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

Delighted to be kicking off day 3 here, our final day of the conference. Sad that it's coming to a conclusion but it's been an exciting week here. We're delighted to be inviting Salesforce to the conference. Welcome, Brian Millham.

Thanks, Brad. Appreciate it. Thanks for having me.

Thanks so much for joining us. President and COO. I'm Brad Sills. I'm the senior analyst on large cap software. And before we get started, just a quick commercial. It is II season and we'd love your vote. The tech team works hard here to put on events like this and content through the year. So your support on the II vote is always much appreciated. With that, Brian, again, welcome. Looking forward to the discussion. Thanks so much.

Looking forward to it, too.

So why don't we just start on your role as President and COO and your areas of responsibility in the organization and how that fits in with the rest of the executive team, Marc and the executive team.

So I'm responsible for -- as COO of the company, obviously I am responsible for all of our sales organization, our professional services business, our partners, what we call customer success, as well. I have HR. I have our business technology organization. So I have roughly about 70% of the org. I always say maybe it's easy to talk about things that I don't have, which is finance and our product and engineering organization, a huge chunk of that rolls up through me.

Wonderful, great. And Q1 results, fresh off the results last week. Why don't -- you want to just touch on some of the key highlights that -- from the earnings [indiscernible]?

Yes, there was -- I think I described it as a mixed result for Salesforce. Certainly some highlights in the quarter. Obviously, cash flow is very strong. Our attrition numbers are good. We had strength in our business in what we call multi-cloud deals. Our large transactions were very good actually in the quarter, growing 25%, deals over $1 million. So feel good about where we're going on the multi-cloud strategy. Strengths around the geographies. We saw very good strength in our Japan business. It continues to be a great, great part of our organization, a great leader, Koide-san, over there that has been with us for quite some time, 10 years and really outstanding leader. Canada was a strength for us which was good to see in North America, to see some strength in that business. India continues to be a great driver of growth for us, albeit smaller but also a great strategy for us as we think about location strategy. We've really moved a lot of our talent. I should say we have moved and we've hired a lot of great talent into the India market as a strategy for scale and growth. And some of our industries performed very well. Pub Sec was very, very strong for us in the quarter. Financial Services was strong in the quarter, which is great to see, some great transactions in that business. I may have mentioned our attrition numbers. But a real strength for us in the quarter, too, was our attrition was lower than expected. We actually beat plan on the attrition side, so still seeing a lot of customer success with our customers. So those were the -- certainly the good stories. We did feel some headwinds in our Americas business and EMEA as well, felt some headwinds. And then a bit of a surprise in the quarter was our Latin America business did not perform as well. Has been a strength for this organization for quite some time and really a driver of growth, largely due to deals pushing out in that market. We had some large transactions that did not come together in Latin America. Good news is many of them have come over the line in May. And so I feel good about where they're going to be in the second quarter.

Wonderful. You're certainly not alone in the software industry with experiencing some macro pressure. I think you also talked about some execution changes that also had some impact, so if you could elaborate on that as well.

Yes, happy to. It's always a challenge. Q1 is always a difficult quarter. You spend a year executing as well as you can. And then you look forward and say, "Hey, what are the things that you want to do as a leader to make sure you're set up for growth and scale, not in Q1 but over the next 3 to 5 years? How do you think differently about your go-to-market strategies?" We -- I think as you probably know, Brad, you've been following us for quite some time, we wanted to make some changes in our go-to-market. We think we can get more efficient in the way that we dedicate our resources to the opportunity. We don't need a fully dedicated sales team for every product that we have. And so as we brought teams together, it does create some account relationship changes in the quarter. I'll give you an example. We really feel like our core sellers can sell our Slack technology as an example. A dedicated team of 500 sellers, why not put that product in the bag of our 10,000 sellers? Good idea, worked actually very well in our first quarter, actually saw great growth. That would be a change that we created. Another change would be we sell a commerce product and a marketing cloud product. Both buyers are VP of Marketing. So let's put those 2 teams together and see how we can go accelerate that business. Short-term disruption but longer-term scale that we're going to get in that business. So some examples of things that we're doing to drive more efficiencies in the organization, long term will be much better for the company, both from a cost perspective but we really believe selling more of our technology more in the hands to drive productivity up for our sellers will be a driver of growth going forward and that's why we created some of those changes.

