CRM - Recent Transcripts (8.9.20)

salesforce.com, inc.
NYSE:CRM
Company Conference
Presentation
Thursday, July 23, 2020 7:30 PM GMT
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Contents
Table of Contents
Call Participants .................................................................................. 3
Presentation .................................................................................. 4
Question and Answer .................................................................................. 7
SALESFORCE.COM, INC. COMPANY CONFERENCE PRESENTATION | JUL 23, 2020
Call Participants
EXECUTIVES
Craig Cuffie
ANALYSTS
Adrienne Trimble
Carlos Dones
ATTENDEES
Dicran Arnold
Jay O. Kerley
Applied Materials, Inc.
Larry Smith
Tokyo Electron America, Inc.
Mary Champagne
Reginald Layton
Shaheen Dayal
Unknown Attendee
Copyright © 2020 S&P Global Market Intelligence, a division of S&P Global Inc. All Rights reserved.
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Presentation
Carlos Dones
Okay. Welcome, everyone, to the Virtual SEMICON West 2020 Supplier Diversity Panel. First of all,
before we jump in, this is -- SEMICON West is celebrating 50 years. So congratulations to the SEMICON
West team for 50 years of excellence, and all that they do for our technology industry in general,
congratulations.
My name is Carlos Dones. I'm with supply chain management with Applied Materials in Austin, Texas.
And I'm a member of the MOD group that actually helped pull together this panel. The title of the session
today is, We Hear You and Stand Together. Given recent events in the U.S. and around the globe, we
thought that it was appropriate to pull together a panel of leaders across our industry as well as a few
adjacent industries to talk about Supplier Diversity and to talk about in equities and place it in the context
of Supplier Diversity. How Supplier Diversity can help drive innovation. It can build a better world as well
as it can close in equity gaps. And so this promises to be a very outstanding panel discussion.
I'm hoping everyone learns something from this. So please lean in, learn as much as possible. If you have
questions, put them in the chat, and then we'll get to as many questions as possible. Whatever we can't
get to, we're going to have a follow-up session at 1:00 p.m. We'll drop the link in so that you all can join
us at 1:00 p.m. Pacific time.
With that, let's go ahead and get ready to jump into the panel.
I'd like to introduce our moderator. Ms. Adrienne Trimble, who is the President and CEO of the National
Minority Supplier Development Council out of New York. We're so grateful to have her here. And so with
that, I'm going to pass it over to you, Ms. Trimble.
Adrienne Trimble
Great. Thank you so much, Carlos, and I'm really, really honored to be moderating this panel discussion
today. As you've indicated, we have a lineup of some of the most provoking thought leaders in the field of
Supplier Diversity, and I think it's going to be an incredible conversation as we begin to dive into why this
topic is so important, especially with what's happening right now around our country.
So let's go head and get to the slide presentation. We'll go ahead and start the conversation.
Carlos Dones
Did it come up for you? I have it.
Adrienne Trimble
I don't see it. Does anyone else see it?
Carlos Dones
It's showing on my end. Let me -- we may need a little help from the technical support team, if it's not
showing up. Let's see. Let me try this. tell me if you can see it now.
Adrienne Trimble
Which screen do you have?
Carlos Dones
I am on Slide 1 right now.
Unknown Attendee
Yes, I can confirm, I can see it. It's just you can't.
Adrienne Trimble
I can't. So you are -- what's the title of the slide right now? Is it the one it says We hear you and Stand
Together?
Carlos Dones
Yes.
Adrienne Trimble
That's the one. Okay. Great. All right. Well, again, thank you so much, and I'll try to make sure I follow
along. But given the current activities that are happening across the country, impacting the globe overall,
the semi industry has been really -- trying to be a leader in this space and bringing this group together to
have this conversation is going to be really impactful. And we hope that you take something away from
this where you'll learn and grow and be able to apply it within your own organizations.
Can you go to the next slide, please? So I'm excited that I get to introduce this outstanding panel today.
Some of them are participating via phone. So you may not hear them right away, but we want to make
sure that you know who we have as the thought leaders that will be shared in this discussion today.
We have Shaheen Dayal, who is the Vice President of Supply Chain, Director of Fab Technology and
Sourcing for Intel. We have Jay Kerley, who is the CIO and Vice President of Enterprise Enablement Group
for Applied Materials; Larry Smith, who is the President of Tokyo Electron and America; Mary Champagne,
who's senior manager at TEL. They will be joining us via phone. So you may hear them in just a little
bit. We also have Reginald Layton, who's the Vice President of Corporate Sustainability and Supplier
diversity at Johnson Controls. We have Dee Arnold, who is the Vice President of Business Development
for Worldwide Technology; and Craig Cuffie, who is the Senior Vice President of -- and Chief Procurement
Officer for salesforce.
All of these individuals have very lengthy vials, which you can find on the SEMICON web page, if you want
to get more information about their background and their accomplishments. But we're going to go ahead
and get started with our discussion today because we want to hear from them, some of the teachings and
learnings and best practices that they can share with all of you.
So let's just shot right in.
I'm going to start with you first, Shaheen -- oh, I'm sorry, I forgot. I got to go back to put in the context.
Go to the next slide. Thank you for that.
Let's kind of set the stage and talk about what supplier diversity is so that everybody has a common
understanding. When we say Supplier Diversity, it's referencing businesses that are owned, operated
and controlled by diverse individual, individuals or companies or entities. And that can include women,
minorities, ethnic minorities, LGBTQ, veterans or as we look at those with diverse ability, depending on
where you were doing business rather regionally or globally.
So take that into consideration as you were thinking about how you wanted to define are diversity within
your organization. And there are NGL partners, advocacy groups that support one of these demographic
groups that can help you as you look to and have more inclusion within your supply chain.
Next slide. What we want to make sure that we talk about today and help you understand is this is not
just about the social impact or social costs. This is about the business sense that Supplier Diversity makes.
And we want to give an example of looking at Intel, for example. Intel set a goal of spending $1 billion
in 2019, hoping to double that by the year 2030. And they understand that there are multiple benefits
that's associated with that. We know that it drives competition within your supply chain, and it also drives
innovation within the supply chain. It enables revenue and continuity of the supply chain. And we didn't
learn anything about that continuity of the supply chain through COVID-19, we learned that it's important
to have a very diverse supply chain so that you have a backup plans when you do have those disruptions
that impact goods and services. We know that there are benefits to your corporate social responsibility
programs as well as your ESG and investing and looking at where you do business around the world,
understanding the impact of your supply chain and how it represents your company's brand and your
company is valued depending on where you're doing your business and then making sure that it aligns
with your corporate value.
So those are things that we can look to, again, the model the Intel set and others in the semi industry
as you are trying to build your supplier diversity processes. The one thing you don't want to miss about
this, and again, this is why it goes beyond just being a social cause but a business driver as they look
at the customers that many of you have that are part of the Billion Dollar Roundtable and require some
type of Supplier Diversity processes as part of the business partnership with their organizations. You have
customers that are in the Billion Dollar Roundtable, such as Apple, Dell, Boeing, Toyota. You have the
automotive industry represented by General Motors, Ford, Honda, Microsoft, IBM, AT&T.
These companies are able to sustain $1 billion of spending with diverse suppliers on an annual basis,
which is a requirement for the Billion Dollar Roundtable. But it's important to understand that, that's just
their key metrics, but most important is the fact that it's part of their business strategy, which is why it's
so important that it's represented throughout the supply chain, which is where you come in.
So let's talk about what that's really going to look like, what that means about how you as an industry can
help drive more inclusion in the supply chain.
Part of that exercise and that process to allow you to do so is the task force that's been developed to help
drive this industry forward. Making sure that you're establishing common standards and requirements as
you look at what is inclusion and how do you find suppliers and develop suppliers in this space and making
sure that this group is open to all so that you can understand the competency that's required for Supplier
Diversity leaders and procurement leaders that are really trying to make a difference in this space, making
you understand again how it drives cost competitiveness in your supply chain? And how do you bring
those diverse suppliers in? Those organizations that are already a part of this are represented here on the
slide as you can see. You can feel free to reach out to any of them if you have more information on how
you become involved with the MOD task for supporting diversity within this industry.
Okay. So that's all the housekeeping. And so I wanted to make sure I got through that. Now let's get to
the meat of the discussion because this is the highlight that I really wanted to make sure that we dive into
today. And we're going to start with the panel discussion. I'm going to ask some questions, ask each of
the participants when you answer, try to limit your poses to no more than 2 minutes because I know that
we all get passioned around this topic, but I want to make sure that we have the ability to hear all of the
thought leaders on the call today. So again...
Carlos Dones
And Ms. Trimble, I think Mary's at least logged in audio wise. Mary, can you hear us? Are you there? Okay.
We'll keep working it.
Unknown Attendee
Go ahead and speak. One moment team. One moment. Go ahead, Mary.
Mary Champagne
Yes. I'm here. Can you hear me okay?
Adrienne Trimble
Yes. We can hear you, Mary, excellent.
Mary Champagne
Okay. And I will conference Larry into the same phone number.
Carlos Dones
Okay. That's fine, Thank you.
Question and Answer

Adrienne Trimble
Thank you so much. I'm glad that you're able to join us. We're going to start first with Shaheen from
Intel. And I wanted to kind of to you to think about this question, because it's really impacting all of us, I
would say, on this call. But how is Intel responding to the recent global events and the Black Lives Matter
movement within your organization? What are some of the things that you guys are doing to make this
visible discussion amongst your leadership team?
Shaheen Dayal
Yes. So thank you, Adrienne. Intel is taking this very seriously, as we should. Our CEO has taken a very
strong -- our CEO, Bob Swan, who's taken a very strong position. He has come out and told our workforce,
standing on the sideline is not an option. The Black Lives Matter, period. And given Intel's inclusion being
a core value for Intel, it is imperative on our leadership at Intel. And the way we see it, for us, it's our
responsibility and more of obligation. So the kind of things that Intel is doing is while we are using this
opportunity to make it very clear to our employees, through our workforce, to the communities we live in
that we will not tolerate these types of social injustice and acts of racism. There is no place for that. And
Intel, there's no place for that at our communities.
We are showing to our black employees, our colleagues, our friends that we stand with them. We're
reaching out to them with. We're listening, learning, trying to understand, we will never understand. I for
one, I know, will never understand what it means to be in the shoes of some of my black colleagues. But
taking the time to listen, to understand and then act. And Intel as a company, some of the things we've
done is we have a $1 million donation that we are doing for different NGOs and community organizations
that are focused on addressing social injustice and racism issues.
We've also spoke about Supply Diversity, and that's what we hear for today. Even in our Supplier Diversity
goals, we have added specific milestones along the way to address from a business perspective. So we've
put in a goal that by 2023, $250 million of our spend would be for black owned suppliers and $500 million
for minority suppliers.
So we are taking actions and making sure both from an employee setting this tone with our company and
humanities as well as from a business perspective, acting to address these issues.
Adrienne Trimble
Excellent. I think something you said is so critical, and that's having those specific targets and goals
that will drive your activity. And I think that's something that really helps with the transparency and
accountability of being able to ensure that you're really having intentionality around inclusion in your
supply chain. So thank you for those deliberate efforts and Intel being a leader in this space.
I'm going to turn to you next, Jay. One of the things I think is important as we level set this discussion
for today. Talk a little bit about what you hope the message or the action is that the audience will take
away from today's discussion that can help them as they go back to their work for environment and how
to improve inclusion within their supply chain.
Jay O. Kerley
Thank you. Thank you very much. Yes. I think the first thing for me is the title of this event is We Stand
together and We Hear You, right? So I think the big takeaway that I'd like people to think about is that
in the semiconductor industry, we are fierce collaborators, and we are fierce competitors, right? And we
understand that.
But this transcends -- these issues transcend our industry, right? And as a result of that, we need the
strength of the entire community to overcome these challenges. And Supplier Diversity is just one of many
ways that we can get there.
Now if I take that context and apply it to semi as a whole, it's important that everyone understands the
semiconductor industry is large and it is growing larger. There are going to be changes in the landscape of
of companies, the impact that they will have, the profits that they can generate. And technology is going
to disrupt many, many industries. So the pervasiveness of semiconductor applications, the AI Big Data
era, coupled with the current pandemic, we really see that the demands of technology in the whole market
is going to get structurally larger. So we are open for business and I want everyone to understand that.
And it's important that we rely on our trade associations and our partnerships to help us develop these
pipelines. And that's why I feel that the semi MOD working group is so important.
We are open for business. Applied Materials is committed to selecting diverse suppliers. And these
products and supplies -- we have high standards, and our customers have high standards. And that's why
we want to use the platform, the energy of semi MOD to help us develop that platform.
Adrienne Trimble
Excellent. Thank you. And I think you're absolutely right. That collaboration is so critically important.
Next, I'm going to turn it to Larry. Are you there, Larry? Can you hear us okay?
Larry Smith
Can you hear me okay?
Adrienne Trimble
Yes, we can. Thank you so much. I want to shift just a little bit because we've talked about how this
Supplier Diversity impact is with the Black Lives Matter. But we also know, as Jay just mentioned, there's
also the whole pandemic that's going on. Can you talk about how the commitment of Tokyo Electron has
evolved or shifted at all in the wake of COVID-19 and the prices that we're facing as a country.
Larry Smith
Yes, I sure can. Thank you for the opportunity, and I apologize for some of our connection issues today,
but I'm glad we're able to have this conversation. If I think back to 2011, when Tsunami hits Japan and
the earthquake affected our supply chain, our ability to do business. So it was really focused around just
the business portion for the entire world. And so over the last 90 days, we've been filing ECP plan that was
developed post-Tsunami and included a pandemic. And so we prepared for it. You're never quite prepared
to the level of this. But we had a good framework. We've shared with other companies, with our customers
and with our communities.
And one of the things after 90 days [indiscernible] of looking at all of these issues is I asked the question
about a month ago is, based on what we've done for the last 90 days, what are we going to do differently
as we come into the new world, there's a new normal? And so we've decided to have that same intensity,
something called an escalation or task force, but we're calling them a daily huddles of which diversity and
inclusion is the primary focus of 1 of those 4 huddles.
Now across those 4 areas, we are looking at recruiting and retaining and talent and benchmarking and
metrics. And also the component on learning and development, how do we educate and expand our team
in to learn and listen around the issues that we're facing on the Supplier Diversity and others. And then
1 key pillars we're talking about today is expanding that diversity of supply. And it's a perfect example
in response to COVID-19 is we had to get out and get PPE and we had to look for masks and protected
because we are mission critical, as Jay mentioned, and we have to continue to engage with our customers
and get the necessary equipment to continue to do that.
So because we started this initiative under the partnership with Intel a couple of years ago, we didn't just
go -- actually, we had to go to anywhere we could find it. But at many points, we explored that diverse
supply chain for a new requirement in our business. And I think as we come into this season, we'll apply
that huddle, apply that intensity, bring that fence of urgency to a key strategic initiative, and that's one of
our key lessons.
Adrienne Trimble
Excellent. Thank you so much for that. I think you're spot on, as we talk about just the heightened
awareness around this topic and aligning it more to the business strategy for organizations and
really collaborating with each other. So that's so critically important for this work to continue with the
momentum that we now have for advancing it.
Regi, I'm going to turn to you next. You have a key role as the vice chair for the Billion Dollar Roundtable,
and you've been in this space for quite a while and definitely seen as one of the thought leaders.
What trends are you seeing around this topic as you talk to your peers and other members at the Billion
Dollar Roundtable? We know that this is -- we have -- I'd say we want to make sure this is not just a
moment, but it truly is a movement. What types of trends are you seeing that will lead us to believe that
this is actually going to keep the momentum that's now been started?
Reginald Layton
So thanks, Adrienne. And first of all, I want to thank the -- this industry group for inviting me.
To answer your question, what I've seen is all of the above that our panelists are talking about. From
internal huddles on diversity and inclusion, given what's going on with the social unrest around the
country, but also a renewed emphasis on suppliers who can provide equipment to help prepare companies
for dealing with the COVID pandemic. BDR has started a series of webinar showcasing their BDR members
who are engaging the supply chain on both these issues. So I think this group is showing thought
leadership and sharing it with the rest of the industry. And the BDR has been instrumental in showing
other companies and other industries that this is, in fact, very doable. For example, at Johnson Controls
since March, we've surveyed our top 1,500 prime suppliers on what they're doing to support supplier
diversity in our supply chain. We've also did a video sequence -- a video series for our internal employees
so that black employees and community engagement leaders would understand that Johnson Controls is
behind building buildings that are safe, comfortable and sustainable.
So that means using diverse suppliers to provide safety equipment, but also using new technology so that
our buildings, particularly in heating, ventilation and air conditioning systems that we install user diverse
products so that we, in fact, are living and walking our talk in sustainability. That's what we've seen at the
Billion Dollar Roundtable and at Johnson Controls.
Adrienne Trimble
Thank you you so much. And hopefully, for those who are looking for more information, Reg, can you
share the BDR's website if they want to see some of the best practices in action?
Reginald Layton
Yes. So they can log on to www.billiondollarroundtable.org. A survey will pop up just so that the BDR
understands which industry they're in and what level in the organization the respondent is. And then it
will begin to share best practices and ask the survey respondents what best practices they have. And then
they'll also be able to see who are the 30 companies that are part of the Billion Dollar Roundtable.
Adrienne Trimble
Excellent. Thank you so much for sharing that. Thank you.
Dee, I'm going to turn to you next, representing the minority business community on this panel. We know
that there are some diverse suppliers in the industry that are afraid to actually state that they are diverse.
And sometimes they don't get certified or registered with any of the NGO organizations that are there to
advocate on their behalf. What type of feedback or coaching or information with use, which you give those
suppliers to help them leverage their diverse status during this time right now?
Dicran Arnold
Thank you, Adrienne. Let me start off by saying, one, WWT is in a blessed position, that we've been
in business for 30 years, and we're celebrating our 30-year anniversary this year. And when I talk to
NBEs and they say to me, well, I shouldn't get certified, I say I got 13 billion reasons why you should
be certified. And that's the amount of revenue that WWT did last year. And that $13 billion isn't all from
just being a diverse supplier. Of course, you got to be great at what you do. But a lot of times, the
conversation with a customer may begin with around supply diversity. And we've been blessed at when we
talk about the Billion Dollar Roundtable, WWT does business probably with about 90% of them.
So when companies say that they're nervous about being a minority-owned company and I said, well,
been the largest minority-owned company, a $13 billion company, I think, is really important because
one, it aligns with some of the things that our customers are looking to do. And more importantly, when
you start talking about being a minority-owned company, you have an obligation to give back to the
community. And when you hear companies like Intel and Johnson Controls speak earlier about what
they're doing, it aligns to what WWT is doing as well.
So what better way than to tell a potential customer that you align with all of their business needs from
being a minority-owned company but to make a difference in the minority community as well. So 13 billion
reasons why you should be minority certified.
Adrienne Trimble
Those are some great reasons, right there, 13 billion of them. So thanks for sharing that. And I think
you're absolutely right when you -- one of the things that we try to tell minority business is that it's not
about being a minority business. It's about being a great business that just happens to be of minority
status. So make sure they lead with their business solution and business strategy first.
And then you're right, the benefit of that is being able to connect back to those diverse customers that
they represent in the communities that they're serving. So thank you for being a leader in the space. And
creating those opportunities for other minority businesses to follow.
Craig, I'm going to turn to you next. Salesforce, as we know -- well, first of all, the tech industry overall
has really trying to build their Supplier Diversity supply chain and in Spain. You talked a little bit about
salesforce and with a salesforce commitment to supplier diversity overall? And how do you get the
leadership team to embrace it the way that you have so far?
Craig Cuffie
Thank you. Good morning or actually, right now, good afternoon. A little good afternoon here on the West
Coast. to my fellow panelists and Adrienne. Thanks for asking me to join.
So when we think about Supply Diversity and salesforce, so tech has struggled overall when Supplier
Diversity. Tech has struggled with diversity. So I think we should just call it sort of as we see and we put
it right out there. We go from the number of suppliers that we employ and get on our roles in pay to the
number of employees from lower level to evacuate. It's been a problem, and it's well documented and well
known.
Salesforce is a bit of a different company. And we're 21, almost 22 years old this year. And our founder
is still here, Marc Benioff and has been very focused on the culture of the company, and we have a very
inclusive culture, and that manifests itself in a number of ways. So we think about diverse suppliers, they
come and we employ them in a number of different areas, all the way from celebrities to any of you've
been to dream for us. All the way down to folks that help us run the business. But we know that we can do
more.
With what's happened in the country very recently with the world will pandemic be receptor infection the
current amount of civil and the risk that we have and the challenges we have around national leadership
around some of these issues more imperative that we can refocus and get refocused on what it means to
truly engage the power of diversity in the company. And we do in a couple of different ways at salesforce.
Very recently, we called together a task force, like Larry mentioned the task force. We have a task for us,
direct report to the CEO. And it follows the principles that Mellody Hobson had talked about. She talked
about the 3 Ps, people, purchasing, philanthropy, and we added policy. So we call them the 4 Ps. People,
like, don't be afraid of the numbers, right? The numbers are your numbers, your goal is to improve them.
So milestones, measurements and money, right incentives, the right milestones and make sure you're
measuring and your fortunes will improve relative to people. That's no different than what suppliers. When
I have this talk, I say, guys, I'm just by recruiting team. I want to diversify suppliers, right? I don't make
-- want to make sure that we have a diverse slate and that we are selecting some from the diverse slate.
Purchasing, the CEO of Pivot and say, hey, Craig, what are we doing on purchasing with diverse suppliers.
There's a lot of things that we can do with diverse suppliers. And we can do more dedicated amounts of
spend, better payment terms, we think about semi. Semi is not -- there are very small businesses that are
in semi, right? They're big businesses in semi.
Small businesses have a problem getting paid, make sure that we understand those challenges because,
as we all know, cash is key. What are we doing with our charitable giving, where is that money going?
Is it going to education? Is it going into communities that need it? And then we think about things
like policy are we -- or as we have done as a company, stood up for a number of issues that impact
underrepresented minorities and groups so those are the things that we do around diversity and inclusion
in our company.
Specifically, in my area, we have committed to increase our spend with diverse suppliers, 25% year-on-
year. We've committed -- I have committed with the company, $100 million directly to black suppliers,
right, over the next 3 years. And we've committed $100 million in our ventures fund, so a separate
ventures fund for investment in black on business. So we are putting our money where our mouth is which
we've always done, we're talking about it more than we used to, and we've doubled down in a number of
areas.
Adrienne Trimble
Excellent. And again, thank you for being such a leader in the space. You definitely have been representing
the industry overall in terms of your ability to get momentum and have inclusion going throughout the
supply chain.
I'm going to turn the next question to Mary. And it's a little bit tied to the question that's come from the
audience. I'm going to put a little bit of a spin on it. So welcome, Mary to this. Can you hear us okay,
Mary?
Mary Champagne
Yes. Can you hear me?
Adrienne Trimble
Yes, we can. Thank you. Thank you. Representing Tokyo Electron, being a Japan based organization, can
you talk about how you've been able to get the commitment to supplier diversity being from a company
that probably represents more of a homogeneous demographic group and what type of strategies you've
been able to use to get the type of buying necessary to drive supplier diversity inclusion?
Mary Champagne
Sure. And thank you for having me. I would say, working with diverse suppliers give us a competitive
edge. And in Japan, we have recognized women-owned businesses. And so now we are working as
a global company to explain all levels of our about Supplier Diversity, what Supplier Diversity is.
And working with women-owned businesses directly in Japan, so suppliers that we have in Japan,
understanding -- explaining to our suppliers what diversity is and that they qualify and then helping them
through that process. Also helping all levels of employees to understand what diversity is and how we can
use diversity, both for -- within the semiconductor industry.
I think at times, people think that diversity or suppliers are small businesses and only used for what
we would consider something not going on our tools, so indirect. And that's not a true statement. So
trying to expand that. I think it's all about communication and the commitment of the executive team to
understand and how -- about Supplier Diversity and how to drive that competition?
Adrienne Trimble
Excellent. Thank you for that. And again, we know that a lot of that has to do with how you educate
and drive awareness within your organization. And as I mentioned, coming in at the very beginning,
understanding what parts of the world you're doing business and what does diversity mean to that part of
the world or where you're trying to build your supply chain. So thank you for giving those examples.
I'm going to circle back to Shaheen now because as we talk about making progress with Supplier
Diversity, we know it has to be that the best practices tell us driven from the top of the organization,
right? And given the progress that Intel has made, obviously, that's something that your leadership has
embraced. Can you talk how -- talk about how Supplier Diversity fits with the corporate values and the
direction in the business strategy for Intel?
Shaheen Dayal
Sure. Thank you, Adrienne. So corporate core value for us is inclusion. And if you look at Intel's vision,
right, it's -- our purpose really is to have a world-changing technology and use that technology to really
enrich the lives of each and every person. So it's really core the whole inclusion, making sure that we have
-- that the supply diversity concept is embedded in our core values and our purpose. So it's very deeply
embedded in there.
And if I look at what Intel has done, and you're absolutely right about having the vision and the direction
from the top. So in 2015 is when Intel made a commitment at that time -- our CEO made a commitment
to have $1 billion spend for diverse suppliers. And at that time, we were just about $250 million or so in
spend. We have that goal to hit it to 2020. We actually achieved our goal a year in advance because of the
initiatives we've been driving with our supply base, we make it part of our supply chain of how we drive
our suppliers and how we expect our suppliers in their supply chains also to drive supplier diversity. And
we have doubled down. We've got goals now that are -- by 2030 that we would have $2 billion in spend
and I mentioned some of the goals, specifically for the minority and the black owned businesses.
We also have our -- we are one of the largest venture funds of its kind intel cap that focuses on diverse
suppliers there. And that is diverse businesses, and that is really $400 million that we've had in spend in
there. So the thing I want to point out as we look at these initiatives, right, you mentioned about having
the diverse businesses need to focus on their business offerings. And what I want to say about supplier
diversity and how it is really embedded in is this whole program that we have is not because we want to
really help necessarily, we're looking at it from a business perspective.
It's a business imperative for us to get the best options, diverse options, different capabilities and the way
we are going to have access to those capabilities and be able to innovate is that we have an equal playing
field. And today, that is the problem. We don't have a equal playing field. So we don't have ways to reach
out to talented amazing capability that exists, and that's the whole initiative of including making sure we
are getting those initiatives so that then we can drive our business forward.
Adrienne Trimble
Excellent. Thank you so much. Thank you for that. I have a question from the audience. I'm going to
post to all of you and whoever feels comfortable address this, please feel free to jump in. But one of the
questions is, if the best supplier is selected, what steps can that diverse supplier take to encourage their
customer to qualify the product when they are very confident and established with a current incumbent
product. So it sounds as if though -- of a competition piece where you have a diverse supplier that's
coming forth to participate in our RFP process. But there is a strong incumbent there, how do you ensure
that they get a level of advocacy that can help them get their product to the table for consideration.
You want to take that? Okay Reg.

