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

Great. Afternoon. Thanks for joining us. This is Kirk Materne with Evercore ISI. I run the software team at ISI. So we're very pleased to have the President and COO of Salesforce with us this afternoon, Bret Taylor. Bret, thanks for joining us. Always a pleasure to talk to you, and a lot to talk about. So we're going to talk for about 35, 40 minutes, do a fireside chat and then we're going to -- I'll take some Q&A. [Operator Instructions] And I'll try to weave those questions in throughout the conversation. So Bret, again, thanks for doing this. I know you're busy, so appreciate you taking some time.

I guess just to start, you guys had a really nice earnings call a couple of weeks ago. One of the things that was interesting was I think Marc probably used the word reimagine maybe 5 or 6 times on the call. And one of the things I sort of talk with people about was like, well, how do you reimagine a $20 billion business, right? It's not like you can just stop everything and rebuild it from scratch. But I think there are some things that happened over the last year that you all have taken advantage of COVID to reposition yourself for the next decade, 5, 10 years for Salesforce. So can you just talk about what that means in your mind and maybe an example or 2 of where you've been able to use COVID as a way to rethink business processes, whether in R&D or sales, that you think puts you in a better position maybe today than where you were 12 months ago?

Yes, Kirk, it's a great question because I don't think any of our customers imagined that they would stop everything, start working from home, reimagine how they operate their company last year. But literally, every white-collar workforce in the world did that last year. And so it was interesting. I can't say without a pandemic, would we and would have all of our customers gone through this transformation. Almost certainly not. But we did transform ourselves, and we've been using this phrase the all-digital, work anywhere world. That's kind of our vision for what emerges on the other side of this pandemic. And it's pretty simple. It's just because the habits that we've learned in this pandemic aren't just going to go away, right? Our consumer habits, like all of us who have used DoorDash or grocery delivery or I, for example, first got to use telemedicine. I got a Zoom doctor appointment for the first time, like many of us in this pandemic. Those are all going to remain. But then if you look inside our companies and just how we operate, our salespeople aren't going to all get on airplanes and go meet with customers in every customer meeting. Why is that? It's not just because we're trying to lower our travel and entertainment expenses, and that's a great side benefit. It's because you can get on a Zoom much faster, much more conveniently. You don't need to schedule to all be in the same place at the same time. We actually observed that you can also call higher. It's much easier to get a CEO on a Zoom than it is to figure out when you're both in the same city at the same time. Gavin talked about something on the earnings call I thought was notable. We did a digital sales kickoff this time. We didn't all go to Vegas, like sales teams have done for apparently decades. And as a consequence, we got everyone enabled on our new value proposition for Customer 360 faster, and we got a couple more weeks of selling time. On our engineering, as you mentioned, sort of R&D, we actually have materially more check-ins per engineer, and it's because people are spending less time in meetings. And kind of you reflect, "Hey, why did we have so many meetings before?" And I think in many ways, when you're thinking about the disruption of the pandemic and say how do we use this as an opportunity to transform our culture for the positive, how do we make sure we don't snap back on the other side of this, and as Marc mentioned on the earnings call, Amy Weaver, our new CFO, is really trying to reimagine our operating model and saying, hey, what is our future of our real estate, what is our future of our travel and entertainment, what is the future of our culture, making sure that we don't end up with permanent Zoom fatigue like we all feel now, but saying we can be a stronger company on the other side of this. And before passing it back to you, I think one of the most exciting parts for me is this is also what we're selling to our customers. We have a digital sales solution, digital customer service, digital marketing, digital commerce. And so we're trying to live the future and then sell that vision to our customers who are all going through the same, somewhat awkwardly fast digital transformation, I think a decade's worth of digital transformation in 1 year. So it's a great opportunity for us, but I think in a broader way, a great opportunity for us to demonstrate to our customers how to transform themselves.

