Good day. My name is Carmen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Salesforce Demandware Acquisition Conference Call. I would now like to turn the call over to Mr. John Cummings.
Sir, the floor is yours.
Thanks so much, Carmen. Good morning, everyone. Earlier this morning, Salesforce announced it has entered into an agreement to acquire Demandware. The details of this transaction can be found in a press release issued approximately 7 am Eastern Time this morning. Joining me today to discuss the transaction are Keith Block, Vice Chairman, President and COO Mark Hawkins, Chief Financial Officer Parker Harris, Co Founder Alex Dion, Chief Product Officer and Todd Embling, CEO of Demandware.
The purpose of today's call is to discuss the acquisition of Demandware. Keith and Mark will review the proposed acquisition and the terms of the transaction, including the estimated impact on our fiscal Q2 and full year fiscal 2017 guidance, which we gave in our most recent results call in May. After our prepared remarks, we'll turn the call over to your questions. You should be aware that our discussion and responses to your questions may contain forward looking statements related to the acquisition of Demandware and estimated results of the company, which are subject to risks, uncertainty and assumptions. All statements other than historical facts included in our discussion, including but not limited to statements regarding the timing and closing of the transaction, the expected benefits and financial impact of the transaction, expected performance and future business plans and any assumptions underlying any of the foregoing are forward looking statements.
Should any of these risks or uncertainties materialize or should our assumptions prove to be incorrect, actual company results and actual effects of the transaction could differ materially from these forward looking statements. A discussion of risks, uncertainties and assumptions related to the acquisition and the estimated impact of the company as well as other information on potential risk factors that could affect our financial results are included in reports filed by Salesforce and Demandware with the SEC, including each company's reports on Forms 8 ks, 10 Q, 10 ks, particularly under the heading Risk Factors and the tender offer statement on Schedule TO and other offer documents to be filed by Salesforce as well as the solicitation recommendation statement on Schedule 14D-nine to be filed by Demandware. Please be aware that any unreleased services or features referenced in today's discussion or other public statements are not yet available and may be not be delivered on time or at all. Customers who purchase our services should make these decisions based on features that are currently available. Finally, the intended acquisition of Demandware includes a tender offer made by Salesforce and a subsidiary.
The tender offer has not yet commenced. The discussion regarding the acquisition is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any securities. When the tender offer commences, Salesforce will file a tender offer statement on Schedule T0 with the SEC and Demandware will file a solicitation recommendation statement on Schedule 14D-nine with the SEC regarding the tender offer. Demandware stockholders and other investors are strongly advised to read the tender offer materials, including the offer to purchase and related letter of transmittal and certain other tender offer documents that have yet to be filed and the solicitation recommendation statement when they become available, as they will contain important information that should be read carefully before any decision is made with respect to the tender offer. The tender offer statement and the solicitation recommendation statement will be available for free at the SEC's website, www.sec.gov.
Free copies of these materials and other tender offer documents will also be made available by the information agent for the tender offer. So with all that, let me turn things over to
you, Keith.
Thanks, John. Good morning, everybody. Before I begin,
I wanted to let you know that Mark will not
be on today's call because he had a prior commitment to appear on CBS this morning. So we can all enjoy that today as well. This is a historic day for Salesforce and for our customers. We couldn't be more excited to talk to you this morning about our agreement to acquire Demandware. This announcement is particularly exciting because it signifies Salesforce's entry into the digital commerce market.
So not only will this extend our CRM leadership, the acquisition of Demandware positions us to capture this multi $1,000,000,000 commerce market with a recognized leader in the space. So today, our customers are connecting with their customers in entirely new ways across sales and service and marketing and communities and analytics and IoT in our platform. And now with the addition of Demandware's industry leading commerce capabilities, we're in a unique position to extend our CRM leadership with the new Salesforce Commerce Cloud. Our customers have been increasingly asking for this. It's coming up in many conversations.
Every company sells, services, markets and every company is looking for world class digital commerce capabilities. And they're looking for new ways to bring these processes together so they can engage with their customers in entirely new ways. No one in the world can do that but Salesforce. And that's why companies of all sizes are coming to Salesforce to help them with our digital transformation, which is why this makes so much sense for our customers. Now digital commerce will soon be an $8,000,000,000 industry With Demandware, we'll be well positioned to deliver the future of commerce and lead the multibillion dollar commerce market and create yet another $1,000,000,000 cloud for Salesforce.
