you about is where we're going and what we do for our long range plan and how we're thinking about it for the next several years and how we've been investing and why we have a commitment to take this to a higher level.
And in fact, we do. This is what I'm excited to talk to you about. It's the $20,000,000,000 to $22,000,000,000 that is our long term target. In FY 'twenty two, that's where we're going. And we're going to talk to you about a clear pathway to get there, a pathway where we have confidence to really show you the playbook of durable growth, not only in the past, and you look at that durability right up through, but also in the future.
And I look forward to describing that. So let's get into that. How do you build an opportunity like this? How do we do what we have done? And how do we build that opportunity going forward?
This is another way we think about the company a lot, and we think about how to assess opportunity a lot with this cube. And so the thing I want you to pay attention to is, detail through each one of those and talk to you about the pathway to $20,000,000,000 to $22,000,000,000 And what I want you to see is that little green cube within the bigger cube represents the sales cloud. That's where we started the company. We were with 1 cloud. That's what we sold.
We were in 1 region, the Americas, and we were one to whom we sell, which was in the small and medium business. And by the way, does anybody know what the TAM was at that time? It was 700,000,000 dollars by Gartner. It's a lot bigger now, right, because we've been systematically building out the who, the what and the where. I'm going to talk a little bit more about how we're going to do that, what that means for $20,000,000,000 to $22,000,000,000 in FY 'twenty two.
So let's start with what side of the cube, the what we sell. When you look at the what we sell, the very first place to start is the world's best undisputed best CRM platform in the cloud. We're number 1 by a long shot. You know that. We'll show more data.
I'm a big data fan, as you all know. But we have put together and you can look at the portfolio today. This is a long cry from Net Cube that had one single color on it, right? Is that marketing is that your favorite commerce, service, sales, collaboration, platform, an industry focus, Trailhead, you pick it, but we have the best portfolio, and that portfolio shines. All of our core clouds are the leader in the Magic Quadrant in Gartner, every one of them in the core group.
We have a very strong product, and that is really allowing us to do what? To help CEOs and their boards fundamentally transform their companies with a digital transformation. We all know in the midst of the 4th Industrial Revolution, where are people starting their digital transformation. They're starting about growing and taking care of the customer, and that brings them to us. And we get to be the tip of the spear on that.
And by the way, the feedback on this, it really tells you this whole opportunity of the full picture. And when you look at the full picture, what you've soon began to see is this opportunity of just how populated that is, just how much opportunity is in that particular portfolio, which is really, really powerful. And when you look at that, then you start to say, well, how big is that opportunity today? Not the $700,000,000 TAM, how big is it today? Once you fully absorb that platform, you pick your favorite of what we sell, then you take a look at the size of the market.
And that is really, really powerful. When you say actually, last year, according to industry sources, it was $72,000,000,000 dollars 72,000,000,000 in TAM addressable, and you look at the share across the way by cloud. And the thing I want to point to you there when you study that is we're always trying to build pipeline in this company as we look to grow the company. And you can see where we started with sales and service, and we just keep building that out and building that pipeline for the future. But let's take a look at how that builds out in calendar year 'twenty one, which is fiscal 'twenty two.
Look at the size of these clouds. You know it's the world's best portfolio, and you take a look at that and you can literally see the opportunity. But what excites me the most on that chart is not just the size and magnitude of the TAM. Look at the growth rates. This is the fastest part of enterprise software, full stop.
It's the fastest part in terms of growth. And look how we're performing on the very top line. We're persistently, consistently taking share. And so what you can quickly see is, in fact, we're extending our CRM leadership. Without question, we're extending our leadership.
And so what you can see here is a pattern I put up year after year. And you can look at the top 3 players in CRM. And you look at our market share at 18.1% as of recent announcement for last year. And by the way, I just showed you the growth rate of our industry, and you know the growth rate of our guide for this year is in the 24% to 25% range. So you know where that graph is going.
When it gets updated for the next year, it will be higher. You can see the persistent patterns with some of the competitors. And by the way, I put the top 3, but as a courtesy because I know a lot of you asked me about Microsoft, whereby they're not in the top 10, I did put them on the graph just so you could see that data from a courtesy standpoint. So we've been taking market share, and we're going to persist on that. But that's part of that momentum, that flywheel that's allowing us to continue to grow.
And by the way, one of the motions that allows us to take share is to land and to expand. And so let's talk about that. This chart is really neat because it's one of the playbooks that we use very, very well. The top is around landing and the bottom is around expanding. And we're able to do that with a broader and broader portfolio.
So center your eye on the FY 'eighteen top circle. And on that one, one of the things you can see is that for every new dollar business, this is new information for you, every new dollar business, $0.74 on a dollar goes into our installed base and $0.26 on a dollar goes into it's basically due to new logos. And within the new logo, what's going to meet is that 39% of the time, we're leading with Sales Cloud. Our gold standard, we go in, it opens the door to digital transformation, and then we are able to continue to grow over time. So we clearly know how to expand.
And in fact and we clearly know how to land, and the land is at the top. But if you go down to the expand at the bottom, one of the things you look at is you parse the circle. And one of the things you see is the light green talks about the once you're in the installed base zone into the installed base, it talks about buying new seats. It talks about buying upgrades. We do that very, very well.
And we know why people do that. Of course, we do because they like the product and it's solving a problem. That's a very healthy sign when you can sell into your installed base. As a very positive thing. And on the other side of it, the dark green has to do with our installed base is very fertile ground for selling new products.
So when you have a really great product suite, you're able to go right into the installed base and to continue to deliver growth. So we certainly know how to land at the top, and we certainly know how to expand at the bottom. And that's one of the motions that's going to help us as we continue to push forward, and it's due to a strong product suite. Let's look at the product suites. When you look at how that is going, basically, it's growing and growing, and this is another new bit of data for you.
For every new business dollar that we get, $0.69 goes into core products and $0.31 goes on to add on products. Well, this is a one two play that we've been talking about on the earnings calls and in interactions with you that really is powerful. And let me explain to you. A lot of you ask me like why is Sales Cloud accelerating? Well, part of it's because Sales Cloud continues to improve with Einstein, with Lightning, with verticals and so on and so forth, but part of it also is the fact that we have an add on with SteelBook, with the CPQ.
And that one two punch is really allowing us to continue to grow well, not just in Sales Cloud but in other capabilities. So this is powerful. And if you take it down to platform, at the bottom, you can pick any one of these of this broad portfolio that we have, you can take a look at platform, the same thing happens. You got the platform and then inside it, you got shield. That one-two play really helps us, again fortifies this durable growth motion that we have.
Let's look at platform is really what's kind of interesting is there's a portfolio within a portfolio. In other words, you see all those clouds that we have, but I'm going to show you some data that you've never ever seen before. And that is when you look under the covers to platform, there's a whole another layer of portfolio. And let me show you that. You take a look at that, let's just break this up a little bit.
Now you start to see that we have almost $1,000,000,000 business alone in Salesforce Platform. We have Heroku that's helping us in the B2C business. We're now a B2B2C business as well in terms of our capabilities. We have dev environments and things that are very useful to the customer. But the ISV, the ISV, the last time we did show you that one data point, it was approaching $100,000,000 I believe.
Now it's a fast growing vibrant part of our ecosystem. And you know what happens? It extends our coverage. It extends our solutions and it extends our ability to help our customers, which extends our ability to grow. That whole ecosystem, that flywheel is helping it gets moving and it creates inertia, and it also creates a competitive moat for us.
It's really powerful. So if you take the ISV idea and you go to the right of the chart, one of the things that you know is this we have the world's biggest B2B AppExchange, full stop, in software. And that is another part of this whole competitive mode, if you will, that allows us to pave the way for durable growth. And so you can pick any favorite stat you have on there. But one that I like to pick is that if you think about FY 'fourteen, which I kind of told you about that as a marker, and then you think about where we're at today, when you look at ISVs that had more than $5,000,000 of recurring revenue, we only had 1 in FY 'fourteen.
Today, we have 11. This ecosystem just keeps moving, and it's powerful. So I hope you can see that, that first part of the cube is being built out really, really nicely with the world's best portfolio, and it keeps getting better with ecosystems such as the ISVs and such. Now let's shift to another side of the cube and talk about where we sell. And in the where we sell, I think it's a great place to really think a little bit more in terms of gaining share internationally.
And when you think about that from that standpoint, that is early stage opportunity for us. It's huge early stage opportunity for us. And so in that respect, what we have is a huge TAM. It's there. You can see it in every single geo, And you can see the market share and the opportunity here for this early stage growth opportunity, and that is very powerful.
But what I like more is when you start to build that out and you take a look at the TAM in 2021, our calendar our fiscal year 'twenty 2. This opportunity that we have, you see, if you look at the very top of the graph, right, if you look at the top of the graph, you can see our growth rates and then you can see the market's growth rate. And what I love again is that ability to outperform in every single geo in an area that has huge TAM and a lot of runway for the future. So that's powerful. But I think the thing I want to show you again is something new that you've never seen before, which is actually to go deeper into the international side and show you more of what's powering us to go forward.
And on that side of it, one of the things that I want you to look at is the top 9 countries that make up 80% of our business. You've seen that before. But what you haven't seen as we get even more focused and we look at the top 25 cities in the world and focus very, very heavily in terms of how do we prioritize that, do we get even closer to the customer to make the customer success full. And when we do that, we're rewarded with growth. And so this is the way we think.
And when you look at this top 80%, you're going to see that come up again and again and again because we're trying to focus our energies to get closest to the customer, to be there to serve them, make them successful and grow as a result. But if you think about this going from geographies, regions, cities, let's take a look at our evolving coverage model and see what's happening from that standpoint. In our evolving coverage model, you can see this actual progression. You can see from where we were centralized in San Francisco and starting in the company and evolving to build out regions and really now focused all the way to cities to have the ability to get close and to be successful. You can see on this chart also that we've been growing internationally in terms of investing in our headcount very disproportionately.
And that is very purposeful to allow us to be able to, again, propel this growth going forward. And I think the other thing, you can pick lots of different things on this chart, but if you shift yourself and you actually go over to the far right, one of the things you'll see are the international data centers. And you know we've been building these around the world. But the thing I want to point out to you is we've been building these around the world and we have partnerships. Of course, you know there's not very many companies in the world that have a partnership with AWS and now Google Cloud Platform.
That's a very powerful capability for us. And that gives us even more optionality as we expand internationally. And I believe Diane Greene might even join Mark this afternoon just as a guest when he's talking this afternoon. So that will be good as well. But you can see how we continue to evolve our coverage model, and that is another powerful thing, and it's also part of where we sell and as we build that out in the entire queue.
But that would bring me to the next part that I think would be important to cover, which is who do we sell to and how do we build out that face of the cube. I think on that face of the cube, I think one of the things that you can see, again, is this whole notion of a portfolio that provides a solution to all the customers. And so from that standpoint, one of the things that I want to say is that instead of starting in that one single little notch of the cube that was Sales Cloud and serving SMB, you can see where we started with SMB and you can see that we've gone upmarket. And by the way, why did we go upmarket? Because 80% of the market is in the commercial and the enterprise space.
You see that 80% coming up again and again and again because we're trying to stay very focused in terms of what we're doing. And you can take a look at the market share. And I think the thing you can see there, again, is the opportunity to both have share but to grow share across the board for years to come. And that's part of what endures and creates durable growth for us. And so we feel very encouraged by that.
But also, when you build this market out, it even amplifies the point of going upmarket is absolutely, positively the right thing to do, and we see that opportunity. And again, when you look at the growth rates in each of these different areas, I think that's super powerful from that standpoint. So that really gives us a sense that, again, we're not just selling to SMB. We're covering the ground. That's going to help us in the path.
But also, when we take a look at multi cloud, which again is brand new data for you, you've seen cohorts of this. This is for the entire 150,000 plus customers and millions and millions of users. So it's harder to move this in aggregate, but I'll tell you a little bit more about this. This tells you about an opportunity that we have, and this opportunity is to sell multi cloud both at the enterprise space more and more, and we've shifted it a bit. But we've also done a shift down at the commercial and the SMB space in terms of moving it forward.
So these are huge opportunities to grow further when you look at really pushing this play. What it tells me right now, though, is something very revealing that's not on this chart. And that is at the top of the if you look at the top 200 cohort, we're making much, much more penetration in multi cloud. And what it tells you is over time, you're going to see that seep into the broader numbers. And gradually, this thing will continue to shift.
But it's early days. We've got a lot more work to do and a lot of opportunity here for that to be part of the durable growth for the future. When I talk to customers all over the world, I hear them talk about 2 words. I hear strategic. And you're amidst customers this entire week, you can ask.
But I also hear the word now of mission critical. And you can see why when you look at this next stat. This next stat talks about we were proud again back in FY 'fourteen to put up the fact that we had 700 customers that were doing more than $1,000,000 of recurring revenue with us a year. And we're becoming more and more strategic to these group of people. But today, we have 1600, so we're more than 2x in that regard.
And so that relationships of recurring revenue continue to build, but they build at the $5,000,000 recurring level. They build at the $10,000,000 recurring revenue, and they build at the $20,000,000 recurring revenue. So you can see that opportunity at every level is expanding. And it's really because we're more strategic and we're more mission critical. But speaking of expanding, I want to get into that and show you some more data you've never seen before.
And I want to talk about this whole notion of expanding with our top customers. Now what this is, again, references for you, if you look at FY 'fourteen, top 10, and you look at FY 'eighteen, Q2, top 10, you take a look at these, and I want to point out a couple of things. The first thing, this is recurring revenue per year. And what you see at the bottom is the entry bar to be in the top 10 is well more than doubled for recurring revenue per year, and that's one point
to make. The other thing that you
see as we expand our opportunities, look at to the right of the chart and look at all the different industries that are being covered in that respect. And you can look at new folks like retail, telco, Internet, whatever the case might be, you can look up and down that chart. But let's take one at the top and imagine somebody did a 4 or 5 year deal. That is a lot of opportunity and a lot of commerce, a lot of opportunity to grow together. And we really are making progress in this respect, and we're making progress by industry.
So a number of
you have asked me, Mark, could you show more data on industry? And we like to share as much as we can, especially in events like this. And let's take a look at industry, and I have some data that I'd like you to see that will give you a better sense of how we're thinking about that. And when I look at industry, you can see the TAM, you can see it by group, and these are the top 6 that we've been focusing on for a long, long time. And you look at the again, the market shares, we have meaningful market share in most all these industries, and yet we're getting started, right?
This is something with early stage opportunity to grow and grow and help us propel on the durable growth. And so if we build this out, again, we see that these top 6 make 80% of the opportunity of TAM. But as we build this out, we begin to see, again, an even bigger opportunity. But again, what I like the most is the market growth And so you can see how this can propel us going forward from a TAM standpoint. But let's look and go deeper on the traction that we're getting in this particular part of the business here because we are going deeper and we are making traction.
So let's look at that. When we look at traction
in these target industries, I want to just walk around this chart.
The first thing I want
to talk about, there's a lot to like on this chart, but if you look at the top, it talks about 40% of our executives are aligned by industry. And one of the things that I've told you in the past is that the first thing we needed to do is get people who could speak to industry, they could talk to industry and they could sell from an industry standpoint. We now have 40%, from 10% to 40% of our AEs are aligned by industry, and that's a big move. The other thing we said a few years ago that we would do is we would literally create products, vertical products to help, and now you've seen things like Financial Services, Wealth Cloud, Financial Services, Retail Banking Cloud. You've seen Health Cloud.
You're going to see more and more of that motion of products by vertical, and we know that's also part of this whole play. But one of the things is that, that has created a lot of opportunity. And when you look at selling a vertical product, 57% of the time when we sell a vertical product, 57% of the time, in fact, that's generating a new logo. That is really powerful for us.
You pick whatever is on the billboard that
you like the most. I look at Financial Services, 17 out of the top 20. That's powerful. But we again, we are getting traction and we're getting help as well. When I say we're getting help, the SIs and part of that valuable ecosystem that extends our coverage, again, that helps to build that competitive mode for durable growth for the future are the SIs.
They're by nature focused to implement by industry, right? And they're investing in us in a couple of different ways. One is, it's kind of remarkable when you look at this as the who's who of SIs, every one of them uses sales force. That's an investment. But number 2, every one of them have been investing heavily in certified people who can help with system integrations.
That's very powerful, too. And by the way, the reason that they're investing so aggressively, you know and I know, they see the same TAM, they see the same opportunity, they see who's winning with market share, they see the growth opportunity and they see the Gartner reports for where the customer likes to use a various product, and they are a vital part of our ecosystem. And a data point that we've never shared with you before is for every new dollar of business that we do, 50% of the time, we have an SI involved in this, 50% of the time. So they are a valuable part of our ecosystem and that flywheel, that competitive moat that we keep moving forward. So that gives you another good sense in terms of our opportunity, what we're doing as we build out that side of the queue.
But it kind of brings us back to the queue, right? You can see where we built it out on the what. You can see where we built it out on the who and the where. And you can see now this pathway that went from $700,000,000 at the beginning of the foundation of the company in terms of the TAM to $120,000,000,000 according to the industry analyst for calendar year 'twenty one. And for $120,000,000,000 TAM, I think we have a huge opportunity going forward.
And so when we look at that, it kind of brings us full circle, which is we have some very, very clear drivers for durable growth, consistent, persistent durable growth. We are confident in our long term target, and you can see the growth drivers of why we are. And by the way, what this tells you, too, is upon achieving this, we'll not only be the fastest company ever in the history of enterprise software to get to $5,000,000,000 or the fastest ever to get to $10,000,000,000 but will be the fastest in the history of enterprise software to get to $20,000,000,000 And on that note of a durable growth, I'm going to turn it over to David Havlik. I'd like David to come in and talk about durable growth, leverage and economics. Over to
you, David. Thank you. Thank
you, guys. Okay. Thank you.
Thank you. Thank you, Mark. Another round
of applause for Mark. It was
a great presentation on growth. So I want to welcome everybody. I know this is my 13th Dreamforce, and it's every year, we kind of
raise the bar. And for
those of you that had a chance to go listening on Michelle Obama morning, it was quite remarkable. For those of you that didn't, we appreciate you coming to our analyst session. I was walking around earlier, chatting with some of you. Dreamforce is really a family reunion, and I am really happy to see all of you. I used to see many of you much more often than I do now, and so it's great to sort of reconnect with all of you.
And I really encourage all of you to embrace that spirit as you enjoy your Dreamforce experience, to reach out to our customers, reach out to our partners and really get a sense about what the company is all about. For me, the family reunion experience is never complete without a
hug from John DiFucci, so
I was very happy to
get that this morning, of course. Appreciate that, John. He always seeks me out now, which is fantastic. I look forward to that, so thank you for that. And I'm just curious, by show of hands, how many here this is your first Dreamforce.
Anybody first Dreamforce? Pretty remarkable.
Will, do you want to stand up for me?
So Will Danoff is a long time shareholder. Can we give Will a round of applause? So this is Will's first Dreamforce, and he was very excited today, and I think he's never going to miss another Dreamforce.
I hope you guys all sort
of feel that energy as you sort of enjoy your Dreamforce experience. So welcome, Will. Welcome to Ohana, and thank you very much for coming. All right. So let's jump into it.
So before I start, as I traveled around the world the last year, I've met with many of you, and invariably, our conversation goes to the same place. It goes to, tell me about the growth engine, tell me about the growth model, and then let's talk about leverage in that model. And we invariably for those of you that spend a lot of time with me, I invariably start drawing a lot of pictures on the wall. And by the way, the Investor Relations team is like no more pictures this year.
So I'm
not going to draw any charts for you guys this year. So you're welcome. But I think it's super, super important that you understand the model. So I want to sort of start with a picture that you all know because it's a foundational picture. You're all going to recognize it, but I really want people to internalize this picture.
Actually, what am I doing here? Okay. So this picture is a picture you've probably seen before. Mark Hawkins has showed this last several years. Very, very simple and it's a picture that is essentially the growth engine for every cloud computing company.
You start with a recurring revenue amount, right, and then you try very hard to drive success in your customers to mitigate your attrition, right? So your attrition actually is like a negative for you, right? Of course, you know that and you know what our attrition rate is and it's why Salesforce works so hard to drive customer success. And so you have this recurring revenue attrition. And then, of course, you add new business to your recurring revenue balance, right?
And this is sort of the the 2 of these things together are what we call net new ARR, okay? And you start with the beginning recurring revenue amount and you end with an ending. It seems really simple. But there are 3 things I really want you to take away from this, and I think people don't fully internalize this. Number 1, as long as your new ARR is greater than your attrition dollars, as long as the dollars of new business are more than your attrition, you're going to grow.
And actually, if you go back to the recession, sales force actually came out and said our new ARR growth was negative and our attrition rose meaningfully. But the dollars of attrition were still meaningfully lower than the dollars of new business. And so what happened? We continued to grow. In fact, our growth rate dropped out around 20%.
So it's really important, number 1, to understand that it's the net of those numbers that really matters and actually reducing attrition is a growth engine as well as adding new business. Number 2, it's really those numbers that define sort of the second derivative of growth. In other words, those two numbers together, the net ARR, is really the second derivative of growth for you, and those are the areas where you should be focused. I know a lot of people are focused on the total billings number. It's really that incremental number that matters so much.
And I think with the new 606 accounting standard, you guys are going to get a little bit more visibility into this. I'm not going to spend time on that today, but you'll get a little bit more visibility into this. And then number 3, as you're evaluating subscription models, you guys can actually go calculate that new AR number, not perfectly, but you can approximate it because you have the starting balance, right? You have the starting revenue, the recurring revenue subscription business. You have the end, and you generally know the attrition, So you can solve for that.
So I'm going to let you do that yourselves. But this is an important sort of foundational piece of information that you need to have. And I'm going to sort of build on that because this also defines the leverage opportunity in the business. So I want to talk a little bit about that. I'm going to give you some examples.
I promise there'll be no charts today, but there will be some characters and animals in my charts.
Okay. So let's talk a little
bit about leverage. This chart on the left shows, if you think about it as a profit frontier. The last several years, I've talked a lot about subscription economics. I talked about how you can solve for your margin over time. And if you introduce growth rate into that equation, you can draw a chart yourself for any cloud computing company with growth on the vertical and margin on the left.
And if you hold your cost to book, cost to serve and your attrition flat, those subscription dynamics, if you hold those constant, if you grow your revenue faster than that new ARR number, you actually create leverage. But what happens? If your revenue is growing faster than your new ARR, than your new ARR, what happens is you're decelerating. So you're sort of moving down that line, and you get what we call model leverage. It's a structural piece of leverage that exists, and it occurs as your growth rate decelerates.
And it's super important to understand that, okay? In the past, I referred to this as natural leverage, but it's a structural sort of model leverage that exists in the model as your growth would so you sort of move down that profit frontier. Now the other kind of leverage you can generate is if you actually improve the underlying dynamics, okay? I guess I said I wasn't going to show you a chart, then I went right to a chart, didn't I? If you improve the subscription dynamics, you could actually move that profit frontier out, right?
And we call that operating leverage, okay? And operating leverage looks a little bit like this, right? That line moves out. You've either improved your cost to book, you've improved your cost to service, etcetera, okay? So there's 2 ways you can generate leverage in your model.
1 is a structural model leverage that comes with deceleration and one is operational. And I want to show that to you by using 3 customer examples.
And in the theme of Trailhead, I'm going
to call these 3 customers the Camper, the Explorer and the Trailblazer. So indulge me in this, will you, okay? Meet these 3 companies. The Camper is a company that is focused their growth philosophy is let's grow that new ARR dollar number and let's grow it by a constant dollar number each year, okay? By the way, these are all great growth companies.
I want to be crystal clear.
If you could invest in them, you'd probably own them all.
They're great growth companies.
But the camper is going to focus on that new ARR number. The Explorer and the Trailblazer are going to focus on the net new ARR number.
The Explorer will try to
keep again, grow the net ARR by a constant dollar, and the Explorer or the Trailblazer is actually going to grow up by a constant growth rate, okay? And it's super important to understand that the growth philosophy that a company employs in many ways defines its leverage opportunity. So let me pay this off by showing you what these customers look like. This is the camper in year 1. The camper is going to grow 20%.
The camper has 10% attrition. And obviously, if you use my simple model that I started with, to grow 20% with 10% attrition, you kind of have to add $30 worth of new business. It's not really that complicated, right? You guys all get right? And again, the principle, the growth philosophy of this customer is to keep growing the business by adding $30 every year, right?
So let's take a look what this looks like over 4 years. This company is adding $30 every year, and you should notice a couple of things really quick. First, it's kind of awesome, their revenue grew from $100 to $169 so roughly 70% growth in just 4 years. That's not bad. A couple of other things to note.
Notice the revenue growth rate on this chart, 20% in year 1, 15% in year 2, 12% in year 3 and 10% in year 4. So very meaningful deceleration. But interesting, this company will still be a $2.30 company in a decade. So this is a company that in 10 years' time will more than double in size, but again, their growth rate is meaningfully decelerating. And by the way, one other interesting sort of anecdote and you guys could solve for this, this company can never get larger than anybody solve?
How big can this company get? Who said it? $300 right? Well, this company gets to $300 at 10% attrition, they lose $30, they add $30, they're done. So this company has a growth trajectory that gets them to $230,000,000 they crop out at $300,000 a lot of deceleration.
But let's look under the hood, right? If you look at those numbers up on top, the new ARR, that new business number is growing at 0%, $30 $30 $30 $30 The CAGR is 0%. All other things being equal, roughly speaking, your sales and marketing costs should be growing somewhere like 0%, right, because you're growing essentially a new business at 0%. The net AR number interestingly is actually negative. If you think about that as the second derivative of growth, dollars 20 in year 1, dollars 18 in year 2, etcetera, you can read the numbers.
That's because of the installed base rise at a constant attrition rate, those attrition dollars are starting to wash out that $30 So the second derivative of growth is negative. That's why you see the deceleration in revenue growth here. And then interestingly, over the 4 years, the revenue CAGR is 14%. That's not bad. 14% revenue CAGR with 0% new business CAGR, that's a lot of leverage opportunity.
That's what we call modeled leverage. It's purely a structural function of this company's deceleration, 14% revenue CAGR, 0% new business CAGR, okay? So hold on to your memory banks because I want to introduce you to these other companies. The second company I want you to meet is the Explorer. Again, the Explorer actually looks exactly the same in year 1.
So don't get hypnotized by the model. These two companies look exactly the same in year 1. They both have 10% attrition rates. They're both going to go to $120 but they have a different growth philosophy. Remember, the philosophy of Explorer now is to grow that $20 and they're going to keep that well, actually, they're going to add that $20 every year because that's their philosophy, right?
Let's grow let's add $20 every year. Let's see what that looks like over 4 years. So this company is going to grow like this over the 4 years. They're going to keep that $20 constant. So what do you notice about this company?
Firstly, they're going to grow from $100 to $180 in 4 years, again, pretty good. Not meaningfully different, by the way, than the camper, right? Camper was roughly $170 This company is roughly $180 That's not that different in 4 years. It's a lot different actually
if you look at over 10
years, right? Remember the camper got to 230%. The Explorer is going to get to 300. But what do you notice about that growth rate? It actually looks kind of similar to the camper, right?
There's still deceleration, right? 20%, 17%, 14%, 13%. Pretty good, a little bit better than the Camper, but it's similar phenomena. Now they're not going to actually go to flat growth, right, because they're going to keep incrementally adding $20 into perpetuity. So their growth rate eventually is going to sort of approach 0.
