Salesforce, Inc.

Welcome to Salesforce Fiscal 2021 Third 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 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would like to hand over the conference to your speaker, Mr. Evan Goldstein, Senior Vice President of Investor Relations. Sir, you may begin.

Thanks, Chantal. Hello, everyone, and thanks for joining us for our fiscal 21 third quarter results conference call. I'm Evan Goldstein, Senior Vice President of Investor Relations. Our results press release, as we see filing in 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 Chief Revenue Officer, 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 impact of 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 these forward-looking statements. A description of these risks, uncertainties, and assumptions, and other factors that can 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 to Mark.

All right. Well, thank you so much, Evan, and just thanks, everyone, for being on the call today. I hope you and your families and colleagues are all safe and healthy and preparing for the holiday season. It's nice and crisp and cold here in San Francisco, and we can feel Christmas approaching. It's all in the air. And as the season approaches, I wish the very best to you. It's been such an unbelievable year in so many ways for so many of us. And, you know, we've really had to reimagine every part of our business and our lives and also work with so many of our customers and really even our families to do the very same thing the past has really gone and we can all feel that and the future is coming we can see there's certainly a light at the end of the tunnel especially with these incredible vaccine announcements but here we are in this present moment and uh wow there are so many things happening and so many exciting things to talk to you about on this call today And we're reimagining our entire business. We're reimagining our industry. And we're even reimagining Dreamforce. So many of you have emailed me and called me and talked to me about your ideas for Dreamforce. But I'll tell you, when it really comes right down to it, Dreamforce is different this year. It just is. You know, it's not the Dreamforce that we wanted. It's the Dreamforce that we got, the Dreamforce that we wanted. It's the Dreamforce with all of you. You know, all of our trailblazers and all of our Ohana and all of our friends from all the world. The best part of Dreamforce is being together in person. And it was a little bit like Thanksgiving all by ourselves last week. And here we are again. It's kind of Dreamforce by ourself. So we've reimagined Dreamforce. And the first thing we did is we said, well, you know what? We're going to have Dreamforce for each and every customer. And we've already reached out to thousands and thousands of our customers. We're creating custom Dreamforces exactly for them. We've already done almost 5,000 of those Dreamforces, which is has been our prototype, and we hope to do over 100,000 Dreamforces before we're done. And these are unique presentations exactly for our most important customers in the world. And then we have a huge conference coming in a couple weeks, which is our Dreamforce Trailblazer Conference, which gives our ability for all our trailblazers to come together. And then tomorrow, we've got a phenomenal, phenomenal event with myself, with with uh many of our executives brett is gonna join me um on stage as well it's gonna be live from san francisco it's gonna be cold we're gonna be doing it outside i think brett's holding the camera for a while and i'm holding the camera for a while it's basically you know we're following all these protocols and we're trying to stay as safe as we can you know we've all been tested and we're ready to go and it's going to be very excited we're going to have some very very special guests tomorrow some great customers and some really outstanding music. You're not going to want to miss that presentation. And by the way, if you'd like to have Dreamforce to you, please contact our Salesforce executives and we will arrange Dreamforce for your company. You'll be shocked at the depth and incredible custom presentation that we're able to bring for you. And we've reimagined how to do a conference. We're not doing it like everybody else. We have our own unique approach. Of course, you would expect nothing less of Salesforce. And one thing that's really cool is how well Dreamforce to you is going. I want to thank my entire Dreamforce team. I've definitely got them working much harder than they should be working, especially during this holiday season. Well, Look, we're going to have some exciting announcements, surprises. You're not going to want to miss it. All of you need to tune into that. But the keynote, again, is just one part of an amazing month of Dreamforce 2020. It's Dreamforce to you. We're empowering every account executive in our company to do this. It's going to be amazing, and you're going to love it. Look, let's get right into it. Let's get into these numbers and get out of this opening. This was an unbelievable year. And that was an unbelievable quarter, Q3. Wow. It was our strongest Q3 ever. You know, record revenues and margins and just deals and just unbelievable. And it follows the strongest Q2 in our history. And Salesforce just has never been stronger. Look at our core organic growth. It's just incredible what the numbers say. Revenue has risen to $5.42 billion today. up 19% year-over-year in constant currency. By the way, if you look at that sequential growth from the second quarter at $5.15 billion to $5.42 billion, incredible. And this is up 19% year-over-year in constant currency. And we're raising our full-year fiscal 21 guidance. Now, as you remember, in the first quarter, the pandemic was hitting, and we didn't know what was going on. We were hiding like everyone else under our desk. Then we realized, wait a minute, we can succeed through this And here's our guidance. And, Mark, I think it's our guidance is now higher than our original guidance for the year. We're actually delivering guidance at $21.11 billion at the high end of the range, representing 23% growth. So not only did we come back, we came back stronger. And no other enterprise software company is growing at this rate, especially in our core and organically. We expect our revenue to continue expanding, growing from 21.1 this year to now over 25.5 billion. And for those of you who are watching the enterprise software industry over the