Salesforce.com had another beat and raise quarter where they beat expectations and raised their revenue guidance. When you are growing at 27% year over year (28% once currency headwinds are factored in), it is easy to have a succession of beat and raise quarters — All you have to do is figure out how to add two billion dollars in revenue this year and then continue to do so geometrically every year forward.
On Wednesday’s earnings call, CEO Marc Benioff claimed that SFDC continues to invest heavily in its sales cloud platform while competitors have invested elsewhere. Remarking on SFDC’s continued leadership position in Gartner’s Magic Quadrant, he stated that
Everyone else kind of abandoned their technology in this area and they are trying to give it a lot of lip service, but the reality is there is just no comparison between what we have and what the other vendors have at this point. It’s incredible and it comes through in our demos, it comes through in our wins, and it comes through in the core customer success.”
The Sales Cloud, their oldest and largest cloud, saw an acceleration in its growth rate due to its Salesforce1 “rebooting” combined with the new Lightning user experience which was designed as mobile first. Other growth drivers were Pardot, their B2B marketing automation platform, and the recently acquired SteelBrick CPQ (Configure, Price, Quote) service.
Lightning also supports the Force platform. It’s mobile development capabilities help developers “rapidly build and expand and create these applications using Lightning and deploy them on all these different devices,” said Benioff. “Lightning is so unique and so special in the industry. It lets our customers build these applications quickly at a very low cost and deploy them across so many different platforms that we’re going to see a continued growth in core clouds.”
The Next Growth Driver: Artificial Intelligence
Benioff also discussed past and future growth drivers for Salesforce and the tech industry. Past drivers include cloud computing and social with mobile as a key current driver. Moving forward, growth will come from the integration of artificial intelligence across SFDC to improve customer experience and workflows. Benioff provided the new SalesforceIQ Inbox service as an example:
[The] Salesforce Inbox is very exciting because it uses artificial intelligence and machine intelligence to work with our users, to work with our emails, to work with their calendars, and work with their CRM data to give them perspective ideas on exactly how do be more efficient in the sales, service, and marketing processes of their companies…
This is another major growth factor because it will appear in sales, it will appear in service, it will appear in marketing.
For the past few years, Benioff has been discussing the importance of being a customer company that interacts with customers across a broad set of platforms and departmental touch points with “systems of intelligence.” It is along this front that SFDC has staked out its most recent competitive differentiation:
We’re in the midst of a massive generational shift; a new generation of customers and consumers is clearly emerging. We have been calling them here at Salesforce C generation customers. Customer generation, consumer generation that these are people who want it now, they want it fast, they want it easy, and they’re mobile, they’re social, they’re always on, and our customers are working to connect with the C generation in new ways, very exciting. I mean this is really part of a huge shift that’s happening in computing. We’ve gone from the first generation of computing which was very much about systems of record to the second generation which was systems of engagement we talked about that on these calls many times over the last 10 years. And we are clearly moving into this incredible world that the system of intelligence that’s all yielding these incredible systems of customers or C generation customers that are — that our customers are connecting to. And that’s we’re so excited about.
Focusing on the customer, delivering systems of intelligence, developing a mobile-first platform, betting on the cloud when the tech market is collapsing, and embracing social. These decisions all seem obvious in retrospect, but in the fog of corporate battle, the trick is to identify and implement the next wave early and better than anybody else. When you think about it, that’s easy — sort of like growing revenue by two billion dollars this year.