Salesforce, Inc. (CRM) Earnings Call Transcript & Summary

Great. Thanks. So thanks, everybody, for joining us for the next session. I'm Walter Pritchard, the software analyst here at Citi. And happy to have with us Mike Micucci, who is the CEO of the Commerce Cloud at Salesforce. And I just wanted to let -- to remind people, I put out a few calls for questions. If you want to send your questions in, my e-mail there is at the bottom of the screen, and feel free to send me additional questions as the session goes on here, and I'll try incorporate those as best we can.

Again, Mike, thank you for joining us here. Would love to have you just give a little -- even as Salesforce about 10 years came in through an acquisition that Salesforce did, which is -- we've seen actually quite a few people show up at Salesforce that way and stay. Maybe you could just give us a little bit of background, your history at Salesforce, and I obviously mentioned your titles to what you're doing now.

Yes. Well, thank you, one, for the opportunity today. It's great to get to share the story of Commerce Cloud. I joined in August of 2009, coming up on 11 years. I know this date very well. And I had started my own company, a company called GroupSwim in 2005. It was a small collaboration / kind of [ plural ] company. And we came on board in 2009 with the goal to help Salesforce build Chatter. So my team came on board and we piled on with the Salesforce team, we built and launched Chatter and then from there, we decided to figure out a way to take Chatter and let -- help companies communicate across company boundaries, so connect companies together. And that led to building Community Cloud, which I launched in 2013. Fast forward, I still manage Community Cloud, which is quite a large product of Salesforce now, in addition to Commerce Cloud, which is B2B commerce, B2C commerce and our new -- we launched order management product. It has been absolutely a blast in what we've been doing.

Got it. And so now as part of -- a CEO conference call, you have Community Cloud, you have the B2C Demandware piece and then you have the B2B side. Can you maybe help us understand any other products that are under your purview just to frame the discussion for folks?

Yes. I mean -- so I think you nailed it. Commerce Cloud, which represents B2C Commerce, B2B commerce, our order management product, our content management product, all of Community Cloud, which is anything that touches portals. So if there is a portal interface for Salesforce, whether it's connected to Service Cloud or Sales Cloud, any part of Salesforce. So for example, like the Small Business Association, those loans that we did with our partner nCino and others, the interface into that was Community Cloud, which is one of our products.

Okay. Got it. So maybe just starting out high level here. Could you talk about -- I mean, Salesforce has been a growth company for a long time. Can you talk about which areas of the business that you're focused on you see driving the most current growth? And sort of where they are in their life cycle in terms of being able to drive sustainable growth?

Yes. I think if you -- this year, obviously, everything is pretty crazy. Went into the fiscal year with one plan, and obviously, working through Q1 had a completely different plan. And I'll kind of frame this through 2 lenses. The product lines I lead, which are really, I think, in all, are essentially the experience products, right? And they connect consumers, they connect businesses together. And both have gone through an unprecedented growth swing right now. Commerce Cloud, I think, you probably heard on earnings call, Bret mentioned it. Our GMV, based on store revenues, are well up over 100%, where essentially every day is Black Friday at this point. But interestingly enough, Community Cloud, aka the portals, has also been surging, partly because a lot of public entities, governments, whether it's the state of California, the state of New York, are using Community Cloud to push out all sorts of public safety, PPE, COVID programs. And we launched more Community Cloud portals in the first quarter of this last year of this fiscal year than we had in any quarter ever. I think March or April, we launched the most in a single month than we'd ever launched. And really a testimony to the platform that we can spin these up so fast, and they're perfect for public entities because we can launch them, we can connect right into CRM and manage the whole kind of process, whatever that might be for whatever, contract tracing to testing.

Got it. And how do you separate, I guess, maybe it's starting to get impossible here to sort of think about the pre-COVID world versus where we are today because we're going to move forward in a new environment. But how do you think about the sort of demand drivers that you saw kind of going into this time frame here? And then sort of which of those have been sort of magnified? And then have there been any that have slowed down in terms of demand drivers, given what we've seen here across your portfolio?