Reginald Layton
Yes. So I -- yes, this sounds like you're reading my daily diary, right, my journal. This happens at Johnson
Controls all the time. So first of all, just like Intel said, you have to have the infrastructure to have the
buying teams even open to considering diverse suppliers. So that being said, those are table stakes, right?
The diverse supplier is selected for more consideration. Then our Supplier Diversity team begins to work
with them on helping them identify what are the gaps in our existing supply chain that they can fill.
In other words, it's easier to provide a solution that the incumbents are not providing. So we make sure
they prioritize those solutions that the incumbents are not providing. The next thing. I should have put
that first, they have to be competitive. So in other words, they have to be able to provide whatever the
product or services at a better price than the incumbent. A lot of people assume, oh, they can't do that
because that's diverse because they're diverse. Absolutely not true. Absolutely not true.
So we make sure that the diversifier knows that we know the pricing levels of the incumbents, and we
make sure that they know they can be competitive. And if they need help with that, we tell them, okay,
you should look in this type of area, you should look in delivery, you should look in logistics. Oh, that's the
other thing.
When we are looking at a supplier candidate, we're looking at the total value that they're bringing, not just
the price of the widget or the price of the service. So we encourage them to think beyond just the pricing,
but what delivery are you going to do? How are you going to manage the supply chain below you? How
are you going to have just-in-time resources for us? Because if they understand the full picture of what
they're competing against, we found that they compete just as well as anybody else.
Adrienne Trimble
Absolutely. Thank you for that. Anybody else want to add to that?
Dicran Arnold
I'll add from a MBE perspective. At WWT, we realized that we're just bidding when the RFP comes out
that we already lost a gain because there is that incumbent who has a relationship. So going back to the
question that I previously answered about being a diverse candidate, our company and why you should be
certified is using your network, using the NMSDC network to build relationships, and to build relationships
so that when you get to that point, that you can be that you're not an unknown.
Supplier Diversity managers can help companies in a lot of different ways in building that relationship.
And so what I see a lot of times is that people wait on RFP to come out and then try to respond in your
unknown commodity. Versus building relationships before the RFP comes out. And then when it comes out,
people have a better idea of what your product is, and then that will give you a better chance of winning.
So leverage the network that you have in front of you. There's 23 councils at NMSDC that you can be a
part of. You can meet diversity managers, you can build a relationship there. You can get introductions to
the right people. So that when the RFP comes out, you're not coming from a blind spot, but you're coming
from a spot, hey, I know this guy or I know this company that I can introduce you to that has a great
product that they've been telling me about versus nobody knowing about your products or services.
So your network is the most important thing that you can have, leverage the NMSDC network, leverage
your diversity status and build upon that, so that you're not coming from the dark because if they have an
existing relationship, and they don't know you, it's going to be real hard to overturn that relationship.
Adrienne Trimble
That is a great point. I remember telling folks when I was leading a Supplier Diversity at Toyota, I had 3
pile. I had my A pile, my B pile and my see-you-later pile. A pile were the people who showed up, they
were engaged. I knew who they were, and I knew how to facilitate those introductions. The B pile were
the folks who we had some initial conversations. The C ones were the ones we never saw, and all of a
sudden, wonder why they would put in on the RFP, and it couldn't get a response back.
Well, we don't know who you are. We have to go to the whole betting process. So that is excellent advice
on how to make sure that your brand is known throughout the NMSDC network or wherever you're trying
to do business, I think that's really key.
Jay, this question is for you because one of the things we've noticed is that supplier diversity is now really
aligned with sustainability efforts, ESG efforts. It's a much broader discussion. Can you talk about how you
see supplier diversity fitting with investors' commitment and developing work around ESG?
Jay O. Kerley
Yes, absolutely, absolutely. Rightfully so, Supplier Diversity can be heavily metrics, goal oriented and
governance based activity. And I think that's how sometimes people may want to interpret it through the
ESG lens, right?
But I believe that we could reach higher. I believe that our diversity, without inclusion is not enough right?
So it's not only about diverse and diverse spending. It's about inclusive partners, right, that can help you
differentiate, that bring value and are absolutely sustainable, right?
So we call that DVS in our world, differentiated, valuable and sustainable. That to me is a partner that is
part of my journey and is inclusive. The data suggests that more inclusive businesses like Intel, I know
for sure, based on their outreach and the work that they've done, I really want to thank Shaheen as well.
She has been -- and Intel has been a great partner for us and a guiding light and a mentor on our journey.
And I don't think we would be where we are without their support and help. So Shaheen, thank you so
much.
The data suggests that these inclusive business cultures are 2x more likely to exceed financial targets
and 6x more likely to innovate and be more agile. And let alone, I think that you're going to be more
attractive to future generations. So really linking Supplier Diversity to our value system has been critical to
mobilizing our strategies. You heard it from Shaheen. You're going to hear it from me. Supplier Diversity is
directly linked to our ESG strategies. And it's directly linked to our culture of inclusion.
I believe personally that environmental sustainability and social sustainability business practices are
already differentiating how companies are valued. Consuming rises, without regard to their environmental
impact, the social impact, and the human impact is not aligned with our values, right? Our mission is to
make possible a better future. And through these platforms and through our work on ESG, that's how
we're going to accomplish it.
Adrienne Trimble
Excellent. Thank you for that. And again, it's kind of a much broader conversation. So I think the folks
need to understand that and understand how it drives a broader strategy for companies. So thanks for
that perspective.
We only have a few minutes left. So I'm going to ask this final question for -- I'm going to start with Craig
first and then ask either Larry or Mary to jump in with some final words.
But I know that for the semiconductor industry, some of the programs are really new. A lot of companies
are just getting started. Craig, what lessons or advice, which you have for those that are just getting their
program started to get the traction that's going to be necessary for them to make progress with inclusion?
Craig Cuffie
I think there's a lot of alignment that's required throughout not only just procurement team, but also to
the company, right? This is something that even though it may manifest itself as a procurement program,
it's a company program. And so driving that understanding in our senior leadership support, the CFO,
the COO, the CEO is very important. And then once you get that and we understand the business case,
because it's a business case, it's not a nice-to-have.
It is -- this -- we get better outcomes. We make more money. The last time I looked, we're about making
money. That's the part where we created companies, most of us. I don't know why the wait for doing that.
It becomes a platform for change. So we talk about business being one of the biggest platform for social
change. This is one of the ways in which we can do that as stakeholder in corporate America.
Adrienne Trimble
Excellent. Thank you. Anything that you add, Larry or Mary from a Tokyo Electrons perspective?
Mary Champagne
Yes, yes. I would add to that, you need leadership behind you, you need to start small. You can't tackle it
all at one time. You maybe work with your current supply base. I would say that we were very surprised
when we ran our supply base through some metrics and found out that we had suppliers that were diverse
but we were not counting them as diverse.
I would also say, ask the questions upfront out when you're starting to speak with new suppliers, or even
your current suppliers, are you diverse? And maybe they are diverse but they don't haven't read just
through that whole entire process. I think starting small, having some software to assist you with that
process of collecting that data and those certificates. And just having a team and leadership behind you to
just hold you up to help you through that process and understand how to track it, what you're looking for
and just getting -- having agility in that space and understanding that it's a slow process.
Adrienne Trimble
Great. Thank you for that. And Dee, from an MBEs perspective, what are some advice you would give
to those that are looking to, again, get the business visibility with some of the industry -- some of the
companies in the semi industry that are looking for diversifiers, what should they do? You gave some
examples around how to engage with NMSDC, but are there other things they should do from a business
perspective to help better position them.
Dicran Arnold
Well, the first thing I'm going say is call it WWT. At WWT, we're real blessed that we're not only an MBE,
but we have our own supply diversity program. And one of the things that we've done with several
companies is best practices, right? And so iron sharpens iron, as Dave like to say.
As we do business with the Billion Dollar Roundtable companies, they've helped us shape our Supplier
Diverse program that we turn around and doing that favorite to other corporations that are trying to start
their Supplier Diversity program, and we have built out a whole program for those who are interested and
trying to establish it. But the one thing you learn about in the Supplier Diversity world is that everybody
is a friend. Even if you're a competitor, you're a friend and everybody wants you to be so successful. So
you can call up almost any diversity manager or anybody who's in the diversity world and they're going to
be willing to be there to give you some advice to help you through those times. And it's going to be some
tough times as you're trying to get out all suppliers and bring in new suppliers to get people on board and
stuff.
And so the NMSDC network is good all the way around from trying to establish a diversity program, trying
to leverage contact to get business. And trying to establish a diversity program. So -- but I'm serious
when I say call it WWT, not just to do business, but we can help you with your Supplier Diversity program
as well. And give you that MBE perspective and walk you through all the things that we've learned in the
process as well.
Adrienne Trimble
Thank you, Dee. And for those on the line, there are 13 billion reasons why you might want to reach out to
them. So anyway.
Thank you to all of our panelists today. You guys have been fantastic. You've shared some great
information.
Carlos, if you go to the next slide, the final slide. For those that might be interested in how you can get
involved and engaged, we'll say first is, be bold, take the lead, don't wait for someone else to ask you to
join. You can get involved to reach out to any of the members of the manufacturing ownership diversity
group. You can join them in this work. And make sure that you try to influence the work that you're doing
where you are locally and get your own program started.
You've heard some great resources today on how you can get your program started, talk with your
senior leadership team and make sure it's a policy that's driven from the top of the organization. And of
course, being the President of NMSDC, I have to say this, make sure you align yourselves with an NGO
organization, advocacy group that can help you get your program off the ground and running so that
you can become more involved and get information from these types of thought leaders that we have
represented on this video conference today. So you can make contact with any of the member of the MOD
task force to guidance information, and you can also see the website that's listed here.
So thank you all so much for tuning in today. Thank you again for the panelists for sharing your thoughts,
your information. It's been a great conversation. I'm hoping that the audience was able to take away
some nuggets that will help them advance inclusion within their supply chain.
So -- and thank you for having me as your moderator. I really enjoy hearing from my group here and all
the partners that have been able to provide information that's going to help us as we look at economic
inclusion across the semi industry. So thank you a lot for being here today.
Shaheen Dayal
Thank you, Adrienne.
Reginald Layton
Thank you so much.
Craig Cuffie
Thank you for the opportunity.
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salesforce.com, inc. NYSE:CRM
Company Conference
Presentation
Friday, July 10, 2020 4:00 PM GMT
Contents
Table of Contents
Presentation .................................................................................. 4
Call Participants
EXECUTIVES
Parker Harris
Co-Founder, CTO & Director
ANALYSTS
Brent Alan Bracelin

Piper Sandler & Co., Research
Division
Presentation
Brent Alan Bracelin
Piper Sandler & Co., Research Division
Good morning, and thank you all for tuning in here for a special P.S. Friday keynote. Really pleased to
have the original godfather, OG of SaaS here, Parker Harris, who co-founded Salesforce. So Parker, thank
you so much for joining us.
Parker Harris
Thanks, Brent. I think we got to give Marc Benioff the OG. I'll be his consigliere.
Brent Alan Bracelin
Well, listen, we really appreciate it. It's been some journey. We actually just kind of went through framing
the overall kind of state of cloud software. And it is interesting, looking back 20 years, to think about
being one of the pioneers of a market that's kind of gone from really nothing into now what we think will
cross into a $200 billion industry this year. So certainly, I appreciate your time.
Question and Answer