last, I don't know, four or five decades, I don't think there's been an enterprise software company in history that's gone from 21 billion or 21.1 billion to 25.5 billion. And we're all modeling, I'm sure, right now what the fiscal year 23 number is, right? So when you look at those numbers, wow, you just can't find any other company like that. And with the strength of our core products across sales, across service, across marketing, commerce, we're growing year over year the size of entire companies. We have a lot of great companies in cloud computing, but you can see how we're kind of just stacked one of those right on top of us here. So Salesforce has never been more relevant, more strategic to our customers. An example of this is what we've already seen this past week with the incredible scale, the reliability, the strength. of our customer 360 platform this weekend we were up all weekend running cyber week it was incredible from black friday to cyber monday we processed more than 31 million orders it was up 62 year-over-year but not you know just thank you to our engineering team just absolutely world-class performance and execution by them huge high fives commerce cloud marketing cloud well you know that those were started as acquisitions And now we've turned it into a multibillion-dollar business. And now with Tableau, well, our customers are able to leverage all the data coming in, spotting the trends. It's been a phenomenal, phenomenal weekend with these holiday insights. You've probably watched that online. You've probably seen some of our incredible Tableau dashboards we put together. And on any given day now, you can see our customers are delivering an average of 2.6 billion marketing messages, 4 million sales leads. logging 19.7 customer service conversations. Einstein delivered more than 80 billion AI-powered predictions every day across Customer 360. Incredible. And Salesforce then takes all of that in sales, in service, in marketing, in platform, in analytics, in conversation, in channels, in collaboration, and we lock it into a single source of truth for our customers. connecting customer data across systems, apps, and devices. And for our customers who have now seen this next generation architecture, and you're going to see our next generation platform tomorrow, but I don't want to give away too much of what Brett Taylor has built, but it's incredible. But let me say that that idea of the single source of truth, well, no one else has ever tried to do such a thing. And it's why for the seventh year in a row, we've now been ranked the world's number one CRM by IDC. That's why companies of every size and every industry are building amazing digital experiences for their customers with our scalable, flexible Customer 360 technology. And you look at this quarter, great customers, great customers like Prudential, Accenture, NBCUniversal, Telefonica, Zoom, Data California, I mean, American Family Insurance, I mean, so many great companies, so many great customers, and it's why 43 states in the United States are working with us on their response now to the COVID-19 pandemic. You probably saw us. We've even helped over fully eradicate COVID in some places in the world, including a great state of Victoria in Australia, where they had a terrible situation and used work.com, and they have now announced that they've eradicated the virus, and I wish that we could work more closely with more government, more deeply to to do exactly the same thing because the combination of mask wearing and social distancing and religious contact tracing, well, boom, you can eradicate the virus. Well, very excited to see them and congratulations to the state of Victoria. I also, this quarter was in Singapore, visiting our 1100 Ohana there. And I'll tell you, they've eradicated the virus there. You can see the chart. unbelievable now our customers are benefiting from the fast time to value we deliver with customer 360 which has been critical during this pandemic and it's going to remain so going forward and with mulesoft and tableau every company can easily unlock any data from any source and see and understand in ways that are leading these faster smarter decisions and the customer reactions when they see these customer 360s The eyes are lighting up because they've never seen their business quite like this. All right. Well, now let me just tell you what I'm really excited about. Slack. I couldn't be more excited about what Brett and Stuart have put together. Wow. I mean, when they came to me and brought me this idea that Salesforce and Slack could come together, My eyes lit up. I said, this is the next generation of the customer 360. This is our ultimate vision of having this incredible user interface on top of all of these services with all these channels and all the collaboration running on all these devices and integration interactions and the ecosystem and the industry that has been created around it and all the applications. Amazing. And let me just say also, I've watched Stuart and Slack grow up over the last six years. It's been amazing. It's reminded me of another great company, Salesforce, I have to be honest. And I get to look right out my window, and do you know what I see? Slack. Slack's logo. Because Slack's building is right next to my building, and I'm looking into their building all the time. Stuart is waving at me. Now I'm waving at him. Now we're giving each other big hugs when the pandemic is over. But that idea that these two great companies are right next to each other in Salesforce Park is amazing. And Stuart and his team have built one of the most beloved platforms and brands, okay, and technologies. in the software industry and it's a perfect match for both of us that's going to extend our our companies make us both stronger and look we spend more than a decade focusing on this vision that we've had for social enterprise everyone probably remember members in nauseam all of the social enterprise presentations that i've delivered in my career this makes it all real this makes it all true this brings the best of both worlds the integration it's a marriage made And have heaven. It's amazing. And we've spent more than that. I can't even think about how many conversations Parker and I have had on the vision and then to see Stuart come in with red and make it all real. Well, that's just awesome. And we see in Slack a once in a generation company and platform. It's the central nervous system of so many companies on this call and our company and so many of our