Yes. It's -- the COVID piece has just been like it's kind of mind blowing from a commerce perspective. We did $40 billion in GMV last year, and I've never seen a growth curve like what we've been seeing in the last 3 months. Each month is a new record on GMV. And the entire industry flipped to digital-first in like 2 weeks. We're seeing customers do things they'll do in weeks that used to take them years. They've moved these projects forward despite COVID. They've just prioritized anything digital because they realize that at this point, this is not going away. It's going to come up, it's going to come down and it's impacting their business. It's impacting how they manage their inventory. So like for us, from a growth driver, it's literally helping our customers now like transform at like what used to take years now into weeks. And the first month or so in the crisis really in Q1, a lot of it was about, okay, how do we get stabilized, get our workforce working from home. And now they're all in kind of reopened and getting back to work, but in -- through the lens of digital-first. Many -- like in the retail sector, many of their stores are not going to hold them back up or if they are, they're going to be very slow or they're going to turn them into DCs. So how do we help them there? So this is all like changing from a growth perspective. I think the other piece is Commerce Cloud, up to this point, has been heavily retail fashion-oriented from an industry perspective. We're seeing massive growth outside of that industry, a big surge across consumer products and then B2B as well, where B2B product, very much focused on manufacturing. This was kind of a new area for a lot of companies. Now they're shifting completely where they have to squeeze big efficiencies out. They don't have the same flexibility of putting their physical sales force to work. They have to be basically at home. So they have really come back to us and said, "We need to accelerate the B2B piece as well." So that shift, what's happening for us is it was a lot of positives, has really shifted our business from not just retail, but really a broad industry TAM expansion.

Got it. And I guess, obviously, the overall picture at Salesforce, not your responsibility, but guidance for the year came down a little bit and so forth. Are there any areas of your business that you're seeing some softness in? Obviously, the -- we totally get it, the commerce piece is, I think, across the industry, that's been an area of very clear strength. But I'm curious is there any areas where user or buyer behavior might be changing to the negative side, driving somewhat of a headwind?

Well, I think if you look at commerce, this is why -- it's kind of been interesting. I'll kind of paint it through the lens of commerce. If you look at that business, if you're -- particularly in the retail sector, there are a lot of winners and losers here. I mean, if you're in an industry, particularly like the fashion industry, where the demand for your product is really slowed because, look, I'm working at home, I'm wearing a hoodie right now, so a lot of us are not -- it's just -- it's a completely different mindset of what people are purchasing. And so we're seeing a slowdown in your traditional kind of retail fashion apparel unless you're in like athleisure or something like that. But like I mentioned, it's shifted over where we're seeing a lot of demand in other areas. So the other thing I would say is, broadly, is speed is really the new weapon, which is great to be a -- have a platform because the companies used to do these big replatform projects. If they're in commerce, was like, "Hey, I'll replatform, it takes me 6 to 8 months and then I'll run that platform for 8 years." Now it's like, "Okay, I need to basically accelerate digital transformation. I'm going to take these small projects on, bam, bam, bam, fix my inventory, fix my store, curbside pickup or whatever." So having kind of a portfolio of products that you can slot in. So to answer your question and come back is we do see slowness in certain segments, particularly in areas where -- really particularly hard hit with COVID, where they just can't make capital investments. But the change has been -- there's been so many other industries like, "Oh, I have to go digital-first. I have to go now. I have to like reprioritize a lot of my investments.

And how have you, from the perspective of going to market, when Demandware came in, this was sort of an add-on product. You had a few other products that were sort of add-ons. Where is the company in terms of kind of pre-COVID and now leading with Commerce Cloud versus Commerce Cloud being a sort of add-on to the broader sale that's happening?

Yes. Here's maybe a good way to think about it. Companies when they buy into Salesforce, they're really buying a platform to run their business. Commerce is often the tip to the spear for any consumer business. It's where we capture the order and build the experience. We took a big step engineering-wise back into the architecture a couple of years ago and really worked on the underwriting platform to make sure the systems can work together. And those are starting -- those efforts came out with Customer 360. Last year, at Dreamforce, we really kind of pushed and showed the world what we could do in connecting. So where we see big benefits is the combination of Commerce Cloud and Service Cloud, and it's hooked together by our order management system. So we launched [indiscernible] GA with the new order management. It was completely rebuilt on top of the Salesforce, what we call core Lightning Platform. It's a native data model. Just -- all that means we've completely connected Commerce Cloud and Service Cloud together. So when you buy Commerce Cloud, it's pretty natural to add order management and customer service because they look like the exact same product. It's no swivel chair. It makes it really easy for our customer service agent to respond to any order, do refunds, appeasements, all within one system, completely connected to one customer record. That is just an unbelievable cost savings for customers. They don't have to integrate 2 systems. They get 3 releases a year, world-class workflow management, all completely tied together. When I show this demo, when I show them connected together, and it's just the way it works, ground up, it's kind of a game changer for most of our customers. And that combo of Commerce Cloud plus order management plus customer service is really a killer, winning combo. It's been a big, big piece. In fact, this year, just because with Commerce Cloud, I have add-on products like order management, I'd say about 20% of my pipeline right now is just that combination of adding these add-ons, which connect customer service together. It's been a real win.

