Salesforce Inc (CRM) — Q3 2019 Earnings Call Transcript

Thanks so much, everyone, and thanks for joining us for our fiscal third quarter 2019 results conference call. Our results press release, SEC filings, and a replay of today’s call can be found on our IR website at www.salesforce.com/investor. With me on the call today is Keith Block, Co-CEO; Marc Benioff, Chairman and Co-CEO; Mark Hawkins, President and CFO; and Bret Taylor, President and Chief Product Officer. As a reminder, our commentary today will primarily be in non-GAAP terms. Reconciliations between our GAAP and non-GAAP results and guidance can be found in our earnings press release. Some of our comments today may contain forward-looking statements, which are subject to risks, uncertainties and assumptions. Should any of these materialize or should our assumptions prove to be incorrect, actual Company results could differ materially from these forward-looking statements. A description of these risks, uncertainties and assumptions and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Form 10-K. With that, let me hand the call over to you, Keith.

Thank you, John, and thanks everyone for joining us today. As you can see from our results, we had another great quarter as we continue to deliver strong growth, customer success, and execution at scale. Revenue in Q3 was up 26%. And given the strength of the quarter and our outlook for Q4, we are raising our FY19 full year revenue guidance to $13.24 billion at the high-end of the range. This represents 26% growth this year. Obviously, we are very proud of the quarter and the momentum in our business and our leadership position in the market. We’re also initiating revenue guidance for FY20 at $16 billion, at the high end of the range, representing 21% growth for the year and demonstrating the incredible demand for the solutions only Salesforce can deliver. We are clearly executing on our vision of transformation and success for our customers, and we are doing it at scale. Every company in the world has a mandate to digitally transform its business. We continue to see this in Q3 with strong performances across every industry, every market segment, and every geography. We grew 25% in the Americas, 26% in APAC, and 31% in EMEA in constant currency. Now, since Dreamforce at the end of September, I've traveled around the world meeting with more than 100 CEOs and world leaders. The conversation is consistent everywhere I go. It's about digital transformation, it's about leveraging our technology, it’s about our culture, and it's about our values. This sea level engagement is translating into more strategic relationships than ever. In fact, in Q3, the number of deals generating more than $1 was up 46% over last year and the number of $20 million plus relationships we have continues to grow significantly. In fact, in the quarter, we renewed and expanded a nine-figure relationship with one of the largest financial services institutions in the world. I'm very excited about this. As you know, an overwhelming majority of our revenue is multi-cloud. Customers like DuPont, Citi, and Uber, among many others, are all driving more meaningful relationships with our customers across sales, service, marketing, commerce, integration, and more. I was recently in Australia where I met with dozens of government officials and CEOs across several industries, many of whom are being challenged by disruption, and all agree that being closer to their customers and citizens is critical to their growth and their success. And this is not unique to Australia. Digital transformation is a global phenomenon. Now, we had a great quarter in EMEA where we strengthened our relationships with Deutsche Telekom, NG, and Dyson. In APAC, we expanded with Bajaj Finserv and formed a new relationship with MLC Life Insurance. In Japan, we expanded with heavy industrial manufacturer IHI as one of the world's leading manufacturers. Our industry strategy, which is all about speaking the language of the customer, continues to drive exceptional growth. Our strong momentum with Financial Services Cloud continued in Q3. And as I mentioned before, one of the largest financial services institutions in the world selected Financial Services Cloud as well as Einstein. Mutual of America Life Insurance also selected Financial Services Cloud and is leveraging Salesforce Einstein to improve their go-to-market strategy and customer engagement. Heading on, Federal Credit Union, with nearly 2 million members, is also going all the way with Financial Services Cloud as well as Community Cloud, Einstein, and MuleSoft to deliver a best in class member experience. The Salesforce platform now powers mission critical applications across the Department of Veterans Affairs, while Service Cloud helps ensure veterans can reach a life support agent 24 hours a day, 365 days a year. This is very important for those folks. We also expanded with a branch of the United States Armed Forces to transform how they engage with service members from recruitment to retirement. With Health Cloud, we formed a new relationship with WorkSafe Victoria in Australia and expanded our existing relationship with Alcon, one of the world’s leading eye care and medical device companies. Now, partners, which are critical to our growth, continue to expand our ecosystem, which extends the power of our core offerings. At Dreamforce, we added Apple to our roster of strategic partners, which we're very excited about. That roster includes Amazon, Google, IBM, and others. In this quarter, our SI partners were engaged in 64% of our new business globally and continue to invest in their Salesforce practices. Global partner certifications are up 26% year-over-year. That's the 19th consecutive quarter that our partner certifications have grown by double digits. Finally, we continue to execute again and again with our proven integration model. As a result, we're already seeing great returns from our acquisitions of MuleSoft and Datorama and CloudCraze. Speaking of MuleSoft, integration has become a strategic imperative for all of our customers; it has captured the attention of C-level executives in virtually every conversation I have. In the quarter, companies like Ahold Delhaize, WeWork, Michael Kors, and others just love MuleSoft because it’s able to unlock data from legacy systems and accelerate their digital transformation. In closing, we’re thrilled with our results and our strong momentum heading into Q4 and FY20. It's been an outstanding year-to-date, and we're well on our way to achieving our goal of $21 billion to $23 billion in revenue in FY22, faster than any enterprise software company in history. I want to thank our customers, our partners, and employees for their trust and continued support. I also want to take a moment to thank the firefighters and first responders who courageously battled wildfires here in California. Our thoughts remain with them and all of those who have been affected by these terrible events. With that, I will turn the call over to Marc.