But if you look under
the hood of this company, what
do you notice? In order for this company to add that incremental 20 percent to offset that modestly growing attrition as the installed base grows, they got to add a little bit of bookings. They got to add a little bit of new business. In fact, this company's new business has to grow at 6% per year, CAGR, to offset that growing attrition. And you see that on this chart.
You can see that the attrition rises, the bookings rise to offset it, dollars 20 a year add. The net new ARR, which is at $20 the net being new, less attrition, stays constant, right, at 20%, consistent 20%, a $20 growth every year, but their CAGR is 0. The revenue CAGR here is a little bit better at 16% versus 14% as I showed you with the camper. But what do you notice on the leverage side of things? You guys probably see where I'm going.
16% revenue CAGR versus 6% new business CAGR, 16% versus 6%. And again, we assume a constant cost to book, right? Our costs are going to grow at 6%. That's a lot of model leverage. That's a lot of structural leverage.
Deceleration, as it turns out, drives that structural leverage, okay? Super, super important to understand that. So let's take a look at the trailblazer. Again, do not let the model hypnotize you because this company looks exactly the same in year 1, $100 growing to $120, dollars 10 of attrition, dollars 30 of new business. They're adding $20 But what's the growth philosophy of this business?
The growth philosophy is
we are going to sustain growth and we are going to grow that incremental amount by 20% per year. So that $20 that you see on this chart is going to grow by 20% per year. Let's see what that looks like.
That looks like this over 4 years.
Pretty interesting. Okay. So what do you notice? Firstly, this company is a $208 company, not wildly different than the $180 I mean, we could sort of financially, we'd round that all off to double. So both companies are going to double in 4 years.
This company is a little bit bigger. Will notice that the growth rate actually doesn't decelerate, right? 20% consistent, durable, persistent growth for this company. You'll notice they're very different actually, exponentially different in a decade. So if you're executing for the long haul, this is sort of a better company.
If you guys are any of you get measured on your performance over 10
years, this is probably
the company you want to own because they're going to be 6x the size, the camper will be 2x and the Explorer will
be 3x, okay? So this is a
much more persistent model. But if you look under the hood of this company, what do you notice? You notice that all of those numbers at the top are the same. The new business is growing at 20%, the new ARR. By the way, the attrition is also growing.
The attrition dollars are also growing at 20%, if you do simple math. The as a result, the net new or the net new business is growing at 20%. So it's got a very positive sort of second derivative growth, That's a good thing. And by the way, the revenue CAGR is 20%. I think you guys know where I'm going with this, right?
There is no structural leverage in this company because the revenue growth is the same as the new business growth, okay? It's not to say this company can't generate leverage. It's to say there's no structural model leverage in this company, okay? So this is what an explorer looks like trailblazer,
I mean.
So it's super important to understand how model leverage works, and I hope seeing those 3 companies helps you see that. So let me just summarize really, really quickly. The growth philosophy of a company defines in many ways its long term opportunity and it's also its leverage opportunity. On the top line, there's only one of these companies that is sustainable growth that is going to continue over time, right? The camper is going to decelerate to 0, as we already said.
The Explorer is going to roughly approach 0, and then the Trailblazer, of course, is going to keep going into perpetuity. So the philosophy is really going to change, but it takes a number of years for you really to see that, and hopefully, you saw that in those examples. On the leverage side of things, what did we see? We saw that the deceleration that existed in the Camper and the Explorer created a lot of model leverage, and the Trailblazer just didn't have that. So there's not a lot of model structural leverage in the Trailblazer.
And on the operating side, again, this is the other side of the efficiency leverage equation, it's also a little bit lower.
Let me tell you a little bit
about that. When you're investing for the long term, you're thinking about things like your brand. You're thinking about things like your long term product road map. You're thinking about things like data center security. And when you are a trailblazer, you are thinking about making those investments every single day.
When you are a company that's not really focused on the long haul, you may cut corners and may not make those investments. So it turns out the operating leverage side of things, the trailblazer is less willing to make those trade offs because they're investing for the decade, okay? And if you look at it from a risk of underinvestment perspective, as it turns out, the camper has a much greater risk of underinvesting. The camper is much likely to deliver a surprise to all of you and say, guess what, we're done or guess what, we don't have that security or guess what, we don't have that next thing, okay? And so I think it's very, very important to understand that.
And again, model leverage is a function of growth and operating leverage is, as I said, a function of driving efficiencies into the business, okay? So let me pivot from there and just sort of I'll just close this by saying this is sort of where Salesforce is to be perfectly transparent. Salesforce is operating somewhere between the Explorer and Trailblazer. I'd love to say that our growth was perfectly consistent every single year, but even Salesforce has a bit of deceleration. And so we have a bit of model leverage and we're driving operating leverage in our model as well.
But Salesforce is farther to the right on this chart than most of our cloud computing peers. So let me show you this chart to that extent. This chart actually shows some of our cloud computing peers. Salesforce is not on this chart. All of these companies have a market cap greater than $9,000,000,000 Probably every one of them is owned by those of you in this room.
Some of them are larger than us market cap and some of them are smaller, but they all share one thing in common. One of them is having going through a model shift and you can probably pick the one. They share something in common, and that is meaningful deceleration. There's nothing wrong with that. This chart is not intended to say these are bad companies.
These are great companies, all of them. It's just a
different philosophy,
okay? And these companies actually have a lot of model structural leverage in their businesses. This chart shows Salesforce over the same period of time. On the left, you can see our revenue, and on the right, you can see our deferred revenue, right? And this is sort of like past and future.
And interestingly, if you look at the annual revenue on the left, if you exclude the acquisition of ExactTarget, which was a pretty meaningful acquisition for Salesforce in FY 'fourteen, Although, the growth is even flatter than that chart would show. It's kind of remarkable, actually, that a company of our scale is delivering this sort of consistent, what Mark Hawkins described as, durable growth year in year out, and you see it playing out in our deferred revenue as well. So we're delivering this very, very consistent, durable growth. And by
the way, as we've been saying to you for
the past decade, that is our strategy. That is our growth philosophy. It is to keep stoking that engine of growth. We gave you a goal today of $20,000,000,000 and Salesforce will be a different company again when we get to $20,000,000,000 okay? That is the DNA of this company.
That is how we're built, and I think we've got a proven record of delivering it. On the other side of the equation, on the leverage side, this is what the last 4 years has looked like. So pretty consistent margin improvement. We could debate whether the slope of that line could be steeper. We could debate.
But the company has consistently, year in year out, delivered margin expansion, okay? In fact, we've delivered leverage in G and A and sales and marketing, and it's actually you can actually see that model leverage and that operating leverage playing out. On the G and A side, that's purely operating leverage. We're getting more efficient on our G and A. On the sales and marketing side, we're getting more efficient, but we're also getting a bit of that structural model leverage, right?
And I talked about that earlier, and you see that play out on this chart. At the same time, you've seen us make some very important investments in the business long term. Infrastructure, nothing matters more than being the most trusted cloud in the world, nothing. If you walk away from here with anything, nothing matters more than that, and this is not a company that's willing to cut corners on it. And you see it play out.
We're building a global network of data centers. We are doubling down on security. We're partnering with the biggest infrastructure players in the world to make sure that we have the best infrastructure in the world. And we're also, both organically and inorganically, making sure we have a product road map that's going to sustain us not to $12,000,000,000 not to $14,000,000,000 but to $20,000,000,000 and beyond. And you see those trade offs playing out here.
So we've done a really nice job of delivering consistent leverage over the last several years. That brings me to this slide. And on the left, many of you will recognize that box as the center column of our historical growth margin framework, and we've been in that box for, as I said, the last many, many years, sort of sustaining growth. And we have delivered very, very consistent operating leverage while we've been in that box without really the benefit of a huge amount of model leverage. Structural leverage really hasn't been there.
And in that context, we feel really good about our margin performance. Equally, we first provided you the framework in fiscal year 2012. In fiscal year 2012, we were a very, very different company, we put some stats on this chart you can see. We're a $2,000,000,000 business with a $25,000,000,000 or $26,000,000,000 TAM. We had a handful of products, and we had less than 10,000 employees.
We had no idea in fiscal year 'twelve that we would be looking at $100,000,000,000 plus TAM. We had no idea that the market would come to us the way it has. And if you look at today, Salesforce is a company looking at a $20,000,000,000 plus revenue target on $120,000,000,000 plus TAM. And equally, we're a very different company even from a cost structure perspective. Remember, we've made some pretty big acquisitions since 2012.
We acquired ExactTarget. We acquired Demandware, and that has changed, at some level, our cost structure. So Salesforce is a very, very different company today. And as we look forward on margins, you should expect our margin performance for the foreseeable future to look very similar to how it's looked for the past several years. On a cash flow basis, you should equally expect our cash flow to continue to grow at roughly the rate of revenue.
Okay. So with that said, I want to turn to my favorite topic, and that is durable growth economics, and this is sort of the long term economics of the business. Now Mark Hawkins showed you this chart this cube earlier, and it's important to understand this. Firstly, it might surprise you to know that Salesforce today has one P and L and one operating segment for the entire company, a $10,000,000,000 scale, and there's a reason for that. Having one P and L and one operating segment lets us be very agile and execute at speed.
We're executing at the speed of a startup at $10,000,000,000 scale. We don't have this huge matrix of P and Ls where we're bartering and negotiating because that's actually not good for speed. That actually just slows you down. So it's been part of our secret sauce. So subscription economics have been very, very important for us to sort of understand the dynamics of our business.
Mark talked about these three dimensions, the cost to book, the cost to serve, the attrition across those dimensions is all very different. And so my job is to help deliver for all of you near term durable growth, right, with leverage, long term subscription economics. I want to be investing in businesses
that are good for the
long term. And by the way, those things sometimes are at odds, and I'll show you that in just a second. And really, if you think about this as an optimization model, near term, long term across all these dimensions, it's almost like a Rubik's cube. I meant to bring a Rubik's cube with me, but I didn't. That's really what we're managing, right?
We're managing this Rubik's cube with all these different subscription economics dimensions with these short term and these long term goals. And the input to that optimization model is what? It's dollars and it is people. And those are sort
of the key inputs.
So if you think about margin really as an input to a larger optimization model, I think you'll understand more the operating principle of how
Salesforce operates.
Before we get to the next slide, one of the questions many of you have asked me when I've been out on the road is, how do I know you're really going to get
to those long term margins?
How do I really know? You've thrown that number out, that mid-30s number for a long time, but how do I really know? And you said, give me some more insight into maybe your most mature businesses. So I want to do that with the next chart. And this chart shows our cloud businesses.
Our cloud, they're not really businesses in terms of P and L. They're cloud products. And obviously, I don't have a P and L for Sales Cloud, but I do have subscription economics. And with the current economics and the current growth rate, we estimate today that the economic margin of the Sales Cloud business is approximately 30%, which is actually pretty close to our company long term target. So we're already doing this today.
Our most mature business, the Sales Cloud, which is $4,000,000,000 plus in revenue, is already delivering these kinds of economics for us, and it's doing it, by the way, at a 17% growth rate. So this is super important. Long term, as our growth rate declines and we get a little bit more of that structural model leverage, the long term economics of those are even better. They're north of that mid-30s percentage number. So this is super, super exciting and super important.
And it shouldn't surprise you, obviously, the cost to book in the sales cloud is, for instance, much better than it is for our other core clouds, etcetera. So it has the cost dynamics in that business are very good. If I look at this by region, I'm not going to give you the specific payouts in these regions, but it's really important to understand the cost of book actually, this shouldn't surprise any of you, varies by region, not just because there's cost differences in labor costs, etcetera, but just because of scale. And so the cost to book in the Americas is actually meaningfully lower than most places in the world.
And if you go back
to this idea of optimizing long term, short term, if we were to pivot all of our resources international, what would happen? Our growth rate would slow way down near term. Our margins would also go way down near term. So we're spending more to get less, okay?
And what we've committed, we're
not going to do that.
We're going to deliver durable growth, etcetera. So we have
to make that adjustment slowly over time. What we have to do is go find efficiencies other places in the business. So this is super important.
If I make all of
these regions better on a cost to book basis but I shift the mix a little bit, I may make the aggregate worse. And this is just a simply mix versus rate analysis, right? So I want you to understand that my job is to drive those efficiencies into the business
every day. Like how do we
find an efficiency so we can turn that crank a little bit more? How do I go after that? And this is why you haven't seen this big shift in our regional mix over time, right? The only way for us to make that big shift is
take our near term growth down
and take our margins down, and we don't want to do that. So I think it's important to understand that. All right. Well, we're on the home stretch. This is the customer side of the cube that Mark showed you, and you can see the enterprise is actually a really good business, should not surprise you a bit.
Low attrition rates, long term customers, huge in sell opportunity. But what do we also know about the enterprise business near term? Brad, perfect answer. Cost of book is a lot higher, it turns out. Longer selling cycles, more resource intensive selling.
So if I'm going to go after that big long term opportunity, I got to make a trade off in the near term, right? And again, we're making those trade offs, right? We're going to find efficiencies in the
business to
go fund this trade offs. And we keep thinking of this as fuel. Mark Hawkins has sort of coined this phrase inside of Salesforce, has said, how do we find fuel inside of the company with efficiencies to go fuel these investments, fuel the international growth, fuel the enterprise. They're all less efficient near term, but they're great long term opportunities, okay? And I think we've done a really, really good job of that.
We've made progress, and Mark showed you some amazing stats in the enterprise. I just want to
close with this. Over on the
far right, this is the profit frontier for Salesforce, okay,
in rough terms.
And we're sort of living as we're moving down that profit frontier. We feel really good that we're where we are. On the profit frontier, it gives us clarity about not just where we are today, but equally clarity on where we're going. And all of you can create your own profit frontiers, not just for Salesforce, but for every cloud computing company. You guys have the math.
I tried really hard to restrain myself today and not show you guys a bunch of theoretical chalkboards and all that, but you can go look at the analyst days the last couple of years. You guys can go do this for every cloud computing company, right? And you can do the math. And you could probably even get pretty close for Salesforce, okay? But that math for us says we are on a path to greater than mid-30s margins, okay?
And the company is focused on durability of growth, given a $12,500,000,000 goal for next year and a $20,000,000,000 plus goal for FY 'twenty two. So with that said, I would like to bring Mark Hawkins back up on stage, if we could. And we're going to turn the rest of the time over to all of you. I guess I should end with the thank you slide. So let's give all of you guys a round of applause and give Mark a round of applause as we come back.
Thank you.
Well done, David.
Thank you. You did a nice job, for sure. Well done, David. Yes. We this is the fun part where we get a chance to answer questions, and we have a bunch folks in the audience that will attend you.
So
Karl, Kyrsten, the Deutsche Bank. Thanks for
having us. For sure.
So a question about the long term target. So one thing I noticed is the high end of your fiscal 'twenty two revenue target assumes about 20% growth. Your 45,000 headcount target, if you run the math, assumes a little bit more like low teens growth. So it does I know there are costs other than headcount, but it's a pretty big chunk of your overall cost. So those targets suggest that there should actually be a fair amount of leverage in those out years.
So, maybe you could comment on that observation if it feels right.
Well, happy to address it, Carl. Thank you again for coming. And I think a couple of things. One, we're excited about the target, which you referenced at $22,000,000,000 in the high end for FY '22. In terms of the margin, again, I think the thing that the headcount growth, it says greater than 45,000 employees, that's fine.
There should be the ability to continue to gain efficiencies, as David talked about, from a pure operating standpoint, exactly the way you frame that. So we expect, in the same way I tried to frame this, is every single year, we need to show progress along the way. You should expect us to improve margins every single year along the way. And so then the degree of it, of course, we haven't given you a long term target in terms of FY 'twenty two, but we have given you a long term target for operating margins that David touched on, which is greater than 35%, and that's pre 606 accounting standard change. So I think if your question is, can we get leverage, we intend to operational leverage, as you've described, David.
Should you expect us to improve our margins, you should. On the same way that this year, in February, I'll do the 5th guide of improving it year on year. So David, you want to add anything to that?
Yes. I mean, I think the key takeaway is what Mark said, and that is that we have reached a scale now where operational leverage needs to be part of our internal narrative. Growth can be very hypnotic to a company over time. And I think we've reached a scale now where we need to deliver that operational leverage, not
just for you, but doing so is going to make us better as a company. It's going to make us
more innovative and more resourceful in those things, and you see that in those forecasts. Obviously, those are very high level numbers. But I think the fact that those are the numbers that we put out suggest that we are really pushing hard on that. And then again, that's what I do every day. So that's really part of our journey.
That's our intention,
yes. Great.
Hi, guys. It's Adam from MoffettNathanson. And I'm not going to ask a question about margins. Two questions about the top line. One, is it safe to assume that, that long term guidance is organic revenue growth?
It is absolutely organic. And we think that, that is our opportunity. And when you look at a $120,000,000,000 TAM and the reference time comparable to our long term target, think that's achievable. And obviously, it's part of our long range plan. So it is absolutely organic.
And just secondly, David, I believe you mentioned attrition improvement as an opportunity for revenue growth, which clearly it is. You all saw a significant improvement in retention as you move to longer term contracts. Are there other levers that you're currently working to improve your retention? And where do you think that can go from, call it, 91%
to the 80%?
Yes. I mean, obviously,
as I said, quicker as
you get bigger and bigger, attrition becomes more and more of an opportunity to drive growth. You don't think necessarily of it as a growth lever, but it actually is a meaningful growth lever for us. The biggest driver for us as we go forward is, as our mix really starts to shift to the enterprise, just the dynamics in that business are very different. I mean, when you're in the SMB space, if you say 1 in 5 SMBs goes out of business every year and onethree of your business is at 20% attrition in the 3rd year business, there's sort of a structural 7% sort of attrition that's sort of unavoidable. But as your mix changes, there's a real opportunity.
I will tell you that even in the low end, we're now automating our customer success. For those
of you who have followed us for
a long time, you know we have success managers that are really there to drive success in our biggest customers. But at the low end, we're automating that process so that we can use AI essentially to drive the behaviors even in small customers that we know are consistent with long term success, things like login rates, customizations, integrations with other applications, etcetera. So we're very, very focused on continuing to drive there, but probably the biggest long term lever for us is a mix shift.
I agree with David.
And I think, David, the one thing I might add on that is the App Exchange. When people use App Exchange as well, that also creates another level of stickiness and such. Agreed.
Thanks. Hi, guys. Kirk and Turf, Evercore. Thanks for the new information. That's really helpful.
Question just about international, and David, I think you touched upon this in terms of the need to balance going after those markets versus sort of the drag at how it weighs on margins. Are you seeing now that international is actually growing faster than the rest of the world or you've seen international sort of spike up versus the U. S. Business. Are you seeing the requisite improvement you'd want to see in cost of book to give you confidence that as you invest more there that you can get this won't hinder your overall leverage as you think about that balance going forward?
I'm just trying to get a sense on progress internationally on a
market. Yes.
And then we'll do
a 12 on this one. One of the things I thought David did a really nice job of is just giving you a sense of the dynamics. David, you talked about the various variables and how they change over time. And the reality is that when you get scale, things change over time. So it's not like as much a structural issue as it is a scale issue.
And I thought you showed a really nice way of showing how those variables work over time. So my commentary is having spent a lot of time internationally, lived internationally, watched businesses, blossom internationally, we have a tremendous opportunity internationally. And I think what we're really talking about is how do you invest in that scale and how do you deal with the scale being here and it's going to be there in that very national structure over time. But David, I'd love to have you elaborate more.
Yes. I mean, if you the scale thing is very, very real. If you look at our European business now, it's a $2,000,000,000 kind of business, right? It's a big, big business. And Mark talked about pushing empowerment out into the regions.
I will tell you that there is nothing that the international teams want more than full empowerment to be able to make their own decisions locally. And I think enabling that is going to allow us to efficiencies. In fact, even at the Michelle Obama event, I was sitting next to Chris Ciari, who runs our commercial business in Europe and Mark Innes, who runs our Asia Pacific sales organization, then we're actually talking about
this. And they're like,
give me more empowerment. And so I think
that's going to be very, very important. So it's probably scale, but it's also pushing that empowerment up to let those guys go drive it down and let them begin to pull
the levers more close to the customer lives. Alex
Zukin from Piper Jaffray. I'm going to ask a margin question.
Sure.
So I guess, as you think about your efficiency as an organization, where do you find you have the most room to improve on your efficiencies? You mentioned, I think a couple in the slide, but where do you find the lowest hanging fuel for that growth buyer? And then if you can maybe also comment on the trajectory of
the free cash flow margin to your long term target?
Yes, sure. Both the fuel and the efficiency and the free cash flow margin. I think the first thing on the efficiency is very clear. David had touched on some things. We've been scaling G and A, for example.
I looked at a chart recently, David, that we went over 5 years of strong scaling. And at the same time, we see more opportunity. And without getting into all the details on that, you should expect that to be 0.1. You can think about that. We've trained everybody in our team, for example, on BPI, Business Process Improvement, at a grassroots to empower people to think differently and to drive efficiency.
Because as I've been part of companies that have scaled to north of $50,000,000,000 a couple of times, that was a common ingredient, train everybody. We have automation projects. We have all kinds of projects that we're looking at without going all through the detail. Number one area is G and A. Number 2 area, I would say, is think about sales and marketing without carrying like AE quota, if you will.
There's areas that's kind of like G and A but in a sales and marketing capacity. And that would be the second area that you should expect to see more very specific scaling from that standpoint. And again, there's a battery of things. We talk about projects, automation, policy, location, we could go on and on, and we do go on and on, but I'll just stop at that. Those are
the 2 areas very specifically, and I
hope that answers Alex.
Yes. I mean, the only thing I would add is I said Salesforce is a company that's $10,000,000,000 scale that's executing at the speed of a start up. Obviously,
startups have a
little bit more chaos inside of them. So this is as Salesforce sort of grows, this idea of standardization and consistency and policy and things like that is sort of something that we're introducing over time that will drive cost savings across a lot of elements. Early G and A is an area where we can do better. But what is that about? It's about standardization.
It's about automation, etcetera. But as sales force grows I was talking to some of you earlier, sales force is like this big teenager that's growing into an adult. It's introducing policies that are consistently implemented across the company in all myriad of areas, and they're going to make a very big difference for us going forward.
Yes. And just again, there's so many places we could go there. Alex, we're going to have the whole hour on that for sure. But the second thing you asked about is operating cash flow. And here's the thing I want you to think about, and David said it right in his part of the presentation, which is our operating cash flow should grow pretty commensurate with the revenue growth right now.
That's kind of the general view that we're thinking about over the long term, and that's what you're addressing. I think the way to think about it, there are some levers that we're looking at right now. Obviously, our operating margin is going up, right? And it has for 4 years. We told you, I told you, it would.
I'm telling you in February, it's going to go up again. We're going to guide it again. So that's the up arrow, if you will. Keep in mind, as we raise our profitability, we're also burning through NOLs rapidly. And so that can have an impact on cash taxes.
So that could be another force that we have to kind of think about. And then thirdly, you're all dealing with today, where does tax reform come? And so I think the best way to think about it right now is think about it being stable in that kind of zip code, and then we'll keep updating you as we go, Alex. But I think that's a good way to frame it, okay?
Walter Pritchard, Citi. Just on the I think one thing that creates a little bit of discussion around the margin matrix that you've put up very consistently for 5 years is in that growth range, you talk about 100 to 300 basis points of margin and you've growth's been great. It's always been kind of margins in the 100 to 200 range. I'm wondering is there a condition that would allow you to drive the 200 to 300 as you're in that growth or maybe the answer is we just have durable growth for longer. You gave that in 2012 and we're talking kind of 100 to 200.
I just wanted if you could help people get comfortable within that range. I know it's I'm kind of slicing something here.
I'm very glad you asked that. I'll lead and I'd love, David, for you to weigh in on this too. But I think when you think about that range of the 100 to 300, we've been delivering persistently and the guide this year is and now for the finish is approximately $150,000,000 And we think that's just appropriate given the choice of going to tackle this TAM, which is $120,000,000,000 TAM in calendar year 'twenty one and investing to really go on a setup that's quite remarkable actually in terms of where we're at to go build this business. And kind of, David, back to your trailblazer metaphor, that's where we're going. So it's very much Walter of choice as opposed to a structural situation.
And we're choosing to invest because we remember, I set the table with a high level profile? Financially, we're looking to the long term. We're creating long term value, but we know we have to deliver progress along the way each and every year. And we think at the 20% plus grower, Walter, that that's just a good zip code to be in. And even in the range, I think, that we have been doing in the last few years, I think, is a reasonable range given what we're set out to achieve for long term value.
That's what I would say. But David, I want to welcome you into that. Yes.
Again, we introduced that in 2012. And one of the things I own is the long range planning process. And you I like to think I'm perfect at it, but it's a 5 year forecast for the business and it turns out everything doesn't happen perfectly the way you expect. And 5 years ago, we didn't know we would acquire ExactTarget or we didn't know we would acquire Demandware, etcetera. So I think a lot has changed.
But as Mark said, we are a very different company. I think one of the really important takeaways in context of the fact that this is a company with a durable growth goal is we're going to have to lean more and more on operating efficiency, right? This guy's given me a bigger job, and the bigger job is go ring out efficiency out of this company, okay, so that we can continue to fuel this durability, right? So operating efficiencies and this notion of operating leverage is going to be more important to us as we go forward because candidly, in 2012, it's kind of hard to know how long we'd be in that box or how much model leverage we get versus operating leverage. But as we go forward, I think this idea of operating leverage is just more and more part of our narrative, more and more part of our DNA as a company.
And I think we'll be talking more about that
in the future. That's exactly right. And part of the thing that we didn't get deeply into, Walter, that David touched on also is he, as I've asked him to look at more and more efficiencies, I've asked our procurement team to report to David in part of like looking end to end on the spend, and we've had some great dialogues about that. But just think of that opportunity. And having thought about that in prior situations, that's a very fertile ground, and I just have immense appreciation for what David can do.
And I think the team, we're going to just continue to focus on that. But it's part of fuel to take us to the long term plan that we talked about. And it's part of the thing that gives us confidence.
Over here. Raimo Lenschow from Barclays over here. David, thanks for going through the difference between what how you think about it and how other people might think about leverage in the model. You also probably appreciate where some of us are spreadsheet monkeys and kind of compare kind of you against upper guide. Of that philosophy of having to invest more versus kind of you having still room to improve, what do you think the delta is between like actually naturally you will have a slightly higher level because you're investing more versus actually there's efficiency gains that as you grow up you can kind of show to other guys?
You're talking about the operating leverage side of things?
Yes, operating leverage side. So for example, I think G and A, 10% of revenue almost versus other guys kind of 5%, 6% that are much smaller than you. How much of that is spending?
Yes. Let me give you
a really real you have
to understand, remember who Salesforce is. One of the things Mark and I have been talking about, he just gave me this new procurement opportunity, and I'm like, what is happening? What is going on, right? He's going to do a great job. And but as I think about one of the things in that organization is shared services.
And we could say, let's put shared services all over the world and move jobs
all over the world or we
could say, maybe Salesforce should be a trailblazer in that way and go create jobs in rural parts of America that where jobs aren't being created, etcetera. That wouldn't be a cost optimization opportunity. It would be a decision that we make. So we're going to drive efficiency in the business, but I wouldn't think of us as just purely the only thing that matters is to be the right? Because it's not part and parcel with the DNA of the company.