Got it. And just following on something you said there. I think we were at Dreamforce, it feels like years ago now in the fall, but there were a lot of integrations shown and you have MuleSoft and so forth that bring some of that in. Where are you -- I mean, some of these acquisitions have been done for years now, where are you in terms of the sort of integrations and being able to deliver that seamless experience, specifically where things connect into Commerce Cloud? And I guess from 2 angles: One is the broader sort of integration priority at Salesforce, and then the other is just the M&A integrations that need to be done when you bring in another company.

Yes. I tell you that, really happy about where we're at from the integration piece. Specifically, on MuleSoft, we did a lot of work with the Mule team over the last year. And MuleSoft and commerce are really 2 very complementary products. Even before MuleSoft became part of the Salesforce Ohana, many of our customers were using MuleSoft for that integration there. I mean, to deploy a commerce system, there's about 32 different integration points. So having something like MuleSoft and create that common integration layer is just a big win. You see, many of our customers, it's a combination, like I said, they're buying Salesforce to run their business. So it's a combination of buying Commerce Cloud, Service Cloud, order management, Mule for the integration and marketing for demand generation. So I'll give you an example. You can look it up if you want. It's called the Commerce Cloud Developer Center. Anybody can use it. We launched it in February as part of headless commerce, and it's for developers, where they can go and explore APIs, look at sample apps, there's a marketing service in there. It's a phenomenal Salesforce-on-Salesforce example of best practices. It is a Community Cloud, it's a portal. MuleSoft is integrated in. So it's MuleSoft Anypoint. So fast for developers interacting with all the APIs, and it's all running for Commerce Cloud. So when you're essentially using Commerce Cloud, you are, in fact, using MuleSoft. It's part of the stack. And then if you want to create a common integration layer for any warehouse management inventory, many, many companies buy MuleSoft in conjunction. So these products are really coming together. And again, that's one of our big advantages is you often go into a company, you look at their kind of stack for commerce, and it is a very complex set of interdependency products that they get bogged down in maintaining integration, so not driving kind of customer experience to store revenue. We've really helped eliminate all that with the combination of MuleSoft, pre-integration with Service Cloud so that they have this complete system. The marketing cloud piece of that, I haven't talked a lot about, is the other pillar for demand generation. So I often talk about it like this, marketing cloud for demand generation, all the way through to the abandoned cart, Commerce Cloud for the experience, capturing order, it doesn't stop when you hit order, then it gets passed over to order management and customer service. So we complete that complete circle. If you're going to run a business, anything north of $10 million, all these pieces have to happen online. When you get to $100 million to $500 million, they just become imperative. You're differentiating them in the market. It is not just your store, but how that complete experience comes together.

And could you help us understand where you are in that process? You articulated that there's multiple point solutions that are legacy that are involved in this whole commerce team with customers. Where are you in terms of, I mean, landing with one product versus being able to sort of replace a lot of these other products? How far along is that in the sort of sweet spot of the customers that you're going after with your product line?

This year, post Dreamforce, we're pretty far along. The -- like I said, the GA, the general availability, of order management in February with pre-integration to service cloud, so checked, checked, done. MuleSoft, we pre-integrated in, plus MuleSoft accelerated. That also went GA in February. So checked, checked. So these pieces of the product have all been done and integrated. And now they're just part of our normal selling motion. Marketing Cloud, we have done great work on our connector pieces. And so customers who want to connect Marketing Cloud into commerce, the connector piece is now -- we have been -- we talked about this at Dreamforce. We are going to announce the new version of B2B commerce shortly. It comes out this quarter. And it is a reimagined B2B commerce experience completely tied into the whole Customer 360 and Lightning. So it's native integration with Service Cloud, native integration with basically Marketing Cloud and Pardot and all of CRM. So if you're looking at running, particularly your channel, and you already have Salesforce, this is like very much just like adding a blade into our platform. We're really excited about the product. We've had good success with B2B. This is going to add a lot of acceleration.

Got it. And one area that I also saw some focus on at Dreamforce, and I think it was an initial foray into this market. It's been the web content management area. What do you sort of -- maybe position what you're trying to accomplish in that market. There's obviously been web content management systems across the landscape for many, many years. There's competitors like Adobe that are investing pretty heavily there. How would you sort of position that? And then I had a follow-up on that.

