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

Hello, everyone. Welcome to our Salesforce Innovation Day broadcast. We are so glad you could join us. Today, we'll be giving you an inside look into how generative AI and the world's #1 AI CRM can help you grow trusted relationships and transform business like never before. You'll hear from our industry experts and leaders, learn about the very latest innovations and solutions and, of course, as always, you'll be inspired by our trailblazers. And today's show is just the beginning. As the Innovation Day series of events, we'll be traveling right across our region in the coming weeks, giving you the opportunity to connect in person with the community. So do stay tuned for dates coming to your city. But as we connect virtually here today, please do take advantage of the chat feature. Our team is on standby to take your questions or connect you with one of our Salesforce team to learn more. Now let's get straight into all the innovation as I welcome Senior Vice President and General Manager of ASEAN, Sujith Abraham.

Thanks, Wendy. Welcome to everyone joining us from across the region. AI is one of the most significant technology shifts of our generation. It will change the way we live and the way we work. It has the potential to unlock a whole new level of productivity, augmenting humans, reducing low-value tasks, driving hyper-personalization and highly accurate predictions. But this is only possible with good data. AI needs to work on vast data sets amalgamated from various sources. It needs to operate with trust and within ethical guidelines. Today, we're going to talk about how Salesforce can help you drive customer success with CRM plus AI plus data plus trust. For years, we've helped you capture important interactions that come from how you sell, how you service and market to your customers. And that's a great foundation for AI. But CRM data alone is not sufficient. Companies need to break down silos and unlock the vast quantities of trapped data sitting in databases, data management systems, transactional systems and legacy systems. This needs to be combined with unstructured data and unified to provide a complete view of your customer. Our latest innovation, Data Cloud, can help you bring all of your customer and company data together, take action and drive success through the world's #1 CRM. We'll talk more about that and all the innovation that is available to you today. But first of all, I want to take a moment to thank you. Thank you to our customers and our partners and our employees, to all of our trailblazers. We appreciate you taking the time to join us today. 2024 is shaping up to be a year of incredible opportunity. And I'm really excited to continue to connect and support all of you right around the region. Now we've been on an incredible journey since we started Salesforce in 1999. It's a source of great pride for me to see our growth and impact in this region over the years, starting from our humble beginnings in Asia back in 2004 to now expanding to 13 countries across the region. Through initiatives like Hyperforce, we've also enabled data residency in Singapore, in Indonesia and in Australia. Our growth and impact are absolutely intertwined, and we are committed to making a positive difference as we continue to grow. Now, today, we are the third largest enterprise software company in the world, measured by revenue. We are empowering remarkable organizations to deliver exceptional experiences and make a meaningful impact in our communities. And we're doing it all with our values at the very center. At Salesforce, our core values guide everything we do. It's why our customers partner with us. Our customers know that trust is our #1 value and that we'll always lead with our ethics and transparency. You'll continue to hear a lot from us about the value of trust and how trust is a critical part of what we're doing with generative AI. Our data is not our product. It never has been. That's never been more important than right now. You know that we prioritize your success. We're successful when you can make your customers successful. And we'll bring you into the future with innovative products that are relevant, integrated and easy to use. We're always building technology that is equitable for all and sustainable for the planet. Our values shape every step in our journey with our customers. And we're very proud of this because, at the end of the day, we believe in business as a platform for change. And one of the ways we use our platform for change is through our 1-1-1 model, where we pledge 1% of our equity, 1% of our time and 1% of our product to giving back to our communities. Since our inception, we've given over $2.5 million to ASEAN communities around us and over 160,000 volunteer hours. Our commitment to the communities that we work in and serve has always been a part of our overall vision. At Salesforce, our vision has always been to help you connect with your customers in a whole new way. This vision has guided every single action we've taken over the past 25 years, and it's helped us to become the #1 AI CRM in the world. With every innovation, acquisition and product launch, we've been building towards a single source of truth for your business. And that's never been more critical than right now. At a time when AI is changing everything, Customer 360 is the world's #1 AI CRM, helping companies build stronger customer relationships, drive faster time to value and innovate with every technology wave. We're providing more capabilities to more customers than any other CRM vendor. Every capability we add is designed to help you better understand and connect with your customer in a whole new way. I really enjoy the opportunity to regularly connect with our customers. And it energizes me to see our values of trust and innovation, in particular, really come to life in our discussions. And so many of our customers have one thing in common. They know that they can grow their businesses by becoming more connected to their customers through AI. To share more about the opportunity AI presents, please welcome Rain Hu.