Yes. Well, let's keep on maybe that thread in terms of the discussions with customers. How have they changed? I mean digital transformation wasn't exactly new before COVID, we've been talking about this pre-COVID. It was clearly put on steroids or accelerated or however you want to frame it. How have the conversations changed, I guess, in terms of maybe urgency and/or depth? Meaning people are trying to move faster, but are they taking on more products at the same time? Are they taking on bigger projects? Because, I mean, as you know, transforming an enterprise is a little bit more of an evolution than a revolution technologically. So maybe how has that changed maybe if you look back 1.5 years ago if you were talking to the CEO of a company, his willingness to take on maybe more products at a time or sort of a bigger shot at goal upfront on the land versus sort of doing a more normal land and expand? Sorry, I ask a few things in there but...

No, no, it's good. They're all related, as you implied. So I'll give a couple of examples that I think are representative and then get to some of your questions about kind of big deals and multi-cloud deals, which was a topic on the call. I think a great example of this was Honeywell. This has been a longstanding customer of Salesforce, and they've been manufacturing products for 100 years. They shifted 7,000 sales reps to virtual customer meetings, big sales cloud transformation. And it's a really great example of a company that's been a customer of our product for a long time, really using the digitization of the economy as an opportunity to reimagine their own sales force implementation and expand with us, really do more with it. Similarly, 3M. This is a great example of speed, which is one of the themes you brought out. They make a lot of the personal protective equipment that first responders and others use all around the world. They had a huge problem with counterfeiting early on. So they used our Service Cloud to spin up a fraud reporting center, found thousands of scammers and they did it in less than 48 hours. And what's really interesting about those stories, that's a moment in time, the fraud around personal protective equipment. But that is a testament to sort of the speed and agility and time to value of the Salesforce platform that's now really shifting the conversation with our customers about the importance of investing in Salesforce as a platform, the agility that you get. And as you mentioned, digital transformation is no longer the job of the CIO or the Chief Digital Officer. It's a CEO and Board-level discussion, whether it's a bank who saw the PPE loans -- PPP loans process and how quickly you had to stand up those portals or a retailer that needed to implement curbside pickup overnight. I think -- now I think every Board and every C-suite is looking at their technology platforms and say, "I want the agility for the next disruption to our business." So I think it really accelerated investment in digital, and you really saw it in our Q1 numbers. And I think probably the most prominent example of this is 7-figure transactions grew over 120% year-over-year in Q1. And as you sort of alluded to, those 7-figure transactions included more than 4 of our clouds on average. So this isn't a transformation of one department. It's really a full Customer 360. And I think Marc made a statement on the earnings call that I firmly believe is true. This isn't about digital transformation. It's about digital customer transformation. Because when you're thinking about coming out of a pandemic, such as challenging economically individually and for a lot of companies around the world, everyone's thinking about growth right now. And that's really about changing your customer experience, digitizing. And our Customer 360 platform is really at the center of that conversation.

Yes. And when you think about Customer 360, so for a long time, it's been more of a point product world where people might be solving marketing with the technology -- customer services technology. But clearly, the lines are blurring. And do you think you're -- and can you talk about sort of the integration on the back end and maybe Hyperforce as it relates to sort of bringing to bear a platform that's more integrated and the ability to have those sort of more suite-based discussions or, frankly, solution-based discussions with your customers versus approaching it more on a, "Hey, marketing is doing its own thing. Service is doing its own thing?" I mean that doesn't seem to be a practical solution anymore in where we're going.

Yes. I mean what's interesting about this is it's a technology problem, as you described and I'll answer your question, but it's really driven by our customers. They don't want point solutions anymore because if you have a customer service interaction because you called someone up and then get a promotional e-mail from the marketing department that's tone deaf, at this day and age, your expectations have been raised so high by all the consumer companies that do this so well that's no longer acceptable anymore and you're no longer going to pass for that. And when you look at the transformations we've done with companies like AT&T, it's really around that idea of a Customer 360, really an end-to-end customer experience. Every touch point, whether you're calling a call center, chatting with a chatbot, getting an e-mail, digitally transacting, talking to a salesperson, we're the one platform that can do it all, and that's really our value proposition. As you alluded to, though, we've grown organically, and we've done acquisitions. So we've really spent a lot of time investing in the integration of our platform. At Dreamforce last year, we announced Hyperforce, which is a really big, I think, technology achievement for us. We ported our platform to the public cloud, and we kind of reimagined both the scalability and trust of our platform. So we can now deploy in more regions. So we're deploying in over 12 regions around the world this year to handle things like data residency requirements. We've built a lot of our compliance and trust built in, which means even the most compliance-forward industries can actually use this technology. Many of them haven't had access to it because of the rigid requirements of industries like financial services, public sector. I think we're really proud of that. And more than anything, it also is B2C scale. So I joke with Parker back when he first wrote Salesforce. So as you know, salespeople manually enter in data into a form in a web page. That's not the way CRM works anymore. It's big data. It's streaming data. It's Internet of Things. And so we really tried to reimagine our platform around data and extremely large hyperscale data because we really think that's the future of Customer 360 and CRM. So really proud of our engineering team to really work on this integration problem, but also really excited about this next generation of our platform that I think really represents where the puck is going in CRM.