Yes. We developed our CMS, one, through the lens of removing friction for our customers. So the CMS we built was -- started out to accelerate our portal deployments. And so that if a company could use CMS, they wanted, but they really wanted a way where it was just seamless but tied back to the customer. So that if I had a piece of content, I could reference it exactly back to the customer or the account from the partner. And so what we did is we took an idea since we think it was like headless CMS. And we developed it so that it could be used across any piece of Salesforce. And that CMS, you could start with an e-mail campaign, so you can write your e-mail copy, push it out an e-mail campaign. That same copy can be reused in Commerce Cloud. So if you want to post it as a blog or a landing page. That same copy can be used in Service Cloud, if I have to push it out to their customer service channel. And that same copy can be used inside Community Cloud or, let's say, a portal or a customer service example. So think of it this way, our goal was to have remove friction for customers to go fast. If you have an existing CMS, great, we'll work with it. We've been working with it for a decade with all sorts of different CMSs. But again, the goal here is to remove friction, remove integration points, so that when a company is using these products, they don't have to spend all this time stitching it together and maintaining integrations. Three releases a year, one platform. Think of it as content that can be used across the entire Salesforce spectrum. And of course, we use it outside of Salesforce. Our goal is really just making it easy, remove friction in integration points. And it also helps a lot from an AI perspective because we can gather a lot more signals to use and target that content.

How do you -- so a follow-up on that. How do you think about the buying decision sort of historically? And then more importantly, moving forward around the CMS. So you're trying to tie it very closely to your sort of outbound channels, the commerce, the marketing -- e-mail marketing and so forth to enable customers to go fast. And to some degree, though, web content management has been a separate buying decision that happens on its own. Are you sort of trying to sell across the board there? Or do you not want to be slowed down by trying to get into that sales cycle and really focus on the kind of moving fast sales cycle that you've articulated?

Our focus is this is a great add-on product when you're buying Marketing or Commerce or Community Cloud. So if you're already making a decision to build your experience around one of these 3 pillars, adding web content management on as a way to accelerate it is a pretty natural decision. We didn't kind of wake up one day and, "Hey, we want to just have this new web content piece." Instead, we really wanted to take a step back and say, "How can we help our customers be more successful?" And it was really through that lens, and we tried to reimagine how content would work through the lens of being customer-centric versus being website-centric. If you want to go build pages, there's tons and tons of products out there. But if you want to put the customer at the center, tie it to content and then push it out through multiple channels, that's the kind of net difference.

Got it. And I think actually, that answer, I think sort of answers the next question, but I want to make sure I put a finer point on it. So you've got Adobe as the leader in that web content management space. I think you sort of almost [straw man] articulated their strategy around the web. But how -- in terms of what you're seeing in the 6 months or so that you have this product out in the market, how would you articulate competitively versus Adobe in that market that you've seen as it's been out on the street?

I think COVID, and what we're seeing with COVID really amplifies this, is back to speed. Speed, digital-first is the name of the game. And it needs to be so that it's personalized to me wherever I go. So again, you could take a model where I'm going to be content-first, I'll put pages up and content and then try and work backwards. Instead, we work it the other way: customer first. Okay, how do I match the product, the content to where the customer is going to be, no matter what channel. And I think that lens of speed and connectedness is really the name of the game right now, and it will always be. It's going to accelerate. So this was kind of -- I would say, is like the next-generation of where content needs to go. Content is not the lead anymore. The customer is the lead and building the experience. Content is the thing that fills in the gaps.

Got it. And then similar to what you talked about with B2B commerce, where do you feel you are in terms of sort of release road map, having like the full -- sort of meets the Gartner magic quadrant specs and all that for the web content management capability, as you talked about it versus, say, B2B commerce and some areas?

Yes. I think we're crushing it on B2B. I think the Forrester Wave just came out. I'm sure we can share that, or it's probably up on our website. We're the leader in the B2B, for a product that we only pushed out about 2 years ago. I'm seeing many companies now at well over 1 million orders per month, which is phenomenal on the stack. As I mentioned, the new product that's coming out is literally just a function step, force multiplier in the product. And I'm bringing this up in the fact that, our platform, Lightning experience, allows our customers to build very declarative experiences super fast. So this is not just my team building B2B, this is leveraging the full impact to Salesforce from our app exchange all the way through. And you'll see that connected journey. And so if you're a company who uses Salesforce maybe to manage your partners, new customer service, adding B -- or CPQ, adding B2B is literally as much as enabling it and building out the process for us. So we are -- I would say we are -- we've just kind of opened the next chapter on B2B with this new product. We've literally been working on it since the acquisition happened. And it's just going to be really well received. Couldn't be more excited about it. And I say that because it's been kind of part of our vision since probably for 2 to 3 years now is building this next step.

Got it. And then similarly, with web content management, where do you feel that product stands, say, versus the kind of Gartner magic quadrant traditional definition of what a product needs to be to be considered a leader in that space?