We believe this will be another future growth lever for our business as we look to grow to $10,000,000,000 $20,000,000,000 and beyond. And with that, I'd like to hand it over to our Chief Product Officer, Alex Daon, for his comments.
Well, thank you, Keith. As you know, we had a long relationship with Demandware Tom and the leadership team. In fact, they even recently joined us, if you remember, at Dreamforce on stage last year. And we continue to be impressed by their vision, leadership and execution in commerce. It's very clear what a unique company Demandware is.
And now, how extraordinary, the combination of Salesforce and Demandware will be. We already have incredible synergy in our joint customer base. In fact, I got plenty of e mails this morning from customers that couldn't be more thrilled about this acquisition. Many of the world's leading retail brands use Delano Way as a platform for digital commerce, order management, point of sale and store operation. Companies like L'Oreal, Marks and Spencer, Lands' End and the list goes on and on and on.
They share our passion for customer success. It's a shared value, and I'm thrilled to welcome the entire Demandware team to the Salesforce family upon the close of the transaction. Tom is right here with us on the call. It's great to have him here, and I'd like to hand it over to him for his comments. Tom, it's yours.
Thank you very much, Alex. This is truly an exciting day for Demandware, our customers and our employees. When we founded Demandware in 2004, our mission was to revolutionize how retailers engage and inspire their consumers everywhere. Today, Demandware is growing to be the largest enterprise cloud commerce company that serves some of the greatest retail brands around the world. And we're the only cloud company ranked in Gartner's Magic Quadrant as a leader in digital commerce.
We're headquartered in Massachusetts with more than 1,000 employees and offices around the world, including the United States, United Kingdom and Germany. It's very exciting to be here today in order to join forces with Salesforce. Our agreement with Salesforce follows inbound interest that we recently received. Having spoken with Salesforce and other parties, it became clear that combination of sales force is the most compelling transaction for Demandware. In addition to significant value for Demandware shareholders, joining forces with the number one CRM platform accelerates our growth, our vision and helps us to transform the future of digital commerce.
The synergy and combination of Salesforce and Demandware is extraordinary. 1 unified cloud platform across every segment of CRM with a total focus on customer success and innovation. This is an exciting future for our joint customers, our partners and our employees. We believe that our shared commitment to customer success and similar cultures ManWare's employees for their hard work, which has enabled us to reach this milestone. I'm very excited to become part of Salesforce and look forward to working together to transform and dominate the market for commerce.
Let me now hand the call over to Mark.
Well, thanks, Tom. And this is truly a game changing transaction that is highly strategic. This will extend our leadership position in addition to expanding our TAM significantly. Under the terms of the definitive agreement, we've agreed to acquire Demandware for approximately $2,800,000,000 net of cash received. This represents a per share price of $75 for all Demandware outstanding shares.
We exited Q1 with approximately $3,700,000,000 in cash and marketable securities and we will finance the transaction through cash on hand along with a $500,000,000 3 year term loan to provide additional financial flexibility in the near term. The acquisition will be structured as a cash tender offer, as John said, for all of DemandWear's outstanding shares, followed by a merger. We expect the transaction to close in late Q2 subject to expiration of antitrust waiting periods and other customary closing conditions. Assuming the transaction closes as planned, we estimate demand where we'll contribute approximately $100,000,000 to $120,000,000 in incremental revenue for the remainder of fiscal 2017. By the way, this estimate includes an approximate $50,000,000 fair value adjustment to Demandware's billed Doctor and unbilled Doctor deferred revenue, which is off the balance sheet.
A provision for modest levels of business disruption in the weeks after the acquisition closes as well as other adjustments. Including Demandware's expected revenue contribution, we now anticipate full year revenues in the range of $8,260,000,000 to $8,320,000,000 For the Q2, we estimate Demandware will contribute approximately $0,000,000 to $10,000,000 to revenue assuming the transaction closes as planned. Including this contribution, we now anticipate 2nd quarter revenues in the range of $2,005,000,000 to $2,025,000,000 From an earnings perspective, while Demandware generates a modest non profit non GAAP operating profit, we anticipate the acquisition related integration costs and transaction fees of approximately $30,000,000 along with the incremental investment demand where we'll be needing, will reduce our full year 2017 diluted non GAAP EPS by approximately 0 point 0 $7 As a result, we now expect FY 2017 diluted non GAAP EPS in the range of $0.93 to $0.95 We expect about $0.03 of the full year non GAAP EPS reduction to fall in the 2nd quarter, primarily related to due diligence, banking fees and other transaction related costs. This results in an updated 2nd quarter diluted non GAAP EPS estimate of $0.21 to $0.22 In order to provide an accurate forecast for the full year GAAP EPS changes, we need to complete the purchase accounting process after the transaction closes.