Thanks, Sujith. We know that there is just so much opportunity right now and ahead of us. At Salesforce, we have a long history of helping customers transform with AI. We started in this first wave, predictive AI, with Salesforce Einstein. Einstein has driven amazing results for our customers to sell smarter, serve smarter and engage smarter. With the release of our GPT products last year, we surge forward into this second wave, generative AI. We are seeing incredible productivity and range of capabilities. And now we are rapidly entering a new wave of AI. Soon, autonomous agents will be able to communicate with each other and do tasks for you. As we move through these technology waves, CRM will become even more important to our customers than ever before. And Salesforce is going to help you all with this extraordinary potential of AI. In my role, I'm lucky enough to speak with a wide range of customers. They all know that AI can grow their business and help them connect to customers while also reducing cost and driving efficiency. Now every business transformation is an AI transformation. Companies know they need an AI strategy to stay competitive. The opportunity is incredible, but we know there can be challenges standing in the way. Right now, companies are looking at the AI opportunity and trying to figure out how to get there, but they don't always have the right strategy in place. Their results aren't driven by customer data. Their AI isn't in their flow of work. It doesn't know what you're doing so it can't give you guidance. All this disconnection is [ obviously of productivity ]. Our customers need a better way. And we need to deliver our platform in a whole new way so that as the industry moves forward, you don't have to rewrite your whole system. We want to future-proof you with the Salesforce platform and so to deliver the AI experience you want. We've been innovating to help companies everywhere leverage the latest in generative AI based on their trusted customer data. And we are not new to this. We've been on a mission to deliver a single source of truth for your business for nearly 25 years. Every innovation, acquisition and strategy in our history contributes to this most powerful and comprehensive single source of truth on the market. This comprehensive data about your customer, seen by every team across your business, sets you up for the AI opportunity ahead. And to share some of our very latest innovations, please welcome Gavin Barfield.

Thanks, Rain. AI will be the most significant technology innovation of our lifetime. It will and is changing everything, from the way we work, to the way we sell, service and market to our customers. AI is rewriting the playbook. And Salesforce is front and center, bringing this amazing technology to our customers and to your customers. We've rebuilt our platform to give you the tools you need for the AI revolution. And I'm so excited to introduce Einstein 1, the trusted AI for customer companies. This is a platform built for AI. It's fully integrated, intelligent, automated, open and customizable at scale. With Einstein 1, we've extracted the complexity to deliver an open and extendable platform that evolves with this fast-moving technology. The Einstein 1 platform underpins all the core applications you use today across sales, service, marketing, commerce and more. It brings together unified workflows across your entire business. It brings native Einstein AI with both predictive and generative capabilities. And it's deeply integrated with Data Cloud, providing a comprehensive data lakehouse built right inside the Salesforce metadata framework. Data Cloud helps break down data silos. It brings together Salesforce data and external data, both structured and unstructured, into a single source of truth, a true Customer 360. And you can access this powerful data and AI from your favorite apps like Slack, Tableau and Heroku and from other popular apps and productivity suites. And Einstein 1 is low code, no code. So you don't need an army of developers to benefit from the full power of the platform. You can build your own apps that leverage off the power of the platform, thanks to our open ecosystem. And you can bring in any integrations with the power of MuleSoft. This is an all-new platform for an all-new technology age. The AI revolution is also a trust revolution. We can't unlock the promise of AI if we don't trust it. At Salesforce, trust is our #1 value, and all of our AI innovation is grounded in our tenets of trust, just trusted ethical AI. We're bringing these to life for the Einstein Trust Layer that provides a way to safely bridge private data with public AI models. Einstein 1 has been built for you, our trailblazers. It lets you deploy AI across any app, bringing productivity and efficiency to everyone in your organization. And with our platform, you can build powerful AI apps and automations with clicks, not code. And this democratizes apps development for everyone and enables massive scale. We have supplemented these low code tools with free learning that supports millions of developers worldwide. We have trailblazers building entire businesses on the platform. And this is only possible because our platform is open. This has been true since we started this company back in 1999. We never wanted to box our customers into solutions. We want you to use your existing AI models, integrate with your existing data investment and partners and work with apps that customize Salesforce for your business. So we built Einstein 1 platform to deliver enterprise AI with core functionality, customizable and extensible for any business. And we've been bringing AI to every one of our best-in-class apps and industry solutions right in the flow of work, not in a separate application you need to alt-tab and cut and paste to. So just imagine if your sales reps could have all their calls automatically summarized, scored and action items listed out cleanly, or if your service agents had accurate replies generated for them and all they had to do with check and hit send or if your marketers could automatically generate customer segments, e-mails and landing pages. And imagine if the next time you load your Slack, AI summarized exactly what you've missed and needed to follow up on. This is a promise of AI across the Customer 360. To enable these amazing functionalities across the whole suite of Salesforce products, meet Einstein Copilot, a fully conversational generative AI assistant built right into our apps. Now you can simply talk to your CRM to work more efficiently. This completely transforms how you can use CRM to connect with your customers. It makes your teams more productive than ever and it makes everyone an Einstein. Now we've built the platform, but it's you, the trailblazers, that put it to work. So let's hear from one of those incredible trailblazers right now. To introduce them, please welcome back Wendy Walker.