Yes. And maybe along those lines, talk about Slack as part of that. Obviously, having a collaboration platform that pulls some of this together. I think there's a data element to it on the back end that I think is important maybe over the longer term as well. So can you just talk about how Slack fits into that? Because I think there still is some, I think, misunderstanding about it relative just as a collaboration platform onto itself, which is a very good one. But I think Slack plus, Customer 360 is obviously a 1 and 1 equals 3 scenario for you all...

That's just code enough to say 1 plus 1 equals 7. So even more...

Yes. There you go. There you go.

But I'm really excited about Slack. I mean I can't -- in my mind, this pandemic was defined by really 2 technology brands: Zoom and Slack. Our lives are just running through these digital technologies right now, and it's just more relevant to our customer base than ever before. It goes back to our first question, which is what is the future of the way you engage with your fellow employees, with your partners and with your customers? And I can't predict the future perfectly right now. We're in this kind of unprecedented period coming out of a global pandemic. But I can tell you, it's going to be much more digital than ever before. And it comes up in every single customer conversation, just about this future of work, this all-digital, work anywhere world. And when I think about what does it mean to be able to grow on the other side of this pandemic, it's Customer 360 as a digital collaboration tool and Slack, and it's particularly those 2 things together. So think about a B2B sales team running on Sales Cloud. They have a mandate maybe from their head of sales, maybe from their CFO, saying, "You're not going to get us -- on as many airplanes anymore, and you're going to use these tools to collaborate digitally with your customer." Well, you look at tools like Slack Connect, which is their capability to create a channel not just for internal use, but actually for use with your customers and partners. You can create a deal room to close your deals, connect Salesforce, connect DocuSign, get those deals closed. Quarters close on Slack, and it's an amazing capability when you're thinking about the future of digital sales. Similarly, I've talked to so many heads of customer service who have, through the pandemic, their call center is no longer a building. It's just in the cloud, and they're not going to go back from that either. So how do you swarm on cases to get fast time to resolution, to drive all those key metrics around customer satisfaction? Slack plus Service Cloud is an amazing ability to do that. And if you go to any digital agency, I can tell you, they run Cyber Week on Slack. Just -- and go see how they do it. They've connected every single martech tool, and there's like 1 trillion of them because it's martech. They've all connected to Slack, and this is their digital command center for Cyber Week. So when I look at the 2 together, I really say that Slack with Customer 360 is an amazing capability for our customers to help them succeed and grow on the other side of this pandemic. And for Slack, what's been so remarkable about Stewart and Cal and team have built is just how beloved it is. And so I view, when I say 1 plus 1 equals 7, I think we, through the vision I just described, can introduce Slack to a large number of customers. And they'll fall in love with it, and it will spread to so many departments around those companies. And so I think it's a really remarkable combination of our strengths and our strength serving our lines of business and really serving that front office growth for our customers. They will introduce Slack in a really, I think, really interesting and complementary way to our customers. And then I think it really makes our value proposition more relevant than ever before, but more importantly, helps our customers. And the last thing I'll mention, I think you mentioned sort of misunderstanding Slack. I think it's just much more of a platform than people realize. They have just millions of developers using this thing, so many amazing apps. And we're really excited to get the most open ecosystem in this space. I love the idea of bringing together our ecosystem and Slack's, and I think it would be an amazing capability for every company and every developer in the world as well.