Brent Alan Bracelin
I guess, maybe we'll start out as you think about the opportunity, what was the original kind of idea, going
back 20 years ago, behind kind of salesforce.com? And how much of it -- has it changed in 2020?
Parker Harris
Yes. Well, I met Marc Benioff in '98. We have been doing cloud compute -- early cloud consulting, and the
idea was, let's do sales force automation. So not full CRM, just sales, and just make it really easy. Our
model is as easy as buying a book on amazon.com. This was on Amazon. It was a bookseller and a CD
seller when that has existed. And it was really just about speed and simplicity. We had one of our original
investors, Magdalena Yesil, from USVP, she invested personally, and I asked her before we even started
the company what's defensible. And she said, "Nothing, you just got to go fast." So it's just all about
making something simple and usable and getting it out there. And we had some early dot-coms as the
original users that used it for free, and we just started from there, starting from small companies and built
up.
Brent Alan Bracelin
Is that kind of move fast model still kind of an important part of kind of what you think is the culture
there?
Parker Harris
Yes. What's interesting is we have found as a company, even though we're over 50,000 employees now,
that during this crisis, we actually have gotten a little bit more scrappy, a little bit more kind of focused on
now. And it has helped us somewhat get back to our roots that we had when we started the company. It's
been great. Yes. So speed and scrappiness, I think, are definitely important of any company, and you want
to make sure you don't lose that.
Brent Alan Bracelin
Absolutely. And I think it is interesting to think about how our lives have changed, right? As we all think
about this, it's amazing 4 months now into quarantine. But there's been some good things, I think,
that come out of it. We'll maybe go into that a little bit later. But as we kind of maybe start with this
whole state of the cloud kind of past tense theme, one of the 2 big kind of technical premises that I
know Salesforce was built on is this idea of multi-tenancy, right, and then obviously, this no software
mantra, right? We're going to move away from installing software and just using it, right, on an Internet
connection like buying a book. One of the things that I find that's surprising 20 years after this multi-
tenancy mandate to be a cloud company, you still see a lot of legacy companies that are hosted, right?
They have a single-tenant hosted model. So my question for you is from a technical perspective, is it hard
to create a multi-tenant model? Is it -- why are other companies still not fully kind of walking down this
multi-tenant kind of path?
Parker Harris
Yes. Well, it's very hard to take an on-premise piece of software that was meant to be shipped that
a customer had full control over the code that they could change the actual code of that signal
implementation. Take that and move it to the cloud and turn it into a multi-tenant model where that same
piece of software serves many, many customers. When we started the company, we were building a piece
of software that we're thinking, okay, how many companies would this ever serve at once. And it's all the
way down to first principles of the architecture on how would you multiplex a piece of software.
Multi-tenancy in and of itself is, I believe, was important for us when we started the company. I still think
it's very important. There are new models now with cloud computing, with Infrastructure as a Service,
where Kubernetes has taken over the world by storm, a lot of people are using containers. You could take
a piece of software like an on-premise software, and you could scale it out millions of containers, and
they all have the same piece of software. And you could run that one piece of software and maybe get
away with it for a while. The complexity comes in innovation. How do you do that and then innovate?
How do you do -- at Salesforce, we do 3 major upgrades a year, a lot of functionality. How do you then
upgrade all of those things and make sure that the quality exists on all of those single containers and
that the security exists and that the performance exists, and that's -- it's all what I'm thinking of. People
thinking multi-tenancy, single versus multi-tenant and they oversimplify it. You have to think about what
does the customer need. They want the trust, security, compliance, availability, performance. They want
the innovation agility. They want great solutions. And you've got to figure out how to do that, and it's a
juggling act. And I think multi-tenancy is a key piece of that. I think where Salesforce is headed for some
of our largest customers, it is multi-tenant, but we dedicate a lot of infrastructure to them. And so it's
-- everything is not exactly the same. And we would have competitors say, "Oh, if they're multi-tenant,
you're not going to provide that same isolation and quality of service." I disagree. I think it's important
to be able to do both. But how do you, like Salesforce, serve the mass of customers that we do, the small
customers, the medium customers, the large customers, that's been important for our business since day
1, and our revenue is nicely split across all of those segments.
Brent Alan Bracelin
Clearly, the multi-tenancy architecture is validated, obviously, by the success you've had. So congrats
there. I guess, maybe from a personal perspective, if you just kind of go back, anyone that's attended a
Dreamforce is certainly aware of the Ohana value and culture. And I guess, maybe bring us back to the
roots of that and how important and why do you think it's stuck over the course of the last 21 years.
Parker Harris
Well, I have to credit Marc for that. When he was at Oracle, he was -- Oracle had -- he started early, big
success there. And late in his career at Oracle, he was working not only on innovation but on something
called Oracle's promise. And that was about Oracle giving back. He was putting computers in schools. At
the time, it was thin-client computing. So that was like the thin-client computer, putting them in schools.
That was when he started a relationship with General Colin Powell. He had a school where he was --
couldn't get the computers into the school. He told General Powell his problem. General Powell said, "I
can help you. Got a bunch of soldiers to come help actually get those computers in the school." And so
this radically influenced Marc in his thinking about giving back that why should you wait to be successful.
Why should you wait until you're the size of Oracle or bigger, like us right now, and give back then? Why
can't you give back all along? And so we created our 1-1 model, our philanthropy. General Powell was
there at the very beginning with us helping with schools. We were helping him with schools, frankly. And
that basically was the seed of our culture in terms of the importance of doing more than just being a
successful start-up, a successful economically that as Marc would say or we say, business-to-business is
making the world a better place. That gave really our culture a much greater mission, and then it just
gets back to the people. And what takes us places in what we do in terms of doing good in the world is
not just at the top, where we have ideas of where we want to do good. It's all over the world where our
employees care, and it's never been more important during this crisis. We -- the first thing we did during
the crisis is we focused on our employees. We focused on their mental health. We were doing webinars
with meditation and wellness and health and sleep. And then we moved pretty quickly, ironically, to trying
to help get some PPE to various parts of the country that needed it. UCSF reached out to us. We have a
close connection to them, as you know, and that kind of blew up into something more. We were getting,
through a partnership, PPE from China and getting airplanes and trucks and stuff. And it's just part of kind
of who we are, makes me proud to be part of Salesforce, that Ohana is not just our employees. It's our
employees. It's our stakeholders. It's our shareholders. It's our customers. It's our partners. And so that's
kind of what has made us a great company, I believe, what brings customers to us, brings partners to us,
brings shareholders to us. And now more than ever, companies have to lead this way or I think they'll fall
behind.
Brent Alan Bracelin
Right. The culture is a very, very, very clear differentiator. You said one thing early on, and I'm asking a
little bit more because from the onset of the company, as you're meeting early days with Benioff and kind
of mapping this opportunity out of what it could be, was there a goal? Was there aspiration? Could we
someday be bigger than Oracle?
Parker Harris
What's funny is, early on, I think at the very, very beginning of the company, it was about a small
business. And I remember this was when Hotmail was bought by Microsoft. I think it was $400 million,
something like that. We were 4 people in an apartment in Coit Tower who thought, "That's pretty cool."
Marc said, "That's pretty cool, but we're going to be much bigger than that." But at the same time, we
didn't have our sights early on, on Oracle. We had our sights on Siebel. And we were saying, "Wow, maybe
one day, we could compete with Siebel, and we could beat Siebel at what they're doing." And I think being
tactical and being focused has always -- scrappiness has always been part of our culture. So I would say,
as a company, we market far ahead of what we're doing. We do have long-term aspirations and visions,
but the way we work is very tactical. We're month-to-month to 12-quarter close at Salesforce for our
salespeople. It's -- when we were doing events, it's events all the time, plus the big Dreamforce. And so
no, we didn't really think about that. But certainly, as we kept growing, and you see our charts that we put
out in our ads about #1 CRM and we look at our competitors, certainly, we're keeping an eye on them. But
-- and it was quite a moment when, at least at one point recently, our valuation was bigger than that of
Oracle. And that was a bit of a shock for me. I was like, wow, that's definitely a milestone.
Brent Alan Bracelin
Sure. Absolutely. I would agree. So let's just go back maybe as you just think about kind of consumer
kind of digital trends, enterprise digital trends, it does feel like there's a different governor here, right, in
the enterprise. It did take you kind of 10 years, almost 10 years to kind of scale to that first $1 billion.
What are some of those governors as you think about what investors should think about as they look at
some other small, young Internet companies? What are governors to growing faster in kind of this digital
enterprise space?
Parker Harris
Yes. Well, I think in enterprise especially, something that we have always prized, and it's ironic that I'm
saying this, is the go-to-market and the sales function is just so critical. When we went public, I don't
remember how many people we had, but our tech team was very, very small. And so we've always --
we've -- we invest a lot in tech. But when we -- when we're running the business and when we look
at smaller companies that we want to invest in, smaller companies that we might look to acquire, we
often will see a company that is led by technologists that has prized technology. And I'm the first to say,
technology innovation is the lifeblood of these companies. But what they miss is they go to market, and
they think that building the IP, build it and they will come. And with enterprise software, you got to sell.
You got to market. You got to sell and you got to hire those salespeople, and building up a sales army and
training them and getting them -- getting the pipe to them and getting them able to be productive takes
time and takes a lot of money. And it's like a big flywheel for the company, and we've built ours, obviously,
over 21 years. That's the first thing I look at when we look at smaller companies. Obviously, we want to
know they've got great IP that is defensible in some way, that the team has high quality. But usually, with
every acquisition or every investment, the first thing we do is we say, "You've got to invest more and you
got to market." And so that would be my first bit of advice is that is an obstacle to growth for sure.
Brent Alan Bracelin
Surprise me as a technologist, the first governor you talked about was go-to-market. But which I think
it's a powerful statement, right? It really does show, right, even with your technology architecture bias,
acknowledging that, that go-to-market engine is a critical, critical path to success. I think that's helpful to
understand from an investor perspective.
Parker Harris
Yes. And I think there are definitely companies that are trying to figure out how to do enterprise with a
consumer model, and it's hard. You can definitely -- at the low end of the market, if you can do it with
enough automation and enough training, enough of an ecosystem, you can potentially grow a really nice
company. But as you go upmarket, you can't replace -- you can't have technology replace that relationship
focus, the sales focus and even post sales, that customer success focus.
Brent Alan Bracelin
Super helpful. Before we maybe shift gears to kind of the present kind of state of cloud, I thought it
might be interesting to kind of go back and just think about what's unique a little bit about Software as a
Service. And if I look at the S-1 filing back in the day, 2003 to '04, $7 billion TAM, that was the CRM TAM.
Today, I think Gartner sized that at close to $50 billion today. So there is this notion that a lower cost,
lower friction software product can actually expand the TAM. I mean, walk me through how much of that
TAM expansion is kind of tied to just that lower cost SaaS model.
Parker Harris
Well, it's kind of funny that I was doing sales force automation before Salesforce and at a company
called Metropolis Software, then a company called Clarify that became Nortel, Amdocs, and we started
Salesforce, and it was focused only on the sales part of the CRM. And as we grew that, and it's definitely
a large part of our business, investors and a lot of pundits would come to us and say, "You're tapped
out." This was like 15 years ago. There's only so much room you have for sales force automation. And I
think it's not just the unit economics, I think that's your question, at least in our category. The world has
moved towards customer centricity because of the Internet because of consumers with cell phones where
your connection to the brand is more direct than ever. Even if it's like Michelin tires, Michelin is trying to
connect to you, the driver, owning the tires, not just through their distributors, that has made CRM more
relevant. And so that's definitely been, I believe, what's fueled Salesforce's success as the market came to
us as we grew.
In terms of unit economics, I think that what I love about Software as a Service is you can provide a
better quality offering at a lower cost, and in business terms, if you can do something better at lower
cost, you're definitely going to have a better business and grow it more. It's just too expensive to ship
software to create success when the software is sitting behind someone's firewall in their office with their
IT department. I have no idea what's running, why it's working or why it's not working. I -- to help them,
I have to get people to go physically to that office and go figure out what's going on. With Software as
a Service, if somebody -- if a customer has a problem or they have a question, it's right there for me,
obviously, with all the security controls, but I can have people go understand, well, what's going on for
this customer, how can I help them? And I can put the best people in the entire company out to help
that account really, really quickly. Kind of like this. We're -- right now, we're bringing people together
and everybody who's listening, you're all over the world, and we're just leveraging simple technologies
in to make that happen. This is much lower cost to do this event than it would be to have people fly
somewhere, come to an office, take however they got there, come in, the amount of time to get there,
have this meeting then leave. So even right now, we're seeing the efficiencies of cloud. So I think that
there's a lot more opportunity out there. Frankly, for those investors out there, I think this space that
we're in right now around collaboration tools, and obviously, Zoom's hugely successful IPO, but I just look
at the innovation, we were just in a little breakout room in Zoom. That is a very simple piece of technology
that's part of Zoom. What more will happen in the space of collaboration and what more will happen in
how we work? We just launched an offering called work.com focused on employees, focused on helping
companies get back to work. There's a huge opportunity in that space as well.
Brent Alan Bracelin
Absolutely. Now I think that really leads into kind of the next discussion, like the present tense of cloud
and this idea that the world is different, right? And listen, I think I'm a little surprised, full disclosure, that
investors were quick to go to the end game, were quick. And then I think you've seen enough signals,
right, there's enough digital signals out there that there could be an acceleration. But my question for you
as you think about the post-COVID era, where investors are certainly getting excited about this idea we
can accelerate digital adoption in the enterprise, cloud adoption in the enterprise, SaaS adoption in the
enterprise, what's your take? What's your view? As the godfather of SaaS with the 21 years of expertise,
do you think the world has temporary changed? Or do you think there's some permanent changes here
that could drive an acceleration in cloud adoption?
Parker Harris
Yes. I think that something significant is happening to us right now. I look at -- certainly, we all were
shocked when we went shelter in place and the whole globe shut down. And I think we were all like,
"Okay, at Salesforce, what's going on with our employees? What's going on with our community?" You
see we had to like do that first. But what I've been amazed with is the willingness of customers to have
conversations during this time. And we're having kind of -- and they're very intimate, like this is my home.
I'm talking to you probably in your home. Everyone listening, probably in your home. It's very personal
and it's very intimate, and you're not coming into some large office building, for example, in New York City
in a suit, and they're in suits and there's this formality, which kind of slows down the actual conversations
that you want to have. And so I think this crisis is creating a lot more trust in digital. And so it's moving
more people to accepting that digital is super important. Transformation is super important, and our
customers are seeing that. They saw it before, but then they're like, "Oh, wow, I need to connect and
understand all of my customers now more than ever because they're all over. And I don't know where they
are. I need to connect with them in digital ways, not physical because we're not going to see them." And
so I think it makes this transformation all the more important. We're having some amazing conversations
with our customers. And I find it incredible and they're not in their offices. And we're talking about how
can we help them connect with their customers, how can we help them? And it's not different. It's still the
same conversation. It's just there's a greater acceptance and a greater urgency.
Brent Alan Bracelin
The change, it sounds like, it was around just the urgency and, I guess, acceptance and trust. I think
that's a really important point, the trust in these digital tools. I mean, just for me personally, I used to
have a virtual background, right? And then not only virtual backgrounds, but what I've kind of noticed in
doing these kind of P.S. Friday events, it feels really authentic, right, to be in whatever setting you're in,
right? And again, back to that digital trust, I think it is different. So that's certainly good to hear.
Let's shift to internal changes at Salesforce post COVID because you think about it internally. How much
-- so you're talking about external changes around digital. What about the internal changes at Salesforce
post COVID? I mean, how meaningful -- what are the biggest kind of most difficult things that Salesforce
had to do internally to adjust to this new world?
Parker Harris
Yes. So I think the first thing that we had to do, at least -- I mean, there's 2 questions there. What did
we do coming into this? And then I think we also -- we should talk about what do we see, where are
we going. But coming into this, I think one of the biggest things that we saw, ironically, we talk about
connection and connection to customers, connection to employees, we saw such a huge need for us to
connect even more to our employees. And so you're asking about speed and scrappiness and being small.
We feel more scrappy and smaller now because we invested an incredible amount of time and energy to
connecting with our employees and our customers. So we now have, every week, an all-hands call for
the entire company that the entire management team is on, and we're bringing in speakers to it. We're
bringing in customers. It started out very much as a way to listen to our employees. We've also -- it's
also become a tool of enablement to talk to our team to re-explain who we are and what our products do,
why they're important, to help enable the sales team. And so communication and connection has become
even more important during these times. I think if we hadn't leaned in, that was a huge, huge change.
And then, as you know, Salesforce is a very big event culture. We do a lot of events. And the events we
used to do pre-COVID were physical in-person, large events. The last one we did, I think, was a Sydney
World Tour. We did it just at the cusp of COVID. We're not doing those anymore, right? We're not -- we
didn't do one -- we have a Paris World Tour, which is my favorite, we did not do. Dreamforce this year is
canceled. And so we're also rethinking what does it mean to have connection with our customers from an
event basis, and we're rethinking it to be smaller, more frequent. Doing an all-day or multi-day event is
too much. This call is great. You're doing it every Friday, it sounds like. That's great. We're doing the same
thing, whether it's TrailheaDX, I've got my sign here. So we did an event, and I had some decorations and
they gave me the decorations, and we have an event, it was broken up. But even our salespeople, you
think about marketing has moved even more to the sales team, where the sales team is having even more
meetings, even more small events but they're smaller and more frequent. And I think that's a shift a lot
of companies need to look at is that you need to connect more than ever, but you got to rethink. You can't
take what you did before and do it in this model. You can't have the link, you can't have the size. So if
you're going to make it smaller, make it more frequent, make it more personal.
Brent Alan Bracelin
Yes. Listen. I had heard 2 months ago at a SaaStr event that some Salesforce people were talking about,
yes, we're moving to weekly meetings. And I didn't know if that was like a short-term thing, but that
certainly is interesting. You guys, even 2 months later, continue to do these weekly kind of communication
meeting, so something seems to be resonating there. And it is interesting now. Like the cost to do that
isn't high either, right, thanks to Zoom and other technologies.
So maybe we'll shift to the external changes. You talked about some of the things you're thinking about
event-wise changing internally and rethinking things. How are you thinking about supporting sales
environments in this remote sales world? Are you thinking about changing product road map and moving
things around and adding new things? What has to -- what are you contemplating on the product road
map side to enable a remote sale world?
Parker Harris
Yes. Well, I think, yes, crisis can be used for innovation. It's an opportunity, and we're leveraging this
crisis to really try to innovate. So what I was just talking about is how can we innovate in our marketing.
Let's not think about how we marketed before. And what does it mean now, but also what would it mean
going forward? And what are we learning from how we market? work.com is an offering that we just
launched, and we built product in, I don't know, a month. It was super quick. We leveraged some of our
existing products, but we've built some new capabilities. And because of the crisis, we were bringing
people across the product organization together. It wasn't just, "Hey, let's segment off part of it." It was
kind of an all in, like let's launch this work.com offering because we wanted to figure out how can we
help people get back to work. But also when you look at that, it's also how do we help companies work
with their employee base, something that we haven't been in that much in the past. So it was a way to
leverage the crisis to go quickly and be very relevant in what's happening right now. And I think what
we're looking at in our road map is what else can we do? What else can we do that is very relevant, very
current, where we can go quickly and also try to rethink how we collaborate. So it's not just a -- that's a
sales cloud effort. That's a service cloud effort. That's a platform effort. That's a MuleSoft effort, Tableau.
We're still doing that. We still want to be best-of-breed in those categories. That's part of our success is
we're both best-of-breed in each category but also look at it as a holistic CRM. But we are looking for more
opportunities where how do we bring together the breadth of our capabilities for some specific purpose.
work.com is a great example.
Brent Alan Bracelin
So work.com kind of is a proof point of a new way of maybe developing products at Salesforce, a little
more collaborative. And maybe, again, back to that comment about being scrappy, you're going to be
doing kind of this new program moving quickly. On work.com, the human in me said this is great. The
capitalist in me has to ask the question. Can you -- is there a way to make money on work.com? Or really
is it -- think of it as part of maybe the pledge, more in the pledge camp versus the capitalist camp?
Parker Harris
No. You've probably been reading the news, but we're deploying that and selling it as an offering to
state and local governments, a number of corporations. So we're seeing a lot of interest in it because
it's something that's needed. And I mean you can simplify underneath it. We're selling. In that, there's
service cloud. In that, there's communities. So when you think about work.com, in that is the platform.
And so it's a repackaging of a number of capabilities plus some new apps added to it. And what it's doing
is it's opened the door for us so that companies can see -- many companies who have gone wall to wall
with us understand this. They have started with sales, they added service. They started exploring the
platform. They build the apps. They started to create workflow automation for their employees across
their company. This is just another way to do that. It's just more direct. And so what we're seeing is it's
opening the door to new opportunities for the platform, as an example, for more employee-based apps to
help those employees collaborate, ultimately, back to the ultimate goal, which is to serve their customers
because that's what we're all in the business to do.
Brent Alan Bracelin
It makes sense. Bouncing around here, and I really appreciate it, we're going to shift to M&A. And we're
kind of approaching the anniversary of the Tableau acquisition. So maybe we'll kind of drill down and...
Parker Harris
Do you want to know what we're going to acquire? Is that what you...
Brent Alan Bracelin
Yes. Just if you could just share us your M&A wish list for the next 2 years. There's no more broken e-mail
on that, sorry. But 1-year anniversary of Tableau. What are you most excited about as relates to Tableau
kind of maybe 1 year in? And what do you think is maybe underappreciated about that asset from an
investment perspective that drove you to quant that and pay them like what you did?
Parker Harris
Sure. Well, first of all, it's just an incredible team. I've gotten to know Adam Selipsky, so much more
sense than what in addition to the company. I was just talking to their Head of Technology, Mark Nelson,
yesterday about some really interesting opportunities. And I think what you have to understand is, if you
look at Salesforce, as we've grown, it's not our data. So we're like the bank in that we house data for you.
We protect it. We're not looking at it, but that data is hugely valuable to our customers. And we have a
huge asset for our customers in all of that data, and then they need to understand it and not just the data
that we host but all of the other data. I think everyone in the world right now is discovering the power
of data, and many are struggling. They're definitely leveraging these cloud platforms. The hyperscalers,
they're putting a lot of data out there. They're using tools, but it's a lot of work. It's hard. And so I think
what investors need to understand is it's not just -- Tableau is not just about analysis. It's also about data.
And even like their brand, they use the word data, not analysis, as part of what they talk about. They help
companies see and understand data. And so I think there's a huge data opportunity that we have that we
can expand on, and we're kind of looking at ways to move forward there.
Brent Alan Bracelin
Cool. So it's almost like a layer that helps sees -- converts data into something that humans can kind of
understand because the volume is just so large, right? Well, how do you extract that?
Parker Harris
We're all struggling with it, and it's a huge problem. Like if you look at Einstein Analytics, it's extremely
good at in-process analytics. So as you're doing sales, it's incredible. As you're doing service, it's
incredible. But then we're all struggling with the masses of data that are getting created in the corporation
and making sense of it, and that's a huge opportunity for us.
Brent Alan Bracelin
Yes. Let's talk a little bit about Customer 360 because data is at the core of that and the enviable CDP
kind of opportunities. But one of the concerns I have is while there's an appetite and maybe more trust to
move forward with some of these projects, greater sense of urgency, there are also some kind of economic
stops. So I guess my question for you is what is the appetite around this big CDP, Customer 360, digital
transformation project? Do you think those are going to be tough to kind of get done in this environment?
Or is that really where you are engaging at a higher level with customers?
Parker Harris
We're already doing it. I'm deep in some work we're doing with AT&T, for example, and we're helping
them achieve that single source of truth for their customers. And obviously, at a company of that scale,
it's a huge, huge effort. So that's why I'm digging in with them. I think it's not -- your question is are we
completing these projects in this environment. I think this is something that I've been working on for more
than 21 years. Actually, prior -- I was doing CRM prior to Salesforce. So getting to the Customer 360,
getting to the single source of truth is like that holy grail of CRM, and it's a moving target. As the world
has gone more digital, as data gets created, more and more data is getting created every day, that goal
is something that is always ahead of us. Customer 360 is a way and is a path to help customers show
them, here's how we're going to help you get there. And you don't -- I don't think there's a completion
of it. It's more of think about how does AT&T get a single source of truth in their call center to know that
I've got DIRECTV and I've got my cell phone and my kids have cell phones and I've got a different plan for
my phone. How do they see all of that when some of -- like some of those are acquisitions. AT&T has got
a lot of different systems. But if you really want to know your customer, when you call in the call center
or you're going into the store and then you want to up-sell them and give them more value and more
revenue for AT&T, how are you going to do that? And it's not simple. It's not one solution. That's why the
Customer 360 single source of truth from a technology perspective is looking at not just Salesforce but the
landscape of our customer and how do we bring the data assets that exist, both that are happening within
Salesforce but also in all those disparate systems, some of which are legacy systems, and that's where
MuleSoft comes in. Let's unlock that data and bring it all together and then let's use Tableau to understand
it even better.
Brent Alan Bracelin
So it just sounds like, listen, the direct-to-consumer trends are out there. Customer 360 is -- certainly,
there's an appetite, but don't think of it as one singular event or product. This is going to be more of a
kind of a journey of multiple instances of products.
Parker Harris
It's just a summation of our strategy. I mean, it's a very simple thing to go talk to a CEO and say, "Don't
you need a single source of truth for -- of your customer?" And then you'd start -- and then I get involved
and I start talking about, "Well, here's how we would get there." And let's talk about why you need that,
where do you need that in the call center, in the AT&T store, in the sales process when it's a new customer
or when you're upselling, that you need it everywhere, where you're selling, servicing, marketing, e-
commerce. You need it across the breadth of that and for every company, what's most important to that
company? Where is the biggest ROI to start tackling that problem? And frankly, companies are struggling
to do it on their own. And that's where we're coming in and adding a lot of value.
Brent Alan Bracelin
So we have probably 10, 15 minutes left here, Parker. This has been a fascinating conversation for me.
I appreciate your time. Let's shift to an interesting discussion where we get to put on our futures hats,
right, and talk a little bit about the future state of cloud. My -- as we think about this opportunity, $200
million cloud software spend this year. We haven't -- actually, we took our numbers up through 2025 to
$590 billion. We do think this is a $1 trillion kind of opportunity, just that cloud software market. So my
question for you, what's the appetite here? How much of that $1 trillion opportunity exiting 2030 does
Salesforce want to go after?
Parker Harris
We'll take as much as we can get, Brent, come on. We are a growth-minded company. And we're
constantly looking for opportunities for growth, both organically. That single source of truth, huge amount
of growth we're going to get from just CRM. But then you look at our assets of Tableau and MuleSoft. And
those categories, there's huge opportunities there. There's huge opportunities as we look at employee
applications like work.com, what more can we do in that space, what kind of partnerships can we have
in that space. So I'm just amazed, Brent, that every year, companies say -- our investors, partners, they
say, "Parker, when are you going to do more than CRM?" And you could argue that we're in analytics.
We're in integration, that is more than CRM. Although you could also argue it is CRM. We kind of argue
both ways. I'm just amazed that the CRM market continues to expand and it gets redefined. It's not the
same definition now as it was 21 years ago. So I think that market will continue to grow. We will continue
to grow inside of it. That's who we are, and we will go to adjacent areas. So the data discussion is really
interesting, data analytics. I think that that's a huge space. There are a lot of players in that space. We
see great opportunities there. And again, we are a growth-minded company, and we see huge opportunity.
So we're going to keep doing everything we can to take care of our customers that we have but then grow
the company in the future.
Brent Alan Bracelin
The flip side of the question is what's -- is there anything off limits? And as I think about just the
conversation here, you're mostly talking front office. Sounds like now maybe a more interested focus on
middle office, right, helping employee productivity and then some of the data stuff. But back office like,
hey, not interested? Or is there really, as you think about like, hey, not going this area, do you have any
off-limit areas in cloud?
Parker Harris
Marc will be laughing now because our culture, and he would be talking about beginner's mind, right? And
so when -- early on, my 2 co-founders, Dave Moellenhoff, Frank Dominguez and I, were arguing against
Marc saying we should never have a consulting group. We should never have services because we thought
we want to keep this simple. We don't want to write a lot of code. And so that was off limits. And I think
we have to have a purity of focus. We have to -- but we also need to be able to take the opposite side
of an argument. We need to have a beginner's mind. And so I would say nothing is off limits, per se.
And we will argue internally about all kinds of directions but we have to let our customer base guide us
most of the time. And sometimes, we need to be ahead of our customers but kind of check with them. So
obviously, Tableau was a big play for us. But we kept seeing Tableau at our customer base. We kept seeing
the demand for analytics. And so we're going to really let the market lead us and take us there. There
may be opportunities. But right now, I don't see our customer base saying, "Why don't you go to the back
office, right? Why don't you go worry about supply chain?" That is not something that they're that worried
about. Although in a way, we're taking a CRM angle on some of that. We're going more deep in order
management because we're in B2B commerce and B2C commerce. Order management and inventory
happens to be something that you have to do to support those businesses. So CPQ, also in there. So we're
doing a bit. And I would say, we'll probably just keep redefining CRM. What does CRM mean? And we're
always going to take a customer-centric view of it, but as customers need us to help them automate more
processes that touch the back office, in insurance, you have claims management. So we have to integrate
with those back office systems.
We're going to go -- speaking of industries, so I was talking to David Schmaier, who's the CEO of Velocity,
incredible company that we brought in. We're going to go much deeper in industries. There's a huge
opportunity to -- we talk about speak the language of our customers, but also the product should be the
product that they want. That shouldn't require a lot of customization, a lot of development to make it
industry-specific. And so that will pull us in new directions. I wouldn't call it back office, front office. We
will always be customer-centric. We're always going to look at customer processes and what can we do to
help, and that's where growth is in every company, how do we help companies do that.
Brent Alan Bracelin
Very clear. And I think that's the North Star here. That does sound -- it definitely sounds like customer
centricity, right, like what do they drive, what their customers are driving here. Let's talk a little bit about
a discussion we have a lot with investors around this cloud titan battle or potential battle. As you think
about cloud platforms today, there seems to be a pretty clear delineation between the big cloud IaaS
platforms and then the apps that run on those kind of cloud platforms. But over time, there potentially
could be a movement up the stack. As you think about an existential risk to your business or given your
kind of 20-year history as again, the godfather of SaaS, do you think it's just a matter of time before the
IaaS platforms move up? And how do you respond to that competitively?
Parker Harris
Yes. I do think -- I've been equating the IaaS platforms kind of to the operating system wars of 30, 40
years ago, which one is Windows, which one is the Mac OS, which one is Unix. But all companies are
moving to those new platforms, those new operating systems. And those operating systems have a lot of
great tools, a lot of great systems to store data, to process data, to write software, to do computing at
scale, which is incredible. But if you look back at those days of those OS providers, they didn't take over
every single enterprise app. They didn't move up the stack. They tried, but Microsoft did not dominate all
of enterprise software as an example. And so IaaS, we're even moving some services to these public cloud
providers and leveraging those technologies because it's just, from an IP perspective, it's just helpful. And
I wish Salesforce had invented IaaS. We kind of had an opportunity. Maybe you can argue, years ago, we
were doing stuff with VMware and talking about it and -- but we're focused on CRM. So for us to do CRM
and then also add that business, it's just very different. So I think that these IaaS providers are going to
add more capabilities that you could potentially put together maybe. But they're not going to be focused
on the success of bringing it all together.
So Amazon has -- I think it's Amazon Connect, their telephony offering. We partner with them. So you
could argue, "Well, that's a competitive offering, and customers could put that together." We think it's
great, and it's part of our offering. And so I don't worry so much about the IaaS providers moving up
and taking over our space. What I do worry about and think a lot about is data. It's back to that data
conversation. It's that the IaaS providers are getting people to move their compute and move their
workloads to the IaaS platforms, and they want data on those platforms. And you look at Oracle's strategy
like put data in an Oracle database, and they've got you. Put data in SQL services on Azure. Put data in
these platforms, and I think that's where we have a huge opportunity. It's a threat and an opportunity.
That's why Tableau is such a huge asset. That's why MuleSoft is such a huge asset. And that way, frankly,
the 21 years of business we've had and the data that we protect for our customers as an asset, it's a
huge, huge opportunity for us. The threat would be, if we don't solve that, and I believe we will, that, that
data leaves us and the value goes to these other platforms. And so I think that's more of the battle ahead
and less about our -- is someone going to build a better call center offering. I just -- I don't think that's
going to happen. I don't -- kind of never say never. So like I said earlier, beginner's mind, we have to be
wary. We have to think about this, and we talk about this threat and play it out and try to think, well, what
could -- it's good to have competitors. We like having competition. But at the same time, we have to not
pivot to our competitors. We have to pivot to our customers. And as our customers move to these cloud
platforms, how do we also have workloads that work together. That's why we have these partnerships
with companies like Amazon to -- as companies are moving their workloads to Amazon, how do they work
better with us? And how do we -- we're not going to be like some companies and say, "No, your data stays
within us and you can't do anything with it outside of us." So as you do workloads on Amazon, if they will
help you understand your customers better, let's take those signals and bring them into your CRM. If the
CRM can help you with, let's say, your supply chain, Unilever, big customer, does work on their supply
chain on cloud providers. That's great. AI and analytics, understand it's the machine, that's wonderful.
But if the supply chain is getting backed up and it matters to a customer, that's also signals that need to
come over to your CRM and help them manage their customer relationships. So I think it's important that
we are cognizant of where these providers are going, that we can see them as partners and potentially
competitors as well. But again, I just keep pivoting back to that data opportunity, and that's why the
single source of truth as a strategy is so important. And I mean, that's ultimately what these customers
are all trying to achieve. And I think we're the furthest along on that direction. We are not a technology
provider. We are not providing an operating system. We're providing a solution. We're providing customer
success for that solution. And so I think that's where our future lies.
Brent Alan Bracelin
So we're kind of running out of time here. I'm going to ask one last one. And it's really kind of more of a
-- where is the world going? As you think about this $1 trillion opportunity, where should investors kind
of do some more work? What technologies are you most interested in over the next 5 years that maybe
could surprise investors?
Parker Harris
Yes. You should invest in Zoom.
Brent Alan Bracelin
Well, yes. That is interesting and certainly is something that you could do at any point in time. But as
you're thinking over the next 5 years, what would you say, do work on this, do work on vertical, do work
on this area? Like what is it? Clearly, you kind of answered it because we all got to hear on data and this
and that. But just to put a pin on most exciting things over the next kind of 5 years from a technology
standpoint.
Parker Harris
I think for Salesforce, it's definitely around data, it's definitely around verticalization, going deeper into our
customer base. I think when you look at the shift we're in the middle of around how we work, around the
acceptance, there are so many companies that said, "We're never going to let our employees work from
home." And now they're like, "Maybe we're going to let them work from home permanently." Wow, what
a shift. And so I think that there are opportunities ahead and innovation ahead in the next 5 years around
how we work, how we collaborate. And there have already been, I think these video tools, collaboration
tools. It's a hard market at the same time. I think there's always a new competitor coming in that who
would have thought that a company like Zoom would be successful in this space when it's just littered
with the past of all these different providers and you think this next one is going to be it. But I think
that there's going to be a lot of innovation around collaboration and how we work especially because
of this huge shift we're in the middle of. And so I'm pretty excited about that as well. We're exploring
it with assets like Quip and we just launched something called Salesforce Anywhere, looking at how do
we increase collaboration for CRM because, obviously, we're not trying to do everything. But how do you
do more collaboration in place in your CRM with -- and so Quip is very exciting for us. And if I were an
investor, I'd be looking at this space pretty hard and what's happening around marketing virtually, what's
happening around selling virtually, what's happening around servicing virtually. And what's the innovation
happening there, that's what we're looking at. And I think it's pretty exciting.
Brent Alan Bracelin
Future of work, absolutely big area, lots of interesting things happening there for sure. So Parker, I just
want to thank you again. It's been a great discussion here. Thank you for inviting us all into your home
digitally. It's been great, and thank you all as well for tuning in today. We will have one more kind of
keynote session with Ian Buck, the VP of Accelerated Computing at NVIDIA. We're going to have about an
hour break, but please come back, tune in. This has been a very insightful conversation. And thank you so
much, Parker.
Parker Harris
Thank you, Brent. Thanks all for tuning in.
Brent Alan Bracelin
Thank you.
Special Call
Thursday, June 18, 2020 5:00 PM GMT
Contents
Table of Contents
Presentation .................................................................................. 4
SALESFORCE.COM, INC. SPECIAL CALL | JUN 18, 2020
Call Participants
EXECUTIVES
Gavin E. Patterson
Chairman of Europe, the Middle
East & Africa and President & CEO
of Salesforce International
ANALYSTS
Stewart Kirk Materne

Evercore ISI Institutional Equities,
Research Division
Presentation
Evercore ISI Institutional Equities, Research Division
Good afternoon, or good morning if you're on the West Coast. It's -- this is Kirk Materne, I'm the
Head of Software Research at Evercore ISI. And appreciate you taking some time out to join us. I'm
delighted to have Gavin Patterson with us, who is the newly appointed President and Chief Revenue
Officer at Salesforce. Gavin is nice enough to give us some time. So we're going to run through sort of
a fireside chat. I have a number of questions I'm going to pose to Gavin, but if you'd like to ask me or
have me ask any questions on your behalf anonymously, please just feel free to shoot me an e-mail at
kirk.materne@evercoreisi.com, and I'll be happy to try to work your question into the conversation.
So Gavin, thanks very much for joining us. I realize you're in the midst of taking on a new role. You're
moving to San Francisco. So I know you have a lot on your plate. So I appreciate you taking some time
out to do this with us.
Gavin E. Patterson
Chairman of Europe, the Middle East & Africa and President & CEO of Salesforce International
Thanks for the opportunity, Kirk. It's good to be here.
Question and Answer

