Salesforce's shift from international to global supports strong second quarter
Salesforce’s shift from international to global supports strong second quarter
Fri, 08/23/2019 – 03:36
- Another strong quarter for Salesforce with some global nuances taking shape.
Earlier this week the Business Rountable, representing 200 of the biggest corporations in the US, was in the spotlight for a restatement of purpose based around inclusion, ethics and society rather than solely on shareholder return.
That was music to the ears of Salesforce co-CEO Marc Benioff, whoâ€™s been a vocal advocate for such a mindset for many years. So it was hardly surprising then that he chose to kick off yesterdayâ€™s commentary on another stellar quarter for Salesforce by focusing on the roundtable declaration:
Many of the words that they were using almost exact phrases were written by Klaus Schwab, the founder of the World Economic Forum. Over 50 years ago when he was at UC, Berkeley, and it’s great to see the BR team take this as incredibly progressive stance and I’m just very grateful to them because of course at Salesforce we do believe that business is the greatest platform for change.
For itsÂ second quarter, Salesforce saw a 22% year-on-year rise in revenue to $4 billion, bolstered by the acquisition of Salesforce.org. Acquisition activity did however take its toll on net income, down to $91 million from $299 million this time last year.
By cloud, growth was:
- Sales Cloud up 13% to $1.1 billion.
- Service Cloud up 22% to $1.1 billion.
- Platforms up 28% to $0.9 billion.
- Marketing and Commerce Cloud up 36% to $0.6 billion.
As is now traditional, co-CEO Keith Block focused on customer wins during the quarter:
FedEx selected Salesforce in the quarter as the platformÂ for their customer service transformation. FedEx will use Service Cloud Einstein in their call centers to drive agent productivity, with AI-powered recommendations in Einstein analytics to get a deeper understanding of their customers needs across their business.
The Union Pacific Railroad system, one of the world’s largest transportation companies chose Salesforce as its unified CRM platform to deliver faster, more proactive service. Now that includes automated shipping notifications and tracking updates, so customers can plan better and improve their shipping experience, very important.
Airbnb turned to Salesforce to power its global messaging program. Airbnb expanded with Marketing Cloud that continues to deliver meaningful hyper personalized communications with this community of guest, hosts and travelers engaging with all Airbnb users across the globe on a single platform.
And we continue to expand our relationship with Marriott, one of the world’s great companies which is using Salesforce to better anticipate each guest travel needs and display relevant offers during that stay and provide a more personalized customer experience.
The quarter also saw the completion of the $15.7 billion acqusition of Tableau, although the decision by the UKâ€™s anti-trust regulator the Competition and Markets Authority (CMA) to review the deal means that the companies will operate separately until that process is completed. It also meant that discussion of future plans for Tableau was limited, although the firm is expected to contribute between $550 million and $600 million to global revenue across the full year.
Block also touched on the smaller $1.35 billion purchase of field service managment firm ClickSoftware:
As far as ClickSoftware we’re very, very excited about the ClickSoftware acquisition. Field Service is incredibly strategic to a number of industries, such as utilities, telecommunications, equipment manufacturers, and we have a very strong product in Field Service Lightning. And the combination of Field Service Lightning, which grew 100% by the way year-over-year in the quarter, and ClickSoftware is very, very compelling.
EMEA came in for some attention, although the B-word (Brexit) was conspicuously absent. The region currently represents 20% of overall revenue and boastsÂ a 25% growth rate. Block said heâ€™s recently visited a number of European countriesÂ and cited a number of use case examples of success, such as UniCredit:
This is a very strong bank in Italy. I think we’re all we’re in a situation that’s going on in Italy from a macro perspective, from a government perspective. But the CEO of UniCredit is really betting the future of UniCredit around Customer 360 initiative and the experience for his customers that he wants and how he wants to transform that bank.
And that is the same conversation that is going on in every industry. I was in Paris meeting with one of the largest bank CEOs in the world. You know the Barclays story that we have in the UK. We have industrial manufacturers in Germany,Â automotive manufacturers, who are trying to improve the customer experience and driving 360 degree [vision]. So the one thing that is very, very clear to me is that whatever is going on around the world, we see a buying environment. We see CEOs investing. And top of mind for them is digital transformation, which begins and ends with the customer.
With the recent appointments of country CEOs for the UK and Australia – the first time such roles have been created – Block also spoke on an interesting topic – the idea of moving from being an international company to being a global company and what this means in real terms, arguing that key factors are around culture behavior and how customer problems are tackled on the ground:
One of the important things are being a global company is to be able to think globally and think strategically and act locally. And we want to empower our leaders in the field so that they can make decisions on behalf of the customers in front of the customers. There’s an expression that says, the best decisions are not made in the office; they are made out in the field. And by hiring these seniorÂ executives and cultivating and growing our other executives inside the company so that they’re empowered to make these decisions, we think this is a perfect way to skill a company.
With respect to being a global company versus an international company, kind of the key tenant of being a global [company]Â is that you act the same, you behave the same, you execute the same, no matter where you are all over the world, whetherÂ it is with one or many customers. And as we bring in these seniorÂ executives, we’re augmenting and enhancing [that] with an incredible management team.
Another strong quarter to keep Wall Street happy. The wider Business Roundtable announcement is nicely timed for Salesforce as it begins the approach to the annual Dreamforce gathering in San Francisco in November and for Benioff himself with the imminent publication of his next book, which focuses on the theme of business as a enabler of change in society.
Meanwhile core themes for Dreamforce itself are beginning to become clear. Whether the CMA review is complete or not, there will clearly be a big focus on the future role of Tableau, as there was with Mulesoft last year. With the ClickSoftware deal due to close in Q3, field service management can expect a bigger role in the spotlight. The main product focus though will still likely be around Customer 360, which Benioff explicitly teed up on yesterdayâ€™s call.
Image credit – Dreamforce
Disclosure – At time of writing, Salesforce is a premier partner of diginomica.