Yes. I'd say we're early in CMS. It's only -- I think we've only released it. It's less than a year. It's seeing excellent adoption, particularly through Community Cloud. It's kind of a checkmark for Community Cloud. We only just launched it in February for Commerce Cloud. But again, when I look at Commerce Cloud and Marketing Cloud, if you're trying to go-to-market quickly, the more integrations you can remove, the faster you're going to go. And in post-COVID, when you've got to deploy a solution because you have the inventory locked up somewhere, in a couple of weeks, having that CMS, it's just integrated in, just removes another piece of friction. So yes, we're early on that product journey. But again, it's not a traditional CMS. Think of it as a platform that supports content delivery across any product at Salesforce that gets automatically upgraded and just becomes kind of the way you do business.

Got it. Okay. That makes sense. I wanted to sort of transition the discussion a little bit to talk about go-to-market and then talk about some of the ways we see the business come through in the numbers. On the go-to-market side, can you help us understand sort of the sales motion for your product relative to maybe the larger strategic enterprise sales reps versus sort of specialists around Commerce Cloud? Where are you seeing the most success with -- as it integrates in with the sales operations at the company?

Yes. I mean, so particularly on B2C, we run, what we call, prime organization in B2C. It's a very -- it's a specialized team, global team. And we've had a lot of success. They have a lot of commerce expertise. They partner up with their core team, particularly when it's across industries. So we'll run plays just financial services, health care or whatnot, where it's a combination of products. That's been tried and true practice of Salesforce and very successful. B2B, it's a mix. We obviously attach it when we sell on B2C, but it is also fundamentally a product that fits very well in the Salesforce B2B core sales motion. And so we sell it as probably we saw more through our core sales team than through the traditional prime commerce team. And customers want a platform for commerce. I think -- so you will -- there'll be a day relatively soon where it's not B2B or B2C, it's just a commerce platform. And I am just expressing commerce in different ways and different touch points. Most of the world's products are being digitized at a very quick pace. And what we think about today as a store tomorrow is probably starting in the doctor's office and ends up in a shopping cart. And so I think of it very much that way is we're adding commerce capabilities throughout anybody's workflow. And sometimes, we sell that through our core teams, sometimes we sell it through our specialist teams. But we see these use cases blending more and more. And that's really been our ultimate goal is distilling commerce down to the platform elements, product price, catalog and then letting them be embedded in any sale.

Got it. Got it. Relative to the way that you sell -- Demandware, for example, before it was acquired, there was more of the sort of revenue business model around GMV, and I think the company transitioned that to some degree. And you've talked about some of the GMV metrics up 100%, things like that. What are customers telling you around how they want to pay for this product or this product suite? Sort of capacity-based things, like GMV and web pages and so forth, versus something that maybe ends up looking more like a more fixed cost for them?

Yes. I mean, I think in any business, companies want predictability. We modified the Demandware model, mined it more to what we thought was market acceptable. We constantly tune that. It is based off of GMV. So we essentially -- we got to figure out what their GMV projections are. They buy a percentage of GMV, and off we go. We recognize and burn that GMV down over the life of the contract. So GMV grows immediately, like when it's surging, doesn't necessarily translate directly into net new revenue. That's recognized over the life of the contract. What is happening is they're burning down their GMV commits a lot faster. So that will generate more renewals because they're going to have to renew faster on the GMV side. B2B, we sell on orders. That aligns much closer to the industry. And I think you'll see us continue to tune these models to make it more transparent and easier for companies to digest. But that's everything. Pricing is an ongoing kind of evolution, but it's all about removing friction at the point of sale.

So is it safe to say then on this sort of surge in business, right now, if XYZ customers lost capacity in the contract, you're not going to see any more revenue. But if they work through that capacity faster, you might see them come back and commit to more earlier than they would have before?

Yes. It's going to drive a faster renewal cycle, correct.

Okay. Okay. Got it. And then just one other actually product-related question. I had a question come in here that I wanted to incorporate in. You talked earlier about order management. You mentioned that a few times. So like I've been involved -- I've been covering SAP for 7 or 8 years. And thinking about the traditional ERP type product line that has traditionally had things like order management in it, how do you contrast where your vision is around order management versus -- I would imagine some of these customers, they have a long-standing ERP system that might have an order management [ appendage ] on it.

You know what's interesting about order management? Because we started working on the product about 18 months ago is I talk to customers almost every day. And I've yet to meet somebody who likes their order management system. It's like, "No. I don't like that." It's like, "Yes. It can get us a job done, but whatever." So we rethought order management I think about like Amazon Prime. Amazon Prime, when you buy Amazon Prime -- probably everybody on this call uses Amazon Prime, that's essentially about order management. So we rethought it as customer-first, customer-centric. And I mentioned before, it's meant to be visible. It's tied in to customer service. So you have much more visibility over the order I placed, when is it going to be delivered, how I do my refund, how do I do appeasements and tie it into the customer service experience. So that was the goal. There's tons of back office, warehouse management and so forth that the ERP systems will always do. But we reimagined order management as customer-centric and customer-focused. And when you show this, that tied-in experience, particularly as you start to drive it into stores, it is really a game changer for the customers. It's been really well received.