Yes. There's a lot of really valuable data captured in those Slack channels. And can you talk about how that plus maybe the data captured in Salesforce 360 already, being able to apply algorithms to that data to make better decisions on customer outcomes, things like that? I realize that might be more of a 2-year down the road kind of thing. But there -- it seems like there's a big opportunity on that front to keep -- we're really moving the goalpost, frankly, in terms of what does a Customer 360 platform allow you to do, meaning being more predictive than analytical rather than sort of responsive and reactive. I mean is that a fair, I guess, way of putting kind of where you see the vision going on those 2 things together?

100%. I almost couldn't be -- put it better than you just put it, but I'll back it up with some stats actually. So in April, we saw Einstein eclipsing over 100 billion predictions per day, which is incredible. And if you -- we've been sort of releasing that metric periodically just to sort of demonstrate how much momentum we're seeing in our AI platform. And the reason why it's accelerated so much this year is because of the move to digital. So when your conversation goes from around a conference room table to in Slack or in Zoom and your partners start working through a portal rather than calling you up on a phone, the artifact of all those interactions is data. And as you said, it really affords the opportunity for systems like Customer 360 to be more predictive and more intelligent. It will help a customer service agent find the next best action, help you when you return from the office to summarize what went on so you can actually catch up from this or drowning in all that digital data. But more than anything, and it's in part why we were so excited about Tableau and why we're so excited about investing in Einstein, is we can actually help you see and understand all that data. I've talked to so many CEOs who have a really good data strategy and really understand that, especially with all the changes to technology platforms and browsers, that the future is really in first-party data. They have all this data, but they're not getting the value from it. And I think that's the hard part, and that's why we're so invested in Einstein and Tableau. We really think if we can come with a solution that not only helps you automate and build digital customer experiences but help every person at your company see and understand the data to really become a data-first culture, that's really the future of companies that will succeed in this digital economy. So it's a huge area of focus for us. We're really excited about the multiyear technology investments we made at Einstein that are really bearing fruit right now. And I do think that with the whole economy going digital, I don't see that slowing down anytime soon.

Yes. I mean you guys obviously put up really strong results in Tableau last quarter. Do you think that's just an outcome of what you're talking about, which is that executives now, they might have the data but they're finally at the point where they want to see it and be able to visualize it more clearly? It's funny because we've been talking about for a while, but maybe this is another one of those outcomes of COVID where it's -- people are like, "Look, I got to make faster, better decisions. I need to understand it and see it more clearly than getting it through a spreadsheet." So I mean it seems like those 2 things are actually creating an output in the Tableau growth that was obviously really strong last quarter.

Yes. I mean so every digital transformation is a data transformation. That's the simplest way to put it because every input and output of a digital interaction is data. And so it really means that you can do more with it. And in fact, I think the value proposition of Tableau, which I've always loved, is really about creating a data culture at companies. So people aren't acting from intuition or acting -- because that's the way we always did it. They're actually looking at data visualization, making informed decisions. And I think Tableau really enables companies to operationalize that, to really connect all their data, not just the data from Salesforce but all their enterprise data. And I think that's a really powerful concept. I also think it speaks, though, to our ability to integrate acquisitions, which I think is unparalleled in the software industry. And we have been acquisitive, but we have realized the synergies. And I think you saw in the MuleSoft numbers, you see it in the Tableau numbers, 8 of our top 10 deals included Tableau and 5 of our top 10 deals included MuleSoft. And I think that as we look at opportunities like Slack, when that eventually closes, I think we do -- we are really competent at bringing these technology platforms together in a way that really benefits our customers, and I think you see it in the momentum in the numbers.

Yes. You all have obviously built out a very broad platform of technologies. One of the things that is going on at the same time is that you're obviously sort of verticalizing some of these solutions to go after sort of that last-mile business process on an industry-by-industry basis. So can you just talk about -- obviously, David came over with the Vlocity deal. He's obviously in charge of products now. Kind of how do you think about that? Because it's interesting. You're building out obviously more of a horizontal platform. But to really create business change, you have to understand the industry to a certain degree and be able to address the industry's challenges or understand -- speak the language of the industry. So can you just talk about what we should be expecting from you all on sort of the vertical front and how is that going thus far because it seems to be going pretty well?