Okay, wonderful. And back to the macro commentary. I think if I'm reading this properly, it sounded like the environment kind of reverted back to what you had seen in Q3. Q4 might have been a situation where you -- sales reps rose to the occasion, you executed really well but the underlying demand environment might have been kind of pretty similar to what you've been seeing. I know it's been challenging really for the last couple of years generally across the industry.

That's right.

So how would you describe it? I don't want to put words in your mouth but...

No, you kind of nailed it. I think we all had hopes coming out of Q4 that this was the new normal and we're going to see this sort of acceleration. We had a very strong fourth quarter from an execution perspective. And in retrospect, looking back on it, I think it was probably more to do with really strong execution by the sales teams, the product teams, our executive staff, everybody in delivering our fourth quarter versus it being a change in the macro environment. We still feel the measured environment out there right now and really felt it in Q1. Q1s and Q4s are also very different. They are different fields. And as you know, in tech, everyone sort of gears up, they have that big fourth quarter. We certainly did that this year and had the big deals and the small deals, the midsized deals. It all came together in our fourth quarter. Every time you roll over to a new year, it's a new start and you're trying to figure out go-to-market changes, for example. You couple that with what I think we've been very clear about is sort of the pipeline issues that have existed for Salesforce, what we call coverage ratios when we enter a quarter. Q3, Q4 last year, we were able to bridge weaker coverage ratios with just better execution. Q1 with some changes, a tough macro that exists and just sort of the natural sort of slowdown you see in a Q1 sort of combined with some tougher environments out there. And you saw it. I mentioned the Latin America business. One of the strongest sales leaders we have was not able to get some of the big deals that we bet on across the line. But when you diagnose those and you dissect what happened, you're seeing more pressure on budgets. We've got to rebuild the ROI plan that we had on the flows design. A lot that's going on that feels very similar to the first half of last year versus the Q4 that we delivered for the business. And so you see compressions of deals. We closed a bunch of deals that we thought would be a little bit larger. That's sort of a natural outcome. And so we feel good about our plan for the year. If you ask me, I hold ourselves to a pretty high bar. We probably had -- we could have executed slightly better in Q1 and we had a macro that felt more like the first half of, for us, fiscal year '24.

Understood, understood. Well, before we move on from Q1 results, there was a lot of discussion on pipeline on the earnings call. So wanted to double-click on that, if we could, please. Just where is the focus there? You mentioned that there was a bit of a shortfall this quarter and I know that's an initiative to kind of improve upon that. So where is the focus there?

You know it's interesting. We've -- in my tenure at Salesforce, we've always had this mantra, we need to have 3x pipeline coverage in any given quarter that you're entering to get to the numbers and the commits you want to get to. It's been harder. In the same way, it's harder to close deals, it's harder to generate pipeline in this market as well. We felt very good about our ability to generate. The demand environment is still strong. It's actually where the pipeline is landing in quarters into the future. So in a better market condition, you might see, you generate $1 billion in pipeline and it lands -- 50% of it will land in the quarter you're in and 50% will land in the quarter that went out. We're seeing those deals landing further and further out in the quarter. So it's our job to go figure out ways either to generate more pipeline in quarter so that we're able to hit the numbers or be able to put more value associated with the transaction so that we're able to pull them forward from future quarters. We need our product teams more integrated into the demand. So we've really built a tighter partnership around the campaigns that we're going to go to run and generate that pipeline. So feel good about where we are. As an example, in our Q1, we beat our pipeline goals significantly. We're very happy about the demand that we're seeing out there. Do we need to raise the targets a little bit in this environment to make sure that we've got the coverage on the bookings number? I think we do and that's the plan that we have in place right now. Everyone focused across the company, our marketing organization, our product teams, our sales organization, our SEs, everybody focused on this pipe generation issue. We want to get to a quarter that we're not having to grind out every single month because it's just tough in this market to raise the pipeline volumes that we're able to deliver the numbers.

That makes sense. That makes sense. Are there any bright spots within the pipeline build effort, especially the clouds or offerings you'd call out?