Got it. So not to put words in your mouth, but it sounds like order management was connected into the ERP. You're sort of trying to wrestle that away from the ERP and replace it with integrations into some of those pieces that will almost always live in the ERP system, like warehouse management that you mentioned.

I would put it this way. Order management will always integrate into ERP. That's important. It will always integrate into warehouse. But the legacy order management systems were very, very back office, very inflexible. The new order management system that we developed like, again, Amazon Prime is very customer-centric, a lot of visibility for people who order, very tied into customer service and it's very workflow-centric. So with COVID, for example, you could spin up a new workflow on order management in basically less than a few hours and push it back out. I'll give you an example on that. We started surveying our customers as they kind of got stabilized in the new normal. I started talking to many of them and said, "What do you need?" And they said, "Well, we really need to figure out how to do curbside. We have inventory locked up in these stores. We need to get selling. We need to get it out of the stores." So a very simple extension to order management. We launched what we call a commerce quick start for curbside delivery. Essentially, it's just a set of new workflows on the order management system in conjunction with -- we put out a simple portal where you can go and look the order up. You couldn't do this with a traditional back-office system. It's tons of integration, changes to your ERP system. We did this in a couple of weeks. A customer can deploy it in 2 weeks or less. And it's just workflow, it's workflow changes to help them respond to this crisis, get product to their customers but be very, very transparent. That's how I would define new order management world.

Okay. Got it. That makes a lot of sense. I've got 2 other follow-ups coming just on the stuff before we discussed, so I want to go back and just get them. One was a very simple question. It's around B2B and B2C. I mean, you did articulate that going forward, at some point, it's going to be one market. But how do you look at the size of those 2 opportunities today and sort of your -- the size of your business? Or how much success you've had in each of those 2 as of now?

Yes. B2C, our B2C product is much more mature. Demandware has been in the market for a long time. B2B is new. It's growing quickly. When we launched it, we just -- just as a reference point, looking across the Salesforce installed base, we saw a little over $1 billion, little over $1.2 billion in total addressable market just within our installed base for selling in for B2B. It's an early product, something that we've been doing in less than 2 years, but it's growing really well. And it really is just well suited to our customer base. But over time, I see this merging together where it's -- really, it's just commerce experiences. And companies are starting to get there. B2B is kind of where B2C was 4, 5 years ago where everybody is like, "I got to put a storefront up." They're kind of in that frame right now for B2B. But because of COVID, they're like, "I got to go digital like really fast." And it just took what was a slower process 6 months ago to like super acceleration. And that's been also -- like we launched 4 quickstarts: one was for curbside, one was for direct-to-consumer, another one was for B2B. The B2B one is seeing the most interest across our customer base where companies are like, "I have to move quickly now on B2B. It can't be this kind of second or third project. It needs to be top priority."

Got it. And I guess, generally, the market estimates out there would suggest that the B2B -- B2C market today is several multiples the size of B2B. I assume you'd agree with that. Or any --

I think in the selling market, yes. But the addressable market, if you look at the Gartner and TAMs or whatnot, they're about the same size, B2B is a little bit bigger addressable because there's other factors to it. But yes, I would say the B2C market is more mature from -- there is a much more defined audience, so there is particularly a head of e-commerce or the CEO who's very focused on the B2C channel. B2B, those kind of structure is still coming in place.

Got it. And then a question came in around GMV. And I think you articulated how customer commits to something and then has to sort of true-up and early renew potentially. The question was around -- that came in was around generally how much of the customers' sort of annual GMV expectation they would commit to upfront? And obviously, we're in sort of untested times where probably GMV volumes are off the charts. But how would that generally work around the commitment they would make upfront, the GMV, versus how much they would generally true-up?

Well, if I understand the question, typically, a customer knows roughly their business plan and how much online store revenue they're going to do. So they -- when we negotiate a contract 3, 5 years, let's say, okay, we're going to do $500 million in GMV over the life of the contract, renegotiate the rates. And then, like I said, over the life, we burn that GMV down and then we get to a renewal. And then we rinse and repeat. With COVID, what we're seeing is we're burning through GMV commits faster. It's still -- we're only a few months into this, but I expect we will see earlier renewals from many companies as they need to true-up their GMV. When everything shut down and all your revenue is going through to your store, it just increases the amount. It's pretty natural. I mean, we're going to see when stores open up, there will be a shift or some of the spend will start going back to the stores and we'll see a slowing. But we're at a new normal where, particularly in commodity goods, why would you buy a detergent anymore in a store? You're going to buy a lot of this online. Particularly, the subscriptions service is becoming strong.