If that was
our goal, we probably would say
to you, hey, our long term operating margin target is 45%, which is more consistent with some of the companies that are very mature, those larger companies who have a
little bit more of that
kind of culture. So I think there's no question we can drive a lot of efficiency
in this business across a
lot of dimensions. As Mark said, we could talk about it for hours. But I think it's important to remember who this company is because this company is a very different company. So the generational company that you guys are seeing here, Will, we're talking about it, this is a different animal, and we are going to drive efficiency. You have our commitment to that.
But don't forget, it's not purely about that.
There's other
things to say.
And also and to keep that into the context of where we're going in the $20,000,000,000 to $22,000,000,000 So but it's absolutely part of the delivery along the way. And I talked to the entire employee population on a repeated basis. We look at that as spend it like it's yours because every dollar is a dollar we can commit to take us to the future and to help our customers and to be successful for the long term franchise, and that's what we're focused on behind the scenes.
Jeff Linn with TCW. So my question relates to attrition rate. When I see some of your peers in SaaS, they have attrition rates closer to 2% to 3% a year. How do you think you can improve on what you're doing right now? And what impact may that have on margins and efficiency?
So for attrition rates in general for You
said 2% or 3%?
Yes. Everybody's got a different definition of attrition. I honestly so I don't know what their definition is, to be perfectly candid with you. But a lot of companies are looking at the add ons as an offset to the attrition, and they're saying sort of the net. I've seen companies say my attrition is negative 20% because my installed base grows, right?
So I don't know what their mix of customers is or what that reporting is. That would be very unusual. That number is really kind of consistent with, say, an Oracle maintenance kind of number, right, because you have sort of no sort of customer insolvency, and you essentially have almost 100%. But I don't know what's
in that range. I actually
think it's a really important point. I've seen people do upgrades, fiscal notices of price increases. All kinds of stuff can distort that, Jeff. But I think to the point about what can you do to improve, I think the notion is to the extent that our mix goes more to enterprise, that will naturally help as it was called out. I think that the extent of some of the projects that we have with Maria Martinez, who is an amazing executive, has run all kinds of projects to look for early warning adoption, all the kinds of things that we've been thinking about and AppExchange, so many different avenues.
But we think we're not guiding it, but we're looking for continuous improvement, Jeff, for sure. Not just in the mix, we're looking for every way we can drive the rate down, too. Yes.
And I would just close with,
we think we can do better on attrition. 2%, for us to get to 2% the way we report it would require us to go 100% enterprise than in every other part of our business. And that's not something we're willing to do. So I wouldn't look for that given how we report it anytime soon. Yes.
John, the IR people make these decisions. I don't make decisions. Yes.
You already got a hug
today, John. What do you need from me? Come on.
Right here, please. Well, this is a
non margin question. This has been great. I'm curious, David, what you feel you need to do to maintain this unique culture at Salesforce? And then second, as you're going to double again, it seems like that could be a big challenge for the company. But also secondly, for a non techie mark, are there other clouds that you need to offer to continue to grow with your existing businesses?
Sure. I'll hit the first one and then we'll have David go to the second one. And then in terms of when we look at the runway today, that we have the clouds we need to get to where we need to go with the long range plan. I mean, we literally have a long range plan, maps, product strategy and such. So from that standpoint, well, that's a clear message back to you.
Are there other opportunities in a market that's so big? Yes, I'm sure there are. We right now have $120,000,000,000 TAM that we're pointing toward, and I think we've got the gear we need to. We've always done M and A has been part of our past. It will be part of our future.
But you know the profile of anybody, which has largely been tuck in, small accuhires. For the most part, we've done exact target and obviously, our demand weren't such. But I think we largely have what we need in core. Yes.
And just quickly on the culture, we've really redoubled our focus on culture last couple of years. And I don't know if any of you noticed that, but whether it's the work environments that employees work in, even the Trailhead theme of Salesforce is about connecting Salesforce. This isn't just about enabling our customers, it's also about enabling our employees and bringing them closer together. Salesforce talks a lot about our HANA and we're really investing hard to make Salesforce a unique place. And that came about, just to be clear, 2 or 3 years ago, the company got to be fairly large.
We started
to feel like a lot
of different companies. This happens to a lot of companies.
And I think it's attributed to the management team. They really sort of doubled down and said, let's make everybody feel equal. Equality is one of our values as a company. Let's make everybody feel included. Let's create workspaces that are very, very unique, etcetera.
So we've actually made an investment. By the way, it's another thing that's unique about us. I think it was Raimo asked the question over here. That's important. We want to be a destination workplace.
We want people not just to come, we want them to stay, and they do, and we have the best workforce in the world because of it. We made an investment in downtown San Francisco, etcetera. Those things are very, very unique. And I would just sort of close with on the cultural thing, you have to hire people that are going to be successful in your culture, right? And you guys have met a lot of our employees.
And I encourage you, as you're out enjoying your Dreamforce experience, get to know us, okay? We are all very intense, but we're good people. And I think hiring the right people is very, very important. Yes. I agree.
I just want to say one thing that was really unusual. I sometimes you have the outside looking in and you get feedback. David, very much building on your comment. Somebody told me, they said, how do you get there was a rhetorical question, how do you get 171,000 people to register and come to an event and actually stay and like really interesting people and actually come and stay. And I think that's part of the culture, David.
It's just this whole ecosystem when you talk to our partners, our customers, it's total transparency. Just ask them, what does the culture do in terms of doing business together as well? And it's interesting to hear from somebody else's point of view, we enjoy it because we work in it, right? But it's interesting to from the outside saying, I like to do business with these people. I like their values.
So the culture is more than just inside the company, Will. That's what I would say. It's an important asset for the company.
Great. Thank you. And thank you for the new information today. I think it was really helpful. I had a question related to your fiscal 'twenty two targets and just wanted to think about if you could elaborate more on how you see Service Cloud playing into that opportunity?
And ultimately, what do you see as this opportunity? Could it be bigger than Sales Cloud as we look ahead? And then the second question was just to David. Aside from mix, what could you do to drive down cost to book and cost to service?
So I'll start then, David. And so Heather, thank you. I think in terms of Service Cloud, yes, it could be bigger than Sales Cloud, it could. 2 is that we like when I look at Service Cloud today based on the last quarter, we were at about a $2,600,000,000 run rate. And at that growth rate, we were growing 50% faster than the market, which was growing about 13.5%, and we're growing twice the rate the sales cloud grew at that scale.
And we're investing other quite substantially, whether it's in vertical capabilities and whether it is things like Einstein or Lightning and that type of thing or even inorganic things like Kwire and Qlik with field service and that type of thing. So I think that it, in fact, could be without guiding it per se as I look at the future, right? I think it's a very important part of the question for us. And that's what I would say on that one, particular cloud. David, over to you?
Yes. On the cost of book side
of things, I think there's a real opportunity for us to build a low touch sales model, a very low touch, maybe no touch sales model for low end, something we talked a lot about with the leadership team is how do we do social selling. And you guys probably follow some companies that are doing an amazing job, a company like Atlassian, who's letting their products sell and letting their community sell. We're doing a good job of that
at places like Dreamforce, but
we can do a better job of that just more broadly in our business and take those savings and reinvest them into that more resource intensive enterprise space. So I think there's an opportunity there. On the cost to serve side of things, as Marshall already touched on, I think the near term opportunity is really G and A. If you look at our R and D today, arguably their R and D, one could even make
the case it could be higher actually. So I wouldn't look for a lot of
cost to serve in that space. So I'd say near term is G and A. Longer term, there's an opportunity around sales support resources and also in our gross margin COGS for delivery. But I think that's longer term. As you guys know, we're getting closer to Google, we're getting closer to Amazon, experimenting with how do we augment our services today, maybe a day comes when we drive savings that way as well.
So that's how we think about those things.
Thanks. John DiFucci from Jefferies. David and Mark, all the information today is helpful and also the trailblazer and all that stuff.
Careful, John. Good to have you here. But when I most
of the conversation is about incremental margin leverage and you're talking about improving efficiencies and all, but some of the conversations that I had with investors and some of the questions that I've always had in the back of my mind or not in the back of my mind, it's been public, is that what are the margins today in Salesforce, not the incremental margins that you can get, but what should they be today given you talk about scale, you have huge scale and you have this huge renewal base, which doesn't cost you much. I mean, it costs to service it, but it doesn't you can't you don't have to capture it anymore. And that's where all the profit comes from. And it's just gets you bigger and bigger. And it's not so much that you're going to do 100 to 300 basis points of improvement every year.
It's that shouldn't margins be 20 something percent today. I think that's now granted the stock has done really well and what you've done makes a lot of sense for the stock. And by the way, I kind of preach something different around
It's not in the air corner anymore, not
in the middle of that thing.
Exactly. So but in this past year, like according to our calculations of ARR or new subscription ACV, you've really seen acceleration. You guys are doing really well. But a couple of
years ago, there were a
couple of years where it wasn't 20%, it was less than 20%. So it was questioning how you're spending that much. And I so I guess the question is internally, when you talk about efficiency, have you ever had a conversation that, you know what, are we wasting 10% of spend trying to capture? Should we stop spending some of this marketing spend, some of this sales spend? Hey, Keith, it's not just growth.
Remember, you used to have a P and L in your old life, maybe you got a P and L now.
And Keith will be here, so you can ask him on that as well.
I'm just curious, internally, that's something that's I don't think you need to do that today. But internally, it's something you always you question because having that
long term.
So John, I think that I think, A, it's a very short question, and we appreciate that. You should know the mantra that we have within finance is better, better, never done. It's always about being better. It's always about looking precisely at every dollar that we're spending. That's why David and I were talking and you on this fuel program of literally looking through everything we look through procurement, everything we look through in terms of how we invest.
And I think it's always this opportunity to be improved. And I think anybody that says differently doesn't have an operational mind because that's the way people think, as you know. So we have looked at things. We continue to scrub things. We continue it's a process.
It's a journey from that standpoint. You can see the last 4 years of the journey in terms of improving that. You can see the intention to improve that again when we guide. Better, better never done is what I would say. David?
Yes. I think it's a good question, and I agree. It's a very fair question. And we could certainly debate it. And I'm not going to sit here and tell you that every single dollar we spend is perfectly spent.
But again, the focus of the company is building durable growth, building customer success and building a destination employment place to acquire and retain the best people in the world. And I think we've done a pretty good job of that. If you look at our pathway to $10,000,000,000 no one got here faster. And to $20,000,000,000 if we're able to achieve our goal, no one will get to $20,000,000,000 faster. So for those of you that know me, I am a pretty frugal guy.
So it's very easy for me to say I get it, but it's also impossible for me to argue with the success we've created. And so we have to find balance. As I said, I think the efficiency conversation becomes a bigger conversation from here inside of Salesforce. As I described it, we're kind of a teenager growing into an adult, and that's part of that conversation. So you're going to start paying taxes for those.
You went and saw Michelle Obama. It was kind of fantastic, right? She's like kids are so great and then they grow up and they start making all these demands. I think that we're going through that process too. And I think efficiency is more and more part of our narrative.
But I think we've done a really good job to hear. And we can debate whether it's perfect or not, but we've done a remarkable job.
So I think we're going to continue to manage that. And that's all in the backdrop of a durable growth target that is where we're going. So I don't make
the decisions. Eric Wood at Cowen. Hey, Eric. So this may be a little premature, but looking at the $20,000,000,000 or $2,000,000,000 in fiscal 'twenty two, is that is there something a magical number where you hit that number and growth starts to slow and margins start to expand at that level? Or is that something you're going to look at when you get to that level?
And then as a second question, you touched on fuel. Maybe you could unpack
a little bit more specific around what's going on with the fuel initiative? Yes. I think the one of the thing I would say, Derek, first of all, welcome. But I would say, look at the TAM that we're addressing in FY 'twenty two by 3rd parties at $120,000,000,000 by anybody's assessment, and we're looking to be $22,000,000,000 at the high end in FY 'twenty two in the relevant year. So I think you can see a really clear path to this, and that's the way we think about it.
That's why we conveyed it to you. When we convey things to you, you know we're committed to them. You can see us focus and deliver on what we commit to. And so I see a very clear growth path. What's on beyond that, I can see a whole lot of TAM in front of us, just as by third party evidence in that regard.
So that would be what I would say in that regard. In terms of the fuel concept, it's just it's almost like a mentality. Think about that as like a mentality. But you've heard, we are looking at every dollar in the company with a constant eye on how do you repurpose that to get the most out
of your dollar. It's like
a family. It's like, how old is
a family run? It's business. You want
to look at every dollar, spend it like it's your own and be very specific about it. And so I've asked David to take on some additional responsibilities. But we look there's so many different aspects of this. It's like where do we start and where do we stop. But I think are we looking at all of our procurement spend?
Of course, we are. Are we looking at all of our policies?
Of course, we are. Do we
look at where we locate things? Of course, we do. Do we look at alliances and partnerships? As David alluded to, of course, we do. But this is not a and Derek, I know you know this is not a light switch thing.
This is a journey as you look to just drive continuous improvement and betterment and get the dollars and stretch the most you have for every dollar you spend. That's what I
would say. Yes. I would add that if you look at our guide that we gave, the sort of first blush guide for next year, it actually the $12,500,000,000 looks shockingly similar to what we did last year. Last year, we said 20% to 21% as our first flush. Pretty similar, and I don't know how better to show durable growth than that.
Last year, we had the benefit, of course, of an acquisition. Next going forward, we don't have that benefit. So we are doing a really good job of being as close to that trailblazer as we possibly can. And ironically enough, you kind of don't want that durability to go away because that's the answer to the leverage question. The easy leverage is if our business suddenly decelerates.
But does any of you in this room really want that? We certainly don't want that. We have this huge TAM. We need to execute into it. So ironically enough, you kind of don't want that.
You might think you do, but you kind of don't because there is a consequence no, there's a consequence to it. I'm not trying to be cute. There's really a consequence to it. As far as the fuel goes, this is really important. And as I think about it in the company, I'm going to and I made a proposal to my boss yet, but I'll make a proposal right now.
We're going to create a program office inside of Salesforce that's not just my organization. It's going to have a person from the ES team and a person from the travel team. ES is employee success. That's what
we call HR at Salesforce.
The all of the different teams inside of Salesforce to say, what are the things that we can systemically change in this business? Because we're not going to be able to fuel growth by handing out fewer stickers at Dreamforce. I'd love to tell you that's it, John. That's a good example, by the way, of a few dollars we'd probably do a little better. That's not going to change anything.
What's going to
change are these big systemic changes in the business. So this idea of having a program office, a fuel inside of the business that is chaired by me and that will have representatives from across the company is brand new. And it's a great example of this idea of driving efficiency into the company to say, oh, and then having regularly report out that Mark's staff meeting, Mark Benioff staff meeting, say, here's how we're doing. Here's how we're doing on leveling. Here's how we're doing on our travel policy.
Here's how we're doing on all these things that matter because at our scale, that's where you can really start to drive a lot of money out of the model.
Yes. So we'll scrub and you should do that. But I think that and this is well articulated by David. But I think that the other point that we look at, and I know you get, is just the doing that also in the context of being a company that's talking about $20,000,000,000 to $22,000,000,000 and growing 20%. That's a rare setup and a rare market opportunity when the world is continuing to come into the CRM space.
We see the opportunity with the TAM, and we have a really, really nice setup. So we want to do that, drive it long term and do exactly what David described and what we've been talking about.
All right. One final question.
Sorry, Kash.
Thank you, Ian here. Mark Murphy with JPMorgan. So this target of $20,000,000,000 to $22,000,000,000 going out about 3 to 4 years, it looks like it's about a 21% CAGR off of next year at the high end. And it feels pretty bold. It feels pretty robust.
I guess I sit here thinking maybe it doesn't to you. Maybe it feels pretty obvious. So I want to ask you, outside of the market growth rates, does something is something giving you multiyear visibility that maybe we don't fully see or don't fully appreciate? And I want to ask you on 2 topics. Number 1 is the ramp deals that I don't think we talk about in the open a whole lot, but some of them are structured that way.
And number 2, David, when ASC 606 comes out, do you think that's actually going to help us appreciate the visibility beyond just 12 months. If I may, a final one. Is the 150 bps, is that essentially what you reverse engineer into that allows you to keep the net new ARR flat and kind of prolong the glide path?
So we have 3 questions. Wow, One has to do with a bold target, I agree, but we'll talk more about that, including the touch on ramp deals. And one has to do with our operating margin goals. And then the one in the middle, David, was
ASC 606. ASC 606.
So David, let me start with the first and the end, and you chip in wherever you want with ASC 606. But $20,000,000,000 to $22,000,000,000 is our plan. And you guys know us. We've been in the marketplace a long time. That is our plan.
That is our target. That is our long range plan. And yes, we have been thinking long and hard about that and the opportunity. You can see where the market is going. You can see you can talk to the customer.
You can see that people are modernizing way they connect with their customer in a whole new way. That is not a phrase that's hard to internalize, right? In anybody's business, it's literally modernizing the way they connect in a whole new way in the backdrop of AI, in the backdrop of all new kinds of things that are possible. And we see that with every customer that we're talking to, we see a huge opportunity. And we feel like not only is the market coming to CRM, by the way, who would have ever guessed 10 years ago that the biggest part of the enterprise market and the fastest growing part of the enterprise market is coming right to us.
That's the reality. And that having been a part of businesses that have gone big before, that is the precursor to really good things. The second thing you have to ask is do you have the technology and the platform to get there and the reality is we do. And the third thing you have to ask again, what I talk about is the ecosystem, which is ever expanding and you guys can talk to people in an unvetted way here when we walk out the door. But Mark, we absolutely have confidence in that and a plan and a pathway.
And we think it is bold, but we think it is realistic, number 1. Number 2, on the operating margin side of the number, I think what we're saying to you, and again, I'll guide the operating margin in February, but what we're saying is that we're in the right zip code at this kind of durable, persistent, consistent growth. We're in the right zip code in terms of put up that yearly improvement year over year while driving long term value. And that's exactly what we're looking at. I'm not talking precisely about a guide for next year or that, but we're in the general zip code of where we think it makes sense.
So David, feel free to add on to either one of those and then hit the ASC six zero one.
Yes. I I think this whole notion Mark hit on it perfectly. This whole notion of digital transformation is really real. And as crazy as it sounds, a $10,000,000,000 scale, we are not gated by opportunity. The opportunity and you see it in that room, the big keynote room, we are not gated by opportunity.
The world is in a massive state of change, and Salesforce is in the pole position to be able to help transform companies as they navigate their way through that change. And the world went mobile and social, all these things happen and sort of supercharged our opportunity. And so I think we feel very bullish about our own opportunity. And equally, we found a formula, I don't know that I would describe it exactly as you do, that allows us to sustain growth and deliver those near term and long term goals. It works pretty well.
As far as 606 goes, we'll be making more comments about 606 on our Q3 call, and so you should be looking for that. As far as the visibility, yes, you'll get a little bit more visibility, particularly to that off balance sheet, what we used to refer to as backlog. That's been a little bit of a black hole. You'll be able to now see how much of that piece is going to become revenue in the next 12 months. I would say, though, and we'll be having lots of conversation, I'm sure, over the next year, not just about Salesforce but about lots of other companies.
Again, do not let the model hypnotize you, right? This is the most important thing for us at the end of a quarter is to book good business, not just to book business. That's different than software. We would rather book a business the week into the next quarter than jam a deal in that's a bad deal, right? And whilst people will be looking at these 12 month numbers, I think there are going to be moments when it's less illuminating than maybe people wish to do.
And I think everybody gets that last point that David made. But just to kind of underscore it because we're our job is to communicate and share insights with you. It's really a great point, Dave, and you and I talk a lot about it, which is recurring revenue. If you want to book a good deal, you don't want to do something enjambment at the end of the quarter and just to bring it all way home. It's a really important point.
Yes. I mean, if you look at today, our balance when we book a deal, if we do a 20% to 30% discount on that deal to get it in the quarter versus doing it at list price and doing it the next day, I think, 1st day of the next quarter, what would you rather us do? We get one day of revenue extra, but we get a lifetime of a worse transaction.
And
by the way, that is something that we really need to sort of make our sales teams even understand because sales teams are built to solve their quarterly number. But as a management team, we have to constantly be vigilant on that to say, you know what, tell the customer we'll do the deal in a month, not like traditional software.
Right on. And by the way, when you elevate to the very first slide I showed about taking the long term, remember I said those 3 things you're worried about, and one of them is preserving the long term economics.
And that's exactly what David's talking about when we do a deal, make sure it makes sense that's going to deliver
the long term. Is talking about when we do a deal, make sure it makes sense and it's going to deliver the long term economics. That's an example of that, something we work on every day.
Great. With that, gentlemen, thank you very much.
Mark Hawkins, David Havlick, we have a quick round of applause
Thank you,
guys. So just to let you know, we're over what our scheduled time is. We are serving lunch upstairs on the 4th floor in the Terrace. So, encourage you to do that. We're going to try to be back here in 40 minutes.
So, I'm sorry about that.
Also want to let
you know that the slides that you saw today will be available on our website a
little later this afternoon. So it
will be available for download. Okay?
Great. So see you back here in 40 minutes.
Creative team. They were pretty good actually. I have to say, it was pretty amazing.
All right. So welcome back, everyone. I hope you enjoyed the first part of our session this morning with Mark Hawkins and David Havlick. And I'm very pleased to introduce our next panel about Salesforce and its product portfolio. So
I think you heard a lot this morning about
this expanding product portfolio of ours has really driven our TAM and driven our growth over the past several years. And so I think we're very fortunate to have the leaders of these major products here with us today. So I'd like to introduce Alex Daon, who is our President and Chief Product Officer, along with Bob Stutz, who is the CEO of Marketing Cloud and Mike Rosenbaum, who is EVP of CRM Applications. This group collectively has significant experience at Salesforce and across the industry. So really, this is an opportunity.
I'm going to let Alex just open up with a few sort of thoughts on Dreamforce and where we are today, and then we'll open it up for questions. Okay?
Take it away, guys.
Okay. Well, thanks, John. Thanks and welcome to Dreamforce. How many of you have been able to watch the Mark's keynote yesterday, sorry on myself. So the vast majority, so that's great because that's going to help us go quickly into what we want to cover today, which is mostly the product.
So the keynote yesterday was a very different tone, as you can see from the previous keynotes, less of that technology and more of that people, which is really the feedback we got from our customers as we go on the road between the summer and Dreamforce to our major customers. Mark visits 20 cities and mid customers. And the big feedback for each keynote was really about to focus on the transformational part at the people level of what's happening in the 4th Industrial Revolution. So the theme of this conference is there is a big disruption made of not one technology, but a combination of technology. We call that the 4th Industrial Revolution.
And there is really two sides of that revolution. 1, the fantastic opportunity for our customers to transform their companies and you heard the story on stage of 3 amazing companies who are leader in the industry. T Mobile, tell you ahead of the pack in the digital transformation in the telco industry. Adidas and if you follow their performance, also a company that completely transformed the packaged goods market and 21st Century Fox, which is also very amazing transformation in another industry completely disrupted by digital. So, those 3 customers were amazing showcases about what's in front of us, how the world is changing, what are the opportunities.
But there is a flip side to this transformation and the flip side is, do we have the talent? And I was just having lunch at the CEO table and there is really 2 things emerging when you talk to CEOs in the full out Dreamforce, which were really
what we heard when we
were on the road. The first thing is, do I have the team, do I have the talent to do my own transformation? And the second is, am I going fast enough? Speed is a new currency in this new world. Am I going fast enough?
And that's, for example, a big thing for Adidas. The pace of innovation is now completely different and it's a big transformation for a lot of organizations. It's a big transformation for the job market and that's why the theme yesterday for Mark's section of the keynote was not just about the products and all the new technology, but we are to orient everybody about what we are hearing as being a technology provider. It's great to provide great technology, but it's much better to provide technology that enables you to be agile, to go quick, to transform your business and the tooling to scale up the organization and bring the talent on board. And that's the slide that Mark presented around the sales force economy.
In the next 3 years, more than 3,300,000 jobs will be created around the Salesforce ecosystem. And that's what is in our mind when we come to the product. So we need to stop there because we can talk about tons of technology, but the main challenge we see for our customers is the pace of transformation is faster than ever and I need the talent to do it and the organizational structure and to scale up my workforce. How do I do that? And that's really the theme this year of Dreamforce.
So the theme this year was really about the 4th Industrial Revolution, what does it mean for your customers and how do we enable you as a technology provider to do that transformation. And in a technology. So the slide I wanted to have and in fact, I jump into that, sorry guys, because I should have done faster, but I have with me 2 of our product leaders and it's very interesting because we have actually Michael Zandbo who runs all our CRM application and Doug who runs our Marketing Cloud, But somehow, they are all representing 2 sides of Salesforce in a sense that we have built over the last past 5 years the most complete CRM and not just the most complete CRM because we do from marketing, sales, service, but the most complete because we are the only vendor that has B2C at scale and B2B at scale. There is no other vendor you can go to that can cover your CRM for B2B and B2C. Most vendors are either, oh, I am great at digital on B2C or I am great on B2B.
Salesforce will cover both. Why does it matter? Well, just look at the 3 companies who were on the keynote yesterday, T Mobile, Adidas, 21st and Tory Fox. Are they B2B or B2C? They're both.
They're covering both and it's actually very important in this world of hyper connected customers to have this complete panel. It was a very important part of our strategy in the past 5 years to not only have the most complete CRM, but also have the number one CRM for B2B and the number one CRM for B2C and somehow you could I am going to oversimplify, but Mike has been leading the B2B fault of the house with Lightning and our core CRM and Bob has been leading the B2C because Bob you send how many emails a day from your service? So it's about 2,000,000,000 to 3,000,000,000 a day. So that's B2C upscale and I think they will be able to answer your questions on all the different side of Salesforce. And before we end up, we open to questions to the 3 of us, I want also to share about the product strategy.
There is one slide to remember about our product strategy. That's the slide that Mark presented yesterday. It's a very important slide for us. We spent a lot of time on it because this slide is called an architecture. It's an architecture, but from a marketing perspective standpoint, it's not a technology standpoint.
At the very top of this slide, the circle is the most complete CRM. We have the most complete CRM. We cover everything from advertising to industry packages, commerce, service, community, sales, collaboration, which is Quip, of course industry version of Salesforce. So our job is that each and every bubble in that circle is a leader in its segments. In fact, if you were to buy or if you were to look at the marketing cloud and utilization, that's the number one marketing cloud.
Our commerce cloud is the number 1 cloud commerce platform. Our service cloud is the number 1 service platform and so on and so forth. So our job is to make sure all those clouds are leaders. If it's that they were independent companies, they probably would be the number 2, number 3, number 4 cloud vendors. But all those clouds are also integrated and connected around the Salesforce platform.
And the Salesforce platform that is at the foundation is actually the secret sauce at Salesforce since the very beginning. The Salesforce platform is what's empowering the trailblazers like Stephanie. You see the picture of Stephanie Aurora here. That's what gets Agility speed of deployment. The Salesforce platform is a very abstracted platform.
It's about click no code. Of course, you can do a lot of code in it, but we try as much as we can to enable each and every customer to be declaratively onboarding this world. And what we have done this year is to double down on the platform. The big news of Dreamforce is not about a new cloud. We already have the most complete CRM.