Yes, there's the resilience of our big sales and service cloud products is sort of amazing. I'm always sort of blown away when you look at those technologies. Sales Cloud and Service Cloud alone would be some of the largest software companies -- cloud companies in the world just in a stand-alone environment. We continue to see demand for sales and service. Our Data Cloud product has been a home run for us and continue to see the demand from our customers there, albeit an organic innovation that takes a while to have a big impact on an org of our size, we are seeing great acceleration there. Our industry clouds continue to be a great driver of our growth for us and really solid. We feel very strong about where the pipes are landing by regions as well. And so we -- this is all broken down. The cloud variants will sort of change slightly by market and so it's hard to give you like a specific. But on the rollout, we feel very good about our core technology and the demand that we're creating on the pipeline front.

Wonderful. Great to hear. Why don't we shift to some of the key areas of focus in your role as COO? Operational efficiency has been a big focus for the organization. Last year was a big step forward in that, obviously and you made some tough choices on some reduction in force. So just -- I think it would be helpful if you could comment on kind of where you are with that effort? Where is the focus incrementally from here on driving operational efficiency and...

Yes, thank you. Yes, you're right. A big step forward and a tough year for Salesforce. You never like to take some of the actions that we had to take last year but appropriate, given the circumstances and we're proud of the work, what we've done. As hard as it was, we've got ourselves into very different place from a margin perspective. But the work is not done. We always feel that there's more that we can be doing. I mentioned I hold myself to a high bar and it's sort of my job, and I know you had a dinner with Amy Weaver, the 2 of us are really responsible for the operational efficiencies of this organization. We're going to continue to look for ways to drive those efficiencies but we're also going to couple that with growth. And so when we make decisions around where we want to invest now, it is oriented to how are we going to go drive the top line and keep an eye on the bottom line? Things like spans and layers, for example. Do we have places in the organization where we can take people out potentially and invest in things like more AEs or more SEs for example, on the more technical sale that we're in right now with Data Cloud and AI? And so it is top of mind for us. It's all about operational excellence. That's what we ground ourselves in. It's really changed the culture of the business as well. We've always been -- if you sort of look at our business 25 years in, we've always been a performance culture. We're trying to take that to the next level right now and orient everybody on, "Hey, we've got to go figure out a way to grow faster in this business environment," I should say. But also keep an eye on that bottom line as well. And so strategic investments, let's make sure we're very clear about that. And let's also ask ourselves, are we getting the most from everybody in the business? And if we're not, we're going to have to make reshaping decisions around the org.

Okay, great. Why don't we shift to the core business. Sales and service, you mentioned earlier that it's been resilient and we certainly see that in the results, I think, 10% to 12% growth consistently over the last couple of years. So I think it would be helpful to understand kind of where are you in terms of penetration of that market? It's one of the largest markets in software. You're the largest vendor in it. So where is the incremental seat coming from? And where are you seeing the continued strength in that business?

Yes. I think there was sort of this notion that in the near term, AI was going to transform sellers and service people. And then you realize people still have to get to their numbers. They still need to hire people and they still need to add more salespeople. So we are adding incremental sellers. The base is growing, not quite at the level it was prepandemic or even postpandemic when we saw that cloud companies really accelerate. So we are seeing some growth in that. We also have done a very nice job of pricing and packaging and thinking differently about what products we put in the hands of our sellers. So we introduced last year what we call UE+, Unlimited Edition Plus, which has now been changed to Einstein 1 edition. So we're seeing a high price point per user that we're getting from our base, so obviously expanding. Also have a lot of new technology that we're adding to the portfolio in Sales Cloud. You probably know we did an acquisition for compensation incentive management, a company called Spiff, that has been a nice add-on, will be a driver of growth. Revenue Cloud, as an example, something that fits in that portfolio and is driving net new transactions with customers who already use Sales Cloud. And so when we talk about multi-cloud, oftentimes, people think, oh, go sell sales and service and marketing and commerce together. We also have sort of a deeper view of this in a Sales Cloud world where you have Sales Cloud and you can buy Spiff or you could buy Revenue Cloud or you could buy ECI or you could buy a bunch of other products as well. And so we've got a sort of a deeper vertical view of it or you can go horizontal across the multi-cloud strategy. Both are true, by the way, for both sales and service.