Thank you, Keith. Before I begin, I want to express my gratitude to all the first responders and everyone who has worked tirelessly over the past two weeks. We've faced tragic events in Northern and Southern California, affecting 14,000 families who lost their homes and 500 businesses. Unfortunately, many first responders also lost their homes in the fires, making this a devastating situation. This year's fires are the worst we've seen in Northern California. Our hearts go out to the victims and their families, and we deeply appreciate the efforts of first responders. The smoke filled our city for weeks, reminding us of our connections, from San Francisco to Butte County. We want to thank our employees and customers who supported relief efforts by donating supplies and gift cards. We're committed to continuing our support and have initially allocated $2 million to relief efforts. All of us at Salesforce will stand with our neighbors as we rebuild. This has been a significant experience for us in recent weeks. Now, regarding our financials, Keith mentioned it: we had a fantastic third quarter, and we’re looking forward to an extraordinary fourth quarter. Our guidance indicates we're aiming for $16 billion next year and just two years from our goal of $22 billion to $23 billion, which is remarkable. A huge thank you to our team for these exceptional results; it’s a historic moment. I recently spoke with Jim Cramer about the remarkable changes happening during the Fourth Industrial Revolution. We're witnessing transformative advancements in cloud technology, artificial intelligence, machine learning, and deep learning. As we embark on this journey, we will continue to see significant growth. At the heart of digital transformation is the customer, and CRM is more crucial than ever. The CRM market is the fastest growing segment in enterprise software. This marks a shift from when Keith and I first entered the industry in 1986, where customer focus was overshadowed by other technologies. Today, it’s all about the customer and CRM, and we are leading this exciting market with impressive growth rates. Salesforce remains the global leader in CRM, continuing to take market share as we strive toward $16 billion. We're unique in our dedication to CRM at this scale, offering a comprehensive Customer Success Platform for both B2B and B2C companies. Dreamforce exemplified our success, with a turnout of 171,000 registered attendees and 10 million online views, making it our largest event ever. We had attendees from major companies like Marriott, Brunello Cucinelli, and Unilever, all connecting with their customers in new ways. Our new products, like Bret Taylor's Customer 360, amazed attendees by integrating our services into a holistic view of customer interactions across various departments. Additionally, our integration with MuleSoft offers customers powerful integration capabilities across multiple systems using an advanced API architecture. The collaboration with MuleSoft has further enhanced our business operations. As seen at Dreamforce and throughout the quarter, our joint efforts have yielded impressive results. The introduction of Einstein Voice has enabled Salesforce to understand and process data seamlessly, enhancing productivity for employees and customers alike. Our partnership with Apple is another exciting development, as we look to innovate further in the mobile space. We're also strengthening relationships with other cloud giants like Amazon, Google, and IBM to drive innovation. Our customers are thrilled with the advancements in our industry as cloud technology becomes mainstream. At Dreamforce, we announced strategic partnerships that enhance our offerings with key players like Amazon and Google. Regarding Einstein, our AI capabilities have seen tremendous growth; we’re now delivering 4 billion predictions each day, surpassing our expectations. As we continue to develop smarter products, Einstein remains central to our Customer Success Platform and enhances every aspect of it. We’ve seen significant adoption of our platform, particularly during the busy shopping season, with our customers processing over $20 million in orders, showcasing strong growth. Notably, half of those orders were made via mobile, demonstrating a pivotal shift in consumer behavior. Our community of trailblazers, totaling over a million, plays a crucial role in our success, utilizing Trailhead for workforce development in the digital economy. Our commitment to diversity and innovation is evident in our culture, recognized by Fortune magazine as the best place to work. We also appreciate recognition from Harvard Business Review for our strong performance. Our dual mission to change business practices and improve the state of the world is evident in our recent initiatives, such as the Step Up Declaration to combat climate change. We are dedicated to public education, investing over $50 million in local schools as part of our goal to contribute $100 million. The recent passage of Proposition C reflects our community's commitment to addressing homelessness, and we're actively supporting local organizations to help those in need. Thank you for your support, particularly as we address homelessness in our cities. We're eager to announce further initiatives this week. It's a reminder that businesses are part of the community, and our strength lies in those connections. We strive to show how business can drive positive change. Now, I’ll turn the call over to our Chief Financial Officer, Mark Hawkins, to discuss our quarterly performance.