Yes. It's such an important part of our product strategy. We now have over 10 industry verticals built on our platform, and the value proposition for customers is so simple. It's rather than you doing this yourself, we build it out of the box. So industry-specific business processes, industry best practices, whether it's things like best-in-class, things around trade promotion management for consumer goods or helping really realize for banks around the world a vision for unified banking. So you can bring together your consumer, your commercial, your investment banks and really provide that single view of your customer as you're trying to grow across different what used to be silos in your business. And I think what's really great about David Schmaier, you mentioned, who's the CEO of Vlocity, I -- it sort of -- I joke that I think he's forgotten more about CRM than I know. He's been in this industry for a long time. He was head of product at Siebel. He's really bringing that industry-first mindset. And I think it's going to grow in importance over time. I think it means faster time to value for our customers, and it's also what our customers want from us because when they're thinking about their customer experience, it's not a general purpose. They don't want a bunch of wood from Home Depot and say build a house. They want us to start them on third base. So they can get going quickly. And I think that we've really architected this in the right way. We have a really wonderful robust platform that's, I think, the best-in-class low-code platform in the industry. We've built best-in-class line of business applications in sales and service and marketing and commerce on top of that. And then our industry solutions are built on top of that. So our industry customers get all the value of all the layers of the platform underneath. And then similarly, as our customers are sort of customizing this themselves, they get so much depth because of that sort of layered investment. So I think it's really unique in the marketplace. I'm very grateful for David's leadership as well. And I think we'll continue to really expand that industry footprint and respond to our customers' needs.

That makes tons of sense. Talk to us about where sort of the international markets are maybe relative to the U.S. in terms of just maturation. Are you seeing different patterns of adoption internationally or versus what you see in the U.S.? I realize every country perhaps is a little bit different. You have industry champions in certain markets in Europe, for example. But where do you -- obviously, when we look at Salesforce, when we look at the size of you, international is still in the 30s as a percentage of revenue, which it was unheard of for scaled software companies 5 years ago. If you were at $20 billion, you already had 50% had to be coming from international because you just have to get the revenue somewhere. So it still seems like there's huge opportunities for you internationally. And how should we think about the opportunities for you all over the next couple of years?

Yes. So it's -- the keys for our growth have been international expansion, industry verticals. And I think that really continues, and we really see a lot of opportunity for growth in both of those kind of areas of strategic investment. And we're seeing just incredible momentum internationally, and we're also seeing incredible momentum in the public sector as well that have really, I think, been fueling our growth. And I think we have a really focused international effort, focusing on the countries where we have really large enterprise software markets. And Gavin Patterson, who's our -- I guess, I shouldn't call him new anymore, but new as in this past year, Chief Revenue Officer, has just done a great job bringing in great leadership to lead internationally and just have those executive engagements with the most important companies in Europe, in APAC and all around the world. So I feel really good about our international strategy. As you said, we're still a majority U.S., but I think that reflects the momentum we see across the marketplace, not in any way diminishing the momentum we see internationally. I still think that will be a huge driver of our growth in future years.

And I assume all the trends, though, you see around digital transformation, they're global in nature, right? I mean a B2C company equals...

Entirely global, yes.

Yes. I mean there's no change in the challenge. It's just how fast they can adapt to it or how fast they can embrace the technologies. I guess are there any governors on growth internationally? Or is it just sort of maybe 10 years ago was sort of data residency and things like that used to be something would pop up, but those seem to be solved essentially through a lot of your partnerships now? So any -- I mean, it doesn't seem like there's any governors on international growth. It's just a matter...

No. I think the trends towards the digital imperative is universal across industries, across countries all around the world. The one interesting thing is this pandemic is uneven around the world. So as the U.S. reopens and caseloads are just plummeting, which is I'm so grateful for all of the scientists who invented these vaccines, we -- our colleagues in India and Brazil and Asia are going through really, really hard times right now. So I do think -- but your broader question, the broader digital transformation of the economy has happened globally. And the -- as you mentioned, I think we are best-in-class as it relates to things like data residency and compliance around the world. So I don't believe there's any limit to our potential to grow internationally.