Okay, wonderful. Great to hear. So maybe if we could just take a step back here and just look at the kind of broader tech stack that the Salesforce offers, what are the key pillars to growth in your mind going forward?

Yes. Obviously, the multi-cloud strategy as well. When you have a broad portfolio like this, it's a huge opportunity to go talk to a customer who's happy on your technology, use you for sales and service and maybe they want to use you for marketing or maybe want to use for commerce, or maybe they want to build a deeper strategy with their data. And that has become a big opportunity for us as we think about MuleSoft sitting in the center of that, bringing data into Data Cloud and then leveraging that as part of the AI strategy going forward. So that's 1 big growth driver for us, is going to be that multi-cloud strategy. Industry, as I mentioned, a big part of our strategy and has been for quite some time. Our go-to-market organization shifted to an industry view probably 15 years ago. We want to show up to our customers in the right way. When you show up at Bank of America, you don't want to speak the language of a tech company, you actually want to speak the language of a bank. So we made that shift and it was great that we did it and we were winning more deals because we were speaking the language of the customer. As we started to hear from those, they also want products. We want product to show up this way as well. I don't want to have a generic horizontal product. I want Financial Services Cloud. And so you've probably seen from our earnings very good results on our industry clouds, been very, very strong. As you probably know, we're also a very direct oriented organization. We are a -- hire more salespeople and go win the market. We think we've got an opportunity to do more in the indirect channels as well as a growth driver for us. And so I think a big opportunity to leverage new notions, certainly the old notions of ISVs and we want to go build our ISVs that we sell our technology, the GSIs, huge leverage for us in the market, all these big global system integrators that can help us go win transactions. But these marketplaces that have emerged are very interesting to us and we're very excited about the relationship we have with AWS, where we're on -- we run our service on AWS. AWS wants to burn down commits that their customers have with them and they're allowing Salesforce to do that for them. And so we're doing a lot of joint marketing together in a indirect model that says, "Hey, you can buy Salesforce through the Marketplace on AWS." So new channels that are opening up for us, amazing to see sort of the pipeline that's been built there and the acceleration that's happening. And so those are some of the things that we're doing. There's many others that we're contemplating in our business right now from a growth driver perspective. International would be another example. And the international markets aren't -- they're still feeling the same thing that we are certainly in Europe. But if you look at the total revenue split by region, we have room to go faster in international markets and we'll make those decisions from an investment perspective to ensure that we've got enough capacity in those markets to go drive the growth from an international perspective. So it's funny. We continue to do that work. But if the Americas is so big and they have similar growth rates, you're sort of constantly catching up on that, we think we can surge investment there to get better growth out of the international space.

Wonderful. Great to hear it. You mentioned Data Cloud. Before we go to Data Cloud, why don't we just start kind of higher level on AI, the AI question? Where does AI sit in the Salesforce stack and how are you addressing the opportunity? And then how does Data Cloud fit into that?

Yes, great question. AI has been a huge emphasis for us since probably April of last year. We pivoted the entire company to this transformation. We want to make sure that we are leading and I think we are right now. We're, I feel, in a very enviable position of -- most of our customers are coming to us saying, "Hey, help us go through this transformation with you." We have the privilege of managing a lot of their data today. All their customer interactions are happening on our platform and they're saying, "Hey, how can I take advantage of AI to drive higher productivity, better efficiencies in the organization, more margins, better customer relationships?" And so we're excited about the opportunity. What we're seeing on the AI front is a lot of small trials, lots of pilots that's going on right now, people testing the waters to see what's possible out there. I think there's a demand that says, "Hey, let's go get all the benefits right now." I remind people all the time, hey, this transformation happened less than 1 year ago kind of and we just released our copilots in April. We don't have a lot baked into our financial plans on AI for the year. We think it's sort of a next year and following year phenomenon. But we are seeing incredible demand for it. Customers want to be using the AI in the flow of work. If I'm a seller, I want to be augmented with AI every day. I want someone to be helping me be more efficient, higher productivity so I can drive better growth for me as an individual. If I'm in the call center, I want cases resolved for me so I don't actually have to go do the mundane work that AI can do on my behalf. And so we're seeing a lot of demand and a lot of testing. I was with a very large global brand in the retail space. They have 500 pilots going right now on AI, all small, little things. And then the CIO said to me, "We want to find the 2 or 3 or 4 that are really going to have a big impact on our business." And he has been kind of using my balance sheet to look at this, like, where are costs out of whack, in my opinion? How can we leverage AI in each of these areas? Maybe it's in supply chain, maybe it's in the go-to-market strategies. And so he's getting narrowed down on where are going to be the use cases that I can go really big on it. And so the opportunity is huge. I think we're still early on the AI front but I think there's a massive opportunity in the field.

