Low-key Benioff as new kid on the Block steps up to pitch Wall Street

When Salesforce.com CEO Marc Benioff delivered the commencement address at the University of Southern California earlier this week, he was his usual impassioned and evangelical self. (It's a great motivational speech and worth a look here BTW!)

It was a somewhat more low-key version who turned up yesterday on the firm's quarterly conference call with Wall Street analysts - and that had nothing to with the numbers.

Salesforce.com turned in a better-than-expected 37% rise in quarterly revenues to $1.23 billion from $892.6 million a year earlier, although the net loss continued to widen,  to $96.9 million from $67.7 million in the comparable quarter last year.

But Wall Street was happy enough to boost the stock by 3% in after hours trading on the back of some bullish projections. For the year, the company now pitches revenue between $5.30 billion and $5.34 billion, up from the prior projection of $5.25 billion to $5.3 billion.

Some highlights from the numbers:

• Americas revenues up 39% to $876 million.
• Europe grew 42% in dollars and 35% in constant currency to $231 million.
• Asia Pacific rose 21% in dollars and 26% in constant currency to $120 million.
• 900 new bodies joined in the quarter to bring total headcount to 14,200, a 38% increase year on year.

The resulting analyst conference call didn’t really break any new ground, other than marking the debut appearance by former Oracle sales boss Keith Block in his new role as Salesforce.com’s President and vice-Chairman.

See also: Salesforce.com expects $5 billion run rate "any minute"
Feb 28 2014diginomica.com

Block took a very active role in the call, with the result that it was far less of ‘the Benioff show’ than previous interactions with Wall Street. It was down to Block, for example, to close off a question about breaking out ExactTarget’s contribution to the overall revenues.  (They're not telling us!)

It will be interesting to see how this double act plays out longer term.

The message - and the challenge

As the man charged with building in-roads into more large enterprises, Block also outlined the messages he’s taking to customer meetings:

“There are several messages that are important, not the least of which is our corporate messages around the Internet of customers and connected customers and how we sell and service in market and how we are a company of system engagement.

“Those are all very strong messages that certainly resonate with our customers and our partners. But the other set of conversations that take place are around a dialog around having a strategic relationship with those customers and what does that mean.

“That is all around predictability and transparency…It’s about trust, it’s about being an advisor. It’s about how do those contribute to how our customers unleash the power of social and cloud and mobile in our technologies to change their business models, to transform their businesses and really unshackle them from old technologies.

“These are messages that truly resonate with customers. They want these conversations. They want this impact that we can bring to the table and they’re excited about our opportunity to partner with them.”

This point was picked up by Jillian Mirandi, Senior Analyst at Technology Business Research, who argues:

Salesforce.com will differentiate by evolving its messaging and portfolio, positioning itself as a strategic advisor for customer engagement.

Salesforce.com is reaching a saturation point in the US CRM market, and will diversify by evolving into a customer engagement business platform, managing the customer engagement from marketing through sales and services.

This more holistic, integrated approach also maps to changing customer purchasing patterns from own-and-control buyers to outcomes buyers; Salesforce.com has been selling a CRM outcome, and now is selling a broader customer engagement outcome.

Such a tweak to the strategic emphasis will bring its own challenges, she adds:

By expanding its value proposition to enter the self-proclaimed “trusted advisor” role, Salesforce.com faces challenges in training its sales team to manage customers like partners, and focus on the bigger picture rather than product sales.

Account executives are already bundling products together according to customers needs, and the next step for Salesforce.com to move into the strategic role outlined requires sales force training and/or professional services personnel brought into deals early on. TBR does not anticipate the latter as Salesforce.com has stated they want to leave the vast majority of professional services to partners. However, if the company chooses to expand its services team, SI partners like Accenture may feel threatened.

No toothbrush

For his part, Benioff went over the Marketing Cloud pitch, dismissed the idea of Salesforce.com treading on Workday's toes in HR, but didn't really touch on the Internet of Customers meme (which meant no intelligent toothbrush references!).

His most enthusiastic contribution to the analyst call centred on Salesforce1. As well as the by now standard ‘I run the company from my phone’ riff, he cited Home Depot as a prime example of how others use the offering:

“We have made a huge investment on the Salesforce1 platform over the last couple of years and so many customers now have deployed it.

“One of the applications that I saw that got deployed this quarter was with Home Depot where they rolled out this amazing new, How-To application.

“You go to [it] right on homedepot.com, you will see our platform poking through, where it gives them the ability to have deep engagement with all of their customers who are building and cloud sourcing and interacting with Home Depot employees and all in real-time.”

Benioff added that he sees Salesforce1 as the new competitive differentiator:

“We are seeing now where companies can take all of this and build their own apps well. That’s really exceeded what could happen. I really think it’s given us this huge leg-up against the competition.

“A lot of our competitors, it’s not that they haven’t move to the phone. They have moved into cloud. Here we are, we have a solution that not only runs great as a cloud service, running billions of transactions every single day, that service is available in whatever device you are using.

“It runs the way the any other cell-phone network would work, like a Facebook or Twitter, but it’s your own private company network or with your partners or with customers.”

Verdict

Good numbers, no competitive name-calling, Wall Street happy, modest uptick in the share price, job done.

But a curiously low-key Benioff contribution to the call with Block as the new kid on the, er, block. This could prove an interesting dynamic in future quarters. An Ellison/Hurd double act?

 

Disclosure: at time of writing, Salesforce.com is a premium partner of diginomica.