If you want to
go ahead and take your seats, we'll go ahead and get started. So good morning, everyone. I'm John Cummings. I'm the Senior Vice President here at Salesforce in charge of Investor Relations. And on behalf of the entire Investor Relations team, Andrew Zilli, Anna Saliba and Rose Salzwedel, I want to welcome you to Dreamforce 2016.
Thanks so much for coming. We're delighted to have you here. As you probably looked around, you checked in. You may have seen a few bears, not the sell side kind, but that's all part of Trailhead. And Trailhead is an experience to help our customers, people new to Salesforce learn about the product, how to get deep into Salesforce, how to learn and experience Salesforce in a new way.
And we're really excited about that. In that context, we've kind of laid out a day that's very similar to that. So we wanted to sort of embrace that Trailhead theme and do something sort of fun and educational and hopefully that's what you get out of not just today, but this entire week here at Salesforce. So our agenda this morning will be to start with a business overview with Mark Hawkins, our CFO and David Hablick, our Executive Vice President in charge of Finance. We'll break for lunch, she'll be upstairs on our 4th floor.
And then after lunch, we have a product Q and A session led by Alex Dion, who's our President and Chief Product Officer and a number of his team members As well as and then after that, we'll have Keith join to talk about our go to market strategy and then we'll do a technology panel later in the day with Parker Harris, our Chief Technology Officer. And then as you saw or hopefully you saw, we'll have Marc Benioff here in this room tomorrow at 3:30 as sort of an extension of today's session, talk about strategy, vision and so forth and get to a number of questions that I know many of you are eager to ask him directly. But don't forget too, later this afternoon, we'll have drinks here, just outside of 5 and hopefully you can stick around for that and we'll have a number of of the management team joining us for that as well. As you know, in forums like this, we may be making forward looking statements. Those forward looking statements are subject to risks, uncertainties and assumptions.
And all those risks, uncertainties and assumptions can be found in our most recent forms on 10 ks and 10 Q filed with the SEC. So with all that done, I hope you guys have a great week and look forward to being around to answer any questions that you have. But if we will dive into this and you'll take away some something new and learn about sort of Salesforce's vision to scale to $20,000,000,000 and beyond. And with that, let me invite up to the stage, Mark Hawkins, our Chief Financial Officer, who will kind of take you through that.
Okay. All
right, Mr. Cummings. And no tie today. You're looking sharp. Okay.
First of all, welcome to Dreamforce. It's super awesome to have you here. We're delighted that you invested your day with us. We hope you invest a lot of the week with us. I hope some of you can join us for the U2 concert.
The Benefit concert, We've designed this to be very informative and very productive for you. We've heard from a lot of you and we try to factor that into the feedback of this presentation. Of course, you're going to see Marc Benioff tomorrow. We've worked hard to make that happen as well. That should be another good session.
So let's get into this scaling to $20,000,000,000 and beyond. For so long, people have said, hey, could these guys get to $10,000,000,000 dollars I just want to ask you guys the first time you heard us say $10,000,000,000 what did you think? Okay. Well, that is clearly line of sight today. And we're going to talk about that.
That's going to happen. And we're going to show you more detail on that. But now I want you to raise your sights. Want you because we're raising our sights to $20,000,000,000 and beyond. And one of the things I'm going to show you today is the presentation that will give you confidence on our track to get to $20,000,000,000 and beyond.
And for us, it's very exciting. It's very motivating. And we see that path very, very clearly. And we're going to talk about our competitive advantage and our strong core business and how that's going to help us to get to that $20,000,000,000 and beyond. So let's jump into it.
There is no place better to start my presentation than the revenue growth margin framework. People ask me about this you guys and this I call my compass. This is the single guiding financial principle in our company. I have shown this and trained every employee in Salesforce on multiple occasions about this is how we make trade offs because we have a 1, 2, 3 priority for financials. Number 1 is we grow.
We're a growth company. Top priority. Number 2, we expand our operating margins while we do it. And number 3, we drive the commensurate amount of operating cash flow to make this all come together. And that's what we do.
And we're right in that middle column on this guiding principle, this compass that we keep using to drive back that's where we're at. And I want to share with you some things that are important. You know our guide that's happened at the time of the earnings call at the high end was 25% growth. That's right in the middle of that column, in that gold column, and that's where we're at. And by the way, important point to share with you today, something that I think is important to call out as I see us there for the foreseeable future.
And so you're going to hear more about that and that's I want to make sure you hear that from me today. One of the things I'm going to talk about also is around the unit economics in the mid-30s. And if anything, there's upside to that at mature volumes. And we're going to unpack that a little bit and give you more detail in terms of how we see that. And David is going to do that in a presentation that very nicely describes why we have even more confidence than that over time.
But that's the right place to start. So let's embark on the journey, the scaling exercise. But the thing I would say to you is like we're on this right path as we begin this journey. When you think of that framework, take a look at this slide and let me just unpack it one bit at a time. If you look on the left side, you look at the revenues going from 4,000,000,000 dollars and the estimate right now into the range that we gave at the guide.
And you can see the company is just dramatically going up. That compounded annual growth rate in that short period is roughly 30%. I already mentioned in the current year, our guidance at the time of the call was 25% for the year. The 3rd raise of the year, we have a strong core. And one of the things I would say to you is that's on the right path.
Let's look at the trend line that's there. But before we do, there's one big thing that's going to happen. When you think about that trend line, you see us jumping our profitability again and again and again, 9 quarters in a row of operating margin expansion, while we're the fastest growing software company in the world in the top 10, while we're taking market share. It's not easy to do all those together. We're doing that.
And by the way, I am personally proud of the fact that we've raised our operating margin over 400 basis points since FY 2014. Do we have more work to do? Of course, we do. Are we operating and driving and using that compass with the framework? You can see it in the numbers and you can hear it from me and our management team.
And by the way, that's going to result this year, we're going to have a first ever in the history of the company. We're going to deliver $1,000,000,000 of non GAAP operating margin this year. That is part of what this compass and this framework is helping us do. So let's now pivot to the right side of the column. Let's look at the operating cash flow.
When I got here, we were talking about we aspire to get to $1,000,000,000 in operating cash flow. Well, we certainly did that. But you can see our guide this year says we're going to eclipse $2,000,000,000 and that will be another first for the history of the company. So we're on the right path with that framework. And that path has landed us to be an amazing 4th biggest software company in the world.
And what I love about this slide is it talks about clearly we're going to hit $10,000,000,000 We believe it. You believe it. And in fact, when you look at the Street consensus today, it's over $10,000,000,000 So I have another important point to share with you today. We will be a $10,000,000,000 company next year. Not going to get into all the details.
We're going to I'm not going to pre do the guidance, but we will be a $10,000,000,000 company next year. We'll get more refined as we do the guidance in a few weeks here. But why can I say that? It's because we have a strong core and you're going to hear more about that. But what's stunning about this chart is not only the fact that we clearly have this we're kind of at base camp, if you will, in the scaling to $20,000,000,000 And we're going to eclipse this $10,000,000,000 number next year, but our sights and our opportunity is so much more.
And you can see it, you know it, and you're going to hear more about it. But one of the things I love the most on this slide is take a look at the growth rates of the top 5 software companies in the world. You hear a lot of moving parts, you see a lot of different things. I would say when you have the facts, you found the facts, not all bad. That's a consensus.
Let's take a look and go further and say the first thing you would ask me is like logically, okay, Mark, like what gives you the conviction that you're going to get to $20,000,000,000 beyond? And I'll tell you what gives me the conviction over $100,000,000,000 TAM. I am in the sweetest part of the enterprise software space. It's a double digit growing TAM. And let me call out something.
When we started the company in 1999, we had 700,000,000 dollars in TAM according to Gartner. According to Gartner, right now, we have $70,000,000,000 going to $105,000,000,000 in just a couple of short years. That is a market, and we are extremely well positioned in that market. And by the way, important point to call out and to underscore, it's with the products we have today. That is the opportunity in front of us to get to $20,000,000,000 and beyond.
Having been to the $20,000,000,000 and beyond club multiple times, we have a great opportunity to execute on. That's where we're at. And so the logical question then would be, well, okay, this is great. It's a great opportunity. How are you faring about against the competition?
My favorite slide, consistent, persistent market share gain. This is my 3rd dream force of getting up and showing you yet again taking market share. Forget the conjecture, forget the marketing spend, we're taking share. 3rd party, you get it, you subscribe to it. Took 150 basis points.
And what I really love is what's happening persistently. Not only are we taking share, people are falling behind. They're falling behind substantially. And when I look at Microsoft, people ask me about that sometimes. They'll get FY11, 5.7, hey, great company, we admire all these companies, 4.3.
This is not my data. This is the market data. And there's a reason that this is happening. And you'll hear, you talk to people unvetted, you'll talk to partners, you'll talk to customers, you'll see so many people with here in this week, but why is it happening? It's because we have a competitive advantage.
There's no question about that. You can see that this is like market share is like blood pressure. It's feedback to the system and the customers are voting with their dollars. And why do we have a competitive advantage? There's 3 aspects that I'm going to share with you.
I'm going to unpack each 3 of these. The first is, of course, our product strength and innovation. No shocker to you, but I want to unwind that completely, share that to you. A large and loyal installed base, and you by the way, you're going to see customer advocacy like you haven't seen in a long time when you come here and go mix with all these folks. I'm confident of that.
And then you're going to I'm going to talk to you explicitly about a world class team and culture and what we're trying to do to create that kind of experience that helps propel us to that $20,000,000,000 and beyond. And so let's unpack this one at a time. It's not a shocker that we're a trailblazer because that's been our origin. We pioneered cloud SaaS delivery, but that's not where we stopped. We were first to the cloud, quick to the social enterprise, quick to mobile.
Running your company on your phone is a reality today. We know it. You know it. We're in front of it. Our applications are there to help you.
IoT at the enterprise level, we help some of the biggest companies in the world today, and we're just getting started in AI with Einstein you're going to hear a ton more about. So we know a lot about innovation. In fact, we get innovation award after innovation award. But the point to call out here objectively is I know there are people on that chart that I just showed you in the top five that have a dream to get to where we are, where we were 17 years ago. And they have a 2 or 3 year transition model to get to where we were 17 years ago.
And so we are driving an advantage and we're going hard with innovation because we know that this innovation, if it's pointed to the customer, and that's what it's all about, we know good things will come. And by the way, good things have come. When you look at our product leadership, our cloud apps are the undisputed leaders in the Magic Quadrant, every single one up into the right absolutely and it correlates, right? Taking market share like crazy persistently, you look at the Magic Quadrant ratings of our products, you talk to customers firsthand on the problems we were solving for them to connect with their customers in a whole new way. It all hangs together.
And by the way, again, this undisputed leadership in product has resulted in us. Recently, we've got a lot of innovation awards, but recently we got the Innovator of the Decade across all industries. And that just motivates our engineering team because they are purpose driven to help our customer. And speaking of our customer, everything that we're doing, all the innovation that we're doing is guided by this true north of having a strategy focused on the front office of taking care of the customer and helping them connect in whole new ways. And that phrase really means something now.
When you look at what happens when people are not modern in terms of how they connect with their customer, they're falling behind in a market that's rapidly changing. Omni channel, all the things that people need to do, it's changing dramatically and we're in the forefront. We're in this secular space and in very, very good position. But by the way, we haven't innovated only internally. We've also done M and A.
So let's talk about that. Our M and A strategy is simple. It's very clear. We buy companies to augment current clouds or to really accelerate new product initiatives. And that's what we've done.
And there's an amazing set of companies here that have helped us do what? To apply technology for what? To help our customers connect in a whole new way. And that's what we do. And we're very disciplined.
We're very discerning. We have a number of board members here that are in review committees. And all that you would expect from a world class Fortune 500 company, and that is helping us because this together with our organic focused on the customer yields what. It culminates in an incredible CRM platform, the smartest CRM platform in the world. In this model, this engine has changed the world.
It has absolutely changed the world and continues to change the world in software. You know this, I know this. We were first with the multi tenant model. We've layered in IoT capabilities. We're layering in Einstein capabilities.
We have Lightning, Force, Heroku, AppExchange. We are apps first we are a platform first company that has apps on top of it that are world class. Now let's see how these world class apps have done. How have they translated commercially? Let's take a look.
This is kind of interesting. If each of our clouds were an independent public company, get this, if each of them were independent public company, and I'm only showing the subscription revenue, we would have 4 out of the top 10 pure play cloud software companies in the world. It's even better than that actually because if you look at the fact that Veeva runs on force.com, we would be powering 5 of the top 10 clouds in the world with that model. And yet, we have competitors on that list that are trying to get to where we were 17 years ago in a few years. That is a competitive advantage.
That is why the share gain is happening. That is why the TAM is so attractive. That is why the opportunity to scale to $20,000,000,000 beyond is absolutely in the grab with persistent innovation, persistent customer focus and execution. That's our opportunity. So let's go and say, look, the innovation doesn't stop within our walls.
We have an unparalleled ecosystem. And by the way, I hope you get to meet all the partners. We have over 400 partners here. You're going to see an incredible ecosystem. You can talk to them unvetted.
We have an app exchange that's the biggest enterprise app exchange in the world. That's yet more innovation coming to bear to help our customers. We have 49% of our new business deals where we have a great SI or a partner involved to help us. We have people investing heavily in certifying their people. By 30%, of course they are.
It's a huge opportunity. Everybody is getting away from the legacy. Everybody is going to the future, and you can see who's positioned with the innovation for the future. So the innovation didn't stop inside the walls. It's all helping our customer and expanding our opportunity.
So I hope that's really clear, all the way from TAM to market share to why we're winning and that technology advantage is undisputed and the product advantage. Let's go to a large loyal installed base. And look, I'm going to start with something from a John talked about Trailhead and you're going to see a lot about the branding, But think about this financially. I just want you to think about this. The virtuousness of we create this fun way to engage to do what?
In Trailhead, one of the aspects of Trailhead is everybody that's a system administrator or user of Salesforce as a customer can get online and they can get certifications. They can get badges, Trailhead badges that they put on their LinkedIn resumes to do what? To make them more successful, to make them heroes in their customer companies, to do what? To make Salesforce a better value and to get more value. And what do you think that does to stickiness?
What do you think that does to success? What do you think that does to ROI projects? That helps. And you know what? We are maniacally dedicated to these people.
And do you see the virtuous circle? We're helping them. They are heroes. There's a better result. There's a better business ecosystem.
They're advocating for us and we're advocating for them. I ask you when you're at Dreamforce to see if you get the same kind of advocacy and any of the other people on the list that we're competing against. That will be something you can check out while you're here. But customer focus and loyal install base is something, but that other thing pencils out. When I look at customer loyalty, the first thing you want to do in a subscription business is you absolutely want to have declining attrition, dollar attrition.
And I think we have been able to deliver that. And when you look at this, you look at from Q2 'eleven to Q2 'seventeen, our attrition rate, dollar attrition rate is down dramatically. In fact, the rate is down 45%. So what does that tell you? It tells you we have more and more satisfied customers, more and more stickiness is happening.
And by the way, we have the opportunity to take that down lower. But let me quantify that from a CFO perspective. Because that rate change just over that period, I have $500,000,000 more of recurring revenue because I'm satisfying customers. I share this with every employee, all employee broadcast, and I talk to them and say, I want you to think about me as the customer success CFO. I want you to satisfy that customer to no end because when you do that, what happens?
Good things happen in our business. And so in fact, it does. So we have a lot of customers. We have 150,000 plus customers. Let's talk about it and how we're doing across the pyramid, if you will.
We have 150,000 of them. It's a very important growing asset. And what I want you to know is like 60% of our business basically goes into existing installed base and then 40% for new business. But if you take that 60% and you break it down, 70% is add ons and upgrades because they love the product. It spreads virally.
You know this. You can ask any of the customers when you're here during the week. And then we sell them new products. That is the definition of land and expand. And that is the best motion that we have in the company because the products are so good, and they help sell themselves once we get in there.
1 150,000 plus customers, that's exciting. That's an asset of that loyal installed base that's helping propel us to this $20,000,000,000 and beyond. Let's take a look at the pyramid I talked about and how we're doing. If you look on the left, you see our top accounts that we're doing more than $1,000,000 of business with. That's exciting.
It's almost tripled since the timeframe of Q2 'thirteen. And you know what, it's jumped 30% in the last year. That is a good sign. And by the way, if you pivot to the top of the pyramid, you say, let's take a look at big relationships that are $10,000,000 and beyond, that's jumped 47% in the last year from 57% to 84%. We like those dynamics.
We like that feedback mechanism that customers want to expand bigger and bigger relationships with us. So you're probably saying, Mark, I got it top of the pyramid, mid market, but what about SMB? Let's talk about SMB. In fact, SMB our business in SMB, I don't know if you know this or not, from Q2 'thirteen to Q2 of 'seventeen has nearly tripled tripled. And you can see by the way, you can see that with the elongation of those bars.
But what I really love is that blue section, that 22%, because that's the portion of our business that's attributable to customers in that space that are doing more than $1,000,000 a year with us. We are growing across the pyramid. We are growing with an incredible opportunity with our installed base, and the relationships get deeper and deeper. And one of the things we can see is just this incredible success where we land, we plant seeds, we expose and let great products sell themselves. And what I love about this chart is our portfolio helps drive within the installed base and beyond because here, you can look and this is at the tip of the pyramid.
A couple of years ago, we talked about 13% use 4 clouds or more, and now it's jumped up to 4 75% are using fork clouds or more. But by the way, that's at the tip of the pyramid where we just get penetration and there's tons of dollar TAM in front of us and then we let it go viral. And that is our single best selling motion because of the strength of the product. So I hope you can see the power here of the large and loyal installed base. And by the way, one of the things I do want to comment on, and we're going to have people in here speaking, including Keith, our whole vertical strategy is just even more opportunity with our installed base.
And some exciting things are happening and some new logos that we created already, over 100 new logos in our 2 verticals that have come up just since we launched in Q1. So really neat stuff that's happening. Keith, same question is for Keith on that. But let me now pivot to the 3rd part of my presentation. And it's around what makes this possible?
What makes us go from 17 years to the Fortune 500? What makes us be the fastest growing top 10 software company in the world? What makes us get to be number 1 and persistently taking share and having competitors like Microsoft, Oracle and SAP falling behind? What kind of environment does that? What kind of environment gets a tradition of innovation that's unparalleled?
What kind of environment creates the best products undisputed in the Magic Quadrant across the world? Well, this is the kind of environment I want to talk to you about because it's been very thought about that this environment and our core values are a competitive advantage, and we are investing to make that happen. And that's the point I want to share with you from a financial perspective. We are a different company. You only have to go around Dreamforce.
You only have to look at Trailhead slides to know we're a different company, but it will be more and more so as you go throughout the week. But we see this as a competitive advantage, another part of that competitive advantage, not just the technology model, which is undisputed, not just this incredible loyal installed base that's an advocate for us, but our employees love to be here, and they're the ones that are going to power us to $20,000,000,000 and beyond. And I think this is really critical. You can pick your favorite quote. We have 4 values that we talk about that are really important values and some of them are very different than other companies.
But I want you to know that those values are picked and chosen to get together the best environment possible to attract the best and the brightest in the world. And that's what it's all about. We're unique. Speaking of unique, we've made investments and we've made statements on equality for all. That's one of our values.
Women's leadership, the environment and 111. And I'm not going to spend a lot of time with you other than to have the context that all this adds up to what, is to be the destination employer of choice. We can attract the best and the brightest in the world. We're always we've been listed as the most admired software company in the world, 100 best place to work, all these kinds of things. We got lots more work to do.
That's not the point. The point is this has been very purposeful to be able to create the best environment and have a social impact and inspires our employees and wants to bring the brightest and best because we're having the right impact inside and outside the company, and we're able to be a magnet. These are just a few of the visionaries and leaders that are joining our company as of recent. So there's just so many more. But I hope you can see the point.
The point is that our culture, we view, is a competitive advantage. And so to wrap up my section, I look at scaling to $20,000,000,000 and beyond. Having been there twice before, we have a clear and present opportunity, a clear and present path with the products that we have today. We have $100,000,000,000 TAM and double digit growing. We have the best products in the world.
We have a track record of innovation that's unmatched. We have a large and loyal installed base and we have a customer focused culture to perpetuate results and scale in that mountain to get to $20,000,000,000 and beyond. So that's my update. I'm looking forward to now turning this over to David Havlick. And David is going to talk about the benefits of scale and strong economics.
David?
All right. Great. Thank you so much, Mark. Absolutely. And can we give our CFO a round of applause?
All right. Very, very rare that a CFO gets applause. So that's awesome. Nice job, Mark. I'm really excited to be here.
This is my 12th Dreamforce and Dreamforce is such an exciting time for Salesforce employees. And I think I talk about this every year, but it's a chance for us to reach out to our customers, to thank our customers, it's a chance for me to reconnect with all of you. And I want to thank all of you for your support as well, but it's also a time of reflection. And as I reflect back on my 11.5 years at Salesforce, I remember my 1st year Salesforce was a $300,000,000 company. We were aspiring to deliver our first $300,000,000 year.
And as you all know, we're on a journey now to deliver the first $8,000,000,000 a year. We've really grown up, and that's really the thesis of my presentation today is to talk about how that scale is really impacting the business and actually creating some real meaningful benefits and also how it's affecting our economics. And I'm going to structure my conversation around 3 areas. 1st, I'm going to talk about how it's impacting our ability to deliver on the P and L, to deliver the profitability and the growth you all expect. 2nd, I'm going to talk a little bit about how it's impacting some measures that you all fall very follow very closely on the balance sheet and cash flow.
And this is a bit of a return to last year, but it's really, really important because we're really seeing some changes on our balance sheet and in cash. And I want you all to really internalize that as you walk out today. And then lastly, we're going to talk about long term economics and how Salesforce thinks about long term economics as we travel through the life cycle of a company. So let's jump into the P and L. As Mark said, this is our gross margin framework.
This is our compass. This is our guide. This helps us make decisions every day. And this is a starting point for the P and L. And obviously, as Mark said, we're very confident that we can stay in this growth center column for a very, very long time, this 20% to 30% for the foreseeable future.
And I'm going to talk about how we're going to do that later in the presentation. But I really want you to be thinking about profitability and how our scale is allowing us to deliver that 100 to 300 basis points in the near term. And I'll touch on how our scale again is letting us drive towards that mid-30s operating margin in the long term. So it's very, very important to think about this in context of our scale. And so let's just get started with that.
This slide shows our revenue performance over the last 7 years. And you can see it's been a pretty remarkable journey. 7 years ago in FY 2011, we delivered $1,600,000,000 in revenue. And today, we're, as I said, coursing towards the $8,000,000,000 a year. We're more than 5 times the size we were just 7 years ago.
And what's most remarkable on this slide is that orange line in the middle. And that line shows our constant currency revenue growth. It's kind of remarkable when you look at that line to see how steady it's been. At $1,600,000,000 scale, we were growing at a rate of roughly 28% in constant currency. Through the first half of this year, that growth rate remains relatively unchanged at $27,000,000 And you see for the past couple of years, we've been delivering this very, very steady growth.
And this has created an amazing foundation, not just to build towards that $20,000,000,000 that Mark talked about, but also for us to make decisions and pull levers to deliver the profitability that you want. And the next slide really shows that. This slide shows our margin performance over the last several years, but it also shows our head count addition. So this shows our incremental net head count addition for the last 6 years. And you can see we've broken it into organic hires, which is the light blue lower part of those bars as well as inorganic acquisition hires.
And you see we've added a lot of people at Salesforce and it's been a bit lumpy. But what's exciting is as we've scaled the last 3 years, we've been able to make a lot of investments in the business and continue to deliver that margin expansion. Mark talked about 9 consecutive quarters of operating margin expansion. And obviously, this year, we've made some acquisitions to help fuel our growth going forward. And we've done that in a way that's been completely invisible to you in terms of our margin performance.
We've made small tweaks in our organic hiring to be able to fit in some of that inorganic hiring and again deliver that margin. We've also made the biggest acquisition in our history, as you all know, the acquisition of Demandware. And even in the face of that acquisition, we're still able to deliver 70 basis points of operating margin improvement. And this is really important, and it's really a function of our scale. If you turn back the clock 3 years ago, we made a similar size acquisition, ExactTarget, which was very, very important to our business.
And you guys have all followed the success of that asset over the last several years. But if you recall, and as you can see on this slide, when we made that acquisition, our margins actually declined a bit. And that was because we didn't have the scale to be able to do those kinds of things. So our scale is now giving us the flexibility to be able to make investments in headcount, to do M and A and to do things
we need to do to
grow the long term while still delivering to all of you the profitability that you expect. Our scale is also letting us absorb and manage our way through uncertainty at times. And so this slide shows FX over the last year. And FX has been a little bit volatile, particularly for the GBP, which as you all know, we have a bit of exposure to. And with Brexit, the GBP, obviously has weakened fairly meaningfully.