Thank you very much, Marc. As you’ve heard, we delivered strong third quarter results as we continue to execute at scale. Third quarter revenue was up 26% in dollars and in constant currency, despite experiencing a year-over-year FX headwind to revenue of $15 million and a sequential FX headwind to revenue of $19 million. MuleSoft contributed $128 million to total revenue net of purchase accounting adjustments. Looking at the year-over-year subscription and support revenue by cloud: Sales Cloud grew 11%, Service Cloud grew 24%, Platform and Other grew 51%, including approximately $105 million from MuleSoft, and Marketing and Commerce grew 37%. Our attrition exited the quarter below 10%. Operating cash flow was $143 million, up 14% over last year. Third quarter OCF included our first bond coupon payment of approximately $44 million on the MuleSoft acquisition debt. Unearned revenue ended the quarter at nearly $5.4 billion, up 25% in dollars and 26% in constant currency with MuleSoft contributing approximately $103 million. Unearned revenue was impacted by year-over-year FX headwind of $34 million and a sequential headwind of $39 million in the third quarter. We've already said that unearned revenue can be lumpy due to invoice timing or renewal timing, duration changes, etc. We saw that in the third quarter, where unearned revenue came in a bit better than our guidance, reducing the quarter-on-quarter sequential decline in unearned revenue from Q2 to Q3 that we have historically seen. This also has an impact on the sequential change from Q3 to Q4, which I’ll discuss in a moment. Total remaining performance obligation, which represents all future revenues under contract, ended Q3 at $21.2 billion, up 34% over last year. MuleSoft contributed approximately $300 million to the balance in the quarter, the current portion of the remaining performance obligation, business that’s both billed and unbilled expected to be recognized as revenue in the next 12 months was $10 billion, up 27% year-over-year. Moving on to guidance, we came off strong third quarter results. We are now once again raising our full fiscal year 2019 revenue guidance to $13.23 billion to $13.24 billion or 26% year-over-year growth. This guidance includes approximately $375 million from MuleSoft. We expect to deliver non-GAAP operating margin improvements of approximately 50 basis points at the high end of our prior guidance range, even while the demand environment gives us the confidence to continue investing in MuleSoft and other growth initiatives. We are raising our FY19 GAAP diluted EPS guidance to $1.06 to $1.07, our non-GAAP diluted EPS guidance to $2.60 to $2.61. Keep in mind, this guidance does not take into account the possible future impact related to ASU 2016-01. We are maintaining our full-year fiscal 2019 operating cash flow growth guidance of 15% to 16% year-over-year. As we've discussed previously, this guidance includes a headwind of approximately $150 million related to our acquisition of MuleSoft. For Q4, we’re expecting revenue of $3.551 billion to $3.561 billion; GAAP diluted EPS of $0.89; and non-GAAP diluted EPS of $0.54 to $0.55. Turning to unearned revenue, we expect fourth quarter year-over-year unearned revenue growth of approximately 17%. This implies a sequential growth rate of approximately 52%. Let me provide some additional context to this UR guidance. First, the FX environment has changed significantly over last year. We anticipate a year-over-year FX headwind to UR of approximately $200 million in Q4 versus an FX tailwind of approximately $130 million in Q4 of last year for a $330 million FX swing year-over-year. That represents about 5 percentage points of growth. Secondly, in Q4 of last year, we had an extremely strong renewal quarter, including some of the largest renewals in history. This drove outsized growth in our billed and unbilled deferred revenue in Q4 of last year. Finally, as discussed at the most recent Investor Day, the timing of invoices and renewals can impact the UR balance in any given quarter. Third quarter UR came in ahead of our guidance. The result of this dynamic, which has a direct impact on UR balance of successive quarters and the related sequential changes, is something to keep in mind. This is the last quarter we’ll provide unearned revenue guidance. That said, when we report our fourth quarter results, you will have two full years of data on the current remaining performance obligation, which we think is a more complete metric because it’s contract-based versus invoice-based. Moving on to FY20 guidance, as you’ve heard from Keith, our demand environment remains very strong. As a result, we’re initiating fiscal 2020 revenue guidance of $15.9 billion to $16 billion for year-over-year growth of 20% to 21%, keeping us on track to deliver our target of $21 billion to $23 billion in revenue in FY22, now only a little over two years away. We will provide our cash flow, EPS, and non-GAAP operating margin guidance for FY20 when we report our fourth quarter and full-year results in February 2019. To close, we delivered another strong quarter of results, and we have great momentum as we look to close out the year. I want to thank our employees, our customers, our partners, and our shareholders for your continued support. I wish you all a wonderful holiday season. And with that, let's open up the call for questions.