Yes. Marc actually, I think, was out in the public talking about sort of 50%, 60% of your employees being more remote as you come out of this. How do you see that as an opportunity? Obviously, the challenge, I think, for everybody is how do you keep maintaining what is a really unique culture as you go through that. But as you think about it from an operational perspective, are there opportunities for you to go get talent in geographies where you weren't able to because you didn't -- it never made sense to have a regional office in a certain state or location? I guess what are the opportunities on that front? I realize, hopefully, real estate savings is one of them around downstream, and I think Amy would agree with that. But maybe I was thinking more from an operational perspective. Have you given that much thought? I realize this is still sort of in real time.

We've given it so much thought. I mean I think it's all we want to talk about because it's such an exciting transformation. First, I'll start with what you -- start with the sort of, I'll call it, boring but really important. I do think because we're reimagining the way the company operates, we're trying to get more disciplined and really recognize that we can get the kind of top line revenue growth that we're known for, continue to do that, but get more profitable over time and really put more discipline in the business. And Amy has been just an amazing leader on that front. And I do think this is an opportunity to get more disciplined, and we're excited for it because we think we can get stronger and more disciplined at the same time. But the second thing is that -- the second point, I think we can get stronger, and we're so excited about it. I'll just give some examples. Dreamforce last year was digital only. We had over 140 million people watch it online, 140 million. I mean it's crazy. I don't think there's been a software event that achieved that level before, maybe I'm wrong. And so we're talking about we're really excited to have Dreamforce in person this year with 5,000 Trailblazers in San Francisco, in London and in Paris and New York. That's going to be really exciting for the small number of people who can make it. But I don't want to go backwards. I want to make sure that we continue to have this amazing digital experience where we can reach that kind of audience with our value proposition to inspire people with the stories about how to become a Trailblazer and benefit from the sort of investment in technology. Similarly, I mentioned at our first sort of question, we were talking about all the things that I think we've really invested in sort of a cultural change around digital customer engagements, the digital explore -- experience. I do think we can find more talent from more places, not just engineers in San Francisco and salespeople in New York. I think it really enables us to find success from anywhere, and I think that's an incredible opportunity. So we really believe we've become a stronger company in this pandemic. And as I said, I think we're really trying to think of it in a broader way, which is how can we learn ourselves and become a stronger company, but also with Customer 360 and once the transaction closes with Slack and Customer 360, help our customers find success from anywhere because we're in this -- I couldn't imagine a moment like this where every company in the world is saying, what is our office strategy going to be for the next decade? I mean, literally, every company in the world is doing this at the same time, and it's a crazy moment in history that I'm grateful to be a part of. And I think we really have a unique opportunity to be kind of a trusted digital adviser to companies going through that transformation.

You're always thinking ahead on a number of fronts. And one of the questions that's been coming up more often is when you're rethinking things, rethinking traditional pricing models in terms of per user versus consumptive-based pricing models are starting to almost blur, how do you think about that with you all? I mean, historically, the CRM side has always been more of a per user pricing model, but you now have more consumptive type of models like a MuleSoft or something like that. So at the end of the day, the customer wants to buy a product that delivers value. So how are you thinking about sort of meeting the customer where they are on that or helping them along? I mean I imagine for Gavin, this creates a lot of more nuanced conversations perhaps with your biggest partners. How should we think about -- I imagine at the end of the day, you'll all be flexible to do what's best for the customer, because you always have. But can you just add maybe some color around that or some context around that? Because I think it's an interesting question for software companies. Being able to understand both ends of that and being able to address both ends of it, I think, is an advantage for the companies that can do that.