It's really about a new version of this platform with a new version of Treleb. We built into the platform training with Treleb, where we made it a platform this year. Now you can build your own trails, you can scale up your own employee, you can transform your company digitally through Trailhead. We've Einstein. Last year, we introduced Einstein.
Einstein was AI in every CRM application. But now Einstein is a platform. It's not just a platform for developers or data scientists, it's a declarative platform. Everybody in this room can build a declarative app on Einstein. You create your data model.
You create a declarative field. You don't have any programming to do and that's the power of My Einstein. Mylining that you have released and you will be able to comment more is about the customization. As I said, the B2B and B2C is converging. You see all those brands like T Mobile is a good example.
There is no frontier between the B2B and B2C experience. There is a need for internal apps to be branded, to be customized to reflect the brand and the energy of an organization. With my lining, now we can completely customize brand sales force to your employees, your partners and also for customer facing experiences. And then My Salesforce, which is the mobile flip side of My Lightning, which is enabling your own mobile app to look like Salesforce with no code, just clicks and you push to the App Store, we take care of all the plumbing to do that integration. And the last news yesterday was Quip, the collaboration platform, which also becoming a platform where you can embed application within Quip.
You can collaborate not just on text and checklists, but you can collaborate on videos, you can collaborate on calendars, all those components are little apps you can put into a Quip document. So as you can see the news yesterday about Mytrailed, My Einstein, Mylinning, MyselfSource and Quick are all about speed and lowering the barrier of entry to the 4th Industrial Revolution. It's all about the trailblazer and enabling the vast majority of us to become digital innovator, to become pioneers, to become trailblazers. So that I wanted to start with that orientation about the news yesterday because it's really about speed and it's really about arming, scaling up the workforce. It's about simplifying the barrier to entry across the board through the platform.
So with that, I love to open unless Bob you want to add those things or anything I missed. So with that, I'd love to open up like every year to questions because I know we have a lot of very exciting questions in this room. I think there is one behind actually.
Sorry, John. I'm in front of you, bud. It's Keith Bachman from Bank of Montreal. And I wanted to ask you a little bit about Einstein and the analytics. And your customers all are creating big data pools underneath Sales Cloud, Marketing Cloud, etcetera.
And historically, Salesforce has told those customers, it's your data, we won't have look, you own the data. And yet with the advent of Einstein, it seems like you're throwing algorithms towards the customers to try to help them to get leverage that data. But how does that relationship need to change you think over time? We're certainly looking at it from our bank's perspective in that you need
to have greater access to
the data in order to really help customers leverage this. Thanks.
Okay. So, Mike, I think it's probably a question you want to take. Yes, sure. I would start by saying that the relationship with our customers and their data hasn't changed at all. Right?
The majority of what we're doing with Einstein are, I would say, specific to each customer. They have control over how it's used and how and what we do with it in order to provide insights back to those customers. I think, as we all, together in this CRM, that we'll make choices to CRM that we'll make choices together with our customers that make sense for them and allow them to get more value out of Einstein. We're delivering a tremendous amount of value today from Einstein with what I would call some tenant specific models. And that means that the relationship with those customers and their data hasn't changed at all.
And we're very, very happy with that. We definitely see the potential, as you think forward, around what I'd say you could call it global models where the ability of Salesforce to share models and I wouldn't say data, but models that facilitate customers getting up to speed faster with Einstein. That potential exists. But just like everything else we've done with Salesforce, that will be done in conjunction with and partnership with our customers. So, like a really simple example I'd give you to help you understand this is the bot framework, right?
So, it takes some effort to train a bot to be able to understand language. And so, to the extent that Salesforce can train a bot to understand language that works across the Salesforce customer base, that's incredibly valuable to each and every one of our customers. And each customer wouldn't necessarily want to have to go through the effort to train that bot specifically for their language, right? So, that's an example of where I think, for the majority of Salesforce customers, they'd be very happy to share towards a global sort of model. But to reiterate the initial point, we're delivering a tremendous amount of value right now with single tenant models, and Einstein is working great.
We're very happy with where it is right now.
This thing
on? Yes, sir. Samad Samana from Stephens. Bob, I think this question is for you. Marketing Cloud, I think, has seemed to have been reenergized since the acquisition of CrUX.
And now with the planned integration with Google 60 Analytics, it seems like the maybe the conversation around who Marketing Cloud is competing against or how competitive it can be with CMOs and specifically I'm thinking about Adobe, who I think most of us see as the primary competitor there. Is that changing or evolving? And how big of
a role has Crux played?
And how big do you think the Google partnership will play? Well,
not having a DMP definitely was a shortfall for us, right? Now that we have a DMP, it allows us actually to develop a much bigger story around marketing and around B2C because for the first time, we actually can tell the whole story of from collecting data to analyzing the data to being able to engage in a whole different way with consumers and that we couldn't do before. And if you take the Google 360 Analytics piece and now you tie that in, it just makes things a lot more effective and efficient. And yes, from a competitive standpoint, I don't even look at it from that because I actually believe there's no other company that has the assets that we have, both on the B2C and the B2B side. When you think about what's important for customers, especially around consumers, it's about acquisition, it's about retention and it's about growth.
And you need all that, and you need data to actually for companies to be successful in that realm. And so the DMP plus the Google Analytics piece gives us all that data to really help our customers to be better successful when they engage with their consumers at the end of
the day. And to add to that, I think we are stepping into a world the digital marketing world has stepped into hyper personalization. The concept of 1 to 1 is really key to everything you do. And when you do it at scale on B2C, you obviously need to power you need scale and you need assets like a DMP, like a platform like our Marketing Cloud and of course tons of AI. I think you're doing about 400,000,000 predictions a day in that day, do look alikes and make sure that the email you receive is at the right time of the day with the right content, matching your profile or the look alike you are compared to other profile.
And today, we believe from a competitive standpoint, we have not only the most personalized platform because we can really manage that complete journey, but also we do it at a scale no one else is doing.
Thanks, Jay Felice Howard. Two questions, if I may. I thought it interesting that in one of Mark Hawkins' slides, you showed platform as your largest TAM. The question there is, could you talk about the investments in R and D specifically allocated platform, how that's evolved or where it may go? And then secondly, a broader question yesterday and now you've referred often to Industry 4.0.
How would you define Industry 4.0 in terms other than sales, service and marketing? In other words, what are the other elements of Industry 4.0 that you think you might logically become connected to, for instance, getting at some point involved with customers' product development, means of production, things that perhaps might precede sales, marketing and service? So there's a
lot of there's multiple questions in your question. So thanks for that. I think the first question is about the platform. Platform is a big TAM. How do we translate that in terms of investment internally?
So we don't I don't want to end up into analyst solutions jail. So I don't think we communicate about all the details of where our account is going. But for sure, as I started my presentation, the platform is a secret sauce. We are very clear about that. That's what makes Salesforce different.
And this platform is not only the secret sauce because it provides speed for our customers to customize. Also that platform provide things that a lot of other vendors are chasing like free upgrades a year. 100% of our installed base is on the latest release of Salesforce because all their customization, all their implementations are in the form of metadata. It's pretty magical actually what we do when we push on your release because we upgrade hundreds of millions of users overnight with not a single need for the customers to implement their sales force. They just get the new features.
When we push lining, people got lining without to do anything. So the platform has been clearly all along the secret sauce. Now the platform is obviously monetized in 2 ways through our platform revenue for CIOs and developers, but also through our CRM apps. In fact, the CRM apps on both the platform, that's what makes our CRM applications, whether it's sales, service, marketing, Perhaps it's because you can benefit from all those platform development tools, workflow configuration, identity management, all the integration layers. So the platform provides all the services that we bundled with our CRM apps.
So the revenue is kind of distributed and between those different flows. Clearly, the platform the platform is the reason why it's a big time is because the platform is all about tooling the digital enterprise and that's I think the segues to your question about the 4th Industrial Revolution. For us, the 4th Industrial Revolution is not a technology revolution. All those technologies are great. They are exciting.
Your car is connected. Yesterday, we were on stage with the CEO of Ducati America, the motorcycle. They just launched a bike at Dreamforce, which is amazing. The bike is connected. What does it mean?
What it means now, the bike can share data with Ducati about how you use it. And how you use it is important because that's going to drive the way they're going to connect with you. That's going to drive the way they're going to, for example, offer you to try other bikes because they may be more appropriate for your usage. It's going to connect the way they're going to sell you maintenance and upgrade. So I'm taking this example because in each and every industry, the technology is opening new doors.
But at the end of the day, what really matters is whether you are connected elevator like KONE, you are connected bike like Ducati, you are now connected directly digitally with your customers like Adidas. Well, all those brands, one thing in common is there is a customer. Behind all those technology experiences, whether it's voice, whether it's connected devices, whether it's vision, behind each and every product and services, there is a customer. And what the 4th Industrial Revolution is really doing is it's shifting our expectation. If you flip for a minute from being in a financial discussion to being into yourself as a consumer, Look at your life.
How much disruption you've been through in the past 5 years and what does it mean to the way you expect to interact with your car vendor? You really want to go to a dealership to buy a car? Now, 5 touch points before going to a dealership are online. You want to buy button on the you go to the configurator online, you would like to buy the car. Why go to a dealership?
It's shifting this industry. Each and every industry is being disrupted because our expectations as a consumer have been disrupted already. The train has left the station. We expect our product to be smart. We expect digital connection with brands.
We expect that one to one interaction. Is just happening. It has happened with different aspects of our life. We expect it from everywhere. And our job as a vendor is really to provide the platform for our transformation is hard.
There is a technology dimension to it and that's why the platform is so important. So there is also a people dimension to it. And that's why this year's Dreamforce is so much about the trailblazers because the trailblazer model is the fastest thing we have found to help our customers, to help their employees to access to those new jobs that are created, those new jobs. And you heard yesterday amazing story, whether it's Stephanie Herrera or Sheryl Feldman, people who did make career changes and now they are VP, Senior Director title in big insurance and big banks and they don't even have a college degree because of TreLab and because of the investments we've made to scale up the ecosystem around Salesforce, we believe it's equally important to the technology we are bringing to the market and that's why you see this year with two sides about the 4th Industrial Revolution. Amazing opportunity, a big, big, big, big workforce transformation and these are really the 2 themes of Dreamforce this year.
So I talk a lot. I hope you have questions for Bob then.
Yes, thanks Bob. Thanks for taking
the time. Kash Rangan with BAML. A question for you is, how do you monetize AI? Everybody talked Google, Amazon, Microsoft, everybody talks about AI. How can you put a dollar number to how you can generate a certain amount of revenue because of your AI initiatives?
I guess the heart of the question is, how is Salesforce uniquely positioned to take advantage of AI as a monetizable asset?
Well, that's a great question. Actually, your last statement is actually a great yield for the answer. So thank you for that. How do you make money out of AI? Well, first, we believe that AI is going to be part of any application stack.
If you think about the story of a computer system is we started to store data in a shared disk and then we started to put a business process there on top of it orchestrate a business process. Now we have data and now with the cloud, we have a lot of data. If you think about a company like Adidas, who is selling pretty much every transaction that comes from their .com flows through Salesforce, every single email that touch their customers come from Salesforce, Every social interaction they do with their consumers comes from Salesforce. Think about the amount of data we're gathering for our customers, to Mike's point, whose data are stored in their instance. AI is just a way to put the data back at work.
And the way position Einstein is not a generic AI platform. That's where Einstein is different than other AI stacks. Einstein is a smart SCI and what we did last year was to say we're going to put a lot of AI, but it's going to surface through our apps. When Bob sends the email for Marketing Cloud, this email is powered by AI. He knows when to be sent and what to put in the content to deliver a higher click through.
When Mike manage an opportunity, the opportunity scoring is based on your sales guys activity and what drives to conversion. So Einstein is 1st and foremost the smallest CRM. And the way we monetize it, well, it's very simple. It's through having the best marketing cloud, having the best sales cloud, having the best service cloud. So really enabling our customers who run on our cloud to have higher value proposition, higher click through for marketing, more deal conversion and productivity for sales cloud, a faster case resolution for Service Cloud.
So we see AI as clearly a huge component of the next level of productivity through all those different business processes. That's kind of the short term tactical thing, but it's very important because our point is, we don't sell a product and disappear with our customers. We upgrade the service three times a year and what our customers want is speed, speed of innovation. Having AI baked into your platform is speed and innovation that we're providing for them and that's a very important part of the strategy. The next wave of AI for us is basically point and click AI and we have learned a lot.
Doing our own smart CRM with Einstein is that we enable you to build your own AI powered application or your own AI powered dashboard and these are the news we are doing, we are announcing with Ryan Stein at Dreamforce, which is really enabling, empowering everybody to do AI and create value through AI and that monetize through the Einstein platform in that example. You want to add?
I would say it's great. We see AI as a defining characteristic, a differentiating characteristic of every single CRM application. And it's you can't underestimate how much it's going to transform the way people use the CRM systems. And so we're very excited about it. We're just getting started with it.
It's going to continue, and I think it will continue to generate revenue for us, I guess, just by helping us create the best CRM in
the world. And you're going
to see a flurry of features. I mean, we just started there. Last year, we launched Einstein. It was a big shock to everybody. We launched 18 features, which was really our first delivery, but we have been working for quite a while.
As you know, we have acquired a couple of startups in the Bay Area, but 14 companies in the past 2 years around AI, try to assemble the best teams of data scientists under Richard Saucier who is doing the advanced research for us. He is building all the next wave of AI engines. We are embarking into our core application. So we are really staging AI with super advanced research that we trickle into our core product. But our vision at the product level is
to make AI like point and click and make sure your data when you start gathering data into sales force, whatever data you're gathering into sales force, those data are smart and they can afford the next level of productivity. And I think we're building AI and machine learning into every single process, which is the difference between us and every other competitor out there. For us, it's just part of every single process. It's not an add on. It's not something.
We're looking at every process and figuring out how do we make it smarter, how do we make it easier for somebody to do that, like on the marketing side. How do we take a lot of stuff that's done manually today and make it so that it's automated using machine learning to make it faster, smarter so that consumers get the right stuff that they want at the right time on the right device and they're not getting overwhelmed with things they don't want at the end of the day. And that's really the power of machine learning for us.
Thank you, guys. It's Tom Roderick from Stifel. So I was hoping to ask just Yes.
I know you've been trying to get the knife for quite a while sitting in the middle, but let's go for the sorry. So where is the question? Alex.
Oh, here, okay. Hello. So
I wanted
to ask a follow-up question just on the Google partnership announcement yesterday, but more from a product perspective. And in particular, two elements of it. Bob, for you, the Marketing Cloud, it seems like some really interesting synergies there with Google Analytics. So I'd like to hear your perspective on that and what that brings to the table. And then from the Quip side of the equation, how does that fit thematically into the partnership to offer G Suite to all customers using both products?
So for us on the
marketing side, it's really simple. We take the number one marketing analytics platform and Marriott with the number one marketing engagement platform. And what that does is it makes the 2 of them much smarter, much better, and it's a win win for our customers at the end of the day. It's been one of the number one asks that our customers have been really pushing on us, which is bring that power of Google Analytics together with the power of your engagement platform so that they can make much more smarter, better decisions because the more data you bring into an engagement platform, the much more accurate it is, the much more pinpointed, personalized, targeted messaging that you can actually send to your consumers.
And on the partnership with G Suite is actually very exciting for us because, first, a lot of our customers have been asking for tight integration and G Suite is a broad set of products, starting with Gmail. And on Gmail, I mean, number of users of Gmail ourselves internally, we have a fantastic integration. I mean, Salesforce in Gmail is basically you're doing your emails and you have a Salesforce panel and you have Einstein reading the emails, guiding you on who's doing what, suggesting schedules of meetings. So you basically blend the Gmail environment and the G Suite environment with Salesforce. So that productivity is mind boggling and I really invite you to extend it because we feel it's really the future of those applications.
It's deep, deep integration of the workflow and AI is powering you and so forth is just surfacing when you need it. And there is like, oh, it's a customer or it's an account, you have all the new informations popping up. So we feel it's very important to have those integration for our customers. The same way we had done this integration with Office, but we are going, of course, with Google much deeper because the cloud nature of the architecture was enabling us to go super deep and with Chrome and Gmail and Salesforce inside, it's a very exciting deliverable. Then you have all the productivity tools.
Quip is a very different animal than G DOC or spreadsheet because it's truly a collaboration space. I mean, what there is really 2 things or 3 things to remember about Quip. First, it's mostly a collaboration environment. 2nd, it's a killer mobile platform. I think what has been driving the success of Quip and the adoption of Quip in the past year is just the Brett and his team have nailed what the collaboration platform should be on the mobile phone and I don't know if you're using it or if you had the chance to play with it.
But I think it's hard to argue that there are ways to collaborate on the phone. And I think what they are doing this year, which for me is probably the biggest workflow in collaboration is this concept of apps where you basically can in the document plug little components that can be a calendar, can be a campaign, can be a third party component, can be a piece of sales force and you can collaborate. I mean, you saw yesterday 21st, Century Fox, you can collaborate on the video into a document and everybody can put its comment at different time of the video or you can collaborate on the calendar. So think about running a deal, closing a deal, collaborating on the project, that's true collaboration. So Crip is clearly opening our mind and you clearly can see the G Suite and Quip can be integrated together.
You can start blending those components between each other. Quip is 1st and foremost for us a collaboration platform and we have a killer, killer mobile experience. So I know the lines sometimes are a little bit blurry because, oh, you write text, you do a spreadsheet, but the end game is slightly different and we see that more as kind of things that can connect to each other and collaborate to each other down the road. So that's the way we see the link between the two. We're very excited about this Google partnership.
As you know, there's 3 dimensions to it. Google Analytics, G Suite for our customers and the last one is running some sales force infrastructure on GCP. So obviously, a very exciting year for us to have this partnership. Any other points? I mean, you've been involved in the Dropbox and many products that are integrated in G Suite.
I thought you covered it really well.
Alex, it's a high level question on Google, the Google partnership. And I think I thought that was really interesting and it's really interesting with the analytics and some of the other integrations. But it also said that you're going to use Google for international expansion and they're going to be a preferred public cloud vendor. I think you had an announcement in May, 6 months ago, that said very, very similar language for AWS. And it speaks to Salesforce's influence that both these companies have this kind of partnership.
But usually a preferred vendor is the preferred vendor. And so it's hard to or is this Bob's Marketing Cloud Network? I mean, it's hard to figure out like what are the lines between the 2? Like what do you Canada is AWS? Is, I don't know, Mexico going to be Google?
Like how should we be thinking about that? Well, the
first the way we think about it is being infrastructure agnostic, I think, opens for Salesforce. First, we will be looking at our customers and our opportunity for growth because we are facing a fantastic growth in terms of business, as you know, but also in terms of usage on the service and having the strategic partnership these preferred vendors, even if there is more than 1, let's say, there is preferred vendors with an S, we are partnering with the best players in the industry and we think it's super important in today's time to have those alliances and the ZIIP technology partnership because as I said, speed is the currency today. Speed is the currency for our customers and it is for us as well. And we see those partnerships as opportunities for speeding up our business. Being able to open a country on the 3rd party infrastructure and not our own computers is great.
It's a great opportunity. The fact that our stack, because it's the same sales force we're running on AWS or GCP, our objective is really the same stack can run on the different substrate.
Our own infrastructure, I think
is a fantastic asset for Salesforce. It's also from a technology standpoint, I can tell you Parker and Ron Deacon runs our takeoffs have done wonders because it's a very complex problem. But we think that having this opportunity to partner with the companies who are laser focused on building those those infrastructure as fast as they can and be able to run our services on those infrastructure is a huge asset for the future of Salesforce and for the
future of our customers. So that's first the way we look
at it, which is making sure we have the tooling to ensure our customer success and building the growth we see in our business. And we are also very excited to partner with those companies who are leaders, trailblazers themselves in each of their industries. So when you think about web analytics, what's the first thing that comes to mind? And having a deep integration with our marketing cloud, the leading marketing platform into the leading web analytics platform is fantastic. And I think we have also a big vision as we step into the new world of integration.
There are things we will be able to do much deeper between those products because we manage a pretty broad set of the lifecycle of the customer in Salesforce. So you can think about a lot of very interesting applications. For example, if you know that if you click on an ad, you ended up purchasing on the site, you can target your ads much better the next time. And I think the synergies down the road between the two companies are very exciting for us. I guess just a quick follow-up.
Does the Google partnership change in any way the AWS partnership change in
AWS partnership?
No. It doesn't change anything. We clearly work with both companies in a very integrated way. We love both companies. They are both partners, customers and technology partners And we see I think we're very excited about this ecosystem.
And we really see a lot of success. I think we're facing, as I said, Industrial Revolution is such a massive shift. There's a lot of room. The market is big. I mean, you've been probably looking at all the market sizing of infrastructure, platform as a service, software as a service, there is so much growth in front of us that our customers want us to be deeply integrated and partnering in that world.
So I think it was very important for us to build that ecosystem of partnership and integration.
Thank you. I was just wondering if you could share with us, Alex, what did you learn from the rollout and I guess introduction of Wave analytics that you've been able to apply to the go to market for Einstein?
To apply for Einstein go to market, It's actually a very good question. I'm sure you have an opinion you want to start. I'd love to also, but I want to give a voice to each of you because I'm the only one doing the talking.
It's a good question. You're making me think. I don't have a bad answer for that. I think that let me say this. I think the importance of maybe I'm going to answer your question in reverse.
Okay. Sorry. Einstein is unlike any other product we've ever released or built at Salesforce because it doesn't have a discrete answer that's the same for every customer, okay? With Einstein Analytics, we can put your data into analytics. We can make a chart.
That chart will have the right sum on it every single time, right? Every single customer will get the same exact value from that. Einstein is different, right, because the shape of the way that a customer is using Salesforce and using their CRM system has an impact on the value that they're going to be able to get from the machine learning and the AI that we're able to apply. And so, one of the things I think that's unlike what we learned with Einstein Analytics is that it's really important for us to partner very closely with these initial customers to do things like assess for them how much value they should expect to get from the implementation and also work with them to better utilize Salesforce in order to feed Einstein more effectively. Hopefully, that makes sense.
I think that there's a feedback loop that's involved here. And very often, these implementations lead to people using CRM more effectively, right, to create more signal, as people say in sort of ML data scientists would say, right? And that enables people to think about a new way to use CRM, to use Salesforce more effectively, to create better models, deliver more value from Einstein. And so, from that perspective, it's been unlike any other product we've announced, and I think it's had a really positive impact on how people are using Salesforce.
And maybe Bob, your first job when you joined Salesforce was Wave Analytics. So you've been leading the charge. Maybe you
can share your perspective?
I think on the go
to market side, which I think is what your question was, what did we learn? I think we learned that we really need to understand the use cases really well and we really need to understand how our customers are going to use it, what they're going to use it for and making sure that we've really thought through the complete solution before we go to market with something. And I think on Einstein, we did a much better job around that than what we did when we initially announced WAVE.
I think what Bob did very well on WAVE was really to double down the go to market. The product is an amazing product. But if you go to market as a generic BI, it's not our core sweet spot. So it takes a little while to scale up the go to market. But basically decided to deeply embed the go to market into the sale of the service and that's clearly what has turned the corner for Wave, which is now called Analytics Cloud and that focus on our core sweet spot market when you bootstrap a business unit, until you get to a couple 100,000,000 of revenue, it's very important to stay in your sweet spot and not try to create a new segment.
I mean, we have an amazing installed base. Let's just focus on that for the 1st couple of years. And I think we probably made a mistake the 1st year
on the wave
not to focus on installed base. With Einstein, as you heard, when I had a question about Einstein, it's not a generic AI platform. We started by launching Einstein in each and every cloud as the smartest CRM. And as the time goes by, we're going to open up the platform capabilities because people want the platform. Like the one the platform on Wave, actually now we see a lot of amazing applications of Wave, but to go as fast as we can, just focus with new products on the installed base, it's big enough as a market for this product.
I don't know if it answers your question, but I'd say one let me just add one idea, right? And it's something that I think we've learned generically across every product at Salesforce over the past couple of years, and that's the importance of Trailhead and training people how to use and implement these products on day 1, right? So, there's like no product launches at Salesforce anymore without us having a suite of learning and badges on Trailhead so that, right from the very beginning, we're creating the mechanism to implement successfully those products. And I know that probably sounds obvious, but it was net new for us, right? I think we relied on the community.
We relied on the system. And we're growing so quickly and creating so much market and so much demand for these products that we have to be thinking about that immediately upon the products being launched. And so, Lightning I'm looking at the slide here. Light, Trailhead, IoT, all of these products now come with learning built in so that we're enabling the ecosystem immediately, and that accelerates the adoption of those products initially.
And it goes to also our LoRa addition. Learning UU is a good point. Learning was a big eye opening and Learning was initiative of the Trelette team and Sarah Franklin and we tried to have Sarah on stage with us. We unfortunately had a little scheduling snafu because but Saa drove the Trelette vision and I think it has completely transformed sales force as a growth organization. Also our thinking about what is a successful software launch because clearly we are stepping into such a new world with a speed of innovation that for our customers to be able to digest all that innovation, you need a very, very powerful learning platform.
And even when we think about, for example, low end editions, you know, the SMB market, instead of having a wizard like historically, every product had a wizard, just have trails. In fact, it permeates even to our marketing. We feel like today, probably the best marketing tool we have is some trials. In 5 minutes, you are going to get a badge and learn about what is SSA, what is service, what is AI And Trelette has completely shifted our mindset about go to market, about onboarding and about scaling up. So when we launch a new product, I'm glad you raised that, it's completely blended into the go to market plan.
Thanks. I was curious about your thoughts on sort of a data co op kind of offering with your clients because obviously if you're a big company and you're Adidas, you have tons of data on your customers already. If you're a midsized customer, not so much and the algorithm can only get so much better if there's not a lot of not only internal, but maybe even external data going through it to create best practices in your industry, in your geography. I'm just kind of curious if you've had those discussions because as Bob mentioned, the ultimate marriage is taking the internal data and matching it up with like a data set like Google has on sort of on advertising. So I'm just curious where you are having that discussion or how we should think about it.
So there's kind of 2 questions in your question. One is about putting neutralizing data to build better predictive engines. And today, you can build neutralize models that don't always require the merging of the data. And that's very important. So you can still create, for example, an industry sales opportunity scoring model that doesn't need to be built to neutralize different orgs or sharing of customers.
What you're really sharing is the model. So that's very important because there are things we can do in onboarding AI with customers that could be done without solving the other question.
Now the other question I think is
a big idea. It's a big idea. I don't know if you want to jump on that, but being able to start on reaching your data with other customers, that's first the idea of what Bob is doing every day on GMP. And but I think this idea is going to probably grow into other areas of what is a software PACS. I don't know if you want to talk about it, Lee?
Yes. No. And I mean, we do it today with what we call Data Studio, which actually allows customers to actually share data segments across each other. And those segments are done in a very safe, trusted way. There's usually a timeframe by which another customer can use that data before it sort of expires.
And I think over time, especially in the marketing world, that's going to become even bigger and bigger as there's more cooperation between different companies around sharing their data. And data is really becoming an asset for some companies. And in some industries, they actually put it on the balance sheet as part of their asset.
Raimo Lenschow from Barclays. If you look at the if you talk to AIML guys and listen to them what could be done with an AI platform and for example the sales cloud in terms of automation, automating task
for sales guys, you're going
to make them 20%, 30% more productive. Can you discuss a little bit how you kind of think about then the monetization of that opportunity. Sorry, we kind of watched you guys. But like how do we think about that? You kind of you're going to change the world for sales guy compared to what he's doing today and how he's doing it.