When we think of beauty, we can't help but be inspired by the L'Oreal Group. It is the world's largest cosmetics company and comprises more than 35 beauty brands, including Kiehl's, Lancôme, Aesop, the list goes on and on. The beauty industry is transforming, and L'Oreal is leading the way. They chose the Customer 360 platform to help them meet their customers' needs. From virtual try-ons to social commerce to real-time beauty consultations, L'Oreal is taking technology and personalization to a whole level. And with Salesforce supporting the customer journey, L'Oreal is creating the beauty that moves the world. We're thrilled today to be joined today by Anil Chilla, Regional Digital Director at L'Oreal SAPMENA, to speak to us about their story of innovation. Now Anil drives the strategy for CRM, first-party data, CDP, consumer experiences and augmented reality beauty services across L'Oreal's digital platforms. He's helping to create those amazing experiences that L'Oreal consumers around the world have fallen in love with. And joining him for this conversation is our very own Alison Olsson.

Welcome, Anil. Thank you for spending time with us today. We're all excited to learn more about the innovation at L'Oreal. Your consumers are now enjoying beauty experiences both off-line and online that they perhaps never had before. So how is Salesforce helping you to create these moments of wonder?

Thank you, Alison, for inviting me. Very glad to be here. L'Oreal Group's mission is to create the beauty that moves the world, which means to create beauty for women and men that feel -- for them to feel more beautiful and feel better about themselves. As our CEO, Nicolas Hieronimus, mentioned recently at his keynote at CES Las Vegas, we are a beauty tech company, which means that we're not only a beauty company but technology augments and powers a lot of the products and experiences that we are creating for consumers across the world. One of our missions is beauty for all to beauty for each, which means beauty innately has been a part of a culture for millennia. And the idea here being that beauty is personal. And beauty is very individual to all of us. And technology innately has that power, the power of being able to personalize, personalize experiences to be able to suit one's own personal preferences. And as a part of our tech ecosystem, especially in SAPMENA, the region that I belong to, it's a relatively young region, just 2.5 years old. And Salesforce is a partner in a lot of the experiences that we create with for our consumers, starting with our CRM and marketing automation, our commerce, e-commerce systems as well as some of our automation related to our B2B part of the business. So in a nutshell, it's both B2C and B2B, both online and off-line and pretty much omnichannel.

Thank you so much for the partnership. So in Marketing Cloud, L'Oreal has activated over 100 million contacts globally and Commerce Cloud provides the backbone for over 200 direct-to-consumer sites. You're reaching consumers all over the world. How are you able to take all that data and create relevant personalized interactions in your drive for even better experiences?

Sure. That's a great question. From our perspective, really starts with the consumers. What consumer need are we trying to address? What problem are we solving for the consumer? And how do we improve the experience and satisfaction of the consumer with our products and services. So it really starts from observing, understanding and not only the consumer but our partners, distributors, et cetera, who we work with quite extensively. So -- and data helps in understanding that. So but really, it starts with the consumer problem. For example, what we have observed is e-commerce as an experience is great. But when someone needs a much more personalized or a consultative kind of experience, we need to be able to provide that in a virtual or in a digital sort of format as well. In the physical world, in a typical retail store, when a consumer goes, they can meet a beauty adviser, have a conversation. The beauty adviser is able to see the person and have the right advice given to our consumer. However, in the online world, especially where some products are high-involvement purchases, the consumer needs a lot more advice. So what we've done with our e-commerce site is we have provided an assisted commerce capability. So which means, when a consumer comes to a site, she can have a consultation with a real-life person, not an avatar, because what we've seen is that we like engaging with real-life people and that's -- versus, say, a digital sort of avatar, and through that experience, be able to address the questions that the consumer might have and provide the right sort of product and regimen for her to be able to sort of use which is suited to her personal sort of requirements. As a part of that, what we have observed, and this is where data helps is, that our consumer satisfaction is, in some cases, upwards of 95%. When we see, look at conversion from consumers who've gone through experience, an assisted sort of commerce experience, what we see that our conversions are significantly more than 2x of what they are versus a plain vanilla experience. So that's one example. The second example is a classic one from the pandemic, where a lot of our salons were shut, consumers were locked at their homes, hairstylists were locked at their homes. And there was a question of livelihood for the stylist because they didn't have any consumer walking into the salons. So the consumer couldn't come to the salon. But then what we did was created a very quick fix, sort of conversations to commerce experience, which helped the salon go to the consumer. It was using some capability which existed, connected WhatsApp. A consumer can browse, talk to a hairstylist or a salon, and the salon is able to sort of deliver a product for them. So at the end of the day, for our salon business today, now this product has been scaled across many markets within our region, Europe, like Indonesia, India, Egypt, et cetera. And there are more than 20,000 salons which are sort of enrolled into this program. So I mean, that's another example of how we are using -- or the understanding from a consumer perspective, aided by data and aided by technology and obviously some of the platforms that we have to create better experiences both for our consumers as well as partners.