Yes. It seems like at this point, you're in that stage where customers are kind of getting data ready for AI, get the data into Data Cloud, manipulate the data, integrate the data and then the applications will come later. Are there any key themes emerging with some of this early traction you're seeing in terms of those applications? Einstein Copilot is one, CDP seems like another huge opportunity here.

Yes, it's interesting. The theme we're seeing is most companies have really messy data right now. And the saying goes that your AI is only as good as the data that underlies it. And so the demand that you're seeing from our product portfolio right now in that Data Cloud space is, how do I go create that golden record of a customer? And the use cases are all over the place. But we feel and McKinsey agrees, they said 75% of the value is going to happen in the front office around AI. And so we're trying to help our customers see the areas and create those use cases for them. The call center has been the area that I think probably is the nearest term place for a transformation. But the Data Cloud piece has been a big winner. You know we started in the CDP space, which is, I have personalized all of my e-mail campaigns to my customers by segmenting markets and looking at them from a geography perspective, that's now transformed to sales and service. And so we're helping our customers along that line. You see companies like CrowdStrike making big investments in Data Cloud so that they can get better growth, better insights, more forecasting accuracy from data they're pulling from multiple sources. FedEx is a story, I think, we told on the earnings, I can't remember if it was earnings call or a call that we told the story. They had a problem where they're signing up a ton of customers but they weren't converting to ongoing users of their service. And -- but it was 2 disconnected systems, the sign-ups versus, "Hey, where's the transaction happening on the fulfillment of shipping." By bringing those 2 things together, they're able to identify who are the people who signed up and didn't use and then get very personalized e-mails that get sent to them with promotions that engage them and to start using the platform more effectively. And so the benefits are awesome. We want to start to tell stories on the lines of those productivity gains that they're seeing or top line growth or cost takeout, whatever those things are. So we're seeing those benefits today.

That's great. Any metrics you could share on that in terms of where the ROI is, what are some of the benefits that -- in terms of what you're generating here?

Yes. We're seeing actually in our own business, not in front office but we have some AI that's been running in our development organization under Srini Tallapragada. He's seeing a 20% productivity gain in the dev world and engineers being able to get product to market faster. You see it in all the technology that's coming out right now. Certainly some gains we're seeing. In the call centers, you're seeing 20% efficiencies, augmented work productivity that's happening because people are not doing the mundane work actually that the AI is actually doing the case generation, send out the case resolution, close the case and then summarize that back into our products. So the benefits are there. We just need to start to get it to scale.

Wonderful. Industry clouds, why don't we go back to that? I know it's a key focus here and you've seen real traction there. Can you just give us a sense for how does Sales Cloud, Service Cloud, how does it vary from industry to industry? How specialized is it? And so maybe just a question on just at the product level, how differentiated is the platform? How unique is the Salesforce platform from industry to industry? And then from a go-to-market standpoint, how does that vary?

Yes. So maybe I'll start first with the go-to-market, that's where we originally did the design and the most -- when we started Salesforce, we were very much a horizontal product. If you had a sales organization, we're going to sell you Sales Cloud and we went out and did that. And we were very effective at that for many years. And then we went broadly to the geographies and we sold all the products in every geography and language. The most mature markets in the world, we started to realize were hitting the wall on our ability to go close larger banks, for example, without speaking their language and without having products. And so we went to a design model of, hey, we've really got to make sure that we have AEs that are able to speak that language. You don't show up to a bank and talk about accounts and contacts and opportunities, you talk about portfolios or you talk about clients and you talk about loan processing. And so as we built product and even through the acquisition of Vlocity, we did now probably 10 years ago, that's probably not, it's probably less than 10 years ago, about 8 years ago, they were building on top of our core technology, a single platform, but building technology on top that actually built these processes for a specific industry, whether it's health care, whether it's financial services, retail, for example, travel and entertainment. We have a lot of products that we're laying on top. The benefit is, of course, we get to accelerate sales cycles and we're having better conversations with our customers. It's also faster speed to deployment because we know their industry, we can get them up and running. We're now at 13 industry clouds across the organization, their product organization. I'm a big believer in going deeper in those 13 versus going to the 14th and 15th so we have a lot of open conversations with the product teams on this. But I think it's a big part of our strategy and it's been a home run for us. You see it in the numbers, really, really strong numbers from an industry perspective.