great customers connecting everyone and everything. And now we could go even bigger. better, more exciting, and it brings all the companies, people, the data, the tools together, and you can see all the CRM information, the sales, the customer interactions. You probably saw Slack Connect, which extends the benefits of Slack so employees can securely work in collaboration with partners, suppliers, but especially important for us customers. Wow. That's a game-changer. And when I've seen this incredible storyline that what Brett and Stuart have put together, it is like, wow, this is bigger than I've ever thought it could be. And when I've looked at the companies from around the world who are implementing Slack, from the fastest growing startups to Fortune 500 companies and Starbucks and Target and HP and what they're doing, and then when we integrate that with a single source of truth, oh boy, it's a supercharger. So We already know more than 90% of Slack enterprise customers are also Salesforce customers, but we also see how much farther they can go because we just use ourselves as an example. Yes, we're a great Slack customer, but we could be doing so much more. But when it's integrated with Salesforce, it's like, wow. And that's what I plan to bring that message to all my friends, all these CEOs that I work with all over the world to help them transform their business and grow their businesses and helping them to survive and succeed during this pandemic, well, we're going to make sure that they just have this incredible single source of truth experience as well. Look, we've already shown with ExactTarget, with Demandware, with MuleSoft, with Tableau, how we acquire, how we can integrate, how we extend acquisitions, how we transform our own product line, how we can develop compelling models for our customers to get value. And we'll expand Slack as well in the enterprise, not just among Salesforce customers, not just by lighting up our tens of thousands of salespeople. That's not what this is all about. What this is all about is the value of the social enterprise and creating this incredible idea that you have this amazing hub of productivity, of collaboration, of integration, and applications that now leverage all this amazing data. And, I mean, you probably saw if you watched the Tableau conference-ish this year, the vision they've had for Tableau integrated with Slack. You look at what Salesforce has done. I mean, it's absolutely incredible. And by the way, you know, look at what Zoom is doing with Slack. It's absolutely incredible. And you look at that product. I mean, you're talking about my productivity environment every day. Zoom and Slack and Tableau. Oh, yeah. And Salesforce and all the applications and dashboards and everything I use to run my business is all Salesforce now. everything on my desktop here. I've got my computer in front of me right now. And everything is Salesforce. And I'm like, Whoa, this is just absolutely incredible. So congratulations, Stuart. Brett, I just want to give you a huge call out because awesome what you have done. And I never thought it was even possible never was it wasn't even in my consciousness that it could be possible. And you did it. Now, before I turn this over to Mark Hawkins, I'm sure you've now already seen that, you know, absolutely one of our very best CFOs we have ever had is retiring. And it's just sad, you know, to see Mark go. I'm going to try to keep him around in the company as long as I can. I think I'm going to have some good success because let me just tell you, he is absolutely, I really think, Mark, you're absolutely, I mean, I don't want to, You know, we have especially Steve and Graham out there, such great close friends of all of ours, of mine and yours as well, Mark. But, Mark, wow, you've really outdone yourself. What a career you've had at Salesforce. And I'm just so grateful for everything that you have done for the company, and I am so grateful, Mark. for everything that you've done for the industry and also your relationships with all the CFOs. When I look at your incredible CFO conference that you run at Davos, when I look at your work that you have done as well with Prince Charles with sustainable accounting, when I see the value that you've added to the whole world, not just at Salesforce, not just in the industry, but in the world with these new sustainable accounting standards, Mark, I am deeply grateful to you. So, I want to tell you that Mark is going to remain our CFO through the end of our fiscal year, which is going to end January 31. And then Mark, I believe you're going to stay on as an advisor, hopefully for quite some time. And then at that point, I am absolutely delighted to announce our new Chief Financial Officer, who has been on a few of our calls here. You all know her. She is an amazing person, a core part of our organization. executive team, a core part of our entire company, core with our board of directors, my core consigliere, Amy Weaver. So, Amy, congratulations as our new chief financial officer. I couldn't be happier for you. And I know that Mark also joins me in sending you congratulations. We'll hear from him in a second. And Amy will become our president and our chief financial officer effective February 1 of next year. So congratulations, Amy, you are now going to become our fifth CFO at Salesforce. So it's been, uh, probably the five best CFOs in the world. I can't imagine you're joining this incredible group and you Amy to have you as our fifth CFO. I mean, unbelievable. And Mark, thank you again, because I will always be so grateful for your tenure and, uh, I'm sure we're going to have a smooth transition of power and looking forward to hearing your announcement of your new cabinet. And, Mark, when I look at how you have been such an important part of our success over the last six years with revenue growing five times to over $20 billion, actually $21.1 this year, Mark. and a market cap reaching more than $200 billion. Employees growing over 54,000 a day. And, Mark, you set the foundation, and you know this is just the beginning, and you're lighting up my $50 billion dream so aggressively. And we all know it takes a great CFO to help scale a company that well. You know, I'm very grateful for this. And, Amy, you know, you've been that trusted advisor. I mean, it's all one family, so thank you. I know this is going to be a seamless transition, but my heart is really filled with gratitude. And let me turn this over to our Chief Financial Officer, Mark Hawkins.