In fact, this morning, Mark and I were just talking about how the GBP is again down, and I think it's $1.27 today for those of you keeping score on the GBP. So this is very, very important because again, even as we've managed our way through this, you haven't seen it in any of our results, right? We've been able to deliver that strong top line and deliver the profitability that you all expect. And this is very, very important because as you know, we are making investments internationally. Sales force today is 70% U.
S. And 30% international, which is a little unusual for a company of our size, represents a huge opportunity for us. And you can see we're making some investments primarily in these 9 countries. And we're investing in data centers, we're investing in people. And you can see our constant currency revenue growth is now internationally growing faster.
So international is going to become a bigger part of our narrative. Over time, it represents a huge, huge opportunity. And because of that, I wanted to spend a minute and because I know it's on all of your minds, I've received many questions over the last 90 days since Brexit on the topic of FX. What I'd like to do is just spend a couple of minutes talking a bit about the mechanics of how FX impacts our business. So this slide shows our just a very quick high level lay of the land.
We have 4 regional hubs today: San Francisco, London, Tokyo and Singapore. And we have exposure to 3 functional currencies today. The U. S, obviously, were in U. S.
Dollars Europe, the Great British pound Asia Pacific, were functionalized to the U. S. Dollar and then in Japan, the Japanese yen. And of course, we bill in many currencies. This slide doesn't reflect all of the currency we bill in, but it shows you a couple as an example.
The key takeaway here is 3 functional currencies. And what I'd like to do is sort of walk you through a little bit of detail how the mechanics of that works through our numbers. And to do that, I'm going to use that blue box, that European blue box. We're going to use Europe as our example. So let's say we have a customer who's in on the continental Europe and we bill them in euro.
The moment that we bill them, we immediately translate that to a functional currency, right? We hang it up on the balance sheet. At that moment, we're exposed to that day's spot rates. That's what we call transactional FX exposure. And obviously, that can change over time.
Then so obviously, we hang that up on the balance sheet. And then as you all know, we revalue the balance sheet at the end of each quarter at the quarter ended FX rate. But during the quarter, we're recognizing revenue through the quarter on a daily basis, and we're exposed from the functional currency rate, in this case, from the GBP to the U. S. Dollar on a daily basis.
And this is what we call translational FX. So transactional FX, I. E, the billing currency to the functional currency and then translational FX from the functional currency to our consolidated currency, obviously, the U. S. Dollar, are both impacting both deferred revenue and revenue.
So as you think about your modeling, it's very important to understand both of those things. And we've talked about on our calls that this year, the company in total has headwind to revenue in an amount roughly equal to $100,000,000 to $150,000,000 It's primarily translational headwind for us because, again, we have the functional GBP. But if you think about moving forward to next year, assuming rates stay unchanged, and that's probably not going to happen, but for the sake of this example, we'll actually get some transactional benefit and then continued translational pressure. And over time, the net of the 2 will sort of net out. So it's important to understand both of those effects as you begin to think about modeling both deferred revenue and revenue.
On the expense side, we have exposure as well, and we have exposure in this case to the local currencies. And again, those are translating back on a daily basis as well. So from a margin perspective, what that means is we have revenue coming in one currency and we have expenses coming in another. And depending on how those rates work, some quarters we have a bit of margin pressure. In other quarters, we have a little bit of margin favorability.
And again, because of our scale, we're able to manage through that variability and deliver very consistent results to you. So our scale is really letting us manage our way through some of this complexity, but I wanted to share this with you because I know it's been on many of your minds and many of you've asked me personally to help understand how this works.
Okay.
So hopefully that makes sense. Great. My CFO says it makes sense. I'm good. All right.
So I'm going to end with a discussion of long term economics. And I'm just curious by a show of hands, how many of you were here 2 years ago at this event? How many of you weren't here 2 years ago? You guys can raise your hands higher than that. Come on.
Okay. So there's a few of you who weren't here. So you guys are a bit of a disadvantage. So with the people with their hands up, how many of you weren't here last year? Okay.
So this is important because this is our favorite time for those of you that are new, this is going to be our favorite time of the sorry, going to come back to that. Forget hold that thought. I'm out of sequence here. Let's talk a little bit about deferred revenue before I get to my subscription economics section. Deferred revenue, this is our favorite measure.
And you can see today
we have
$12,000,000,000 of deferred revenue on and off the balance sheet today, roughly $4,000,000,000 on the balance sheet. And this is obviously a measure you all follow very closely, and it's something that gives us great confidence. You can see that 80% of our business, our annual revenue is under contract when we start a fiscal year and 95% of our business is on contract when we start a quarter. So this is again how we're able to deliver that predictability and that consistency that you all expect. And it's the thing that helps me sleep better at night because Mark sort of tasked me with delivering on the operating margin growth framework.
But as we talked about last year at Dreamforce, the as we scale and get bigger and bigger, there's several impacts that are beginning to change the seasonality of this measure. And if you guys will recall last year, we talked a little bit of how our measures are becoming a little bit more seasonal. Our business isn't becoming more seasonal, but these measures are becoming more seasonal. And I want to talk a little bit about that. So as we compound each year, more and more Q1s and more and more Q4s, we're stacking up more and more business.
And this compounding effect is beginning to have a meaningful impact. I'm going to show you that in just a second. We're also, as we get larger, in many cases, aggregating contracts for customers, making them all coterminous in the same quarter, particularly in Q4, and that's creating a bit more Q4 seasonality in our deferred revenue. And then all of that's being offset by this sort of rising tide of very consistent amortization. So this is very, very important because it's changing the seasonality of the deferred revenue measure, and I want to share that with you.
And this slide hopefully gives you a sense of that. This slide shows the sequential growth in deferred revenue for the 1st fiscal quarter for the last 13 years. And for those of you that followed us for a long time, you can see 13 years ago, 12 years ago, etcetera, you expected sequential growth in deferred revenue and we delivered. And then something happened in 2,009. 2,009 was the Q1 ever in Q1 where we didn't add deferred revenue sequentially.
And for those of you that followed the stock at that time, the stock traded off, I think, that day, 15% or 20%. Because up until that period, we'd always sequentially added deferred revenue. But you see a very, very clear pattern here. And now, of course, you all expect Q1 deferred revenue to decline. If you look at Q2, you see a very, very similar pattern.
13 years ago, huge adds in the first in the second quarter and then you can see it sort of over time is very, very consistent pattern. And now for the past 2 years, for the first time, we're now seeing that number equally. And that's because of this rising amortization again and we're not compounding and stacking up enough in Q2 to sort of offset that rising amortization.
So you
see this very, very clear pattern. Same thing for Q3, the gray bar here is actually our guide, but again you see a very, very clear pattern. And then from the Q4, you see a very, very similar pattern. Pattern maybe doesn't look so exaggerated here, and that's for two reasons. First, as you all know, we went to annual invoicing in 2012, and that's muted this trend a bit.
But the real reason this trend doesn't look so pronounced as the others is just because of the scale of our Q4. Today, our Q4 is when all of you look for huge Doctor builds. And last year, we ended with more than $4,000,000,000 in deferred revenue. Just to give you a sense of the scale, those numbers on the bottom show what a 1% sequential change in deferred revenue mean to our business today. It's $28,000,000 13 years ago or 10 years ago, it was more like $1,000,000 So Q4 is really when you expect to see that.
So very, very important seasonal pattern. So it's important to understand that as you guys think about this measure, and I know you're all modeling off of this number. Obviously, deferred revenue is a liability offset by a receivable asset. So you would expect the same to be true for cash. And of course, that is the case.
I'm going to talk about that in just a second. I showed you guys this slide last year, and it shows FY 'six, FY 'eleven and FY 'fifteen deferred revenue. And you see, again, here the peaks are getting higher and the valleys are getting a bit lower. You add last year, you see a continuing of that trend. So again, lower peaks lower valleys, taller peaks as you think about deferred revenue.
And as I just said, the exact same is happening for cash flow. So you should be thinking about cash flow and deferred revenue both as getting meaningfully more seasonal, even though our business underneath isn't. It's really about that compounding and the rising amortization level. Okay. So now I'm going to get to the part of the presentation where I really wanted to get to, which is long term economics.
I guess I was ahead of myself, so I apologize for that. So this is my favorite time of the presentation. And for those of you, I want to ask you all to raise your hands again. You're going to be a little bit disadvantaged at this point because we are going to go back to school. And I love this part of the presentation.
You might note my office hours are a little bit less than they were last year. I've been very busy sort of in the basement Mark Hawkins, excuse me, very busy in
the basement. So I don't
have a lot of office hours. If you have questions outside of that, of course, you should address them to John Cummings. But for those of you that were here the last couple of years, you remember 2 years ago, we introduced this concept of lifetime economics. We talked about cost to book, cost to serve and attrition and how they affect the long term economics of the business. We introduced this concept sort of from a framework perspective.
And then last year, we built on it. And we talked about how focusing on growth versus focusing on margin can have sort of profound impacts as well as short term decisions can have long term impacts and vice versa. And we talked a little bit about some of those trade offs. Today, we're going to talk about how subscription economics apply to the business life cycle. And to do that, I'm going to use the S curve, which is if you work for me, this is one of my favorite charts.
I don't know why I love the S curve. But the S curve describes the business as we move through the life cycle. And you can see in early stage of a business, when the business is accelerating, what we're going to talk about today is how the economics of a subscription business drive meaningful natural margin pressure in a business. And it's why early stage cloud subscription companies in many cases are very, very unprofitable. And at maturity, there's some natural leverages there's some natural leverage in the model that comes from deceleration.
Salesforce is in the middle. Salesforce is in that middle column as we talked about from the growth margin framework. We intend to be there for a very long time. And because of that, we're able to deliver both top and bottom line. And I'm going to talk a little bit about how we think about that and how we intend to stay in that middle column.
So to do that, I'm going to return to a customer we used last year, which was the Acme company, the Acme cloud company. Now this chart shows growth rates and on the vertical axis and on the horizontal axis it shows time. And just to be clear, the time is not moving left to right, it's just relative time, okay? And at t equals 0, The Acne Company is growing at a rate. So I'm going to ask a question now of the audience and see who knows.
And I see Mark here in the front and some people Heather's in the front. So I may call on you guys actually. For this company to accelerate its revenue growth, what needs to happen in new business relative to revenue growth? Anybody want to take
a shot at that? It's kind
of like we're in church a little bit. Nobody wants to take a shot at that?
Sarah, do you want to take a shot at that?
It needs to grow faster, right? New business needs to grow faster than revenue for this company to accelerate. So if we move from t0 to t1, new business needs to actually grow faster. So it looks something like this, right? And the way to think about that is we actually call that business velocity inside of Salesforce.
We say when the velocity, which is described as the new business growth divided by the revenue growth, is greater than 1, you actually have acceleration. Makes perfect sense. And equally, when that velocity is less than 1, you get something that looks like this, pretty simple. So if the company is moving from T1 to the right, this is a company that's actually decelerating, right? So if Acme Cloud is to accelerate, new business needs to go faster than revenue.
And to decelerate, it needs to go a little bit slower than revenue. All right. So that makes perfect sense, right? It's going to get more exciting from here. This is a 3 0 one class after all.
All right. So we've talked over the last couple of years about cost to book. And so if we think about cost to book as the cost to go get those bookings and if we assume the cost to book is flat, in other words, the cost to acquire doesn't change, cost to get a dollar of new business doesn't change, then by definition, we can say if cost to book is flat, then sales and marketing expenses should move at the
same rate as the bookings expense or as the new business. Does that
make sense? I see some heads in the front nodding. Does that make sense? Great. Because there will be a quiz at the end of this.
So if I got this out of sequence, that's the least I can do in return. Okay. So then let's go ahead and replace that line with sales and marketing expense. So we can replace that bookings line with sales and marketing expense. And I think you can see where I'm going here.
In a company with acceleration, the sales and marketing expenses are actually growing at a faster rate than their revenue, right? And again, this is assuming a constant or flat cost to book. And as a result of that, you get this natural pressure in the business. It's unavoidable. It's just part of the model.
And equally, as you would expect, you get this natural leverage for deceleration, okay? So this is a very, very important element. It doesn't mean that you need to have better efficiency and cost to book. It means there's this natural play that exists between the growth rates of your new business and your revenue and what it means to sales and marketing expense. So the example I'm giving you here is a flat cost of book, right?
So there's some natural leverage inside of related to bookings. Now of course, there's also some leverage you can get in other places, right? And we all know that you can get incremental leverage by doing better on your cost to serve, right? So if you can grow your other expenses at a rate slower than your revenue, then you're going to get some incremental leverage on top of that, right? So So there's some natural leverage that comes with selling and there's some choice leverage that comes in some of your cost to serve areas, right?
And so this is just an example to give you a sense of the construct that cloud companies are working with. Now for Salesforce, where we given this dynamic and given this leverage, we make some choices, right? And the first choice we make is to go back to that gross margin framework and let a meaningful element of that leverage go to the bottom line because we've committed to all of you that will do that. So we deliver the profitability you all expect. But the second thing we do is go invest in more businesses, go invest in more growth.
That means new clouds, that means new geos, that means new verticals, right? That means more innovation. You're going to hear about that over the next couple of days at Dreamforce and that's why you all come. But by laying on S curve on top of S curve, new business on top of new business, we're able to extend our growth and create in a way this virtuous perpetual growth engine. And it's really been the driver of why that revenue growth line I showed you at the start has been so, so flat.
So we're taking some of the leverage and delivering it in profit and we're taking some and reinvesting it back in the business. Now underneath it all, it's really important to understand as well that we're managing to that long term economics number of mid-30s, right? So we're really cognizant of the fact that as we lay these businesses on, they're all going to have different economics numbers in and of themselves, but as a portfolio, we're still driving towards that mid-30s number. All right. So this is where we started our presentation today, and it's where we're going to end.
And that is to say, I hope you got a sense about the fact that our scale today is allowing us to deliver the P and L, deliver that long term growth, deliver stay in that 20% to 30% range for the foreseeable future. We have levers in place that allow us to deliver that margin that you all expect in the near term. And equally, the economics and the way the model works give us every confidence that we will be able to deliver the long term margin that we've committed to as well in the mid-30s. So with that, we are done. And with that, I'm going to go ahead and bring Mark Hawkins back up on stage, and we're going to take some of your questions.
Well, let me just start and say let's give David a round of applause as well here. Come on. Awesome member of the sales force team.
We're back here. We're going
to have somebody run. Here we go, please.
Thank you, Mark and Dave. Keith Weiss from Morgan Stanley. In thinking about the margin framework, you guys have been very acquisitive year to date, made some really interesting acquisitions and some dollars plus dollars plus acquisitions that have taken place. Does the margin framework still hold? And are there gives and takes we should be thinking about?
Is there other investments that you're giving up in order to do these acquisitions and stay within that margin framework?
Sure. I have a couple of things. 1, and as the framework that holds, yes. We're absorbing those within our framework of thinking about the business. Again, the framework is like a compass that we keep driving back toward.
But yes, it's comprehended within what we're thinking about with our framework. Yes,
we're committed to this.
So David,
what do you have? I'm trying to make sure to answer that correctly.
The way you should think about the investments we're making is an accelerator, right? I mean, every day, it's a build versus buy decision. And when you think about some of the things that we've acquired, it's really just accelerating our innovation. As I talked about from a headcount perspective, we're fitting in inorganic headcount additions relative to organic. So a lot
of times we'll add some people and then we'll slow down a bit on our organic hiring. So I actually think it's causing us to go faster because it's really your question really should be thought of in context of build versus buy. And I think it's we found a really good balance of being able to deliver both. I think that's a great addition there because effectively we talk to people and say, hey, there's a certain amount of funding that we have. Do you want to accelerate through M and A?
Or do you want to accelerate through it organically? And that's all comprehended together, David, I think, well added. We're having the mic runners here, guys. Otherwise, we would Yes. You have to be on webcast
Over here. Thanks for the presentation, guys. Kirk Matera, Evercore. Mark, when you think about the long term margin framework and you think about these S curves that you're layering on, do you look at that by cloud, meaning if we were
to see sales cloud on its
own, would that be a good representation in terms of where margins could go for a business that is sort of more not still growing, but at a little bit more mature growth than some of
your other clouds. I'm just trying to get
a sense of how you guys think about that by cloud and the investment sort of trade offs you have there?
Certainly, we think about it. Kirk, it's a great question. We do look at it by cloud. We first think about it aggregately, and then we certainly try to think about it by cloud as well. I'm glad you referenced sales cloud because what I like is the sales cloud with the innovation is in the teens in U.
S. Dollars. And you're going to see the power of investing. And really, I think David did a very nice job of showing that S curve and the power of reinvesting in such and keeping that cloud moving forward is a great example, of calling out. But I think we think about it by cloud, we think about it in aggregate.
Can I just add one thing to that? I think it's really, really important to understand that the economics for different businesses are different, right? And one of the questions we get is, well, what if your cost
to book goes higher? If our cost
of book goes higher for a business and our attrition is lower, right, then the lifetime economics are fantastic, different than maybe another business with a lower cost of book and worse attrition dynamics. So think about it as by cloud, by region, by what we call segment inside of Salesforce in terms of how we sell it and then by industry, kind of like a Dungeons and Dragons team
actually with a lot
of size. And we're trying to sort of manage all those pieces now on sort of slightly different dynamics.
Thanks for the question, Kurt. Please.
Hi, it's John DiFucci from Jefferies.
Hi, John.
Hi, Can we get off that stage, David? You're going
to give me a hug?
You can come up on stage. You're going
to give me a hug?
Yes, great. It's a bear hug, right? Yes, indeed.
But anyway, I'm
it's not a bear anymore. We're neutral. Yes. Anyway.
Thank you, John.
The question is, we're always trying
to figure out how to measure your top line. And I know there's a lot of discussion around bottom line too and how the model works. But and we try to measure something we call new subscription annual contract value. And we look at the revenue, we look at the calculate billings when we come to what we think is a logical answer. However, we also realize there's a lot of nuances to that and timing of renewals, things like that.
We're not going to get the exact number all the time.
I I'm just wondering if
you ever considered actually just giving that new subscription ACV or growth number something like that. Oracle actually does. So there's somebody out there that does do it. They call it ARR. Just curious if you have that discussion, especially now that there's some a lot more questions around it after last quarter.
Sure. I think one of the things, John, that we're always looking at is always trying to continue to look at what we do, how we measure the business, how the world's changing how we disclose as well. That's, I think, is a very good and fair question. I think people right now understand how we're focused on measuring the business today, including we talk about revenue, we talk about, as David very nicely called out, both a build Doctor and then unbilled Doctor, so people can see the entire business that we have come in eventually, which will make its way to revenue. But I take your point, and there's always opportunity for considering different things.
But David, anything you'd add there?
Can I just
yes, I think it's important to understand? I think it's a great question. Firstly, anything Oracle does something that we probably wouldn't do. But we'll take a look at it, right? I mean, they're not exactly the model of best practice.
But okay. But putting that aside, sorry,
if Ken Bohn is listening, I apologize.
But I can say that, you can say that.
I think it's really important a software company do, they chase new license revenue at the end of the quarter, right? It doesn't matter what because they want to give you guys a number. Then they got this get well program called software maintenance. And that's because they want to make that licensing number. Well, we don't have a get well program.
Like we'd rather get a good deal done in the 1st week of the next quarter rather than chase a really bad deal to make a number. And we don't want our sales team like driving towards some number that we publish because in the end, we're managing this annuity over many, many years. So if you think about I know you all want more disclosure, but think about the behavior it drives inside of a business, and we don't think that necessarily would drive the right behavior.
So I would just add that. Yes. I think it's a great addition. Thanks for asking, John. And we have folks right up front here.
Hey guys, Catharine.
Hey guys, Catharine. Hey guys, Catharine. Hey guys, Catharine.
Two questions. 1, the $20,000,000,000 aspiration for revenue against the TAMUX 100,000,000,000
does that include just the products that
you have today or does it contemplate acquisitions? And secondly,
if you look at the cost to book,
is there a trend that your newer businesses that are subscale have higher cost to book? And how are they trending relative to the core sales product? Let me turn
it over to Brent
because Brent has the next question.
Sure. So let me take the first and then David, if you want to do the cost of book. For the $20,000,000,000 and beyond, that is with the current clouds that we have, the current product set that we have effectively. We do not need to go find another cloud to get to $20,000,000,000 and beyond. And I think the math of the TAM of $100,000,000,000 and we're you look at where we're our consensus is right now is $8,300,000,000 ish for this year, you can see a clear line of sight to that.
Gosh, so it's a great question. Happy to clarify that. David, on the cost of book, you want to? Yes.
I mean, obviously, all our business have different cost of book dynamics. And I wouldn't necessarily think about it as small businesses at high cost of book and big businesses selling. I mean, you think about even the Sales Cloud, as we look to get very, very strategic inside of the biggest companies in the world, we're trying to become a strategic advisor and you're building more and more resources behind that. So there are even instances in mature businesses where cost of book can move up or down. The key for us is we're trying to we're managing a portfolio of those things, right?
And we do it in the construct both of delivery near term as well as the long term. So the answer is yes, they're different, but I wouldn't think of them per se as just small as big and big as small.
Does that make sense? Thanks.
I think the biggest question we're all trying to reconcile is this pace of M and A you spent $4,000,000,000 just in the last few months, combined with the slowdown in the core business and what happened last quarter. So just trying to understand, is this pace of M and A happening because you're seeing the core organic? Is it happening because you see some assets that have been mispriced? I was just trying to understand how
to reconcile it.
And maybe they don't have anything to do with each other.
Just trying to
No, I'm happy to answer that. And David, feel free to chip in. But I think at the end of the day, we when you talk about the $4,000,000,000 of course, roughly $3,000,000,000 of it is Demandware, which is something we've been looking at for years. Super happy to fit in, totally fits within the wheelhouse of CRM. That's something I think a lot of you have expected us to do for a long time, and I couldn't be happier to have that, Brent, just to be really clear on that one.
But you're absolutely right. There's other things that we've added on. And I think one of the things I think is that there if you look at opportunities in software, and software has been consolidating for 30 years, but it never happens like linearly. It kind of happens and bursts and people come to approach you. So we have a plan.
We're very happy with our core. As you know, we've raised our top line for the 3rd time in a year, slightly the last time. We're going to the future. We have a strong core business. But we also see opportunities when things change, when people change and companies change, and they come to us and we see how that can fit in.
And we think about can it help us with what? Can it help us with innovation to help our customers be more successful in the space that we're in? And in the case of the ones that have come up, they have. And I hope everyone's seen we announced Crux, a DMP, I think, fits just very nicely into what we're doing. It tucks in perfectly with our marketing cloud capabilities, an example, like today.
So I think that's what I would say about that as I see this as an opportunity to build on a really strong business. That's what I would say.
Buffett, I think that's a good answer. I mean, we've reached the scale where we can do these things now. The world has changed in terms of valuations and things like that, and we can go ahead and go faster and go take on some of those assets. And as an aside, if you look back over the last couple of years, I would just add, we hadn't really done very much M and A for 2 or 3 years. Sort of had a big year when we bought ET and we digested and the world has changed and so the time it goes now.
That's what I would say.
Yes. Raj Das Balyazny. Historically, the company has had a very strong balance sheet. The recent acquisition, some of them have been using leverage as well as stock. Just wanted to try to understand what's the leverage framework that you feel comfortable with given the company is strong larger, you do have more flexibility, but trying to understand that.
Sure. No, it's one of the things, and we even have Board members here today, but they know that we always are talking about the capital structure. And I think you said it, Raj, at the beginning, which is we're a company with a strong balance sheet. We're a company that wants to have a strong balance sheet, and that's important to us. And so you can see what we've historically done in terms of our balance sheet.
There's no big sharp turns on that. In terms of our thinking around that, we reevaluate that. Like every presentation that I've ever done as a public CFO, we need to address capital structure with the Board in an ever changing world. But I think we are a company that's a Fortune 500 company that believes in having a strong balance sheet and that's what I would say. And we're I don't know a lot more to say about that than that.
So David, anything you would add on that?
No, I think it's good.
Yes. Terry Tillman with Raymond James. I guess, what did you learn from the ExactTarget acquisition that you can apply to the Demandware acquisition in terms of whether it's fleshing out revenue synergies, cost synergies, etcetera? And maybe a report card on where you are with the Demandware, obviously understanding it's so early, but maybe some early kind of low hanging fruit around synergies. Yes.
Very great question. First of all, I'm pleased with ExactTarget. I think it's really penciled out nicely for us. I think by any definition, we I mean, you can see some of that in the revenue that we're disclosing. But in general, we're very happy with that, and we feel like that is that's going to go in the ranks of a really, really good M and A as we continue to look back on that.
That would be the first point, I would say. I think the second point, I would say, and by the way, save this question too, Terry, when Alex is here, because I think we would say for sure that we would have gone faster in terms of integration. And I think we're absolutely taking that learning from ExactTarget. There was a lot of different dynamics that were going on at the time, but I think we would integrate even faster. And I think that's the lesson that we're going to profit off of.