So I guess just for folks that aren't as familiar with you or your background, can you just give us a little
bit of what your background is? And maybe more importantly, why you decided to join Salesforce last
year?
Gavin E. Patterson
Sure. So I'm originally a chemical engineer. I spent the first 9 years of my career in CPG in P&G in
marketing jobs in mainly Europe. And then I switched to what was called TMT in those days in late '99 as
the internet was really taking off, and that seemed to be where all the action was. And probably, if I look
back now over those 20 years, I chose the wrong T because I chose telecoms and had a 20-year career in
cable and then 15 years in British Telecom, BT, with the last 5.5 years as CEO.
But -- so I finished in January last year and I started building a portfolio of advisory and nonexecutive
opportunities, and one of those was responding to a call from Marc, who said come and work with me
in Salesforce. And I didn't really want to do another executive job at that point. I was pretty tired of
executive life, and he said, well, come and do a bit of [ fat ] work, some business development, build an
advisory board for me, this sort of thing. So I was -- I'd been doing that a couple of days a week between
August and January, and I really enjoyed it. I knew the company a little bit. So I've been a customer at BT
since 2005, and I knew Marc quite well over that period.
And as I was doing the sort of 2-day-a-week job for them, I was -- as I said, I was enjoying the work. I
was enjoying being an executive or being close to an executive again. And then before I know it, initially,
they asked me to take the international executive portfolio up after Miguel went. But there was always
the plan to merge international with U.S. and create a single sales function. And after a couple of months,
Marc said, "Why don't you do this?" So it's sort of -- I was just joking to Kirk, it's a sort of try-before-you-
buy experience. And I'm very happy with my choice, and I'm really looking forward to picking up the full
portfolio when I take over CRO.
That's great. And when you are looking or exploring the opportunities with Salesforce, obviously, one of
the bigger opportunities would seem to be international growth. And since you sort of started out in that
area, I sort of want to ask a couple of questions about that, maybe more specifically. So when you think
about Salesforce's opportunity, maybe in Europe, which you're obviously very familiar with. But as we
think about Asia-Pac, what kind of stood out to you? What is -- what's sort of the gating factors for making
the business bigger internationally? And I guess in that original role you had, what were some of the plans
or things you were excited about internationally?
Gavin E. Patterson
Well, the beauty of international is actually I've had the benefit of learning from the U.S. first. And a
lot of the experience that the company has had in building its U.S. business applies directly to the non-
U.S. part of the portfolio. The business starts, was started in the SMB space and grew up from there
into commercial and enterprise. And that motion is one that we've seen play out in -- outside of the
U.S. as well. And increasingly, as you get into the top end of enterprise and particularly multinationals,
multinationals in Europe, in fact, I would say the same in APAC, actually, are not fundamentally different
from U.S.-headquartered multinationals. They want the same things. So there's a playbook to follow from
the U.S. Of course, at times, you have to add a local flavor to it. But the opportunities are very, very
similar. And indeed, I think it even plays out in Africa. So in our Q1 results, we talked about a deal I was
involved with, with Standard Bank in Africa, which is Africa's biggest bank, turned out to be the biggest
deal we did in quarter 1 in the end. It's the same standard Customer 360, sales, service, marketing cloud
that we would sell to other financial services companies around the world. So I think the opportunities
internationally are still there. It's really about scaling the business, finding the right people to deliver that
with. And ultimately, I'm very confident of medium-term growth.
And when you think about sort of the international markets and the broader trends around digital
transformation, the same types of pressures are going to impact financial services companies or retailers.
Are they a year or 2 behind the U.S. in terms of acting upon the urgency? Do you think they're catching
up fast? I guess as you take on sort of the global responsibilities, are your conversations really any that
different internationally than the U.S. at this point in time? Are they at an earlier stage? I'm just trying to
get a sense on how far behind maybe the U.S. either Europe or Asia-Pac is at this point in time, around
this broader digital transformation discussion?
Gavin E. Patterson
I think COVID has been a great leveler in many ways. So if I look at the sort of the type of conversations
I've been having with CEOs outside of the U.S. and I share notes with Brian and Marc in the U.S., they're
very, very similar. And I think Salesforce is beautifully placed to be able to respond quickly to that change
of circumstance and remain relevant to our customers as they try and navigate through this change. So
initially, it was about how do I move from the office to running the business from people's homes, then it
was about stabilizing the business and now it's about growth. And each stage of that, Salesforce has found
a way of remaining relevant, building a dialogue with customers. And I think from what I'm seeing, the
importance of Salesforce is being a partner, and digital transformation is becoming even more significant,
I think, as many customers are accelerating their investment. And they're looking for better -- new ways
or better ways to manage their relationships with their customers. So I think Salesforce is extremely well
placed.
And I guess just to follow on, on sort of the tenor of your conversations, since you brought it up.
Have they changed over the last month? You mentioned they're not all -- sort of, everybody was
obviously focused on just stabilizing the business and making sure everybody is safe to start. Have the
conversations sort of tacked back to having discussions about here's where we are today and here's where
we want to be in a year, and how do you help us get there? Are they sort of forward-looking again? And
can they -- I'm just trying to get a sense on if everybody is sort of looking ahead again, or we're still sort
of in wait-and-see mode?
Gavin E. Patterson
No, they're much more looking ahead now. So conversations, as you can imagine, in those first few
weeks, and it tended to be around when a country went to shut down. Our customers were looking at
ways of how do we manage to maintain our business operation when we've got to move it to people's
homes. And the beauty about being a software -- a cloud-based solution means that actually, that is pretty
seamless if they're using Salesforce.
Now of course, then, as you can imagine, everybody is looking to conserve cash. They're looking at
prioritizing CapEx. You go through a period of that. But again, in many, many cases, in fact, the majority
of the cases that I'm seeing, investment in digital transformation is prioritized and maintained. And in
some cases, people realize that they've got to accelerate it. And increasingly, people are turning to the
future and figuring out what that business needs to look like as we come out of this situation. So we
talked about this, I think, in the Q1 results. But just to reiterate it, we're seeing conviction and confidence
increase week-by-week in our pipeline and in our Q2 numbers. So it's -- we're not giving you any different
guidance in that. That's absolutely the same message we gave in Q1, but it is -- it's pretty noticeable.
That's great. That's good to hear. And obviously, Salesforce's product portfolio has expanded pretty
dramatically over the last few years, especially since probably the first time you interacted with them as
a customer. When you're talking to clients, are there any products that stand out from your perspective,
whether it might be Tableau wasn't that well, sort of wasn't that broad in, say, some of the international
markets, so I would think that there's pretty good opportunity for that internationally. MuleSoft, Service
Cloud, anything in particular that sort of stands out to you in terms of the opportunity when you think
about it? I guess I'll just stick on the international side for right now.
Gavin E. Patterson
Sure. Well, one of the things that sort of surprised me and was a pleasant surprise when I joined in August
last year was the sheer range of services that Salesforce offered, which sounds pretty embarrassing, given
I was a customer. But I was a -- BT was mainly a CRM customer, and we did not know, I did not know
much more. I knew you could get, obviously, Marketing Cloud and Service Cloud, but some of the new
services I wasn't aware of. So to me, this is just demonstrates the potential of the business and why we
are far from saturated, because I'm not isolated in having that view from the conversations I've been
having with CEOs and C-suites. So I mean the key to it is, how do you talk to customers about it, how do
you make it relevant to them? And the Customer 360, I think, is the way to think about that. It is a way
of explaining how all the services come together, be that Sales Cloud, Service Cloud, Marketing Cloud,
analytics, field services, et cetera. They need to be built on a single truth, a single data set. But from
that, you can pull together a 360-degree view of your customer, both in their B2B life and their B2C life, if
they're a business customer and a consumer customer. I mean it's very, very powerful.
MuleSoft and Tableau, I think, are fantastic acquisitions. And I find them both very exciting. MuleSoft
plays extremely well to the objection of this all looks too complicated. How can I integrate it with my
old stack, which, for many CEOs -- CIOs is they're risk-averse and the thought of changing the sort of
-- their existing software stack is something that they get very concerned about. And applications like
MuleSoft really give you a way of bridging to new cloud-based services in many cases. And I can tell
you, Tableau is a great sell CEO to CEO, And something I wish I'd seen when I'd been CEO of BT. There's
a way of analyzing and visualizing your business real-time, scraping data from existing sources to do
that, providing AI-based analytics on the back of it. It's a -- it's one of those situations if you demo it to
a CEO, they say, I want that. They don't always say that about CRM. They know they want it, but they
can't articulate it in the same way. But when you show them Tableau, they say, that's what I want to run
my business on. So it's -- each of these things give us different ways into talking about the customer --
talking to the customer and making sure that we remain relevant, even if they've -- they're longtime users
of the core CRM product.
And maybe along those lines, how do you think about sort of industry specialization? You obviously just
bought Velocity. I saw David is now the Head of Industries, which is great. I've known David for a long
time. And I think Velocity had a lot of success. Obviously, maybe just speaking about the telco opportunity
around that since you're obviously well versed in that industry, how important is it to be able to go in and
talk to an executive about Customer 360 from an industry perspective? And how do you see that sort of
playing out maybe over the next couple of years for you all, as it would seem to be a real sort of TAM
expander, an opportunity for you to go deeper and deeper with your customers?
Gavin E. Patterson
I think it's undoubtedly the right strategy. As the business gets bigger, you have to move from the sort of
the general to the vertical, I would describe it as. And you can see that in the way the U.S. organization
has moved to verticalization. We're beginning to do that in other parts of the world, particularly U.K. and
Japan, where it makes a lot of sense. And why it's -- I mean ultimately, you just have a more engaged
conversation with the CEO and the CIO and the CDO if you're really talking their language. And this is
really -- I felt this is, when I was CEO of BT, the difference in conversation you would have over sort of
generic Customer 360 with a telco-specific 360 is quite significant. And it's just easier to get your mind
around, yes, these guys understand me. I know they have solved the problem I face somewhere else
already, and hence, I'm more likely to buy. And you see that in the data as well. You get much higher
ASPs with industry-specific products and services. You're able to open up new logos at a much higher rate.
Attrition is lower. So I think the data is clear cut. And my own personal experience as a CEO from the telco
industry is absolutely consistent with that.
Yes. I guess maybe just to dive in a little bit deeper on the international side. In markets like the U.K.
and Japan, is it just doing a couple of verticals to start? U.K. would seem to be pretty obvious to have a
financial services sort of focus. Where -- how far behind are the international markets versus the U.S.?
And how do you think about that on a region-by-region basis? Obviously, Germany is probably a little bit
heavier manufacturing, things like that. So how are you kind of trying to bring a vertical overlay, but also
understand the dynamics area, and every geo is a little bit different, especially internationally?
Gavin E. Patterson
Yes. I think it is about a direction of travel. I think it has to have -- you have to remain relevant to any
particular geography's specific strengths. And I think you articulated very well there, Kirk, in a sense
of surprise, surprise, the U.K. has a very strong financial services vertical. It's pretty strong in CPG and
reasonably strong in pharma and life sciences. Germany, manufacturing and mobility are very strong.
Switzerland, of course, with -- it's got a strong base of multinationals out of Switzerland, pharma, financial
services, CPG play very well. So I think it is -- it may not be every market has every vertical immediately.
You need to be able to build a critical mass so that you can make the -- to get that sort of impact in the
market itself. But I think I'm in no doubt this is the right direction to travel.
And I guess when you look at the sales organization, as you look ahead to taking on your new role on
August 1, are there any areas internationally where you feel like there needs to be a little bit more? And
there might be a few, but are there anything that's -- any regions, I guess, that stand out to you where
your presence is under scale versus the opportunity, at least the opportunity today, not even a couple of
years from now? I realize your sort of still working your way into that role, so I'm not sure if you have any
thoughts on that yet. But just kind of curious, when you look at the portfolio of products and then sort of
the opportunity on an international basis, any places you think you're significantly subscale at this point?
Gavin E. Patterson
No. I mean I'll be honest with you, there's opportunity in every market we're playing in. So I don't think
we're tapped out anywhere. And I include the U.S. in that from what I can see so far, that we've got
higher penetration of the core CRM products in the U.S., of course. but there's still great opportunities,
I think, adding further clouds and then verticalizing them and adding some of the new products and
services. Elsewhere around the world, I don't think any market is completely saturated in any sense.
What I see is markets growing, and we're growing market share. And I would think we will look back over
this period that we're going through at the moment, the sort of COVID year. And we'll be able to see a
dramatic discontinuity in the curve around digitalization of people's businesses. So I feel very bullish about
the opportunities that lay ahead or lie ahead of us all around the world. And even in emerging markets,
as I say, to sell a big deal into Africa that is the biggest bank in Africa, which will act as, I think, as sort
of lighthouse account in many ways for how we can take advantage of Africa and its emergence over the
next 10, 20 years, I think shows that we work in all weathers and in all conditions.
Yes, that's an interesting opportunity unto itself. I want to shift gears a little bit. A couple of weeks ago,
I think Marc was talking about bringing you on. And I think one of the things he was excited about was
bringing someone into the role that had more of an executive background versus maybe a more traditional
sales background. And I guess as you think about or you thought about taking on the CRO job, what do
you think your experience as a CEO helps you with when you think about your new -- this new role that
you're taking on? Is there -- as you come into the job, what do you think you can maybe bring to help
sort of broad -- go deeper with the sales or help add another layer of experience onto a sales organization
that's done, frankly, really well over the last few years?
Gavin E. Patterson
Sure. I can see some people are probably surprised at the appointment in some ways. But let me tell
you what I think I'll bring. Look, I've run a big organization as a CEO, 100,000 people, $40 billion, $45
billion in sales, operating in 200 markets. So I've run -- I'm used to managing a number -- a large number
of people. And of course, there are now 10,000 sales execs in Salesforce alone. I'm used to selling into
boardrooms. So BT's customers included many of the banks in Wall Street. I did a lot of business with tech
companies in Silicon Valley. A number of the pharma companies and CPG companies were customers of
BT. So I bring a network that's not just European, it extends into the U.S. and into Asia and Africa.
Beyond that, I've been a customer. I still think like a customer and I think like a CEO. That is, if I look
ahead at where the company needs to get more business going forward, it's more bigger relationships
with multinational customers. I can see that. I've played that role. I know what the problems are that
CEOs are looking to solve. So I can be the voice of the customer as part of that discussion.
And I'm also bringing international experience. I'm used to operating in multiple markets. I know what the
challenges are of working with governments, with multinationals that aren't U.S.-based, navigating some
of the political issues in Europe, for example. All these sorts of things I can bring to the piece as well. So
I might not be a conventional software sales guy, but I've done some very big deals in my life, both in
terms of acquisitions, content deals, but also B2B enterprise deals. And I think I can bring much more of
the CEO perspective to that selling process.
That's really helpful. I guess as I realize, again, you're just stepping into this new role and frankly, you're
still very new to Salesforce. But anything that's changed in terms of your view on how selling might
change in the enterprise software world in a post-COVID world, meaning do you feel more confident
we could do more things virtually? I mean I realize you're probably not going to do a lot of tweaking at
the start of the sales motion or what's worked. But anything that you've learned over the last 3 months
that you think could potentially help drive down or enhance the -- or drive down the cost of customer
acquisition or anything? I think people are just wondering, is virtual selling going to become more of the
norm going forward? Maybe just love your initial thoughts on that.
Gavin E. Patterson
Well first and foremost, we are focused on growth. There's still a lot of potential to grow this business. And
I mean you don't need me to tell you how the structural economics of the business work. And that is our
number one priority. There's no question about that. In terms of what I can -- I think I've learned, and I
think we've all learned, to some extent, I think it -- as we will reflect back on this period, I think the way
the organization has been able to pivot and be able to continue to grow as a business through this and
build the number of relationships it has and the scale of those relationships, I think is pretty remarkable,
given that nobody's traveled anywhere for probably 12 or 13 weeks now. And yet, we are continuing to
sell, not just complete the deals that we had in the pipeline, but do new deals from start to finish. And
I think we're learning that some of the limitations that we thought meant that we would have to travel
to do this sort of business, we've realized that actually much of it can be done through video through
demonstrations that work online. And I think that's going to play more of a role going forward. That said,
do I believe we will fly to see customers to win business? When the customer says, I want to see you,
we'll say, tell me when. And that, I don't think, won't change. I don't think we're in the business of saying,
well, actually, I'm not prepared to come and see you to win that business, because my guess is other
people will always be prepared to go and I think we will need to be prepared to go. And I'm very happy to
do that.
I think the other thing that's really interesting is Salesforce has been a phenomenal marketing machine
as well. And the marketing, the program that sort of is based on Dreamforce and World Tour and strong
face-to-face experiential marketing, you can imagine, we haven't done any of that. And Dreamforce won't
be a face-to-face event this year, as you know. So -- and yet, we look at it and by changing our marketing
plans and doing things differently, we've managed to build a very strong pipe. So I think that is something
where we'll not revert back. There will be a hysteresis, if you like, of -- that means that we won't revert
back to exactly the same almost solus dependence on face-to-face type events going forward. Do I think
there will be a face-to-face Dreamforce in the future, absolutely. My own view. I'm not giving you anything
more than that at this stage. But I think it will -- digital will play a much more important role in the overall
marketing program.
That's very helpful. And obviously, I think we're all hoping to see each other face-to-face in 2021 at
Dreamforce. So fingers crossed on that. I want to leave some time for -- there's been a few people who've
e-mailed with some questions, so I'll make sure I leave some time to address those. One of them was
really around your role and just maybe being a little bit more specific around that in terms of who reports
up to you. It seems that as CRO, you would have both marketing and sales reporting up to you. Can you
just be a little bit more specific, I guess, on that, just so people are aware of kind of where your duties
take you? And what's your day-to-day responsibilities?
Gavin E. Patterson
It's the sales function. So it's the go-to-market sales function within the organization. I will be the person
who's responsible for ACV, which is the key driver of revenue in the business. And at the moment, I'm
responsible for the international component of that. And in the future, it will be international and U.S.
Marketing as a function reports into Bret as the COO, but it is one of those functions that effectively works
between us because their job is, ultimately, to help us build pipeline and build demand for the service. But
my job is all about the sale.
Okay. The second question was really about the Customer 360, just where it is today. I realize Bret is
sort of the product guy, but what are some of the tweaks maybe that you would like to see or maybe not
even -- I don't want to put you under the microscope on that. But maybe what are the things you've done
around Customer 360 where you think the changes or additions from a product perspective are having a
real impact in your conversations with customers?
Gavin E. Patterson
I think it is pretty strong today. So you wouldn't be surprised that I'm not going to sort of come up with...

You want me to put some pressure on Bret and [indiscernible].
Gavin E. Patterson
To just not use this as an opportunity to do some company business in a public call. But look, at the end of
the day, it's a very strong overall set of services that hang together behind a single truth of the customer
and a single source of data. And being a cloud-based service that you can turn effectively into a sort of
subscription model and that you can use things -- you can bring things in and out of it relatively easy.
It's a very compelling overall proposition to a company. I guess if I sort of pivot it slightly to something
we haven't talked about, but I think it is a hugely powerful component of the 360, it's the platform itself.
So the platform and the ecosystem of apps that have been built up around it, both from Salesforce but
also third parties, is extremely powerful. And it's that, more than anything else, you sort of -- I look at
that and say, as a CEO, that is what I want as the sort of underpinning system, if you like, to build my
customer relationships on because it gives me agility. It gives me choice. It gives me the chance to build
things myself, buy things from third parties, but also buy directly from Salesforce. So it's really, really
powerful. I think it's personally, I think, it's underplayed in the way we talk to customers because nobody
else has got anything like this.
There's people who -- some of our competitors, I think, try and talk this way. But if you look at the
strength of this ecosystem, it is very, very compelling. And certainly, it is something I intend to use much
more in my conversations with customers. And if you want to see what it means in action, something
like Work.com was spun up in, I think, less than 2 weeks, building on the core platform, building on
standard building blocks. And it means that actually, you are relevant to a customer exactly what the
challenges they're going through at that time. And as a way of engaging with customers, as a way of
demonstrating the flexibility of the Salesforce Customer 360, it's a fantastic example in that respect. So
it also allows Salesforce, of course, to create businesses that are built solely on Salesforce, and Velocity
is an example of that. It gives us huge reach into the market because there are a lot of people who are
building businesses on the back of Salesforce's software stack, and there's enough value to go around for
everybody there.
Yes. That's a good point. I think if I'm not mistaken, I think Marc and Aneel are doing a webinar
themselves in about 20 minutes, if anybody on this wants to listen in on Work.com. So I guess we're the
appetizer for that webinar.
Gavin E. Patterson
Yes. We are on the end of the [indiscernible] today, aren't we?
Yes, exactly. So the next question was around verticals. We talked about this a little bit. How do you think
about sort of specialization from a Salesforce perspective versus partnering, obviously, with some of the
bigger SIs that have, obviously, very deep expertise in certain verticals? How are you thinking about that?
Maybe where it is today? Is it the right mix? Any thoughts on things -- everything could be tweaked, but
where are you on that front? And what kind of -- how do you think about balancing that?
Gavin E. Patterson
Look, I think what I would say is, I think part of the strength of Salesforce is that it has been designed in
a way that not only can we grow consistently sort of 20-plus a year CAGR rate as a company, but other
companies that build off it that solve problems for customers can do the same thing. And that extends
our influence and our impact and our relevance to our customers. I think if we try to do it all our own,
we would be a smaller, less relevant company, and we wouldn't have had the impact that Marc has had
over the last 20 years. So to me, I think it was visionary to think about a model where actually you can
harness the reach and power of the SI community. It doesn't mean that we don't need our own services
businesses, by the way. I think in many cases, customers want our services to deploy the software and
don't want to engage with an SI. But the majority of programs with customers, and certainly the big ones,
are with an SI in tandem.
What I would say is, we do our best work when we are sitting at the table with the SI and we're equal
partners in front of the customer. That is the right way to do it. I'm less keen on being a component in
somebody else's solution for a customer where we are blind. And the reason for that is, I think we do
the best solution or create the best solutions for customers when we are pretty standardized, minor
customization around the edges, but it is we keep to a standard set of products and services. And the
reason that makes sense for companies is as we upgrade, it means that you can upgrade quickly and you
-- the maintenance of the stack is much cheaper. Standardization is really -- in my own experience, is
really what the CEO wants. They would rather adapt their organization around a standard product than
the product to be customized for their organization. And that is a debate I think we need to make sure
we have with customers, because occasionally, I think they buy customization thinking it's good for their
business. And yet, it leaves a legacy cost structure that you regret later in life. But partnerships with the
SI community and the ISVs, I think, is absolutely fundamental to the way we go to market.
That's helpful. There's a few questions around this. One topic, so maybe I'll phrase it this way, which is
Salesforce's true north is always going to be growth and it should be, given the opportunity. Maybe how do
you think about productivity, just in a general sense? I realize, again, you're not starting in your full role
until August 1, but just how do you think about balancing the opportunity versus increased productivity
or managing productivity? I don't know if you have any deep thoughts on that as of yet, but there's a few
questions, so I want to make sure I at least pose it.
Gavin E. Patterson
Sure. Look, we're very clear. Growth is the number one priority and the number two and the number
three. But I think we need to be able to, I would describe it as, walk and chew gum at the same time.
And certainly, it is my focus or one of my focuses, and one of the things I think I've brought already is a
much closer inspection on things like productivity and participation and making sure that we get as much
out of our sales capacity as we possibly can. And that experience of working in businesses where cost is
more important, it means that it's something I'll always keep an eye on. So look, I'm not going to change
the company mantra. So please don't take anything else away, but what I can say to you is I come from
a sort of 30-year career work where cost discipline and operational excellence are critical to a successful
business over the long term.
That's very helpful, and I think a great perspective on it. Last one for you and then I'll let you go, and
we can all get ready to listen in to Marc and Aneel. Just competition, one of the things one of your
predecessors just talked about was, there isn't many technology companies that get the opportunity to
have a discussion with the CEO. So competition isn't necessarily an RFP bake-off versus other vendors, but
do you see anything -- who's out there if you run into anybody? And just how do you think about, I guess,
competition more broadly as you look to take on the global CRO role?
Gavin E. Patterson
Well I think there are a lot of competitors. I don't think there's any that does the full Customer 360. So
one of the challenges we have, I think, is making sure that we are competitive with each of our clouds
as well as being competitive in totality. We're only as strong as our weakest link, so we can't let one of
our competitors that's particularly strong in e-commerce, for example, or one that's particularly attacking
through service to make any ground on us at all, because as soon as that happens, they establish a
beachhead and then you're into a different ballgame. So we need to be strong in each cloud and we need
to be strong in totality.
The point which is how do you sell into a multinational is a very interesting one. And it's -- you're
absolutely right. You've got to find a way to engaging at the top of the company. And there's an irony
that actually, in many ways, Salesforce is not a huge billing in a multinational company. It's -- in BT, it
probably would have been in sort of one of our top 20 or even 50 suppliers. It would be -- so you have
to -- if the CEO really says, who do I need to meet amongst my vendors, I'll see the top 10, you're not
going to get to see the CEO. What you do need to do is find a way of reframing that to say, how can I be
your partner in digital transformation? And importantly, use every avenue you have to get into that C-suite
and into the boardroom, which is why the relationships with the SIs can be so important because they're
often selling in bigger projects. They've often got auditing relationships or consultancy relationships that
they can leverage, and so often have more of a natural cadence of meetings. It's why it's important that I
leverage my network that's come from being a CEO myself and the people I know, and use that as a way
of getting in to meet CEOs and getting them to reframe how they think about the company. It's a total
CRM company. It's not a pure-play software company, and they should be thinking of them afterwards
as a way of transforming how they manage their total relationships with their customers and a way of
completely growing the business.
And I'd say the last thing, and it's sort of an observation I have of the business, the real key to Salesforce
is, and particularly the CRM, is the software is clearly the market leader, and all the Gartner analysis
shows it's -- they're is clear blue water between the core CRM and its competitors. But it wasn't until I got
into the company and I saw how Salesforce used Salesforce that, that sort of lightbulb moment went on
for me. And I realized that I've not been using it to its full potential when I've been at BT. I've been using
it with our enterprise business to capture leads and sort of manage leads through the process. The way
Salesforce uses it, they use it as the tool to run the business. This is the way you ensure all the functions
are aligned behind the customer and building the product -- building the pipeline and turning that into ACV
that turns into AOV. That's the motion the company uses. So it's not just the software itself, it's how you
use it. And that's one of the other areas I'll be wanting to talk to customers more about.
Is there -- and maybe last thing before you go, that was just really insightful and helpful. Just coming
from a CEO background, I've always thought that when CEOs think about making big decisions on their
technology front, they look around and think about what their customer or the -- sorry, their competitors
are doing. Is incumbency just a huge advantage that sometimes isn't appreciated, meaning -- and I'm
just making this up, but if Coke is using Salesforce, then Pepsi is going to wonder, why aren't they using
the market leader? Does it make it much more difficult for competitors to sort of get into a market when
there's a sort of incumbent that is leading with innovation and already has many of the leading brands
of the world and companies of the world on it? I mean if you're the CEO of BT and your competitor's on
Salesforce, how high would the bar be to go with something else?
Gavin E. Patterson
There is some truth in that. You have to be very -- as the vendor, if you're in that position, and I think
Salesforce is in many areas, financial services being an example, I think you've got to make sure you
remain humble and not complacent. But once you begin to figure out how to create solutions for verticals,
you're just able to solve problems that all customers who operate in that vertical are seeing, particularly
around digital transformation. And I think that's why Velocity, I think, is a terrific acquisition. I know
they've got real -- from my own experience, I could see their depth of understanding on what a telco is
facing, and the challenges that BT are facing are exactly the same in their operation as Verizon are or
Telstra are. So you generally don't compete in your sort of domestic markets with each other. So you're
very interested in seeing how others are doing it and how they're getting impact and building new revenue
streams. And so I think there is a power of market leadership. And the key is just making sure you don't
take it for granted.
That's very helpful. Well, Gavin, thank you very much for taking some time out and sort of introducing
yourself to this new software investor landscape. I think everyone will look forward to speaking with you
more. The fact you did this even before you took on your new role, and I really appreciate it, I realize
that's always challenging. But again, thank you for your time, and best of luck in your new role, and safe
relocation to San Francisco, whenever you're able to do that.
Gavin E. Patterson
Thanks a lot, Kirk. And enjoy Marc, and his musical guest is an excellent one today. So I won't tell you
who it is, but it is worth staying on for it.
Okay. And every day, actually, I get a bunch of e-mails that this is the Leading Through Change series
that Salesforce is sponsoring for that event. So look for Aneel and Marc under that. Hopefully, I don't think
the time's changed. But I imagine that'll be a good episode to listen into from most of the investors. So
everybody, thanks for joining us. And Gavin, thanks, again, and everyone, have a great afternoon.
Gavin E. Patterson
Thanks, Kirk. Bye.
Company Conference
Presentation
Wednesday, June 10, 2020 6:00 PM GMT
Contents
Table of Contents
Presentation .................................................................................. 4
SALESFORCE.COM, INC. COMPANY CONFERENCE PRESENTATION | JUN 10, 2020
Call Participants
EXECUTIVES
Mike Micucci
Chief Executive Officer of
Commerce Cloud
ANALYSTS
Walter Herbert Pritchard

Citigroup Inc., Research Division
Presentation
Great. Thanks. So thanks, everybody, for joining us for the next session. I'm Walter Pritchard, the
software analyst here at Citi. And happy to have with us Mike Micucci, who is the CEO of the Commerce
Cloud at Salesforce. And I just wanted to let -- to remind people, I put out a few calls for questions. If you
want to send your questions in, my e-mail there is at the bottom of the screen, and feel free to send me
additional questions as the session goes on here, and I'll try incorporate those as best we can.
Question and Answer