We expect to be able to provide this update when we release our 2nd quarter results in August. However, you should expect that the impact of the GAAP EPS will be more significant than the non GAAP EPS due to the additional stock based compensation charges and the impact of other various non cash items, including the amortization of acquisitions, related intangibles and income tax adjustments. Turning to cash flow. We estimate the acquisition of Demandware will reduce operating cash flow by approximately 45 $1,000,000 to $50,000,000 in fiscal 20
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for the combined company in the range of 22% to 23%. We look forward to updating you on the transaction and our progress in August. And with that, I'd like to open up the call for questions. Keith, Alex, Tom and I are ready. And operator is there.
Thank you.
Thank you. Your first question comes from the line of Keith Weiss with Morgan Stanley.
Excellent. Thank you guys for taking the question and congratulations on the transaction. Two questions, 1 on the revenue side of the equation and one on the expense side of the equation. On the revenue side, I was wondering if you guys could maybe walk us through where you guys see the most potent areas of synergies in terms of bringing the 2 companies together? And what's the timeframe we should be thinking about for those synergies be realized by this combination?
On the expense side, this is probably for Mark. How does this transaction impact your sort of longer term margin framework that you've put out? Does this in any way sort of push out or change that dynamic between growth and profitability we've been talking about over the past couple of
years? Yes. Hi, Keith. This is Keith Block. So thanks.
I'll take the first part of this and then obviously Mark Hawkins can speak to the expense side. So first of all, I just want to reiterate that we are incredibly excited about Demandware becoming part of the Salesforce family. We have had a long standing relationship with Demandware. We've admired them. We've spoken with them for a very long time as a partner in the marketplace.
And what's become increasingly obvious that as we speak to our customers that we've moved to more of a industry orientation and we get more mind share with our customers as you know in the marketplace that the Demandware name has been coming up more and more. And one of the things that this company has done very, very well historically is to listen to its customers. So we believe there are a number of synergies between Demandware and Salesforce. Our customers are telling us this. We're seeing this in the marketplace.
We're seeing this in a number of industries, particularly retail and PPG. And we have an incredible sales organization in our distribution organization. And this is an opportunity to bring the Commerce Cloud to the customer success platform for our customers and leverage the thousands of sales reps that we have here at Salesforce to drive customer success. Mark, do you want
to take a second? Yes. Perfect there, Keith. Yes. And Keith, Wes, good morning.
Thank you for the question. In terms of the long term operating margin framework, absolutely intact. When we think about FY 2018, we think about that intact, the growth operating margin, operating cash flow framework. So thank you for the question. I will say, I'm pleased to say that we're now at a scale and a size as a company that we can take one of the world's unique assets with the Commerce Cloud with Demandware, take that on board and yet still expand our operating margins year on year by approximately 70 basis points by taking $50,000,000 in revenue write down for Doctor both build and unbilled and also taken over $30,000,000 in deal cost.
So we think that that's a really good outcome. We will continue to be the fastest growing top 10 software company in the world this year and we're expanding operating margin this year even when we're taking this deal, let alone looking to FY 2018. So Keith, that's where we're at. Next question?
Your next question comes from the line of Alex Zukin with Piper Jaffray.
Hey, guys. Thanks for taking my question and congratulations on the acquisition. I wanted to ask you one for Keith, maybe what made this market so exciting for you? And then one for Mark, just looking at Demandware's model as a percentage of GMV based model rather than a strict subscription, how do you look at kind of integrating that into the sales force mix? Yes.
Hi, Alex. So this is Keith. We've had a long standing relationship with Demandware and their name has come up many, many times in the market. This is a company that does listen to its customers. And as you know, over the last 3 years, we have taken a vertical orientation around industries.
We think it's important to speak the language of our customers. This is an $8,000,000,000 or soon to be $8,000,000,000 TAM marketplace. And our customers are telling us when we're thinking about painting a vision for our customers in the industry space around retail and PPG for sure, Again, this is a natural adjacency and a very, very unique company that is the market leader in e commerce and the market cloud leader. So, it's a natural partnership. It's a natural fit.
