Salesforce.com Earnings Call Nuggets: Marketing Cloud Outlook and Salesforce Platform
Salesforce.com (NYSE:CRM) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Marketing Cloud Outlook
Brent Thill – UBS: Marc, I was curious, if you could just give us your view on the next steps for the Marketing Cloud? And if you could also address with Social.com as you mentioned, your pricing is now based on the percent of ad spend, a little different than your past pricing model, can you talk about – should we expect more changes going forward in some of the pricing methodologies that you unveiling some of the new products going forward?
Marc Benioff – Chairman and CEO: It’s an area where I spent a lot of my time. Let me tell you how I look at this strategically. Number one, Salesforce is now the number one CRM company in the world. I mentioned that in the script and that has been an incredible accomplishment for the Company. For us to continue to be number one in CRM in the world, it means that we have to be number one in three main areas. One, we have to be number one is sales, which we are. And if you have seen the new Gartner Magic Quadrant in sales, it’s clear that we’re number one. It’s not any clear than if you get the new Magic Quadrant for customer service and on support, and customer engagement which just came out about a week or two ago now, it’s credible market and customer support we’re number one in service. That has been an incredible journey. It’s been a fight. It’s been a tremendous accomplishment and especially gratifying when we saw SAP got pushed into the Challenger quadrant as we assumed this strong position in the Leader quadrant, and that’s very important to us. So, number one in sales, number one in service and that’s true in revenue, that’s true in market share. That’s true in feature functionality. Now, marketing is an area that we’ve recently entered into, as you know, and it’s not really an area that we’ve gone into organically and through our own development, but we’ve acquired our way into marketing first by purchasing Radian6 and then by buying Buddy Media. Buddy Media had purchased just before we bought them Brighter Option which we then have rebuilt and now re-launched as Social.com. And by no means are we number one in revenue in marketing. This is the year where marketing revenue will enter into the nine digits for the first time, but it’s not a $1 billion cloud yet. It’s a $100 million plus cloud. And our goal is to be number one marketing. But we realize that to be number one in marketing we’re going to have to achieve more than $1 billion in revenue in that cloud and be not just number one in listening, not just number one in publishing, not just number one in social advertising, but in a number of other key areas as well. And strategically, I believe that this is very important to the Company and so I’ve spending a lot of my time looking at this and you’re going to see us experiment and try things and innovate in, as you saw in acquisition, which you’ve seen us do in the last two years, in pricing like you’ve seen with Social.com., in features and functionality, in position and in messaging like you’ve seen us evolve into the customer company messaging. And what that has meant to our customers is that they are looking to us more and more and I invite you to the customer company tour presentations so you can meet these customers and validate this that they look to us to help them understand how to connect with their customers in this kind of incredible new way. And our goal is to be that trusted advisor. And to do that it means that we’re going to have to deliver world-class marketing functionality. We’re focused on that. We’re excited about that. Not just in B2B, but in B2C as well. And what you’re seeing in those changes or in those pricing that you’re asking about, Brent, is, our innovative and ideas and experiments as we move from $100 million business in marketing to a $1 billion plus business.
Heather Bellini – Goldman Sachs: I was just wondering Marc, we have a good number of private companies telling us they’re starting to write you some very big checks for Force.com. I was wondering if you could talk about what we should be expecting in that business, what type of milestone should we be looking for. I know you mentioned what you did in Japan this past quarter, but is there anything else you could share with us on kind of things we should use to benchmark the business?
Marc Benioff – Chairman and CEO: The way to look at this business, which we call the Salesforce Platform is the following way. First of all, for our customers who are buying our sales or service or marketing products, they’re extending those products with applications that are customer-centric and they are customizing, they’re enhancing, they’re configuring, using the Salesforce Platform, which includes Force.com, which includes our APIs, which includes Heroku, which includes Site.com, our website capability, which includes our AppExchange where we have approximately 2,000 applications in there. And that’s step one. They’re extending and complementing the work they’ve done with sales, service and marketing. Step two is a lot of those companies are building very unique custom applications and those applications are the applications that they need, the apps that they need to run their business. It used to be back in the day that few companies would buy SQL Server, Visual Basic, PowerBuilder, SQL Forums, whatever it was to basically do structured and unstructured data management, and have application development capability. We see those customers turning to our platform to get that same kind of capability rapidly. We are very excited about the growth that that brings us, the stickiness that brings us with the customer by starting to manage their metadata and not just their data and delivering those next-generation apps. Three, the AppExchange; you’ve seen a number of really great ISVs emerge on our AppExchange, many of them who are building natively on our platform and these application companies, I mean just great, great, great companies, some that are even going public now, I’m sure you know with native apps. And we couldn’t be more excited for them. We are continuing to grow and also partner from a revenue and go-to-market perspective with a lot of those companies, and we have a whole sales force just dedicated to selling to ISVs. To help them unify with our platform and to go-to market to our customers. These three things together that are working really well with the platform, extending and complementing the CRM capabilities, building entirely new apps into traditional app dev space, (route space); and three, a platform for independent software vendors to build their own applications to target our customers or their own customers or specific industries. And it’s these three things, Heather, together that you hear from some of these what might look like very small companies, writing us extraordinary checks, as you said, but it’s really because we’ve become partners with them much in the way that we’re partnered by the way with our key software vendors. Of course, companies provide us core technology that we write very large text too like Dell or like Cisco, or like EMC or especially Oracle where it’s very important for us to have a strategic relationship with them that we’re writing significant checks to them for their licensing and then it’s a very important part of our business. You’ve seen that now. 14 years of business we wouldn’t be in business without those relationships with those vendors providing us our technology and in the same way that they fuel us and we write them the checks. Those ISVs then write big checks back to us. So, it very much is done by (audit) relationship between us and those customers or between us and our core vendors. And our job is that rising feel will raise all boats and that’s the economy that you’re getting feedback on today.