Again, Mike, thank you for joining us here. Would love to have you just give a little -- even as Salesforce
about 10 years came in through an acquisition that Salesforce did, which is -- we've seen actually
quite a few people show up at Salesforce that way and stay. Maybe you could just give us a little bit of
background, your history at Salesforce, and I obviously mentioned your titles to what you're doing now.
Mike Micucci
Chief Executive Officer of Commerce Cloud
Yes. Well, thank you, one, for the opportunity today. It's great to get to share the story of Commerce
Cloud. I joined in August of 2009, coming up on 11 years. I know this date very well. And I had started
my own company, a company called GroupSwim in 2005. It was a small collaboration / kind of [ plural ]
company. And we came on board in 2009 with the goal to help Salesforce build Chatter. So my team came
on board and we piled on with the Salesforce team, we built and launched Chatter and then from there,
we decided to figure out a way to take Chatter and let -- help companies communicate across company
boundaries, so connect companies together. And that led to building Community Cloud, which I launched
in 2013. Fast forward, I still manage Community Cloud, which is quite a large product of Salesforce now,
in addition to Commerce Cloud, which is B2B commerce, B2C commerce and our new -- we launched
order management product. It has been absolutely a blast in what we've been doing.
Got it. And so now as part of -- a CEO conference call, you have Community Cloud, you have the B2C
Demandware piece and then you have the B2B side. Can you maybe help us understand any other
products that are under your purview just to frame the discussion for folks?
Mike Micucci
Yes. I mean -- so I think you nailed it. Commerce Cloud, which represents B2C Commerce, B2B
commerce, our order management product, our content management product, all of Community Cloud,
which is anything that touches portals. So if there is a portal interface for Salesforce, whether it's
connected to Service Cloud or Sales Cloud, any part of Salesforce. So for example, like the Small Business
Association, those loans that we did with our partner nCino and others, the interface into that was
Community Cloud, which is one of our products.
Okay. Got it. So maybe just starting out high level here. Could you talk about -- I mean, Salesforce has
been a growth company for a long time. Can you talk about which areas of the business that you're
focused on you see driving the most current growth? And sort of where they are in their life cycle in terms
of being able to drive sustainable growth?
Mike Micucci
Yes. I think if you -- this year, obviously, everything is pretty crazy. Went into the fiscal year with one plan,
and obviously, working through Q1 had a completely different plan. And I'll kind of frame this through 2
lenses. The product lines I lead, which are really, I think, in all, are essentially the experience products,
right? And they connect consumers, they connect businesses together. And both have gone through an
unprecedented growth swing right now. Commerce Cloud, I think, you probably heard on earnings call,
Bret mentioned it. Our GMV, based on store revenues, are well up over 100%, where essentially every day
is Black Friday at this point. But interestingly enough, Community Cloud, aka the portals, has also been
surging, partly because a lot of public entities, governments, whether it's the state of California, the state
of New York, are using Community Cloud to push out all sorts of public safety, PPE, COVID programs. And
we launched more Community Cloud portals in the first quarter of this last year of this fiscal year than we
had in any quarter ever. I think March or April, we launched the most in a single month than we'd ever
launched. And really a testimony to the platform that we can spin these up so fast, and they're perfect for
public entities because we can launch them, we can connect right into CRM and manage the whole kind of
process, whatever that might be for whatever, contract tracing to testing.
Got it. And how do you separate, I guess, maybe it's starting to get impossible here to sort of think
about the pre-COVID world versus where we are today because we're going to move forward in a new
environment. But how do you think about the sort of demand drivers that you saw kind of going into this
time frame here? And then sort of which of those have been sort of magnified? And then have there been
any that have slowed down in terms of demand drivers, given what we've seen here across your portfolio?
Mike Micucci
Yes. It's -- the COVID piece has just been like it's kind of mind blowing from a commerce perspective. We
did $40 billion in GMV last year, and I've never seen a growth curve like what we've been seeing in the
last 3 months. Each month is a new record on GMV. And the entire industry flipped to digital-first in like 2
weeks. We're seeing customers do things they'll do in weeks that used to take them years. They've moved
these projects forward despite COVID. They've just prioritized anything digital because they realize that at
this point, this is not going away. It's going to come up, it's going to come down and it's impacting their
business. It's impacting how they manage their inventory.
So like for us, from a growth driver, it's literally helping our customers now like transform at like what
used to take years now into weeks. And the first month or so in the crisis really in Q1, a lot of it was
about, okay, how do we get stabilized, get our workforce working from home. And now they're all in kind
of reopened and getting back to work, but in -- through the lens of digital-first. Many -- like in the retail
sector, many of their stores are not going to hold them back up or if they are, they're going to be very
slow or they're going to turn them into DCs. So how do we help them there? So this is all like changing
from a growth perspective.
I think the other piece is Commerce Cloud, up to this point, has been heavily retail fashion-oriented
from an industry perspective. We're seeing massive growth outside of that industry, a big surge across
consumer products and then B2B as well, where B2B product, very much focused on manufacturing.
This was kind of a new area for a lot of companies. Now they're shifting completely where they have to
squeeze big efficiencies out. They don't have the same flexibility of putting their physical sales force to
work. They have to be basically at home. So they have really come back to us and said, "We need to
accelerate the B2B piece as well."
So that shift, what's happening for us is it was a lot of positives, has really shifted our business from not
just retail, but really a broad industry TAM expansion.
Got it. And I guess, obviously, the overall picture at Salesforce, not your responsibility, but guidance for
the year came down a little bit and so forth. Are there any areas of your business that you're seeing some
softness in? Obviously, the -- we totally get it, the commerce piece is, I think, across the industry, that's
been an area of very clear strength. But I'm curious is there any areas where user or buyer behavior
might be changing to the negative side, driving somewhat of a headwind?
Mike Micucci
Well, I think if you look at commerce, this is why -- it's kind of been interesting. I'll kind of paint it through
the lens of commerce. If you look at that business, if you're -- particularly in the retail sector, there are
a lot of winners and losers here. I mean, if you're in an industry, particularly like the fashion industry,
where the demand for your product is really slowed because, look, I'm working at home, I'm wearing a
hoodie right now, so a lot of us are not -- it's just -- it's a completely different mindset of what people are
purchasing. And so we're seeing a slowdown in your traditional kind of retail fashion apparel unless you're
in like athleisure or something like that. But like I mentioned, it's shifted over where we're seeing a lot of
demand in other areas.
So the other thing I would say is, broadly, is speed is really the new weapon, which is great to be a --
have a platform because the companies used to do these big replatform projects. If they're in commerce,
was like, "Hey, I'll replatform, it takes me 6 to 8 months and then I'll run that platform for 8 years."
Now it's like, "Okay, I need to basically accelerate digital transformation. I'm going to take these small
projects on, bam, bam, bam, fix my inventory, fix my store, curbside pickup or whatever." So having
kind of a portfolio of products that you can slot in. So to answer your question and come back is we do
see slowness in certain segments, particularly in areas where -- really particularly hard hit with COVID,
where they just can't make capital investments. But the change has been -- there's been so many other
industries like, "Oh, I have to go digital-first. I have to go now. I have to like reprioritize a lot of my
investments.
And how have you, from the perspective of going to market, when Demandware came in, this was sort
of an add-on product. You had a few other products that were sort of add-ons. Where is the company in
terms of kind of pre-COVID and now leading with Commerce Cloud versus Commerce Cloud being a sort of
add-on to the broader sale that's happening?
Mike Micucci
Yes. Here's maybe a good way to think about it. Companies when they buy into Salesforce, they're
really buying a platform to run their business. Commerce is often the tip to the spear for any consumer
business. It's where we capture the order and build the experience. We took a big step engineering-wise
back into the architecture a couple of years ago and really worked on the underwriting platform to make
sure the systems can work together. And those are starting -- those efforts came out with Customer 360.
Last year, at Dreamforce, we really kind of pushed and showed the world what we could do in connecting.
So where we see big benefits is the combination of Commerce Cloud and Service Cloud, and it's hooked
together by our order management system. So we launched [indiscernible] GA with the new order
management. It was completely rebuilt on top of the Salesforce, what we call core Lightning Platform.
It's a native data model. Just -- all that means we've completely connected Commerce Cloud and Service
Cloud together. So when you buy Commerce Cloud, it's pretty natural to add order management and
customer service because they look like the exact same product. It's no swivel chair. It makes it really
easy for our customer service agent to respond to any order, do refunds, appeasements, all within one
system, completely connected to one customer record. That is just an unbelievable cost savings for
customers. They don't have to integrate 2 systems. They get 3 releases a year, world-class workflow
management, all completely tied together. When I show this demo, when I show them connected together,
and it's just the way it works, ground up, it's kind of a game changer for most of our customers.
And that combo of Commerce Cloud plus order management plus customer service is really a killer,
winning combo. It's been a big, big piece. In fact, this year, just because with Commerce Cloud, I
have add-on products like order management, I'd say about 20% of my pipeline right now is just that
combination of adding these add-ons, which connect customer service together. It's been a real win.
Got it. And just following on something you said there. I think we were at Dreamforce, it feels like years
ago now in the fall, but there were a lot of integrations shown and you have MuleSoft and so forth that
bring some of that in. Where are you -- I mean, some of these acquisitions have been done for years now,
where are you in terms of the sort of integrations and being able to deliver that seamless experience,
specifically where things connect into Commerce Cloud? And I guess from 2 angles: One is the broader
sort of integration priority at Salesforce, and then the other is just the M&A integrations that need to be
done when you bring in another company.
Mike Micucci
Yes. I tell you that, really happy about where we're at from the integration piece. Specifically, on MuleSoft,
we did a lot of work with the Mule team over the last year. And MuleSoft and commerce are really 2
very complementary products. Even before MuleSoft became part of the Salesforce Ohana, many of
our customers were using MuleSoft for that integration there. I mean, to deploy a commerce system,
there's about 32 different integration points. So having something like MuleSoft and create that common
integration layer is just a big win.
You see, many of our customers, it's a combination, like I said, they're buying Salesforce to run their
business. So it's a combination of buying Commerce Cloud, Service Cloud, order management, Mule for
the integration and marketing for demand generation.
So I'll give you an example. You can look it up if you want. It's called the Commerce Cloud Developer
Center. Anybody can use it. We launched it in February as part of headless commerce, and it's for
developers, where they can go and explore APIs, look at sample apps, there's a marketing service in
there. It's a phenomenal Salesforce-on-Salesforce example of best practices. It is a Community Cloud, it's
a portal. MuleSoft is integrated in. So it's MuleSoft Anypoint. So fast for developers interacting with all the
APIs, and it's all running for Commerce Cloud. So when you're essentially using Commerce Cloud, you are,
in fact, using MuleSoft. It's part of the stack. And then if you want to create a common integration layer
for any warehouse management inventory, many, many companies buy MuleSoft in conjunction.
So these products are really coming together. And again, that's one of our big advantages is you
often go into a company, you look at their kind of stack for commerce, and it is a very complex set of
interdependency products that they get bogged down in maintaining integration, so not driving kind of
customer experience to store revenue. We've really helped eliminate all that with the combination of
MuleSoft, pre-integration with Service Cloud so that they have this complete system.
The marketing cloud piece of that, I haven't talked a lot about, is the other pillar for demand generation.
So I often talk about it like this, marketing cloud for demand generation, all the way through to the
abandoned cart, Commerce Cloud for the experience, capturing order, it doesn't stop when you hit order,
then it gets passed over to order management and customer service. So we complete that complete circle.
If you're going to run a business, anything north of $10 million, all these pieces have to happen online.
When you get to $100 million to $500 million, they just become imperative. You're differentiating them in
the market. It is not just your store, but how that complete experience comes together.
And could you help us understand where you are in that process? You articulated that there's multiple
point solutions that are legacy that are involved in this whole commerce team with customers. Where are
you in terms of, I mean, landing with one product versus being able to sort of replace a lot of these other
products? How far along is that in the sort of sweet spot of the customers that you're going after with your
product line?
Mike Micucci
This year, post Dreamforce, we're pretty far along. The -- like I said, the GA, the general availability, of
order management in February with pre-integration to service cloud, so checked, checked, done. MuleSoft,
we pre-integrated in, plus MuleSoft accelerated. That also went GA in February. So checked, checked. So
these pieces of the product have all been done and integrated. And now they're just part of our normal
selling motion.
Marketing Cloud, we have done great work on our connector pieces. And so customers who want to
connect Marketing Cloud into commerce, the connector piece is now -- we have been -- we talked about
this at Dreamforce. We are going to announce the new version of B2B commerce shortly. It comes out
this quarter. And it is a reimagined B2B commerce experience completely tied into the whole Customer
360 and Lightning. So it's native integration with Service Cloud, native integration with basically Marketing
Cloud and Pardot and all of CRM. So if you're looking at running, particularly your channel, and you
already have Salesforce, this is like very much just like adding a blade into our platform.
We're really excited about the product. We've had good success with B2B. This is going to add a lot of
acceleration.
Got it. And one area that I also saw some focus on at Dreamforce, and I think it was an initial foray into
this market. It's been the web content management area. What do you sort of -- maybe position what
you're trying to accomplish in that market. There's obviously been web content management systems
across the landscape for many, many years. There's competitors like Adobe that are investing pretty
heavily there. How would you sort of position that? And then I had a follow-up on that.
Mike Micucci
Yes. We developed our CMS, one, through the lens of removing friction for our customers. So the CMS we
built was -- started out to accelerate our portal deployments. And so that if a company could use CMS,
they wanted, but they really wanted a way where it was just seamless but tied back to the customer. So
that if I had a piece of content, I could reference it exactly back to the customer or the account from the
partner. And so what we did is we took an idea since we think it was like headless CMS. And we developed
it so that it could be used across any piece of Salesforce. And that CMS, you could start with an e-mail
campaign, so you can write your e-mail copy, push it out an e-mail campaign. That same copy can be
reused in Commerce Cloud. So if you want to post it as a blog or a landing page. That same copy can be
used in Service Cloud, if I have to push it out to their customer service channel. And that same copy can
be used inside Community Cloud or, let's say, a portal or a customer service example.
So think of it this way, our goal was to have remove friction for customers to go fast.
If you have an existing CMS, great, we'll work with it. We've been working with it for a decade with all
sorts of different CMSs. But again, the goal here is to remove friction, remove integration points, so that
when a company is using these products, they don't have to spend all this time stitching it together and
maintaining integrations. Three releases a year, one platform. Think of it as content that can be used
across the entire Salesforce spectrum. And of course, we use it outside of Salesforce. Our goal is really
just making it easy, remove friction in integration points. And it also helps a lot from an AI perspective
because we can gather a lot more signals to use and target that content.
How do you -- so a follow-up on that. How do you think about the buying decision sort of historically? And
then more importantly, moving forward around the CMS. So you're trying to tie it very closely to your sort
of outbound channels, the commerce, the marketing -- e-mail marketing and so forth to enable customers
to go fast. And to some degree, though, web content management has been a separate buying decision
that happens on its own. Are you sort of trying to sell across the board there? Or do you not want to be
slowed down by trying to get into that sales cycle and really focus on the kind of moving fast sales cycle
that you've articulated?
Mike Micucci
Our focus is this is a great add-on product when you're buying Marketing or Commerce or Community
Cloud. So if you're already making a decision to build your experience around one of these 3 pillars,
adding web content management on as a way to accelerate it is a pretty natural decision. We didn't kind of
wake up one day and, "Hey, we want to just have this new web content piece." Instead, we really wanted
to take a step back and say, "How can we help our customers be more successful?" And it was really
through that lens, and we tried to reimagine how content would work through the lens of being customer-
centric versus being website-centric.
If you want to go build pages, there's tons and tons of products out there. But if you want to put the
customer at the center, tie it to content and then push it out through multiple channels, that's the kind of
net difference.
Got it. And I think actually, that answer, I think sort of answers the next question, but I want to make sure
I put a finer point on it. So you've got Adobe as the leader in that web content management space. I think
you sort of almost [straw man] articulated their strategy around the web. But how -- in terms of what
you're seeing in the 6 months or so that you have this product out in the market, how would you articulate
competitively versus Adobe in that market that you've seen as it's been out on the street?
Mike Micucci
I think COVID, and what we're seeing with COVID really amplifies this, is back to speed. Speed, digital-
first is the name of the game. And it needs to be so that it's personalized to me wherever I go. So again,
you could take a model where I'm going to be content-first, I'll put pages up and content and then try and
work backwards. Instead, we work it the other way: customer first. Okay, how do I match the product, the
content to where the customer is going to be, no matter what channel. And I think that lens of speed and
connectedness is really the name of the game right now, and it will always be. It's going to accelerate. So
this was kind of -- I would say, is like the next-generation of where content needs to go. Content is not the
lead anymore. The customer is the lead and building the experience. Content is the thing that fills in the
gaps.
Got it. And then similar to what you talked about with B2B commerce, where do you feel you are in terms
of sort of release road map, having like the full -- sort of meets the Gartner magic quadrant specs and all
that for the web content management capability, as you talked about it versus, say, B2B commerce and
some areas?
Mike Micucci
Yes. I think we're crushing it on B2B. I think the Forrester Wave just came out. I'm sure we can share
that, or it's probably up on our website. We're the leader in the B2B, for a product that we only pushed
out about 2 years ago. I'm seeing many companies now at well over 1 million orders per month, which is
phenomenal on the stack.
As I mentioned, the new product that's coming out is literally just a function step, force multiplier in
the product. And I'm bringing this up in the fact that, our platform, Lightning experience, allows our
customers to build very declarative experiences super fast. So this is not just my team building B2B, this
is leveraging the full impact to Salesforce from our app exchange all the way through. And you'll see that
connected journey. And so if you're a company who uses Salesforce maybe to manage your partners, new
customer service, adding B -- or CPQ, adding B2B is literally as much as enabling it and building out the
process for us.
So we are -- I would say we are -- we've just kind of opened the next chapter on B2B with this new
product. We've literally been working on it since the acquisition happened. And it's just going to be really
well received. Couldn't be more excited about it. And I say that because it's been kind of part of our vision
since probably for 2 to 3 years now is building this next step.
Got it. And then similarly, with web content management, where do you feel that product stands, say,
versus the kind of Gartner magic quadrant traditional definition of what a product needs to be to be
considered a leader in that space?
Mike Micucci
Yes. I'd say we're early in CMS. It's only -- I think we've only released it. It's less than a year. It's seeing
excellent adoption, particularly through Community Cloud. It's kind of a checkmark for Community Cloud.
We only just launched it in February for Commerce Cloud. But again, when I look at Commerce Cloud
and Marketing Cloud, if you're trying to go-to-market quickly, the more integrations you can remove,
the faster you're going to go. And in post-COVID, when you've got to deploy a solution because you
have the inventory locked up somewhere, in a couple of weeks, having that CMS, it's just integrated in,
just removes another piece of friction. So yes, we're early on that product journey. But again, it's not a
traditional CMS. Think of it as a platform that supports content delivery across any product at Salesforce
that gets automatically upgraded and just becomes kind of the way you do business.
Got it. Okay. That makes sense. I wanted to sort of transition the discussion a little bit to talk about go-to-
market and then talk about some of the ways we see the business come through in the numbers. On the
go-to-market side, can you help us understand sort of the sales motion for your product relative to maybe
the larger strategic enterprise sales reps versus sort of specialists around Commerce Cloud? Where are
you seeing the most success with -- as it integrates in with the sales operations at the company?
Mike Micucci
Yes. I mean, so particularly on B2C, we run, what we call, prime organization in B2C. It's a very -- it's a
specialized team, global team. And we've had a lot of success. They have a lot of commerce expertise.
They partner up with their core team, particularly when it's across industries. So we'll run plays just
financial services, health care or whatnot, where it's a combination of products. That's been tried and true
practice of Salesforce and very successful.
B2B, it's a mix. We obviously attach it when we sell on B2C, but it is also fundamentally a product that fits
very well in the Salesforce B2B core sales motion. And so we sell it as probably we saw more through our
core sales team than through the traditional prime commerce team.
And customers want a platform for commerce. I think -- so you will -- there'll be a day relatively soon
where it's not B2B or B2C, it's just a commerce platform. And I am just expressing commerce in different
ways and different touch points. Most of the world's products are being digitized at a very quick pace. And
what we think about today as a store tomorrow is probably starting in the doctor's office and ends up in a
shopping cart. And so I think of it very much that way is we're adding commerce capabilities throughout
anybody's workflow. And sometimes, we sell that through our core teams, sometimes we sell it through
our specialist teams. But we see these use cases blending more and more. And that's really been our
ultimate goal is distilling commerce down to the platform elements, product price, catalog and then letting
them be embedded in any sale.
Got it. Got it. Relative to the way that you sell -- Demandware, for example, before it was acquired, there
was more of the sort of revenue business model around GMV, and I think the company transitioned that
to some degree. And you've talked about some of the GMV metrics up 100%, things like that. What are
customers telling you around how they want to pay for this product or this product suite? Sort of capacity-
based things, like GMV and web pages and so forth, versus something that maybe ends up looking more
like a more fixed cost for them?
Mike Micucci
Yes. I mean, I think in any business, companies want predictability. We modified the Demandware model,
mined it more to what we thought was market acceptable. We constantly tune that. It is based off of
GMV. So we essentially -- we got to figure out what their GMV projections are. They buy a percentage of
GMV, and off we go. We recognize and burn that GMV down over the life of the contract. So GMV grows
immediately, like when it's surging, doesn't necessarily translate directly into net new revenue. That's
recognized over the life of the contract. What is happening is they're burning down their GMV commits a
lot faster. So that will generate more renewals because they're going to have to renew faster on the GMV
side.
B2B, we sell on orders. That aligns much closer to the industry. And I think you'll see us continue to tune
these models to make it more transparent and easier for companies to digest. But that's everything.
Pricing is an ongoing kind of evolution, but it's all about removing friction at the point of sale.
So is it safe to say then on this sort of surge in business, right now, if XYZ customers lost capacity in the
contract, you're not going to see any more revenue. But if they work through that capacity faster, you
might see them come back and commit to more earlier than they would have before?
Mike Micucci
Yes. It's going to drive a faster renewal cycle, correct.
Okay. Okay. Got it. And then just one other actually product-related question. I had a question come in
here that I wanted to incorporate in. You talked earlier about order management. You mentioned that a
few times. So like I've been involved -- I've been covering SAP for 7 or 8 years. And thinking about the
traditional ERP type product line that has traditionally had things like order management in it, how do
you contrast where your vision is around order management versus -- I would imagine some of these
customers, they have a long-standing ERP system that might have an order management [ appendage ]
on it.
Mike Micucci
You know what's interesting about order management? Because we started working on the product about
18 months ago is I talk to customers almost every day. And I've yet to meet somebody who likes their
order management system. It's like, "No. I don't like that." It's like, "Yes. It can get us a job done, but
whatever." So we rethought order management I think about like Amazon Prime. Amazon Prime, when
you buy Amazon Prime -- probably everybody on this call uses Amazon Prime, that's essentially about
order management.
So we rethought it as customer-first, customer-centric. And I mentioned before, it's meant to be visible.