Mark Murphy with JPMorgan. So,
I
guess I'll just bring up directly LinkedIn and Twitter. One of the elements that they have in common is they are huge, vast proprietary data sets there. And so part of what I wanted to ask you, if now is the appropriate time to be contemplating large scale transformational M and A potentially, is it relating to potentially the concept that those large data sets that the value of those is increasing in front of the wave of artificial intelligence. And I think we haven't heard yet about Einstein, but
Sure. You're going to hear more about Einstein. I hope you get a chance to attend that. I think one of the things, Mark, I'd say, obviously, that's a discussion we can have directly with Mark tomorrow, and we can go deeper into that question because I think it's a very fair question. I think the thing I would say to you is, obviously, there's I'm glad you brought it up, Mark, because it's like the thing I'm sure people are thinking about.
We're not there's a lot of conjecture about a lot of things in the marketplace, and there's no shock to any of you that, obviously, we comment on this conjecture about different things and that type of thing. But certainly, that's a question that's very fair to ask, Mark. I think your question about data in general is interesting. Data is important. I think Mark would be can give you more elaboration on that in general.
But I certainly don't want to go into the into anything broader than that, would be what I would say. David, feel free to say.
Yes. It's probably a great question for tomorrow.
It's going
to be a tomorrow session with Mark. So it's probably a great question for Mark.
You're here at Unfiltered. And I'm glad you asked it because I'm sure people are wondering.
Hi. Phil Winslow from Wells Fargo. Just have a
question on churn rates. Obviously, that chart that you showed, you showed immense improvement over the past several years in churn. Wondering if you could walk through sort of what you've done to bring it down. And then you made a comment, Mark, about going forward
you have to bring that lower. What are
the next things you need to
do to bring that lower
and what sort of a right and long term target for you guys? Sure. One of the things, Phil, that helps bring it lower is multiple clouds, I think, more attached. One of the things that helps it be lower is more AppExchange installations with people when it gets when people have more and more of their solution coming together. One of the things that helps is we have an incredible customer success group that has something called an early warning system.
And one of the things that's different and having been in all sides of software and technology, what's different is if we sell something to a CEO and we make a business case for them, we want them to be wildly successful. And by the way, if we pick up, we don't own that data, we fiercely protect that data. But if we pick up, Phil, we're not seeing the normal patterns where API calls and storage things and enough activity that we would expect would be consistent with the adoption of that capability, the CEO is not going to call us. We're going to call that team. We're going to figure out we're going to bring people in and we're going to figure out what do you need, how can we help you, how can we support your success.
Because when they do that over the long term, the more that adoption happens, the more the success happens, the lower the attrition rate happens. And so we have an amazing group of people led by Maria Martinez. They just do an absolutely first rate job on that. But I also that coupled with the more of the entire offering that we sell, I think the better the experience is in total in terms of lower nutrition rate. That's what I
would say.
Walter Pritchard with Citi. So early in the year, you came out the lightning additions of the product, added more value and raised the prices. I wonder if you could talk about just sort of realization of some of those pricing moves into metrics that we might see like billings and revenue. And how you think about just sort of state of your pricing in the market given what may be some incremental competition we're seeing out of Microsoft? It seems like they're reinvesting in the market.
Sure. Well, first of all, I think to Walter's point, we did a pricing and packaging and pricing change. Does that make sense?
Yes. Literally the first time since I've been
in Salesforce. And David's seen a lot. And when you step back and look at that, we basically and I think Walter really positioned you right. It's kind of we added some additional packaging, we added some additional functionality and we priced it. And I would say right now, I think that's really unfolding pretty much as we expected.
And just to be clear for everybody, Walter knows this, but for everybody, basically, we grandfathered the installed base. So for people that were installed base, think about their customers, they basically got upgraded functionality, okay, because we wanted them to have a good experience. Now when they add on and they take on new business, then we would get more ASP for that enhanced and expanded functionality. But for people that were already there, they actually got more real time. And so we both took care of our existing customers, and I think they were fine after 10 years for when we added additional value to get additional pricing.
But I think Yes. David, I think it's pretty much shown up
as we're expecting it. Yes.
I don't think it's having a meaningful impact on the you guys follow. And I don't think you should think of it as a price increase. I think you should really think about it as repackaging. If you go back and look at when we first launched Unlimited Edition, one of the big value props was mobility. Well, turn the clock forward 5 years, mobility is something that everybody expects.
So it's not really a driving value for us. So we really repackaged around what customers were buying. They're buying a lot of a la carte services around our additions. We repackaged the way they were buying, but it hasn't had any meaningful impact on things you guys follow.
And the last thing I would say to Walter's point on competition, I don't think the competitive environment has meaningfully changed. You can see the persistent trend in market share. That you can take a look. You guys are probably subscribed to the same one that we are. So that's something to think about.
Down the table, bring it home. Steve Ashley, Robert Baird. How should
we think about the monetization opportunity with Einstein? Well, there's 2 things on Einstein. And again, we will announce as all these things become GA, you'll see. But one of them, Steve, think about some think about like an individual SKU capability for the various Einstein aspects that it'll provide to the various clouds. And in some cases, think about it being bundled in.
And you're going to hear more about it as again, we don't want to steal the thunder, but you're going to hear a lot more about it even this week. And that's what I would say. David, any add?
We have a lot of questions up here in the front row. You don't want to forget these old people on the front
row. Yeah, exactly.
Hey, Ryan Molchan from Barclays. As you go on the journey from like €10,000,000,000 to €20,000,000,000 we talked a lot about leverage on the sales and marketing side. Can you talk a little bit about the other initiatives you might have to take in terms of organization needs to change in terms of how they are set up? I'm thinking about technology maybe
as another driver for that here.
Can you just talk a little bit like the steps you're taking just to kind of change sales force and get it ready for the next day?
Let me start that. Maybe David, maybe he and I can talk to you a little bit on this. But I think if you step back and think about preparing for $20,000,000,000 as we think about it, we'll the way to really scale a company, having done this multiple times, is you have to it's not like you address one thing. You have to address the entire ecosystem of your company basically. And so when we think about scaling, we have incredible people that have you just take Randy Curran, for example, that manages our entire tech ops service delivery.
He's got incredible experience. He's run Azure before. He knows how to scale a company. And so Randy will do his magic. Let's just take for example, and all the things that he can think about from that standpoint.
David, I know you showed a really nice job when you were showing kind of some of the natural leverage we get depending over time as we scale the company. But my message to the entire company is that every one of us need to think about how to take it to a higher level. And when you put that challenge out to people, my experience is they come up with like really interesting initiatives function by function, division by division to support it. What I'd hate to do is get into too much of the detail on that because if I do, I'll be reporting out to you how we're doing on that. But generally speaking, expect all the company to scale, and certainly, there'll be major initiatives.
Devin?
Yes. What is the most amazing actually, if you really internalize that subscription economics framework is we can just literally keep our existing cost of book, cost to serve, attrition and sort of drive to that number naturally over the long term. So what's remarkable is we, in many ways, don't have to get more efficient as our business over time. So but obviously, as Mark said, we're always looking for ways
to do better. And there's always ways where you
can drive incremental efficiency. And then we obviously choose whether we let that go to the bottom line or reinvest it back in growth.
Hi, thank you. Sarah Helene with Macquarie. Just a couple of questions I wanted to dig into with you guys. I know you talked a lot about the seasonality in deferred revenues. And we've done a lot of work on how billings are really on a quarterly basis a core indicator of future growth.
And we consistently see when we regress the numbers that there just isn't a correlation there. And so as you're talking about the increasing seasonality you're seeing in Doctor, we've kind of fallen back on looking at billings on a trailing 12 month basis as more at least more statistically correlated. And maybe it circles a little bit into John's question, but is there a better metric we should be using to have a little bit of a better capture of what's going on? And then just number 2 really quickly. David, I know you jumped into the cost book in particular.
And certainly, we understand the unit economics. I'm just wondering, is there any benefit that you're seeing in terms of the cost to book as you push more customers onto multiple clouds? And are there ways to improve the economics there? Because I think that should be a nice lever for the business.
So I'll let if I take the first, you take the second. Great. Okay. So, sir, we agree with the conclusion in the sense that not so much the exact metrics that you use, but the quarterly thing is I mean, we've been on record a long time of saying that, that is something that can be really choppy to say the least. I think the thing that we think a lot about, and I'm sure there's a ton of different algorithms than you guys have an algorithm that you look at.
But I think David and I were talking, we talked to the leadership team a lot. One of the things that goes through our mind a lot is what's happening to the total build and unbilled Doctor because I mean, it's literally revenue waiting to happen. And so we think a lot about like how does that growth rate look? And we look it's like 28% in the last quarter, that whole pipe of activity there. And we talk about our revenue being 26% constant currency and that being what it is.
We look at that a lot. That's why we disclose that. And we think that's so much more meaningful than something that's super choppy. But I can't comment on your specific algorithm. I know you're super analytical and smart and all that.
I don't know exactly what you're doing. But the aspect of no, no, but I was like everybody says, what do you think of my model? And I'm like, God, I've never seen it. I better not comment. But I'm sure there's algorithms that people are thinking about.
I'm just trying to be really transparent with you. That's what I think about, David. I would just add, there is no perfect measure, right? In fact,
I see our Chief Accounting Officer in
the back row, and he's kind of cringing a
little bit, because there are
so many ins and outs inside of deferred revenue. I mean, there's early renewals and then there's renewals that get extended with courtesy renewals and there's all kinds of dynamics. And there's a $4,000,000,000 number that you guys are laser focused on to the nearest $10,000,000 right? And my Chief Accounting Officer was like, woah, there's all these things happening. So unfortunately, there's no perfect measure.
With respect to cost of book and multi cloud, there's clearly leverage for us inside installed base. That's why Mark spent so much time talking it today and we should start to get that benefit over time. I would say that different clouds do have different buyers. And so it's not like the guy that's purchasing the marketing cloud is the same guy that's purchasing necessarily the sales cloud. But certainly, as we become more strategic inside of accounts, having multiple clouds gives us an opportunity to be more efficient.
There's no doubt about it.
Yes, it does. And also, when we do a CEO sale, they want to look at multiple clouds, which is really nice about it. They're not functionally driven, SIR. So I think that's an efficiency, too, because we can hit the number one point sometimes.
We'll work down sell side alley here.
Hi, guys. Thanks. Alex Zukin from Piper Jaffray. I'll try the M and A question from a slightly different direction. So I think if we look at the pace of M and A, that's you guys have done a great job addressing that.
But if we think about the context of the recent kind of M and A, there's some speculated, it's more transformational in nature. As you lay out a $20,000,000,000 goal of revenue and $100,000,000,000 TAM, is there and this may be a better question for Mark, is there a better way to understand your thought process around transformational M and A in the context of TAM expansion, getting there faster? And we've talked you guys have arguably considered more transformational M and A this last 6 months than really probably ever in the history of the company. So just any kind of
help there would be great.
I would Alex, I think, hey, you're right. I think this is a great question for Mark. But I and I think I mean because I think you have an expansive thing that you would like to get feedback on. And that's why we've worked hard to get Mark here so that we make sure that we address as many questions as we can and give you really good access. I would say to you, again, transformational is kind of like it's always interesting because when you're asking the question, I'm thinking like, well, the biggest M and A we've ever done in the history of the company, well, we've only done 2 big M and A.
One of them is the Manware. I think about that transformationally in the sense that it fits into CRM. It rounds out something that we completely didn't have, And it's completely something that's really important to us. But I also get the context of your question. And so I'm just trying to share with you kind of like real time what's kind of going through my head.
But I do think it's going to you're going to be best served by here and Mark directly on this one. I really believe that because I think your question is broader than that. That's what I would say.
Yes. Agreed.
Keith Bachman from BMO. I wanted to ask 2 questions along those similar lines. David, you've mentioned a couple of different times the framework on margin expansion at scale. But if one of these larger deals occurred, there could be some slowdown in the minimum margin erosion. So should investors at least contemplate something that happened a couple of years ago where perhaps the margin expansion story was at a minimum slowed for a period of time before it reaccelerated?
And the second part of the question is, you've talked about the framework, the guidepost, if you will. Some of the larger deals that have been at least thought about, and I don't think it's anecdotal speculation, Mark has specifically said he would have paid more for LinkedIn than $26,000,000
And so
at that level, some capital will be required. But what's not on the framework is any discussion about growth in margins, but nothing on the capital side. Sure. So I'm not sure how at least you would infuse some discussion about what are the guideposts around capital as it relates to some of these transformations?
Sure.
So I guess the first thing that I would say here on the capital, we haven't published a framework for that. It's never been a topic. I mean, obviously, the whole discussion that Mark's had about LinkedIn raises a question on that. And that's something that we can think more about. But I think one of the things that you should think about, and you can see with our cash flow when I talk about hitting $2,000,000,000 in cash flow, is that obviously the amount of cash flow that we have and how fast we grow our company has a bearing on the kind of cash generation we have and what our capability is to finance and or even pay down any debt we have.
We have some debt today, how fast can we pay that down. That's something that we do comprehend. So I'm not prepared to give you a framework on the fly on that, but I take your point. But you certainly should expect that just as a general course of managing the company, we look at our cash flow, we look at the delivering of our existing debt. We look at the cash accumulation over the course of our long range plan.
We think about all that together. We think about that with the Board, and there's a very disciplined process. And it's not like once a year. It's like all the time we sit down and talk to them as you might expect. And then as far as the framework and do we deviate from the framework, I appreciate your question.
You're asking and it's a very legitimate question. It's not something that we're prepared to go down to like a lot of hypotheticals. You can imagine, it's a very legitimate question. But I think hypothetically, I would kind of step back away from that. That would be Yes.
The only thing I would add is we've had the framework in place for 5 years, and that should give you guys some confidence, right? It's definitely part of every conversation that happens. I mean, obviously, we're managing for the long term of the business. We want to do the right thing for customer success over the long term. But I think it's really important to understand that this framework is really becoming part of our DNA and part of our culture and part of the decision process.
And
if you look at our past behavior, I actually think I always thinking about like past behavior is like powerful because it's not just conjecture, it's fact. And you can see what we tried to show you as we use that compass to just relentlessly kind of pivot back to be in the framework where we needed to be. And as David showed, we had things where we were working through, but then you can see the track in the path that we're on. So I think if you think about it as something that we're constantly pivoting back toward to make sure we're in that framework, I think you got a really good sense of where it's at.
David and Mark, Jeff Houston with Navistar. Curious if you could talk a bit about stock compensation. I know it's not included in the non GAAP, but it was part of your framework and also with unit economics as you get into gross margin and sales and marketing, stock compensation does play a big role in that. How do you think about that as a framework as you look at your compass and also the unit economics?
Yes, of course.
Yes, I'm glad you asked it, Jeff. We have looked at our stock based comp and talked to a number of you over the last few years. And certainly, we talked about bringing it down, and we have. We brought it down into a level over the years. It was significantly higher, and we brought it down into a single digit range.
And it's something that we look at. We have to be competitive in the world and the industry and the space that we're in, but we're trying to make sure that we're being judicious on that and very intentional. Our comp committee is very attentive to this matter. We have like I said, we have some board members here today that are very attentive to that matter. So we're trying to both make sure that we reward world class and at the same time and be competitive in our space.
And you're seeing our stock comp scale over time as you would expect it would. When I benchmark and see all these different companies and how as they get more and more scale, it gradually brings their ratio, it kind of brings it down over time. And I think over a longer period of time, that will be us. But I'm not guiding that right now. But certainly, over the long period of time, I would expect that.
Derrick Wood at Cowen. I had a question on the cost to serve. And a couple of quarters ago, you announced a deal with AWS to leverage their infrastructure. And I imagine maybe that can help you slow down some of your own data center investment. So is that something that you see over the longer term that can help cost to serve, that can help on the gross margin?
And then maybe can you just give us a framework for what you're thinking around new data center investments versus AWS in the next couple of years? Sure.
So let me again, we're tag teaming. Look, what I would say on the AWS relationship is we love that relationship in the sense that it is very strategic. They use us extensively, and we've used AWS for years. It's just that relationship has discontinued to blossom. We use it for everybody's benefit, Heroku.
We use it for RelateIQ, I think, Radian 60. But I think there's a few different things that we use it. We've also talked about the notion that how this can help us as we expand our footprint even internationally in certain areas. We can elect to do that. And that can be powerful, by the way, Derek, because you can get to a point where you have full scale in a country to use a full footprint or can you use like a partial footprint and that doesn't escape us that potential.
But that relationship with AWS is really helpful. I think when you get broader about service delivery, it doesn't escape us the optionality of the cost So I think that is something that's exciting to us, David. You know?
Yes. I mean, again, we talked about M and A and in some sense, this is very similar. Our DNA still is go fast, number 1, and deliver customer success, number 2. And so having these new capabilities, whether it's AWS or Azure, something like Google or Oracle working on it, really exciting to us because we're like, wow, this is an opportunity for us potentially to go fast. I don't know that they're mutually exclusive.
It's really about speeding customer success. And it's early days, and we'll see where that goes. So that's how I would think about it.
Karl Keirstead at Deutsche Bank. If we could just go back to the last earnings call and the Doctor performance in the July quarter and the 3Q Doctor guide, I think that created a healthy debate about what the Doctor growth is likely to look like for the next several quarters. So with the passage of another month since the earnings call, is there any more clarity you can give us on that, maybe the extent to which the kind of invoicing seasonality that David talked about affected your 3Q guide? As you look into fiscal 2018, the extent to which some of this unbilled backlog might convert to Doctor and get us feeling comfortable about the fiscal 2018 Doctor growth?
Sure. Let me thank you, Karl. Let me I'll talk about some of the comments. And maybe certainly, the compounding can really give you some deep expertise on that. But I think at the end of the day, when you look at Q2, just as a reminder to everybody, yes, we performed 27% growth in the Doctor as reported in constant currency, right in the middle of our guide of 26% to 28%.
And one of the things that we talked about with that is that we were affected by foreign exchange, which we reported and showed and disclosed. We're also affected by compounding, which David has done. I thought it just did an impressive job of just laying out the patterns. It's hard to see the pattern and you can bring real clarity to the pattern. I think, David, that was very well done.
But you can see that pattern is certainly something that is showing up. And I and we try to communicate that to you because we think it's important when you're interpreting results. I think you could also see that result when you look at the Doctor. It's just it's hard to talk about Doctor without talking about the total picture Doctor, which grew 28% in aggregate, the even bigger number. And so that I always think I look at that number, back to Sarah's question, and compare that to the revenue that we posted at 26% constant currency and say that's what it is.
And yet also in Q2, we had we talked about a bit of softness at the very end of the quarter, primarily in a U. S. Operation. And Keith is going to be here and happy to go over that again. But that was Q2.
But we still with all that there, 27% constant currency, 28% for the big number, that's what the number was. When we look going forward in the guide, of course, we had to take a look at foreign exchange and take a read on that, and we had to take a read on the compounding factor that David had talked about. And at the same time, we raised very slightly again the revenue for the year, 3rd time of the year. We raised the revenue for the number. And I've just told you already, obviously, we don't update in quarter, but I did tell you that we will be a 10 dollars company next year without getting specifically into the guidance.
So that gives you a little bit of a sense of what we're thinking about for the future and stay tuned for the guidance that will come. But that's Carl, I appreciate you asking because that is a topic that was of interest. And I'm trying to give the context we have. And David, I welcome. I mean, the compounding thing, I think you laid out very nicely.
Yes.
I think that's fine. We don't obviously give inter quarter updates on deferred revenue, so I can only tell you. Great. All right. Before we close, can I please get Andrew Zilli, Ro Salswedal and Anna Saliba to come up in front and join John Cummings up in front?
Can you come up here, Anna? Yes. I want to recognize, this is our Investor Relations team, and we are incredibly fortunate to have this group led by John. They've created this amazing day. They've created this amazing content.
But mostly what they are is amazing spokespeople for Salesforce to tell our story to all of you and to relay all of your feedback back to us. And I want to recognize all
of them for putting on such an amazing day today.
And let me just add, being humble, IR reports to David. So I want to thank David as part of that group. So David, let's give it up for you as well here.
Thanks for that. Thanks for those thoughts, David. Thank you very much. So, well, that wraps up our business overview section this morning. Just a couple of thoughts here.
Number 1, the presentation that you saw here from Mark and from David will be up on our Investor Relations website here this afternoon. And we're going to break now for lunch. Lunch is up on our 4th floor on the terrace. And then we'll come back here at 1 for a Q and A session with Alex Daum, who's our President and Chief Product Officer. And you can dig a little deeper into some of the initiatives that David and Mark had touched on.
So that breaks for now. We'll see you back here at 1 o'clock.
All right. If you all
would like to take your seats, we'll get started in here in just a minute. All right. So we're going to go ahead and get started with the third half of our show. Just kidding. I think there's some nice people here.
But I would like to welcome Alex Deyenne, who is President and Chief Product Officer at Salesforce, along with the members of his team, and I'll let Alex and his team introduce themselves. But this is an opportunity for you all to ask questions, dive deep into sort of product, product strategy, and get to know both the executive team and the management bench that we have across the product portfolio and go deeper into some of the products you care most about. So with that, I'll let the rest of the team join you. And Alex, take it away. Okay.
Well, thank you, John, for the short introduction. I'll let everybody join on stage. I think the best is I'm going to quickly introduce myself. So I'm Alex Dayon. I run the product organization and pretty much all the different cloud.
As you know, our product team is organized by what we call cloud, And each cloud corresponds to a very specific business process or functions or industry. And our objective today is to go and to be able to answer any questions you may have related to our product offering, our product strategy and the amount of news we're bringing to the market because Winfort is always a milestone in the year for us where we announced a lot of innovation, a lot of acquisitions. So we're here to answer all those questions. But before we go into the interaction, you also notice that we have an amazing bench of leaders at Salesforce. It's true across the entire organization, but it's partly true in the product organization.
I'm sure those of you who have been covering the tech industry for quite a while, you'll see on this stage a lot of familiar faces. And we really pay a lot of attention to scale the company as fast as its revenue when it comes to management and leadership. So with no further due, I'd love to let all those leaders to introduce themselves. And ladies first, Stephanie, why don't you start?
Hi. My name is Stephanie Buscemi. I head our product marketing organization. I've been with Salesforce just about 3 years now at this point.
Bob Stutz, CEO of Marketing Cloud as well
as Chief Analytics Officer for Salesforce.
Mike Rosenbaum and I run Sales and Service Cloud and been in Salesforce for 11 years.
Adam Seligman, platform developer, admin and Trailhead and I've been at Salesforce for just over 5 years.
John Wiecke, Salesforce Industries, Vertical Products, also 5 years Salesforce.
I think now we can open you had a pretty busy morning. I think Mark went through all the product strategy at a very high level. So we can open to questions right away. And we have Mike in the room, so feel free to
there we go.
Tom Roderick with Stifel. Question on the Marketing Cloud side, might be
a little bit early to answer this since
it was just announced yesterday, but the acquisition of Crocs and the idea of a data management platform. Can you talk about more about what that brings to you strategically, How you think about integrating it? And what you've already done from a partner integration standpoint with them? Thank you.
Yes. So Crux today is already a partner. We have numerous joint customers with Crux today and the integration will be really fast and what it brings to Marketing Cloud is it really allows us to identify new segments for customers to market to in a quick fast way and high scale.
Hi, it's John DiFucci from Jefferies. Great to see the product people up here, Alex, because there's a lot of
talk in this room about what Salesforce might do from a strategic level in acquisitions. We all know that you did on you or the company did on LinkedIn. There's a
lot of talk about Twitter.
What do you and I think some people understand a little bit better what LinkedIn would have done for you. I guess from a product I'm not saying you're going to buy Twitter, but what would it do for you? Like what because I keep getting asked that question as sell side analyst and I just don't have a good answer. And I'm just curious from your perspective, so I'm not saying you're
going to buy it, forget about, I'm not asking that question. What would something
like Twitter with access to that data do?
Okay. So it's a question around M and A strategy. I take it broadly as what's your M and A strategy because indeed there is so much noise. So I can comment on how we look at acquisitions, what type of acquisitions we've been looking at and how we operate those acquisitions. So first and foremost, if you step back, what is our strategy as a company?
We define ourselves as a customer success platform. Our job is to help our customers to connect their customers in a whole new way. The world is changing. Every business is being disrupted, every business. Banks, newspapers, cars, you can walk the campground.
You'll see showcase our customers at booth where they show what they're doing in their digital transformation and you can see customers like T Mobile, General Motors, Eli Lilly, Farmers Insurance, Aldosho's, all those customers are getting completely disrupted in the new digital world. It's not just for marketing, for sales, for services across the board. The way you operate in a new world is very different. Our job has been to be basically the technology engine behind those digital transformation. That's our core mission.
We're not here to build an ERP or to do HR system. We believe that this is the fastest growing segment in the whole industry. There is 1,000,000,000 of dollars being spent by every CEO to lead their digital transformation. And that's really the core of Dreamforce. People are coming to Dreamforce not to talk about HTML, SQL, Hadoop, Big Data.
You don't hear those words here. You only hear stories about customer success, about transformation and that's what we do. That's what we do. We abstract our customers from the technology to give them the tools to lead their transformation to innovate quickly. So that's the big vision.