Again, we've known about these guys for a long time. Tom and his team are terrific. And our customers are telling us, hey, this is a great extension and a natural adjacency to the
customer success platform. And
Alex, let me just jump on the second part of that question. First of all, following the closing of the transaction, our expectations regarding integrations, we'll be looking at a lot of things. But certainly, to your point, Alex, this is a GMV based model. We had the great pleasure to spend time with Tom, Evelyn, the CEO as well as Tim Adams, the CFO and really understand and think through this model. And we see this working very, very nicely with our customer success platform and snapping in very naturally, as Keith talked about.
In fact, it is that one open spot in CRM that we wanted to cover. And so we see opportunities here, including even over time, looking at how this all snaps together and even down to the ideas of invoicing. So there's a lot of ideas that we'll be thinking about. But again, that's following the closing of the transaction. We can get more into that.
Okay. Next question.
Your next question is from the line of Ross I'm sorry, the line of Kirk Materne with Evercore ISI.
Thanks very much. And I'll add my congrats on the deal. I guess maybe the first one for Keith. When you think about integration from a go to market perspective with Demandware, is this going to be somewhat similar to what we saw exact target meaning leave the business somewhat alone and then sort of integrate in the core CRM folks over time in terms of being able to sell the product? And then just, I guess, along the same lines, how should we think about Demandware in sort of the retail industry units or how we should think about them interacting, I guess, over the next, say, 12 to 18 months?
Thanks.
Yes. Okay, great question. So let me respond to the first part and then I'm going to ask Alex Dion to weigh in here. We had a very, very successful acquisition with ExactTarget and the Marketing Cloud. The integration has gone incredibly well.
I think you've seen that in our financial results and certainly driving customer success. We learned quite a bit actually from our acquisition of ExactTarget and we really I would say we cultivated a very successful integration playbook. We expect to follow a very similar path Demandware once the transaction is closed. Again, the customers have been asking for this and we're not just adding a new Commerce Cloud. We're also bringing world class commerce capabilities to the entire Jazz platform.
So we're really, really excited about that and particularly to the retail space. Alex, do you want to
make a comment?
No, I think, Keith, you nailed it, which is we're very excited short term by the synergy with the retail team and the retail division at Salesforce, but it's a much bigger play for us because as you know, our vision of the customer success platform is really to enable our customers to connect with our customers in a whole new way. And that's how we build our leadership in CRM. We are the number one CRM vendor because we are the number one Salesforce Automation vendor and we capture market share every year. We are the number one customer service vendor and we're capturing market share every year. We are today the number 4 marketing vendor with the acquisition of ExactTarget capturing market share every year.
Actually, we gain positions every year. And the only blind spot we had in CRM was commerce. And we think the market is now ready for a disruption. The future of commerce is really through solutions like Demandware, where not only you provide amazing personalized one to one shopping experience on your phone, but also connecting the store into that experience. And our vision is obviously to connect all that throughout the entire customer success platform.
So we see the Montoya has an amazing business as it is, but we see the synergies through
our sales, service, marketing, communities, IoT and analytics solution as being an amazing future. Yes, I'm just going to add one comment there. Thank you, Keith and Alex. I think, Kirk, you touched on 2 key things here. One is just this whole opportunity.
And as Alex had talked about, Alex, I think the TAM now is what $8,500,000,000 in 2020 additional TAM opportunity that fills out that whole CRM spot that you talked about and that is exciting to us as a company already with a large TAM. I think the second thing that Kirk touched on that I know we as a leadership team have talked a lot about is just ET and how well ET has gone and that integration and the success and really thanks to all the team members at Salesforce that really made that work. And so I think both the opportunity and that past success really position us well here as we go forward. Yes. Next question, please.
Your next question is from the line of Ross MacMillan with RBC Capital Markets.
Thanks so much and my congratulations to both sides on the transaction. I actually had a question for Tom Ebling. Tom, you mentioned you alluded to inbound interest in Demandware and I'd love to get your comments on why Salesforce is the best home for Demandware? And then related to that, would love any commentary around customer overlap. And maybe more importantly, where does Salesforce have retail customers that Demandware doesn't?
Thanks.
Okay. Thanks, Ross. Well, with respect to Salesforce being a great partner, it's actually interesting. We have modeled our business on Salesforce for so many years looking at what they've done as the leader in cloud capabilities and really the creator of that market. So we've always admired the company and over the last few years, our partnership efforts have heated up.
