Salesforce.Com Inc at UBS Global TMT Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Good. Thanks, Brian. Maybe we'll start -- you've been in front of investors, obviously, a few times, but for those that perhaps haven't had a chance to meet you, Brian, do you want to just take a minute to describe your role at Salesforce, what functions roll up into you?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. And maybe I'll ask you, Brian, how exactly you define that. So if I were to ask Marc how he thinks about customer success and, therefore, what metrics he cares about, what are those, Brian? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2021 / 8:00PM, CRM.N - Salesforce.Com Inc at UBS Global TMT Conference (Virtual)

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Yes. Well, that's a perfect segue. So let's ask you about that, Brian, because on this last call when Amy and Evan were discussing the results, the attrition and churn results were particularly good, where it was one of the lowest in Salesforce's history. So I guess I'm talking to the executive who can take ownership for that success. And I'd love to ask you what's going on behind the scenes to drive that low attrition? You must be up to something. This can't just be an external market phenomenon.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Well, congratulations to you and the team. That stood up to us in the investor community.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : One of the other measures of success you mentioned, Brian, was just condensing shortening the go-live time frames. And that's actually of interest to me and I think a number of tech analysts for this reason, and that is that when we talk to companies -- software companies and their clients and their SI partners, one common theme is that everybody seems to be running at kind of a 0 bench these days, and there's labor shortages. And one of the fears that investors have is that if these labor shortages are acute enough, it may essentially elongate the go-live time frames because there's simply not enough people to help your customers get live on Salesforce. So is that beginning to bubble up, a? And b, what specifically are you and the team doing to prevent that bottleneck from starting to happen?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : And Brian, you mentioned that the internal Salesforce professional services organization might roll up to you. So is Salesforce running your own services organization at a pretty high utilization rate, given the demand and the shortage of talent. I presume so, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2021 / 8:00PM, CRM.N - Salesforce.Com Inc at UBS Global TMT Conference (Virtual)

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Yes. Good. Let's do model a little bit broadly and talk about sort of the state of the demand backdrop if that's all right, Brian. I think one hot subject, so let's just hit it straight on, is to what extent were "front office technology initiatives" pull forward over the last 18 months, such that we might be sitting in front of a slower growth period versus the more optimistic view that the growth can continue at this fairly torrid pace. Because when -- even when I've been talking to a lot of your large customers, one of their first priorities after the dust settled post COVID is to address sales and marketing and e-commerce platform upgrades and customer support. So it did feel like the front office was an immediate priority. So how would you address those concerns that perhaps a lot of it's sitting behind you and we might be slowing growth?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : So maybe the answer is that these "front office sales marketing customer support investment cycles" are longer duration that they can be 2, 3, 4 years such that we shouldn't be as careful about kind of a slowdown near term. That 2022, the outlook still looks pretty constructive in your judgment. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2021 / 8:00PM, CRM.N - Salesforce.Com Inc at UBS Global TMT Conference (Virtual)

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. Okay. Let's talk a little bit about some of the results that Salesforce put up in this most recent quarter and kind of bring them to life. I thought one of the stars of the show was the Sales Cloud growth. That was supposed to be the part of Salesforce's suite, Brian, that was supposed to be single-digit growth by now. It's been around for so long. And here you put up, I think, a 17% growth and it actually accelerated. What is happening there, Brian, maybe to help investors understand the drivers of that part of your business?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Yes. Brian, I don't know how much you pay attention to Veeva. I know they're actually a significant partner and customer of Salesforce, actually, so you probably do. Now obviously, they're serving the life sciences industry. But one thing they alerted Wall Street investors to is that the sales reps for the large pharma experienced such a productivity increase by not being out on the road driving around but by Zooming and e-mailing and phoning that frankly, they didn't need as many sales reps. So there's a little bit of a contraction in the number of sales reps occurring in the pharma industry. And unfortunately, for Veeva, that's having a little bit of a negative effect on their CRM business. So the question I wanted to ask you is, is that phenomenon something that you're seeing outside the pharma industry where the productivity gains are so pronounced with the pandemic that the rate of sales rep hiring is slowing at all? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2021 / 8:00PM, CRM.N - Salesforce.Com Inc at UBS Global TMT Conference (Virtual)