It's tied in to customer service. So you have much more visibility over the order I placed, when is it going
to be delivered, how I do my refund, how do I do appeasements and tie it into the customer service
experience. So that was the goal. There's tons of back office, warehouse management and so forth that
the ERP systems will always do. But we reimagined order management as customer-centric and customer-
focused. And when you show this, that tied-in experience, particularly as you start to drive it into stores, it
is really a game changer for the customers. It's been really well received.
Got it. So not to put words in your mouth, but it sounds like order management was connected into the
ERP. You're sort of trying to wrestle that away from the ERP and replace it with integrations into some
of those pieces that will almost always live in the ERP system, like warehouse management that you
mentioned.
Mike Micucci
I would put it this way. Order management will always integrate into ERP. That's important. It will always
integrate into warehouse. But the legacy order management systems were very, very back office, very
inflexible. The new order management system that we developed like, again, Amazon Prime is very
customer-centric, a lot of visibility for people who order, very tied into customer service and it's very
workflow-centric. So with COVID, for example, you could spin up a new workflow on order management in
basically less than a few hours and push it back out.
I'll give you an example on that. We started surveying our customers as they kind of got stabilized in
the new normal. I started talking to many of them and said, "What do you need?" And they said, "Well,
we really need to figure out how to do curbside. We have inventory locked up in these stores. We need
to get selling. We need to get it out of the stores." So a very simple extension to order management.
We launched what we call a commerce quick start for curbside delivery. Essentially, it's just a set of new
workflows on the order management system in conjunction with -- we put out a simple portal where you
can go and look the order up.
You couldn't do this with a traditional back-office system. It's tons of integration, changes to your ERP
system. We did this in a couple of weeks. A customer can deploy it in 2 weeks or less. And it's just
workflow, it's workflow changes to help them respond to this crisis, get product to their customers but be
very, very transparent. That's how I would define new order management world.
Okay. Got it. That makes a lot of sense. I've got 2 other follow-ups coming just on the stuff before we
discussed, so I want to go back and just get them. One was a very simple question. It's around B2B and
B2C. I mean, you did articulate that going forward, at some point, it's going to be one market. But how do
you look at the size of those 2 opportunities today and sort of your -- the size of your business? Or how
much success you've had in each of those 2 as of now?
Mike Micucci
Yes. B2C, our B2C product is much more mature. Demandware has been in the market for a long time.
B2B is new. It's growing quickly. When we launched it, we just -- just as a reference point, looking across
the Salesforce installed base, we saw a little over $1 billion, little over $1.2 billion in total addressable
market just within our installed base for selling in for B2B. It's an early product, something that we've
been doing in less than 2 years, but it's growing really well. And it really is just well suited to our customer
base. But over time, I see this merging together where it's -- really, it's just commerce experiences. And
companies are starting to get there.
B2B is kind of where B2C was 4, 5 years ago where everybody is like, "I got to put a storefront up."
They're kind of in that frame right now for B2B. But because of COVID, they're like, "I got to go digital like
really fast." And it just took what was a slower process 6 months ago to like super acceleration. And that's
been also -- like we launched 4 quickstarts: one was for curbside, one was for direct-to-consumer, another
one was for B2B. The B2B one is seeing the most interest across our customer base where companies are
like, "I have to move quickly now on B2B. It can't be this kind of second or third project. It needs to be
top priority."
Got it. And I guess, generally, the market estimates out there would suggest that the B2B -- B2C market
today is several multiples the size of B2B. I assume you'd agree with that. Or any --
Mike Micucci
I think in the selling market, yes. But the addressable market, if you look at the Gartner and TAMs or
whatnot, they're about the same size, B2B is a little bit bigger addressable because there's other factors to
it. But yes, I would say the B2C market is more mature from -- there is a much more defined audience, so
there is particularly a head of e-commerce or the CEO who's very focused on the B2C channel. B2B, those
kind of structure is still coming in place.
Got it. And then a question came in around GMV. And I think you articulated how customer commits to
something and then has to sort of true-up and early renew potentially. The question was around -- that
came in was around generally how much of the customers' sort of annual GMV expectation they would
commit to upfront? And obviously, we're in sort of untested times where probably GMV volumes are off the
charts. But how would that generally work around the commitment they would make upfront, the GMV,
versus how much they would generally true-up?
Mike Micucci
Well, if I understand the question, typically, a customer knows roughly their business plan and how much
online store revenue they're going to do. So they -- when we negotiate a contract 3, 5 years, let's say,
okay, we're going to do $500 million in GMV over the life of the contract, renegotiate the rates. And then,
like I said, over the life, we burn that GMV down and then we get to a renewal. And then we rinse and
repeat.
With COVID, what we're seeing is we're burning through GMV commits faster. It's still -- we're only a few
months into this, but I expect we will see earlier renewals from many companies as they need to true-
up their GMV. When everything shut down and all your revenue is going through to your store, it just
increases the amount. It's pretty natural. I mean, we're going to see when stores open up, there will be
a shift or some of the spend will start going back to the stores and we'll see a slowing. But we're at a
new normal where, particularly in commodity goods, why would you buy a detergent anymore in a store?
You're going to buy a lot of this online. Particularly, the subscriptions service is becoming strong.
Yes. And do those true-ups tend to be like if I signed a 3-year contract with Salesforce and they have sort
of GMV volumes for each year that I have in the contract, do I true-up after the first year? Or do I not
true-up until I blow through that third year of GMV commit?
Mike Micucci
It's a little bit up to the customers. But often, when they get close to the end of the contract, they're
looking at where they're at, and they'll then want to true-up at that point and so renegotiate a renewal. So
it's not every year. It's through the life.
Okay. Got it. That makes sense. And then another question as it relates to just the sort of go-to-market.
You have companies, very large brands that are using Salesforce here that are all well known. And you
have other peers that are at the low end of the market that -- if you and I wanted to open up like a
skateboard shop or something, we would just very quickly put up a store. How focused are you on that?
I think we see at Dreamforce all the CEOs from high-profile brands. I'm talking about the high end of the
market. How focused are you on that really down-market, low-end sort of tail part?
Mike Micucci
Yes. My focus is primarily on companies with roughly $10 million in GMV and above. I'd say our sweet spot
is definitely in the enterprise. Now you'll see us continue to drive down-market with the products as we
mature our declarative tooling to make it much easier. What I often see from companies is they'll start off
with a small store. And then the brand accelerates and a couple of things happen, and these are kind of
like triggers for me for a good opportunity, is a need to expand internationally and/or their business has
grown to a point where they just can't scale anymore. It's not so much they can't scale through physical
like shopper volume. It's -- the things that start to get impacted are customer service, order management.
"I got to integrate with 3 more systems. I need to launch in Canada, U.K. and Mexico." These are where
Commerce Cloud runs your business. I mean, that's where Salesforce comes in, and we can run -- literally
run the business. So that brand is now at that point where I can integrate and buy 5 different systems
and spend a ton of money or it can really prove the model, we're really good at expanding internationally
with multiple sites, managing multiple geos. And then like we've talked about connecting in the customer
service, order management and marketing. That's where we win.
Got it. That makes sense. I wanted to sort of -- 2 other product-related questions, one kind of following
along that line. Around -- if you look especially at that low end of the market, it's popular to maybe
integrate in things like a fulfillment network, payment processing and so forth. How important --
obviously, at the high end of the market, those customers are handling those -- themselves and they've
got very competent operations. At that low end, say, you get to $10 million, maybe a little bit above that,
how important is it that -- is it for you to have those capabilities that sort of -- not necessarily integrate
into other systems that they already have but provide some of these things that the bigger customers are
going to go out and buy themselves?
Mike Micucci
Yes. I call it potentially [ merchant ] services. Look, you've kind of seen the playbook that we run. We're
trying to remove friction and remove integration points. We offer tons of choice through the AppExchange,
whether it's Avalara for tax or CyberSource or Adyen for payment. Many of our companies are running
globally across many different regions. They need different sets of partners for different regions, which
makes perfect sense. But what you'll see is we will continue to provide turnkey across all these areas.
In fact, just back to the quickstarts we've launched. What we did on the quickstarts is we did pre-
integrations with these partners. So we pre-integrated with tax. We pre-integrated with payments. If
you already had a merchant account, we would just use what you had. But if you didn't, we would -- we
already worked it out with, in this case, CyberSource, so that it was super fast. And you'll see more and
more of these type of arrangements where we're packaging up the entire set of merchant services to help
the customers go even faster. So yes, I would say, particularly on the mid to low end, the more you can
package together the better it's going to be.
So would that -- that would look like, to a customer, they come in and they buy some sort of bundle or
package, and within that bundle, you would be sort of farming out to some degree that service to partners
through the AppExchange. But it'd be purchased almost like it was purchased as a bundle from Salesforce
without [indiscernible] with all that.
Mike Micucci
Correct. And also pre-integrated in. So pre-integrated means they're not going to have to do the heavy
lifting work. I mean, think about payments. The trick with payments, it's very complex. What we see, let's
say, in North America and U.S., completely different if you're selling in Asia Pac or even across Europe.
Different payment methods come in and out all the time. They want to leverage you kind of -- particularly
the newer style, like a firm in the -- Klarna and so forth. So what we're really working towards is giving
a lot more flexibility so as you deploy in all different regions and geos, you can move in and out the
payment types you want without doing a ton of tech lifting.
Okay. Got it. That makes a lot of sense. And then another product-related question. I think social
commerce has been an area where, I mean, there's been excitement, there's been maybe some
disappointment in the social channels. But we have a new world here where maybe people are spending a
lot more time sitting at home on social networks. How have you historically looked at social selling, your
role there? And then is that changing in this new world?
Mike Micucci
Yes. Well, I can tell you, I probably had to check my Internet speed because that's all my kids are doing
right now between that and Fortnite. So I think all these channels are raising an important [ rooms ]. Just
getting back to B2C, and I talked to a lot of companies about how they're reaching out, and depending
on their product, they need to sell on the different channels across all the different social channels. Some
have built a strategy on Amazon.
I look at it from 2 perspectives: how can Salesforce help both from a business perspective and making
sure we support these channels where there's not a lot of heavy lifting on the business relationship; and
also, how do we support these different channels technically so that if you -- if your brand strategy is
basically influencers through YouTube or Instagram, let's go that route. If it's like all through Facebook,
let's go that route.
So we've long done this. We have a number of brands. This is kind of -- particularly the cosmetic
lines. This is a big piece to them. I think stay tuned. You'll see more and more from Salesforce here in
supporting channels and growing those. And I like to point out, across the spectrum of our business, it
fits some people's businesses but not all of them. So when I look at channels, I also look at it globally and
in marketplaces, in international markets. In some markets, it's really important. In other markets, it's
just not important at all. So just like when we talked about payments, this is another area where again
removing friction, putting the customer at the center and allowing my product and price to show up where
I need to but still capture that transaction and then drive it back through a complete experience is really
key.
Okay. Got it. And then one thing that's been articulated at Dreamforce Analyst Day, for us, has been
this sort of cost to book, cost to serve, sort of upfront investment, sort of lifetime value of a customer.
What sort of finer points would you put on that -- for Commerce Cloud as investors are sort of looking at
Salesforce overall through that framework? But specifically to your business, sort of the upfront cost, the
churn rates, the margins on an ongoing basis, any points you can put out there?
Mike Micucci
I think 2 points. One, and I think this has been communicated at the Analyst Day, Commerce Cloud has
some of the lowest attrition at Salesforce, which makes a lot of sense. And these are platform decisions
for companies. They're running their business on it. It is literally the cash register. So once they're making
a decision to run their business, it's a platform decision. These things live for a very long time. And a big
part of my job is to share success with them.
That's why the GMV model is so important. And I really -- that's why I really focus a lot on GMV growth.
Are they growing? Are they getting value out of the platform? Because that's going to ensure retention.
Our entire kind of customer service group model is built around making sure they grow GMV. I would
point out our Einstein, essentially AI capability, is embedded within Commerce Cloud. Its entire goal is
to help accelerate GMV. It's not an add-on product and something you have to buy. It's just there to
help accelerate GMV growth. We see companies -- most companies use it, just turn it on. It's about -- it
increases store revenue by about 10%. So this model is a shared model. And that's pretty much what I
focus on. I also focus on obviously the retention, and that's why I'm pretty proud of the low -- basically
really low attrition on the cloud.
Got it. Got it. Okay. I just had one other question that came in that I wanted to make sure I got here. And
it actually relates to -- I'm not sure that you've completely articulated this, but how do we think about sort
of the long-term profitability profile, again, versus the rest of the company? Is there anything that would
stand out either way that would that -- well, obviously, all these assets within Salesforce are in different
stages of their maturity. So some are investing more than others. But is there anything around the long-
term profitability that maybe you'd point to us to make sure we understand how that might stack up?
Mike Micucci
Yes. Here's how maybe I would think about it, because we clearly don't break this out separately, is we
look at this as how do we help the company run their business. And a big pillar of our business particularly
on commerce is connecting the customer journey and -- across Marketing Cloud, Commerce Cloud and
Service Cloud. And these products are very, very tangential and they lift each other. So it's very often
companies buy in combinations of these. They may start with Service Cloud and come back to Commerce.
They might come Commerce Cloud and then come with the Service Cloud or they may buy them together.
So I think this very much completes our Customer 360, particularly on B2C, which we've been focusing a
lot on today. So I -- this is why it's so important for us. It's why it's so important that we continue to drive
innovation and make sure that we see GMV growth and customer success growth and align it with kind of
the trends.
And it's been -- like this whole last 4 months has been as crazy as I've ever been in my career busy. I
don't think I've left this room in Marina, California since March 3 or whenever that was. And we literally
could watch the economies going up and down in different regions. I distinctly remember when France was
starting to shut down. We're running many grocery companies in France. And I was literally -- we were
watching just massive spikes on spend, particularly on grocery and essentials. And then you could see it
cascade around the world in different countries.
We are humbled and proud of being able to do this at scale. I couldn't be more proud of what the team
has done. And we've done it with 99.99% availability, all while lifting and shifting our team to work
completely remote. And we're seeing that our companies are depending on this as their lifeline. They
continue to run their business. And now they're starting to reopen, and we're helping them reopen,
everything from Work.com. And then we're pushing out and prioritizing investments to make them
successful there.
Got it. Great. Well, that -- actually, I think that's a great place to leave it, Mike. Thanks a lot for joining
here, and appreciate very much your time. I did want to mention for everybody on the line, the next
session is going to start about 5 minutes late, so 11:05 Pacific, 2:05 Eastern.
But Mike, again, thanks a lot for doing that. Hope you get a chance to get out and get on the bike and get
some [ exercise ]. It sounds like things are going well.
Mike Micucci
Thank you. Have a good day.
All right. You, too. Bye.
Mike Micucci
Bye.
Company Conference
Presentation
Tuesday, June 09, 2020 10:00 PM GMT
Contents
Table of Contents
Presentation .................................................................................. 4
Call Participants
EXECUTIVES
Mark J. Hawkins
President & CFO
ANALYSTS
Arjun Rohit Bhatia

William Blair & Company L.L.C.,
Research Division
Presentation
Arjun Rohit Bhatia
William Blair & Company L.L.C., Research Division
All right. Thanks, everyone, for joining us. Sorry for the delay here. My name's Arjun Bhatia. I'm the
research analyst here at William Blair who covers Salesforce. For a complete list of disclosures, please go
to our website at www.williamblair.com. And with that, it's my pleasure to introduce Mark Hawkins, the
CFO of Salesforce. Salesforce or Mark probably need no introduction beyond this point. But Mark, thank
you very much for joining us.
Question and Answer

Arjun Rohit Bhatia
Why don't we just get started maybe with a quick update on the company? You reported strong results
about 1.5 weeks ago. There's a bit of a conservative guidance that you provided. Just give us maybe a
high-level overview of where we are today, where the business is and what you're hearing on customers
on the spending environment.
Mark J. Hawkins
President & CFO
Sure. First of all, Arjun, thank you for the opportunity to chat, and always a pleasure to interface with you
and the investor community. I -- the thing that we really noticed as we've gone through this first quarter
of COVID, if you will, is we noticed the impact, the swift impact of COVID when it came. We noticed the
-- in March, obviously, in the latter part of March, we were really, like probably the rest of the world,
adjusting. And then we started to take a look at the beginning of April with an adjusted view of what
would be happening. And then we -- from that point on, we started to see incrementally better than we
expected from our adjusted plan. And that incremental improvement continued on into May, really right
up through the earnings call that we had talked about. We were encouraged to see our pipe coverage be
improved. We were encouraged to see the amount of commerce we actually did in the quarter. We were
pleased, as I think you could tell, in the quarter, all things considered. And so that is probably the big
thing that we saw.
I would certainly say that what's very clear to me is that the imperative for digital is even greater now. I
was talking to some people, Arjun, where I felt like there's been 10 years of society's enablement done in
like 90 days. I mean in every aspect of life, whether it's telemedicine or e-commerce for people who never
did, for -- let alone connecting with your customer in a whole new way with everything that we provide in
a modern way to connect with your customer, be it sales, marketing, service, community, e-commerce,
analytics, so on and so forth, and Tableau to see and understand.
And so I really believe someday, when we look back on this time frame of the history of digital, it will
come up to a point, and I think someday we'll look as an entire society at how it's going to accelerate.
That's my personal view. So we certainly hear that from customers that they are more determined than
ever to continue that process of digital transformation, and we're here to help.
Arjun Rohit Bhatia
Yes, absolutely. It's going to play such an important role going forward, even more so than it has in the
past. One of the things, I think, a lot of investors were concerned with going into this earnings season,
especially with companies that kind of cater to the enterprise, is this hesitancy amongst CIOs in maybe
pulling the trigger on large transformational deals in this environment, right, as they're a little bit cautious
on their budgets. But you announced a huge deal with AT&T last quarter. I think it's the largest in your
history. And you talked about some of the positive commentary here that make it seem like you're past
the trough. So help us understand what you're seeing in the pipeline that's giving you confidence in the
back half of the year.
And one of the things you touched on just now is that some of the products are maybe experiencing
different levels of demand based on what role they're playing in digital right now. Can you maybe just talk
about where you're seeing elevated levels of demand in the product portfolio versus some areas that are a
little bit more subdued right now?
Mark J. Hawkins
President & CFO
Sure. Well let me just touch on a couple of things here. One is that was probably one of the things that
Marc Benioff had talked about on the earnings call, just how encouraged we were with the amount of
business that we could do through a video conference, through connecting with these relationships with
our customers as we pivoted and reimagine even some of our events and pipeline generation. And so that
was encouraging. But then to your point, like, let's look at the nature of the deal. So AT&T is one of the
biggest deals in the history of our company. Let's -- we're going to break that down. And then also, we'll
come back and talk about some of the other areas that we're seeing, to your question.
But with AT&T, I think one of the things that's really exciting is when you think about the vision that we've
really created for the company, which is when we got MuleSoft, it was to help people unlock data, whether
it was on-prem or whether it was in the cloud, and widen the aperture, unlock the data so they could
increase the clock speed of digital transformation. Noted. For CRM, we have worked strategically to have
some of the most critically strategic data in any company in any organization in the world, which is the go-
to-market, the customer, the service, the marketing, the e-commerce, the community analytics and such.
And so we have that data that we're using to help our customers modernize the way they connect with
their customer. And then the third leg of the strategy was to have Tableau help us see and understand.
So you widen the aperture of the data coming at you, you have been able to even more strategically
connect your 360 CRM and all our capabilities to get a 360-degree view of the customer, and then we look
at Tableau to see and understand data. And then the last leg of the stool really is around analytics and the
application of Einstein.
So the whole point there is that's the kind of thing that AT&T wanted. And I want you to bring it all the
way home and kind of sew that all the way together. Imagine -- and I'll abstract away from AT&T, but
imagine any customer that has different lines of businesses, and they're complex. And imagine they're
not able to fully tap into their installed base to sell. That's a big deal. Let's take Salesforce. We announced
it during a Dreamforce presentation that about 3/4 of our business goes into the installed base and 25%
with new logo business for our new business.
So imagine if we didn't have the power to see everything we had and see all the needs of the customer
and then sell into that installed base. Well that's what Customer 360 is doing, is allowing people not to
have silos and to be able to see all the way around the customer, all the way around the business and be
able to sell in more effectively, more cross-sell effectively, and that's what our customers are trying to do.
And we're trying to help them with that.
So when you take that idea like the AT&T, where you have more access to data that you have that's
valuable, the complete 360 view to help you see the entire opportunity, both new logo and in the installed
base, and then you can analytically understand it and make better decisions to penetrate more and serve
better, then you start to see what we've been doing. And that, I think the AT&T big deal, for example, we
were able to accomplish right in the middle of COVID. I'm pleased about that. If you pivot away from that
kind of a deal that took place in our COVID quarter -- and we had other big deals, by the way. We talked
about Standard Bank, and it's one of the biggest banks in Africa. And that happened in a COVID quarter.
And so we're seeing the appetite for the kind of solutions that I'm describing that's very, very powerful to
the customer.
Now let's pivot to something you asked, more -- almost more cloud-oriented. I certainly see the appetite
for Service Cloud just continues to -- this whole omnichannel service has just got lots and lots of
opportunity to it. I think public and what we're offering to the public sector is another area that, as we
look back on that quarter, is also very exciting as an example.
I could give you more, but I hope I've painted a picture of big deals, different areas by cloud, different
areas even by kind of type of business. But that was the kind of stuff that happened in Q1.
Arjun Rohit Bhatia
Yes. No. That was very helpful. And I certainly look at Dreamforce 2018 when you kind of announced that
Customer 360 vision as a kind of a pivotal moment in Salesforce history. So that was very helpful.
Digging into the last kind of point that you made there on Service Cloud. Last quarter, first official quarter
that Service Cloud eclipsed Sales Cloud in terms of revenue, and it's still growing much faster, right, than
Sales Cloud is. And we haven't really seen that deceleration. It's been very minimal over the past 3 years
in Service Cloud. So maybe just unpack the growth there on Service Cloud a little bit for us. What's driving
the sustainability there? And bigger picture for Salesforce, I know we just talked about the platform vision.
But do you see yourselves landing deals with Service Cloud now as opposed to what we're, I think, as
investors used to as Sales Cloud being the primary draw for customers?
Mark J. Hawkins
President & CFO
I would say to the latter question, yes, definitely. And I would say that the market for Service Cloud is
huge, as we've been looking on the TAM, the Gartner or you can look at your favorite IDC, whatever the
TAM is, it's very, very big. It's fast-growing. What we have noticed, Arjun, is the ability -- it is just so
innovation-ripe. And what I mean by that, we're using service bots to help people. We are doing field
service capabilities, the need to modernize service, I mentioned public sector. Public sector provides
services to its citizens. And the ability to automate and the ROI on that, the math -- it maths out so
easily because of the scalability of what that does. And so I would say to you, Service Lightning, with the
Einstein capability with service, with the bot capability with service, field service, I feel like this is a very
target-rich opportunity for us. And we're pleased.
It's one thing to be #1 in an area, which we are in most of our areas. But it's another thing to do what I
call as competitive separation, where you try to innovate so much that your customer wants to continue
to vote and trust you with their business. And that's what ours is all about, it's customer success. And it's
innovation in the Service Cloud. And I'm glad you called out that point too because I've been monitoring
this, and we've been calling the crossover point. But this business is -- has got lots of room to run, and it's
fun to see how we -- by the way, I use Service Cloud just to bring it to home -- to run finance. All of our
order processing, there are so many areas that we use Service Cloud. It's really, really helpful.
Arjun Rohit Bhatia
Wow. Yes. I think it got lost a little bit last quarter in the COVID concerns that everyone was focusing
on. But yes, that's good to hear. One of the -- maybe switching topics a little bit here. Over the past few
years, verticalization has become very important for Salesforce, and it's driven a lot of success, especially
when you look at financial services, you look at public sector, like you just talked about. And recently, you
announced the acquisition of Velocity. So maybe just give us some background, what does Velocity do for
Salesforce and your vertical strategy? Does it help you kind of dig deeper into specific verticals or kind of
give you broader vertical capabilities, maybe in areas that you're not penetrated yet? Just give us some
background on the opportunities of Velocity.
Mark J. Hawkins
President & CFO
For sure, Arjun. I think Velocity has been something that we've been excited about almost since its
inception. It's built natively on the platform. It is dedicated to verticals. And moreover, it has a capability
where you can replicate some of the capability and go into more and more verticals. And so as you know,
years ago, we talked about we're going to go upmarket in the enterprise. And we've done that and done
that in a big way. And that's part of our DNA today. We also just talked about verticalizing. And first,
we'd get the team that could speak the language. We'd get the ecosystem, including ISVs and their app
exchange, to help us, and then we would do products. And then you started seeing financial cloud and
Health Cloud, and they took off. And we've made really good progress. I mean the Health Cloud, for
example, there's always, it seems like, something big we're working on in that one, the retail banking side
of it, the wealth management side of it.
And so we started getting vertical capability not just with language and partners and app exchange for
products. And so what Velocity, the reason we're so excited about it is the ability to take products and
make that go faster. The scalability and the time to market to create more vertical products is going to
be improvement of Velocity, number one. Number two, it's going to take us into places like telecom,
telecommunications, where they have developed a tremendous expertise that we're going to go deeper
into. And so we're going to -- that's just one example, but we're going to have more verticals immediately.
And then we're going to have the capability to develop more verticals quicker. And we like both aspects of
that as we continue to drive this strategy for verticals for the future. So we're definitely excited to have
David Schmaier and the level of expertise there. And it's time. We're now part of the company, and it's
going to be fun to talk to you about products over time.
Arjun Rohit Bhatia
I was on mute. There we go.
Mark J. Hawkins
President & CFO
No. No worry.
Arjun Rohit Bhatia
There we go. You obviously have a very big customer base. It's broad across SMB, across enterprise,
across different industries and end markets. When you're looking at your existing customer base, how are
you thinking about the growth opportunity that you have in that customer base? How penetrated are you?
Do you see a lot of kind of runway for ACV growth [ through Velocity ]? Just maybe walk us through not
maybe the new customer acquisition strategy but [ kind of progress ] with existing customers.
Mark J. Hawkins
President & CFO
Yes. No. Happy to do so. So one of the things that I see is when I look at our installed base, one of the
things, and I want to make sure this hits the mark on your question, which is like how much runway do
we have. When I look at a couple of things, one is the $170 billion TAM, according to Gartner, growing
double digit, one of the most attractive markets in all of enterprise software, in our space, that's a lot of
runway. Then when I look at the fact that we're very honored to be #1 and certainly making gains on that,
but the market share is really just a reflection of are we making progress, making customers successful?
I was heartened by the fact that according to the latest report, we took more share last -- in the last
measurement period than the next 13 companies in a row. So that is public data, not our data.
But I think what it tells you is between the B2B and the B2C opportunities, just a lot, a lot of runway.
And that's something that we've always felt, and we just want to be really, really focused. And I think
customers realize -- you touched on Service Cloud, Arjun. And I think when I talk to customers, they think
of it as a growth strategy. Think about that. Service Cloud as a growth strategy as opposed to a cost.
And I think that's really interesting because what they're doing, back to not being siloed, they're selling,
they're servicing. But when they service because they have a 360-degree capability, they can then cross-
sell right away. And so I think that's just a great example of more penetration, more progress into an
installed base, that would be the second point.
The third point that shocked me is just how stable the amount of our new business is that we get from our
installed base, which I said earlier, 75%, and about 25% new logo for our new business. And I would have
thought over the years, Arjun, that, that would have moderated a little bit. But at our scale as the fourth
biggest software company in the world, to still have that opportunity and bring in new business, with a
logo percentage at that level, at least in my mind, is another data point that we've got a lot of room to run
here. That's what I would throw out.
Arjun Rohit Bhatia
Okay. No. That's helpful. Let's turn to M&A for a second. In 2018, I believe it was, you acquired MuleSoft,
which you talked about a little bit earlier, the value proposition it provides and how it fits into the
Salesforce puzzle. It was arguably, I think, one of the most successful acquisitions in Salesforce history.
And last year, you acquired Tableau, which is the largest acquisition that you've done to date. Walk us
through how the Tableau acquisition and integration is going and maybe how do you think you can take
some of the lessons that you learned from MuleSoft and apply that to Tableau to get the same kind of
success there.
Mark J. Hawkins
President & CFO
I would enjoy doing so. I agree with you on MuleSoft too, in that to accelerate growth, while it's bigger,
has been really something that we've been pleased about. But the root of that question, Arjun, if I could
just back up for a second, it's like when we bought MuleSoft, why did we do that? And back to being
obsessively -- obsessed effectively, with our customer. It was around the world trip, meeting customers.
We'd take -- we not only talk to them, but we keep track of all the topics and suggestions and then do
an analysis of that. And the single biggest thing that came out was that we needed to help them with
integration, full stop. Almost immediately, we began the plan for MuleSoft. Almost immediately.
But the reason that that's important is that our customers were telling us they need help with that and
that they would find that valuable. So that's a process that's not uncommon with us. And I think, frankly,
it's a process that's helped us be successful largely with M&A, not perfect. But most people give us a lot
of good kudos from the team that all is involved in doing that. So now let's take it to your question on
Tableau. We do the same process with people. We're trying to understand what people are looking for.
When we talk about like thinking about what's important to people, Tableau is one of the few businesses
that can help us improve every single one of our clouds, every single one of them. It can help people see
and understand a lot more data that's unlocked through MuleSoft, and it can leverage Einstein. And that
becomes a really, really powerful capability. And so we are very excited about that.
Now it's a bigger deal. It's going to -- it takes time to leverage that in that way. But the same playbook
will be applied in terms of how to leverage it with our Salesforce army of AEs, in terms of how we leverage
the other technologies around it. All the different playbooks to bring everybody together, lock and load and
accelerate is in terms of doing the very best we can with our growth.
Now the one thing that's tricky about Tableau is we never experienced before CMA. Just putting that
on the table. That was a new experience for us completely. So right on the eve of getting it, we had to
completely put it on hold, and it was this thing called hold separate order. So literally, whereby we were
allowed to legally close it, we had to operate it as a completely separate and independent company until
we got clearance from the United Kingdom, which we honor that. Trust is our #1 value. We're able to do
that. But my only point of bringing that up, Arjun, is we have to then think of the clock as kind of post
getting through the CMA, which we just had kind of a -- it was nice to have a quarter where we weren't
impacted by the CMA. Of course, we were impacted by COVID.
But all that being said, I can tell you that we, as a leadership team, could not be more excited about
Tableau. With the technology, with our overall product strategy, with what customers see as value and why
they're asking us to have this capability. And I just look forward to doing readouts over the years on how
we're doing. Because we -- sometimes you buy something and you go, gosh, I hope that's as good as you
think it's going to be. We have a good feeling as a leadership team. I hope that gives you a little bit of
construct. And we're doing -- we're now integrating the sales capability and the go-to-market capability.
But keep in mind, for an integration this big, it's not like a light switch. There are stages of integration
over 3 to 4 years even, in that way. We're very happy about it.
Arjun Rohit Bhatia
Absolutely. We might have time for 1 or 2 more questions. But I want to turn to guidance real quick.
Mark J. Hawkins
President & CFO
Sure.
Arjun Rohit Bhatia