Thank you very much. Maybe a question for Keith and Marc. Keith, you did mention you've been in front of a lot of customers of late. I'm just wondering, whether the tone of those conversations have changed much in the last few months, just not so much in terms of the Salesforce projected spend; that sounds like it's very strong, but just your broader view of the economy and the macro. I don’t want to force you into being an economic forecaster, but just wondering if the tone has shifted at all. Then maybe a follow-up for Mark Hawkins. Mark, given that the performance on operating cash flow through the first nine months, you only need about 5% operating cash flow growth in 4Q to hit your 16% growth target. You were obviously much higher than that last fourth quarter. I know it's hard to predict and it's based on timing of invoice payments. But just curious if there is anything you’d provide for us. Thanks so much.

Yes. Hi, Karl; it's Keith. I have been on the road quite a bit actually in the quarter. So, I had the opportunity to spend a lot of time on the front lines with the troops and our customers. Here is the message I'm hearing: It is all about digital transformation. I am not going to make any comment about the macro environment; from what we see, it's all good. This is a CEO-level agenda; this transformation is important. The sense I get, regardless of any speculation around the economy, is that this has really become a mandate. This wave of innovation, this wave of technology sweeping the globe is imperative for these CEOs to be those Chief Transformation Officers. That’s what's going on in the market; that's why you see the results with us.