Yes. I mean the word you used that really resonates is value. At the end of the day, our customers, when they're investing in a technology platform, how it's packaged is meaningful, but what really matters is that they get the value out of it that they expected when they made the investment. And across our portfolio, we have a variety of different pricing models. So as you said, our core CRM is seat-based. Our -- the engagement platform in our Marketing Cloud is volume-based for the e-mails and text messages you send. Our Commerce Cloud is actually based on a percentage of GMV, or gross merchandising volume, that goes through the system. So when you think about a Customer 360 engagement, it's really a variety of different pricing and packaging models. But at the end of the day, what we're really trying to deliver to our customers is a return on their investment, and we want to return on their investment fast. And I think that when we -- and you've heard, I think, us on our earnings call really talk about sort of this accountability towards our customers, delivering these outcomes as fast as possible. I love the AT&T story Marc has recounted a number of times because it's not just the transformation, but it's we did it quickly. And in a time when, I think, there is so much urgency around these business model shifts, I mean, think about it being a consumer goods company going direct to consumer. Like you need the transformation yesterday. And so I think the -- I don't want to diminish the pricing and packaging discussions. I think the way we think about it, though, is when I go call up the CEO or CIO of one of our customers and I say, "Did you get the value expected from this investment faster than you expected it?" I want them to say yes. And if we achieve that, I'll be happy. And I think our pricing and packaging will always reflect that outcome, but no pricing and packaging will fix just our relentless focus on customer success. And I think that's fundamentally what our customers are buying from us, and the build of materials is sort of secondary to that.

Yes. No, that makes tons of sense. One other industry I actually just want to touch upon because it's a big opportunity and one you've been growing pretty quickly is just federal and then state and local government, obviously probably the areas that are maybe moving the slowest to digital but need to speed it up or have been under the most pressure to move. How has it been going in those areas for you all? I realize for a long time, Service Cloud was kind of the first natural landing point in terms of sort of reaching out to citizens. Obviously, COVID's brought in some other opportunity or not, but you've helped them solve some problems. Frankly, more is probably the better way of putting it. Where do you think state and local and maybe, look, federal across the globe are from a digital transformation perspective? And do you feel like you have that same sort of trusted adviser status in those verticals that you do in a lot of the commercial verticals?

Yes. It's been an incredible transformative year for public sector, in my mind. We just had a phenomenal quarter. 5 of our top 10 industry deals were in the public sector. We had an amazing engagement with the Department of Veterans' Affairs, North Carolina's Department of Transportation. And it's interesting. It's our platform, it's Service Cloud, but it's also new capabilities like contact tracing, vaccine management. And it's -- in my mind, these engagements have been driven by the urgency of the pandemic, obviously, in the public health imperative in the public sector. But it's also driving this broad digitization of our -- of the public sector and really thinking about constituent engagement in a more strategic, enduring way. So I think it's resulted in our ability to expand our relationships with so many state and local governments and federal governments all around the world. But I think it will also be, I think, a real starting point for these broad digital transformation, constituent engagement efforts. I think every single municipality around the world really wants to kick off right now. So it's just been incredibly rewarding. The stat that I think is more impressive than any of our financial numbers, 60 million vaccines have been delivered through the Salesforce platform, which is really amazing. And I obviously was not an expert in vaccine management or contact tracing a year ago, and we feel really proud of the agility with which we've delivered these solutions to our public sector customers this year. And I think what's really standing out, I brought up kind of the speed theme a lot in this conversation. It's true in the public sector as well. They see that we were able to stand up vaccine management in a matter of weeks, not months. They see the contact tracing, they can see it's all powered by the Salesforce platform. And so a of our public sector partners are looking forward and saying, what are the platforms we want to align ourselves with to remain digital and agile on the other side of this, I really think and I really hope that we're really gaining trust and sort of the scalability and agility of our platform through these engagements, which are obviously a moment in time unto themselves.

That's good. That's really helpful. And one question came in through e-mail was just around when you think about M&A, what are sort of the decisions on the buy versus build? Obviously, you've had some incredible buys in MuleSoft, Tableau and now Slack is obviously about to close. When you look at that from a product build perspective, what are some of the criteria that goes through in your mind, I guess, is sort of the gist of the question?