But how do you participate? And how do you kind of share that with the customer?
Let me I'll answer the first part. Maybe the second part will come out of my answer. Like I said before, I think we're sort of just scratching the surface in terms of how AI will be applied to CRM processes and use cases. I think we're doing things like, for example, predicting an opportunity close date based on machine learning or predicting an opportunity amount based on a close date or predicting something that is either going to be beneficial to that opportunity closing or a detriment to that opportunity closing. I can imagine a day in which Einstein is filling in all of the information on the opportunity automatically based on the interaction that's happening between a salesperson and a customer.
And to me, in terms of monetizing that, all we're doing is making CRM and Sales Cloud more valuable to our customers. And that should help us share we'll share in the value creation that happens there with all of our customers. But I really am bullish about the possibilities for AI and driving just simple things like adoption, right? When you talk to the average Sales Cloud customer, they kind of sheepishly raise their hand and say, what we really need is more adoption. And if we can use AI to effectively get the benefits of the tracking and the monitoring and the predictions that are associated with the sales cloud automatically through machine learning, like I said, that's just going to create more value.
I think it will grow the total addressable market for Sales Cloud and it will be beneficial to our customers. And I think it will be beneficial to Salesforce. It will be beneficial to our customers. And I think, like Alex said, I think a few minutes ago, we're uniquely positioned to do that, right, because we have this market leadership position. We have the most information flowing into and out of our systems, and that gives us a really we're in a really good position to be able to lead with respect to creating those models and delivering that sort of value.
I think the same applies across the suite as well. Okay.
It's really to be more specific. For a long time, Salesforce Automation System, where basically you record your deal. We introduced Chatter, suddenly you could collaborate on your deal, but it was still pretty much a system of record where you are storing all your data about a given opportunity, who's collaborating, what are we selling, just a system of record. With AI, we are making the system of record basically a system of intelligence, which means it's an assistance and it's not something you need to go and feed data. It's something that basically tell you what to do to go to the next step.
Whether you're on email, whether you're on the into the app, you can be in very different forms of interface and we think it's going to create way more usage and relevance of you were taking the Salesforce Automation business process as an example. But in fact across every product on this loop, you can apply the shift from system of records to system of intelligence. But in Salesforce Automation, the work that Mike and his team have done are amazing because they really apply AI deep into the sales process itself. If you look at a feature like Opportunity Insights, we tell you what to do on the deal base, obviously, on all the patterns of the other deals in the organization. But if connect your email, we read your email for you and we basically score the deal base on who is there, are you talking to right people, are they mentioning is your customer mentioning a competitor?
Is there a change of closing date? All those signals are very specific to a sales velocity. They are basically signals we have integrated into the AI stack and that's for me really the future of that. They are going to be a mix of AI and business process, but really very relevant to your day to day activities.
Thanks very much. Richard Davis. So on the AI and ML stuff, so I'm trying to figure out, are you using unsupervised or supervised algorithms? And then the second thing is, how do you guys think about the whole notion of kind of algorithms versus data, right? Because you have AlphaGo came out and just created some pretty interesting stuff with and it was just the algorithm, not the access to all the data.
So how do you guys kind of think about that and what's your point of view on how you run the AI side? Thanks.
You want me to take so not being the AI expert in the room, how does AI work? First, our AI runs on our stack. So it's our own infrastructure that runs our AI. And when we do, for example, a predictive forecast and then we take a very specific feature we just launched at Dreamforce this year, it's a feature we have been using ourselves for now 5 quarters in a row internally at Salesforce. It's called predictive forecasting.
That's what the name says, which is basically tells you at every time of your quarter, are you going to close the quarter week after week. I have it available on my phone because it's basically in the Salesforce platform. So I can use Salesforce Analytics to report on my forecast. And every Monday, actually, we have a competition Einstein versus Keith Block. Einstein versus Keith who is the best forecaster.
What has been very interesting actually for us because it was a good way to kick the tires is 6 weeks into the quarter, Einstein is about 1% accurate compared to Kyiv. So it's pretty good. But what's happening behind the the reason why I am taking that example at the high level is, Mark sees basically how the quarter is going to look like. Here is what Einstein is telling you, you are going to close per week. Here is what Keith is telling you.
That's great. Keith used the sales force, the sales team forecasting. Each sales person puts a close date and an amount in the system. Einstein doesn't look at that. Einstein looks at
the past 3 years of deals and just
look at your pipe and recreates his own version of the forecast. 1% difference is pretty cool because it's really 2 different paths. Now behind the hood, the way
it works is there is
more than 6,000 different predictive engines working. And that's the magic of Einstein by the way. It's not one predictive engine. It's 6,000 different predictive engine. I'm not especially, so John Ball who probably runs Einstein or it's a social best to answer.
The way I know how it works is, we auto adjust all those algorithms and predictive technologies at the hierarchy, at the sales team hierarchy, which means that we may use a different predictive algorithm for Europe because the patterns of selling and the taxonomy or the typology of your data in Europe is different than the one in the U. S. So all that forecast we create and all those predictive models adapt themselves over time. And I find it's more than just a library of AI. Everybody can have a library of open source AI, AI libraries available on their stack.
That's what most AI vendors are doing. They basically you go, you pick a library, you have data scientists injecting data, checking those data. Einstein does all the planning around and we have 6,000 today, but growing because Richard is providing us with more and more technology and we ought to adjust. We denom the data. We inject the data.
We model the data. We test all the different algorithm and we pick for each level of, for example, the sales hierarchy in the case of forecasting, which model maps the most the typology of those data for that sales hierarchy. So here you can see it's really an AI that has been completely that auto tunes itself and is completely plugged into a very specific problem, which is forecasting. So I can't answer all the questions you asked me. You probably should have a chat with John about the intricacies of that.
But for us, Einstein was really this auto AI on autopilot. And that's what we're doing is My Einstein where you can build an object in Salesforce. So you create an object, you create field and you say this field is going to be a predictive value based on that other value. Behind the scene, there is tons of things happening on our stack to feed that field. You don't see it.
And that's really why the difference between Einstein and most AI platform, we are not operating at the infrastructure level, we are really operating either at the declarative level for the platform or at the functional level for the application.
Hi, Nabeel Elsirshad with Thrivent. Bob, I was wondering if you could talk a little bit about, so ExactTarget used to be kind of the speed of sea island in a way at least from our perception. Now you have Demandware and I think there's more traction on Service Cloud and B2C. So how has that changed your go to market? Which ones kind of lead and follow?
Maybe just talk about those things together. Yes.
I think if you look at all the B2C assets that we have now, ExactTarget was sort of like an island out there on its own. But actually, there was more than that. There was Buddy Media. There was Radian 6. There was quite a few different.
But now, I think, with Demandware acquisition and now with Crux acquisition, what we really have is a full blown B2C story, everything from point of sale to reengagement to service. I mean and if you saw the Adidas demo, it's actually pretty powerful because it's taking all those B2C assets and all the B2B assets and bringing them together in a way that no one else could ever do. And I think we now have a complete sort of really powerful story around B2B and B2C, but we also do B2B2C, which is something that no one else can do at the end of the
day. All
right. Let me thank everybody. And Alex, Mike and Bob, we'll give them a round of applause.
Thank you. Thank you, Ivan.
We have about a 20 minute break right now.
So you can go grab some drinks
or whatever you need and come back. We have Keith joining us around 3 o'clock.
Okay. Well, welcome back. Hope you had a good conversation with Alex and Bob and Mike. Gives you a sense of product strategy, where we're going, what's important to customers. And so in continuing the theme of growth and customer success we've been talking about today, I'm very pleased to welcome up to the stage Keith Block, our Chief Operating Officer.
He's President and Vice Chairman of the company. And it's really an opportunity for you all just to sort of have a conversation with Keith on his strategic priorities and where he sees the future of the company going. So Keith, thanks very much
for coming, and I'll just the stage is yours. Thanks, John. Good afternoon. Hi.
How's it going? Happy Dreamforce, I suppose. Let's see. We can go right into Q and A or I could tell you what's going on. Why don't I just tell you what's going on?
How's that? And then we can talk about whatever you guys want to talk about. So obviously, we just finished Q3. Can't talk about it too much because we're in quiet period. Suffice to say, very, very pleased with the results and the execution.
You'll see, hopefully. Hopefully, it'll make everybody in this room happy without getting into too much detail. But coming right out of the Q3 close and going right into Dreamforce, it's been kind of a crazy time but a good time. So far, the feedback has been wonderful on Dreamforce. I think every year, we say this is going to be the best Dreamforce ever, and I actually do think this might be the best Dreamforce ever from a customer perspective.
We've gotten a lot of really great feedback. And I'm sure that many of you have also spent a fair bit of time talking to our partners and our customers as well, and I bet you're probably getting the same feedback. So great momentum in the business, very, very happy, good growth. I think Mark Hawkins and David Havlick took you through a lot of the growth figures and kind of our strategy and where we see the market going. So I'm pretty confident that Alex did a terrific job talking about our product strategy.
So I'm happy to discuss anything that you want
to talk about,
Michelle Obama, whatever you want to talk about.
It's all good.
Keith, Alex Zugan. Alex, how are you? I wanted to ask you about scaling capacity and how you think about how much of that capacity is going to come from more reps versus higher quotas and higher efficiency? And then a follow-up would be, we talked a little bit about sales G and A as a potential lever for operating incremental operating leverage earlier in the keynote with Mark and Dave. And I'm curious kind of how you think about the functions within sales that our sales support and how much leverage or operational execution there is to drive on that?
Have you been sitting in on our budgeting meetings?
So I think, first of all, those who know those of you who know me know that part of my background in my career has been about operational efficiency and driving out, let's just say, repurposing money to invest in the future. And that's certainly the thesis that we're using. I'm sure that Mark and David had spent some time talking about it over the next 4 years. We think that there's an opportunity to repurpose. I'm just going to say $1,000,000,000 That's certainly the goal to fuel the growth because this is certainly unprecedented growth at scale.
When I think about scaling the business from a capacity perspective, there's a couple of dynamics there. Obviously, one is just the total capacity. I mean, you hit all the variables in the equation, either higher heads, you make them more productive or some combination thereof. I think we should be able to do both. Every year, by the way, we ratchet up the productivity of our salespeople.
Just raising a quota doesn't make them more productive. We invest as our portfolio grows. We invest in enabling these people because we do have a broader portfolio. We're not in SFA land like we used to be years ago. So that's always a challenge and an opportunity.
But productivity is top of mind. When I think about the go to market organization in every facet of the budget, both the front office of the sales organization and the back office of the sales organization. We're also, we've been experimenting over the last couple of years in different distribution models, indirect versus direct, because those have their own economics. So obviously, everybody is familiar with the direct model. A form of the indirect model, kind of the classic, is our focus on the ISVs.
So we continue to build out that ecosystem, ecosystem, and that continues to be a great success story for us and another lever of operational efficiency. Another one is resellers and distributors and specifically in the SMB space. So
there was a point
in time in the company where a one size fits all distribution model made a ton of sense. Obviously, as we become more sophisticated for our customers and the needs of our customers have varied by geographyreach, by industry, by size of company. A one size fits all model is not a good thing. So we are looking at different ways of expanding beyond the classic direct model. The ISV push has always been very, very heavy over the last 4 years since I've been here.
We're looking at expanding that more. But now we're starting to think about alternate distribution models to raise our productivity, expand our reach, lower our cost of sales. So all that stuff is in play. But it's top of mind, I can tell you. I can't look myself in the mirror, so without thinking about it.
Raimo Lenschow from Barclays. Keith, just to stay on that subject. We saw earlier a slide that talked about the different customer groups, enterprise, commercial, SMB. The biggest opportunity seemed to be in commercial actually where you have led the lowest market share according to the slide and it's a big market. But it's one of those kind of hybrid markets and it's then they're staying on the subject in terms of is it direct, is it indirect, how do you address that?
Can you talk to that kind of segment in more detail?
Yes. The dirty little secret about market segmentation is that the difference between enterprise and commercial by our definition is 1 employee, okay? So you segment the market, let's say, at enterprise at 2,500 and above and commercial is 2,499. There's no difference in the market characteristics between how 2,499 buys versus 2,500. Where that starts to vary is when you start getting to below 1,000, below 500 and certainly before below 100 employees.
There is tremendous opportunity in that commercial space, kind of upper mid market, low end enterprise that we get excited about. But there's you saw the slides, so I don't need to take you through it. There's still a lot of opportunity across the board, geographically, industry, cloud. So we're pretty excited about that. And you see in the results.
This is Keith Weiss from Morgan Stanley.
Thank you. Thank you
for taking the time to talk with us.
Of course. When we think about
that opportunity that you're talking about, we can look at sort of the IDC slides and whatnot, and that kind of tells you what's being spent on old solutions or sort of what people are doing today. But you're talking to us about digital transformations and people changing the way they're doing business. It seems like the opportunity is going to be something different than what it was in the past or just a linear trend of what it was in the past. Can you help us understand when you go into these customers and you talk about doing a digital transformation, how do you think about pricing? How do they think about value?
How do you guys think about sort of where you should be extracting value at that customer? Because I think that probably better informs the market opportunity versus straight lining what happened in the past.
Well,
so here's the way I would answer that, Keith. First of all, I appreciate the question. Depending on who you're talking to the account, you're going to get a different you're going to have a different characteristic. So if the CEO of KONE was up here, he would be talking about something different than perhaps the CIO of KONE. They're going to view things from a different lens.
The CIO is going to be thinking about I have to do more with less. I'm way down by the legacy. I've got to keep the lights on. And I'll give you an interesting statistic and story in a second about that versus Henrik, who's going to sit there and say, all I care about is growth, and growth is driven by customer success. So tell me what the future of service is.
What tell me what the future of field service is, where does IoT play, where does artificial intelligence play. And that's kind of that conversation. So they're very different dynamics, but at
the end of the day,
they want to grow their business. And that is different than the way that companies have spent in the past. The way that companies have spent in the past has been more of a, I would say, more of an infrastructure play. Technology is an infrastructure. It's been more of a modernize my accounting systems.
None of those things are going to enable a company to grow. But it's all about growth now. You have no choice. The world has changed with all these different technologies. So I mean, you've heard us say this countless times, cloud, mobile, social, data science, IoT, now artificial intelligence.
And if you don't embrace these technologies, before, with the old technologies, it would take a decade, 2 decades before somebody ate your lunch. It can happen overnight now. I was talking to the CEO of, I'm just going to say, a top bank because if I tell you the ranking, you guys will figure out who it is, but it's in the United States. And to this day, even though the current administration has relaxed regulations around compliance and reporting systems, They've gone from over 90% of their IT spend on maintenance and regulatory. Now they're down to like 70%, okay?
It's still not a lot. It only leaves 30% for innovation. And he's got 2 pressure points. So one pressure point is that over 70% of all banking transactions today are done on a mobile device, okay? So the world has completely changed.
So he's got to shift his model to what millennials want to do in terms of banking. So there's that pressure point. The other pressure point is that 70% of the money that goes in to this bank comes out and goes to the competition because he doesn't have enough modern technology. He hasn't done enough innovation, not him personally, but that company has not innovated with these new technologies to be able to maintain those that loyalty base, to keep those customers and to expand share. So it's a real problem.
So I it doesn't matter what industry you're talking about, whether it's financial services, whether it's health care, whether it's industrial manufacturing, it is the same conversation. And if you want to keep spending on legacy technology and be a relic, it's going to happen quickly. Amazon has showed it. Uber has shown it. I mean, there's dozens of examples of companies that have come out of nowhere that are taking advantage of the technology.
So that's the sort of conversation that I've typically had and many of us at Salesforce have had with these CEOs. It's it really is the whole digital transformation story disrupt or be disrupted. And I would say 24 months ago, some people were starting to believe it. Now I barely talk to a CEO who doesn't get it.
Hi, Keith. It's Adam Holt from MoffettNathanson.
Hi, Adam.
How are you?
Good. How are you?
I'm good. So I had a question on the enterprise side of the business. I was particularly taken with the slide that showed the biggest percentage of growth at the largest end of the deal spectrum. Yes. So you had 8x growth for deals over $20,000,000 5x growth for deals over $10,000,000 I haven't been around as long as you have, but have been around for a while.
I don't
know how I react to that statement, but that's okay. Well, I'm only
25 years old, so that really makes you that And I'm yes, okay, whatever.
Yes, I got you. But I guess where
I'm going is those are
sort of historically large software deals. And traditionally, there haven't been that many of those out there, But you all have identified a $40,000,000,000 opportunity. And so just trying to better understand, like, where are you finding those deal opportunities? How many really do you think they are? Can that double again?
Do we start to see $50,000,000 deals? I'm just trying to get some context around what seems to be almost an anomaly if you look at the history of the software industry.
Well, look, I'm very, very proud of the company, and I'm very, very proud of the team. They have done tremendous work. And we demonstrate a level of transparency with you. I don't know if we've done we've been this transparent before about these sort of data points. The I think I know the chart that you're talking about.
This is probably the top 10 club chart that you probably heard me talk about on the analyst calls, in the results calls. And I really think we're at the tip of the iceberg here. So if you look at the statistics that show you where we were in FY 'fourteen versus where we are now, where we think the future is going to be, Look, I remember sitting when I came here, I remember sitting in meetings and people would say, if we can only get a deal of this size, right, and then we all of a sudden, we started to get 1 or 2 of those. And then we'd say, well, can we get one once a quarter? And then it became, can we get one twice a quarter?
And then it became, can we get one 3 times a quarter? And we've really created what I would call a very large deal machine and specifically fueled in the enterprise space. And like what's going on in the marketplace? Well, number 1, the market has changed. I'm sure you've seen the chart that shows that the largest space in enterprise software is going to be CRM with a CAGR of 14.9 percent.
Going over the next 4 years, we're growing at nearly twice the rate of the market, which means we're taking share. You've seen all the market share slides. So our solutions are compelling. The world all these technologies are forcing customers to think about digital transformation. I mean, there's so many imperatives.
And we have a strategy that says we speak the language of the customer. We scale at a global basis. We have an incredible ecosystem, the best ecosystem in the cloud. And all those ingredients are driving these very large, very strategic deals. I mean, the fact that we have a CEO track here at Dreamforce speaks volumes.
Now many of you go to a lot of technology conferences. Is there a CEO track? Because my prior life, there was no CEO track. In fact, if you could get a CEO to come to San Francisco, it was pretty amazing. But we have CEOs here at Dreamforce of these companies, and that speaks volumes of the strategic relationship.
So and these deals are certainly an indication of those strategic relationships. The and it's not just here at Dreamforce where we meet with these CEOs. They're coming regularly from all over the world. 2 weeks ago, we had a CEO of 1 of the premier companies in Japan coming to talk about digital transformation. And they're not talking to anybody up in Seattle, they're not talking to anybody in Redwood Shores, they're not talking to anybody in Waldorf, they're talking to us.
So all of these things, the trust, the innovation, the solutions that are industry specific, the ability to make sure that we drive their success, whether we're doing it organically or doing it with partners. That's why you're seeing these large deals. And do I think there's more? Yes, I do. I think there's a lot more.
There's a lot more that we can do.
There you go. A quick follow-up. You all don't always give out your guidance at Dreamforce, much less long term guidance at Dreamforce. Obviously, that goes through you. Can you give us a sense for what you see that made you want to do that?
I think I've heard half that question selectively.
So can actually, can you give them
back to Mike, just the estate, tell me what that tell me
what you're looking for here.
I'm just you don't always even give next year guidance at Dream much less long term guidance, but you did and that obviously goes through you. So what did you see that got you comfortable in doing that? Why did you do it?
Look, generally speaking, we have a lot of momentum in the marketplace. There's a lot of things that are giving us confidence right now, not that we haven't had confidence before. I mean, look, the results are the results are the results. I mean, you can't argue with the results. But again, we've had a pretty good 1st 3 quarters.
You'll hear about Q3 in a few weeks. If I tell you anymore, John Cummings will tackle me on the stage, so I can't tell you anymore. But a lot of customer success, a lot of really good wins. And we know we start working at Dreamforce the day after Dreamforce, okay? So come Thursday, we're going to start thinking about Dreamforce.
And as we came into and it's an all year long thing, okay? And as we're coming into Dreamforce and thinking about what our messages are going to be and what we're going to do, and we're talking to customers. Mark talked about being on the road. We're all on the road talking to customers. You can feel it.
You can sense the momentum. You can see it in the deals. You can see it in the renewals. And as we think about our annual planning cycles, which Mark Hawkins will tell you, he's nodding his head in the back of the room, we're in the thick of it. We're going right through our budgeting cycles for next year.
We're doing our LRP, our long range planning. And we see just a lot of really great indications for the business. And that's why you're hearing this message. Keith, Derek Wood at Cowen. I want to drill into your vertical cloud focus.
And it sounds like financial cloud maybe the one that's most mature followed by Health Cloud, but I want to get a sense for what else you're focused on. The auto vertical has got a lot going on with connected cars and autonomous driving. I see the slides that show only 2% penetration into public. So it seems like there's opportunity for public cloud.
Could you share kind of
how your vertical strategy is going and what's
on the horizon? Yes. So thanks for
the question. So here's the way I'd like you to think about the I'm going to call it the industry strategy, okay? And this might be the best way for everybody to understand it. So first of all, I'll go back to when I said the one of the growth levers was speaking the language of the customer, okay? And it's been a consistent theme, a consistent change in the culture of the company over the last 4 years.
And that is all about assembling solutions. It doesn't mean you have to productize. You just take a horizontal product and you configure it to satisfy the requirements of a telecommunications company or a retail company or a banking customer. That's just core product, okay? And you have to have that right messaging and references.
References sell, right? References are all about credibility, right? You land the biggest fish in particular industry, there's a domino effect. If they could do it, so could we, right? So that is kind of an overarching playbook.
Then there are vertical specific solutions. So I'm very carefully using industry versus vertical, okay? So there are vertical specific solutions like the Financial Services Cloud, like Health Cloud. So a year ago March, we launched both of those products, FSC and HSC. They actually have been our fastest growing products.
It's the first time we've done something in the company that was vertically oriented with their own SKU, if you will, and their own pricing scheme. There's a lot of goodness there. I think Mark and David probably took you through some of that stuff in terms of net new logos that have been established. These are companies that have never done business with Salesforce before. But because we have a vertical specific product solution, we're opening doors.
They're having a conversation with us. And a couple of weeks ago, we announced Retail Banking Cloud, all right? Now the example that I gave about that U. S. Bank, they're actually going to go with Retail Banking Cloud because that 360 degree view of the customer, I just told you what kind of bank they
were, 360 degree view of
customer, that's what Retail Banking is all about, right? So retail banking is expanding into consumer banking and then other types of banking. So we will continue to build organically pieces of Financial Services Cloud and Health Cloud. We will also leverage our partners, our ecosystem, like the Encinos of the world, like the Velocities of the world who have deep, deep, deep, deep, deep expertise in telecommunications and insurance. We announced a partnership with Guidewire in insurance with Financial Services Cloud so that these expand our reach because they're building on our platform, which is very exciting for our customers because it just accelerates the pace of innovation.
As far as public sector goes, that in itself is its own animal, okay? Now that is one of our fastest growing businesses, particularly in the United States. And if you're familiar with the public sector business, there's a level of certifications that you have to achieve to be able to sell and service the public sector. So the civilian agencies have their own certification level, the Department of Defense has its own certification level, the intelligence agencies have their own certification levels. I mean, if Dave Ray was up here, he would be able to give you a complete dissertation on this stuff, okay?
But that business is growing. And there's certainly been a call to action in the United States. And Marc Benioff and I know because we've been to the White House and we've heard this message about transforming, reinventing government, leveraging technology. So there's definitely momentum there. And so we're excited about that possibility.
So look, we're furthest ahead globally in the United States because we're further ahead on those certifications. We don't have those certifications all over the world. We don't even have all the certifications that we think we're going to get here in the public sector. That sort of stuff that Parker is working on with Randy Curran. But that is a very, very hot area and ripe for modernization for sure.
Does that help explain the industry versus the vertical stuff? Yes. Okay.
Keith, thanks for taking my question. Steve Koenig with Wedbush. Hey, Steve. Hey. I'm curious, something startled me when I saw the CRM market share slides, and I saw Microsoft at 1.4%.
I'm glad that startled you.
It did. And there seems to be a pretty big disconnect between the mindshare that Microsoft gets in the market. And you guys clearly have a lot of success competing against them, but you're focused on beating your enemies and they seem to be a competitor that gets a lot of mind share from you guys too. So why the disconnect? What do you guys need to do to keep ahead of Microsoft?
What is the what's necessary for you to keep winning competitively? Well, I think you
should be asking them that question. Look, we're focused on customer success, and we don't we're not a company that sees the boogeyman around the corners, if you will. And as long as we stick sticking to our knitting, driving success for our customers, driving innovation, that's been a really good recipe for us for 18 years, and it seems to be getting better. If you look at they're kind of down into the left and we're up into the right. So it's always good to have an eye on who's out there in the marketplace, but and we never want to be complacent.
We never want to be arrogant. But the winning formula, I think, is innovation and customer success, and it's working for us. You should ask them that question. But I appreciate you asking me that question. Okay.
Hey, Keith.
Hey, Kurt.
Hey, Kurt.
Hey, Kurt. Question about the international opportunity. You guys are still scratching the surface, I think, in terms of the overall TAM that's out there for you. Could you just talk about sort of the thought process and where you want that to go over the next year? I know you have more of a city orientation in terms of how you're building out things now.
So more cities just staffing up bigger where you are where you already are.
Can you just talk a little bit about the
sort of the go to market philosophy on that over the next year, 2 years?
Yes, sure. So thanks for the question. So one of the three growth levers has always been the international expansion. And again, just a from just a sheer risk perspective, financially, we want to balance the portfolio of the company. But as we moved into the enterprise, it was very, very important that have to serve our customers globally.
So we are heavily concentrated in, let's just say, 9 countries around the world. But we do business in
a lot more than that,
but we're just heavily concentrated because we don't want to do a lot of focus. I mean, one of the things that's different about our model, and as you know, the perpetual model is when we sell something, we actually have to have people who can service it in theater, right, versus you can sell perpetual and whatever happens, happens, right? So we will continue to expand that. Over 40% of the people that we've hired this year have been in international. We think that's a wonderful opportunity.
We've seen
great growth out of those businesses in EMEA and APAC
in Japan and Latin America. And plenty of opportunity.
By the way, I
think people sometimes get concerned. There's still plenty and plenty of opportunity in the U. S. But the international market is newer for us, and we're trying to capitalize on it. Just so you understand, I think I've shared this with
you guys before. Every quarter, I go
through an analysis of our installed base and what percentage of the installed base globally in every single sector and every single industry do we do I mean, I'm not going to give you the bar, but a meaningful amount of business. And that's where I have confidence knowing that even in the United States, we have we still have room to run. But international is a huge, huge part of our strategy.
Hey, Keith. Cash from Bank of America. 15th reinforce.
You've done that longer than I am. I'm younger than Adam, in fact.
Two questions for you. How does Salesforce make money off of Einstein? I mean, you're running sales. I asked the same question of the product executives. I asked the same question of you.