Yes. And do those true-ups tend to be like if I signed a 3-year contract with Salesforce and they have sort of GMV volumes for each year that I have in the contract, do I true-up after the first year? Or do I not true-up until I blow through that third year of GMV commit?

It's a little bit up to the customers. But often, when they get close to the end of the contract, they're looking at where they're at, and they'll then want to true-up at that point and so renegotiate a renewal. So it's not every year. It's through the life.

Okay. Got it. That makes sense. And then another question as it relates to just the sort of go-to-market. You have companies, very large brands that are using Salesforce here that are all well known. And you have other peers that are at the low end of the market that -- if you and I wanted to open up like a skateboard shop or something, we would just very quickly put up a store. How focused are you on that? I think we see at Dreamforce all the CEOs from high-profile brands. I'm talking about the high end of the market. How focused are you on that really down-market, low-end sort of tail part?

Yes. My focus is primarily on companies with roughly $10 million in GMV and above. I'd say our sweet spot is definitely in the enterprise. Now you'll see us continue to drive down-market with the products as we mature our declarative tooling to make it much easier. What I often see from companies is they'll start off with a small store. And then the brand accelerates and a couple of things happen, and these are kind of like triggers for me for a good opportunity, is a need to expand internationally and/or their business has grown to a point where they just can't scale anymore. It's not so much they can't scale through physical like shopper volume. It's -- the things that start to get impacted are customer service, order management. "I got to integrate with 3 more systems. I need to launch in Canada, U.K. and Mexico." These are where Commerce Cloud runs your business. I mean, that's where Salesforce comes in, and we can run -- literally run the business. So that brand is now at that point where I can integrate and buy 5 different systems and spend a ton of money or it can really prove the model, we're really good at expanding internationally with multiple sites, managing multiple geos. And then like we've talked about connecting in the customer service, order management and marketing. That's where we win.

Got it. That makes sense. I wanted to sort of -- 2 other product-related questions, one kind of following along that line. Around -- if you look especially at that low end of the market, it's popular to maybe integrate in things like a fulfillment network, payment processing and so forth. How important -- obviously, at the high end of the market, those customers are handling those -- themselves and they've got very competent operations. At that low end, say, you get to $10 million, maybe a little bit above that, how important is it that -- is it for you to have those capabilities that sort of -- not necessarily integrate into other systems that they already have but provide some of these things that the bigger customers are going to go out and buy themselves?

Yes. I call it potentially [ merchant ] services. Look, you've kind of seen the playbook that we run. We're trying to remove friction and remove integration points. We offer tons of choice through the AppExchange, whether it's Avalara for tax or CyberSource or Adyen for payment. Many of our companies are running globally across many different regions. They need different sets of partners for different regions, which makes perfect sense. But what you'll see is we will continue to provide turnkey across all these areas. In fact, just back to the quickstarts we've launched. What we did on the quickstarts is we did pre-integrations with these partners. So we pre-integrated with tax. We pre-integrated with payments. If you already had a merchant account, we would just use what you had. But if you didn't, we would -- we already worked it out with, in this case, CyberSource, so that it was super fast. And you'll see more and more of these type of arrangements where we're packaging up the entire set of merchant services to help the customers go even faster. So yes, I would say, particularly on the mid to low end, the more you can package together the better it's going to be.

So would that -- that would look like, to a customer, they come in and they buy some sort of bundle or package, and within that bundle, you would be sort of farming out to some degree that service to partners through the AppExchange. But it'd be purchased almost like it was purchased as a bundle from Salesforce without [indiscernible] with all that.

Correct. And also pre-integrated in. So pre-integrated means they're not going to have to do the heavy lifting work. I mean, think about payments. The trick with payments, it's very complex. What we see, let's say, in North America and U.S., completely different if you're selling in Asia Pac or even across Europe. Different payment methods come in and out all the time. They want to leverage you kind of -- particularly the newer style, like a firm in the -- Klarna and so forth. So what we're really working towards is giving a lot more flexibility so as you deploy in all different regions and geos, you can move in and out the payment types you want without doing a ton of tech lifting.

Okay. Got it. That makes a lot of sense. And then another product-related question. I think social commerce has been an area where, I mean, there's been excitement, there's been maybe some disappointment in the social channels. But we have a new world here where maybe people are spending a lot more time sitting at home on social networks. How have you historically looked at social selling, your role there? And then is that changing in this new world?