Let me just add to that. I mentioned this a bit at Dreamforce as well. When I talk to CEOs, which happens almost every day, especially given the recent tax cuts, they've been investing aggressively, and the economy is booming. I've noted many forecasts at the 4% level for the United States; we felt that before, discussing the economy's strength even before those optimistic growth estimates. Looking ahead to next year, I’m not certain it can accelerate beyond its current pace because I'm unsure where we would find all the necessary new hires. What’s happening is remarkable for us and for everyone. There may be modest production growth, perhaps 2% to 3% in GDP next year, but I wouldn't be greatly surprised by that, and I don't expect any significant shifts in the economy. I view the solid growth we have experienced this year as beneficial for companies moving forward. I anticipate several more years of strong economic growth. However, when I speak with European CEOs, they tend to be more cautious. Some of these leaders, particularly in their regions, may not share the optimism of their American or Asian counterparts. This is how I perceive the current economic landscape as we continue to observe robust numbers. We still see a strong focus on investment as well.

Yes. Let me just jump on the second part of the question, Karl, thank you for that. Yes, we are obviously pleased with our operating cash flow performance year-to-date as you've called out. We're tracking the fiscal year number that we have been driving toward ever since we acquired MuleSoft. We called out a $150 million impact that would be negative in the first year of the acquisition, mainly due to debt expense and some lost interest income. When you look at it, besides the fact that we're absolutely tracking our fiscal year, Q4 is one of the biggest quarters of the year for us. Obviously, we’ll know more as we get to the end of that. We feel that this is appropriate to stay with the fiscal number, especially in light of the fact that Q4 has a clear FX headwind if you just look at the FX rates year-on-year; that's another factor to be considered. We’re staying on track for the year. We’ll know more at the end of the quarter. But given the FX headwind, I think this is totally appropriate.

Thanks guys for taking my question and congratulations on a great quarter. I just really want to focus on the concept of front office suite. Obviously, you guys have talked about that for several years now, and we're believers. If you think about this year, we've seen probably north of $15 billion of M&A from some of your competitors trying to build out the different pillars of a suite. What are you hearing from your customers in terms of the competitive landscape, especially sort of post this M&A and even beyond the M&A, some of the data sharing initiatives out there between frenemies? What are you hearing from customers, how do you think about how the landscape has changed?

I think that we should ask our President of Products, Bret Taylor, to share kind of his vision of where we're going with our Customer Success Platform.

Our strategy as it relates to competition is really reflected in our Dreamforce announcements, particularly Customer 360. When you talk to our customers, they're not looking to buy a piece of technology; they’re looking to transform their business. Our strategic advantage is that we’re the number one in sales, number one in service, number one in platform, and number one in marketing. As you look at Black Friday, you can really see where our customers are using every single one of those technologies to transform their customer experience. You might send out a promotion for your Black Friday sales via a text message or via email in our marketing product. You transact in our Commerce Cloud; you provide service via our Service Cloud. We’re the only company that can provide all the solutions in an integrated way. Now with Customer 360, you have a single view of your customer through all the touch points. Our strategic advantage relative to competitors trying to catch up by acquiring the second place product in each of the spaces is that we are an integrated solution. Our customers are looking for an integrated solution to their business problems, not just pieces of technologies, and that’s our strategic advantage in our product portfolio.

Bret, you've done a great job. When we look at that product portfolio, you’ve built out with the Customer Success Platform. You've got sales, service and field service, marketing, B2C and B2B e-commerce, engagement with Heroku, which still remains on its square; you've got platform and this incredible ecosystem; you've got integration with Customer 360, this work with MuleSoft; you've got advanced analytics across various industries; you saw what Financial Services Cloud did this quarter; you've got partners and communities enablement collaboration, and on top of all of that, you have that whole trailblazer community. I don't think there's any company that has built out a comprehensive Customer Success Platform like that. When you got to Dreamforce and saw it tied together with Customer 360, what was your biggest surprise?