Yes. I'd say there's probably 2 major categories as we think about inorganic additions to our portfolio. One would be within our clouds, adding functionality, particularly from a partner that's already been built on our AppExchange. So a great example of this would be SteelBrick from a number of years ago, which became our quote-to-cash platform. It's one of those things where we don't want to compete with our partners. So we have an amazing partner that's built on our AppExchange. And strategically, we feel like we could actually integrate the product in a more complete way for our customers if it weren't a third-party company. We'll always try to acquire rather than compete with a partner that's invested their time and effort in our AppExchange. The second way is sort of the new cloud, the MuleSofts, the Tableaus and the Slacks. And that's really where we're listening to our customers and realizing that there's an adjacency to our current product portfolio that, as you put it, 1 plus 1 can equal 3 or in Slack's case, maybe 7, and where we really feel like that we could provide a more complete value proposition to our customers that we couldn't as a stand-alone company. I'll use MuleSoft as an example. We talked about Tableau for a little bit already. MuleSoft is an API-first integration platform, and it really enables you to connect all your enterprise systems, all your legacy systems so that you can actually move faster for all of your digital transformation efforts. That was typically a type of technology that's chosen after a project like Salesforce. Okay. So you want to deploy Sales Cloud. You want to connect it to your ERP system. Let's figure out a solution to do it. We can now go into customer engagements and say we actually have built-in integration as a value proposition in our platform. And for the CIOs and the CEOs in the room, that's a much more complete, much more robust value proposition than they were independently because we're solving a lot of problems for them out of the box. And so I think there's an incredible opportunity to do that with Slack. We're really excited about that opportunity. I think we've really proven our ability to do it with Tableau and MuleSoft as well.

There's actually a follow-up that just came in across the web and it sort of follows up on this. Does the regulatory environment change your calculus at all in terms of M&A? It hasn't necessarily been as much of a focus in the enterprise world as I think it has been in the consumer tech world. And I'm sorry, I know you have lot of heritage on that side of the world. Does that factor in? I don't want it to be a leading question, but I was just kind of curious. Is that something that you all have to think about at all? Or do you feel like most of the things you would look at wouldn't kind of garner attention from the regulators along those lines?

Well, I'll start with sort of -- there's -- not sure if the question was sort of M&A focused or more broadly. I'll answer both. On the M&A front, we don't -- we really think about value to our customers as our #1 driving force. So that's really all that drives our M&A strategy. And then obviously, tactically, can we execute on this transaction and deliver on the returns that we talk to all of our stakeholders about. I do think there's a -- outside of M&A, there is a lot of shifts in privacy regulation, data residency requirements. There's -- and it's really impacting sort of our technology investments, technologies like Hyperforce; technologies like our customer data platform and our Marketing Cloud, which is really emphasizing first-party data with all the changes to privacy regulation. So I'd say broadly, there's just a proliferation of regulation around technology related to privacy, data residency, compliance. And I think that that's one of our assets right now is that we are really investing in our platform to meet those needs internationally and for, especially, multinationals that have to meet those requirements in like sort of combinatorial explosion, we can really solve that complexity for them. So I do think outside of the M&A angle of this question, I think it is something that's impacting our road map and something that I think we're really delivering on for our customers who have to deal with this complexity themselves.

And to your point, I guess, on the marketing angle of privacy, do you find where customers are coming back to you as an adviser and saying, "Help us deal with this because it's too confusing for us to kind of manage on our own," is that helping, I guess, the Marketing Cloud into itself in terms of you all taking on some of the complexity of being thrown at, frankly, your customers by regulatory agencies?

Absolutely. I think that starting with GDPR and then CCPA in California and then I think just kind of sort of a balkanization of privacy regulations around the globe, it is just a huge issue for our customers. You saw the recent changes to iOS that changed a lot of usage of things like third-party cookies. I think it's really -- we're really trying to build privacy into our platform as a core capability so that our customers can -- not be on their heels when responding to these changes, and I think it's really important. It's also just at our Connections conference, which happened last week, we announced our customer data platform for our Marketing Cloud and really oriented around marketers getting more value from their first-party data. So it's a very privacy-forward product and one of the fastest-growing parts of our Marketing Cloud portfolio for that reason.

That's great. Well, we're about out of time so I'll probably leave it there. Bret, thanks very much for joining us. I know you have a ton going on, so I appreciate you taking some time out of your day. For those of you that joined us, please follow up with Evan or anybody on the team at Salesforce for any follow-up questions. And everyone, take care and hope to see you all soon. Thanks, Bret.

Thanks, Kirk.