Now how does it translate to product? A big question, how do you translate that to product? Well, we believe that the segment we're in is the CRM. It's kind of a new generation of CRM, so we're careful using the word CRM. But typically in terms of spending, we play in the CRM category.
That's where the money is flowing. And the CRM historically has been divided by sub segments, which corresponds to the way companies are organized around their customers. You have advertisement people, you have marketing people, you have sales people, you have support people, you have product people. So all our clouds kind of map those buyers, those functional buyers who are coming to Salesforce to transform themselves. Even though all our products are connected together, at the end of the day, we stitch them together.
So when we look at acquisitions, we really do 2 things. There's really 2 types of acquisitions we're doing. The first one is we're trying to fill segments in the CRM space we don't play and we hear our customers asking us to do it. Marketing cloud, Commerce cloud, CrUX, steel brick for CPQ. These are abuse extensions of our addressable market.
We enter that segment because we know these are products that extend our reach in our core sweet spot. We're not going to brand new segments. We don't know how to operate or sell. And when we buy those assets, we pick the best. If you look at Marketing Cloud, if you look at Commerce Cloud, if you look at Querks, each of those companies are leaders in some form of analyst segments.
Marketing Cloud in the Magic Quadrant, Commerce Cloud is the leading cloud e commerce in the Gardner Magic Quadrant. Crocs is a leader in the Forrester Wave in terms of DMP. So we really go after the leading technology and it's okay to pay a premium because you want the best team in the industry and you want the best technology. And we really spend a lot of time making sure we get the best asset and the best competitive edge out of those acquisitions. So that's one big pack of acquisition, which bring revenue, expand our time.
There's another set of acquisitions we're doing on a regular basis, probably way more in numbers, which are technology acquisitions. The world is changing faster than most company can innovate. So you always need a good balance between the build and the buy. We're building tons of technology internally, but when it comes to AI, for example, artificial intelligence and Einstein, we did a mix of building internally the core infrastructure with a team that was dedicated under John Ball. And then we bought the best team we could find.
When it comes to discovery, we bought BeyondCore. When it comes to sales AI, we bought Implicit. So we went to buy those little teams that were made of the best data scientists in the industry that were not really a revenue acquisition. There was a pure talent technology acquisition that we could integrate into our core. So that's really the way we're looking at acquisition, which is help our customer accelerate their digital transformation and really have two level of acquisition, the big one with revenue and time extensions, which obviously require bigger consensus within Salesforce.
And the smaller one, which are usually the decision of the people on stage, they make those decisions. We don't have to get to Mark's approval to buy a small talent around AI. We just want to go fast and let the team execute. So that's really the way we're looking at M and A. As you look at our track record, we're not that crazy.
I know people whenever we do the articles in the press, we look at crazy people buying anything we see in the corner of the street. But there is for each of those if you pay attention for those 2 categories, we'll always buy the best technology we can find and we put a lot of thinking behind that. So that's my answer. Well, as shareholder, you would want us to be deeply involved. As shareholders of Salesforce, we have obviously a CEO with a very dominant personality, but we really work deeply together.
We go deep. We go deep and we look at every aspect of everything and we challenge ourselves very hard because indeed all the acquisition we've made so far, the price are expensive. If you want the premium assets in the market, the price are expensive, but that's the nature of the technology market. And of course, you need to challenge yourself internally. So clearly, there is Mark is involved, I am involved, Parker is involved.
We really look at every single aspect and pitch ourselves both sides of the equation. There is a lot of internal discussions around those acquisition and also we have process internally which is very formal when it goes to we need to go to the Board. We have an M and A committee. So we have tons of documentation internally to make sure those acquisitions are done to the interest of our customers first, but also our shareholders.
Thanks. Steve Koenig with Wedbush. Maybe this one's maybe Bob or John or whoever wants to comment. So first part of the question, maybe an update on where do you stand relative to selling to B2C companies? Where is that in your and what are your strategies for driving further into the B2C space?
And then beyond that, maybe just an update perhaps from John on where you are with your industry strategies and where you're headed with that and current state of the nation on that?
You want to start with industry and I take B2C after that?
Sure. I mean, I think we sort of have a couple of key parts of our industry strategy. The first is, I think, pretty fundamental, which is we started as a company that was incredibly successful with what you sort of think of as a horizontal focus. But the fact is we've kind of been technology was technology was pretty unique in the marketplace. It was cloud based, it was a single version of the product, continual innovation, great extensibility to this metadata architecture and the platform that we have.
So customers kind of discovered a lot of the value in it for specific industry use cases a while ago. But over the last few years, we've really started seeing that. We've started bringing a lot of their best practices and best use cases. And we've actually helped amplify the success that they've had and make it more broadly knowledgeable to the marketplace as a whole. And we brought in a lot of industry talent, people who grew up in the communications industry, in the retail industry, in the banking industry.
And they've basically helped us better articulate the message of the marketplace, something we call speak the language of our customers. So our job is to help customers basically make their customers more successful. And for us to do that well, we have to understand that from an entry context. So we've really increased our investment in that over the last several years. The other thing we've done is we've actually found it in certain use cases, it was incredibly helpful for us to actually extend our core products to address industry specific use cases.
It started a few years ago with the government cloud, where we basically made our products FedRAMP certified, so we could sell into the federal marketplace. But then this last year, we introduced Health Cloud and Financial Services Cloud, which are still based on our core customer success platform. We're not building core banking systems or an EMR system. What we found is incredibly helpful for us to basically extend those products with healthcare and financial services specific use cases because it allowed our customers to more quickly see the value, it allowed our sales people to basically close deals more quickly, it drove faster adoption helped everybody really understand how we could solve those unique industry problems. And I think we've had great success since we've started introducing those products this year.
So, the strategy is really to continue to round out those products. Initially, Financial Services Cloud is focused on the wealth market, but we're rapidly expanding into retail and insurance and other use cases. The same on the Health Cloud side, it was provider focused, but we actually have a number of life sciences companies implemented and now we're actually looking at the payer
space as well. And then
I can answer regarding the B2C question. So clearly today, if you're a B2C company, put yourself in the shoes of the buyer just for a minute, there's no better place than Salesforce today to do your digital transformation. And it's clearly something that we've been executing for the past 6 years step by step. It started with Service Cloud. Service Cloud suddenly Salesforce was going above and beyond just the Salesforce automation.
We could run big call centers at scale for large telcos or large financial institution. And we started to step into the B2C world with that first product. And since then, we have extended pretty much every year the portfolio of products. And now you have Service Cloud, you have Marketing Cloud, which is the largest digital marketing engine. I mean, no one else send more than emails, personalized emails than us.
On Black Friday, I think Bob you send like 3,000,000,000 emails. Personalized, each of them is different. No one can do that at that scale and ensure that deliverability and track all the signals and all the feedback. With Commerce Cloud, it's another step to be completely irrelevant to our B2C customers. Crocs is another step.
So we're clearly building really the best, the most complete CRM for any B2C brand in the world. And you'll experience that firsthand. I really encourage you to work the campground where you see our customers. We even have a store in the campground. You can buy T shirts and ties.
There is a sales force tie for sale. Vivienne Vines runs their store, they're online, everything runs on Salesforce. We have Aldo Shoes, runs on Marketing Cloud. So we have all the digital brands like General Motors, we run on Salesforce. And I also one of the brands that really surprises me every year is the brands like Adidas.
You're probably familiar with Adidas, the sport shoes. We run the call centers. We would thought that there is 700 people in call centers to support basically the Adidas customers. They run on Service Cloud. We run their online website.
If you go to you type on your phone adidas.com, you're on Salesforce. The whole experience, the whole digital experience is Salesforce. And it's our Commerce Cloud and you can buy shoes and they are in fact sell more than $1,000,000 worth of GMV through Salesforce on that online is growing double digits. It's one of these amazing stories. So we clearly can cover the complete lifecycle from advertisement, marketing, commerce and support for a B2C brand.
So we feel we really have done an amazing execution in the past 5 years by expanding Salesforce from being really indeed when we started really hardcore B2B opportunity management, sales guys selling over the phone to a complete CRM that can service not only B2B customers, but B2C brand with the most relevant portfolio of products.
And over here, do you want to add? No, I
think that covers it. I think on
the marketing side, we truly are the leader in B2C. So
Ed McGuire from CLSA. This is a question for Stephanie. I'm over here. We haven't heard as much about the analytics clouds as we have some of the other clouds. Could you provide an update in terms of where the business is proceeding according to your plan, your expectations, some commentary on the changing competitive landscape with Microsoft launching Power BI and QuickSight in the market.
And also down the road, to what extent Einstein may play a role in the evolution of the analytics cloud and how it relates to the other clouds?
Sure. So we brought Wave the analytics cloud out about 2 years ago here at Dreamforce. And when we first brought it out, we went with a platform first orientation. We knew all along that we were going to develop our own CRM analytic applications, who better than Salesforce to build the CRM analytic applications on top of it. But we also wanted to make sure that we could build a robust partner ecosystem on top of it as well as allow our customers to build any analytical application on top.
We started with that platform and then over the last 2 years, we've delivered for sales, for service, for marketing and IT, analytic applications, the Wave app on top of that. We've seen tremendous momentum in our sales organization and with our customers using those analytic apps, because really what they were having is they have free operational reporting with Salesforce already, but they sometimes have the need to marry 3rd party data and they can do that with Wave. They can marry their CRM data and Salesforce with that 3rd party data. They can do that in a self-service easy way and get up to speed fast. So we're seeing huge momentum there, both departmentally as the platform has matured, we're actually seeing a lot more pickup within IT organizations as well.
And it's working quite well and that it really sells 2 ways in our go to market. 1, we see that it's our quarries are able to sell this and it's sort of a seed and grow. And then we also see that it's been attached and expansion into some of our larger accounts. Anything you want to add on Analytics Club?
Yes. I think we really are differentiated in the marketplace from our other competitors and the fact that we are truly the only platform that can do true insight to action. So not only can you see your data on a mobile device and we have the ability to build analytical applications that are mobile. But you can click on any piece of data and take an action directly from there. And I think that's a huge differentiator for us in the marketplace.
I don't know
a single other platform where you
can do that today. And as far as Einstein, Einstein is integrated into our analytics cloud today. And if you get a chance, you should see some of the product that is GA today that you can actually see Einstein embedded in and working in Wave and in Sales Wave as
well as in Service Wave today?
I'm actually tomorrow I'm doing part of the keynote and I'll show Einstein in wave where we can build wave is an amazing way to explore wave is really the navigation layer on top of your sales force data. That's really what drives our customers to the Wave platform because that's the way to really understand their sales force data and have an experience in terms of navigation. But you can go all the way down to the field in sales force and take actions because it's the same pack, it's the same log in, it's the same identity. But what we're doing with Einstein is we're now bringing predictive modeling into the Wave platform. So tomorrow, I have the pleasure to be on the keynote with Stephanie.
So together, you're doing one demo and doing another one and I'll show Einstein into Wave where we can help you find stuff, build some models, so things you can't find on yourself in your data set. And that's really the power of Einstein is to be able to discover, predict, to recommend and maybe automate if the level of prediction is high enough to do to the next step. And we will show that in action. But it's clearly it's an amazing asset to surface all those predictions, Wave. And also Wave, every year I'm amazed by how much Wave is taking over the conference.
If you pay attention working also the campground, the demos, everybody is telling a story for Wave because it's such as I say, it's such an amazing layer on top of Salesforce to understand your data that most of the demos I was working this morning earlier that came around start with Wave because that's the best way to articulate what's really happening in the business process.
Yes. I think one of the things I know all of us hear the most, whether it's an executive briefing center or meeting with a customer, I've heard numerous people describe it as Wave is a carrot, not a stick. And whether we like it or not, but maybe historically to a salesperson, a consumer of CRM, it's mostly been transactional screens. And really the promise that Wave is a give back is that we're now moving to more of a much more informational UI that's more engaging. It keeps sales service marketers in the applications longer and you've talked to any CIO, that's what they want to see in terms of adoption and usage.
It's Bhavan Suri from William Blair. Just a quick follow-up on the analytics space. As you embed that into each of these applications, you've had to rejigger pricing for Wave a couple of times. So I'd love to understand how you're thinking about the pricing as it relates to bundling within that cloud application itself? And then just a follow-up on Quip, how you plan to integrate that in the various clouds, pricing and how do you plan to monetize I guess also importantly, what does that do to your relationships with Microsoft and Google?
So I'd love to get some product thoughts on that.
It's really a question around price first, packaging and pricing. So when we launched Wave, Stephanie was looking through the story of Wave, the 2 years' story of Wave. We started with Wave as a platform because it's really you need to build a platform before getting the app. So we launched Wave as a platform and it was priced as a high level platform and it was not really priced per user at that time. And we knew we were starting from a very different point that where Salesforce is starting new products, which is per user, easy sell, add on sale.
So with the wave apps, sales wave, service wave, marketing wave, we have now a pricing per user, which is really an add on pricing, we call that option, which basically enables every Salesforce customer to add to their deployment this option, which just adds on top of their so the pricing, I think this price for the top additions are about $75 add on to what you're already spending with Salesforce. So for us, it's basically an opportunity to expand the portfolio of product we're selling to each and every user sold on Salesforce. And your question your second question was about Quip. So Quip is typically the acquisition of probably 1st and foremost, it's I hope you'll have the opportunity to meet Brett Taylor or if you don't I mean, try to locate him or go to one of his sessions because we've quickly 1st and foremost bought the best talent pool you can ever imagine. I mean Bright comes with the same reputation and ORI was the person who wrote Google Maps.
He's been at Facebook. He's one of the probably the most talented executive in the valley and he built a product called Quip, which we were working for a couple of years with. I mean, we've been very close to Quip. They had integrated in Salesforce. They were done the street on Market Street.
And as the product was maturing and we were seeing the traction, we've joined customers, customers like Facebook who are using the 2 products together. We felt that clearly Quip could bring collaboration within Salesforce to the next level, especially around documents, productivity like producing documents or using spreadsheets. And we felt that there would be an amazing combination to bring that to the market. The mobile experience is killer. I invite everybody to download it and test it for yourself on your phone.
And that was really about making sure we help our customers continue to be productive in context in sales force. Our strategy has always been to be open. I mean, we go where our customers want us to go. So when it comes to the relationship with Microsoft, we have a big investment, probably bigger than actually our investment in Quip in just integrating into the Microsoft products. We have deep integration into all the Office assets, Excel the number one integration that most customers are asking us is clearly Outlook and Exchange.
So here we support pretty much every possible configuration of Outlook and Exchange. And I can tell you there's a lot of them. It gives a lot of edX to Mike next to me. So our goal is to basically deliver success to our customers. Some customers want us to integrate to the Microsoft products.
Others want more integrated collaboration and we're very excited about this product. This is clearly, clearly a very disruptive technology. I think we've been using it for now quite a while internally at Salesforce. Those guys have really nailed the usability, the mobile experience and the integration of Salesforce is just mind blowing. Salesforce Identity, you can put Salesforce data into your spreadsheets and documents that are dynamic data and there is a level of integration like we could not do with anyone else.
So we want to play in that field. We think there is value for us to have an offering. But on the other hand, it's not exclusive. I mean, this is really part of our DNA. I want to just wrap my long answer on the fact that the way we define success at Salesforce is through usage.
We don't want to own everything. We just want to make sure everything we introduce to the market is being used. And most of our Monday morning meetings, all of us here, we look at usage data on the service. That's what matters to us. If we spend money on a product that is not used, there is a problem.
And we feel that we need to service a lot of different requirements. That's why we so open to other companies and try to share as much with other companies because we do believe it drives usage and value for customers.
Over here on your left.
Hi, it's Samad Samana from Stephens. So it seems like Trailhead was something that was off in its own corner last year in Moscone West. And this year just walking around, I see it everywhere. I was wondering if maybe you can give us an idea of what type of impact Trailhead has on the platform? And if you could give us an idea of what adoption levels look like for the monetization framework?
And if it's a beginning of a foray into a commercial learning product?
Yes. It's a question about Trailhead. Abby, talk about it. It's been incredibly exciting. We launched it 2 years ago with one slide in the developer keynote.
That was it, and it was like a little pod. And again, it kind of comes down to usage. We just had a really a latent need for customers to want to innovate on the platform and do more with the platform. We thought we would start with technical topics like developer topics and programming on the platform. What we discovered very quickly was there was a lot of demand to really broaden beyond that from developer to admin, from admin to analyst, to sales manager, sales rep, everything about Wave Analytics.
So now we've got basically coverage of almost everything in the customer success platform. We've even started to put content in and just for everyone's benefit on the way we manage, so the way we manage our employees and manage our teams. Instead of making that private secret sales force training, we just put that public to the world in Trailhead. Also, our diversity and inclusion content, that's the quality for all, is a key corporate strategy. So again, our internal training on that, we put in Trailhead.
And we're on Twitter and we're out talking to customers and in our success community, listening to the feedback and watching the adoption. And it just kind of continues to amaze us all the adoption around the world. We've got 5 languages supported, all this different content. I'll answer the second part of your question, sort of the future and monetization. Just one other observation.
What's really amazing for us from a product management standpoint is it really closes the loop on our product back to usage. We have live telemetry from all of our service to understand how every single user, every single admin, every single developer is using it. And then with Trailhead, we have the ability to go help them adopt more and learn more, and then we can watch and see if they use it in production. And so we use our own technology, our own CRM technology, our own process technology, enforce.com, our own marketing automation and analytics technology, our own Heroku technology to run the Ruby on Rails front end that you see when you hit Trailhead on your mobile phone and our APIs. So this is letting us close the loop and drive adoption of all of our different products, which is incredibly exciting.
So it's taken off, as you've seen, it's taken off in a really big way, which is really great. We get a ton of feedback from the community and our product managers learn which features are getting used. To answer the second part of your question, I think the learning management space is a really interesting space, but it strikes me from the outside as maybe a little bit of backward looking space. It's all about just delivery of content and sort of the Trailhead model is figure out how to make the content fun and engaging and social and gamified and kind of the Salesforce way, incredibly customer centric. So what we decided to do is start with our own employees.
We're using Trailhead to train all of our own Salesforce reps in distribution and internal employees, train them on the Ohana way, train them on how we do sales, train them how we do customer engagement and customer success first. And we're learning from that and we'll sort of learn
from that and decide how and when to
turn into a commercial product.
And just to add to that answer is, you've seen our Trelette is becoming the brand. And when we asked ourselves a couple of months ago, what is our brand? How should we look like at Dreamforce? And the first thing that came to everybody's mind was Trailhead, because Trailhead is about this big family, this big ecosystem and this learning process and this openness. And that's why now you see the World Conference is looking like a national park, which came from the Trailhead team.
And that's pretty exciting actually.
Brian Valenteo from Barclays. Continuing on that, Ford, talked about the digital transformation that's going on with your clients and how they have to think about the whole spectrum. What are you guys doing around bringing all those products together? Because at the moment, it feels a little bit like a silo, like Mike is already kind of bringing sales and services together. Bob is still running marketing.
How does it have to change in the future to kind of be able to do the end
to end from a product perspective? Yes. Well, I'll probably let you answer on each side. I think there's really 2 1st and foremost, our strategy is to offer that integration to our customers. That's what they want to do.
That's the number one thing they want us to do. And very often with acquisition, we're actually asked by customers. They say, why don't you guys buy this company and integrate it because I have to do it on my own? I want you to do it. And we hear that from the largest B2C brand of the world every day.
So that is also guiding our thinking. And indeed, when we acquire a business, my strategy at the product level is we have 8 clouds and 1 platform. Let's summarize it all. I want each cloud to be a leader. If each cloud was an independent company, you probably saw that in Mark's presentation this morning, they will be leader in our category.
They will be leaders. But my job is to make it 1 cloud, to connect all those clouds together. And when it's products we build from the inside, it's pretty easy because we just build on our stack. The Wave was a product we build from the inside. It's really, really tightly integrated.
The identity, the data are co located, huge value day 1. When you acquire a business, obviously, you're also acquiring as part of the good things that you're bringing tons of And I think we so far are doing a good job of integrating those And I think we so far are doing a good job of integrating this business for our customers. I mean, the one that was probably the biggest integration was Marketing Cloud, where we delivered identity data, I'll let you comment, but we every year, we work super closely with our customers to deliver on new level of integration. Sales and service are completely integrated. They are really deeply integrated because those two products are built on the stack.
Communities is deeply integrated. Analytics is deeply integrated. So it's really the integration work is mostly when we acquire an asset and that's the 24 to 36 month roadmap. There is no secret behind that because you need to go step by step to evolve their stack. But if you look at the rest of the industry, we feel very good about the level of integration we offer to our customers.
Do we feel we have done everything? No. And that's clearly our core value proposition. That's also why we have a job. It's to make sure we integrate those products.
Commerce Cloud now is in the process of also doing more and more integration even though they had some before the acquisition. But our integration for us are mostly Frodo's acquisition. Everything we do internally starts from the core stack and the integration. And Einstein, for example, started from the inside and then we plugged the acquired businesses into that stack. But Einstein is very integrated, one of the key value propositions.
You want to comment on the Marketing Cloud?
Yes. And on the Marketing Cloud, the integration is very deep today. And as an example, we pass 3,000,000,000 contacts a month between Sales Cloud and Marketing Cloud. The connectors that we've built between sales and service, everything is fully integrated. And if you look at if you have a chance to go to the Palace Hotel and see the marketing lodge over there, you'll see that everything is enlightening, full integration.
And so we've come a long way in integrating Marketing Cloud. It looks and feels like every other Salesforce product now. And back left.
Hey, guys. Alex Houghton from Piper Jaffray. Mike, maybe for you on the topic of service cloud and specifically service management. As you think about expanding the delivery around service cloud, particularly inwardly facing, I wanted to get your specific take on IT service management, HR, how that competitive environment is kind of evolving and how you view your strategy in that vertical?
Thanks for the question. I was getting lonely. So here's how we think about it. So number 1 is, I'd say that the customer facing side of service is a huge market and a huge opportunity, and that's our primary focus is being able to if you about what Alex was saying, it's about making it very, very easy for companies to deliver best in class digital experiences to consumers and allow them to iterate quickly and keep pace with all of the change that we all know that we're all experienced in our personal lives. And then when you think about is it necessary for us to expand, not really, but is there an opportunity for us to expand into inward facing customer employee service with HR and IT?
Absolutely, right? So what we see is there's a lot of companies who have seen the power of Salesforce and the Service Cloud say, why can't I just take all these benefits and apply them to employees? Why can't I get the same level of service that we can get that we're delivering to our customers and apply to employees? And so from that regard, I think that we see those deals quite a lot. And so that it will augment the sort of baseline Service Cloud business.
But to be perfectly clear, the baseline Service Cloud business is about reinventing how companies connect customers and delivering a world class digital experience. And that's what's behind things like there's another recent acquisition that we did is a company called Haywire and making it possible to bring a text message or any really message channel directly into a service center and making that really just drop dead easy. And so those kinds of things will be applicable to employees too. And so that's how we see those markets.
Hi, thank you. Sarah Helene with Macquarie. I wanted to dig into Einstein a little bit with all of you actually. And forgive me, it's been a while since I've been in school, but my understanding of machine learning and AI, which I acknowledge is pretty limited, is that you really do need a good data model for intelligence and then of course you need a data set for continuous training purposes and then of course the compute processing capability to do so. And so I'm wondering and maybe this is a little specific, but perhaps it's behind some of the M and A headlines we've been looking at recently.
It's really about getting a large and arguably live data set. And if I'm correct, I'd love to or if I'm not, what I'd love to understand is when you're working with Einstein today, what data are you using for training the model? And perhaps even a bigger question, are there limitations in terms of what you can do with the data you have from your customers today under your contracts? And where do you see that unfolding in the future as you
Let me take a shot. You want
to take a shot? All right.
Let me take a shot, and then you can make everyone answer the question. It's a great question. So this is how I think about it, right? CRM, what we do is provide a pattern for companies to follow in terms of how they can engage with customers, right? Database application, if you think about it on the sales side, that goes from leads to opportunities to account management, right?
And that pattern is a big, big, big opportunity for machine learning and data science, right, because we have hundreds of thousands of customers putting data into that pattern that we can then take these techniques, apply it to and make predictions about outcomes, right? And so that gives those patterns exist all over our CRM portfolio, whether it be marketing or sales or service. Should I predict whether the opportunity is going to close or can I predict how long it's going to take us to resolve this case or can I predict who to route this case to or can I predict which is the best e mail to send to a customer? All of those things are much more doable because we are specifically taking these techniques and applying them to those CRM use cases and those CRM patterns. It's actually an incredibly good opportunity to apply customers and the contractual relationships that we have with our customers and the contractual relationships that we have with our customers.
And so when we bring something new to market like Einstein, customers will be completely explicit with them about how we will use the data and how those models will be developed and how they will work and then all be completely explicit and those customers will opt in to sharing that data with Salesforce in a new way, which will provide them this new benefit of the insights and the automation that Einstein can provide.