We have a significant portion of our customer base that are joint customers in one form or another between Salesforce and Demandware. And many of them have very creative things around clienteling and other types of applications where they've used the 2 technologies from the Demandware and Salesforce to achieve their business goals. So we're really excited about the potential combination in that respect and we think Salesforce is absolutely a great match. They also have a culture like ours in terms of focus on customer success and innovation and many of the principles that have been important, here at Demandware. What was the third element of the question?
Yes, that covered the question.
Yes. Okay.
Well, I can also comment. I mean, we've been operating through our retail team and industry units in the retail space. So we indeed have a lot of customers that are using our community product, that are using our Marketing Cloud product, where we see a lot of synergies down the road about growing faster within that installed base.
Yes. Just one final comment on that. As we again, as we reach higher and higher into these organizations and get more mindshare and they look to us to be their trusted advisor and paint a vision for them around specific industries, retail obviously is a focus area for us. These customers, I mean, we want this entire suite, this entire platform around customer engagement and commerce is an incredibly important piece of that. And that just keeps coming up more and more in the dialogue.
And so there are very, very synergies, a great deal of customer overlap and an incredible amount of opportunity. So we're very, very excited about this.
Your next question is from the line of Walter Pritchard with Citi.
Hi, thanks. I guess question for Keith or Alex. I wonder if you could talk about your B2C business right now. How much of your business are you engaged in customers on B2C efforts? I mean, you obviously started off life as a B2B vendor, but have made quite a bit
of progress
there. And then just related to that, wondering, you've obviously had a robust partnership ecosystem in this area. You've taken a couple of markets where you've decided to move into directly versus partner. Why do that in this e commerce space? Thanks.
I think it's a great question about this clearly is going to accelerate and bolster our product offering into the B2C space. We have a fair amount of B2C customers through our Service Cloud. I mean, you know big customers, big call centers around Salesforce, and there's a fair amount of them. Force, and there's a fair amount of them. For our Marketing Cloud, we are today the largest e mail provider for the largest retail brands in the world.
In fact, we sent 3,000,000,000 e mails on Black Friday, personalized one to 1 interaction on Black Friday. So we have throughout our portfolio of product a very strong presence in D2C that has been growing over the years, thanks to Service Cloud and Marketing Cloud and Communities in particular. And clearly, what we heard from those B2C customers was the fact that commerce is changing and there is the future of commerce should be connected to their customer success platforms. So this strategic move for us is clearly in line with our growing presence in B2B space and what we're hearing from our customers as what they expect us to deliver to them. Yes.
And the second part
of that, just with respect to our ecosystem, I think you know that we've invested significantly in our ecosystem throughout the history of the company. We think it's important to drive customer success and bring solutions to bear across many fronts whether they're platform solutions or whether they're industry specific or line of business solutions. So we're going to continue to grow and nurture that ecosystem upon the close of the transaction. Again, it's an important part of our strategy. It's one of our growth planks that we talk about a lot in addition to industry specialization and international expansion.
And we're looking at this in a very positive way. Demandware has a great ecosystem of partners that they're going to be bringing to the table. There's plenty of room in this market for a lot of technology players and partners to be successful. So at the end of the day, we are all about customer success. We want to provide the best solutions for those customers.
And we believe that many customers will be able to find an incredible amount of value in third party solutions in this commerce space.
Great. Operator, next question.
Your next question comes from the line of Terry Tillman with Raymond James.
Hey, good morning, gentlemen. Thanks for taking my question and congrats as well. Keith, Alex or Mark, I'm not sure who this would be for, but it's a big picture question on product strategy. Part of this is a vertical fulfillment in terms of retail or consumers, consumer brands that are selling direct. Also you talk about digital commerce and demand where it does get in the order flow.
And so what I'm curious about is, is this a bit of an evolution here in your strategy, whether it's M and A or product in terms of not just front office, but extending into back office because it would seem retailers would increasingly demand more from you, including maybe even getting into kind of workflows that get into back office. Thank you.
Well, let's I can start and I think if you can feel free to jump in. But I think your question is very important because the way we look at the our product strategy is really to help our customer to transform them and connect the customers in a whole new way. With that vision comes really a different mindset about what is the back office, what is the front office. With that customers being connected mobile, 1 to 1 powered by data science, you see basically the customers being into directly connected to your back office to a certain extent. In fact, the big revolution we've been seeing over the last past 10 years has been the real reason for the success of Salesforce is now the customers are in your information system.