Wonderful. Great. Why don't we shift to SMB? We think of Salesforce as a large enterprise vendor but Salesforce got started in SMB and then moved up market over time. Now it seems you're kind of focusing back on the down market segment of the industry. So maybe if you want to talk a little bit about the effort there, how you're addressing the SMB?

Yes, it's interesting for me. I've been at the company 25 years now and we started selling 2 seats to small companies that were SMBs back then. And then you fast forward and people are like, "Oh, you're just an enterprise player." I'm like, "No, no, we still sell to the SMB." It still represents a big part of our business today. But what we found over time is we've -- as we solve the needs of our large enterprises, the complexity of our product went up dramatically. And selling a behemoth that's difficult to get up and running to a 15-person sales team, this isn't working as well. And so some energy around how do we go rebuild and simplify that product. Simple, easy, fast used to be a mantra at Salesforce, so we can get people up and running. It's how we won the market from our friends at Siebel. They weren't even serving that market and said, okay, let's just make it easier to get up and running. Let's get back to those roots. Let's get back to how we can get customers taking full advantage of our product portfolio on a single platform, by the way. So it's simple and easy across sales and service and marketing and commerce now. We can start to feed in some of the capabilities of Data Cloud and AI as well on a single platform. And some exciting things that we're doing where you can just turn on new technology, you don't have to buy it, you can easily self-serve and turn on that product. We've got some learning to do in that market, and we're getting some good feedback from SMBs that, "Hey, you're not as easy as you once were." What we've done in a very short amount of time is very exciting, a new product called Starter that's in the market and then an advancement to that called Pro, with sort of a lot of new energy around the SMB business.

Wonderful. Why don't we shift to some of the offerings outside of the core clouds, Tableau, MuleSoft, Slack? If you want to just touch on each one and where is the focus on driving incremental growth? And what are some of the initiatives?

I'll start with MuleSoft, if I can. Obviously a big part of our strategy, data is at our core right now. And we think about how do we bring data from every source around a business that can help influence the success of either the selling efforts that you're in or the supporting efforts that you're in or the marketing efforts that you're in. So at the center of that is moving data around, moving into Data Cloud and getting that golden record that influences a lot of our AI. It's been a huge success for us. It's been a big driver of our growth. We are a big believer in MuleSoft and we'll continue to do that. In this new data and AI world, it becomes a hub for us to go talk to our customers about. And the nice thing about it is, we're even -- it's crazy to think about people running big IBM mainframes and systems that you don't really think about integrating and bringing data in. Those now become rich sources of data that we can bring into Data Cloud and leverage going forward. On the Tableau side, some great innovations that you're seeing, Tableau Pulse. We now have a Copilot for Tableau as well. The market is big and we want to make sure that we are in the space called analytics and make sure that we're dominating the TAM there. So AI will be infused in everything that we're doing there. We also are bringing that technology closer to our core as well, so it's easier to use the analytics with our core technology. So we'll get more lift from our core sellers as we get better integrations of that technology. And then did you ask about Slack? Was that the...

Yes, yes.

So Slack has been a great success story for us in the quarter. I mentioned the go-to-market change that we created, where we're putting it in the hands of more of our sellers so that we can go sell it. As we think about the future there, we think Slack may become the conversational interface of our AI technology across all of our core products. We see the love of the technology across so many companies out there. They love using it. We need to better integrate that Slack product into Salesforce technology and that's the effort that we're on right now. We've introduced Slack AI, which is incredible way to summarize your channels. If you use Slack, I don't know if you guys are Slack user but it can be a little noisy through the channels. And Slack AI does a great job of summarizing all that's going on within a channel very quickly so you don't have to read through all the posts that are out there. We're excited about the future of Slack. Maybe taking a little bit longer than we would like to integrate it but we're very excited about what we see there as an overall platform, the layer across the top of all of our core technology.