You want
to add a little bit on the
Yes. I think just two things. 1, I want to underscore Mike's point on the trust. That is so core to our values and everything we do and we thought a lot about that as we were bringing Einstein to market here. The notion of being able to leverage that data across customers, every customer is going to have the opportunity to opt in for that.
So their MSAs, they'll get fully exposed, full transparency and there's a ton of work from our go to market perspective to make sure that all of our They're
looking for this. They want the smarts
on it. In terms of the They're looking for this. They want the smarts on it. In terms of the data set, that's a key piece. You know all the right stuff to ask on it.
And it's all about not only taking all of that CRM data, but what is the other data that we can marry with our CRM transactional data to help banks have more and more on that and be able to make the models richer and richer. And that's really what we're focused on right now. And I see a lot just coming off of working on the Wave team in terms of what are all the 3rd party data sets that people want to bring in, in terms of is it social data that they need to bring in, is it their ERP data, what are all those things that we can do. As Mike said, we look at our end to end processes of sales, service and marketing, what are all the key points of insights that you'd want potentially predicted for you and that the model can start doing that? And what are all the data sets that we can overlay to make the model richer?
Mark Murphy with JPMorgan. I had a question on the platform business. So it has generally been accelerating and it's at a good scale. I'm wondering, can you help us to maybe unpack that into these subcomponents of the Platform business. There was a nice reference to Veeva earlier this morning.
I'm wondering, is there a part of that, specifically the ISV business, is it possible that that is pulling away from the other components in terms of scale and growth? Or is it more balanced when you look across Heroku, the Force platform itself, the Lightning platform, etcetera?
Yes. I won't go into specific numbers per category, but we definitely look at the business with sort of the 3 different parts. The kind of core AppDev business of Force, Lightning and Heroku, where our customers are building new applications, new use cases, all sorts of amazing new scenarios and customer engagement apps. The second one is the ISV business, which is a really exciting and thriving business. I came from the partner keynote this morning and the room is packed.
And what's kind of neat is the ways those ISVs can get to market is really richer now. It's not just a force dot com app. It's using the Bolt technology, they can sell Bolt templates. They're consuming Heroku. They're providing analytics apps, analytics add ins.
We have a data provider marketplace. Just more and more richness around that ISV business is pretty exciting. And then the third is a really healthy add on business. Our customers are adding technologies like Shield. They're developing more solutions.
They need SandBox and storage from us. And so that is often a great way to start with a customer that's focused on sales or service, but then broadens to Aptev from there. So it's in primary mission to sell those things, but they're really important to broaden the customer's perspective of what they can do with us. All three of those components are growing quickly. And it's incredibly to spend time with the customers and see as the lights turn on for them and they figure out all the new things they can do with the platform.
Hi. A question for Mike. How does the combination of Microsoft and LinkedIn change the competitive landscape for the sales cloud? And how do you plan to address the long term threats? Thank you.
So first of all, I think you got Salesforce has always been an open Salesforce has always been an open ecosystem and an open partner in terms of the way technology works and our expectation that you can integrate Salesforce into and out of collection of different applications that customers use. I mean, I think at the end of the day in terms of competitiveness, Sales Cloud is far and away, the market leading product for sales force automation in the world. There's no more trusted product. When customers want to make sure that, that implementation is going to work and that there's an ecosystem of partners and a platform to back it up, Sales Cloud is going to continue to be the market leader, and I don't see anything changing that.
This one is for John. John, can you just talk
a little bit about the success you've seen thus far in terms of your first party apps in both financial service and healthcare? And then how do you think about going into other vertical industries, not only sort of developing them yourselves, but also maybe buying your way and you obviously have a very thriving, excuse me, ISP ecosystem in a lot of these verticals. So is there a chance that you could actually look to maybe acquire your way into some of these places longer term versus just developing them yourselves? Thanks.
Yes.
So I think we're in our 2nd full quarter of selling the Financial Services Cloud and Health Cloud. I think we're close to 150 customers now. What's really exciting about that is, something like 35% of those customers are net new to Salesforce. And I think that's one of the things that we've really learned in introducing these industry products. Even though if you look at Financial Services Cloud, under the hood, a lot of it is core sales cloud functionality.
If you look at Health Cloud, a lot of it under the hood is core service cloud functionality. And we've leveraged a lot of the functionality in those core components and the platform to deliver that to market, but it's been really tailored to these marketplaces. And in some ways, just the fact that we created branding around it. We announced and we had a big deal at HIMSS, we went
to a bunch of
financial services conferences. We got a lot more attention in the marketplace. And we've done well in financial services and healthcare traditionally, but there's a lot more growth that we could do there with our core products. About a month ago, we did a big announcement around telemedicine support with Health Cloud and it was all based on SOS functionality that was built into the Service Cloud. So we're incredibly encouraged by the results we've had so far and again we're broadening the of use cases in the more segments.
So obviously, the next question is where do we go next? And we're certainly looking at other industries where we think we can take the same sort of model into. The thing we've tried to do is sort of keep a focus on our core mission, which is how do we help our customers connect with their customers only ways. You look at these products, Health Cloud is basically care coordination, which is service basically in the healthcare context. If you look at Financial, Service Cloud is basically a sales use case in the Financial Services segment.
But it's really helped us, I think, accelerate our mind share there and generally the growth we've had in those industries. So we're certainly looking at other industries to try that model. And if we find a partner that's done similar work that can basically help us move in that market more quickly, we'll certainly be open to it. Like with any M and A, I think we look at, is it a place like Alex said earlier, is technology we want? Is it a strong team?
Have they got momentum in the marketplace? And then we'll certainly be open minded to consider that.
Derrick Wood at Cowen. Wanted to follow-up on the Microsoft competition question. And there was a press release recently that HP Enterprise is choosing to move off of you guys and Oracle to go to Microsoft. So just curious from your view, why you think that took place? And then from a partnership standpoint, in the last couple of years, Satya was on stage.
There was a lot of focus on Microsoft partnership, maybe not as much this year. But you did announce a new alliance with Cisco. So it'd be interesting to see hear about what's incremental there and how you expect that to play out over the next couple of years.
Yes. Well, I can take first pass because there's a broader well, first, Microsoft is the sponsor for the conference. They have a booth on the conference. So we welcome the Microsoft partner at the conference and we think it's the interest of everybody for our customers. At the end of the day, it's all about what the customer wants.
In the cloud, you can't create divide. You can't rule your territory. It's an open world. And we believe that both for Microsoft and us, the customers are telling us loud and clear they want us to work together. So that's kind of the guiding light behind that.
And they are a sponsor. They're pretty much on every sponsor panel. You have the Microsoft logo. They have the booth. We continue to work very aggressively on those different points of integration.
And keep in mind, Microsoft is a big company. They have many product lines. CRM is a tiny piece of their revenue, their $30,000,000,000 of revenue. It's a teeny little piece that is somehow not really material. So of course, they will announce some wins.
What I can tell about HP is I've been myself working very closely with the HP team for many years because HP is a big sales force deployment. When we talk about scale and complexity, they are in that zone. Very few vendors can power that scale and deployment in terms of sales and service. And I can tell you that Salesforce will continue to run HPE sales and service whatever announcements have been made for a couple of years at minimum before they figure out what their go forward strategy. And we're going to work very hard to make sure they are successful as long as they continue to be a Salesforce customer.
But for me, as a product guy, HPE is a customer. They're going to remain a customer for a couple of years, maybe more, and before they figure out what this announcement really means to them because the scale of the implementation is clearly among the most complex and border in the industry and we're going to treat them as the probably understand that they You probably understand that they also do 1,000,000,000 of dollars of business with Microsoft. So they have obviously a parallel relationship. So then the announcement with Cisco is the same in the same vein than what we've done with Microsoft. It's customer driven.
Some customers want to use Skype for collaboration and we announced that last year. Remember, I demoed the Skype integration during the Western Union demonstration on the keynote and it's great and we continue to release constantly new features with the Skype team and they have, I think here, a couple of keynotes actually where they present more stuff. But when it comes to call center to collaboration, some customers want us also to support the Cisco infrastructure and it's also driven by this other side of the segment where we want to make sure our customers have the choice And it's our duty. In the same way we want to integrate the products we acquire, we also need to integrate with the leaders in their industry. We need to provide that level of integration so our customers don't have to deal with that complexity.
And we have a dedicated team in my team who is solely focused on building those integration points with our ecosystem of partners. It's really part of our DNA. We're not a company who wants to own everything from A to Z. We really want to be the best at what we do well and make sure we have the most valuable ecosystem. Sometimes it's hard because this ecosystem may have overlapping functions or frictions, but that's okay.
That's the industry. That's where we are. It's a very active and elite industry. So we can live with that.
Yes. I just would say what Alex said is really, really important because the design philosophy around product at Salesforce is that it's open by default and that there is an API for the product feature by default and that the product teams and the product managers are thinking about the product we're going to deliver, but they're also expecting it to be connected to other things in ways that we have not designed or imagined. That leads to all this overlap, which I think is great. You What I mean? Because it creates confusion a little bit, but it also more creates innovation and choice.
And that's why this conference is so successful. That's why the customers keep coming back because they have choices. And I we remain committed to that, I'd say, as a product team.
Thanks. Abhay Lamba with Mizuho. Just following up on Manish's question here. Mike, can you talk about the importance of data that's in LinkedIn or Twitter or some of these platforms? Do you really need to own that data for your product road map to really work over the next 5 to 10 years?
Or is this something via integrations you can kind of work around it? Thank you.
I guess I'd just say think about what I just said in terms of openness and APIs, right? Like it's a pretty vibrant landscape, I think, that we all live in, in terms of where this data is and where it's being created and how it's being used. And Salesforce is committed to a philosophy, I suppose, an approach that we want to make it very easy to bring that data into Salesforce, very easy for you to get that data out of Salesforce put it into another tool. Another great story is Black.
Yes, in particular with those 2 vendors, we already have tons of integrations. LinkedIn even has a product on our app store to basically do sales in Salesforce. It's not new. I mean for years they have been they have their sales navigator. I mean, they do CRM already.
It's not like bringing new ID. These IDs have been around for quite a while, and we've been working very hard with those companies to make sure they had access to our data, we had access to all their data. We live in the world of openness and I think that's really our guiding light and somehow part of probably all the noise you're reading right now in the press, which is it has been, I think, everybody's success to be able to share those data, obviously, in a compliance and regulated way, but to enable our customers to connect, they're all together. Twitter, we have the Fios. Our customer when you use our social studio, we have in real time every possible Tweet in the world available into your marketing tools in Salesforce and we've been working for many years together.
So it's not a matter of ownership. It's a matter of use case and integration between the two companies that has been very important. So we continue to operate on those integration. And I think when we see those integration being blocked for some reason, then we react. And that's I think the statements we've seen in the press.
Well, I don't think we can really come. I don't know if it's the area of you probably had this discussion this morning. As I said, as part of our M and A strategy, we want investors to look at every possible opportunity in the market. That's our job. You want us to look at those opportunities.
And I think we need we always step into any acquisition with a very open mind. The monks are here if you want to open your mind, but we are not dogmatic about we don't have like clear principles. We're really open about every opportunity, every when there is a process, you want us to look seriously at every possible angle of the problem. And I think so far, if you look at what we've done so far, materially to date, I think we've done a pretty good job on the acquisition front. I think you clearly can see we have executed very well.
We've built a muscle. Sometimes things are harder than we expected, which is obviously the part of the game, but we've been very mindful in terms of our acquisition strategy. And I can assure you that's always the way we look at the future. We're very, very mindful as a company about doing those acquisitions.
Thank you, Steve Ashley, Robert Baird. Mike, I was going to ask you about communities. It seems like I'm hearing about it more from people. I was wondering if you were hearing about it more from people, if there is actually more activity around your customers' point communities, what kind of uplift they might provide to a sales cloud kind of customer monetarily? And if there are primary use cases that are emerging that you're just seeing kind of throughout organizations?
Thanks.
Yes. We're definitely seeing a continued, I guess, acceleration in terms of customers deploying communities. And we have 100,000,000 users now externally in terms of our customers' customers accessing those communities and actively interacting. I'd say 3 use cases and it's sort of how we take this product to market. Number 1 is about partnerships and partner relationship management.
Number 2 is customers and the ability to get customer service and also create a customer community to share insights and deflect customer service. And then also internally, we're seeing a big uptick in terms of how people are deploying a community as a social network, so to speak, inside of a company. And the number one thing that we've done, and that's why Lightning and this Lightning Bolt framework are so important, the feedback that we got was that we love this, it's great, but how can we can you help us go faster, can you help us deploy these things more quickly? And when you see the demo of what you can do with this framework and literally create a community in 3 clicks and 30 seconds of the thing building and now your community is live, we're really excited about that product. Extending it out to the ecosystem of partners and the brands that created packages with this Bolt framework were pretty amazing.
Accenture and Deloitte and PwC and on and on taking their expertise, packaging it into a community application and putting it on AppExchange. We're very, very excited about that. So I'm glad you asked the question. We're
But one thing we've seen is in our care coordination solution with Health Cloud is actually using communities as a way to create not just people think of public communities, we're actually using it to create private communities where basically the caregivers inside the healthcare facility, the at home caregivers and the patient actually come together in a basically a secure environment basically to share information, have the conversation, basically
interact with their caregiver in
a way that they've always wanted to. And Communities is the perfect platform for supporting that.
Kashuram, Anadheep here. When I look at your TAM relative to the revenue contribution today, sales and service cloud, you got about $5,000,000 in revenue. Your TAM is $19,000,000 You got quarter of that. And if the companies realize its long term growth ambitions, dollars 20,000,000,000 with a $100,000,000 TAM, it seems to me that there's a lot of heavy lifting that needs to be done on the platform and analytics side. Today, the largest TAM ironically is in platform and analytics.
We combine the 2, it's about $40,000,000,000 going to $50,000,000,000 So what is it what do you need to from a product perspective to capture what seems to be your fair share of these 2 end markets 4 to 5 years from now, so you can actually hit your growth objectives? Sorry, Mike, you're off the hook.
It's up
to the others.
Hold on. I'll tell you one other thing. Don't discount the possibility that the TAMs grow in sales and service as they have over the last 10 years, right?
You've been saying that. Yes.
But the beauty indeed of our market is it's growing 12 to 13% overall a year. So even if we were to stay at fixed market share, which is not what we're doing, we would grow 12% to 13% just by keeping our market share. And as you see, we have a more aggressive strategy, which is for each and every cloud to continue to capture market share. When you have the high market share like Sales Cloud, we basically expand the spectrum of the footprint by adding CPQ. For Service Cloud, we're adding field service, which adds a couple additional 1,000,000,000 of market share.
So we gradually expand this. We try not to go too fast because you need to be good at what you're doing before you go to the grass is always greener. And when it comes to platform and analytics, I would like to quote Mark, which is you always overestimate what you can do in a year, but you underestimate what you can do in 10 years. And you really go step by step with those products. You can't change overnight the market dynamic.
What's important is you enter into a big market with the right playbook, the right sweet spot. Those businesses, the analytics answered the market 2 years ago as a start up. It was really a start up. It was a brand new product on the 30 year old market. You need to be laser focused on one scenario and grow out of it and be very clear where you play, where you doesn't play.
And that's really what we've been doing with Analytics, which is we want to be the best Analytics for the Salesforce customers. There's plenty of 1,000,000,000 of dollars to do just there before you are everything to everybody. So each cloud has a very specific road map given where they are. The platform development is a tricky market as well. You can really lose a lot of money by trying everything to everybody because every day there's a new technology, there's a new framework, there's a new device.
So we need to have clarity of mind about where you're going to double your revenue, what is the next area of growth and go step by step and you build a very solid position because you want to lead one part of the ecosystem instead of being too thin. And the platform I think has done a fantastic job with the CIOs. If you work the conference and ask any CIO what does he think about the platform, going to tell you this is the best thing I have today to deliver innovation in my company. So we want to be the best platform for the CIO. That's our anchor point.
We want the ecosystem because it's very important for the CIOs. So that's kind of how we're building our tooling and our products every year because keep in mind, unlike a lot of other companies we're going after in terms of growth, we have limited resource in a sense. We're growing fast, but we need be very careful not to spread ourselves to Fin. So you need to prioritize. Every year we go through and it starts week after Dreamforce.
We go through excruciating prioritization exercise in terms of funding those teams. And they need to pitch us how they're going to execute and we operate as internally, pretty much like as a Board of VC that is having start ups and those guys need to convince us that they're going to use the money the most effective way to penetrate their market. Are the times big? Yes, they are super big. But there is a certain point where if you go too big too fast, you're going to run a lot of cash, you're going to confuse everybody and you won't be really building your leadership.
And that's kind of the way we're looking at it, which is we want the small products to become leaders and they execute a laser focused strategy. We want the big products to expand the addressable market once they have really anchored their leadership to other areas. But we don't want to be too broad too fast. It's a fine balance. And keep in mind, just to wrap up my statement, we are a subscription business.
The most precious asset we have when we look at our competitor is our installed base. Keep in mind, this year we're going to do 8.3 with our guidance, 8,300,000,000 of revenue. We are subscription business. These are subscription. These are the new license.
So it's very important for us also when we balance our investment to make sure that those customers are happy, they're growing, they're using the system. And Dreamforce is for us a unique tool and also for you to check with our customers. Are we doing a good job listening to them? Are they adopting the system? Are they using all the license they're buying?
Because this is a very, very hard barrier to entry when you add that level in subscription with that level of usage. Whoever can claim we're going to go after the sales force, you need to disrupt a very strong anchor point that is built on usage and recurring revenue. And that's our core DNA and that's why it's so important for us to have an open ecosystem and to have our ears wide open. This conference is one of those tools. I spend and I know all of you spend tons of time during the whole day and at night with customers to make sure we listen.
We listen deeply. We listen to each and every signal they have to make sure that we're doing a good job helping them. That's my answer about market share. The market share is already there and we need to continue to be very careful step by step building the next level of sales force. You want to add something, Mike?
Someone has been patiently waiting here.
Stuck in the middle.
Okay. Sorry for that.
I'll find an NC next time.
Yes, it's the middle cities.
It's Brent Thill with UBS. Bob, on the Marketing Cloud, going back to what Mark highlighted, the CAGR is the highest CAGR in terms of the growth rate for all the clouds. Can you just give us a sense where you see the lowest hanging fruit in that opportunity to go after? And you're not used to having anyone in front of you, but you do have Adobe ahead of you in revenue dollars. Do you see this as a different strategy where Adobe is going.
How do you play in that world?
I think our advantages is, first of all, we own the CRM market. And you couple marketing with the core CRM products, it gives our customers a huge advantage. For us, I think, we announced yesterday the intent to acquire Crux, which sort of adds to our whole marketing portfolio.
It was a piece we were
missing. It allows us now to actually play in a bigger way in the B2C segment and deriving new audiences. But also, if you think about what crux does and the fact that they can use intelligence to go through billions of profiles and trillions of events, to generate new segments for marketing, This is a way to really help our customers and actually to drive our customers and allow them to actually to get to know their customers better actually.
I'll just pile on as someone's marketer here sitting up here. As a marketer, if you look back 1 decade, 2 decades ago and we were so focused just within the four walls of the marketing organization in terms of web data, lead data, things like that. Now if you're running as a marketer just on that, you're in big trouble. And so when I look at us relative to our number 1 or number 2 or whatever you think competitor out there on the marketing side, I look at the fact that we're now being able to bring that, as he said, the CRM data across sales and service and marketing and then put Wave as that interface across all of that.
And having the analytic platform that for not only sales, service and marketing, but to
build any on top of that. If you look at some of the other vendors out there, they may specialize in web analytics, one type of analytics, but they're not giving you that analytics across that entire spectrum. So just to me, the data that you can get and how you as a marketer can work across sales service and marketing is a huge leg out for us.
And Tom, to add to that, I think our philosophy, we have actually very different plays on this market indeed than Adobe in a sense that we are really data centric and they always have been more content centric, tracking website activity. Their life starts with the creative content you produce with creative suites and then you start building analytics or emails or campaigns, but it starts with the content. Our world starts with the customer or the profile. And that's really the core center of gravity of everything we do in marketing. So there will be areas of marketing we won't do.
But what we will do is really what matters in the connected world where people are trying to figure out if someone is on Twitter and goes to a website, what happens? Is this the same person? You can do that with a DMP. You can't do that if you just do web analytics, you have the half of the picture. So we really try to build this customer journey to customer journey to deliver better personalization, better targeted advertisement, better marketing campaigns, more personalized commerce.
For example, our commerce cloud, as today, Einstein, a as today Einstein, a predictive Einstein engine in it. The customers who are using it, basically when you search on the e commerce navigation, you ask for a sticker, you could buy a sticker. We will present the stickers based on your profile and the people who are using predictive navigation or navigation into e commerce site converts 14 more their shopping cards than the others. And those signals are very important. That talk center of gravity is really to start from the data, the profile of the customer to deliver those personalized.
And what we do is we try to make sure we integrate well with any creative content sources or processes we have around. But our view of the marketing market is this point for disruption because it doesn't start with the content, it really starts with the customer or the profile because before it becomes a known entity, it's just a profile that is surfacing for signals and data science and that's really what Crocs is giving us. That's really our philosophy about this market and I think we're really bringing a very differentiated play for our customers. What we do with Marketing Cloud, no one else can do at that scale. No one can send that level of personalization through emails and messages at that scale, no one in the world.
And that's where we're very unique. Commerce Cloud, no one is managing 300,000,000 shoppers every year, €16,000,000,000 worth of GMV move for our Commerce Cloud. No one does that at that scale. So each of those assets gives us a unique edge in terms of being able to target and market individuals.
It's Bhavan Suri here again. Just a quick question. The finance team had come on earlier and given us some metrics about number of clouds at the top 200 customers. And so last year, I think the metric was 20% of your top 100 customers were using 4 plus clouds. And then this year, Q2, the metric is now 75% of the top 200 customers are using 4 plus clouds.
It's a pretty dramatic expansion.
And so I'd love to sort of
get the color from each of you in the various clouds sort of the penetration rates in these top 200 customers. And are these small instances with sales being the primary one and that's how it's expanding? Or are these sort of larger deployments in these multiple cloud scenarios?
Well, first, our strategy is to get our customers using 8 clouds. So that's why we try to make sure we love our customers to use 8 Cloud. We have actually we spent a complete study around the adoption patterns of our customers internally. And out of the top 20, clearly, the majority started kind of the story of Salesforce. They anchored themselves around Sales Cloud, then they added Service Cloud, then they started to spend more with the platform to develop the app.
So that's the majority of those customers. Now you always have customers that went either straight because they are big B2C to really, really big marketing cloud investments because for them the engagement was the number one thing. All your customers will start also super big with Service Cloud. These are smaller groups. Those 2 groups are smaller.
But the majority starts through the through a big sale, SFL and Service. But depending on the industry, you may see a couple of customers going like upfront super big on service or super big on marketing. So I can tell you really a pattern. We have segmented those different customers. But clearly, what we're trying to do is to make sure we build those maps in terms of what's the life cycle of a customer for it to go from one cloud to another cloud and also to adopt within each cloud the different subcomponents of a cloud.
For example, I know Mike tracks very precisely the usage of mobile apps, the usage of outlook connectors, because we know these are adoption patterns that drive to additional purchase.
It also connects back to Trailhead. One of the strategies to make the admins, developers in the account that work with Salesforce make them heroes, make them trailblazers. And they become evangelists internally that then go develop new use cases and bring in a new cloud, bring build new applications and extend from there. And that strategy seems to
be really clicking for us.
It's Ed McGuire from CLSA.
A question about the Platform. There had been some discussion in the past about the economic multiplier effect that the Platform actually brings to the other to the other clouds. And I was wondering if and this is sort of a broad question to the panel. I mean in the past, we've heard about the proportion of objects, custom objects in the sales force system, how much that's increased and how much that improves stickiness. Two questions.
One is, what is in terms of growing the platform, how much outbound efforts are there to drive demand and how much is inbound, how much is pull from users of other clouds? And secondly, could you comment on the economic value that gets touched by the platform across the other clouds?
I can take the first part, which is we do aggressively go sell AppCloud licenses, sell Force.com licenses, Heroku licenses, Lightning. Appforce.com licenses are lighting user experience. We very aggressively do that. We pitch new use cases. We call it wall to wall when we go drive that out with the customers.
And what's great is then we get complete coverage across sales, service, marketing, all the different lines of business and then customers can really start collaborating on whole new use cases we could probably never dream of, business processes that cut across, everyone has access to the customer. So we do have a direct sales team that focuses on app cloud licenses, and we're out fighting for customer wins every single day.
I would just say that just to be clear, the number one competitive advantage of Sales and Service Cloud is the platform, right? And the fact that what Salesforce does, and I think John said this to me a couple of days ago, the fact that we can allow a customer to completely configure and customize their application, build a completely new application if they want and then upgrade them 3 times a year and nothing breaks and it just keeps working and we just keep able to add this new functionality, that is like a technology miracle that is still the core differentiator of Sales and Service Cloud, right? And so I don't want to underestimate the economic value of the platform to Salesforce overall. And yes, we sell it directly in these other use cases, but the fact that it's part of Sales and Service Cloud and the whole ecosystem and platform that are backing those two products, it's an incredible advantage for us.
