While Salesforce was hosting the London leg of its World Tour series yesterday - lots of content to come from that over the coming days - CEO Marc Benioff was back at base to announce the firm's Q1 18 numbers with revenue up 25% year-on-year to $2.39 billion (with deferred revenue up 26%).
Breaking down the company’s various cloud contributions, Sales Cloud revenue was $829.6 million, Service Cloud revenue was $651.2 million, Marketing and Commerce Cloud revenue was $289.0 million, and Platform/Other revenue was $431.1 million. There was a net loss of $9.2 million v net profit of $38.8 million for the comparable quarter last year.
That left Benioff confident enough to raise full year expectations to $10.3 billion, up and over the coveted $10 billion run rate.
With the numbers crunched, it was on to the highlights of the quarter and an assessment of the ‘state of the nation’. Some highlights below - in Benioff’s own words.
We have made an incredible amount of progress with our focus on the government business, the public sector business here. We had a big announcement in the quarter of IL4, which obviously is making a difference for us. We've expanded our relationship in the quarter with the U.S. Air Force and the U.S. Army. So we see that as a huge opportunity as the government really focuses on trying to modernize and transform their business and their organization, their technology. So there's a lot of potential there in the quarter. We had a significant win with the state of Florida. And we did some incredible work in 3 11 for one of the largest cities. So stay tuned on that, for one of the largest cities in the country that we all know and love.
On a Sales Cloud Revelation
We kind of had a breakthrough in how we think about Sales Cloud and the ability to grow that revenue stream. And that you saw with our acquisition, for example, of SteelBrick. When we acquired SteelBrick, it also gave us the ability then to extend Sales Cloud with CPQ-type functionality, which was something that we did not have previous to that, previous to the acquisition, and we're able to organically grow the product. That has been a big revelation for us as we look to all the options and all the things that our Sales Cloud customers need that previously we didn't have. In addition to that, we continue to close very large new Sales Cloud licenses.
On office politics and Einstein
[The] ability to consult with Einstein [Salesforce’s AI offering] has made me a better CEO. I have the ability to talk to Einstein and ask Einstein everything from product areas that I should be focusing on, geographies that I should be focusing on, the linearity of bookings during the quarter. Every question that I possibly could have, I'm able to ask Einstein. And I think for a CEO, typically the way it works is, of course, you have various people, mostly politicians and bureaucrats, in your staff meeting who are telling you what they want to tell you, to kind of get you to believe what they want you to believe. Einstein comes without bias.
On the blurring of B2B and B2C
When I was down in Las Vegas, I was meeting with a very large manufacturer of furniture who has not done a lot of automation. It's a huge company with tens of thousands of employees. And they are both a B2B company, where they are building their furniture, designing their furniture, creating their furniture and they're selling it to partners and they're selling to the resellers, and they're selling it online to different vendors, and their B2C company, they have their own stores and they also do their own online.
They're like, "We are looking for an opportunity to digitally transform our company. And honestly, we're not the state-of-the-art, and we need a B2B and a B2C transformation. Can you help us?" And I said, "Honestly, I think Salesforce is the only company today who can work with a company like that and be able to come in with a full range of capability, technology, services, relationships, partnerships and say we can transform you whether you're B2B or B2C or both.” And it was the first time that a customer actually ever came up to me and said, "I'm B2C and I'm B2B.”
On being ‘born cloud’
We have a major customer right now who just has imploded with SAP Hybris because it's on-premise software product built in the last generation of software. And these retailers, they don't have time to wait and they don't have the ability to take on the risk of this old enterprise on-premise stuff like SAP Hybris and that's why you see this rapid acceleration of our Commerce Cloud. But that's just a metaphor. They just don't have the ability to take on the risk of any of that old Oracle or SAP on-premise software. So that's why, by basically being born cloud, by being born social, born mobile and now being born AI, we can do more for customers today and go faster than ever before.
On the competition
Our competitive position has never been stronger. Just look at the latest data from the top industry analysts, IDC, [which] shows Salesforce grew its overall market share more than any other CRM vendor. According to IDC, we are number 1 in CRM, we're number 1 in sales applications, number 1 in customer service applications, number 1 in marketing applications in 2016. If you go to my Twitter feed, there's a nice chart that we put together using the IDC data. Salesforce is gaining share at a much faster rate than our competitors. We increased our market share in 2016 by more percentage points than the rest of the top 10 CRM vendors combined.
On job growth
Our ecosystem of customers, partners and developers is generating hundreds of billions of dollars in GDP impact and creating millions of new jobs. And in a time an incredible change in the world and incredible areas of workforce development, we are so excited that so many people are coming to Salesforce to find a new employment. In fact, there's hundreds of thousands of job openings today that are calling for Salesforce skills, and we've seen this incredible situation where Salesforce developers and Salesforce administrator are 2 of the highest-paid jobs today in the United States. It's very exciting time for Salesforce. We expect to grow to nearly 30,000 employees worldwide this fiscal year, something I'm very proud of.
At Salesforce, we really strongly believe that the enemy of my enemy is my friend, and I think that makes Amazon Web Services our best friend.
Another good quarter contributing towards to the now-inevitable $10 billion celebrations later in the fiscal year. The deferred revenue growth rate will ease any concerns that this was in danger of slowing down. Onwards.