Obviously -- it's obviously a big topic for investors, [ and investors are ] always concerned about that. But
if I look at quarter-over-quarter guidance, you're talking about CRPO being down sequentially quarter-
over-quarter. But in a lot of what we've talked about today and what you talked about in the earnings call
is that we're kind of past the bottom. We're starting to see a recovery, pipeline is stabilizing. So maybe
just help us -- or walk us through your philosophy and how you're taking into account some of the current
macro conditions in putting out your next quarter guidance and your full year guidance as well.
Mark J. Hawkins
President & CFO
Happy to do that. So -- and I think it's actually really -- it's a great question because I think you probably
have 1,000 different companies you talk to, and each has a little bit of a different construct on how they
did it. What we wanted to be is incredibly transparent about how we did it because none of us have ever
been through a pandemic before. And it's kind of a given, but it's kind of an important framing. So when
we thought about the -- what we could see in Q1, despite not being immune, for sure, to COVID, we put
up a lot of business in Q1. And I think people were maybe pleasantly surprised is the feedback we hear.
We put up a lot of new business. And our attrition went down, and it actually went down year-on-year not
immaterially. And so those are good attributes.
Our pipe, as we talked about, as we came right up to the earnings call, we can speak up to that point, was
getting incrementally better from our adjusted plan week-by-week and almost day-by-day. We thought
that's a good attribute. And then we have to look to the future. And we -- to look to the future, we went
back and studied the past and said, whereby nobody has been through a pandemic, we have been through
the great financial crisis. What did we do and what would we have modified if we had the opportunity
looking back in history? And the first thing we realized is we had to make 2 adjustments when the great
financial crisis hit. And we said, let's not do that. Let's measure twice and cut once, number one, and be
very clear with everybody about that.
Number two, we saw attrition take a tiny dip-up -- or step-up. And then over time, it reverted back down
to a path of decline, as you would expect. And in that moment in time in the great financial crisis, as
people worked through that short-term period, which is only a point in time, that's what we learned as
we looked back. And then, of course, it sailed -- the company sailed through it with flying colors and is
where we're at today. And so in the same point, this is a point in time in a company that is unbelievably
strategically well positioned. We know that. We can see that with 21 years of market share gain. We
can see that with the Gartner customer feedback. We can see that with our growth rate relative to the
competition and such. But when we have a point in time, and that's what this is, we said, let's assume
that the IT spending recovers to the beginning of next year. Fine. Some people picked yesterday. Some
people picked fourth quarter. We picked the beginning of next year, factor that in. We said, let's assume
that attrition goes up slightly, dollar attrition. It's not customer attrition per se, but dollar attrition,
assuming that customers are in business. And we said, fine, we'll do what we've learned there before.
And we'll go ahead and model that out. We'll make the adjustments, and whereby a lot of people are not
even guiding, we said no, let's guide. Let's try to help as best we can and be as clear as we can on our
construct and be appropriately conservative.
And that's what we tried to do. We know there's a test at the end. And so we dealt with the duality of
what we thought was a good quarter and the reality of an unknown. And the best thing we could do is
be clear about how we're handling the unknown. And then our investment community can take that into
consideration as they interpret how they think about the world. That's what we did.
Arjun Rohit Bhatia
That's very helpful. Really appreciate the transparency in keeping the guidance. I think it helps us all out.
But I think we're up on time here. But I want to thank you for joining us. It was a pleasure having you,
and hope the rest of the day goes well.
Mark J. Hawkins
President & CFO
Thank you, Arjun. I really appreciate the chance to chat. And wish you guys all the best, and wish you just
a fantastic conference.
Arjun Rohit Bhatia
Thank you, Mark. Same to you.
Mark J. Hawkins
President & CFO
Take good care. Bye-bye.
FQ1 2021 Earnings Call Transcripts
Thursday, May 28, 2020 9:00 PM GMT
S&P Global Market Intelligence Estimates
-FQ1 2021- -FQ2 2021- -FY 2021- -FY 2022-
CONSENSUS ACTUAL SURPRISE CONSENSUS CONSENSUS GUIDANCE CONSENSUS
EPS
0.69 0.70 1.45 0.75 3.07 - 3.82
Normalized
Revenue (mm) 4846.63 4865.00 0.38 5033.78 20754.01 20000.00 24692.89

Currency: USD
Consensus as of May-28-2020 7:07 PM GMT
- EPS NORMALIZED -
CONSENSUS ACTUAL SURPRISE
FQ2 2020 0.47 0.66 40.43 %
FQ3 2020 0.66 0.75 13.64 %
FQ4 2020 0.56 0.66 17.86 %
FQ1 2021 0.69 0.70 1.45 %
Contents
Table of Contents

Presentation .................................................................................. 4
SALESFORCE.COM, INC. FQ1 2021 EARNINGS CALL | MAY 28, 2020
Call Participants
EXECUTIVES
Amy E. Weaver
President, Chief Legal Officer &
Secretary
Bret Steven Taylor

President & COO
Brian Millham
President of Customer Success
Group
Evan Goldstein
Senior Vice President of Corporate
Planning and Operations Finance &
Strategy
Sarah Emily Hindlian-Bowler
Gavin E. Patterson Macquarie Research
Chairman of Europe, the Middle
East & Africa and President & CEO Stewart Kirk Materne
of Salesforce International Evercore ISI Institutional Equities,
Research Division
Marc R. Benioff
Co-Founder, Chairman & CEO Terrell Frederick Tillman
SunTrust Robinson Humphrey,
Mark J. Hawkins Inc., Research Division
President & CFO
Parker Harris
ANALYSTS
Brent John Thill

Jefferies LLC, Research Division
James Derrick Wood

Cowen and Company, LLC,
Research Division
Mark Ronald Murphy

JP Morgan Chase & Co, Research
Division
Presentation
Operator
Welcome to Salesforce Fiscal 2021 First Quarter Results Conference Call. [Operator Instructions] I would
now like to hand the conference over to your speaker today, Mr. Evan Goldstein, Senior Vice President of
Investor Relations. Sir, you may begin.
Evan Goldstein
Senior Vice President of Corporate Planning and Operations Finance & Strategy
Thanks, Josh. Good afternoon, everyone, and thanks for joining us for our fiscal '21 first quarter results
conference call. I'm Evan Goldstein, Senior Vice President of Investor Relations. Our results press release,
SEC filings and a replay of today's call can be found on our IR website at www.salesforce.com/investor.
With me on the call today is Marc Benioff, Chair and CEO; Mark Hawkins, President and CFO; Bret Taylor,
President and COO; Gavin Patterson, President and CEO of International; Brian Millham, President,
Customer Success Group; and Amy Weaver, President and Chief Legal Officer. As a reminder, our
commentary today will primarily be in non-GAAP terms. Reconciliations between our GAAP and non-GAAP
results and guidance can be found in our earnings press release.
Some of our comments today may contain forward-looking statements that are subject to risks,
uncertainties and assumptions. In particular, our expectations around the impacts of the COVID-19
pandemic on our business, results of operations and financial condition and that of our customers and
partners are uncertain and subject to change. Should any of these materialize or should our assumptions
prove to be incorrect, actual company results could differ materially from those forward-looking
statements. A description of these risks, uncertainties and assumptions and other factors that could affect
our financial results is included in our SEC filings, including our most recent report on Form 10-K. With
that, let me hand the call over to Marc.
Marc R. Benioff
Co-Founder, Chairman & CEO
Okay. Thank you so much, Evan, and thank you, everybody, for being on the call today. I hope you
and your families and colleagues are all healthy and safe. We're in a moment in time anything -- any
of us, well, that we've ever experienced. And for instance, usually, I'm speaking to you from the top
of Salesforce Tower, but today, I'm speaking to you from my home, as I suspect many of you are in
your homes as well. It's another reminder of how the pandemic has dramatically affected all of us,
our customers and our -- humanity in ways that we could have never imagined. And my heart is with
everyone who has been affected by this virus, especially those who have lost loved ones.
This pandemic is revealing the culture and the core value of every company. And those of you who
have followed us closely know that Salesforce has always been deeply committed to serving all of our
stakeholders. Well, we have really lived this for 2 decades and especially over the last 90 days, the
foundation of our company is our 4 core values: trust, customer success, innovation and equality. And first
and foremost among these is the trust that we have with all of our stakeholders.
The story of our first quarter is very much the story of trust, Salesforce and our Ohana rapidly taking
action to embrace and invest in all of our stakeholders. Indeed, our financial results for the first quarter
reflect the unprecedented long-term investments that we've made in our employees, in our customers
and also our communities. And as our fiscal year began, we were coming off an amazing fourth quarter.
It capped off another record year for Salesforce, and February, the first month of our first quarter of fiscal
year '21 [ builds ] continued an amazing growth trajectory.
By mid-March, of course, and all of you know, the virus emerged into this global, biological and economic
crisis. We rapidly pivoted the company to address 3 priorities in support of our stakeholders: keeping our
employees healthy and safe, guiding our customers to navigate this incredibly challenging situation and
supporting our communities around the world. We view this pandemic in 3 phases. The first 90-day phase
has been about rapid response and investing in all of our stakeholders. We're now entering the second
phase, reopening safely. And the third phase, which we believe we'll enter next year, will be about a new
normal. And I want to spend a few minutes on the actions we took during the first quarter and phase 1.
First, we've invested in our employees, their health, their well-being. Well, this remains our highest
priority. We closed 160 offices around the world in a moment's notice, guided all of our 52,000 employees
to work from their homes. We settled in remote work situations. As a cloud-first company and with our
amazing Salesforce platform, well, this transition was extremely smooth. We rapidly learned that we can
run Salesforce very effectively anywhere, even from our homes. And we found the overall situation was
taking its toll on many of our employees' mental health as they sequestered into their own homes, as
it has been for many people all over the world. And so we invested in mental health and mindfulness
programs to help them. Our core program, B-Well Together, which was initially just designed for our
employees, well, we've had to open that up publicly to all of our customers, well, the whole world because
of public demand.
We also invested in our employees' financial stability. We committed to no significant layoffs for the
first 90 days of the crisis. And in late March, we also gave certainty to our sales team with a onetime
guaranteed commission for the first quarter, which we knew would close at the height of the crisis, giving
them tremendous confidence in our ability to take care of them. This was a critical investment in the
long-term success of our amazing distribution organization. And we invested in our communities. In early
March, we were asked by Sam Hawgood, the Chancellor of UCSF, to help him acquire PPE. UCSF was
already running low on PPE. Chancellor Hawgood was looking for ways to protect his doctors and nurses
and other frontline workers.
But back then, I have to tell you, I didn't even know what PPE was. It turned into a much larger
and more critical effort almost overnight. And as we received many requests from hospitals, nursing
homes, essential businesses, the CEOs of some of our largest customers calling us in dire need, well, in
partnership with UCSF, we helped acquire and distribute more than 50 million pieces of PPE to over 300
hospitals and first responders globally. And just one example, Salesforce sent a 767 loaded with PPE to
New York City at the very height of the crisis, masks and gloves and aprons that we acquired, well, they
were immediately delivered to the state distribution hub at Javits Center. And I'm deeply grateful for our
relationship with Daniel Zhang, the CEO of Alibaba, who helped get this started and make sure that we
got the PPE that we so badly needed [ in New York ]. At the same time, we've donated funding, employee
volunteer time, services to those most in need, focusing on access to care, lost livelihoods, food and
security and the digital divide. This pandemic has exposed deep structural inequalities across our society
that we can't ignore. We can see that on TV right now.
But at Salesforce, our core values include our commitment to the equality of every human being, and this
will be part of our work going forward as it has been for all of us. Look, we also invested in our customers
actually quite dramatically. Even with our employees working from home, our culture of innovation
continues to thrive, deploying new products to help customers at this critical moment in time. I was
especially inspired by the productivity of our incredible engineering organization. And talking with CEOs all
over the world, it became apparent very quickly that many were looking to Salesforce to help them guide
through these uncharted waters. Companies were working from home, leaders had little visibility in their
businesses, no way to easily connect with their remote employees, customers or partners, and they turned
to Salesforce.
For some of our customers most severely affected by the unprecedented impact of COVID-19, we even
granted them a temporary financial flexibility. We also created free rapid response Salesforce Care
products to help companies work to sell the service to market from their homes. And we've already had
more than 38,000 sign-ups for Salesforce Care led by versions of Salesforce Essentials and Salesforce
Quip. That's been amazing.
Our Salesforce Care industry solutions for health care and manufacturing, what they've provided proved
to be crucial for many companies. They're scaling up services to handle increased demand for patient
management, pivoting to much needed PPE, ventilators in their factories. Tableau, well, they were
amazing. They built this incredible free analytics platform, the Tableau Data Hub, tracking the virus and
being used by dozens of U.S. states and countries around the world. You can see it at public.tableau.com.
And with Tableau Data Hub, New York state posted a set of Tableau dashboards that provide a daily look
at the latest testing and confirmed case data at both the state and county level. And that data is also used
by Governor Cuomo during his daily briefings. We're able to do all this because our Salesforce Platform
provides the agility, the flexibility, the speed, creates solutions not in months or years but in weeks, even
days. And when everyone sheltered in place, we saw tremendous growth also in our Commerce Cloud's
weekly order volumes and our Einstein Bot sessions, both were up more than 100% since February 1.
Einstein predictions increased 5x over this time since last year. We also had an amazing job of happening
-- pivoting from physical events to virtual events. We developed an online leadership program called
Leading Through Change. It's had over 75 million views so far, incredible. Program highlights the work our
customers have been doing during this crisis. It gives them inspiration and guidance. It also shows some
Salesforce solutions that are available to help them get their jobs done. It's included phenomenal speakers
like the CEO of Starbucks, Kevin Johnson, and also the CEO of Accenture, Julie Sweet, many more.
And as the virus continued to spread throughout March, we also got a call from Governor Gina Raimondo
of Rhode Island. Gina is amazing. She needed a way to manage her critical contact tracing, which would
enable her state's health department to track the virus as it spread and isolate anyone exposed. So this
became an opt-in manual process where a citizen can report that they've been tested for COVID-19 and
identify anyone else they've been in contact with. Even those contacts can be notified of their potential
exposure to the virus and isolate themselves. And Governor Raimondo inspired us to build an app that
manage this process, scale efficiently and reliably. We're on the phone with her many times. And so we
did it in just a few weeks on the Salesforce Platform. And in addition to Rhode Island, today, we're now
helping more than 30 states reduce the spread of COVID-19, including Maryland and Massachusetts,
Kentucky, Louisiana, California, and great cities in our country like New York City and other countries, too.
This is an incredibly important effort. We're developing the contact tracing app for Rhode Island, we saw --
we need to deliver several products now to mitigate the spread of the virus, and we needed to do it rapidly
but not only for our public sector clients but for our commercial clients as well.
Customers are asking for automation to facilitate the return to work safely, including this contact tracing,
shift scheduling, workforce assessment, a command center for the crisis, and this was the genesis of our
Work.com platform, which has rapidly become a significant part of our public sector pipeline and actually a
meaningful part of our overall pipeline. We've been hugely surprised.
And while all of this was happening, we also delivered $4.87 billion in revenue, up 30% year-over-year.
We delivered $1.86 billion in operating cash flow. Now that was down slightly year-over-year to many of
the actions that I just reviewed in response to the pandemic. And as I mentioned earlier, we also provided
some customers temporary financial flexibility. We also incurred some incremental business expenses,
such as the onetime commission guarantee for our sales team that I mentioned. But we expect these
expenses to be largely or, I would say, wholly encapsulated in the first quarter.
We have great confidence that our investments, we already see it in our employees, our customers, our
communities in the first quarter, well, they're benefiting us. They're benefiting us now in the short term,
the long term with tremendous strength and tremendous growth. And for the fiscal year 2021, we're
updating our guide to approximately $20 billion, representing 17% projected growth year-over-year.
And we believe this guide is very appropriate, given the current biological and economic environment
worldwide.
Our ability to execute globally with speed through the adverse conditions of March and April, well, I'll tell
you, that gave us tremendous confidence we can operate successfully in any environment at any time. It
was incredible. We demonstrated that we have the ability to innovate and meet rapidly changing customer
demands and needs under any circumstance. And the last few months affirm the strengths we have in our
amazing customer relationships and our ability to innovate at scale and operate across different industries
and geographies, companies of all sizes.
And with Customer 360, well, it was clear to us, we have the most complete CRM product portfolio to
enable digital transformation of any company. I was excited to see in the quarter and for the seventh year
in a row, IDC has ranked Salesforce as the #1 CRM. We gained more share in 2019. And we're now seeing
continuous improvement in our business, in our bookings and our pipeline month-to-date. But we've been
really surprised by our pipeline growth. It's been incredible. And our pipelines for the second quarter and
the fiscal year are really strong. I've been on more sales calls with more CEOs in the last 2 months than
at any time in my career. And there's universal agreement among them. Digital transformation, well, this
isn't a want to have. It's a must have. Companies and organizations and governments around the world
have a digital transformation imperative like never before.
And many are accelerating their plans for digital-first work-from-anywhere environment. For example, in
Q1, we signed an incredible and extensive deal with AT&T. With the vision of AT&T Communications CEO
Jeff McElfresh, incredible executive, somebody who's just been completely inspiring to me. Well, AT&T is
moving to a highly accelerated digital-first world to deliver the most amazing 5G service with an incredible
connected experience for their millions of customers and subscribers across every customer touch point.
And this includes their media properties such as DIRECTV and HBO and Turner Sports and more. But with
Salesforce, AT&T will further extend this vision of a single view of their customer, single source of truth
really. With every customer touch point, federated on Customer 360 across retail sales and call centers,
on messaging and online and in-home service and more, only Salesforce could do that, every customer
touch point. The AT&T truck pulls up to my office or my home, that's going to be Salesforce. And I walk
into the AT&T store, and that's going to be Salesforce. And I'm getting an e-mail from AT&T, that's going
to be Salesforce. And I'm on the phone with the AT&T call center, that's going be Salesforce. And we're
going to make sure that they have that Customer 360 in hand.
And I'll tell you, when we're integrating all that data, well, MuleSoft is going to connect AT&T's different
back end systems. Tableau is giving them the ability to understand customer preferences. Einstein is going
to help them serve more intelligent recommendations and root service cases. I was on the phone just
yesterday with Jeff McElfresh reviewing the incredible progress of the project. And it was clear to me, this
is going to empower AT&T to drive more value and build stronger relationships with every customer. And
we're going to begin deploying this with Jeff and his team to AT&T's employees very, very shortly, our goal
is by the end of July, and then to tens of thousands of users in the third quarter.
We're thrilled to have also significantly expanded our 15-year partnership with Standard Bank Group,
the largest bank in Africa. It operates across 20 markets. It's an incredibly important bank to the African
economy. Standard Bank is going to leverage the full power of our Customer 360, including the Financial
Services Cloud, the Commerce Cloud, Marketing Cloud, MuleSoft and Einstein, to provide that single view
of the customer, to build personalized customer journeys and deliver amazing client experiences in retail
banking across all channels.
And when the livelihoods of Zions Bank customers were threatened by COVID-19, well, the Utah-
based bank turned to Salesforce and Customer 360 to virtually support a high volume of loan requests.
They're using our customer communities and our Service Cloud to facilitate conversation with customers,
automate applications processes, provide tracking and visibility to customers waiting for their loans. Zions
Bank stood up its loan application portal in 7 days. Even though it's the 38th largest bank in the U.S., it
became the ninth largest distributor of SBA Payroll Protection Program funds in Round 1 using Salesforce's
Customer 360 platform.
One of our ISV partners, nCino, well, they built an end-to-end solution for federal SBA CARES Act loans
for small businesses all on Salesforce, and it processed more than $35 billion in loan applications for its
banking customers, including Keybanc; IBERIABANK; the world's largest credit union, the Navy Federal
Credit Union, all running on Salesforce Customer 360. And one of the unique aspects of COVID-19's crisis
has been deepening our ties with the local and federal governments around the world. Public sector action
has never been greater. I mean I can't believe how many phone calls I've been on with governors. In
the public sector, a number of our government customers, agencies, if you will, they chose Salesforce in
the quarter to begin helping them address COVID-19-related issues, including some of the very largest
federal agencies. At the state level, we formed a new relationship with the State of California's Office
of Emergency Services. They implemented Salesforce to create a public health ordering system, an
application that helps the state leverage data for urgently needed public health resource across California
to improve customer service. We did it in days.
And the U.S. Census Bureau, well, they expanded their long-time relationship with Tableau. As the
agency's data analysis with visualization platform of choice, Tableau partners with the Census Bureau on
mission-critical data applications in support of the 2020 census and beyond, so important.
Internationally, we also had an incredible deal with Commonwealth of Australia, where we partnered
with the National Disability Insurance authority to deliver an improved experience for more than 500,000
participants that are predicated to access disability support by 2025.
Those are some of the highlights from Q1. Now looking ahead, as much of the world is beginning to move
now into phase 2, what we like to call reopening safely, our Work.com platform is going to become a --
well, it's going to fill a huge unmet need. Step-by-step, we're seeing the economy is starting to come back
to life. Salesforce is also beginning to reopen its offices, first throughout Asia. It has to be done safely. It's
got to be done responsibly, and it's going to be a complex process.
In the new normal, businesses are going to have a new lifestyle, a new lifestyle of masks and PPE, a
new lifestyle of taking people's temperatures and enforcing social distancing standards, a new lifestyle
of testing and contact tracing and a new lifestyle of wellness assessments to mitigate interaction with
the virus. You can see some of the photos on my Twitter feed of our employees entering some of our
offices, looks very different than it did just 90 days ago. We're going to need a command center to
monitor return-to-work readiness. They're going to need shift scheduling because businesses are not
going to bring everyone back at once. They're not all coming back at once that you're going to need social
distancing. And you're going to need tools for emergency response management, and you're going to need
expert perspectives from renowned experts because this is changing on a regular basis.
And from our incredible ecosystem and tools and workforce re-skilling, well, we bundled all that in to this
Work.com suite. You can see it at Work.com. You can see what we built, how we're starting to roll it out,
who our partners are. It's a platform for enabling our customers to reopen safely. And because it's built
on our Customer 360 platform, we're able to spin up this entirely new generation of apps in a matter of
weeks. Amazing.
And I just have to give credit where credit is due, to Governor Gina Raimondo, Rhode Island. It was her
call to us early on in the crisis that inspired us to build Work.com. She was the visionary that said, "We
need information technology to mitigate what's happening with the virus until we have a vaccine." Well,
I'll tell you, at times, even though we have nearly 52,000 people at Salesforce, creating Work.com felt
like many of our early start-up days with the speed and scrappiness, the laser-focused execution of our
management team. It was -- this was the best I've ever seen Salesforce.
And we're already returning to work. We're starting to see the return on this investment now. It's
amazing. In a very short time, Work.com has generated an enormous interest from businesses and
governments at every level, from our partnerships. And with Work.com, well, we deepened those
partnerships with the world's largest systems integrators, including Accenture and Deloitte, the PwC and
IBM, and many of our partners are now building solutions on Work.com as well.
Now it's incredible to see what they've done with risk management and compliance and business
continuity. And just yesterday, Workday announced that it's going to integrate its employee data directly
into Work.com to make it easier for employers to centralize critical data and get their businesses up
and running again. We've enabled and trained all of our salespeople worldwide to be able to talk to our
customers on how to reopen safely with Work.com.
I've been thrilled, and I'm so thrilled also especially in my Workday partnership with Aneel. Well, that's
just an amazing company, make Work.com even more valuable to so many of our joint customers. So
thank you, Aneel, for that.
In the months ahead, I expect Work.com's ecosystem to rapidly become even more robust with even more
relevant solutions. I've had so many of our customers contact us on how they can integrate their own
product into Work.com. That's so cool. And as we move deeper into phase 2, Work.com is going to become
extremely important to all of our customers. We've learned from this crisis, just as we have every time we
have been faced with major challenges, well, we saw once again how our values create value. We've seen
how our agility and our beginner's mind has enabled us to quickly pivot and take action.
And we made investments during Q1 to confront this once-in-a-generation calamity, focusing on our
employees, delivering relevant innovation for customers and supporting our communities with PPE and
grants and technology. Well, we could do all this because of proven strength and sustainability of our
extraordinary business model and our extraordinary technology and our extraordinary Ohana. We know
that when we invest in all of our stakeholders, we're building the trust, the relationships, the innovation
and our business for the long term. Pandemic has shown that digital is a lifeblood for every organization,
whether you're a public sector, state, country or whether you're a commercial organization or a nonprofit
or an NGO. The new normal, phase 3, it's going to require organizations of all sizes, shapes, geographies,
well, everyone is going to have to adopt new ways of conducting themselves and especially their customer
relationships, especially their sales and service, especially their marketing and commerce and especially
new ways of collaborating and re-skilling workers. Every company is going to have to digitally transform.
Fortune's recent survey of Fortune 500 companies found 3/4 of CEOs, well, they believe this crisis is going
to force their companies to accelerate their technological transformation. I mentioned Jeff McElfresh of
AT&T. Well, he's the first one who said that to me. He was the first one who got on the phone with me
and said, "We're going to accelerate our digital transformation at AT&T." And I believe that Salesforce has
never been more relevant or more mission-critical to more organizations. No one is better positioned than
Salesforce to accelerate out of this crisis and bring customers into the new normal.
Now before I turn it over to Mark, I want to make sure you've heard that Gavin Patterson, the former
CEO of BT Group and our current President and CEO of International, will be our new President and Chief
Revenue Officer beginning August 1. And you've already heard of one of Gavin's amazing deals, and I
hope he'll talk about that later on the call. But I'm so thrilled to have Gavin as a member of the team. He's
just an amazing executive. We've been friends for many years, and he's already had a huge impact on our
company and on our management team and I could not be happier for Gavin. But I couldn't be happier
for Salesforce and all of our Ohana, that we're able to have his experience and his capability as part of our
organization. And with that, I'll turn it over to you, Mark.
Mark J. Hawkins
President & CFO
Okay. Well, thank you, Marc. And before I begin, you guys, I want to express my thoughts and my best
wishes for everyone's safety and well-being during this historic time. I'd like to focus my remarks on
providing additional disclosures and commentary on the company's response to the COVID pandemic and
our updated fiscal '21 guidance.
As Marc said, our actions in Q1 were focused on investing in our employees, our customers, our
community in response to COVID-19 and preparing for a post-pandemic future. We continue to believe
that values drive value, and these Q1 investments in all of our stakeholders will result in long-term equity.
We want to provide visibility into how our actions in response to COVID-19 affected our financials in Q1 as
well as our updated guidance.
I'll begin with the top line commentary. Revenue for Q1 was $4.865 billion, up 30% over last year. We saw
good revenue performance by cloud. Sales Cloud grew 16% with approximately 4 points from significant
M&A. Service Cloud grew 23% with 2 points from significant M&A. Platform and other grew 62% with 35
points from significant M&A. And Marketing and Commerce grew 27% with 4 points from significant M&A.
Additionally, we had strong year-over-year revenue performance by region in constant currency. Americas
grew 29% with 11 points from significant M&A. EMEA grew 41% with 12 points from significant M&A,
and Asia Pac grew 28%. Additionally, we were pleased to have maintained a revenue attrition rate of less
than 9% at the end of the quarter. In fact, this is actually down year-over-year and in line sequentially.
This speaks to the diversity of size, industry and geography within our customer base as well as how
mission-critical our products are to our customers. As always, we continue to monitor this metric closely to
determine how the COVID pandemic may impact our customer base going forward.
Our performance -- our remaining performance obligation, representing all future revenues under
contract, ended the first quarter at approximately $29.3 billion, up 18% over last year. And as a reminder,
this metric includes both new business and renewal contracts. In Q1, these contracts were approximately
3 months shorter in duration on average compared to Q1 of last year. And we believe this is a result of the
COVID pandemic, and we expect this to normalize in the future. Please note that the contract we signed
with AT&T entirely resides in noncurrent portion of RPO as our updated revenue guidance assumes no
contribution from AT&T in FY '21.
Our current remaining performance obligation, or CRPO, which is all the future revenue that is under
contract and is expected to be recognized as revenue in the next 12 months, was approximately $14.5
billion, up 23% year-over-year.
Turning to EPS and operating margin. Q1 GAAP EPS was $0.11 and non-GAAP EPS was $0.70. And there
are a few items I'd like to discuss as they pertain to the Q1 objective of investing in our employees, our
customers and our community in response to COVID-19 and preparing for the future, which we believe will
lead to an even stronger business and company.
First, the onetime partial commission guarantee I discussed earlier was approximately $140 million. As
a partial commission guarantee makes it not eligible for capitalization, this expense will reside in Q1 and
not in the future periods. Given how sudden and severe the pandemic arrival was in March, we chose
to take powerful action to care for our employees through this crisis. Second, due to the cancellation
of our physical events this fiscal year in favor of virtual experiences, all event contracts that included
cancellation fees for fiscal '21 commitments were expensed in the quarter. This amounts to approximately
$65 million. We are working with these vendors to renegotiate these contracts as we pivot to digital virtual
experiences, which means we could see some partial reversal later in the year.
Thirdly, we incurred approximately $25 million in onetime lease impairments due to vacating and
subleasing offices that will likely return below-market rent due to the COVID pandemic. And finally,
we prioritize caring for our community by donating approximately $20 million, which came in the
form of PP&E and cash grants. These unique and mostly onetime variable items were partially offset
by approximately $75 million in savings, largely from T&E due to shelter-in-place orders. The net of
these items created approximately 350 basis points of headwind to operating margin compared to our
expectations in the quarter.
Regarding our strategic investments, we recorded approximately $192 million in realized and unrealized
gains. This was driven by significant realized gains on the sale of public securities, partially offset by
unrealized losses within the investment portfolio.
Turning to cash flow. Operating cash flow was $1.86 billion, which was largely impacted by delayed
payments from customers while sheltering in place and some temporary financial flexibility that we
granted to certain customers that were most affected by the COVID pandemic. We expect to collect
the majority of the balance this year and do not expect this to have an impact on our full year cash
flow. In addition, we previously described this partial commission guarantee also created a headwind to
our operating cash flow. Should we not have incurred these items above, our Q1 growth rate would be
consistent with historical rates.
CapEx for the quarter was $323 million, leading to free cash flow, defined as operating cash flow less
CapEx, of $1.54 billion, down 15% year-over-year.
Turning to guidance for Q2 and fiscal '21. Revenue is now expected to be $4.89 billion to $4.90 billion in
Q2 and approximately $20 billion for the fiscal year, the latter of which continues to include $50 million
contribution from Velocity, which is expected to close on June 1. There are 2 important assumptions
reflected within the guidance that stem from our assumptions that the IT spending growth normalizes
next year, which we believe to be appropriately conservative and consistent with our learnings as we
successfully navigated through the great financial crisis.
First, our guidance assumes our revenue attrition rises from less than 9% now to less than 10%
temporarily for the rest of the fiscal year. Second, the guidance reflects the adjustment to incremental new
business expectations that we made due to the COVID pandemic. Another important consideration when
thinking about our FY '21 guide is the magnitude of the above when applied toward term license products.
As a reminder, the term license revenue product typically records approximately 50% of the contract's
TCV immediately to revenue with the remaining balance recorded ratably over the contract term. This
accounting treatment can create uneven revenue trends between fiscal periods. As you saw during half 2
of FY '20, this helped drive the revenue outperformance in those quarters.
Additionally, we are pleased to have experienced improving trends within our pipeline and close rates
between March through today, which leaves us incrementally optimistic about the future. In fact, April was
better than we anticipated it would be when we started that month. We continue to see additional positive
trends in May. For Q2, GAAP diluted EPS is expected to be minus $0.02 to minus $0.01, while non-GAAP
diluted EPS will be $0.66 to $0.67. For fiscal '21, we're expecting GAAP diluted EPS to be minus $0.06 to
minus $0.04, while non-GAAP diluted EPS will be $2.93 to $2.95.
In light of the COVID pandemic and our actions in Q1 to support our customers, employees and
communities, we expect our fiscal '21 non-GAAP operating margin to be roughly flat year-over-year on a
percentage basis. As we prepare for the future, our outlook for the rest of fiscal '21 includes incremental
discipline and prudence especially in regards to head count, largely due to lower employee attrition rate
than planned. As always, we continue to monitor our go-to-market capacity to ensure we allocate the
appropriate investments to achieve our targets both this year and in the future.
For the remainder of the year, we are focused on making ourselves even stronger upon exiting the
pandemic. As a reminder, our EPS guidance assumes no future contribution from mark-to-market
accounting as required by ASU 2016-01. For operating cash flow, we're reducing our fiscal '21 operating
cash flow guidance to 10% to 11% year-over-year growth to align with our updated revenue and margin
guide. We do not expect to provide incremental temporary financial flexibility. We now expect CapEx to be
approximately 3% of revenue in fiscal '21, resulting in a free cash flow growth rate of approximately 13%
to 14% for the fiscal year.
We expect CRPO to be approximately 16% to 17% growth year-over-year in the second quarter, which
we believe is appropriately conservative and consistent with our revenue guide. In light of the uncertainty
surrounding the COVID pandemic, we are reassessing our long-term revenue target for fiscal '24 and
we're planning on giving an update during the Investor Day.
To close, while the COVID pandemic was sudden and a once-in-a-generation crisis, we are proud of the
investments and relationships we have deepened with our customers, our community and our employees.
We are confident our actions in these investments will lead to an even stronger business and company
in the future. And as we move into phase 2, we are strategically well poised with a strong balance sheet
and a durable business model, we are well positioned to continue to leverage this secular tailwind to drive
digital transformation.
I'd like to thank our employees, our customers, our partners, our communities and our shareholders, all
our shareholders for the continued support, and I wish to each of you and your families and your firms,
safety and wellness. And with that, we'll open up the call for questions.
Question and Answer