Yes. Well, I can tell you, I probably had to check my Internet speed because that's all my kids are doing right now between that and Fortnite. So I think all these channels are raising an important [ rooms ]. Just getting back to B2C, and I talked to a lot of companies about how they're reaching out, and depending on their product, they need to sell on the different channels across all the different social channels. Some have built a strategy on Amazon. I look at it from 2 perspectives: how can Salesforce help both from a business perspective and making sure we support these channels where there's not a lot of heavy lifting on the business relationship; and also, how do we support these different channels technically so that if you -- if your brand strategy is basically influencers through YouTube or Instagram, let's go that route. If it's like all through Facebook, let's go that route. So we've long done this. We have a number of brands. This is kind of -- particularly the cosmetic lines. This is a big piece to them. I think stay tuned. You'll see more and more from Salesforce here in supporting channels and growing those. And I like to point out, across the spectrum of our business, it fits some people's businesses but not all of them. So when I look at channels, I also look at it globally and in marketplaces, in international markets. In some markets, it's really important. In other markets, it's just not important at all. So just like when we talked about payments, this is another area where again removing friction, putting the customer at the center and allowing my product and price to show up where I need to but still capture that transaction and then drive it back through a complete experience is really key.

Okay. Got it. And then one thing that's been articulated at Dreamforce Analyst Day, for us, has been this sort of cost to book, cost to serve, sort of upfront investment, sort of lifetime value of a customer. What sort of finer points would you put on that -- for Commerce Cloud as investors are sort of looking at Salesforce overall through that framework? But specifically to your business, sort of the upfront cost, the churn rates, the margins on an ongoing basis, any points you can put out there?

I think 2 points. One, and I think this has been communicated at the Analyst Day, Commerce Cloud has some of the lowest attrition at Salesforce, which makes a lot of sense. And these are platform decisions for companies. They're running their business on it. It is literally the cash register. So once they're making a decision to run their business, it's a platform decision. These things live for a very long time. And a big part of my job is to share success with them. That's why the GMV model is so important. And I really -- that's why I really focus a lot on GMV growth. Are they growing? Are they getting value out of the platform? Because that's going to ensure retention. Our entire kind of customer service group model is built around making sure they grow GMV. I would point out our Einstein, essentially AI capability, is embedded within Commerce Cloud. Its entire goal is to help accelerate GMV. It's not an add-on product and something you have to buy. It's just there to help accelerate GMV growth. We see companies -- most companies use it, just turn it on. It's about -- it increases store revenue by about 10%. So this model is a shared model. And that's pretty much what I focus on. I also focus on obviously the retention, and that's why I'm pretty proud of the low -- basically really low attrition on the cloud.

Got it. Got it. Okay. I just had one other question that came in that I wanted to make sure I got here. And it actually relates to -- I'm not sure that you've completely articulated this, but how do we think about sort of the long-term profitability profile, again, versus the rest of the company? Is there anything that would stand out either way that would that -- well, obviously, all these assets within Salesforce are in different stages of their maturity. So some are investing more than others. But is there anything around the long-term profitability that maybe you'd point to us to make sure we understand how that might stack up?

Yes. Here's how maybe I would think about it, because we clearly don't break this out separately, is we look at this as how do we help the company run their business. And a big pillar of our business particularly on commerce is connecting the customer journey and -- across Marketing Cloud, Commerce Cloud and Service Cloud. And these products are very, very tangential and they lift each other. So it's very often companies buy in combinations of these. They may start with Service Cloud and come back to Commerce. They might come Commerce Cloud and then come with the Service Cloud or they may buy them together. So I think this very much completes our Customer 360, particularly on B2C, which we've been focusing a lot on today. So I -- this is why it's so important for us. It's why it's so important that we continue to drive innovation and make sure that we see GMV growth and customer success growth and align it with kind of the trends. And it's been -- like this whole last 4 months has been as crazy as I've ever been in my career busy. I don't think I've left this room in Marina, California since March 3 or whenever that was. And we literally could watch the economies going up and down in different regions. I distinctly remember when France was starting to shut down. We're running many grocery companies in France. And I was literally -- we were watching just massive spikes on spend, particularly on grocery and essentials. And then you could see it cascade around the world in different countries. We are humbled and proud of being able to do this at scale. I couldn't be more proud of what the team has done. And we've done it with 99.99% availability, all while lifting and shifting our team to work completely remote. And we're seeing that our companies are depending on this as their lifeline. They continue to run their business. And now they're starting to reopen, and we're helping them reopen, everything from Work.com. And then we're pushing out and prioritizing investments to make them successful there.

Got it. Great. Well, that -- actually, I think that's a great place to leave it, Mike. Thanks a lot for joining here, and appreciate very much your time. I did want to mention for everybody on the line, the next session is going to start about 5 minutes late, so 11:05 Pacific, 2:05 Eastern. But Mike, again, thanks a lot for doing that. Hope you get a chance to get out and get on the bike and get some [ exercise ]. It sounds like things are going well.

Thank you. Have a good day.

All right. You, too. Bye.

Bye.