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. And Brian, if we flip to the Service Cloud, which has also been head-spinning successful over the last 10 years, if some of the immediate need was equipping sales reps to close deals and be productive in the pandemic, and that went through an early surge, and addressing your customer support needs came a little bit later, that might actually give you comfort that the duration of that growth pickup for Service Cloud might even be longer lasting. So maybe you could address your view on the Service Cloud for us.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Okay. Well, you mentioned Slack is another leg of growth going forward now that the acquisition is closed. It hasn't been closed all that much, obviously, but the numbers that Evan and team shared with us were pretty damn good around the Slack front. So maybe you could give us some color about how you're essentially getting the Salesforce, you and Gavin, cranked up to upsell Slack. What's that process look like?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : And Brian, it may not have been a concern of yours, but prior to the acquisition, one of the major concerns of tech investors around Slack was that, it needed to duke it out with this beast, Microsoft Teams, every day and how on earth would Slack be able to succeed. So the numbers they've put up recently suggest they've been able to manage that Microsoft competition fairly well, thank you. So I'm wondering why is that? Is that because you and your sales team found a different way to sell against Microsoft? Is it that the end market is just so significant that maybe tech investors were premature into thinking that it was a zero-sum game. Some thoughts on that might be helpful.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Okay. Good to hear. So those are a number of parts of the Salesforce story that I think we're super bullish on this last call. If I can keep things balanced, there is one area that was a bit of a hiccup, and that was MuleSoft. And it may not report in to you, Brian, but I'm trusting that between you and Evan, maybe you could help us understand. So maybe you could just explain what happened at MuleSoft that required Salesforce to sort of step in and make some sales or operational changes. Can you give us a little bit of context?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Okay. So it doesn't sound, Brian, like -- it sounds like it was a sales structure, a go-to-market change. It's not that you sort of forced MuleSoft away from its on-prem term licensing business and forced a faster ratable shift on it. It's not -- it doesn't sound like you made any significant pricing

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : And Evan, feel free to step in, if I'm waiting in the dangerous territory. But in terms of how long it might take to get MuleSoft back on track, Brian, are we talking a couple of quarters. Is that the right framework?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Good, good. So maybe we'll switch topics a little bit, Brian, and you mentioned that you work pretty closely with Gavin on the broader enterprise commercial sales front. So the one thing I'm interested in is, how is that changing post COVID? Like what does the new sales model look like at Salesforce? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2021 / 8:00PM, CRM.N - Salesforce.Com Inc at UBS Global TMT Conference (Virtual) I presume the easy answer is probably more Zooming and less flying, but I got a feeling it's more complicated than that. Maybe you could help to describe it.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Well, I think everybody listening in has been pretty impressed that despite the pandemic and the thought that sales force reps, account execs really needed to be in the field closing deals, you've managed through the crisis amazingly well. And you're not the only one, a number of software companies have. But at your scale, to put up the numbers you have, while all of your sales team are essentially zooming, e-mailing and phoning is frankly remarkable.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Brian, let's talk a little bit about margins. That's the part of the Salesforce story that's at least Wall Street is excited about. I think there's a perception that Salesforce for sure, don't get mistaken, is still very growth oriented, but there seems to be an appreciation that Marc and Amy and the team are just using slightly improved language about the desire to find cost efficiencies, and that's created some enthusiasm about margins. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2021 / 8:00PM, CRM.N - Salesforce.Com Inc at UBS Global TMT Conference (Virtual) So maybe one way to bring life to that is if you could give any example of where in your role and in the teams that report in to you that you've seen a little bit more of a focus on cost efficiency, just to give everybody listening an example of the focus on that internally at Salesforce.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Okay. Terrific. And why don't I finish with a question about your leadership structure. Obviously, that was another highlight from this last Salesforce call where Bret is taking on more responsibilities. Brian, could you help us understand, as Marc and Bret work together, there may not be a clean delineation between Marc's going to do this and Bret is going to do that. But what's the general sharing of responsibilities look like? I think even a simple description might be additive.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Okay. So you wouldn't interpret this as signaling anything to the Street about any change in the philosophy around acquisition frequency, importance on margins. It doesn't sound like you're framing it that way.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Got it. Okay. Terrific. Well, that's a fantastic story. Thanks for helping all of UBS' clients understand the Salesforce story a little bit better. Brian, very nice to have met you face-to-face even if it is virtual. And Evan and Brooke, thanks as well for your help with Salesforce's participation at our event today.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Yes, and happy holiday to all of you.