Alex, you have a little bit of one of everything in the foundational components of whether it's AWS to Oracle to Microsoft. Can you just talk about at some point, does this make sense to harmonize and go to 1? Is it because this integration would seem like it would take a lot of time and money? Or is that not the case if you built some type of abstraction layer where this is this can plug into any cloud? Because I think we're all sitting here watching this going, is there consolidation around the foundation now to make this a lot easier for your developers to build?
Or am I totally missing the point?
Well, the good news for our customers, they don't really see that. They don't see it easy. Yes, because that's the whole point. It's the reality of tech is complex. There is a lot of technology you need to assemble to get to stitch together to get the killer mobile experience you're getting on Salesforce 1 or on the Lightning platform.
Behind the scene, there's tons of technology. There's not just relational, there's application server, Hadoop, security, I mean, there's billions of technology stacks that we have to combine together and also we're evolving all the time. In fact, when people ask us, oh, are you moving out of this database or going to this database? We're already super hybrid. In the back end, there are tons of stuff that are for a long time outside the core Oracle database that runs on Hadoop clusters.
So our back end itself is a pretty complex stack because that's the world we live in. And by the way, that's the barrier to entry for any CIO. Today, you can't run your own data center anymore. It's just impossible when you look at the stack and the complexity of the technology you need to stitch together to deliver those values. So we continue to look at kind of like the acquisition, we are also very open about what makes the best sense.
I mean, when I joined Salesforce, we were switching from Sun to Dell hardware. But customers don't care where you run on. This is a Sun or HP or Dell. What they want is the service to be trusted and working. And behind the scene, they want us to scale, so which means we constantly need to upgrade the types of technology we're using in the back end.
So then customers want us to run sometime in some geography. It doesn't make sense sometimes too far to build a data center. So why don't we partner with an infrastructure vendor like AWS or Azure or Google? We need to be really rational about how we make those decisions and that's what we're doing. But there is no such thing as a standardization into the world of technology because the stack you need to bring together is actually very complete.
There is not one vendor who provides everything. There is one it's called Salesforce at least for our customers because we're solving that. We're extracting our customers from that complexity. And that's why when I hear some companies saying, oh, we're switching up Salesforce, going on my own, and we heard this question earlier, It's
going to
be hard because we're bringing a lot of stuff together every day that covers a broad set of technology to support super large scale complex implementation and that's kind of half of our value proposition. In fact, here we have people who don't have take ups. I don't know if you're planning to meet with Randy Curran or Parker later in the day. But our take ups operation is as complex as our product operation. We only want one side of the coin in terms of technology, what we put into our data centers and the complexity and the constant upgrade and the constant rearchitecture of the underlying services is a huge part of the value proposition that also makes our service so unique.
And I think your question is really about customers don't care whether it runs on this or that, but they don't want it to run and be easy to use. And our job is to always figure out what's the best technology we should be investing in. And we also try different things. And a good example, just want to easy to grasp is our mobile app, Salesforce 1. If you use Salesforce 1, we have 1,005 users on this mobile app.
This is the most adopted enterprise mobile app. Tons of debate, should it be native or HTML5? Should it be native or HTML5? Some people say it needs to be 100% native to be killer experience. Some people say no, HTML5 is the fastest way to deliver cross platform things.
In reality, it's hybrid. And we constantly change some page. On one release, one page will be HTML5, the next day is deleted because we're constantly monitoring the response time and what's the best technology because the answer we have today may not be true tomorrow. We're making those decisions for you all the time. If you're a CIO, there's no way, no way you can build those types of application.
It's a level of engineering and expertise that is really way too high be able to deploy those applications. And we have tracked our entire installed base from those discussions.
From Navistar. John, I wanted to circle you back in before the panel ends. Digging a bit deeper into the verticals, how do you think about outside of financials and healthcare? Are there other verticals you're interested in looking at now? Or are you more focused on digging deeper into those and some of your other current focus?
Well, I mean those are the industries
we sort of build explicit products in. But if you actually go to the campground, we have an industry showcase with customers who basically show end to end solutions that they've done with our products. And it shows sales cloud, service cloud, communities. I came from the comms keynote right before this. Virgin Media was there and they're showing basically how they've completely changed the customer engagement strategy and it's Marketing Cloud and this goes back to sort of Stephanie and Bob's point about MarketNet.
It's Marketing Cloud, it's Service Cloud, it's Communities, it's Analytics. It's all those things together to create basically a customer engagement strategy that's completely changing the way they engage with their marketplace and growing share and increasing customer stats scores. And so although we've built these exclusive products, we actually have solutions based on our core products that go across sort of every industry. In some cases, we create explicit sort of packages around. In some cases, we work
with partners. In some cases, it's just really
a matter of how do we configure and present that appropriately. And for each industry, we sort of determine what is the right approach based on what customers need and what we think the product needs in terms of making it basically available to customers in a way they can easily see. So we'll continue to build more vertical clouds, but we have solutions today in all these marketplaces, in manufacturing, comms and media, in retail, financial services, healthcare, government. And we'll continue to expand that as we go forward.
All right. Well, with that, let's give a round
of applause to our product team.
Thank you all for joining us.
We have about a 15 minute break or so. So jump outside and get some refreshments and we'll be back for a
go to market Q and A around 2:45.
All right. Welcome back. We're going to continue our program with a discussion with Keith Block and Tyler Prince about our go to market strategy, and I'll invite them to stage. So welcome, please, Keith Bloch, who's our Vice Chairman, President and Chief Operating Officer and Tyler Prince, our EVP of Worldwide Alliances and Channels. Gentlemen, thanks for joining us.
Appreciate it. We'll spend the next hour and change in conversation with these 2 gentlemen about what we're seeing in the market and how we're tackling it. So we talked about products so far and did a business overview with David and Mark Hawkins. And so you're sort of our closers here actually. Well, we have Parker after you guys, but this is a conversation that I know everyone's been very anxious to talk to
you about. So we're going to leave
it at that. So
enjoy. Thank you.
Good afternoon.
How does everybody know? John, did you have a question?
I do.
We're going to come
over here. It says Mike.
Okay. Yes, Mike. Hi, Keith. Walter Pritchard from Citi. I'm wondering if
you could talk about some of these new products, analytics, IoT, I mean, I was over in the expo, they're talking about a data lake and it seemed very kind of open ended. I'm wondering how when you're in selling sales and service and marketing, it seems very tangible and some of these others seem very longer term projects trying to maybe prove business value more broadly than just in one department. Can you talk about sales cycles as it relates to things like analytics and IoT and machine learning and artificial intelligence just seems less tangible than what you've sold in the past?
Okay. Yes. So thanks for that question. There are many parts of that question. So let me try and address this as best as I possibly can.
When you take a look at the combination of things around IoT and analytics and artificial intelligence, and I'm going to add another one in there, which is called field service, which is something we're very, very excited about. These are transformational in nature. And this is these capabilities, when blended together, really give companies the opportunity to reinvent their business models in a very, very competitive world. And just to give you an example of that, I was on the phone within the last week with the CEO of a very, very large industrial manufacturer, very competitive global manufacturer out of Europe and they are very excited about working with us and continuing to work with us in terms of combining all of those capabilities and products together as they reinvent service, which can translate into sales and marketing opportunities for them. So it's a very, very compelling solution, obviously selling to the CEO and the CEO level is a very different sell than perhaps the line of business.
But when you have the CEO who is really, for all intents and purposes, the Chief Transformation Officer of most corporations, at least the most progressive CEOs, that would accelerate a sales cycle when you have the buy in from the key decision maker, as we like to refer to them this week, as the key trailblazer inside the company. So we are seeing more and more of those type of opportunities. We are in more and more of those conversations, Industrial manufacturing companies, energy companies, anybody who would use field service, who already has devices and robots that can collect data, those are natural plays for us. So there's a fair bit of activity going on, but that's pretty consistent with what we've seen over the last quarter or 2.
Hi, it's John DiFucci from Jefferies.
Hi, John.
Hi, Keith.
Keith, earlier, Mark Hawkins, I answered a question and said that lessons learned from ExactTarget to be applied to demand where, hey, listen, we'd like to integrate it more quickly, which sounds good. But ExactTarget took years. And in some cases, at least from what I hear, not all your sales guys are actually able to sell it themselves today and you have to bring in another guy to sell it. And I just wonder like in your current role like your previous place the integrations would happen like in a couple of months.
What place was that? Sorry.
If I bring up the name and
you're so self say, we don't do that. We don't do what they do.
But and there's positives and negatives that's taking a long time to integration, right? You take a long time, maybe get more right, 90% right instead
of 80%
right. But in your previous role, you were just bringing it to market, putting it in your bag. Now you've from my observation, you've built a world class enterprise sales force. It was always a good sales force at salesforce.com, but now there's a world class enterprise sales force. And once you establish that trust with your customers, with those salespeople, that relationship,
if you have more in
your bag to sell them, they'll buy more from you. And I just like how do you accelerate getting that in the bag? Because if you do it faster than exact target and you do it in a year, let's say, then that's better than exact target. But geez, why not 3 months or 2 months? Like, how do you how are you making a difference this time with demand where versus exact target?
Okay. So I think that's a fair question. So
when you acquire a company and you try to integrate them, there are 2 different models and this is kind of the way that I like to think of it. There's a spectrum. There's innovation over here. You put a premium on innovation and you put a premium on integration, right? Every company runs differently.
Everybody puts different premiums or KPIs or measures their business to one side or the other. If you integrate a company and you put a premium on innovation, the chances are that you leave them alone and you don't want to spoil their culture and you want them to innovate and you want them to be fairly autonomous. Now when you do that too much, you give up other things, right? So you give up leverage points maybe into the installed base. You may not indoctrinate them into the culture.
You may not get the economies of scale that you would like to, but that's innovation over to the extreme left. Some companies slam it in, okay, and they integrate. And what they do is they kill the innovation because they're trying to do a 1 size fits all, square peg, round hole approach. You might get economies of scales, you might drive cost out of the equation, but you may kill a culture, you may drive out innovation, you may lose talent, you may kill a product line, etcetera, etcetera. So these are the 2 extremes.
And I think with every integration that you do, you have to evaluate the strengths and weaknesses of the company that you're bringing into the sales force and say, is there a premium on innovation? Is there a premium on integration? I don't think either extreme is ever the right answer. I think you've got to find the appropriate fit for the type of company that you've just acquired and you're trying to merge in. I will say that M and A is always tough.
I don't think that's a secret to anybody in the audience. I think we've gotten very, very good at it. I think we've learned a lot through all these acquisitions that we've done. I think we think I would say that we've learned a lot with the ExactTarget acquisition. As far as accelerating time to market, which I think is really what you're driving to here, as you know, I'm a big believer in a specialized sales model, right?
So as we expand the portfolio that our core AEs carry in their bag, they can only get so deep and that's where you have to have these specialized sales forces, what we call co primes or specialized sales engineers or specialized architects to support the sale of those specialized cycles coordinated with the core AE, who's managing the overall sales cycle of the deal or the life cycle with the relationship of the customer. So the way I like to think of it is you maintain these specialized sales organizations, you build critical mass, you indoctrinate them in as quickly as you can. But every one of these is unique, and I think you have to decide, is there a premium on innovation? Is there a premium on integration? And how quickly can you absorb them in?
So I think we've learned a lot. I think the numbers look pretty good.
Thank you. It's Bhavan here. A couple of quick questions. One maybe a short term question and then a couple of longer term ones. Just in the short term, you've talked about softness in July, execution and sort of your own sort of internal things.
Just to get a sense of how you feel, not an update, but just how the last few weeks, months have been since then. And then more strategically So basically, you want an update?
No, not an update.
And then more strategically, just taking the previous question a little bit, you've been a driver of these vertical strategies and approaches. What's worked in the vertical approach? What hasn't worked? Sort of what are the
key takeaways from the ones that have worked that you
can apply and some of the verticals that haven't worked as well? Just to get a sense as you think about rolling out the vertical approach for analytics for the various other clouds too? Yes. Okay. Thank you.
So here's I'll give you the update.
So I think everybody knows, we talked about Q2. So a lot's been said on that. But just to kind of recap, we did see some softness in the business in the United States in July, right at the end of the quarter in Q2. I would have chalked it up to, as I said, execution. I would also characterize it as a blip.
It's a very high performing team that we've assembled. 1 of those very high performing folks is sitting right next to me, Tyler Prince. And we made some adjustments to our playbook, as I said before, and I would say some minor personnel changes layers down in the organization. And at that time, I had said that felt very, very good about our pipeline in Q3 and Q4. As you know, we are almost or we are 2 thirds of the way through
the quarter. So I'm not going
to give you an update on, hey, how's it going? But I will just say that I'll reiterate what I said before that our remaining pipeline in Q3 looks very strong, Q4 looks very strong. So I feel good about where we are. As far as the vertical strategy goes, I'm a very big believer, as you know, in the vertical strategy. I'm actually keynoting the Financial Services session tomorrow, which I'm super excited about.
And my experience would tell you, and I'll ask Kyle with his opinion because he's been around the block as well, but speaking the language of the customer is just so critical if you want to drive these long term relationships and build credibility and trust and take on this mantra of this trusted advisor and being in the Board room. About 2 hours ago, I was addressing the Board of Directors of 1 of the largest SIs in the world, who is a go to market partner with us and also a customer of ours. And their CEO pulled me aside and said there are only 2 companies that I'm talking to, Salesforce and another cloud infrastructure company that you can figure out who it is, but they're north of Peter and it doesn't begin with an M. So I think that tells you the kind of mind share that we have with these SIs. We're very, very vertically focused.
We've had tremendous success in Financial Services. We see tremendous momentum in Financial Services. Obviously, our Public Sector business is very strong. We've got great relationships with Accenture around Consumer Packaged Goods, who is one of our go to market partners. The insurance industry within Financial Services is very strong telecommunications through our partnership with Velocity.
So I don't know if I could tell you that there's a lesson learned. I will tell you that the team has executed incredibly well. One of the industries that we're super excited about is retail, particularly because of the acquisition of Demandware's in our Commerce Cloud. So our customers love the fact that we speak the language that they live in, in the world that they live in. Our systems integration partners absolutely love the fact that we go to market by industry as do they.
We align very nicely with them. So the vertical strategy is definitely working. It's 3.5 years in the making. And we just continue to strengthen things. Just another comment on that is the fact that in March, we released the Financial Services Cloud and the Health Cloud, the very first products that the company has ever released on a vertical basis, and the traction has just been fantastic.
So Tyler, do you want to comment on the SI piece?
Yes. I think you referenced the playbook, right? I think we know what the playbook is to continue to very much focus by industry. And the partner angle of that, which I have responsibility for here at Salesforce, I think is an important part of that. So every one of the large SIs, if you look at the big banners or the big sponsors here, firms like Accenture, Deloitte, PwC, Gemini and IBM organize and orient themselves by industry.
And they have for decades, quite frankly, right? That's how they differentiate. That's how they align their client partners to go engage and understand the industry drivers of the pain points and then bring solutions to them. And so that's given us an incredible accelerator, I would say, to take our solutions and either tailor those solutions slightly, so they resonate well within the customers from an industry point of view or in some cases, go deep and build into specific product. So regardless, it takes that kind of product.
It takes sort of the advocacy of these large SIs to go in and say, I have seen sales force in the CPG space and they've done exceptionally well to following 3 or 4 companies. So a partner doing that as well is important. And then the ISV part of the equation or AppExchange business as well, which is what I look after To go out and encourage and embrace third parties to build applications on our platform or that tightly integrate to our CRM set of applications from an industry specific point of view is pretty compelling. You mentioned Velocity on the telco side. You think of a company called Ncino, which is another one in the banking side.
The list goes on and on. We orient ourselves by industry. So I think that partner strategy is part of the playbook and it's helping us accelerate our go to market.
Hi, it's Samad Samana from Stephens. I wanted to ask a question on Demandware. So one of the strengths for Salesforce historically has retaining the top talent from their acquisitions and keeping them at the company. I was curious if you could give us an update on whether you've been able to retain that top talent and what the early outlook there is in finding roles for them in the future? And then in that vein, when you think about Demandware with ExactTarget, early on you guys had a quota or double quota plan where sales was incentivized to cross sell even before you folded them in.
Are you doing something like that today with Demandware already?
Yes. So we are very, very excited about Commerce Cloud. When you look at our portfolio, including the Marketing Cloud and Commerce Cloud together, we think it's very compelling for retail. A lot of the customers the existing demand where customers were very, very excited when we brought them into the family. And our SI were very, very excited about the acquisition as well.
So this is a case where we were already very good in retail and now we're going to be incredible in retail as a solution. As far as talent, they have great talent. And we all spend a lot of time with that group. Then I'm happy to tell you that we've retained just about everybody. And don't expect us to lose any of these folks.
But we work very, very hard to make sure that we've given them a big you probably heard how many times you've heard the word Ohana, but you're going to hear Ohana a lot this week. But we've kind of given these guys a big 'ohana hug. Ohana is Hawaiian for family, which is a big part of our culture, in case you didn't know. And Jeff Barnett is a great person, great executive. Tom is a great executive.
And they're a big part of our strategy. And they've also, quite frankly, put the Boston area on the map. We already had a great presence in Boston, now with the Haywire and the demand where we've got 2 premium companies as well. So we're all excited about that.
Hi, Karl here at Deutsche Bank. Question for you, Keith. Earlier today, Mark Hawkins put up some metrics around how your revenue mix is skewing a little bit more to larger customers. I think the percentage of revs from customers paying sales force over $1,000,000 a year is 22%. I was just curious to what extent is that mix shift to multi clouds and 7, 8 figure deals skewing your sales cadence to a traditional Q4?
And is that phenomenon playing out in the second half for Salesforce?
Well, I don't think it's any secret that when I joined the company 3.5 years ago, one of the asks from Mark was to help drive the enterprise sales business. And thank you, John DiFucci, for the nice compliment. The and I think we've been very successful. We've built a terrific team. And we've changed the culture and the approach that we've taken in terms of going to market around enterprise.
Part of it is through the industry strategy. Part of it is through the Alliance and Channels strategy under Tyler's leadership. Part of it is our international expansion because if we're going to serve global multinationals, we have to have a presence all over the world. All three of those strategies, I think, have been playing out very, very nicely in the marketplace. I think it's an indication, quite frankly, with the size of the deals that we're getting and the level of access and the level of engagement that we're getting in terms of CEO level access or the reference that I made earlier about presenting to the Board, that we are certainly climbing the ladder in terms of getting mindshare, which translates into wallet share in the Boardroom, in the C Suite and with CEOs.
And to do that, you have to sell and deliver a solution, okay? And a solution may be 1 cloud, but more often than not, it a multi cloud solution, right? So it's an assembly of parts and third party products, if you will, that basically solve a business problem. And that is the cultural shift that we've made over the last three and a half years. And I just look, we just have a lot of momentum.
We have a lot of momentum with these very senior executives in the industries that we've chosen to do business with. So we'll continue to do large deals in Q2. I talked about yet again, we did another significant deal in the quarter. And we have a very good playbook. We'll continue to execute.
And you'll just see more and more volume around that going on over time.
Hi, good afternoon. Sarah Hindley in for Macquarie. Hi. This is a question specifically
for you,
Tyler. Surprisingly, we keep hearing on the SI side a need for more consultants around sales force practices. And I'm wondering if you could give us a little bit of color on where you are in terms of SI's building practices around you in particular. And then secondly, looking at the platform opportunity and how you're differentiating, we're all very aware of Veeva and how successful they've been. I'm wondering, do you have a line of sight into what the next Veeva might be?
And in particular, when you are, I'm going to try to sneak in a third here, maybe I'll get away with it. When you're attracting customers onto the platform and you're going up against competitors, what is it that is really differentiated about the Salesforce platform opportunity?
Okay, great. First part of the question is about the consulting ecosystem, if you will. And we have a what I consider a fairly rigorous process by which we encourage consultants to become certified, right. So they go through a certain amount of training, most of which online, but then they pass an exam to really credentialize themselves so they can then market that to the marketplace. We track that number and I think we provided that number to this group and I from this time last year, we're up about 30%.
Now there's a broader set of consultants, if
you will, that are surrounding
the Salesforce ecosystem. They may not be certified, but they're experts in customer transformation or service transformation, more of the business process. So related to Salesforce, but not doesn't require deep technical skills around Salesforce. And you're right, the biggest opportunity we have is how do we continue to get those firms to continue to grow their resources. And they're doing it in 2 ways.
And this comes firsthand from conversations that we've even had this week. We've got the CEO of Accenture here, the CEO of Deloitte Consulting here, the CEO of Capgemini here, the list goes on and on. So we've had access to this. And what we're seeing them do, they these companies, in fact, I came from 1, I was a partner at PwC, running a large implementation practice around sort of an on premise software provider, happened to be Keith's alma mater as well. So but those practices, these on premise practices that albeit have been very large historically at places like Accenture, Deloitte and PwC, are not growing, right, and are being generous.
So it's not uncommon for them to celebrate when there's flat year over year growth in some of these on premise providers, because a lot of it's focused on application maintenance, hosting, upgrades, right, things like that. And where we change the conversation, this is about transformation. This is about helping people do things different. It allows them to drag their strategy service or bring their strategy service to the forefront and then bring these business process skills. So the excitement and energy we're seeing, the firms I've just mentioned, it's not uncommon for them to talk about their sales force practices to be growing at 50% plus year over year.
Therefore, they're converting resources. And they're converting resources in many cases from these on premise providers us, which is exciting. We're also seeing this rebirth of finding people early in the process either on campus recruiting or folks that are early into the consulting business to really respray and really train them around sales force and the opportunity here. So we're going to double down on this. We had a partner keynote this morning, which was great.
We had full room. Keith joined us as well, and we committed to some additional investments in training. Trailhead, which perhaps maybe some of the product guys talked about earlier, but we're pivoting Trailhead to make sure we can train the consulting world at scale globally as quickly as we possibly can. So I'm excited about that opportunity. In fact, I encourage you to check against what I just said with any of the firms I've mentioned because we're excited about that.
And just to add a comment on that, and Tyler and I were in a meeting this morning where not to name the firm, but they've had 100% growth in their sales force practice. And they're doing it by 2 things. 1 is they're hiring tons of people. They continue to hire, so they're super excited. But they basically are kicking away from the other practices, kind of those traditional legacy practices that Tyler is talking about.
So it's been very exciting for us in the marketplace to see that happen. And again, just addressing the Board of this one firm today, they get it. They know where the future is. They know what's going on in the marketplace. They see this conversion of these amazing technologies.
They know that we're in the age of the customer or call it the Industrial Revolution 4.0, whatever you want to refer to it as. But they know that this is here and they want to be able to play a significant role with their customers and they want to use
it with our technology. Yes. The second part of your question, and there was a third, but I'll at least answer the second part before people get anxious. And it was a question about our ISP ecosystem. We continue to be thrilled with the progress that we're seeing.
And certainly, everyone here is familiar with the Veeva story. We I think we recently celebrated our 10 year anniversary of the AppExchange. So that was really the point at which we formalized how applications come to market with our support building on our platform or integrated to CRM. So and now we have about 3,000 apps on the AppExchange. And there's a number that are very promising and exciting that are coming up through that.
I think velocity is one that perhaps we mentioned earlier. It's coming to this from a very vertical specific point of view. How can we build applications that really complement and sit on top of the sales force set of applications, some
horizontal
some horizontal solutions. There's a
company called Propel PLM, which actually you probably haven't heard of because they're new and relatively new. And they've chosen our platform to standardize to build their next generation of product lifecycle management capabilities. If you're familiar with Agile Software, they were a PLL and provider that PeopleSoft bought back a long time ago. The founders of that have now decided where the platform of choice to build this new innovative solution. So there's lots of those stories coming up.
The other thing that's encouraging though about our platform and opportunity with our partners, it's certainly those that are, let's call them startups. They come in with incredible idea and they choose our platform to build a company around. But the other thing that I think is pretty compelling are the number of partners that have tremendous amount of experience. They've been building software for decades and they choose our solution to build their next generation of applications. The ones that come to mind there are Accenture.
Accenture has a software farm in it, which many of you may know if you follow them. And they have a variety of products. One of them is a trade promotion management product for the CPG industry. And it's a it was sort of the gold standard, if you will. It just happens to be built on technology that's a decade or 2 old.
And so they've chosen Salesforce to rebuild that cloud based solution for CPG companies. Imagine that story, we have Accenture going into the world's largest CPG companies talking about how they've chosen to build this industry specific product on the force.com platform, tightly integrated to Salesforce in partnership with Salesforce. So we go in and are having fun in those CPG conversations. Sage is another, right? Sage, I think we'll get this right.