Operator
[Operator Instructions]
And your first question comes from Mark Murphy with JPMorgan.
Mark Ronald Murphy
JP Morgan Chase & Co, Research Division
Marc, the second week of November should be an interesting one. I am wondering what Einstein might
be telling you about virtual Dreamforce 2020. Some of us on the call have attended every single one
in person at Moscone Center. And so just with it going virtual, curious how you're going to maximize
the impact of Dreamforce so it provides the inspiration that it's known for and also so that it drives the
pipeline for Q4 and beyond.
Marc R. Benioff
Well, that's such a good question, and I'll tell you that, of course, Dreamforce has been such an incredible
part of our culture, that we're all going to miss Dreamforce this year. But you may see that we've already
started some amazing things online and we're getting some phenomenal results. In fact, as I mentioned,
we've already had more than 75 million views, and I think we're having, almost soon, 100 million views
of our Leading Through Change program. And I don't know if you've had the opportunity to watch or
participate in Leading Through Change, but it's been incredible.
And that type of virtual program, I believe, is very much going to be something that is going to be a
permanent part of our culture. We really have been able to inspire our customers and our employees, all
of our Ohana, including our account executives, and enable them with these programs. And while we're
certainly going to miss being together at Dreamforce this year, and that's not something that, well, any
of us could have imagined just 90 days ago, I think that we now see a very clear path to be able to have
virtual events, build pipeline, build community, build brand, create and deliver new products. And I have a
lot of confidence in our ability to execute without a physical Dreamforce this year.
And not just Dreamforce, by the way. We -- as Mark mentioned, we canceled all of our physical events
for this year, and we had to pay an extremely large amount of cancellation fees that all got cost into that
first quarter number. And so all those world tours and all these other amazing events, we do 1,000 events
a year, we're just moving as many of them to the virtual programs as well. And not just the big events,
there's lots of small things happening. So we've got a whole new playbook that we're executing. It's a
great question. Thank you.
Operator
Your next question comes from Terry Tillman with SunTrust.
Terrell Frederick Tillman
SunTrust Robinson Humphrey, Inc., Research Division
I guess my question relates to -- it's great seeing the AT&T win. It seems like a great example of the
digital transformation opportunities. But with Customer 360 and these larger transformational deals, Marc,
maybe you could give us an update. You talked about strengthening pipeline. How do some of these larger
transformational deals, how do you see that playing out the rest of the year? Or is that -- some of that
business harder to come by just because it is more complex?
Marc R. Benioff
Well, I'll give you the beginning of the answer. And then I have been very fortunate this quarter to have
Brian Millham running our global distribution organization. He's also running it in the second quarter while
we're bringing Gavin onboard. And Brian has been with us for more than 20 years. Many of you know
Brian. He's really been the heart and soul of our distribution culture. He's just done a phenomenal job this
quarter.
And I think that what we see reminds us a lot of -- over a lot of different times in the last 20 years of
Salesforce, where you have to have a full portfolio of products and deals, small, medium and large, that
there's an ebb and flow. You're never going to make your number on all large deals or all small deals. You
have to have a portfolio of transactions, and you have to have that across geographies, product segments,
verticals. And that's one thing I've been super proud of the distribution organization, their ability to deliver
that. And then you see that start to manifest in these really strong pipeline. So Brian, do you want to
comment on that?
Brian Millham
President of Customer Success Group
Yes, Marc. I think we made the comment earlier, the strengthening of our pipeline over the last couple
of weeks here has been very encouraging for us. And that strengthening of pipeline comes in all forms,
as you said. It comes from different segments of our market, different regions of our markets, different
products. And so we're very encouraged by the future, both the large deals and the small deals that we're
getting done across our incredible distribution organization. So very, very encouraged as we go forward.
Operator
Your next question comes from Sarah Hindlian with Macquarie.
Sarah Emily Hindlian-Bowler
Macquarie Research
I hope everybody is well. I guess my first question is for you, Marc, Marc B. You guys are talking about
this nice pickup in the pipeline. And I'd love a little bit more color about what you're seeing that -- is it
across certain verticals, markets, products, enterprise, commercial? And then I have a follow-up for Mark
Hawkins.
Marc R. Benioff
Well, thanks. I'm going to have Bret Taylor comment on that because he and I were just talking about that
today. We've been so inspired by kind of connecting to the first question, how a lot of our programs that
we put in place. And I'll tell you the 4 dimensions that we've been really focusing on. Of course, we have a
very large-scale distribution organization. I would say it's more than half of our company. You think about
that in terms of all the customer-facing organization and it's -- number one, the most important thing is
to have everyone, especially when you move to an at-home environment, participating. Participation has
been mission-critical, and that's really where we focus.
What percentage of those sales and service professionals, managers, executives are out there and really
working with customers, and this is an unusual environment. That provided an opportunity for lots of new
training, new -- kind of new ideas, new programs. And the second thing is to enable them with that, to
train them and also introduce them to these new technologies, these products. The third thing that was
absolutely critical after participation and enablement, making sure that they have a relevant position. I'm
sure for many of you, as this crisis kind of unfolded, you didn't have something relevant to say, we didn't
have a lot of time for you. And the reality is Salesforce became incredibly relevant to our customers. First,
in this core digital transformation, and then next was really how we could provide tremendous value in
reopening safely. That became the third leg of our stool. The fourth leg became really critical, the tactical
plays and critical aspects of building that pipeline up. So Bret, you've been the architect of all of these
things. Can you talk to us about how you put that into place?
Bret Steven Taylor
President & COO

Yes, Marc. Thank you. I think that one of the things that you said in your opening script that I'm really
seeing from our customers is this digital imperative. And across the entire Customer 360, we're really
seeing that play out in some of -- both the pipeline numbers and the adoption numbers, some of which
you mentioned on the call. For customer service as an example, our Einstein Bot functionality, which
provides digital self-service, which is more relevant than ever before, is up over 100% just in February. It
really reflects that overnight digital transformation of service.
There's marketing. Einstein is doing over 12 million predictions per day, really represents this mass scale
digital personalization because digital is the one channel really remaining for a lot of our customers
to engage with their employees. On our Commerce Cloud, GMV was up over 100% year-over-year as
commerce digitized overnight. Even on industries, as Marc mentioned, the Small Business Administration
loans process really came out a lot of banks overnight. We helped one of our largest banking customers
go live in just 72 hours. This is all digital. It's fast. And we're really seeing that relevance point that you
mentioned, Marc, being extremely important.
I think that every single CEO, every single CIO I talk to has the same message, which is whatever digital
transformation they have left has just accelerated, thanks to COVID-19. I think these digital aspects of
our Customer 360 platform have become more relevant than ever before, and you're seeing that in the
pipeline.
Operator
Your next question comes from Derrick Wood with Cowen.
James Derrick Wood
Cowen and Company, LLC, Research Division
A question for Mark Hawkins. Implied CRPO bookings growth for Q2 looks to be in the mid-single-digit
range, if I have my math right, following 20% in Q1. And obviously, a lot of companies are expecting a
tougher Q2. But can you just walk us through the assumptions here, whether there's any pressure points
coming from contractions or churn or pushed-out deals or any dynamic you'd call there? And then I know
you don't guide CRPO beyond the quarter, but given the constructive commentary on the pipeline, any
color can you give on how we should think about a potential recovery in CRPO bookings in the second
half?
Mark J. Hawkins
President & CFO
Sure. First of all, thank you, Derrick, for the question. Happy to do that. When we -- for CRPO, when we
look at that for the Q2, you should think about it as approximately 16% to 17% growth rate CRPO. So I
think that aligns well as we think about the revenue going forward in the current year and this temporary
year of pandemic, if you will. So we think it's appropriate line, number one.
I think in terms of the recovery, the way we had -- and you talked about attrition and things of that
nature, we -- I just want to be clear that we're actually very pleased in the sense that our attrition actually
went down year-over-year in Q1. And so from that standpoint, I think it's good. I think what we've tried to
do is we're appropriately conservative having -- going through this pandemic to assume that it would go
up some, and we called that out. It still would be -- we would expect that to be temporary in nature. But
we said for the fiscal year, it will be less than 10%, up some, and that's partly based on the learning from
the great financial crisis. Heretofore, we were very pleased to see what happened in Q1. But that's a little
bit of color. We had to make a call and kind of really make sure that we're dialing the same in light of the
uncertainty that's out there. So I think that would be something to think about.
In terms of the recovery itself from an IT spending standpoint, we think that if you were expecting a
recovery in FY '22, which begins for us in February, could it be sooner? We see companies that are doing
that. That's just what we're trying to do when we think it's appropriately conservative, and so that informs
us in terms of how we think about the demand in environment. But one thing we learned for sure in the
great financial crisis is take a good look at what's going on, see the temporary situation and then we
remember how we navigated through it very successfully and on back to our future.
And we really see that in this particular case, that this is a point in time, a much bigger opportunity that
we all know about, including $170 billion-plus TAM. That's one of the fastest-growing parts of the market,
but everything is being impacted temporarily with the pandemic. So that's what I would say and happy to
have, if Marc wants to add anything to that. Hope that helps, Derrick.
Operator
Your next question...
Marc R. Benioff
Well, I'd really like to open that up to Gavin Patterson, our new Chief Revenue Officer. He's been driving
this incredibly strongly from his office in London, and he's going to be moving to San Francisco shortly.
You heard about this incredible win that he personally led at this amazing organization called the Standard
Bank Group. But Gavin, can you just fill in how you see this market unfolding right now?
Gavin E. Patterson
Well, thank you, Marc, and just to say, I'm very excited to be taking on the role in the next few months.
I've known Salesforce, as you know, for many years, and I've known Marc personally for many years as
well as a customer at BT, where I was the CEO. And I started my career at Procter & Gamble in brand
management. So I know the company reasonably well as a customer.
And over the last year or so, I've been more and more involved with the company, initially building an
advisory board in Europe and then lastly, taking up executive responsibilities for international. And that's
where I helped steer in the Standard Bank deal at the end of the quarter, which was a big win for us and
I think very much a platform deal for us in Africa as we open up that market. So there are many things I
hope I can bring to this job, a customer viewpoint, an international viewpoint, a CEO viewpoint.
But the one thing that's very clear to me is the opportunities are there very clearly. And seeing how the
organization has been able to adapt in the last couple of months to the shock of the virus and rebuild and
become even more relevant to customers gives me great confidence that the opportunities are there. And
as Marc said, the majority of customers that we're talking to are saying, "How can I accelerate digital
transformation?" And there's no better partner to do that with. So I think certainly the growth potential,
not just domestically in the U.S., but internationally around the world, I think, exists for us.
Operator
Your next question comes from Kirk Materne with Evercore ISI.
Marc, thanks for all the work you and the team have done to help out in this crisis. You guys have done
some great things. My question is for Marc B. If we think back to the great financial recession and
you think about what eventually turned the tide from customers wanting to talk to you about digital
transformation to customers actually spending on digital transformation, I mean, I think between you,
Gavin and Bret, you all mentioned that there's a greater understanding of the imperative to spend on
digital transformation today, yet you obviously have some prudent guidance out there for the second
half of the year. So when you talk to CEOs, what do you want to start hearing from them that gives
you confidence that their interest is going to start translating into bookings? Is it simply just business
confidence, better understanding of sort of what's going to happen in the fall around COVID? Just kind of
curious so we can keep an eye on some of the broader data points out there and try to triangulate it to
your thinking on business momentum.
Marc R. Benioff
Well, I think it's such a good question because, of course, when you are addressing a market with a set of
products, capabilities, you're going to have a set of strategies as well as a set of tactics. You're going to
have plays as well as products, programs, and you're going to do that differently by geography, different
by industry.
I think we already know that unlike the financial crisis, the way that this has discriminated against
different industries is quite different than anything we've ever seen before and has been quite shocking
and for some industries, that will take some time for them to recover. In other industries, it's actually
been accelerating, and it causes them to grow faster than they anticipated. I mentioned with AT&T. That's
obviously a company that will transform itself during this moment to become more digital, to become a
stronger, more customer-centric organization. They're going to accelerate into it.
My personal belief is always that in a moment of crisis, you need to invest through it. Maybe not every
company can do that but a lot of companies surprisingly can. That's why you have to offer a full portfolio
of capabilities. I really saw all that come together in the first quarter. I was really impressed with the
bookings that we achieved in the first quarter. As it kind of started to get crazy in the middle of March, I
was like, "Wow, what is going to happen at the end of March and then through April?" Well, this was the
best of Salesforce. This was the best I've ever seen Salesforce perform. I mean it was just incredible to
see all of our Ohana, the sales organization, service, engineering, across the board.
And then in the second quarter, well, as I mentioned, I'm already really, really inspired by the bookings
numbers that I started to see and the pipeline numbers. So we're quite optimistic about what the future is
going to look like for us. And Brian, do you want to fill in a couple of details for us?
Brian Millham
I appreciate that, Marc, and I appreciate the question. For us, it's about being very relevant to our
customers. It's about showing up and listening deeply to what they're going through. And what we're
finding is we're more relevant than we've ever been to our customers, and that's a great place to be.
I couldn't be happier with the broad portfolio of products that we have to go address the problems our
customers are facing today. It's a great product team building incredible products. Work.com is a perfect
example of something that we've reacted to very, very quickly and are helping our customers address
these core issues. And when you sit in that position, I think it's why we see our pipeline is accelerating
right now. So just very, very pleased with where we sit today.
Operator
And your last question comes from Brent Thill with Jefferies.
Brent John Thill
Jefferies LLC, Research Division
Marc, just back to encouraged by the bookings going into Q2. Can you give any color what you saw from
April into May? Many tech companies have seen stabilization and improvement. Are you seeing similar
trends through the month of May? And then maybe for Mark Hawkins just on the expense side. There are
a lot of questions that this environment may kind of permanently shift some of the expenses across tech.
Do you think there's some permanent lasting effect that can inherently make you more profitable through
this as we exit out?
Marc R. Benioff
Well, I'd really like to turn it back over to Gavin for a second and Brian and have them address the
customer environment that we're seeing. And then maybe Bret could fill in the details on the pipeline as
well. Gavin?
Gavin E. Patterson
Yes, sorry, sorry, Marc, I was wondering whether you want Brian to get it. Well, what we're seeing is
confidence is building almost week by week. So clearly, there was a shock that hit the system, particularly
in March. But as we go in through April and we moved through May, I would say bit by bit, and it's not --
given that we're at a different stage in the recovery market by market, it's not the same point in every
market yet, but the broad sense of direction is building confidence, beginning to see get much better
visibility for bookings, not just in Q2 but into Q3 and Q4 as well.
So I can sense the confidence building in the sales organization. We're not getting carried away with
ourselves. But going back to a point that's been made a couple of times on the call. The relevance of our
product set and particularly Work.com is proving that actually more than ever, our products are important
to our customers and key to the digital revolution and transformation that our customers are going to go
through. So as I say, I'm pretty bullish about what I'm seeing at the moment, and we'll continue to see it
grow, I think, from here.
Marc R. Benioff
Brian, do you want to fill that in?
Brian Millham
Yes. I would just second the comments. We're seeing tremendous confidence in our sales teams right now,
pipeline growth that is very, very good year-over-year. And those compares are against a quarter where
we didn't have a pandemic. And so we're feeling very confident about the pipeline growth. As Gavin said
appropriately, we're not getting overconfident. We need to go out and execute, but we feel very good
about where we sit. And hate to repeat myself, but in the -- at a time when you need to be relevant and
you have products that fit the customer need, we feel like we're in a very good position right now. So very,
very happy with where we are in the early, early months of the quarter.
Marc R. Benioff
Bret?
Bret Steven Taylor
President & COO
Yes. I think echoing both Gavin and Brian's comments, I've had 3 customer meetings already today, and
every single one had one theme, which is everyone's looking past the pandemic towards the next normal
and the new normal. And I think all of us have the ability to know that we're not 100% sure what that's
going to look like. But it's all digital. It's work from anywhere. It's a completely new experience for our
customers' employees and their customers. And they are looking at our solution as the most relevant
platform available to really help their customer -- help their company transition to that new normal.
So that's really what we're seeing. I think there's still uncertainty out there, but I think people have
started this reopening process, and you're seeing it in the momentum in the business.
Marc R. Benioff
And I'd like to just kind of give the closing words to -- I'd love to have Amy Weaver give us the closing
words on her -- because she's been involved in so many of our customer discussions. And Amy, can you fill
in exactly how you -- how do you see the situation moving forward?
Amy E. Weaver
President, Chief Legal Officer & Secretary
Well, I'm excited to see this moving forward. It has been a whirlwind of a few months. But when I look
at what we went through and where we're going, what really stands out to me is that everything we
executed during this quarter and every plan that we're making for the future, we're doing it in line with
our core values, with trust, with customer success, with innovation and with equality. And I think that we
found that these values serve the company so well. It leads to a stronger company, stronger relationships
with our customers, stronger relationships with our communities and really a great position for all of our
stakeholders. So thrilled to be part of it and looking forward to the next step.
Marc R. Benioff
Parker, love for you to wrap it up. You've had the full perspective of 21 years, and you've done a
phenomenal job developing and delivering Work.com and Customer 360. Can you give us your words of
wisdom?
Parker Harris
Yes. I think I would just close by saying we're all in our homes right now as everyone is probably listening
to us, follows in their homes. And yet, as a management team, I think we've never been closer, which is
kind of odd that we've been sent to our homes and yet, we're operating more closely than ever and faster
than ever. Marc and I had said, it's kind of like we're back to the start-up days and yet we're a 50,000-
plus employee company.
And I've had the same experience as Bret was saying in working with our customers, we are no longer
walking into our customers' offices in suits and having that kind of separation. We're in their homes with
them, and they trust us. So they're letting us into their homes as we're selling to them and supporting
them and servicing them. And it's just a sign of, Marc, the success that we've had in building that trust
with our customers for 21 years and I guess the reason why we're coming through this as we are.
And so I hope all of you out there are also having that same experience and just really proud of what
we've done as a company during this crisis.
Marc R. Benioff
Okay. Back to you, Evan.
Mark J. Hawkins
President & CFO
Okay. Marc, do you want me to -- maybe I should just tackle the last part of Brent's question there, and
then we'll go to Evan. One, Brent, we definitely are always looking for opportunities as the environment
has shifted. It provides an opportunity for us to take a beginner's eye on everything, and we're certainly
doing that. You heard whether it's pipe gen, whether it's reimagining everything we're doing, certainly
travel, there are so many different examples, but we're constantly looking at focusing obviously in
delivering growth, profitability and cash flow over the long term.
We're obviously very excited about the long-term opportunity to serve our customer and help them, and
we're very aligned. I thought Parker's comment was really awesome about, we're very aligned around
how to navigate through this and get beyond this point in time and really seize the opportunity for an
unbelievably strategically positioned situation to serve our customers over the long term. Marc and Evan,
back to you.
Evan Goldstein
Senior Vice President of Corporate Planning and Operations Finance & Strategy
Thank you all for joining us for our call today, and we look forward to speaking with you next quarter.
Hope you are all safe and healthy.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.

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salesforce.com, inc.

Call Participants .................................................................................. 3

Question and Answer .................................................................................. 7

So let's just shot right in.

Question and Answer

You want to take that? Okay Reg.

Call Participants .................................................................................. 3

Question and Answer .................................................................................. 5

Brent Alan Bracelin

Question and Answer

Call Participants .................................................................................. 3

Question and Answer .................................................................................. 5

Stewart Kirk Materne

Question and Answer

Evercore ISI Institutional Equities, Research Division

Call Participants .................................................................................. 3

Question and Answer .................................................................................. 5

Walter Herbert Pritchard

Question and Answer

So we rethought it as customer-first, customer-centric. And I mentioned before, it's meant to be visible.

Call Participants .................................................................................. 3

Question and Answer .................................................................................. 5

Arjun Rohit Bhatia

Question and Answer

Arjun Rohit Bhatia

CONSENSUS ACTUAL SURPRISE CONSENSUS CONSENSUS GUIDANCE CONSENSUS

Revenue (mm) 4846.63 4865.00 0.38 5033.78 20754.01 20000.00 24692.89

CONSENSUS ACTUAL SURPRISE

FQ2 2020 0.47 0.66 40.43 %

FQ3 2020 0.66 0.75 13.64 %

FQ4 2020 0.56 0.66 17.86 %

FQ1 2021 0.69 0.70 1.45 %

Call Participants .................................................................................. 3

Bret Steven Taylor

Brent John Thill

James Derrick Wood

Mark Ronald Murphy

Question and Answer

President & COO

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