Salesforce, Inc.

Welcome to Salesforce fiscal 2021 first quarter results conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. 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.

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 slash investor. With me on the call today is Mark Benioff, Chair and CEO, Mark Hawkins, President and CFO, Brett Taylor, President and COO, Gavin Patterson, President and CEO of International, Brian Millam, 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. Reconciliation, 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 impact of the COVID-19 pandemic on our business, Results of operation 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 savings. 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 Mark.

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 values 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. While we have really lived this for two decades, and especially over the last 90 days, the foundation of our company is our four 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 investment 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, though this continued an amazing growth trajectory. By mid-March, of course, and all you know, the virus emerged into this global biological and economic crisis for the company to address three 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 three 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 one. 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. And with our amazing Salesforce, it's extremely smooth. 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, Be 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 one-time 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 Hoggett, the chancellor of UCSF to help him acquire PPE. UCSF was already running low on PPE. Chancellor Hoggett 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 Chabot 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 this year. You know, 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 insecurity, 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. 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, employing new products to help customers at this critical moment in time. I was especially inspired by the productivity of our incredible engineering organization. In talking with CEOs all over the world, it became apparent very quickly that many were looking to Salesforce to help them guide through these unchartered 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, to service, to market from their homes. And we've already had more than 38,000 signups for Salesforce care led by versions of Salesforce Essentials and Salesforce Quip. That's been amazing. Our Salesforce care industry solutions for healthcare and manufacturing, well, they provided and proved to be crucial for many companies. They're scaling up services. They handle increased demand for patient management, pivoting to much-needed PPE, ventilators in their factories. You know, 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. firms. You can see it at public.tablo.com. And, you know, with Tableau Data Hub, New York State posted a set of Tableau dashboards that provide testing and confirm case data. 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, great solutions, not in months or years, but in weeks, even days. And with everyone sheltered in place, we saw tremendous growth also in our commerce clouds, weekly order volumes, and our Einstein bot sessions, both that were up more than 100% since February 1. Einstein predictions increased five times over this time since last year. We also had an amazing job is 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. The program highlights the work our customers have been doing during this crisis. It gives them inspiration and guidance and also shows them 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 and also the CEO of Accenture, Julie Sweet, and many more. And as the virus continued to spread throughout March, Governor Gina Raimondo of Rhode Island, Gina's amazing. She needed a way to manage her critical contact tracing, which would enable her state's health to spread and isolate anyone exposed. So this became... An opt-in manual process with a citizen can report that they've been tested for COVID-19 and identify anyone else. They've contacts can be notified of their potential exposure to the virus and isolate themselves. And Governor Raimondo inspired us to build an app that managed this process and 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. So this is an incredibly important effort. We're developing the contact tracing apps 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. not only for our public sector clients, but for commercial clients as well. Customers are asking for automation to facilitate the return to work safely, including the 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, we've been hugely surprised. And while all of this was happening, we also delivered $4.87 billion in revenue. 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 one-time commission guarantee for our sales team that I mentioned. We expect these expenses to be largely, or I would say, wholly encapsulated in the first quarter. You know, 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 of 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 relations. We can innovate and scale and operate across different industries and geographies, companies of all sizes. And with Customer 360, the most complete CRM product portfolio information 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 number one CRM. We gained more share in 2019. And we're now seeing continuous improvement in our pipeline month to date. But we've been really surprised. And our pipelines for the second quarter have been strong. I've been on more sales calls with more COs in the last two 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 environments. For example, in Q1, we signed an incredible and extensive deal with AT&T with the vision of AT&T Communications CEO Jeff McElfresh, an 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 touchpoint. 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 touchpoint federated on Customer 360 across retail sales and call centers, on messaging and online and in-home service and more, you know, 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 email from AT&T, that's going to be Salesforce. And I'm on the phone with the AT&T call center, that's going to be Salesforce. And we're going to make sure that they understand have that customer 360 enhanced. And I'll tell you, when we're integrating all that data, well, MuleSoft, it's going to connect AT&T's different backend 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. You know, 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 and retail banking across all channels. And one of the livelihoods of Zion's bank customers who are 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. Zion's bank stood up its loan application portal in seven 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 one using Salesforce's Customer 360 platform. You know, one of our ISV partners in SENA, well, they built an end-to-end solution for federal SBA CARELAC loans for small businesses all on Salesforce, and it processed more than $35 billion in loan applications for its banking customers, including KeyBank, Iberia Bank, 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. But public sector action has never been greater. I mean, I can't believe how many phone calls I've been on with governors. You know, in the public sector, a number of our government customers, you know, agencies, if you will, they chose Salesforce on the quarter. to begin helping them address COVID-19-related issues, including some of the very largest federal agencies. At the state level, we found the Office of Emergency Services. You know, they implemented Salesforce to create the Public Health Ordering System, an application that helps the state leverage data to urgently needed public health resources across California-improved customer service. They 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 and 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 two, like we like to call reopening safely. You know, 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 math, 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. 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 because 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 reskilling. Well, we've 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 it's 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 of 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 startup days with the speed and scrappiness, the laser-focused execution of our management team. It was, you know, this was the best I've ever seen Salesforce. And we're already returning, you know, 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've deepened those partnerships with the world's largest systems integrators, including Accenture and Deloitte and PWC and IBM. And many of our partners are now building solutions on work.com as well. You know, 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 about how to reopen safely with Work.com. I've been thrilled. And I'm so thrilled also, especially in my Workday partnership with Anil. Well, that's just an amazing company and to make Work.com even more valuable to so many of our joint customers. So thank you, Anil, for that. You know, 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 products 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've 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 the 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 the 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 three, it's going to require organizations of all sizes, shapes, geographies. Well, everyone's 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 You know, every company is going to have to digitally transform. Fortune's recent survey of Fortune 500 companies found three-quarters 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, august 1st 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 you know 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 they were able to have his experience and his capability as part of our organization. And with that, I'll turn it over to you, Mark.