I think they're the 3rd largest ERP provider in the world, the number one ERP provider of SMB ERP Solutions are based out of London. And similarly, they've acquired a variety of solutions and ERP products over the years on a variety of different technologies, some are relatively old. And they have decided to build the next generation cloud based financial system for small and medium sized business and they chose our platform to build So it's a product called Sage Live, which they released about a year ago. It took them 26 weeks from the from when we reached agreement to when they released the first version of this. 26 weeks is pretty incredible if any of you have followed the building financial system.
And they continue to innovate that. They're the early adopter of Lightning, so everything is Lightning enabled. It's a cool story. So between the sort of the startups that are building cool stuff and companies to the folks who have been in the market for a while and certainly have choice and certainly have a point
of view, we're proud many
of those are choosing Salesforce as well.
Keith, Alex Zukin with Piper Jaffray. So I wanted to kind of double click on that on the ISV question because clearly having thousands of ISV partners and apps integrate with the product is core differentiator for you guys competitively. But as you move to specific functionality, I'm thinking field service, something CPQ, I'm thinking others, as maybe $0.20 on that dollar is not enough to kind of capitalize on that $100,000,000,000 TAM opportunity. How do you balance that without alienating that next wave of startups from coming and building products on? Yes.
Let me try to address that. So we're a company that is very transparent by nature. It's one of the things that I think our all of our employees and I think our customers and partners really appreciate is the fact that we're pretty open in terms of what our direction is, what our plans are, how we want to interact with our partners, whether it's an SI or whether it's an ISV. I'm going to use industries as an example because I think it's important. One of the things that our sales force industry team does is they have a product road map.
We pick the 6 industries that we want to play. Let's say it's financial services. We have a process map for the front office and a point of view for the future around CRM. And we make a decision about, are we going to build it? Are we going to acquire it?
Or are we going to go recruit a partner? And Tyler's team plays a big role in this. So if you have that level of transparency, where you can sit down and say this is our vision of the future as it relates to retail banking or wealth management or capital markets or insurance or figure micro vertical within financial services and say we're going to do this and we would like you to do that. There is a social contract, if you will, based on trust and transparency, where we work together and there's a high degree of collaboration. That model has served us very, very well.
So as we think about building our own organic product, we also think about building out our ecosystem and making sure that there's no collision course. Now nothing is perfect. This is the nature of the channel. And it's the nature of a company that has a great platform that would be us, where third parties want to go build product. So we try to be as communicative, as collaborative, as transparent as we possibly can as it relates to what our build plans are versus what we want to go out and recruit in the market.
And that's how we manage the process.
Yes. The only thing I would add is that ultimately, it's all about customer choice as well. And so many of these we have some great examples when we acquired Steel Brick, right? The CPQ, configured price quote market place was very exciting and Steelbrick was a very strong partner of ours, ISP partner of ours and now we're thrilled to have them with the company, very elegant technology and really have enjoyed working with the leadership team when they were a partner and now welcome them to the family. But at the same time, when we acquired them and we're proud of the success momentum we're seeing around Steel Brick, it doesn't mean we're not still promoting folks who may be considered competitive in the same segments.
You can still go to the AppExchange and you can still find other third parties in the same space. And in fact, we're starting to see a phenomenon where some of these folks that build CPQ are innovating on top of our CPQ. So think of that as another layer of the platform. And I think we've done that over and over when you and it's a very resilient ecosystem out there, right? Whenever we move into a new space, it just means the parties around it and the players around it evolve a bit, right?
And they build on top of them, further integrate into our solution. In the meantime, in many cases, there's alternatives in the market that the customers will buy. So it takes some it's important to be there's a science to it because you have to be very predictable where you can and transparent. There's been an art to it as well to make sure we're still the advocates of the partners in the marketplace and promoting them.
Thank
you. Mark Murphy with JPMorgan.
So I
was wondering if you can update us on your progress and traction with the U. S. Federal Government. If you go back to March, there was this $100,000,000 notional contract award with Health and Human Services. That was on top of a $500,000,000 services award.
So the federal government fiscal year ended a few days ago. It's an interesting time coming into the election cycle. I'm just
kind of wondering,
how do you think it's all lining up? What is the government prioritizing? Does it feel like speed of government? Or does it feel like it's kind of moving along pretty quickly?
I'm not going to comment on the election. So Mark, thanks for the question. So you're familiar with the contract. I mean that contract is essentially a blanket PO to do business. What's really important about those sort of agreements is that it is a statement of direction that is very, very important.
And that statement of direction is that in public sector here in the United States, the federal government, and we see this around the world, has endorsed cloud computing as a transformational agent as a wave of the future. In fact, I'm proud to say that one of the folks in Salesforce Industries, Vivek Kundra, who at one point in time was the CIO in the federal government, was one of the original champions for cloud transformation, embracing the cloud for the federal government. So the private sector and the public sector move at different paces. We all know that. But I think the most important thing is that, that contract vehicle, which allows a select few on that contract vehicle to help the federal government transform, leveraging the cloud.
We benefit from that, of course. But most importantly, citizens in this country benefit from it. So it's a good thing. But the most important thing is it is a statement of direction and is an endorsement that the cloud is here and it's the future for the federal government. I think it's a great thing.
Thank you. Those are Keith Weiss from Morgan Stanley. Thank you guys for joining us this afternoon.
I was hoping to talk to you guys
a little bit about distribution strategies around stuff like Project Einstein or the IoT project. It
seems to
me a little bit different in kind from what you guys typically sell. You typically go into existing markets like SFA or marketing applications or service club, whereas this is much more evangelical. When we talk to systems integrator partners about Project Einstein, they kind of shrugged their shoulders. They don't know what they're selling it. So how do you approach these new evangelical markers?
How do you have to Well, thanks for the question. So Well,
thanks for the question. So look, I think it starts with painting a vision. It goes back to part of our critical go to market strategy, right? So again, the 3 legs of the critical go to market strategy were all about speaking the language of the customer and painting a vision around an industry. So super, super important.
2nd was the ecosystem play, right, which is both the ISV play and the systems integrator play. So and of course, the third was the international expansion. I think what's important here is to understand that as these new products and offerings come in, we become more relevant. So the company was born 17 years ago, Mark pioneered cloud computing, all that good stuff, and we're all thankful for that. And it's great to be at Salesforce, and I think it's great for our customers and our partners to be part of the Salesforce ecosystem.
But as we become a more significant player, as we reach into the enterprise, as we deliver great success that we've guided towards this year, as we think about our goals of where we're going to get to $10,000,000,000 is how we're going to get to $20,000,000,000 what sort of market share we're going to capture. It really is about mindshare. And having mindshare means that you have to have solutions that I would call sticky, okay? So the products stand on their own merit, but when you assemble solutions that run mission critical systems for corporations, I don't care what industry you're in, I don't care what geography you're in, there's a common theme, which is mission critical systems to drive success. And everything today is about the customer.
Every pivot point is around the customer. I one of the reasons why we're seeing so much success, why our customer engagement has never been stronger is that if you talk to the CEOs, pick a company, they want growth. Their agenda is growth. Their agenda is shareholder value, but growth is typically number 1. Usually, when a CEO is not talking about growth, that company is not doing well.
They're in trouble. And our message aligns very nicely because our whole message is about growth. So when you think about the ability to transform a company's business model around IoT and then layering in artificial intelligence on how you can make salespeople more productive because they're just going to be more productive because something like Einstein is telling them you should focus your attention here Or the use cases around service, which I'm sure Alex Daillon took you through, which are absolutely amazing in terms of top of the queue, predictive analysis, identifying problems that nobody would ever know about, taking next best action. I mean, you can pick every use case by line of business with Einstein and make a productive far more productive workforce. What CEO wouldn't want that?
So these are compelling messages. So we train our sales force. We train our services people. We educate our partners on the capability and the opportunity to paint a vision. And as we continue to innovate, and one of the great things about this company is we are all about innovation.
We'll provide these more relevant solutions that will be more mission critical, which will go deeper in these organizations. And that just means C suite, boardroom, CEO, stickiness, mindshare and mindshare always translates to wallet share.
Hi, Steve Ashley, Robert Baird. You've done a few 9 figure deals to this point in time. I'd love to just get some color around what solution were you providing? What pain point were you eliminating? And how important was the platform in those deals to delivering
that value proposition? Yes. Thank you
for the question. So these are typically multi cloud solutions. A lot of them are great service use cases, but the walls between sales, service and marketing are basically gone, okay? So if you think I'll pick an example of the company that I've referenced before, not necessarily a 9 figure deal, but a great company called ABB, a great brand, global customer, industrial manufacturer, and they have a visionary CEO, okay? Ulrich Spilhopper is a visionary CEO and he understands that there are traditional industrial companies and there are companies who can actually capture data from robots to make a more meaningful service, flash sales and marketing experience.
And that is a very prevalent use case in the industrial manufacturing. So if you think about there's always been a lot of data out there, there's always been a lot of data collection, Pick your company, pick your industry, but it's always been out there. But the question is, what do
you do with that data? And what is
the next best action? And typically, if you're lucky, maybe you could translate that into better service. But then how do you take the step from maybe better service to better sales? Because your account team a three sixty degree view of the customer. And there's a next best action for the salesperson to sell another warranty or to sell additional products.
So that is a typical use case for these larger deals. And when you have somebody like UroXtend up in front of 400 people unsolicited at the World Economic Forum and saying, I'm completely reinventing sales and service leveraging Salesforce, I think that's a pretty good endorsement.
Thanks very much. Hi, Keith.
Kirk Materne with Evercore ISI. When you think about these bigger transformational deals that you guys are seeing and you think about technologies like AI and Einstein, when you go and talk to CEOs, how many of them have the business agility to even embrace some of these technologies that transformative, meaning there's a lot of business processes that inhibit the adoption of technology. And so the technology in some respects is ahead of where the businesses can actually embrace it. So I guess two questions around that. One, is that why you guys kind of lean more on ramp deals around some of these bigger transformational deals and I expect we'll continue to see that?
And I guess when you think about something like Einstein, of the CEOs that you're talking to, how many of them could really take advantage of the technology within a 12 to 18 month context, just given they've got business processes that are very rigid in nature? Thanks.
Yes. No, thanks for the question. So look, transformation is difficult. It's not unique to us. It's not unique in the software industry.
And transformation is much of a cultural shift as it is a technology shift. So I think the most successful companies who embrace these technologies have CEOs who are visionaries, who appreciate the value of technology, who have a sense of urgency and in some shape or fashion themselves actually are the Chief Transformational Officer for the company, whether they take on that title or not. So I think you have to be very, very careful. And if I were a CEO and I was embracing this technology, of course, I would understand how I would apply it to a business problem. And there's a tried and true process here where there are quick wins and you gain momentum and then you gain believers and then transformation becomes easier.
Easier. And that's kind of a standard practice that most companies undertake. But if you're going to do anything transformational, it starts with the CEO. It has to be the CEO agenda. It has to have incredible business value.
And that person, quite frankly, as I said before, has to be the Chief Transformation Officer. And the artificial intelligence, this is AI has been around for a very, very long time, okay, in various forms. But there's an acceleration because of all these emerging technologies that have come together that make it easier. And we think with Einstein, we've assembled an absolutely incredible solution. And again, going back to those use cases that I talked about earlier around the line of business, the use case around AI for sales or Einstein for sales or Einstein for service or Einstein for marketing, those are natural use cases and they drive productivity.
So anytime you can stand in front of a CEO and justify results with productivity, CEOs love productivity, right? What does it do? Productivity drives growth and it drives shareholder value. So it's not that difficult a conversation. But again, I will tell you these large transformations are as much cultural as they are technology.
Yes. I think
I'd just add to that. I think that's almost precisely the point. We'll see how this unfolds. But if any company technology provider went in to talk to a CEO to talk about how artificial intelligence can change what they do without a point of view, I don't think that meeting is going to last very long. But if you go in and talk about and we're encouraged our partners to do it, and that's why I'm comfortable speaking about this, which is let's talk about how you transform your sales process.
And prior to Einstein, it would have been talking about our amazing sales productivity tools that are going to help you transform yourself. But now that conversation is more than that. So it's about imagine if we bring these wildly intelligent CRM tools to help your salespeople be more capable, your inside salespeople. And by the way, there's an analytics layer to this as well. It will help you get better insight out of that data once you have it.
So I think it's precisely what the market needs. I think it's precisely what CEOs want, which is what is the use case. So I'm slightly confused by all the technology. Help me understand how this is going to help me sell better, service better or market better. And I think that's precisely the point.
Hi,
Kashur, I'm
going to be in there. In a lighter vein, we're all trying to be artificially intelligent while Bascome the Gloria guy that is naturally intelligent, so pretty ironic. My question and I'm going to pass it over to Brent next because he's got another funny thing to say as well. Mark laid out the TAM this morning. Sales and support is about $5,000,000,000 business.
You already have a big share of your TAM. Look at where the company needs to be in order to hit its audacious goal of $20,000,000,000 There's a large TAM in analytics and platform together about $40,000,000,000 today, going to $50,000,000,000 We have
a very tiny share of the
TAM today. So how do you, both Tyler and Keith, view sales capacity deployment, productivity and the cost to book what seems to be a new set of frontiers in light of the company's longer term targets?
Well, you don't want to ask the question?
I'm in. I'm in.
Okay. So is the question about how we deploy our resources to drive Yes. I think so first of all, there is tremendous opportunity here, right? Even in our core business that have been around for a long time. So as you all know, every quarter, I do a very, very detailed operational review.
I do mid quarter operational reviews. I take a look at what we've done in terms of penetration by market, by country, by industry. And even if I go back to kind of a core product like Sales Cloud, there is tremendous opportunity for us. So whether it's Sales Cloud, Service Cloud, Community Cloud Platform, tremendous, tremendous opportunity. We have just remember, in the last 2 years, even though we launched the strategy 3.5 years ago, this whole notion of solution selling, which really translates into multi cloud solutions, really started to get traction 2 years ago, right?
So 3.5 years ago, you put something in place, take some time to get some traction. It's a bit of a cultural shift in terms of changing the way that people sell and position and service our customers. And even building the ecosystem of our partners and building their confidence so that they don't look at us as tactical or opportunistic and they think of us as going to market with them strategically. Across our entire portfolio, we have a lot of room to run. There's just no question about it.
Now every time we release a product, there's a life cycle in terms of is it kind of in its incubation stage, early days, go to market, building up skill set, building up capacity, putting the right incentives in place, the right compensation plans. Somebody asked that question earlier about compensation plans. We try to design all of that to accelerate as much growth as we possibly can. But to set expectations properly, every time we release a product, no company gets it 100% right. I think we do it better than most.
But you learn your lessons. You learn your lessons after the 1st week, after the 1st month, after the Q1, and then you make adjustments. And you accelerate resources or you shift resources and you change compensation plans, you may incent partners, you spend marketing dollars. There's all sorts of levers that you can pull here. Platform, people love Lightning.
In this world that we live in where when you think about it, it's going to be all about intelligence, it's going to be all about mobile, it's going to be all about speed. Speed is the new currency. It's about connectivity. It's about productivity. When you think about all those things, those kind of those 5 concepts, and you're going to hear a lot of that tomorrow, I think it's just a little Mark's keynote.
And when you think about all those things, we want to apply our resources where we think we're going to make the best the most impact to our customers. And so we make those bets and we line up all those things behind it, dedicated sales forces, acceleration around compensation, for example, just to get people really excited, training programs. I mean, there's a massive movement behind everything that we release. And so we want to make sure that we have good plans, kind of a product release process, if you will, all the way through the lifecycle. And then over time, lo and behold, you get really good at it because you continue to refine and innovate the way that you go to market, the way that you invent the product.
The product gets stronger. There are more proof points. I mean, there's as you know, I mean you've been around this business a long time, there's a lot that goes into the thinking behind this stuff. So platform analytics, super excited. Still early days on analytics even though it's been up for a while, and we continue to refine the product.
Einstein, there's tremendous momentum, and we're just announcing it. So but there's a lot of thinking that goes behind it as we plan the business.
Ryan MacDonald with Wonderlic Securities. Keith, for you. We've seen obviously a heightened level of M and A from sales force this year. And you talked a little bit earlier about sort of the finding the right balance with Demandware in particular as you're integrating that. Can you talk about, 1, with even more M and A beyond Demandware with the challenges you face in sort of integrating all of those sort of in a timely fashion or the best strategy to balance that as well as prioritizing that?
And also with obviously with the M and A you're taking on a lot of headcount, how does this impact plans for next year as you continue to look out to build sales headcount, sales distribution organically? Yes. Okay.
So thanks for the question. So a couple of things. Number 1, I've had the opportunity to talk to some of you about this before, and I think maybe Hock had an opportunity to talk about it as well. We have a pretty methodical process around M and A. And again, when we think about M and A, we think about not just the roster of companies that we think about, but we think about cultural fit, we think about the product, we think about the talent, we think about the opportunity to attach, whether it's going to enhance the capability or it's a net new revenue source for us, all those things go into the playbook.
We think about how quickly can we assimilate? Are we going to be able to keep the people? Somebody asked a question earlier. I mean, these are all things you think about as well as, again, I keep referencing this because, Kyle, you see yourself all good. But how will our partners react to this type of acquisition?
And what would they think about it? And what would it make what kind of difference would it make to their world? So and of course, the most important thing is how do our customers feel about it, right? A lot of the great acquisitions that we do, the ideas actually come from our customers. Our customers have been talking about an e commerce capability for years, okay?
So those were where we get a lot of those opportunities from. So as we think about how these things integrate in our business planning, we also have a very disciplined process that Mark Hawkins and I work very closely on called the LRV. It's the long range plan for the company, long range budget planning. And as we think about our M and A activity, we're also thinking about how that fits into the LRV and what the implications are and what our allocation resources are across the company, across every line of business, customer facing, R and D, operational, etcetera. So we actually do a fair bit of planning inside the company, and we constantly innovate and iterate around those plans.
So that's my answer to your first question. I'm not can you just tell me the second question? Yes, please.
Yes. And with the influx of headcount that you've given, like all the M and A hubs that impact your plans for next year
in terms of building out some of the
Yes. Again, we go through this disciplined planning process. I don't know, Mark, where's Hawk? How many times a week do we talk about LRB?
We probably talk at least once a week, I would say, and it's a fluid process where we're always trying to understand exactly as Keith called out, how do we look at the long range plan, how do we look at the near term plan and how do we constantly refresh that? So there's a lot of discipline around that. And we're constantly thinking about what happens organically, what happens inorganically and how does that come together. So we look at it continuously, I guess, would be
the point. Yes. One thing I will add, and again, I was exposed to this 3.5 years ago. And this is a company that runs the business based on prioritization. We have a process called the V2MOM, if you're familiar with that, where everybody starting with Mark.
So Mark and the rest of the executive team sit down on an annual basis and write the V2MOM for the company. And this is the vision and the values of the company and the methods to achieve those goals and the obstacles, the metrics by which we measure the company, this is a very disciplined tool. And it's not just Marc Benioff who ranks the V2MOM along with the rest of the executive team, but Mark Hawkins has 1 and I have 1 and it cascades down, Tyler Prince has 1. My executive assistant has a V2MOM, okay? So there's that level of discipline and rigor inside the country company around prioritization.
And so when we think about acquiring companies, making investments inside the company, outside the company, we go through a very rigorous process through the VICI model. And when you come into Salesforce, you learn how to prioritize because if everything is important, then nothing is important. And that's kind of the golden rule for the company.
Question over here. It's Brent Thill, UBS. A question on international. Americas has been the workhorse at 75% of revenue, but you've got the other 25%. Most companies that hit $6,000,000,000 $7,000,000,000 in software spend about fifty-fifty and you're spending below that.
What do you think needs to happen? Or what are you putting in place to really open up that international opportunity?
Yes. So one of our growth levers has been international, as I mentioned. So 3.5 years ago, we put this in motion. When I came into the company, I looked at the portfolio of business. And I would say in your terms, we were overweight into the United States.
But really to get into the enterprise, you have to serve global multinationals, which means you have to have a presence all over the world. I came from a world where the international markets were certainly a much higher percentage of the revenue in the company. But that didn't happen day 1. That took decades to build that sort of diversified portfolio. So when I came in, I thought in discussions with Mark, we really need to accelerate this.
We need to make more investments in Europe and Asia Pacific and Japan. And certainly, that takes many, many forms. So part of that is data center strategy, part of that is marketing strategy, some of that is distribution headcount, some of it support services. Some of it is in the channel. We've seen great results.
Our fastest growing region is EMEA. And if Miguel Milano was here, our President of EMEA, he would tell you that he's thrilled that the company has rebooted, if you will, in terms of its investment over the last three and a half years into EMEA. So there are a number of growth opportunities in EMEA. Many times in the earnings call, I will make reference to companies in EMEA because we're just doing a terrific job. Now we've got a very healthy business in the United States as well.
But the key is we want to run a balanced portfolio, balanced portfolio geographically, balanced portfolio from an industry perspective and balanced portfolio from a segment perspective, SMB, mid market and enterprise. And industry.
And industry.
Keith, Karl Feuerstedt at Deutsche Bank. Keith, I know Microsoft is an important partnership for Salesforce. But on the outside from our point of view, it feels like the romance has cooled a little bit and they're getting
a little fiestier competing.
Is that an accurate observation? And what's your perspective around the relationship? Thanks. Yes. Thanks for
the question. You should probably ask Satya if he's feeling feisty. I don't want to answer that question for him. Listen, we have a partnership with competition. We are a partner of Microsoft.
We are a partner of Oracle, etcetera. So it's nothing new. Competition is good because ultimately competition is what's best for the customer. So I wouldn't characterize any relationship like that as spicy. I just think that's the nature of the technology industry.
By the way, it's not unique to
the technology industry. I just think it's coopetition. Thanks. Derrick Wood at Cowen. Keith, last quarter you mentioned a major expansion at UnitedHealth and that may have been a first large win with the Health Cloud.
So just would love to hear a bit more on this deal. Was it is there a competitive or I guess legacy displacement technologies involved? Were you able to go after budgets that you couldn't go after before with the Health Cloud and the vertical offering? And given the scope, were there different competitive dynamics that you saw in that deal? Yes.
So I actually don't think I said that, but probably somebody had worked pretty closely called Mark Fenny, if they have said that, but that's okay. And honestly, I don't want to comment on a particular deal. I want to respect the privacy of the customer unless they've authorized it. So I know, for example, I mentioned ABB. I know that wouldn't he wouldn't care if I said it.
He said things publicly and that's fine. Generally speaking though, again, when you speak the language of industry, when you have a vertical specific product, there's just a credibility there. And these are multi cloud solutions. And even if we sell something with Health Cloud, that is going to drag platform and analytics and other things with it. If we sell Financial Services Cloud, it's going to sell more products with it.
So it's been a very good strategy. There's a lot of momentum with both of those products. We'll be releasing new products that we're not going to announce right here on stage from a vertical basis, and we'll continue to cultivate the ecosystem of our ISVs to build out those products as well. So again, industry orientation, speaking the language of customer, having an industry relevant product set that will solve a pain point always drags more product. That's why you get multi cloud deals.
That's why those deals are large.
Thanks. Steve Koenig with Wedbush again. Wondering if you can
talk a little bit about
the customer's desire that we've seen in some cases to have an integrated suite, which we saw play out in the on premise market with the convergence and integration of on premise applications throughout the enterprise. Will the same thing happen in SaaS? And how long can a Wisefab, which is the investing class in CRM, how long can that sustain itself before you all have to rethink your strategy? And do you have to are there competitive situations in which you go up against the Suite based value proposition? And how do you compete with that now?
And how will that evolve in the future?
Yes. Thank you for the question. So this best of breed versus suite thing has been around for a very long time. And everybody has a different philosophy. Where you have winning companies like Salesforce is when you have a best of breed suite, okay, our customer success platform.
Now I think you know that in every cloud, we're a market leader. We're in the Magic Quadrant with Gartner. It's all We're very, very proud of that. One of the things one of many things that's very different between Salesforce and sort of these legacy on prem technology providers is that we have a laser focus on the customer. We do not try to be all things to all people.
We're not in the hardware business. We're not in the storage business. We're not in the server business. We're not in the ERP business. We are just focused on the customer.
And it kind of goes back to my comments earlier around our process on the V2MOM and the culture of the company around prioritization and focus. And don't be all things to all people or don't be all things to all customers, but be very, very focused and be very, very good at what you do. And then over time, if you want to incrementally move an adjacency, that's okay. But secure that serious focus on the customer. And that makes us very, very different.
We're not trying to dilute ourselves with all this stuff out here. We don't get distracted. And I think that's one of the reasons why the company has been so successful.
Hi, it's John DiFucci in Jefferies again. Tyler, a question for you. And it's not about the largest size, but you have a huge partnership network
and a lot of consultants that work with SMBs too. And one of the things and follow-up to Carl's question on Microsoft, one
of the things that we keep we're starting
to hear more of anyway is Microsoft has been plugging away at the Salesforce automation market. Let's focus on that. That's your biggest market right now or your biggest business right now. And it sounds like they've sort of become sort of good enough and it's a lot cheaper than salesforce.com, especially at a time when you're raising prices and adding more value. That all makes sense.