How do you generate dollars off of Einstein? Secondly, Salesforce got a big TAM, your share of TAM is very small. Can Salesforce the guidance implied it's about 20% CAGR over the next 4 years or so. Couldn't sales force grow 25%
plus? Why would you have
to slow down your growth rate if the TAM is so big? Okay. Great. Let me try
to adjust those one at a time. So let's go to Einstein. So monetizing Einstein implicitly and explicitly, okay? So core capabilities in Einstein just make us more compelling, right? So it makes our products more attractive.
We differentiate from whatever competition that somebody asked about, but I won't name their name. So that's kind of the implicit way that we monetize Einstein. And of course, as we add features and functions and capabilities to Einstein, there's an opportunity to it's bundled into pricing, right? Now Alex probably told you there's a ton of excitement about Einstein. I think we all live in this world of artificial intelligence, we think.
I mean, we're kind of at the tip of the iceberg. Everybody has their own definition of AI. Certainly, we have ours, which is unique and specific to CRM. But it's early days. But the even right now, the fact that we have Einstein opens up conversations that we would not have had, which is yet another way that goes into the category of implied monetizing Einstein.
So I think it's early days. It's stay tuned. But if nothing else, it gives us the opportunity to have a dialogue, which is meaningful.
As far
as 1b of your question, I think your question was why can't we grow faster, right? You sound like Mark. Just kidding. I think the thing that's very interesting about this company is and I just had this conversation with somebody. In FY 'fourteen, I think we were a $4,000,000,000 company.
We just guided to 12.5, right? 5 years, we go from we're tripling the company. And one of the things that I think we're all particularly proud of is the fact that if this were a $100,000,000 company, you all would probably sit there and say, well, tripling the company in 3 years or in 5 years, that's no big deal. But we're how many Fortune 500 companies have actually tripled in 5 years? I don't know the answer to that question.
That might be an interesting statistic for the IR people to look up because we might be at
maybe what does he say Facebook? Okay. You say Facebook? Okay. Can we please exit him?
How many enterprise software companies in the
Fortune 500 headquartered in Downtown San Francisco might be the way to do it.
So look, when we set guidance, we're trying to set realistic expectations for you guys. Obviously, we always try to over perform. We never want to disappoint you. We never want to disappoint our shareholders. But we're delivering 20% plus growth every year at scale, and that's pretty rare.
But hey, we'd love to be in a position next year to be able to say 20%, we're only kidding, right? And we're going to work really hard, especially for you to make sure that that happens, okay? Okay. Or actually you, because you use Facebook as an example.
Hi, Keith. It's Keith Bachman
from BMO. And Facebook doesn't make any money. You guys do.
Thank you for saying that.
My two questions are in David's slide, David's slide he had up new potential new clouds and I was just wondering how you think about that you're in the number of clouds today and sales force is primarily in the front office applications. Do you see more front office applications or would you ever contemplate completing the transaction, maybe moving into even back office applications as just part of that narrative? And the second part is just from a go to market question, I was hoping to there's been a lot of discussion today on Google. You signed a partnership with Google. So clearly, you thought you didn't have something or else you wouldn't assign the partnership.
So from a front offer or go to market perspective, what do you actually think you're getting from the partnership from Google that helps your customers out?
Yes. Okay. So the first part of that question, I think one of the things that has made us successful as a company is that we're laser focused on customers and all thing customers, anything that's customer centric where we put the customer in the middle of everything, right? And our message, I think, has been very, very clear in terms of the tagline has always been customer success and connecting with customers in entirely new ways. We're not like a lot of the legacy technology companies, if you will, that have a portfolio that is so broad and so diverse that they can't be a market leader in any category.
I mean, that's just really hard to do. So our philosophy has always been, let's stay in this zone. You've seen the market share opportunities, CRM being the largest enterprise category in 2020. Let's stay on our zone and just be really great at it. And that has always worked.
I mean, when I think what Parker and Mark started the company, it was always about customer, customer, customer. Now there are natural adjacencies to customer, just like there were natural adjacencies when the company was started with Sales Cloud, while sales and service, sales service marketing, then there's platform. When we acquired Steelbrook, CPQ is a natural adjacency. So people probably don't know that still broke came with a billing engine. It's a natural adjacency.
So as long as we stick to the natural adjacencies, I think that's a good universe. Do I envision that we'll get into the back office? That's not really sticking to our knitting because it really doesn't have anything to do with being customer centric. So hopefully, that answers the first part of your question. I'm sure that David and Mark did justice and Parker and Alex, I'm sure, did justice to the Google question.
And when Parker and Brett come up here, they'll probably answer that better than I could. But look, we're a company that's very open. We like our partnerships. Mark threw up a slide in his keynote yesterday about some very strategic partnerships that we have with Dell and IBM and Amazon, and these are natural synergies for us. Google is another one, And that's a partnership that's multifaceted for a variety of reasons, not just GCP, but also the go to market relationship upon analytics.
I mean, the world is turning to data and analytics on top of data. So you have a kind of a natural synergy, a natural partnership. As we think about the world of B2C and where Google plays today and how we leverage that partnership. So at the end of the day, that just makes a more compelling solution for our customers, and that's what we want to do. It's like why do we have an ISV community, right, because we have others who can build with domain expertise, who have who have credibility in that particular space to drive success for customers.
It's the same sort of thing. So you should also ask that question to those guys.
Hey, John. How are you? Good. I've been around as long
as you have, and I've given the
same haircut. Yes, but you're a better looking guy to me, so it's all good.
Listen, Keith, we look at the numbers too. And you say they speak for themselves, and they do. And you can see it in the numbers over the last year and a half or so, which really kicked in, I think, for the enterprise. And granted, there was a lot of work before that to make that happen. But we're also hearing over the last year or so that the other part of the business or the mid marketsmaller companies, there is more competition.
And granted, Mark's slide up there showed sort of flat line at the bottom, but that went to 2016. And we're hearing over the last year, 2017 or so, where we're seeing more traction from other players. And in that market, that's more of a we've heard there's a big company out there called Microsoft that has a product out there that finally is a true SaaS solution that actually is kind of good enough for that market. And that market is much more price sensitive. And if you try we try to compare them price on price, the list price is about half of Salesforce.
I don't think anyone's going to argue that Salesforce doesn't have the best product out there. But is that product good enough for that market? And if it is, do you just let those customers that want good enough take it? Or do you come up with a product that's sort of a little bit dumbed down from what you have now in charge of cheaper price? Is there something you might want to do in that market?
So there's a couple of things. Good enough is only good enough for a point in time. It's not good enough for the future, right? So even if I were to agree with you, and you know I love to agree with you, but even if I were to agree with you, here's what I would say to you, that these companies grow in scale, and they need features and functions and capabilities that allow them to scale. The last thing that they want to do is go with somebody and then have to migrate to somebody else, right, because that's a lot of disruption.
And the bigger you get, the more disruption there is. So that's kind of an important point and the way I would view the market. Our SMB business is healthy. But as we continue to scale the company, we as I mentioned to the gentleman over here when I answered that question, we need to think about scaling that business in a different way. I mean, that has a very different economic life cycle, if you will, in that space than the commercial space, than certainly the enterprise space.
And that's why the one size fits model has been great. But as we think about becoming a $20,000,000,000 company and a $30,000,000,000 company or whatever we're going to become, we have to evaluate those things. And we're not going to rest on our laurels in that space. We spent a great deal of time talking about SMB. In fact, I can tell you this, on November 28, I have an SMB summit in my office, okay, to talk about how we're going to continue to innovate from a product perspective, how we're going to innovate from a marketing perspective, how we're going to innovate from a distribution, do we direct is it 100% direct, is it 50% direct, how do we drive the indirect business, is it through is it just ISVs, is it going to be through these resellers, like I said earlier.
So it's top of mind. We think about it. It's a healthy it's historically been a healthy piece of our business, and it was the beginning of our business. I mean, the company started in SMB. So all those things, we look at them all.
Keith, Mark Murphy with JPMorgan. Hey. So we are continually hearing that the Accentures and Deloittes of the world are sitting down with the largest enterprises at the Board level. And they're recommending that they use Salesforce as the centerpiece of a digital transformation strategy, massive huge projects that will potentially take years. My question to you is, just given that dynamic, are you actually finding that win rates are higher in large enterprise?
Are you structurally advantaged in a way there that as you move up market, it's kind of feels competitively benign because if you have that pull through from those types of firms and also the depth and breadth of the stack, it seems hard to think any other company can compare with the breadth and depth of the stacks. Are you actually finding higher win rates?
Our win rates are pretty consistent across just about every segment, to be candid with you. It's interesting that you met Deloitte. You mentioned Deloitte and Accenture because I'm painting with Accenture tomorrow, and I just presented to the Global Management Committee at Deloitte before I walk in this room. So that's Jim Moffitt's organization.
And
It certainly helps to make sure that the largest eyes in the world believe in your solution because the last thing you want to do as a consultant is to advise a client and have the client say, well, what do you use to run your business? And they say, oh, we use something else. I mean, I'm happy to say that Deloitte runs their business on Salesforce. Accenture runs their business on Salesforce. McKinsey runs their business on Salesforce.
Capgemini runs their business on Salesforce. IBM runs their business on Salesforce. PwC runs their business on Salesforce. Howard Prince has done a fantastic job in his organization cultivating those very strategic relationships. And yes, they are in the boardroom and they're with us in the boardroom, which is a very, very different dynamic for an enterprise software company because enterprise software companies historically have not been in the boardroom.
It's very interesting to see what is going on in the marketplace in that regard because it used to be that those firms would be exclusively in the boardroom. And then maybe 2 or 3 levels down, the enterprise software, I'm going to say vendor was there. I don't view us as a vendor. But the world has changed with all these technologies. And that's why, I think I mentioned this earlier, over the last 24 months, we have seen a very, very steady stream of CEOs coming to talk with us sometimes before those partners to talk about digital transformation and innovation.
But kind of come full circle to your question, it absolutely helps our win rates for sure, because they're going to look for another trusted advisor to validate that we're the right solution.
Doug Schell from Deutsche Bank.
I've got
a question on the smaller customers and to what extent that low touch or no touch sales is an opportunity or something you can broaden out with?
Great question. It goes to kind of what John was asking me earlier. Low touch, no touch sale, I think, is great for a certain market segment. It's a very, very simple model. There are other companies out there that have done it.
And that's I'll tell you what, after November 28, I'll tell you what we do. But look, I think at any given point in time, we have to look at how we optimize our distribution channels, again, direct, indirect, and indirect can take many, many forms. And anything that we can simplify for the customer experience only is going to lead to more sales for us. Any other questions?
All right. If there are no more questions one more. Tom?
Tom Roderick with Stifel. So with David's slide earlier talking about the natural expectation, of course, that as businesses get larger, you naturally decelerate. It's hard to continue to grow at the same pace as you scale. But we've seen the opposite with Sales Cloud. It's not only stayed the same pace, but accelerated the last year.
I was hoping you could talk a little bit more about why that has been. Is that a sustainable element that can continue? Certainly not asking you to project what it's going to be going forward. But if you could help us understand why that has accelerated, what elements of that are sustainable and what aren't, that would be really useful.
Yes. So I appreciate the question. There's a bunch of variables. Like anything else, there's a variable thing here. And some of this is cycles, natural cycles in the market.
Some of this is penetration in a new industry. Some of it is penetration in the international expansion. Some of it, quite frankly, if you look even domestically, when I go back to the meaningful amount of money analysis that I go through every quarter, some of that is net new logos in the United States. So when we sell some of the Financial Services Cloud, for example, it drags. For every dollar that we sell of FSC, we drag $1 a core, okay?
So as we introduce new products that can drag the core, you're going to see acceleration of some of these other products, right? That's natural to expect. And as long as it is just focus and focus and execution. So at any given time, we run a portfolio of business, Okay. Okay.
I guess at this time, Keith, I had another one. So, discussion earlier
Hey, John, nice to see you.
Good to see you too. The discussion for most of the day was around margins and incremental margins as Salesforce got scale. And you actually have a lot of scale. I had asked a question earlier about not so much the incremental margin, but what about current margin of the company? Could you be at 10% higher margin than you are today?
You, in your lifetime and career, have grown a very large business at very high rates in your previous lifetime at spending much less than you have right now. And I'm just curious how active those discussions are because that experience, you're probably the ideal guy to say, hey, listen, we're spending a lot of money here that we probably don't need to spend because we're not getting a lot out of it from what I see. And I just wonder how active that discussion is within the context of Salesforce. I've asked I asked you this question a couple of years ago and you said, John, we're all about growth. Right?
But today, people are talking about margins. So I guess I'm asking the same question.
That's okay.
We are all about growth. So I think I talked about this earlier. I mean, one of the one of my jobs, right, so I mean, part of my job obviously is the growth side of the equation, driving the sales organization and the distribution organization. But another part of my job is as a CLO, right? I have a fiscal responsibility to make sure that things are operating efficiently.
And sometimes, there's a healthy balance, healthy tension, right, growth efficiency. I mean, if you're wildly efficient, you'd choke growth, right? And we've seen examples of many, many companies in technology, outside of technology, where they become so obsessed with margin that they can't grow the company and then you know what happens to those companies, right? They slow, they die off, they don't innovate, their customers flock to somebody else. We're not that company.
We see a lot of opportunity in the marketplace across the board. I think David and Mark probably did a fantastic job explaining what the opportunity was. Where we want to invest in growth, we still feel like we're a growth company. I mean even though we're going to be a $12,500,000,000 company next year, growing at 20% growth, it's who does that in enterprise
software? Who does that, right?
And that's a different type of enterprise software. It's different. So it takes a lot of investment and innovation to make that move, right? Because even though you look at something and you say it's 20 percent, like somebody asked a question about, well, you have 20 I think cash set up going from 25 to 20. In gross dollars, it's a lot of money.
It's a lot of money. And so you have to invest in innovation. And our customers want us to invest in innovation. Now we've made a commitment to improve every year. I think we've lived up to that commitment.
I think you've heard Mark come on record and say that he is absolutely committed. We're all committed to improving our efficiency. David and Mark and I sit down to talk about how do we take $1,000,000,000 over the next 4 years in pockets of the company and repurpose that into things that will help sustain and hopefully accelerate growth. And that's a high priority for us. So that's where operational efficiency becomes very, very important as we think about the drive to $20,000,000,000 But we do view ourselves as a growth company.
20%, dollars 12,500,000,000 tripling the company in 5 years, it's not too bad. So that's where we are. Okay.
Great. I think this will be our last question.
Save the worst for last. Samad Samad from Stephens. Keith, I think the partner program has had a couple of changes in fiscal 'eighteen. The take rate from ISVs was lowered. And I think earlier this year, the value score matrix was changed to favor certification growth versus just necessarily like selling ACV.
And I guess I'm curious as we think about how that has impacted business momentum, I think Mark Hawkins earlier said that 50% of new business is now touched by partners. I'm wondering how you think that's impacted momentum and then maybe a preview on what changes we might expect next year, if any, to kind of sustain that growth that you're seeing from the partner channel?
So the partner ecosystem is the 3rd growth lever that we've enjoyed over the last 5 years. It will continue to be that way going into the next 5 years in that. Having the largest, most successful ecosystem in the cloud is really important to us. It's and you know why it's more important to our customers. So that ecosystem is both the systems integrators, the ISVs, BPO organizations, which have had conversations with us recently, they're all really important for a variety of reasons.
But at the end of the day, it's all about customer success. As far as the metrics for next year, like we're just in the beginning of the planning cycle. But we want the easiest, most seamless, most frictionless ecosystem, okay? We want partners to be able to build on our platform, to be wildly successful, to be enabled to drive success to their customers. We want the SIs to have as much scale and capabilities so that they could do these digital transformations for their customers.
And we want BPO organizations to have a scalable platform so they can drive great service levels for their customers. So that is the design goal. If in any given year we want to change the metrics so we can drive behavior or turn the precision on the dial, absolutely we will. I wish I could give you some insights into next year, but it's too early for that. Okay.
All right. Please join me in thanking Keith for his time today. Thank you.
We have just a couple
of minutes and then we'll have Parker and Brett join us on stage.
Okay. So, welcome back for the third half of the show. Okay, I ripped that off, but maybe I got your attention. So I'm very delighted to welcome 2 technology luminaries really here to the stage in Parker Harris, our Co Founder and Chief Technology Officer and Brett Taylor, who is the CEO of Quip. And of course, many of you may know Brett from his prior iterations at Google and Facebook.
So this is an opportunity to really point some questions at technology or technology roadmap, how we are going to scale the business and continue to scale the company as we reach $20,000,000,000 $22,000,000,000 in FY 'twenty two. So with that, let me just invite to the stage, Brad Taylor and Parker Harris for conversation.
Thanks, guys. And in the spirit of last year when I met with you guys, all questions have to be in 140 characters or less.
I think that joke is too soon, Parker.
I don't know if you remember, but you guys went silent last year.
Don't read the news for next hour, please.
Yes. So I'm Parker, Co Founder, and I've been spending most of my time for the past year, 2 years focusing a lot on our cross cutting architecture to integrate our cloud. So that's where my brain and a lot of my time has been spending. And Brett?
Yes. And I'm Brett Taylor, CEO of Quip. I was previously the CTO of Facebook. And both the recent acquisitions, I've been working with Parker a lot on sort of our approach to technology integration sort of as a guinea pig and also just collaborating broadly on that approach. Probably spend half my time on Quip and half on broader sales force technology strategy.
And I'm representing B2B and he's representing B2C. Okay.
How about some questions?
Walter Pritchard from Citi. So Parker, in a session before you arrived, John or Dave Havlick was talking about gross margins and how gross margins have actually kind of delevered a bit and you've been spending more on cost of providing the service. And I think one of the things mentioned was you have to have the most trusted industrial strength cloud. The other observation is, as you said, you're working on integrating a lot of things and maybe that's sort of bloated the COGS structure a bit with lots of different platforms. I'd love to hear your perspective on where you are from kind of integrating all these platforms, how much additional cost you've had to take on there and how that plays out over the next, say, 12 months to 18 months or 24 months, whatever the timeframe is?
Yes. I don't know if integration the problem for integration is not changing gross margins. It's really the problem of the complexity of integrating all of our clouds. I think when you look at the gross margin change, we've acquired businesses with different cost to serve. And so the business that I built on top of our Oracle database and our sales and service is selfishly in terms of efficiency, super efficient.
We have other services that are more scale out that require a little bit more compute. Those are amazing, but in some cases, they require a little bit more expense. So it's just a blend of all that. We also have been spending a lot of money on our marketing cloud, adding a lot of infrastructure there and scaling that up because of the demand. So it's really just a blend.
We still are targeting roughly the 20% gross margin. So I'm focused on driving that cost to serve metric down to each of our product lines. So it's a maturation of how we run our business. We were so efficient early on, it was like, okay, it's all fine. And it just kind of played out.
Now we're looking at all the different businesses, we want to say, well, what's the cost to serve this business versus the revenue? And an example of that would be our IoT Cloud. I looked at the V1 of that and we looked at how it was architected. Technically, it was brilliant. It was awesome.
But we didn't really like, number 1, the cost to serve. It was more of a single tenant kind of approach, a virtualized single tenancy. And so we took a lot of that tech and rebuilt it. That's what we call My IoT, where we took it and we brought it closer to the platform. You can have trials and sandboxes and we also changed the cost to serve dramatically on that in the process.
Raimo Lenschow from Barclays. We asked earlier, we announced Google as a new partner for you coming from a technical background. You now have kind of AWS relationships, Google relationships, you have your own big footprint still. How do you think about the evolution of kind of your footprint in the different clouds in terms of kind of doing it yourself versus doing it with other players? And what are the determining factors for you?
Yes.
So it's kind of similar kind of queuing off the earlier question. We were very efficient in our software stack that
we wrote early on and
we spent most of our IP on that. And the way we ran it on sales and service on the Oracle database was very traditional in 1999. We used Oracle RAC, SANs and it didn't have a lot of it didn't have much of a software layer. AWS wasn't around. The idea of IaaS and the cloud was not even didn't even exist.
And but that was fine. But as we grew the business, we found over time that we needed to create more automation. And so we've been embarking on that for a number of years and hired Randy Kern, who many of you know who runs infrastructure for us came from Microsoft. We also then said, oh, let's have this relationship with Amazon, which we launched last year and we launched our core service in Canada on AWS and then more recently in Australia. We are doing that on the same substrate basically.
So we are using a lot of open source. We are trying to get back to open source from the process and basically have a software layer that allows us to run our compute in our 1st party data centers, those are the ones that we run, as well as on Amazon and we will use that same tech and style to also expand out to GCP. And that gives us the ability to pick and choose based upon the business and the region and what makes sense from a partner perspective as well?
Thanks. Kirk Materne. Parker, you're spending a lot of time on integration. And I was kind of curious, now that you have Brett with you and there's been a lot of technology advancement around open source over the last couple of years. Are you starting to think about your original plan for maybe integrating ExactTarget a couple of years ago and now we have demand.
Have you changed your approach to sort of how you think about integration or are there new technologies that you can better leverage today that maybe weren't around a couple of years ago? I'm just curious about sort of your ability to now take on some of these new technologies that some of the mega scale cloud guys are able to leverage yourself?
Yes. I'll give you my answer and then maybe Brett can give a more objective view coming in more recently looking at coming from the consumer clouds and having done the CTO and looking at what we have. So Marketing Cloud is SQL Server, Relational Database, storage array, same kind of model as our core system. But it's amazing. We send more scalable than any other competitor in terms of email volumes and customizability, which is why we are doing so well.
But I would
say that that architecture, if I were to start that today, I probably would not build it exactly like that. I would build it and it would look more like Crocs, which is the company we bought roughly a year ago that is built more on a scale out NoSQL architecture, leveraging a lot of services on AWS. And so the CTO and Head of Engineering of that organization now has all of our marketing cloud. So DMP and Marketing Cloud has 1 engineering organization and we are taking 2 paths. We are continuing to move our current offering forward because we are not going to take and uproot all our customers.
I mean, I look at what I've gone through with Lightning, which I thought I'd done a brilliant job and made it perfect for customers to move seamlessly. And even these little niggly things or just change management has just been really interesting to see customers have moved. It's amazing. We have a ton of usage now, but it's taken a lot of work for us to focus on it. And so I don't want to have like a second version syndrome where we're going to go, oh, we're going to re rate the whole thing.
But we are taking advantage of having Vivek Baidya, who's the CTO of crux, to look at both architectures and think about how can we move these things forward together and how and the process how does CrUX DMP get closer and closer to how we think of our Marketing Cloud and frankly also our Commerce Cloud?
Yes. I think that captures it perfectly. I think you look at the companies that were founded in the past 5 years and the architectures look different than the companies founded 5 years previously. That is the standard with technology though. It's almost a privilege to have to change the wings of an airplane when it's midair because that means you have a successful business.
And I think that the thing that I think is the greatest asset of our technology strategy right now is a very platform centric mentality because it means that we can integrate our products for our customers and then abstract that from the underlying technology, which we need to also replace sort of in parallel. And we kind of think of those two things as related, but you can sort of disentangle them. How can we provide an integrated customer experience and then decouple that from the change management and sort of cost of migrating the underlying technology. And I think the platform mentality that Salesforce has really had since beginning is probably the greatest asset we have in achieving that for our customers while we go through this very complex change management process under the hood.
Hi, Kash Rangan with Bank of America. Thanks for taking the time. And you have B2C shoes,
I should point out. Yes.
I wanted
to be comfortable again today.
I want to look as Yes. These are Adidas, just to
be clear. They're a customer.
They're like the 3 stripes, if I'm not looking at it correct. Oh, cool. Yes.
Mine, 2, 3. No, I'm
so guilty. I'm color blind, so I couldn't tell. So, anyway, a question for you. What can you do with Google that you couldn't do before from the standpoint of their infrastructure that is now available to Salesforce? And also more importantly in the Google Analytics side, which has always been seen as a stepchild to Adobe Analytics.
So how do you think about that? What as to what Salesforce can do with Google? And one for you, Brett. As you look at Salesforce becoming a $22,000,000,000 revenue company, what do you think you would do differently given your former background or background as former CTO of Facebook? In terms of infrastructure scaling, what are the things that you would have to do at Salesforce to help the company?
Thank you.
So I think what we get with the Google relationship is just a closer working relationship, step 1, like let's be even closer how we're going to execute and go to market so that we can if we need APIs that don't exist, we are going to be faster at building those for G Suite to integrate, for example. We have already been doing a lot of integration with Gmail and Google Docs, but that will progress even faster. GCP is a natural extension of our data center strategy. So that's exciting. And I think if you look at the technology under Google, it's arguably some of the best in the world.
So that's exciting. And then I personally am probably most excited about the Google Analytics angle. Step 1 is fairly simple. Let's just get Google Analytics working even more closely. We have joint customers all over the place.
I would say most of our customers of Marketing Cloud are also using Google Analytics. And so how can we enable them to be more successful without their having to do the work on their own and how can we wire things up, even just simply in the UI, let's make it simple and then data movement from the Marketing Cloud into Google Analytics and creating targets and segments within Google Analytics. So step 1 is like, let's just get that basic infrastructure in place to have data movement and identity and connection and then UI. And then on top of that, then we can start doing really some interesting things. How does CrUX DMP play with Google Analytics when you think about targeting and segmenting and taking data back and forth?
How do we Commerce Cloud, also if you think about the AI of Commerce Cloud, because it's doing a lot of predictive sorting and predictive analysis, there's data that Google Analytics has that can augment that AI stack that could be really interesting. And I think many of our customers what? I don't know if it matters where one stops and the other ends. I think the point is what problem are you solving. So if I need to solve AI, I could do some AI on Google.
I could also take some data and put it over where the Commerce Cloud AI is running. We can move that frankly, we could take that AI stack and run it on top of GCP and run it right next to Google Analytics. So we can start to explore some really interesting things of being closer to Google where Google Analytics and GCP and all the data is right there, how can we do more leveraging both their underlying infrastructure stack all the way up to Google Analytics? And from a marketing and commerce and B2C perspective, they are our biggest ally. If you look at the world of consumer analytics and web scale analytics, Google is the dominant player.
Arguably, Adobe and Omniture is also a major player. But I think architecturally, if I were to choose where I would place my bet, it's going to be with Google's architecture. That is modern scale out. No one does it better. And I think it's just an opportunity for us together to explore the best in CRM with the best in web scale analytics and targeting and bring the 2 together.
And I think you're seeing just the beginning. This is just the relationship, hey, let's get to know each other even better and let's get let's take this first step down the road together, but it's just the first of many.
And I believe the question was what I do differently or what are my perspectives coming from a consumer technology company into Salesforce, is that fair? Yes. So I'd say there's probably 2 things I think about the most. The first is just scaling an engineering team and a product that is at scale. As a technology company, it's unfortunate that you create the next generation technology and then 10 years later, it's last generation technology.
And you have to constantly refactor and reinvent yourself if you want to maintain engineering agility and maintain your pace of organic innovation and not become dependent on inorganic forms of innovation exclusively. And that's why the investments Parker talked about, about applying like fresh pair of eyes on legacy technologies and having the investment to actually modify those technologies so that our engineering teams can remain as agile as possible and at events like this have some great things to announce for our customers, like the transition of IoT from sort of a single tenancy model onto our platform. It's a meaningful technology discussion that results in both lower cost to serve, but for our customers also a tighter integration with their data. These are meaningful architectural discussions that are harder to make as you grow bigger. And I think something that I think a lot about is that engineering productivity.
