While Salesforce dipped back into the red in its first quarter, after posting modest profits in the previous few, the company remains on a serious growth tear with revenue up 25 percent year-over-year. The full numbers are available here, but as usual, we will go through the earnings conference call and pull out the most relevant pieces of information and perspective (H/T to Seeking Alpha for the call transcript).
Einstein, the Straight Shooter: Salesforce's take on AI in the enterprise is Einstein, built from a collection of homegrown and acquired technologies. It's been pushing out Einstein capabilities across its various clouds. But for now, at least, one Einstein component, Guidance, remains in-house. Salesforce CEO Marc Benioff gave a preview of it on the call:
[W]e then have a piece of Einstein now that we've not yet rolled out to our customers called Einstein Guidance. So this is a capability that I use with my staff meeting, when I do my forecast and when I do my analysis of the quarter, which happens every Monday at my staff meeting like a lot of CEOs do, it's a very typical process, of course, we have our top 20 or 30 executives around the table. We talk about different regions, different products, different opportunities. And then I ask one other executive their opinion and that executive is Einstein. And I will literally turn to Einstein in the meeting and say, "Okay, Einstein, you've heard all of this. Now what do you think?"
And Einstein will give me the over and under on the quarter and show me where we're strong and where we're weak and sometimes will even point out a specific executive, which has done in the last three quarters and said that this executive is somebody who needs specific attention during the quarter. ... 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.
Industries Going All In: Salesforce rolled out a vertical strategy several years ago, and president Keith Block gave a progress update on the call. Ten of the 15 largest telcos, 8 of the United States' 10 largest retailers, and nine of the top 10 wealth management firms "rely" on Salesforce, he said. For public sector, Block reported expanded relationships with the U.S. Army and Air Force, as well as a new deal with the state of Florida centered on tourism.
Salesforce As Digital Transformation Driver: Benioff noted on the call that acquisitions such as SteelBrick for CPQ (configure, price, quote) capabilities are helping drive new Sales Cloud deals, particularly into existing customers. Overall, Salesforce is capturing a bigger piece of IT spending now and this is positioning it as a key player for digital transformation projects, Block said:
[W]e're able to say, "Okay, now the walls between sales, service and marketing are coming down." So now we have an opportunity to provide a 360-degree view of the customer with service and with marketing. And take that now one step further, as we've moved from systems of record to systems of engagement to now systems of intelligence. ... So it's an expansion of our capabilities and our opportunity to drive transformation with these customers.
Amazon Web Services Is Salesforce's 'Best Friend': Salesforce is moving some of its workloads to Amazon Web Services, a move that will help it shave costs and expand its global footprint. But the alignment seems much closer than a financial transaction, judging by this remark from Benioff:
I think 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.
As for that enemy? Benioff didn't actually say the word "Oracle," but he may as well have.