And our job is to help our customers to invent themselves by connecting those customers through their information system. So yes, to a certain extent, you could see that the back office now is becoming the front office in some touch points. And that's clearly the trend we're seeing in the industry. It's not about us moving into back office. I think it's our customers wanting to connect their customers in whole new way and exposing more of their back office business processes directly to their partners, customers and employees to deliver better experience and more productivity.
Yes. Just another comment on that. I mean, we see this in the marketplace on a daily basis where customers have feedback office systems. SAP certainly comes to mind where they're looking for a customer engagement layer that wraps around that legacy technology because they can't extract the strategic data that they need to be successful and make decisions in real time. So at the end of the day, we are a customer focused company.
We focus on customer success. We focus on customer engagement, and that's what's really important to us.
Next question.
Your next question comes from the line of Kash Rangan with Bank of America Merrill Lynch.
Hey, guys. Congratulations. One question for Tom. Tom, what do you think sales force can do for you that demand work could not do on its own? And one for Alex.
Alex, how do you see the product strategy shaping up? In other words, when ExactTarget was announced versus now the product set looks completely different. Can you talk about the integration points and how the future of the e commerce cloud looks like 2 to 3 years from now? And then Keith, finally for you, how do you see the sales force integration into the broader sales force? Is it going to be the marketing cloud folks that will be selling Demandware?
And also your comments on how you think Demandware can move up market because my understanding is that it doesn't sell to really, really large multinational companies. And how do you see that changing? Thank you very
Well, that's a complex multipart question. Here we go. Yes, Tom, why don't you go through your thoughts and then Alex, you can talk product strategy. Yes. Perfect.
Okay. This is Tom. Well, cash, I think there's so many ways in which it accelerates our mission to transform retail. It's when we talk to Demandware investors about sort of 3 strategic initiatives and I think Salesforce accelerates every single one of them. We've talked about large enterprises going after the larger accounts.
And the credibility Salesforce brings as well as the account wear. So I think that's an area of acceleration. 2nd strategic initiative we've talked about in geographic expansion for demand we're selling to retailers in other geographies. As you know, we've just gotten started in place like Japan and Italy, but there's many untapped geographies for us and Salesforce has a very strong presence in Japan and many other geographies that will accelerate our expansion there. And then the third one is the move into sort of we talk about unified commerce or omnichannel, but helping the retailers engage with consumers everywhere.
And you see places Salesforce joint customers who've done clienteling applications in the store with Salesforce, the combination of the CRM capabilities in terms of knowledge of the customer with the actual commerce engine, I think it will be a very powerful way to accelerate that capability. So I think in all the key strategic initiatives we talked about, I see sales force assisting us in accomplishing them.
Yes. No, that's I can only support what Tom just said, which is I think what's amazing with Dunno where is not only the fact they can deliver amazing one to 1 commerce experience through a very powerful merchandising engine that runs behind the online website, but also they are multichannel, which means that they really change the physical to the digital world with the Tomax acquisition and the store, the fact that you can deploy client setting apps that makes store employees as efficient and personal as your own website. So that's obviously a very exciting part of what makes Demandware different. As far as our product strategy is concerned, our job is really to make our customer smarter in building those 1 to 1 personalized interaction, and we think commerce is part of it. And if you fast forward, if you look at the future, our customers' information system are going to be powered by, of course, data, the system of records, which you need a complete view of your customers, which means not only the address, but also what they go and the transaction.
So clearly, having commerce as part of the consumer platform is important. Also we see on top of the data the system of engagement. What are your activity? What are the products you browse on the website? So these are amazing source of signals we don't have today in our platform.
We think it's going to make our CRM much stronger and differentiated. And at the end of the day, what you're going to see emerging across the entire set of data to make all our apps smarter, our sales app smarter, our service app smarter, our community smarter, our e mail marketing smarter and our commerce smarter. And the signals we get from a digital commerce platform are obviously very valuable source of inputs to make sure we deliver that intelligence across the
entire platform. So that's why we think
it's a very strategic acquisition for us. Type of 1 type of 1 to 1 interaction in the cloud in a multi tenant fashion. In fact, I encourage all of you to buy on Demandware powered Web site to experience the power of the one to one experience. I mean, they are one of the rare vendor who can deliver even custom products shopping experience, which I think is just amazing. Yes.