That's incredible. And let's talk more about AI. There are so many new innovations in consumer experiences and augmented reality beauty services, like beauty tech. What are you most excited about?

Well, AI and augmented reality for sure have helped our category quite a lot. So beauty purchases are innately to look and feel good. It's a very touch and feel category, tactile category that people need to try a product and see how it looks on them before they purchase the product. So AR, in that sense, is a boon for us because it helps us to evaluate the product, try it out at our own convenience at the comfort of our homes in a very unconscious way or in a very hassle-free way. What we have seen is that in a typical physical store, a consumer would typically try about 6 to 8 shades of lipstick before purchasing that. Within the digital world, what we have seen is that a virtual try-on experience, a consumer would try typically for 15 to 16 shades. And what we're also seeing is that consumer satisfaction is generally quite high, quite positive versus the off-line experiences. Also, our conversion is typically 2x for a consumer who's gone through a virtual try-on versus a consumer who hasn't. So that's one example from an augmented reality, virtual try-on standpoint. The second one is from a brand in our portfolio called La Roche-Posay which has a service called Spotscan. This is specifically for people who have acne. So it just requires 3 selfies to analyze. It has a database of thousands of people who have gone through that and it's bases that able to make a recommendation on what a person should use as a product to sort of help with their acne condition. And again, all from the convenience of their home and available in a very frictionless way on our digital platforms as well as in our stores.

What an incredible impact. So let's look more broadly. How do you see the industry changing with AI? What do you think is on the horizon?

As with everything AI, especially GenAI, brings both opportunities and risks. And as an organization, we need to approach this really carefully and use a test-and-learn approach, especially with robust governance to make sure that the risks that are inherent in this area are sort of minimized. It really helps in making a lot of the activities that we are doing, a lot of the experiences that we are making much more efficient and effective, especially around augmented consumer care, the use of chatbots, the ability to answer questions from a consumer perspective at any time, et cetera, augmented e-commerce experiences like better PDPs, et cetera, better content packs or pictures, search, media, et cetera. A couple of examples that we have are the L'Oreal Beauty Genius assistant, which was recently launched by our CEO at the CES in Vegas in January. This AI-powered sort of beauty adviser can ask questions, analyze a picture, diagnose and make specific recommendations both from a product perspective and also for a regimen. This was trained on thousands of images and thousands of products and can help a consumer both in-store as well as online and obviously aid, provide a very specific personalized recommendation to the consumer. Having said that, there are risks as well in this area, especially as it relates to data: data confidentiality, privacy, bias in the way the results are presented, lack of accuracy or hallucination in some of the recommendations, when it comes to IP rights because that's a big issue at this point in time, obviously fake information or deepfakes, as we call it, et cetera. In a nutshell, I mean, there's a phenomenal amount of opportunity, but challenges or risks also need to be sort of mitigated for us to progress on this.

Great. And finally, what are the biggest benefits you've seen in your partnership with Salesforce?

We are -- as I mentioned previously, we are a new region, just 2.5 years old, but we have a very broad spectrum, broad geography, all the way from Auckland to Morocco. We have 13 time zones within our markets. As a region, we need to be able to use solutions that help standardize and that we can scale easily across the many geographies, many brands that we have, many markets that we have, all being able to localize to the relevant market or the local market context, but then having a very standardized approach which truly respects the nature of our brands and reflects who we are. And Salesforce helps us in that where we use both the commerce part of it with the Commerce Cloud as well as the Marketing Cloud solution to standardize and scale across our markets using some of the personalization capability that has been built by -- which comes out of the box with these two sort of solutions, and the idea here being that we are able to build once and scale multiple times across all our markets.

Great. Incredible. Well, thank you so much, Anil. We are so proud to partner with you and L'Oreal on your journey, and we're excited to see L'Oreal continue to push the boundaries of generative AI and personalization in the future. Thank you.

Thank you. Thank you for your partnership.

Incredible innovation. I hope you've enjoyed all of our speakers today and perhaps feel inspired to find out more about how Salesforce can help you put your customers at the center. You'll find more information at your fingertips in some of our on-demand content right next to the screen. Take a look at what interests you or reach out using the Contact Me button and we'll connect a Salesforce expert with you. Thank you, again, for joining us. We look forward to welcoming you in person to an Innovation Day event around the region soon. See you then.