Wonderful. You mentioned a comment that struck me, putting Slack in the hands of more sellers. And I think that's an initiative that's kind of more broad-based across the sales organization and that's part of -- key to this effort to drive...

Even the Einstein 1, if you think about the technology, it's honestly just, hey, let's bundle -- charge more for our products. We're bundling together many, many products into that 1 suite of technology, so we sell it once. We don't sell it with 15 people showing up. And so this move to sort of put more in the -- not only in the hands of the core sellers but also to bundle your technology in a way that allows us easier capability of selling at a higher price point, clear strategy for us.

Sure, wonderful. Great. Let's talk about multi-cloud deals. That's been an area where you've seen some uptick in recent quarters. What's behind that? I know it's a big focus. You mentioned selling bundled solutions and offerings that fit together and have natural synergies. What's behind the strength you've seen over the last several quarters in multi-cloud deals?

Yes, it's interesting. We're seeing multiple -- people want a single platform. And I think in this new AI world, I think they're going to move more in that direction of, "Hey, I don't want a separate system for my service, then my sales and then my marketing." Single platform, so I can leverage all that data that sits underneath those customer interactions. You also see in a constrained environment that you see app consolidation. You see CIOs saying, "Hey, I don't want this huge stack. I'd rather be on a single vendor." So a big opportunity for us to go have that conversation. I feel very privileged that we have such a broad portfolio of technology that we can sell to our customers. There's also a underlying benefit you get in a multi-cloud strategy, which is our attrition rates go down dramatically once you've gone from 4 to 5, 6 to 7. The attrition rates are in low, low, low single digits when you're at 6 or 7 of our clouds. So there's a multi-pronged approach of, "Hey, go sell more ACV or bookings on multiple clouds that the ongoing effect that we have on our attrition numbers is significant." We also have a big base. You know after 25 years, we have a lot of customers out there. And so as you think about this growth strategy for us, it's sort of a natural drive success for your customers, make sure they're getting a lot of value and then go sell them the next product and the next product and make sure that you're delivering for them. And so it's been a long-time strategy for us. But as you get more and more products in the portfolio, it becomes even more important that you go sell these products from a growth perspective.

Wonderful. And why don't we shift to the partner channel? How do they fit into this -- all these efforts here with AI and all the go-to-markets here with some of the bundled solutions that you're talking about?

It's a challenge, I think, at the velocity at which we're moving in the technology world right now. How do you even keep your own people up to speed on everything that's going on, enable them and get them out talking to customers in the right way? The effort to go make sure all your partners are up to speed on your technology is significant. But there's work that needs to get done because we get tremendous leverage from them. The GSI community needs to be educated on our AI and Data Cloud strategy and we're doing that work right now. We believe there's a tremendous amount of work that can be done. And it's not -- you probably know that the data work is not all that fun. To clean up data in a big enterprise is not the easiest thing to do. These GSIs have big practices that do that work. And that's the demand that we're seeing from them is, "Hey, I want to use Data Cloud to go do all the work that's out there and then feed that into your technology." On the ISV front, we're trying to reinvent ourselves there a little bit. I would say that maybe we -- it got a little stale over time. It was a big differentiator for us for a long time, the AppExchange and we want to make bigger investments. In the same way that Microsoft and Amazon have built these great marketplaces, why don't we have a marketplace? Why aren't we getting all the ISVs to build on our platform and leverage our technology? And so that's a big effort for us right now. And then I mentioned sort of the go-to-market. We think there's spots in the world that we could be reaching faster and with more success through an indirect channel. For whatever reason, we think hire more AEs and go drive growth is a good strategy. It has been, but there are some markets, particularly in Asia, there are some geographies like Germany that is sort of more -- it's not as centralized, that we could be leveraging more indirect channels to go sell our technology. And so a big emphasis on the partner channel right now to go drive success. The final piece there as I hit the success notion, we want to make sure our partners are driving the outcomes our customers are expecting. And so we're doing more to ensure that they're seeing how the implementations that they have done are working for our customers. Growth strategy that I didn't hit earlier is, drive more success for your customers, you'll see more growth on the booking side. So we want to make sure our partners are living that value for us as well.