I think it's one of the main ways to drive value in a technology company. They're probably the highest paid employees in most technology companies and it's really important to think about that as a strategic advantage. The other thing that I think that we talk a lot about, you heard a lot about Mark's keynote is we started off as a B2B company and now we are a B2B and a B2C company. The scale of B2C is an order of magnitude larger than B2B. A lot of the architectures that we made, I used the royalty, I wasn't here, that Parker made.
When we started, we're based with a really different set of assumptions about the scale that are now our customers demand to operate on. I think that will necessitate some architectural changes. As I said, it's sort of a privilege to have to go through those architectural changes because it means that you've got your business really driving your technology direction, which is the way it should be. But it is does mean architectural changes are necessary. And you look at like the technology approaches like our DMP project, it really represents the way you build a B2C service.
And now we're learning, okay, how do we apply that to our existing models and how do we make sure that the platform that we expose to our developer ecosystem feels really consistent despite the fact that they are really based on a very different set of assumptions historically.
Thank you. It's Brent Bracelin with KeyBanc Capital Markets. Two questions, one for each of you. I'll start with Parker. I want to understand lightning and the importance of Lightning moving that installed base from classic sales force to Lightning.
It seems like it's a pretty important driver for you to enable these new add on features. So where are we at? What portion of installed base has kind of adopted lightning so far? And how do you accelerate that in base that installed base moving over? And then for Brett, as we think about the opportunity for Salesforce 2014 Dreamforce, it was Microsoft 16, it was Amazon.
This year, it's Google. I guess the next question would be, what opportunities do you see with Facebook potentially? What were you doing with them today? And then maybe what could you do with Facebook in 2018?
So Lightning really originated with the idea that the UI that we built and the UI technology that we built 18 years ago hadn't really changed. It was still roughly the same model of web in 1999. Go to the cloud, ask from HTML, you get the HTML. And so the dynamism of the page wasn't great, the ability to customize it. We did a lot where you could reorder fields and add sections, but you couldn't really manipulate it.
It wasn't as plastic as more modern technology. And also just we saw a lot of startups doing a lot of really interesting things with productivity in sales in particular like making a flow of a sales process be more effective and faster like less clicks. And so we studied a lot of our customers and really started with the designs first and then the technology was part of that. And we focused on Sales Cloud first. And so we've moved a lot of our Sales Cloud customers over And we analyze what are the blockers.
We have AI that looks at logs and says, well, we know that this is a blocker for a lot of customers, even little things. And we've knocked those we've knocked pretty much all of those in Sales Cloud off. Service Cloud is right behind. I would say, in terms of with this current release, we're headed into a lot of our enterprise customers moving over. But it hasn't been brought a lack of effort.
So if you go to the 2nd floor of Moscone West, you'll see a whole section dedicated to lightning, to talking to customers, to listening to them. We've done a lightning listening tour. We've gone around and heard from customers. It's very, very important to us to move our customer base over. It's also the foundation, frankly, because it's such a good more modern tech stack for UI for us to integrate our other assets, all the ones that we acquired.
So when I want to put a Quip component inside the UI, it's way easier. It makes it it's very, very simple for me to do that with Lightning and build a Lightning component or bring Marketing Cloud in or in Service Cloud, I want to see the current order or the current shopping cart of a customer that's calling in from the Adidas website, for example. And so lighting is critical to us. It's really part of our future. And I think it's also part of this integration story.
And did you have a follow-up? I didn't mean to cut you off. Yes. So to answer your question about partnerships, so the question, given the legacy of partnerships, what are the opportunities with Facebook? Broadly, the way we think about partnerships with Salesforce is that Salesforce is should be a part of your IT strategy that integrates with all the services you use.
And so our partnership strategy really reflects what are the major technology players that we have common customers in common with that our customers are asking us to more deeply integrate with. And so you saw that early on with Office, then obviously you mentioned Amazon and now Google. And I think it is really based on that. Facebook is a customer of Salesforce, a customer of Quip. And today, we the workplace team announced that they're integrating more deeply with Quip, which obviously helps them internally since they use both quite a bit and which essentially enables both Facebook to be embedded as a live application within Quip and also Quip documents to be more easily shared within their workplace product.
And I think that their enterprise strategy sort of manifests itself in Facebook Workplace. And the more common customers we have, the more we'll work on those integrations because it is sort of our just overall company strategy to really coexist perfectly with all the services our customers use. I think the real as I mentioned this before, it's something that I really internalize coming here from other companies is the mentality that our products aren't standalone products, but actually a platform that can be extended and customized, I think is really the strength of Salesforce. It's why 170,000 people show up every year because they're building really their own applications on our platform. What's really amazing about some of these applications is they're really being built by partners on these open APIs.
It's not a partnership or the contract. It's really like people building these applications because it's what they want, it's what their customers want. And I think that's really, for me, just reinforces what a meaningful differentiator our platform is relative to peers in the industry. And I think it really took me being here for a year and kind of seeing this community to truly appreciate that. It's truly the biggest differentiator of our technology.
Hi,
gentlemen. Steve Koenig with Wedbush. Brett kind of asked my lightning question. I want to just maybe elaborate on that and then ask you a follow-up about analytics. So on lightning, it seems like in terms of the technology work that goes on in the field, there's the most angst around Lightning.
It's still hard. It's still maybe not at parity yet. You guys are visionaries, so your job is to move on to the next project. But is the technology work done there yet or what more has to be done? And is the feel is the are customers ready to be forced to move to lightning yet?
On analytics, I just wanted to ask, what are you doing relative to kind of conventional dashboarding, etcetera, in analytics? What's the status of that? And for Einstein, for the predictive analytics, what are the most exciting use cases? Sorry, that was like 3 questions, I admit it.
Yeah. It's amazing how you guys can ask so many questions in such a short time. So for Lightning, I don't see us as forcing our customers or actually that hard. I think first off there is an education process that our customers just didn't understand what will it take. That's why we wrote a lot of code that does an analysis that they can run that says, well, here given your configuration of your org because of all the metadata that we have, we can actually read that and say, well, here is what it would take to move and here is what you have to do.
We are not forcing our customers to move. We are Many customers are fine right now, staying on the classic UI. But I am trying to encourage them and show them with carrots like there's a lot of good stuff in Lightning and it's good to move. It's also an opportunity for some customers to clean up old implementations. Technology gets old.
We did that at Salesforce with our own implementation where there's a lot of data elements that are no longer really used or they clutter the UI. And frankly, it's just causing productivity problems, but they're not prioritizing that work. So it's also a good use case for that. So I don't see it as this thing where we're forcing customers or frankly that it's really hard. Some customers that have a lot of visual force, which is another technology for doing UI, move over and they feel like, wow, I have all this visual for it, they've got to rewrite it all.
Well, you don't have to rewrite it all. It will work just fine in the Lightning UI. In fact, we've done investment in what we call the Lightning Design System to let you style your Visualforce so that when you move over with the Lightning Design System, all of a sudden your Visualforce will then look more similar to the Lightning UX. You didn't have to rewrite it. But again, we're investing to bring the customers over.
I would suggest you go talk to some customers, go to the 2nd floor of Moscone West. There's probably a lot of customers there talking about lighting and ask them directly. From my experience, the customers that are moving are super happy and much more productive. But the ones that are staying behind, they might have some reasons. It might be just a timing thing.
We're seeing in some call centers, they're choosing to wait a little bit. But that's been kind of this past year, I see this coming year where a lot of those will also start moving? Fundamentally, it's a big productivity win, but a change management cost. And I think People don't like change. I saw this with our own reps.
We moved them over lightning and just having the UI change at all, forget like any technical ever, just having it change, they merely say, well, I liked it that way, because I figured out how to use it that way. Our company hated the move from Outlook to Gmail. Like, oh my God, this is a big change. But now they feel much more productive using Gmail. So there's all kinds of aspects to it.
In terms of analytics, yes, about analytics. So if you've seen the evolution, we have our what we call our operational analytics, which is our built in dashboarding and reporting that you get as part of your Sales Cloud license, your Service Cloud license. And then you buy our Salesforce analytics as an add on with the Wave engine. The UI has been blended. So the same graphics library is now used.
So it's seamless. We also added a company called BeyondCore, which forgetting what we call it, that was the company we bought, but I forgot what the name of the product is. Einstein, yes, anyway, sorry, I forget the brand that we use externally. But that does AI predictions. We put a small bit of that inside of operational analytics, so that we can have more of a step ladder from operational analytics over to the Wave platform, so that customers start to see that value chain as they move up.
And we continue to invest heavily in the Wave platform as well, investing in ETL for bringing more data sets in and more connectors. We still have a pretty bullish strategy on analytics overall. But we're trying to we have I forget
how many is it, but
in terms of usage of dashboards and reports, we're looking at it. There's millions of dashboards and reports that are getting run every single day. And so what we wanted to do is make sure we embrace those users and show them a path forward and get that kind of virality aspect of moving those users up the value chain. And then there is a third question on Einstein. For my Einstein?
Well, that's the whole point is the use cases are wide open because it's a platform. And so it's up to our customers to go figure out what they want to do. The beauty is that you can with just a little bit of data and a little bit of machine learning, you can do some pretty cool things. I think the problem is most companies spend their time trying to figure out how to do the process of AI, how to do the data management aspect of AI and the machine learning and figure and you haven't actually solved any problem yet, you just built the AI machine. You bought 13 companies.
They're all doing the same thing, same open source stacks, same pipeline. And what we've done is we've automated all that. And now our customers can then use that and not worry about they don't have to be the data scientists. They can say, well, I want to try to predict this thing for my business. The example in the demo yesterday in the keynote was attrition.
Attrition is different for every single business. And so I can't build that into the product out of the box. But I can give you my Einstein so that you can predict your own attrition and all of our sales customers want to do that. We have a research group and so what we are doing now is with these early customers that are starting to be turned on to that, we're working with them and we're looking at those use cases and making sure that the AI is successful for them, that they're picking the right use cases. I'll probably have a better answer next year.
It's a brand new offering. But again, we're still staying very true to our core CRM market and looking at the CRM use cases of how to sell better, service better and market better to your customers.
The one thing I want to say that you for I assume all of you saw Mark's keynote. I mean, this focus on trailblazers, which I would describe the media and trailblazer is someone who is a developer who doesn't necessarily know how to write code. She or he is someone who's trained themselves on the Salesforce platform, taught themselves how to administer a Salesforce instance, create custom objects, custom workflows and really be an expert in their business and using technology to implement that. And what's really powerful about this product and really represents our product strategy is how do we make these technologies accessible to a broader range of people so that they're not limited to coders, not limited to software engineers with computer science degrees. And the reason for that is extremely strategic.
There's orders of magnitude more people who can administer Salesforce and set up an Einstein prediction using this new technology than someone who could set up a data pipeline using sort of the traditional open source tools. We think by democratizing it, you'll end up unlocking a lot of business value, open the door for a lot more people to participate in building these sophisticated predictive applications. And that democratization is such a key part of our strategy. And it's the reason why so many people are at this event. And it's a key part of our kind of our strategy to get people give people an on ramp into technology.
That's why I'm very excited about it. I think there's lots to be solved. The predictions won't work if it's not the right amount of data. There will be a lot of things that we probably need to improve in the user experience, help guide people on what's capable of being predicted effectively in it. But I'm really excited we're taking the bold step democratize it.
I think it's pretty unique in the marketplace.
Hi, it's John DiFucci from Jefferies. And questions for Parker. As you start to partner with these public cloud vendors, AWS and Google, are there any limiting factors with your existing stack, like you mentioned the Oracle database, do you use RAC? And if you do, like I don't think that Oracle allows the typical customer to use RAC on AWS. Maybe they do you, but because it's unique.
Yes. So
in our core system, we do use Oracle RAC. When we implemented our core system sales service to run on AWS in Canada and now in Australia, we re architected it so that it did not require RAC. And so it's running more on single node database on EBS. I think that architecturally that's more of the direction I want
to go
anyway and look for more ways to have replication over clustering, which is essentially what we are doing on Amazon. And I think that rack is a great product, but it's highly complex. And so when it works, it is awesome. But when you have a hiccup and at our scale, hiccups happen more often than for most people. You get these weird timing things, you have problems.
And Oracle is a great partner. They support it with whenever we have a problem, they bring their best people to the table. So thank you, Oracle, for that. But I do want to try to over time simplify our architecture and I do think not having RAC will be a good thing for us over time. But it gives us a lot of scale and it gives us the redundancy in a single cluster that we are not quite there yet.
We have it running on AWS, as I said. We are proving it out there and we are learning a lot from that implementation and we are going to take that and then move it forward. And we probably over time will bring that kind of topology back into our own data centers. Yes. So the question is, are you seeing diminishing performance?
It's too early for us to answer that. I mean, it's impossible, kind of impossible. It's very complex to compare running on Amazon versus running on our own equipment. There's so many variables in the differences. It's probably not a fair comparison.
So but it's too early for a a Canadian implementation. We don't have enough load yet to really say, but give me a little time, it will be there.
All right. Do we have any more one more cash?
We brought them to that, Parker. It's perfect.
Yes. I'd like to piggyback on John's question because I remember talking about RAC as John does in 2003. So back to the present, Oracle talked about an AI smart database, self healing, etcetera. What do you think about what Oracle is doing with AI capabilities to the database? Is it being too ahead of themselves?
Or do you think as a customer, it's practically relevant for you guys?
I don't know a ton about it, to be perfectly honest. And it's way too early for us to even look at it. I think when we look at adopting technology from a vendor like Oracle, we are pretty conservative about the next version. So we would not be like, great, the brand new thing, let's jump right on it. I do think that AI can be used in a lot of use cases and AI is an interesting use case for databases for self healing.
At the same time, I am trying to simplify the architecture so that there's less healing to do. So it's great to have AI heal, but what if we could have less cuts? So both are good. And I think Amazon is doing some interesting things around database technology. The Aurora DB is pretty cool.
So you could maybe call that self healing. So but we're not in the database market. We're not trying to sell databases. We're trying to use them. As Oracle's technology evolves, we'll continue to evaluate that.
We'll evaluate open source technology. We'll look at services that
are on Amazon, on GCP.
So we will look across the board. We are always trying to keep an open mind of where to go.
Yes. I was just going to say along those lines, I do think that the architecture of consumer scale services tends to look very different than some of those technologies and it's definitely influencing our technology direction as well. I think Parker's comments about DMP and the marketing cloud sort of are relevant here too as we go forward on our data strategy as well. I
think our brains may have been frozen into dysfunction, but I'll try and get this out. In terms of there are a lot of different data stores at Salesforce and different kind of underlying architectures and over time that would seem to be an impediment to both working across the platforms and also just the general efficiency. But how do you move all the data to some grand unified data store? And is that an idea? Is that a plan?
Or do you think you just end up running on parallel and building links between sort of, but stepping out of like whether that's Oracle or not or Amazon, is there an idea at the end of this road that there is a single grand unified data pool or is that just hopeless?
So probably 2 years ago, I spent a lot of time writing on whiteboards, big circle in the middle of like one big giant data lake, I got a data lake, that would be really nice. It's unrealistic, I think, to for any enterprise, for Salesforce, we'll continue to add new assets, we'll acquire other companies, Nothing to talk about today. But we will add other things. And as I said, we acquired a whole bunch last year. So, yes, we have data a large set of data sitting in Oracle.
We have a large set of data for market cloud sitting in SQL Server. We have got the DMP. We have data assets in our own places. Step 1 is back to that lightning conversation and looking at moving people over. I want to make everything we have now work And it's going to work in a federated way and data is going to be in a number of data stores.
But we're building some new services that are going to enable how do I know that this piece of data is the same customer over here in Marketing Cloud as is it Adidas here in Marketing Cloud, Adidas in Commerce Cloud, Adidas in Sales Cloud? We are building some services that will create the right security layers, the right identity layers and privileged communication so the data can flow. And then we are building services to do, I won't call it master data management, but how do you do customer mastering, because it's important, a customer comes into the DMP, it's anonymous, then they buy, then they log in and they're at the Adidas website and they buy the sneakers and they go to Service Cloud and
they say the sneakers are
the wrong size. Service Cloud has in Oracle, a customer table, need to make sure that everything gets synced up nicely. We are building some technology that's going to support that. That technology will also be super useful. This is a problem every enterprise has.
This is not unique to Salesforce. It's a problem with data management in general. So we have a grander vision of how all of these services will work and the topologies of our customer. So what is Adidas' architecture? What is 21st Century Fox's architecture?
What's T Mobile's architecture? And how can we have all these services work together? Over time, I do think that there will be inertia and gravity of some assets that will come together. So I do see over a longer period of time data that is in our marketing cloud that is used for targeting and segmenting and doing journeys and doing email and SMS campaigns will come together over time with data that's in the DMP. That's a very closely related asset and you want to do segmentation and you're just kind of doing it in both.
Those should come together over time and we're looking at that. And so I think there will be gravity where pools will come together. But requiring that everything is one thing, requiring it comes together can be a science experiment. And what I found when I was on the whiteboard is, I made the mistake that I always tell my engineers never to do. I didn't write down the customer name and say, well, who's the customer and what's the use case I'm trying to solve here?
I was just doing kind of what you're saying, which is, well, shouldn't there be one pool and shouldn't it be this and how would they talk? But that's not what's interesting. What's interesting is what does the dealers need to do and what is the use case? So we have a use case of service for commerce, commerce journeys. Those are specific use cases and who are the customers for those use cases and how can and let's get some of the engineers and architects to go talk to the customer because they know.
And many customers are doing some of these use cases themselves. Louis Vuitton is doing some of it. Adidas is doing some of it. And so they are telling us like, yes, take those off our back and do it for us and make it easier. And so that's really the journey that we're on.
It's a multiyear journey. This is not something that's going to be solved overnight. But it's a fascinating one. It's one that I'm spending a lot of time on, which is keeping me energized here at Salesforce.
All right. Well, with that, we actually have to wrap up. So join me in thanking Parker and Brett. Thank you. And stick around and we'll start with Mark in about 5 minutes or so.
All right. So welcome back.
I obviously am very pleased to introduce Marc Benioff, Chairman and CEO of Salesforce to sort of wrap up the day. So, Marc, without further ado, thank
you so much. Thanks, Marc. Yes.
Well, welcome everyone to Dreamforce. Are you guys having a good time? Are you okay? Good. Before we start, we just finished an amazing hour at the Yrumaena Theatre across the street with Diane Greene, who's the CEO of Google Cloud and a member of the Board of Directors of Alphabet.
And I thought I would just turn it over to her to start out and kick it off for the first five minutes and tell us about give us an update on
how she's doing. So Diane, please welcome.
I'm short, so I'm going to and Mark doesn't need to get on the platform, but I do. So yes, thanks, Mark, for the opportunity. I mean, this was a big announcement for us, getting core services are going really well at Google Cloud. Our productivity and collaboration suite deeply integrated with Salesforce will increasingly be integrated. And then a promotional way of getting it out to all the customers has been really well received, had a lot of great feedback from customers here at the conference.
And then the other great thing is really, one, Google came together here where the ads folks are going to work with Salesforce and so customers can join all their data together, the first time possibility. And I think that's just huge, the 3 of these things together. And all of it is really quite customer focused. The decisions we've made were really what was right for the customers. And so it's been really well received, and I that's really what I wanted to tell you about.
Thanks.
Well, please thank Diane. Thank you, Diane, for being here. Okay. So I'm happy to spend the next hour with you and answer any questions you have. And if you don't have any questions, we have Alicia Keys and Lenny Kravitz waiting.
So it's really your choice. We can do Alicia Keys and Lenny Kravitz or we can stay here. What do you say? Okay. The other thing is, I also want to introduce you that we have a number of members of our management team here, including where did Keith go?
Oh, great. Oh, yes, hiding in the back, Keith Block, our Vice Chairman and COO. Also, we have our Chief Financial Officer here, Mark Hawkins. A number of we have, I see Brett Taylor, who is here, the CEO of Quip. And well, David Havlick and anybody else.
And then, oh, Amy Weaver is right here, our President of Legal. Tony Profit is here, our Chief Equality Officer. Who have I left out, I'm always going to leave out somebody. And I'll joke folk, my Chief of Staff and where? Brett Taylor, I got him.
And we also have 5 members of our Board of Directors here as well, John Roos, Craig Conway, Maynard Webb, Alan Hatzenfeld and Cindy Robertson. So welcome to our Board, including our full compensation committee. So we're going to talk about my comp after this. They love that actually when I say that. So, okay.
I'm happy to take any. We don't have any questions, so we'll just break. Okay.
Hey, Mark. It's Adam Holt from MoffettNathanson. How are you? I'm doing great. So I had a question about the long term revenue target.
You it seemed like went out of your way to talk about organic growth on the last conference call. And Mark this morning said that, I guess this afternoon that the other Mark, the $20,000,000,000 to $22,000,000,000 target is an organic revenue target, which is a little bit of a different trajectory than, say, the past where you've obviously done some critical acquisitions. Could you talk a little bit about that evolution from doing a little bit more inorganic growth to a vision to doubling the company again with an organic trajectory? Thank you.
Yes. Well, I think that there's our growth has been mostly, I would say, organic. I think that there has been 2 major acquisitions that really you could say were added to kind of an inorganic level. 1 was ExactTarget. When we bought them, I think they were doing a few $100,000,000 We've obviously grown that, I think, to well north of $1,000,000,000 now.
That's fast tracking to many 1,000,000,000 of dollars. And we also last year bought Demandware, which also was kind of doing a few $100,000,000 when we bought it and is, I think, fast tracking to be in the multibillion dollar range. And those were very opportunistic moments, both of those also were created somewhat, to use the word again inorganically for us as well, that is we were not actively pursuing that. It really was coming at us because of competitive pressures that we didn't want those go into competitive hands. We had pursued a situation where we were involved with another target that we were not able to acquire before ExactTarget and that really put us in our mind that we have a phenomenal business.
It just continues to deliver and exceed our expectations. You can see that with the incredible customer momentum that we have with all these, we call trailblazers who are here. So for us to actually get out there and make a major acquisition, there better be a really good reason to do that. I think we have had that vision from the beginning. I think we continue to have that vision.
So somebody is going to have to force our hand before we get involved in something else. Does that kind of give you the thing? But it's not we have to keep an open I always say this all
the time, we have to have
a beginner's mind. We have to be open. We can't just say, we're not going to do anything because believe me, if ExactTarget and Demandware had gone into another company, I would not be happy about that right now because it's such an incredible part of our story. Like when we talk about sales, service, marketing, that huge part of that marketing thing has really been born out of that exact target vision, community, analytics, platform, apps, commerce. And of course, we've had a lot of great startups that we've been able to bring in as well.
Those are obviously much smarter, smaller, a lot of them smarter too. But a great example is Brett and his company has been phenomenal acquisition for Salesforce.
Does that answer your question?
Okay.
Hey, Mark. Cash, Ronnen. How are you? 15th Dreamforce sounds very exciting. I think you've been all 15.
Yes, I believe so. I met you at your very first reinforce. You kept telling me that you're going to do X in revenue and I came back and said you already did that, what next? And you said 2x, 3x, 4x. No, I don't know, it's 10x at this point.
So congratulations on the journey looking backward and here's to more. My question for you is, thought of asking you about growth ahead, but I think you answered it in your first question, Adam. As you look at the partnerships that are being formed in your industry, you're aligning with Google, you've got Microsoft with Adobe and you've got SAP and Oracle and you've got this big theme digitization of the enterprise ahead. How do you see these battle lines being drawn? Are these partnerships of convenience?
And I forgot to mention Amazon on your side as well. How does this all shake out? What does it take to win? Is the partnership thing a temporary thing? Or is there something more enduring as you try to be the dominant leader in digitization of the enterprise team?
I think a lot of it is driven by customers. It's customers wanting us to work with other vendors is very important. Some of it is strategic. We have an incredible relationship with Amazon. You know that.
We've deployed those 2 data centers with Canada and Australia. We also acquired a company, at Adams Point, Heroku, which was a small company when we bought it. This turned into an incredible asset of our product line and that's built on the Amazon infrastructure. We also have an incredible relationship with IBM. Ginni Rometty is going to be here tomorrow, the CEO of IBM.
And you can go down and see like at the customer success showcase, KONE and what we've done with IBM or many other organizations that we're profiling here. That has been an amazing relationship. All of our data centers, if you walk through them, have a huge amount of Dell equipment. That's been an incredible relationship. Cisco is an amazing relationship for us as well.
And now we have this incredible relationship with Google. Now the Google relationship has really been around for quite a long time. You probably remember when Eric Schmidt came to Dreamforce and spoke here and where we originally very much encouraged them and tried to motivate them to become more enterprise focused to get G Suite was now called G Suite, but was originally known, I think, as was originally was it Google Docs and what? Google. Google Apps and Gmail and have more of a partnership with it.
Now that's really turned into, I think you look at they have a very rich product line for the enterprise. Diane is obviously a highly experienced enterprise leader, especially with her work with VMware. She knows how to go to market. She knows how to partner with us. But it's even more than just Diane's business.
We're also brought in Sreedhar and his business, which is Google's biggest business, advertising, information, and he has web analytics at a level of scale and capability greater than anyone else. So when you look at that asset, that is very compelling for us to really integrate Google Web Analytics deeply into Salesforce, which is our intention. You saw that amazing demo in the keynote yesterday where all
of a sudden Google Analytics looks
like it's a native part of the Salesforce system. It can give customers an insight greater than anything else. This has been a vision that I have had for a while. To see Google come together as one Google exactly as Diane said is pretty awesome because that is this is a first of a kind relationship for Google, this strategic relationship. That is it's not just Google Cloud, it's all of Google that we're able to come together and bring all of their products and look at how are we going to integrate with them.
That is really where it became super compelling for us. And I'm very excited about that. I tried to really articulate that in the keynote and demonstrate that power. But when you look at G Suite plus the cloud plus analytics, it's pretty awesome. So all of these partnerships are very important and it is high maintenance because they are all some of them are competitive with each other as you know.
But that's our job is to make it all work And we plan to do that the best that we can.
Does that answer your question?
All right. But I couldn't be more excited about that this worked out and that they're so excited. And I exchanged some emails last night with Sundar and I was like, I just couldn't believe what a great job that Sreedhar and Diane did in the keynote and we were on Mad Money last night and I'm like, wow, this is really a dream delivered for us.
Thank you, Mark. Heather Bellini with Goldman Sachs. You started out with 1 cloud when you first started and you have 8 clouds today. How do you see the company's footprint evolving and how do you decide where to take it next?
Well, it's
a tension between exactly what you said, which is we have these different clouds and how the customers view it, which is that they want a single unified CRM platform. So when the customers look at it, more and more what they say to us is, it's sales force. And when we look at it and when we report publicly also the numbers, it's all these unique product lines, sales, service, marketing, so forth and so on. And you could even say we even have another amazing cloud that's emerging, which is Trailhead. I think to see Trailhead and the response to Trailhead, I knew that was going to happen, but I was just down at the customer success showcase and around that Trailhead station and the demos, you can't there's no availability because this is something that every customer is going to want since the emergence of yet another cloud.
That said, what customers truly want is 1 unified CRM platform. Over and over again, that's what we see. Now we have a comprehensive solution for them. It's partly organic development, partly inorganic components that we've acquired. And our job is to bring it all together and make that a unified solution for a customer.