But I know last quarter, Keith
has said several times, not just tonight, that it was an execution issue and sort of
a blip. But that's sort of
the thing in the back of my head that I just wonder. Like at some point, Microsoft's big company, they keep plugging away, they get
something now that's sort of
good enough, at least for the SMB that is much more cost conscious. Can you just comment on that?
Do you see any actually, would you see that?
Would you see that? Do you get any of that feedback?
Yes. I think I might see. I'll let Keith comment on the more of the market dynamics. But the question related to the partners, particularly the smaller partners in SMB, I don't I think I would see it because I think I would see a defection of partners going to an alternative solution provider, and I just don't see it. It doesn't mean it's not happening, but I think I would see it because I think they would promote that, right, that they have done it.
I do know we've recruited a handful of partners, and the conversation is not about whose SFA is better when we recruit that. It actually goes back to something Keith said earlier around this actually, if you're in the conversation, this is about sales and I'm only selling sales, then you're probably having the wrong conversation because the partners that we're seeing see the bigger opportunity where they understand that the lines between sales and service are blurring. In fact, in a smaller company, it's probably even more important than ever because often I mean, that's in a smaller organization, important that sales are very dependent on the service and vice versa. So the conversations I'm seeing are how do companies take advantage of that. These smaller companies also appreciate that we're embedding things like analytics, world class analytics into these applications because for a smaller partner that's serving smaller customers, if they had to go build capabilities around one provider for SFA, a different one for analytics, a different one for, let's stick with AI for now, that's pretty challenging for a really small consulting partner.
So imagine they come talk to us, it's not about sales only, it's about sales plus service. By the way, it's got a proven analytics platform that's part of it. By the way, they're also thinking about what the next generation looks like in terms of AI and others. So I'm I don't think we're losing partners. I think we're gaining some partners in this game.
There's some, but I don't think that's the there's some to that. But I think the majority, I don't think that's the case. I think the majority of the smaller partners pick 1 or the other. Again, by definition, if they're small enough, it's going to be challenging for them to build competencies and capabilities in multiple areas. The bigger the partner is, I think, the more likely they might have multiple practices and we deal with that.
Yes.
I mean, intuitively, if you have a dollar to spend and you're a small partner,
you're
not going to split that between Salesforce and Microsoft. You're going to place your bet on where you think the market leader is. And I think not to rephrase what you said, but I think that's what saying.
That's what I'm
saying. Okay.
Keith Bachman from BMO. Keith, I had 2 for you. You talked about processes and how management buy in various activities. Demandware seems to make a lot of sense for why it's just in your platform. But the events in the last few months seems to be in some respects more reactionary.
For instance, Mark going over the top and saying you'd be willing to pay more than Microsoft for LinkedIn. The first part of the question, is there collective voices that come to decisions? In other words, does the whole management team buy into an outcome like that? And the second part of that question is, you've talked a lot about analytics and Wave and Einstein and all that seems to make a ton of sense. Do you really need as part of that process incremental data rich sets in order to make Einstein and Wave and the various other AI activities?
Do you need more data rich data sets in order to
make all that come to fruition?
Yes. So I appreciate the question. We are continues to have incredible vision, who pioneered an industry 17 years ago. Continues to have incredible vision, who pioneered an industry 17 years ago. And one of the great things about Mark there are many great things about Mark.
But one of the really great things about Mark is that not only did he create a vision, not only do we create a first act and a second act, sales cloud, service cloud platform, we have had many, many great acts. And when Mark takes a look at things, he looks at things with a visionary's eye and absolutely a beginner's mind. And he looks at it through a lens that other people don't see, and he's able to translate that. And in every acquisition that we look at, in every sort of activity inside the company, whether it's an acquisition or whether it's organic in nature, it doesn't really matter, There is an awful lot of discussion and a lot of debate. And that is part of the culture of the company, which is very transparent.
This is something in this culture that I've never seen in a lot of companies, quite frankly, whether as my role as a consulting person, my role as a general manager executive selling to people or just running the day to day operations of the company, the fact that we are so transparent and that everybody gets a vote and everybody gets a voice and everybody gets an opinion really makes us very unique. So as I said, we are unified as a management team in these decisions. There's always healthy debate about any topic, whether it's around M and A activity or whether it's a decision about Salesforce Tower, look and feel of Salesforce Tower just a few blocks away from here. So that is something that I can look at you with conviction, okay? Lots of healthy discussion, lots of healthy debate.
We have great executives on the team that I have the privilege of working with. We have some outstanding Board members. In fact, they're all outstanding Board members, I should say, some of which are in the audience here today, who come with a point of view. And at the end of the day, we fly in formation, and we stand behind the decisions that we make as a company. I'm not going to get into any sort of the discussions that around LinkedIn or any of that stuff.
I mean, I think been written in the press. Everybody's weighed in on their opinions regarding that. But artificial intelligence is here. We are at the forefront of it. It's been here for a while, but this is going to be a very long cycle.
And of course, data is important to artificial intelligence, but data comes from many, many sources. And the beauty of our platform is that we're an open platform where we can get information from many, many data sources. So we're all excited about that.
All right.
I have time for one more question.
Hi, Sarah Hindley in Macquarie again. Question for you, Keith. I wanted to piggyback a little bit on Kash's comments earlier in regards to Einstein and analytics. I'm wondering what's the monetization pathway for those products? Should we be thinking about the replatforming or lightning type opportunity as the monetization?
Or should we be thinking about the next line item that you can break out? And where is that?
Yes. So Alex may have covered this, this morning or today when he was talking about it. But Einstein is built into our platform, part of our platform. So there's some natural Einstein like capability that will just come with the product. We'll be making some announcements.
And again, not sure it was covered today, but we'll be making some announcements around pricing as it relates to Einstein, okay? So there's really 2 ways to look at it. There is a base amount, a base capability that will just enhance the product, which is good for customers. And then for the accelerated enhanced capabilities, there is an opportunity to monetize that.
Okay. Great. Keith, Tyler, thank you so much for joining us this afternoon. Really appreciate it. So thanks very much.
Maybe give a hand. Thank
you.
Well, Keith, you are a tough act to follow, but we've got another great act in fact. And we're just going to keep rolling right now with our Chief Technology Officer, Parker Harris, who's going to come up and talk about, guess what, technology, sort of how we power the sales force solutions and anything else you want to dive into with Parker. Parker, thanks for joining us.
Thank you.
Ladies and gentlemen, be Perris, our Chief Technology Officer.
So do you want me to start talking? Maybe. I think you have some questions.
It's Brent Thill with UBS. There's a lot of questions about the waves that you've been in through M and A. You went through a wave with the exact target. You kind of came off that digested and now we're in somewhat of a super cycle, it seems like given all the M and A that you've been going through.
Can you just walk us through what
from your perspective as founder of the company, why is this happening now? There's a lot of questions around the organic ability for you to deliver versus having to buy everything at this point? What's happening in your mind that is causing this at this point?
I think if you look at
the M and A we've done to date, there was an acceleration. I think when you look at tomorrow, I hope you all come to the keynote, by the way, and you see what we're talking about when we talk about Einstein. There were a number of acquisitions that we did for that. They were small, not that big. But we were really looking for expertise, not just hiring data scientists, but data scientists that have already been building technology and working and how to do that for Salesforce automation for leads and opportunities and MetaMine was another one.
So that was a series of acquisitions that was really important really to flip and we were also doing organic development as well. And so we could do it all over time. And so for speed reasons, we felt like it was important. I do think that that's where the market is going, and it's important for us to have that capability. So we did it for speed.
I've been working on bringing all those platforms together into 1. They actually were all doing it in a very similar way. The base technology is mostly open source, so it's more of the data science that was important. So that was one that we thought was really important. If you look at Demandware, that was a different type of acquisition.
It was really when we look with Alex Dion and Mark and we look at CRM as a category, we want to be the leaders in the Magic Quadrant in sales, service, marketing. And if you look at the Gartner view of the world, not that we guide ourselves by Gartner, commerce is really that 4th pillar. And we didn't think that it would take us a long time to build. It's not a question can we build
it, it's a question of how fast do we
want to go. And we felt like in talking to customers like Louis Vuitton, who used both, they're like, oh, we use Demandware and we use your marketing cloud. Now we didn't ask them should we go acquire Demandware, but it was a good signal. Also came with revenue, bigger company, so a different type of company, not a tuck in. But we definitely look at the larger ones.
We want to understand how does that come in with revenue. So that was a bigger one. The one that we just closed, Krux, that I think you all know about, was very important for two reasons. It's an asset I think that is immediately something we can sell in our marketing cloud. Andy Cofoid who runs marketing sales I think will hit the ground running with that.
But also for me, it really is a platform. It's not a database based platform. It's a horizontally scalable platform for taking all this from anonymous data to known data that I think over time I see it as a basis for a lot of architecture work that I'm doing to bring together all of our B2C assets and then ultimately to bring together the B2B and the B2C side so that it comes together in 1 unified platform. Also, I think that some of these if you look at the market, valuations have gone down. And so we also also I think there's more activity in the market in general because of that, but it's not a reason to go spend money.
We're doing these for very specific product strategy reasons.
Raimo Lenschow from Barclays. Parker, if you we have these at the moment, this big shift in terms of how we think about cloud and with kind of AWS and Azure. As you think about the future of the company, you're using AWS for international expansion, it makes a lot of sense. But how do you think about the underlying platform a SaaS company will have to kind of do themselves, co locate, do it in public cloud in the long run? What's your thinking between between
Yes. So years ago, I hired Randy Curran out of Microsoft who runs infrastructure engineering for me. And really at the base layer of our platform, which is we can call it infrastructure as a service, when we started the company, Amazon didn't really exist as a service and it came out. So we built our own data centers, as you know, where we leased space and we built all the infrastructure. Our customers expected that to trust us and initially weren't trusting companies like Amazon or Microsoft.
I think that, that has changed. And so at this point, for me, it comes down to an economic decision. We do not compete in that at that level of the stack nor do I want to. I think it's a commodity space and I think you really need to be an ad driven business or have some model of revenue like a Microsoft has or an Amazon has that can fuel that, so that big build out. That being said, so what we're doing is we're engineering and
yet I have
a lot of infrastructure that are run today. So that doesn't go away. And so we are engineering with both organic engineering and some open source, a way to run our service in our own data centers in a more abstract way. And then as you know, we have a partnership with AWS to run our service for some regions on AWS. It will be running on that similar layer.
And then we're just going to over time look at what is economically viable for us. We believe in the U. S. Where we have enough traction and enough business that building our own and running our own economically is going to be more favorable to us. We believe in certain other regions where we don't have the scale, whether that's Canada or Australia or other regions, it may be more economically reasonable for us to leverage public cloud.
And yet from the engineering perspective, I'm going to build it in a way that I can kind of watch that play out over time. If public cloud becomes so cheap that I can't do it any cheaper, then I may go to public cloud, assuming that's what our customers want. Now some customers are in the retail business, and I think that's changing, but they don't all want to give money to Amazon. So there are other business reasons that are more than technical why there's compliance reasons and then there's also competitive reasons that we may have to choose other solutions.
Wow, quiet, crickets. I'll step in, same infrastructure type question where we move up a level is,
what are you doing on the database side? And I have heard that you are really pushing
the limit in terms of some of the infrastructure you have. I'm sure handling it. But what are you doing to make sure that you continue to scale up and create flexibility at that kind of next layer up? And then kind of we've got a pretty sales driven company here. How does the engineering follow along?
And how do you feel about kind of solidifying that base?
Didn't follow the second part of your question, but let me answer the database question first. So we started the company and I think we made the right decision about on Oracle as a very solid database. It's probably the most solid database out there. But databases fundamentally have certain scalability restraints. Oracle may not say that, but just the nature, you gain ACID transaction capabilities to make sure that when you save data, it's saved in a fully transactional way.
But you lose some of the things that you see now the scale out architectures horizontally scalable where maybe there's less coherence, but you get this massive scale like Google has or HBase to do Cassandra, all these other solutions. So we have certain solutions that are perfect for running on an Oracle database. Our Sales Cloud or Service Cloud are great for that. Now when you get into marketing automation and you look at Adidas as a customer and you're selling sneakers on Demandware and you're targeting people you don't know and you're tracking clicks and email responses. That's a whole another level of data and I don't think a relational database is the right solution.
That's where I think we're doing a lot of work with things like HBase. Also the asset we just acquired in CrUX has built a lot. It's built on Amazon using a lot of Amazon's horizontally scalable services, but could run-in other places. That is probably more appropriate for that type of data set. And back to Brent's question earlier, what I'm doing over time is there's going to be a data platform.
We already have a data platform, but it will continue to evolve where data might be stored in a relational database like Oracle, it might be stored in a non relational database. But to a customer, it will still feel like one continuum. And I'll also manage the data so that we're not just copying it back and forth and customers don't have to copy it. And so I think a lot of companies are headed that way. I think some companies think that maybe we'll solve the transactional characteristics of these horizontal systems.
If somebody invents that, I think that would be phenomenal. But until then, we will see a mix of data providers. And your second question, I didn't understand. Sorry.
I was trying to be polite. I'll be less polite, hopefully more clear. Hardware driven engineering driven companies tend to overinvest in hardware, underinvest in sales and marketing. Sales driven companies tend to maybe underinvest a little bit in the hardware and hope the engineers can keep the bailing wire and the masking tape and the duct tape working while we sell more stuff. Yes.
I'm not pushing that too hard on your front. How do you kind of keep you guys have had a massive scaling. So far, you've done very well. But how do you kind of evolve the model so that it stays on top of it, especially as you take on more acquisitions, complexity, etcetera? Sure.
So we have a planning process. We call it
the VT MOM process. You may
have heard of it, but it's a way to prioritize what we do. And so number 1 is what we call trust. And we manage the budget by that. We plan the budget. And so when we sit down with Mark and the executive team, we start with trust.
And with Randy, we talk about here's what we need to run all of our infrastructure. And we spend what we need there. Now it doesn't mean that Mark is not putting pressure, Mark Hawkins is not putting pressure saying, we need to see that you save a couple of points. But it always gets what it needs. And it's just that pressure to check to see is that really the number that you need.
And then we move on to fueling the people who keep our current business, which are our customer service and customer support and CSM Group, and then we fund sales. And so it's really in that priority order that we always think of our business. And there's never been an issue with being able to fund what we need on the infrastructure level.
I'll ask Juan here. You mentioned you don't want to get into the infrastructure and services business because it was an ad driven model. I guess my question to you is, when you look at the consumer models out there, does the R and D organization need to operate differently when you're serving a consumer business where you're all more about getting users as opposed to serving a business, which is different requirements? How do you
think about that from an R and
D perspective? I think when you're serving the
B2C world, it's less manual human driven technology where you're in a call center, you have people answering the phone. In sales, you have salespeople selling typically. But in the B2C world, you're marketing to a massive amount of people. And I don't know it's you, I just know that you fit a certain characteristic and I target you and then you respond. And it's really computer science that's pushing you through the sales process and then maybe you self serve and you go to e commerce site.
Whereas on the B2B side, it's usually human beings who are doing the selling, doing the servicing. What I find really interesting is I think there's over time more and more of a blurring of the lines. You take the Adidas example, yes, you're put into a targeted bucket. We think you're going to buy the Yeezy sneakers and the flash sale. So we send you a social post, you go and buy them, but you bought the wrong size.
And what happens, you're going to call the call center. And someone is going to answer the phone and say, Oh, yes, you bought the wrong size. Let me help you. Or maybe you can do that electronically. And so that's where we see is one of these connections and examples of crossing between what we classically call B2B and B2C.
And what I don't want to do and what I think some companies think of is like there's a B2B stack and a B2C stack and B2B technology and B2C technology. I do think that there's different technology, there is different scale. Maybe the B2B is more of a relational database, B2C is not. But I need to make it more of a continuum because when you cross over and you bought those Yeezy sneakers and you're clicking on these things and you call the call center agent, the call center agent needs to know who you are, what did you buy. And maybe if you're going to upsell in the call center, you want to see like, well, more information about not every granular bit, not every click that the computer cares about, but you want to see something a human care about.
And so that's what we're doing is bringing that all together. And I don't think we would be thinking this way if we hadn't backed acquisition strategy bought ExactTarget. We understood marketing automation, but ExactTarget took us into this entirely new space where it made us think more about those types of companies. Even though we were marketing about it at the time, I didn't totally get it. And so we bought ExactTarget and I think Demandware is just yet another synergy that extends that.
Thank you.
Yun Qing from Ring Capital. Can you just talk about from your point of view overall what's going on within the platform of the service market, the industry? And obviously, you guys have done very well over the last 10 years building that out and have early success and early leadership in that position. But obviously, other vendors, including AWS is obviously pushing that market pretty aggressively recently. How does your force.com driven PaaS offering different from AWS, which seems to be more focused on open source kind of hybrid model, a lot of the NoSQL database applications are running on top of that.
Do you ever envision supporting a lot of these open source NoSQL type of database just to be able to compete against that growth area?
So you have to remember that we are very, very focused on being a CRM company. And when we think of PaaS, we think of PaaS in the context of CRM. And so if you're building an application or extending CRM, it's related to something around the customer. And so I feel like we're at a higher level of the stack than like an Amazon. Amazon is a collection of services, and they're amazing.
And yes, they keep moving up the stack. And so one question, I'll just kind of repeat it and say it in a different way, people ask me is, well, Amazon keeps moving up the stack. Aren't they just going to move up into your space? But that's not how Amazon thinks. It's not their business.
You may give a set of services, great, there's a NoSQL database and here's a SQL database and here's a caching service And that's just all technology, but we're very focused on building a solution first backed by a platform that lets what we call these trailblazers then take it and customize it and extend it and build other applications that are metadata driven. And so we just think about it in a totally different way. I think where we have to be careful as a company is that we don't start to think of ourselves as a general purpose path that forget CRM because we have technology that could do that. It does do that.
And you
could say, great, yes, forget CRM, we're going to build a totally separate business. I think then we start to try to figure out how do we compete with some other general purpose path. I actually what I like to think of is an Azure or an Amazon or even through Heroku, which is on Amazon, is that, yes, there are great examples of using open source and using code that could help you. Field service is a great example. I like to think about route optimization.
So we got to send trucks out and the traffic patterns and make sure availability and send the right person to the right location in the most optimal way. There is software out there that does that. We happen to license some, but it could have been something that if we had all the right capabilities, don't rewrite it on my platform and try to translate whatever you've written, Java or Pearl or whatever into Apex. Just use it and extend out to Amazon or Azure or Heroku and run that processing and that complex processing and then come back with the answers and come back to your CRM. And so that's my goal is to extend into an Amazon and Azure, Google Cloud Platform in ways that can extend what we do.
And you see customer examples doing that today, but they're wiring it up themselves. But when I think about, well, how can I have identity be shared authentication and metadata and all of the things that you need when you extend out, you need that context, make that pre wired so that you can actually use that? So I don't see it as a competitive issue. I see it as something we're going to extend to. We're going to stay true to our mission of CRM.
A couple of weeks ago, Whirlpool was talking to us
in this room
as well.
And they talked to
us about multi tenancy at the database layer versus the application layer. Can you explain to me what that actually means? And 2, is that something that is a relative benefit or deterrent for you guys? Or is that something you could take advantage of since you actually use
their database? Yes. That's a
good question. So when we started the company, we built an Oracle, as you know. And Oracle knows nothing about the fact that we're multi tenant, the Oracle database, Oracle Corporation. So in front of the Oracle database, we have a lot of code that manages multi tenancy. But then when it's stored in the database, so let's take accounts or businesses that I'm selling to.
There is a table, a database table in the Oracle system called accounts. And it's and data is in there and it's comingled. It's like your data is in there and somebody else's data is in there. And in front of that Oracle database, we have a lot of code that does the security model, it does the data extensions, we have custom fields, everyone has different custom fields and how to make that optimized. So we've done a lot of work and it works very, very well and a lot of work in all the optimizations.
We are exploring very interesting things with its own its own partition or table space, it's Oracle technology, or maybe even leveraging some of Oracle's native multi tenant capabilities. The only reason that we would do that, where we get the advantage, the only time I care about it is when a customer wants to move around in our cloud. And so why do customers want to move? Maybe they want to move from the U. S.
To Europe because they're a European company and they really felt like they really want their data in Europe. Or as we grow the service, we grow these Oracle databases and sometimes we have to break them in pieces because they get too big. And so when we do that, it would be much better if that was completely seamless to our customers.
It's pretty seamless now.
We've done a lot of tech around it. But if I could just move customers transparently with some Oracle technology, that would
be a benefit. So those are
a couple of examples where it would matter. But it's mostly transportability and management of our farm of data and less about anything inherent in the capabilities of the service. Yes.
Hi, thanks. Steve Ashley, Robert Baird. Is there anything with next gen generation technologies, OpenStack, containers, Kubernetes that would be germane to what you're doing and offer any opportunity for efficiencies or improve speed or anything?
Yes. Great question. That's exactly what I was referring to when I was talking about so when we started the company, we really did all of our IP very
much at the top of
the stack, the multi tenancy and it was really at the application tier. And then we ran the database and at times state of the art, it's not state of the art today. And so what we've been doing over a period of years is building out that middle layer and leveraging every bit of open source we can. So things like Kubernetes and Mesos and whether it's Docker, other container technologies, those are all elements that we're looking at using. They're not all mature enough for what we need.
So we're having to put a lot of our own IP on top of it. And we're giving back to the open source community as much as possible, again, because that's not a layer that we want to own and it's totally fine. But I do think there's a lot of very valuable open source out there right now. I think it's a pretty exciting space. And I think a lot of companies I talk to that are doing the same things are looking for that portability.
They're looking to be able to move around. I think that over time, more and more, there's going to be an arbitration between the public cloud providers where you're going to be able to say, well, Amazon will give it to me at this price, but Google is dying to get more customers, and so they're going to give it away right now. So great, I'll go to Google and then Microsoft. And so that's really where we're headed for any public cloud usage. We want to be able to do that arbitrage as necessary.
Thanks, Parker. When you think about you're obviously rolling out Einstein for service, for sales, for marketing. Each of those clouds has somewhat of a different back end, meaning marketing was built more in a Microsoft back end and obviously you had Oracle for sales
and service. Does that change sort of do
you have to, I guess, construct an Einstein for those separately? Meaning, does how you the data interplay between, say, the marketing cloud differ and how the data would interplay on the sale of, say, the sales and service? And over time is that I guess a hindrance to trying to bring the Einstein functionality together in a bigger offering that would cover all those clouds? Just trying to get a sense on if the back end that they're currently how they're currently set up is limiting as you think about AI over the next say 3 to
5 years?
Yes. So a great question. So back to the conversation earlier about data layer and relational databases, nonrelational systems and B2C and B2B. Really, what I see is and what we're building, we have a first version of it, is a data lake. And so all the signals that are coming when you look at our marketing, we talk about the signals for data science.
There are signals from sales, from service, from marketing, from IoT, from your e mail, your calendar. All of those signals are coming from everywhere. And they're coming, for us, from our marketing cloud. They're coming from Demandware. They're coming from Thunder, IT cloud.
They're coming from our sales and service and communities. And all of those signals need to go into really one location. And so for our first version, that's essentially what we've done. So we don't have separate versions of Einstein. Certainly, there are separate models per customer because we do want to keep that true that each customer has their own data.
It's protected. It's safe. It's secure. It's separate. But really, the value of data science is the signals are coming from everywhere.
And don't forget, the same signals are also super useful and data science is super useful in the marketing sense to do that segmentation and targeting. So I think we're going to see a lot of use cases of that. We've got a first version out. I think we're learning a lot from that and how it evolves over time. And that's really what I mean about how this B2B2C platform comes together over time is what is that?
What is that shared data lake and then or activity lake, we call it, or engagement history is different phrases we use. And then what is the profile of a customer and what is that? And do we have a federation of profiles depending on what the use case is and what is actually shared? But that's the world we're headed into, and I think Einstein has helped push us there.
Any more questions? Yes.
I guess
you had all
your questions answered today. Well, Mark will be here tomorrow. You're just
going to wait and hit him with all the good questions.
I think people look thirsty. That's it.
Well, I actually what it looks like is people need a drink.
Yes. There's a difference.
All right. Well, Parker, thanks so much for joining
us today.
We really appreciate it. Thanks for having me.
So just to wrap things up, I'd like to ask Mark Hawkins to come up and help close things out. But just as a reminder, we'll be back here in this room tomorrow at 3:30 for a conversation with our Chairman and CEO, Marc Benioff. And just remember, make sure you bring your badges with you. We won't be able to get up to this floor, so please remember to do that. We do have refreshments outside the doors here.
So please stick around, join us for a drink. And Mark, why don't you come up and maybe wrap things up for us today?
Super. Thank you, John. Thanks again. I just want to say again, you guys, thanks for investing the entire day. We know your time is precious.
Hope you found it informative, and you hopefully enjoyed the access to our entire management team, a good chunk of it at least. And then also, of course, you'll have a chance to talk to Mark tomorrow. We look forward to that engagement as well. So thank you so much. We'll meet you guys in for a drink maybe out in the for you.
So again, thanks so much guys. Take care.