Wonderful. Maybe back to multi-cloud deals. It's hard to do multi-cloud deals when the product isn't integrated and I know that's a big effort. Commerce and marketing, in particular, I know over the last couple of years, it's been a big focus of getting those integrated with the core sales and service. So how does that play into this? Where are we on that effort? And how do you feel like...

You're well-educated on our product strategy. I like it. Well done. This is -- when you do acquisitions, one, it's difficult to integrate them just from a, "Hey, bring them into the company and figure out how to go make them successful." The multiple platforms has been a frustration for us from a maintenance perspective. It's hard to maintain all these various platforms. It's also been a frustration for our customers. We talk about a -- we call it Customer 360, fully integrated. They haven't felt that as much when you're buying different platforms and their systems sitting in different areas. And so it's been a concerted effort for us to get to a single platform. We want a sort of a mantra of 1 platform, multiple clouds. And so the effort has gone well. I, of course, would like it to go faster. I tell my friends on the product side, let's go. But it's a great strategy for us, particularly in this new data and AI world. Everybody wants their data in a single place. They want a single platform and they want to be able to leverage it. And so making great strides on both marketing cloud and our commerce technology. There are others like Slack that we're looking at right now. We're trying to figure out ways to bring Tableau in, in the future. We want everything on a single platform. We think the benefits are significant from a multi-cloud strategy, from our customer success perspective and the acceleration of multi-cloud.

Wonderful. And maybe on that same topic, are there any key trends or clouds that you're seeing more momentum in these multi-cloud deals? Any common...

Yes, you tend to get more momentum on the non-sales and service because those are the anchors, right? And so certainly, Data Cloud has been a -- that's really where we've seen a lot of acceleration, customers leveraging so much data that exists there but wanting to bring more data through that. And so -- and even it's sort of interesting, we -- and it's a little bit of our selling notion, you can have 15 instances of Salesforce within a particular enterprise. Leveraging Data Cloud to bring all those instances together in a single view of the customer is a great story for us. Customers have said, for us, how do I bring it all together? I don't want 1 instance. Well, with Data Cloud, you can have a single view of a customer across 15 different instances. And so Data Cloud has certainly been an accelerator. A lot of the add-on products that we've introduced, Revenue Cloud as an example, a great add-on for multi-cloud perspective for Sales Cloud. So it's been field service in the Service Cloud world, too.

Wonderful. Why don't we just end with 1 last one on kind of the -- one of the key focus areas for Salesforce, which again is operational efficiency. I think it would be helpful just to provide a little bit of color on kind of where you are with the go-to-market effort in rationalizing the organization, putting the product -- more products in more hands of sellers? Maybe kind of where are you today? And going forward, just from a qualitative standpoint, where do you see opportunities for improvement?

So I would say we're a long way along the path to get to more efficiencies in the way that we're going. I'll also tell you that you only get kind of 1 time a year to do this work. We just did it in Q1. You don't want to be creating disruption all the way along. There's also -- I mentioned earlier, we want to be in the analytics space. I'll give you an example of Tableau. What I don't want to do is move it in and say now we're just selling Tableau to just the CRM buyer, actually want to own the TAM for all of analytics. And so we have to be careful that we don't move too fast in a way that sort of says, "Hey, let's move it into the core reps." But those reps aren't selling to the Head of Finance or wherever they might -- the data buyer or whatever for Tableau. So we're very thoughtful about how we do these things. The good news is, we test a lot of it. So in certain markets that aren't as big or we won't have as big of an impact, we'll say, "Hey, can that seller really go out and sell Tableau to the finance person?" Or are they only going to be oriented to the CRM buyer? And so we'll do some workaround to make sure that we're accelerating the integration where we get the efficiencies and we're selling at a higher price point. But we don't want to break something broader, which is, we walk away from a TAM that's significant in our business. And so those are the balances we're trying to reach there.

Makes a lot of sense. Brian, this is great. Great conversation, learned a lot here and thank you so much.

Brad, thank you. I really appreciate it. Thanks for the time.

Thanks again.

Thanks, everybody.