I think that we have actually done a great job of that. If you go through the show, it absolutely reads as one unified platform and that continues to be our desire. That said, we'll continue to focus on growing and making sure that each of these businesses grow uniquely in their own markets. Each of those businesses in many cases has their own buyer in the company, you know that, and also have point competitors as well. So we manage those businesses independently, but have to keep that big vision in mind.
Does that explain the tension? Okay.
Does that answer your question?
Okay. Thank you.
Hi, Mark. Karl Keirstead of Deutsche Bank. Thanks for another great Dreamforce. Mark,
I wanted to
ask you about how you feel about the broader demand backdrop, not just for Salesforce, but for software. This has been a pretty amazing year where more so the cloud vendors like yourselves are having great years, not just you, but some of your SaaS peers. But interestingly, a lot of the on premise vendors are even putting up decent numbers. Maybe they're declining at a slower pace than we were thinking. And I'm wondering, as you interact with customers, what you might be hearing in terms of their spending intentions that could explain why we seem to be having a
pretty good year in software. I really think that every customer is going through a digital transformation. Those are words you hear a lot from the consulting companies. But and I wasn't sure exactly how to perceive those words. But now when I talk to customers and I have met personally with hundreds of customers, especially in the last just 3 or 4 weeks because I've been on the road pretty much nonstop kind of dialing up what we're doing at the show and the messaging.
Every customer is going through a major digital
transformation and I could just tell you story after story
after story that I've happening really at the CEO level. And I think that's creating happening really at the CEO level. And I think that's creating a huge amount of demand through the whole IT industry. From our perspective, every digital transformation starts with the customer that when these companies are designing their digital transformation, we encourage them to think about it from the customer out. And that has been a successful story for us.
We continue to really focus on owning that one word customer with our customers. And I think that other vendors have their own words that they're focused on and kind of the market has moved into certain areas. Everybody's kind of finding their role in place. And I see that in the market and I see a lot of interest and a lot of demand. And I would do anything if we could turn these spotlights off since we're not broadcasting this on video.
Not that I'm a little bit glared out. Okay, yes. I'd do anything to turn them all the way off. Now you're talking my language. Thank you.
Hey, Mark. Alex Zukin with I hope that's okay for everybody.
All of a sudden, I've seen spots. I'm like, why am I seeing spots? Oh, yes, the lights, okay.
Hey Mark, over here, Alex. Hopefully that's why I have
seen the spots. Okay, go ahead. I wanted to ask a kind of
big picture thematic question. As you are seeing AI almost become the new UI and you think about all the value that's increasingly being delivered by the automation and prediction capability, how do you think about evolving the pricing model within across your portfolio of products beyond Persea? And where does that look like 3, 5 years from now?
We have a lot of different pricing models now. You'd be surprised that the different pricing models we have, whether it's in the marketing cloud is different than our kind of core sales cloud and even Quip. And we have usage based pricing as well. And I think our approach is mostly around the customer. It's we have a direct sales organization.
The power of having a direct sales organization is we can really have that unique relationship with the customer and customize for them. And as they shift or want different capabilities or prices from us, we're going to evolve that pricing. We're not going to be religious about any one particular pricing model. This has really worked for us. We've evolved a lot.
I think in our very large relationships with customers, we look at it more in terms of the total AOV anyway and where we're going with them on the big scale. And that has been, I think, a very strong evolution. And that's how I see it going. But I don't want to take any religious positions on that.
Does that answer your question?
Okay.
Thanks. Walter Pritchard from Citi. Just putting on kind of your industry head and thinking about how this market may play out, you have sort of the SaaS players and the infrastructure as a service players, mostly separate companies. In fact, you've got Amazon kind of locking up as many of the SaaS players as they can to run on their infrastructure. It feels like as the market plays out, Oracle's, for example, got all the applications vendors on their database and then ultimately entered that market.
How do you think about you've partnered with Google, Amazon, Microsoft as a competitor. How do you think about how that consolidation between the apps and infrastructure layer may take place in the cloud?
I think it really a lot of it will be customer driven and a lot of it will be built around, I think, point solutions honestly. What I have seen is sometimes when we get into this suite mantra and this kind of, well, it's got to be the whole integrated suite and that's a view of a company that has everything. I mean, we certainly take that position when it gets into the customer suite perspective as well. But really that kind of Heather's point, which is it gets right down to we have very discrete competitors in each of these components and you've got to keep your eye on the ball on each one of these things. I think there will be a lot of vendors who offer a lot of different solutions that are targeted to different customers.
And I don't know if there will be kind of this kind of mythical consolidation of the industry. Heard about that a lot over the last 30 years. I've yet to I'm yet to be convinced that that is going to happen. I'm sure there will be some things
like when
we buy an email marketing vendor or we buy a commerce vendor, but is the industry going to broadly consolidate? I don't know. I think the one wild card honestly is repatriation. We talk about that a lot on our management team and at our Board level. If repatriation happens, which is
also mythical, I've kept thinking it's going
to happen and then it hasn't happened. I hope it does happen. I think it'd be very good for our economy. If a repatriation happens then I don't have a philosophy. I don't know what is going to happen when all of a sudden 1,000,000,000,000 of dollars come back and that companies have unlimited cash.
Will they acquire? Will they do stock buybacks? Will they give the money back to shareholders? What will they do with it? I don't know.
So that I can't give you that vision on that side. But mostly I think things will continue exactly as they are right now, which is the industry is moving forward in exciting lots of exciting areas. And then if repatriation happens, then I think things could definitely change.
Hey, Raimo Lenschow from Barclays. We talked a lot about AI at the conference. I just wanted to bring it a level up. If you think about the opportunities there, we can almost kind of reimagine like how a sales cloud works because it was a system of record, it's now a system of engagement. You can see it across all your product portfolios, but you can also see how the level of automation will completely change.
Some of them, like you saw our friends from Tesla just kind of saying we need to kind of regulate that a little bit more. How do you think about the whole impact of AI is slightly broader than just kind of on one level for Salesforce? Thank you.
Well, I think if we had Richard Soetra up here or Brett up here, they're going to answer it differently than I am. So I think you kind of answered the first two parts of the question yourself, which is that our industry has 3 layers that are getting more amplified. The first one is the system of record that has been around for a couple of decades, started with the mainframe, this idea that we have a system of record in the database and then that really got enhanced into a system of engagement. For sure that's true with Salesforce too. We were a systems of record that became a system of engagement, not only in how our system works, but how customers interact with that.
And then the 3rd component of that that we're really seeing get unveiled in our industry is a system of intelligence, okay? Now you could say we're also moving to a system of transaction as well, okay? And we could look at what that could mean. But let's say it's either those 3 or 4 components, that wheel, that's really a full illumination, I think, for the customers in terms of where they want to go, especially when it comes to our type of capability with the customer. There's just no doubt about that.
They want to have a system of record of the customer. They want to have system of engagement with the customer. They want to have system of intelligence, which includes analytics, by the way, not just AI, but don't forget, we're going to do more we do more than 1,000,000,000 dashboards and reports a month, right? So they want to have that basic analytics, they want to have advanced analytics and they want to have artificial intelligence, the full arc of intelligence, from basic to advanced, including AI, including AI as a platform and the full capability of transactions, including the ability to share data with other customers as well. That wheel, I think, as it applies to CRM, my dream is that when you think about those, whether it's those 3 areas or 4 areas, you think Salesforce has that complete system of record, system of engagement, system of intelligence and system of transaction that that's we offer that complete solution for the customer.
And I think we're getting really close. I think if you go down and you look at the technology and see how customers are implementing it, we're getting close. Is that going to highly evolve over the last 5 years over the next 5 years? Yes. Just as it has highly evolved over the last 5 years.
But a lot of this technology that we see kind of getting unleashed, especially in the areas, for example, of Einstein and AI, which just a year ago was were just the beginning of that story, right? Now look at where we are just 12 months later with so many customers who have deployed that technology, I think that's only going to continue to accelerate. And if we can do that in one key way, and that is declaratively. Over and over and over again, when we release a new technology and our engineers kind of get out there, whether it's analytics, whether it's IoT or whether it's AI, we have mostly built it initially programmatically. And most of the interfaces initially are programmatic.
And customers, when we do that, kind of have a cool reception to the technology if you look at our history. It's kind of a phenomenal thing with Salesforce. Now it's the right thing to do from the engineering perspective because you want to have that really robust capability, but then you've got to make it dead simple for the customer to use and that's where the declarative interface has to step in. This is Salesforce's magic sauce. No one else is doing this in the industry and I don't really know why.
When I started in enterprise software kind of coming out of the consumer side, when I was making I started programming video games and then worked at Apple. And then when I went to work at Oracle, really the whole rage was 4 gs else. And this whole idea that you had to clear high incredible declarative environments. And there were so many amazing companies doing that, not just Microsoft, but Ashton Tate and others. As we moved into the cloud, there's just not that many super robust declarative environments.
You go out and look at these customers and all these people who are doing this work like in Trailhead Land in Moscone Center on the 1st floor or Einstein Land or Lightning Land and all the customer success land down in Moscone. These are not coders. These are business professionals who are trailblazers who are able to access and use a declarative platform to create business solutions. This remains and continues to be Salesforce's, I think, secret sauce and really where a lot of the power of the company comes from. It's enabling these professionals who have transformed their lives and their careers.
If you look on the Internet, the stories that they tell, it is really warms your heart and it gives you this huge emotional connection with these executives. And they're all here, you feel it. I can see it when I walk around, I'm looking in the eyes of these people, every single one. I've gone over there to Moscone Center in the last 2 days, I don't know, half a dozen times or something like that. I'm watching that and I just am like, who are these people?
These are not the people who are the super coders at the top of our there's not that many of them up here. It's a reality, okay. These are the business professionals who are now fully empowered with technology. And one of these key technologies has to be, and you kind of touched on it, AI. So as we reveal analytics, IoT,
AI, we've got to be able
to deliver that in a way that empowers all of these people and gives them that capability. And that's what we want. We want to be able to get them to march forward. So when I'm talking all of them and less them, I'm feeling very good about what the technical teams have done, because they really are getting zoned in on that mantra, but it's got to be about the declarative capability. You can't give up the code and the code and the APIs, but we have to have no code, we have to have low code, we have to have high code, we have to have the full range and that is I think remains the power of the Salesforce platform.
And I don't think there's any other platform like that today in the industry of any scale or consequence that has this kind of reception that you see from business users when you walk around. That's what I That's what and that's what I'm looking for by the way. That's my fundamental organizing principle of this whole company is trailblazers. There is nothing more important to me than these individuals. I live it every single day and I'm just trying to continue to get the company more and more focused on these users.
Does that answer your question? Okay.
Hey, Mark. Kirk Materne with Evercore. Perhaps an unusual question given you just announced a big partnership with Google. But I actually wanted to ask you about Microsoft and this idea of you're always going to put the customer first and a lot
of your biggest customers are
going to have Microsoft in their organizations. I think we all understand why the rhetoric from a competitive standpoint is obviously amped up over the last couple over the last year in particular. But when I think about Microsoft, I think about you, you guys compete on a very, very small percentage of their overall revenue base. And the benefits for customers in a multi cloud world to have you guys work tighter together, it seemed to outweigh that. I guess the point is, is it possible for that for you all to kind of come back together on behalf of customers or perhaps that's going on in the field already and we don't really get to see that as much?
No, there's always one person in the room who's using a Surface laptop, so I get
that. And it's you. Who else is
using a Surface laptop? Raise your hand. Okay. We got 3 people. And how many are using Macs?
Raise your hand. How many iPads? Okay. How many PCs? And then we got the 3, Surface.
Look, they're 1% of the CRM market. You know the numbers. I like having competitors, but what I just get blown away with is how they just can't keep that management team in place. They just keep leaving Microsoft, you know that. And I think they don't have confidence in that ability to execute in that business.
So that has weighed to our favor and customers feel that. You know, because you go to these conferences just like I do, there is no conference like this that they do. And that's the in my opinion, the mark that is why is it that they don't have anything like that? That when they pull a conference like something business, it's always all the resellers that come together and then where are these people? Now that isn't to say they don't have like build where they get those really high end developers using the IDE, you know what I mean?
Is that the conference I've been to where I'm like, oh, yes, these are all and they're all Windows they have a Windows fever and they have Windows API fever at the conference, but I haven't seen that in any other part of their business other than the Windows API. Maybe they'll get it in Azure, I don't know, but I haven't seen that yet because when the last time that I went to the conference, I didn't see that. I only see that fever around the Windows API and the Surface laptop.
Thank you.
Thank you, Mark, for taking the time to join us today. When we talk to your partners, what they're most excited about is the digital transformations they're doing within your customers, really changing the way they're doing their business. When we talk to Diane Greene about sort of what she's trying to do on GCP, it's trying to enable digital transformations within her customers as well. I think this is a rift on Walter's question. Does GCP and AWS, does that eventually become your competitor because everyone is just trying to enable those digital transformations?
I don't know. I haven't seen that. That doesn't seem the trajectory of these platforms. And I don't really think so. I mean, I really strongly believe that every company has its ethos and its customers and its users and its tribe, if you will.
And I think we know who our tribe is. And we're staying with our tribe. And I think the other companies have their own tribes and their own users. They try to expand in different areas, but you've got to pick your focus. I think we all know what Amazon should be doing to focus, what Microsoft should be doing, focusing on Amazon, what Google should be doing and what we should be doing.
And we should be singularly focused on this incredible market, which is customer and CRM. I mean, it is the biggest, most exciting market in the industry. You've all seen the numbers. It's the fastest growing it's not only the largest part of the enterprise market, it's the fastest growing part of the enterprise market. It's the point of beginning of every digital transformation for a customer.
We have to be the absolute best in those areas. And those key points of functionality like what Heather was saying, we have to be the best in each one of those areas. So that's a very different strategy I think than any other company. You go to all the analyst meetings, you see every company, we have a unique strategy. We have a unique we are focused, I would say.
And you have to agree, this is a company that has a very singular focus on the customer. So when I wrote the slide for the first slide, welcome or calling all trailblazers, okay, Customer success in the 4th industrial revolution, it's all about customer success. It's all about saying to these customers, we're here you're thinking about a customer process, we want you to be with Salesforce. So anything in the customer folks process area, that's where we want to be. We're not over here in the HR world.
We're not over here in the financial. We got our hands full right here. And I think that that focus has really paid out for us. And along the way, of course, there's always people coming and say, you've got to go over here to this market, you've got to go over here to this market, you've got to do this, you don't understand how big that is. And I was kind of like, well, have you seen the opportunity at hand?
And we only have so much resource. So let's focus our resource on what the market that we're going and that's been a very different strategy than any other major enterprise player. There has never been a player before, it's only been focused on customer. And that's all we're doing. And I am not ready to change that strategy.
I don't think there's any reason to, well, as evidenced by this conference again. I think you'd hear it with the customers too. I think customers would there would be a drumbeat or there would be an echo. Yes, you guys should be doing this or why are you not doing that or what about this or what about that. And instead, I think they want more of what we have actually.
I think they want us to do a better job in each of our discrete silos and yet they also want us to do a better job of unifying the CRM platform and integrating, and they also want us to do a better job of being singularly focused on the trailblazer. 1, 2, 3. And that's what's in my mind. So I feel very in touch with the customer. I mean, I go out like I'm in Minneapolis, I'm in Chicago, I'm in Atlanta, Miami, I was in LA, I was in Orlando and I'm talking to these New York, talking Tokyo and when I talk to these customers, that's the residual that I come away with.
Mark, you just focus on those things. So then when you saw the keynote yesterday, which is by the way just out of the mind of the customers, not out of my mind, it's focused on those things, unified CRM platform, excellence in each of the discrete categories, And I think in a lot of things, some of those categories, even customers like, wow, that's possible now. And then 3, we are going to be deeply committed to you, our trailblazers. That's it. That's what's in my mind.
I really feel that's what the customers want from us right now. And when I talk to our management team, that's what I try to anchor back to them. Just focus on that. And that's what this conference is about. If you go down into the customer success showcase, you're going to see each one of those clouds illuminated, but the whole layout is the message.
It's all one integrated system, okay, and the whole trailblazer concept. And that's the whole show. That's it, 1, 2, 3. There's no other magic here. That's all we're doing.
And we just need to do that. By the way, those three things are not so easy. So we have got plenty to do just with that. And so everything plays into that frame. And so when we look at an inorganic acquisition or whatever it is, like Adam was mentioning, it's always in, okay, how is that going to affect 1, 2 or 3?
Because if it's outside of 1, 2 or 3, I don't really want to go there. I think it would be a mistake for us. And you can see like when we did the 21st Century Fox demo yesterday, right, isn't that a wow experience? Like I'm like, wow, When I'm with customers on the road in the last month, they're showing them that demo and getting them the feedback, it's a wow. And a lot of them still don't understand how a lot of those components work.
Even things like the DMP, the data management platform with Crux acquisition from last year, that is still very confusing to a lot of customers, it's even confusing to me. And all of a sudden, they're like, wow, and how does that work? And then how did that get plugged in over here? And then what does that mean? And then how do I do all of that?
And then a company like 21st Century Fox is basically saying the future of creative and content creation is going to be informed by data. And here's the demo and we have our whole creative team here to do that. And that was like, woah! And that is a big message. And I was with another major I was at a wedding last weekend and I was with the head of another major movie studio and I was telling him about this and he was like, we didn't we don't even know what are you doing?
Am like we need to come down and show you what the possibilities are and you can imagine a whole new business for yourself. That's where we are with so many of customers and only we can do that. Only we are going to be able to come into those businesses and have those demos by vertical, by industry or in the government.
That is so powerful.
It's me, Kashrangan again. Thank you, Mark, for taking my second question. You've said before that we tend to underestimate Have
as many as you want.
What do I care? Lenny goes on at 7.
So I figured we got an hour and 15 minutes to ask. Sorry, Lenny is more fun than these questions, I'm sure. You've said that we tend to overestimate really? I can't compete with Lenny, I'm sorry. So you've said that it's easy to underestimate what we can achieve in the industry over the long term and we can overestimate what we can do in the short term.
So as you look through the next 4 to 5 years, what do you think is the sleeper product of Salesforce that could end up surprising everybody? And as related to that, why can't Salesforce grow as fast as it has been growing in the past? Why only 20% growth? Why not grow faster because the TAM is so big, and your
share is so small, so?
Well, we've grown faster than any other company of our size, Scott. There you've all seen the slide. So we're doing the best we can. Could we go faster? Probably.
You might not like the characteristics of the business if we didn't. So part of it is I have to listen to you, you're also my customers. And when I meet with you, you always say give us some top line growth and give us some bottom line growth. And if you want to change that mantra, I can go a lot faster. So I'm willing to do that if that's what you're saying.
But all of our investors when I have an investor meeting grow the top line, give us strong durable growth of both the top and bottom line. And so we're going to give you durable growth. If you want us to go faster on the top line, then you've got to relieve the pressure on the bottom line. But until you do, we're going to give you both, because that's what you asked for and we're responding to you. So that is just something that you've basically you've shifted that in the last, call it, 24 to 36 months where you said we want more on the bottom line.
So we've agreed and we've continued to give you, I think, very good actually solid bottom line growth if you look at the curve over the last several years. But yes, it's going to slow us down a little bit at the top line. We're not going to give you everything on the bottom line because it would impact the top line too much. We want to continue to take advantage of the market. So it's a balanced opportunity.
And I think that's the right thing. Based on what you want, based on what we want, it's a negotiation. So that's where we are right now. If you want to change the negotiation, then we can talk about that. Do you think by the way, before I go on, do you think I'm hearing that correctly from you?
Yes.
Okay.
I just want to be completely connected at that level. Okay. Thank you.
I quite disagree with that. But I was just wondering, how do you balance that view versus maximizing the long term opportunity because ultimately for very long term shareholders which you want to have that's all that matters?
Yes.
Well,
I think that this is the right thing for the company. I think it has to be a partnership with our shareholders. I think we have many stakeholders. Our customers are stakeholders, our partners, our community, our employee and our shareholders are key stakeholders and our shareholders have spoken. They've said they want us to have balanced, durable growth on the top and bottom line and the management team and the Board of Directors has agreed to that.
So when we put out our projections, when we talk about where we are going, next year we're going to do $12,500,000,000 in revenue. There's only been 3 companies before us in enterprise software that have ever made that kind of projection that we've broken through the $10,000,000,000 level. So here we go and we're going from 10% what did we say we're going to do this year? 10.4%. 10.4% at the high end to next year, 12.5% next year.
So when we go from this year to next year, that is organically adding a size of most other cloud companies, right? When we go from 10.4 to 12.5, right? You guys all know the numbers that we're adding $2,100,000,000 in revenue organically. That's a good sized company that we're adding. And we feel very confident in our ability to execute that, not just based on our model, which is this incredible deferred revenue model, not just based on our when I go through the show, the level of customer satisfaction, not just based on the level of quality of our executive team and employees worldwide, the ability to execute on multiple product lines, like Heather was pointing out, the ability to execute across multiple geographies, that gives me the confidence to be able to do that.
And that's and I think that it's a very balanced approach between going all the way out and running a high quality business that's delivering to our customers and profitability and cash flow what they want. And it's a significant and I think that the metrics have been very, very good. So that's how I look at it.
Is that how you guys look at it? Okay.
That's what I mean, I'm trying to hear what you guys want and that we're very sensitive to that point.
Hi, Mark. Samant Samana from Stephens. I haven't been at 15 Dreamforces, but I think I've been enough to where it seemed clear that B2C was emphasized this year at the conference. And I assume that was a fairly conscious decision. And if I think about the M and A over the last 12 months, it was the assets that were acquired seem to focus more on that segment as well.
So I guess how well do you think sales force is serving that market today? And how is the company thinking about R and D investments and M and A in B2C? And how do you look at that as in terms of a growth driver going forward? How do you think about that?
Well, I think it's been a huge opportunity that the door has opened in the last just basically 2 years. So we've always been the number 1 B2B platform in CRM and now we're the number 1 B2C platform in CRM and that's exciting. And when we talk to a B2B company or we talk to a B2C company or we talk to a company that's becoming a B2B2C company like a lot of these companies, we can offer that capability. And so many of these companies are going becoming B2B2C. I gave that example of that tire company.
I was in Miami, I was at this conference, I'm with a customer and the customer is saying, I'm going to make this incredible product, but today I just sell my product today to B2B, this entire company. And now I have this next generation product that's going to directly connect me to the consumer. I'm now going to be B2B2C. We can offer that customer a solution. 6 months ago, I was in Las Vegas at one of our conferences.
Customer comes up to me as a large furniture manufacturer in the Midwest. They sell through their own dealers, okay? They also sell through Amazon and through other resellers. They're their own manufacturer, but they also sell other people's products. Mike, why are you here?
They said, because you're the only one who can offer us a complete solution B2B and B2C and B2B2C. That's great for us right now. And our company is able to articulate that to the customer with confidence, so that we're actually able to go to that customer and make that case of how we're going to transform them and take responsibility with them of that digital transformation. That is very powerful, because that customer is going to need sales, they're going to need service, they're going to need marketing, they're going to need communities, they're going to need analytics, they're going to need apps, they're going to need commerce, they're going to need productivity, they're going to maybe need it by vertical. Though in both of those cases, those were not vertical solutions.
It could be a financial services company, it could be healthcare, it could be the government, it could be a non profit organization where our 4 major vertical clouds. We're going to be able to come in with a very high level of expertise, prototype, deliver and show that customer they're going to be successful. Those are the people who are here at this conference. Those stories, there are 1,000 and 1,000 and 1,000 of those stories walking around Dream Valley right now. That is what motivates me by the way every single day.
When I get out there and talk to these customers, it is a wow experience to me to hear their stories, their passions, their and how they've changed their careers. You see it on the Internet too. For those of you who follow me on Twitter, you see what customers say about us is it's incredible. They're not saying that about any other vendor that I follow. I don't care who it is.
And I don't know why that is. But we take responsibility for our customers' success. We want them to fulfill their passion. We want to help them satisfy their business needs. And we want to do couple it with our corporate values of trust, of growth, of innovation, of equality.
And this is what has made Salesforce, Salesforce. And it's different than other companies. And I think that, that vision that I said of the 1, 2, 3, which is it's all these great products, it's this unified CRM platform, but it's these trailblazers. That is what is this incredible inspiration for me.
I said one more that's based on a comment you made in your keynote yesterday just about not only empowering these people that they can achieve their dreams and really inspire other people, but it seems like you're also giving a little bit of a warning that technology can also be used in a negative way if it's not sort of if it goes unchecked. And you're in a period of time where the biggest technology vendors are getting bigger at pretty much an unprecedented rate.
That's right.
And I
was curious, do you feel like there's any inherent danger in the biggest guys getting big so fast? And was just kind of curious about what message you were trying to impart with that yesterday because it seemed like you want to make sure that there was a qualifier that technology has a lot of things that you could do well, but you got to manage it. Yes.
I mean, let me tell you what's on my head and what's also on my heart, which is that this is an unbelievable revolution. It's an 4th industrial revolution. And the technologies that are coming, you've all seen all different shades of them and you all know what's coming. You guys are the you are experts in this room. You know what's coming.
It is going to be a watershed of capabilities, not just information technologies, but biotechnologies, the material sciences, and nano and quantum and on and on and on, and this is unbelievable. In our lifetimes, none of us have seen what these technologies can do. AI, I mean, autonomous vehicles, it's farms without farmers, it's trucks without truck drivers, taxis without taxi drivers. It's nation states who have warships without navies, right? It's I mean, we go on, it's airplanes without pilots.
So we are in an incredible moment in its history and we all know that and we are all experts in this room. There is nobody in this room who is not an expert on what I just said. And we all know that this technology also can go in different directions. Could it create more equality? Yes.
And could it create more inequality? Could it unite us? Yes. But it also could divide us. Could it connect us and connect us to our customers?
Yes. But can it disconnect us? Absolutely. And we saw that. We've seen that play out right now and the news channels in the last month, especially when it comes to the elections, where all of a sudden the technology company said, oh, we didn't oh, we didn't understand how our own technology is being used.
We don't understand how that oh, we didn't get oh, they did that, we didn't have it, we didn't know. They built technology that they themselves don't even understand what is happening. And you're going to hear that is the beginning of many stories like that over the next multiple decades, because the technology that we're creating could have unintended consequences. That's the nature of technology. Technology is never good or bad, it's what we do with it.
But sometimes technology can go in two directions and then we kind of come in maybe with regulation, maybe with a strong hand, and we shape that technology. That is where we're going. But so much is happening at one time. That's why all of our antenna has to be up. That's why the experts like you guys, like everyone needs to be speak your truth because you're going to be able to see this faster and sooner than other people.
And that's the message in the keynote, which is that the people who are going to shape this future are the trailblazers. They are the people at this conference. I see that every day. I certainly see it when I haven't been on tour in the last month. They are deeply concerned that the future turns out how they want it to be.
And they have a vision for it and they want to shape it with their values. And that is the message. And I think that that is the appropriate message today based on where we are in the world. All right. Well, I want to just thank you guys for coming to Dreamforce.
I really appreciate it. And we're going
to have a great time tonight. And thank you for being
great partners in running the company. Mark?
Mark, thanks so much. He's been super busy this whole Dreamforce and taking the time to spend time with us. Let's give it up one more time for Mark, please. Last point here, we started the day with durable growth with leverage. We hope you got that message and all the detail behind that.
I want to again thank John Cummings, the entire IR team, David Havlick for a really wonderful day. And thanks for hanging in there. Thanks.