Just on
the last point, look, we'll be following the easy playbook. It's been highly successful. That has been a great acquisition and a great integration for us. Demandware obviously has a unique value prop that together with Salesforce and the customer success are going to be stronger. There's no question about that.
And there's a huge leverage opportunity here in terms of leveraging the power of our Salesforce. Thousands of people selling this product into high level relationships that have been cultivated and nurtures over the last few years. So again, we see tremendous opportunity just to leverage the existing sales organization. Also, quite frankly, to invest in the existing Demandware sales organization.
Great. Next question?
Your next question is from the line of Heather Delaney with Goldman Sachs.
Great. Thank you. I just had question for Keith and I guess following up on what Alex just mentioned. I'm just wondering if you could share with us kind of the types of integrations amongst your various clouds that you might envision going forward as a result of this transaction that would make you even more uniquely offer with this asset as a result? And I'm wondering, obviously, there's a big retail play in this acquisition, but also are there ways you think that it could help service cloud in its positioning just even outside of that vertical arena?
Yes. Hi, Heather. Thanks for the question. So look, with this technology we find today with cloud and mobile, social data science, IoT, etcetera, the walls between sales and service and marketing and commerce have really come down. And so everybody sells, everybody markets, everybody services and everybody conducts commerce.
So that's why we think this is a unique value prop in joining the Salesforce family and extending the capabilities of the customer success platform. Alex, maybe you should speak to the product integration component.
Yes. No product integration, I think we learned a lot with the exact target. By the way, I think what also is very exciting stepping into that transaction is I think we learned a lot in the past integration, which was about a similar size and I think we similar challenge in terms of technology integration. Clearly, we have a very clear vision of that following the closing of this transaction what should be happening in terms of integration. We have a lot of joint customers who have shared already with us a lot of ideas.
And to your point, Heather, it's really not just about the retail. I mean, the retail is obviously an amazing short term opportunity where we have today a very differentiated customer success platform that can power the complete customer life cycle, but we can do much more outside this vertical. And for us, we see the Demandware platform as an amazing complement to the other cloud, self service, marketing, communities. I mean, we launched at the last I just want to touch on a couple of examples, community, like Dreamforce. We launched the Buy button and actually Demandware was with us to share.
When you're browsing a community, when you're on the website, talking to other people, you can recommend the example was I think with AVID, where you could recommend music and you could buy some music. We have communities we're running large communities like Home Depot or Pono, the music player from Lilian. All those communities you can add a by button. You can try while you collaborate with people. So these are very simple points of integration that already exist.
We have a fair amount of integration in our marketing cloud where we can segment the marketing campaigns you're running based on your shopping profile. When you left your cart, you should receive the first item you should receive on the e mail. And Black Friday should be the last item you brought when you were visiting e commerce website. Or when you call a call center, the agent should know what your browsing story, so he can also engage about the product that you seem to be interested about. So I'm just touching on a couple of examples that I think are simple example about more 1 to 1 personal interaction that makes every business better.
Excellent. Next question, please.
Your next question is from the line of Abi Lamba with Mizuho.
Yes, thank you. Keith, you guys have been talking about potential for of e commerce for a while. Did you see something in the market or a demand where that catalyzed your decision to make a move now? Clearly, the TAM is large enough for you to be excited about. Can you discuss your portfolio in light of your comments about potential for digital commerce?
And do you think you have all the pieces to capitalize on the e commerce potential? Thanks.
Thank you for your question. So obviously, we're very, very excited about working together with Demandware. Again, they are the market leader and they're the number one leader in e commerce for the cloud. Zen brings significant capabilities in this space. So that would be point number 1.
Point number 2, we have had a long standing relationship with Demandware. We have spent time with them historically. Alex has talked about the work that was done at Dreamforce last year. So there clearly are natural synergies between the two companies. And as we have continued to pivot more and more towards an industry orientation and gotten more mind share with senior executives, Demandware that name kept on coming up in the conversation.
And these customers want us to become more strategic. They want us to advise them. They want us to be trusted advisor and paint a vision around digital transformation. And this was really a great opportunity to complete that vision around digital transformation and the customer success platform. So Alex, I don't know if there's any additional comment you want to make about the product set or
Well, I think it's clearly building some differentiation against any competitor in
the Syama space for us.
