Amid the dazzling Q4 and full-year results they reported late last week, Salesforce.com leaders emphasized two external factors that play beautifully into their hand: CEOs are making digital transformation their top priority, and the recent U.S. tax cuts are giving them the resources to pursue that aggressively.
Noting that he’d had dinner with 20 Fortune 100 CEOs in New York the night before the Feb. 28 earnings call, Salesforce CEO Marc Benioff said on the call, “Squarely in the center of each and every one of their consciousnesses is the digital transformation their company’s going through.”
Across all industries, Benioff said, “Every CEO is thinking about their digital transformation—and every digital transformation begins and ends with the customer.”
And the recent tax cuts in the U.S. are directly fueling a “very fast-moving economic freight train” that’s helping CEOs create end-to-end digital businesses.
“We’ve seen an incredible increase in investment activity with our customers, especially accelerated with these tax cuts,” Benioff said. “That has been amazing to us.”
That turbocharging effect comes at an ideal time for Salesforce because the broad and deep relationships with a range of C-level executives among its customers has greatly enhanced Salesforce’s credibility to be among or perhaps even the strategic technology partner for those top-priority digital initiatives.
Asked by an analyst to describe how Salesforce has been able to generate a cloud-revenue backlog of $20 billion of business on and off the balance sheet—up 40% from a year ago—vice-chairman and COO Keith Block said, “It really comes back to the strategic relationships that we’re driving with these customers: they’re deeper and more meaningful.
“We’re driving their digital transformations, and that results in more large contracts than ever before and more large customers than ever—plus longer contracts in terms of duration, and also a lot of multi-cloud solutions,” said Block. (You can see a transcript of the entire earnings call at seekingalpha.com—I use SeekingAlpha’s transcripts to supplement my own notes from the calls.)
We’ll take a deeper dive into the strategic elements behind those and other dynamics at the high-flying Salesforce—on the strength of its Q4 numbers its market cap has soared to $88 billion—in a future piece but today I want to offer you 20 striking numbers from Salesforce that underscore two important points:
- Salesforce has achieved the lofty “hog on ice” status where, once it’s reached a certain momentum—and Salesforce definitely has—very few things on heaven or Earth can stop it; and
- the surging demand industrywide for the enterprise cloud—whether SaaS, PaaS or IaaS—has blown away every possible doubt anyone could have about its ability to handle any and every type of corporate-IT workload, business challenge or growth initiative. A related piece of evidence is revealed in a piece I posted last week: Microsoft Cloud Hits Superscale As Huge Customers Migrate Mission-Critical SAP Workloads To Azure.
Consider these numbers that Salesforce disclosed on last week’s earnings call:
- 1. #1 Priority for CEOs: Benioff says digital transformation is all about the customer, and “We’re the Number One customer company in the world. No other company in the history of the software industry has been as focused on customer-relationship management, and now customers can achieve that customer transformation with Salesforce.”
- 1 Billion Predictions Per Day: Benioff says Salesforce’s Einstein AI system recently crossed that threshold, meaning the company will redouble its AI efforts and commitments for infusion across all of its products and services. Meanwhile, archrival and primary SaaS competitor Oracle is also making enormous investments in and commitments to AI to bring huge new capabilities to business applications.
- $20-Million Customers: Salesforce said that in the past 12 months, it’s doubled the number of customers at that spending level.
- $1-Million Deals: up 43% in Q4 versus year-earlier period
- 40% of FY18 New Hires: Joined the company outside of the Americas, underscoring its evolution from an international company to a global company
- 55% Of New Business: now generated with partners, showing the carefully cultivated expansion of the Salesforce ecosystem. Another major cloud rival, Microsoft, probably sets the standard for ecosystem engagement as about 95% of its $100 billion in revenue comes via partners—a dynamic that should bring huge new opportunities in the cloud.
- 540 Million Unique Shoppers: used Salesforce Commerce Cloud during the recent holiday season, demonstrating enormous scale and reach
- $150 Million: raised full-year FY19 revenue guidance by that amount, with new range being $12.6 billion to $12.65 billion
- 4-Year Spurt: In the just-closed Q4, Salesforce closed more new business than it did in all of FY 2014
- 10 Top Customers: of the company’s 10 largest customers up for renewals in Q4, 8 expanded their relationships with Salesforce
- $20 Billion Stash: Benioff said that outside of the revenue it’s reported, Salesforce has $20 billion in booked business on and off its balance sheet, representing a 40% jump from one year ago. That includes $7.09 billion in deferred revenue, up 28%; and unbilled deferred revenue of $13.3 billion, up a staggering 48%
- 20 Top Banks: of the 20 biggest banks in the U.S. and Europe, Salesforce now has 18 as customers. Of those 18, almost half (8?) expanded their relationship with SFDC in Q4
- $3.7 Billion Annualized Run Rate: for the Sales Cloud, up 16%
- $3.1 Billion Annualized Run Rate: for Service Cloud, up 28%
- $2.1 Billion Annualized Run Rate: for Platform & Other, up 37%
- $1.6 Billion Annualized Run Rate: for Marketing & Commerce Cloud, up 33%
- 31% Revenue Growth: for EMEA
- 26% Revenue Growth: for APAC
- $10.48 Billion: revenue for FY18 (ending Jan. 31), up 25%; for Q4, $2.85B, up 24%
- $20 Billion–$22 Billion: long-term revenue guidance for FY 2022.
All of which makes it hard to argue with Benioff for punctuating his opening remarks on the earnings call by saying, “This may be our best quarter ever.”
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