I think that's why we're so excited about this transaction because it's not only a blind spot, filling a blind spot we had in the CRM space. I mean, it's one of the 4 tenants. New York Commerce is one of the 4 pillar of CRM, but it's also about differentiation and making sure we build the best customer success platform in the world. And we're very excited about the competitive differentiation this is bringing to the whole Salesforce I'll just add, Andy. I think
the excitement is there. It's a unique asset in the world. It's the only company in the world that can really fill that spot that Alex, you've talked about and I think we're really excited. And Keith, I like the narrative just our customers are asking. And that's at the end of the day, Avi, as they keep asking for this capability and we're really pleased to be able to provide it now.
And one thing I just want to add, which working with the ManuWare product team, I think we share one big common value, which is customer trust. And I think both of us are really around our customer trust and success. And I think that's the common language that we've been seeking for the past years working together, and that's what's so exciting to be
now closer together. Great. Next question, please.
Your next question comes from the line of Philip Winslow with Credit Suisse.
Hi, thanks guys and congrats on to both sides on the acquisition. I just wanted to touch on integration on the Marketing Cloud. It was really interesting the points that you made and they were kind of obvious points of synergies. But I guess the question to the sales force team, when you think beyond that in sort of the synergies between the marketing cloud and our commerce platform and potentially other areas, call it, that our customers are facing. Obviously, ad tech comes to mind as a potential sort of next area of synergy both between commerce and ad tech and marketing software and adtech, retargeting campaigns, etcetera.
How do you think about where adtech fits in, in this customer experience life cycle?
Well, it's a great question because it's clearly highly connected. And we had our marketing conference connections a couple of months ago where we announced our partnership with Facebook and Google where we can integrate our data into their ad targeting technologies. And just in one click, you can send your segment customer you want to segment and automatically you're targeting the right leveraging Google or Facebook targeting technology. And for us, it's all about the data. And I think what's important is really about building the right level of not only record system of records, but on reaching your data with the right level of data coming from your customer engagements so you can be more intelligent around those data, whether you use your own intelligence, your own segmentation, your own predictive engine, or you connect to third parties like Google or Facebook, which offer actually vendors like Salesforce to basically send samples of people you want to target and retarget similar profiles in their ecosystem.
So clearly, to enter that new world powered by data, powered by your customers' data, you need a lot of signals. And having the digital commerce as part of our platform is clearly, clearly a very strong asset. It's a very strategic asset for the consumer world. Excellent. Next question.
Your last question will come from the line of Raimo Lenschow with Barclays.
Hey, thanks for taking my question and congratulations from me as well. Just as on the last question, just maybe a bigger picture question. We saw yesterday Marketo getting taken out, Oracle is getting a little bit more active. Do you how do you see the industry evolving? It feels almost like we are in a consolidation phase where the stronger vendors are kind of continuing to kind of build out the scale.
Is that kind of a right observation or should I not just going to relate to different actions with each other? Thank you.
Yes. Thank you for your questions. We're not going to speculate on the industry. I mean, you can there's probably a little bit of historian in all of us. And we can all up with our own theories about what happens with markets over time, etcetera.
I mean, at the end of the day, we're all about our customers and we're here to focus on customer success. And we're thrilled to have Demandware working with Salesforce and extending our customer success platform. We are responding to our customers. We continue to innovate as a company. Innovate is a core value of our DNA.
And as long as we are here servicing our customers, that's really what we're focused on. And getting into speculation about where markets are going and all that, we're just focused on our customers.
Okay. And on that note, just like to thank everybody. I want to turn it over to our Co Founder, Parker Harrison. I'm going to make one comment and turn it over to him for closing comments. And that is that we are in closing really excited.
We're hitting on all cylinders as a company. You can see that based on our performance in the prior quarters. We're super excited to have the cloud commerce and yet another $1,000,000,000 cloud opportunity. And on that note, I'd like to turn it over to the Co Founder of Salesforce, Parker Harris.
Thank you, Mark. I just want to close by emphasizing how excited we are here at Salesforce to welcome the entire Demandware team to our family here. I think culturally when we got to know the Demandware team, we found a lot of synergies and just so excited to be working with that team. And with Demandware having this new Commerce Cloud is extending the reach of our customer success platform not only online, but as Alex said earlier, even in the retail locations. And I'm just so excited to see where this is going to take us in helping our customers connect with their customers in a whole new way.
Wonderful. Thank you so much Parker for the closing comments and that will end our conference. Thank you so much.
Thank you again for participating in today's Salesforce Demandware Acquisition Conference Call. You may now disconnect.