My biggest takeaway was the importance of Trailhead and that trailblazer community. In addition, when one of our customers decides to deploy our technology, we're not the only person there helping them. Our partner ecosystem is there with them. That partner ecosystem is fueled by Trailhead. One of the things that you mentioned, Marc, in your opening, I think is really powerful: there are over a million people learning for free on Trailhead, and one in four have gotten a new job on the other side of that, because they're developing new skills. Ways to think about it from our customers’ perspective and the thing you see in the Dreamforce is, when someone decides to deploy Salesforce, they have the best ecosystem of support from partners around them. That's really what's driving the success of our customers with the technology which is the thing that we are exclusively focused on.

Great. Thanks. Keith, one of the things that we commonly heard at Dreamforce is that partners are finding it harder to hire and build up Salesforce-certified resources to meet the demand, which is especially concerning given that demand is outstripping supply from a consulting and implementation standpoint. Do you hear this as a trend in the field from your partners? Do you ever see it weighing on pipeline conversion cycles? You were just talking about Trailhead; I know it’s been in the market for a little bit. How effective do you view Trailhead in helping to virally cultivate resources, and can it help maybe populate talent in a quicker fashion than you’ve historically seen?

Thanks for the question. The relationship that we have with our partners is very strategic to our business. You've heard me talk about in the call that they're involved in about 64% of our go-to-market efforts. The certifications have seen 19 consecutive quarters of double-digit certification growth. You’ve got to talk to any of these firms, whether it's PwC, Deloitte, Accenture, or IBM, and ask them what their fastest-growing practice is; it's Salesforce. This is great news for our customers; we wake up every day as a company and think about what's important for our customers. Our partner ecosystem is a big part of that. We are very focused on our partners and we have plans with them, to not only increase their capacity, but also enhance their capabilities. The centerpiece for that is Trailhead. We're offering and extending Trailhead to make sure that they get the right skills at the right time so they can convert and cannibalize their practices from their legacy providers. That's been a part of their strategy. We encourage the growth of boutiques, but it’s not just the enterprise-based business; it's also in the mid-market and SMB. We invest as part of our funds with Salesforce Ventures to provide startups the opportunity to build and cultivate these practices to help with the SMB. We’ve got a comprehensive strategy to build those SMB boutique consulting firms like the Accentures of the world, etc. I’ve never seen a closer relationship with the SI ecosystem like the one we have in Salesforce. We do a lot of joint planning, there is a lot of collaboration, and they’re very integrated into everything we do. Again, they are a big part of our future and we’re very optimistic they will continue to expand and convert the resources needed to drive success for our customers.

Keith, let me ask you a question. Let’s say there are entrepreneurs listening on the call today, and they’re hearing what you’re saying. Are you saying that if I’m an entrepreneur, I want to start a new company providing these kind of boutique services in the Salesforce ecosystem, that’s a good business opportunity? Is Salesforce investing in those companies?

That is a fantastic business opportunity. That’s why we’ve got the consulting firms set up in Salesforce Ventures around the world.

We’ve seen many of those boutiques get acquired by mainstream SIs; that motivates them to grow their practices.

Congratulations to the Salesforce team. I have a philosophical question. You have access to markets with a total addressable market of $145 billion, but only one of your clouds, the Sales Cloud, holds a significant share. I'm curious about when you might reach a tipping point, similar to major tech companies like Oracle in the database market or Microsoft in the operating system market, where they have established themselves as market leaders. How close are you to a point where service, marketing, commerce, and platform markets begin to shift in your favor? While there will always be some outbound selling, the market will start to gravitate towards you, allowing you to capture greater market shares in these areas and fully realize your $144 billion TAM. That's all from me. Thank you, and happy holidays in advance.

Kash, you typically see this in the growth rate we report across all our clouds. This isn't something we're withholding from you. The numbers clearly show that Salesforce is thriving. Our Sales Cloud product is performing well, but we also have a strong service segment, field service, and service add-ons that are all growing considerably. Our marketing cloud business and e-commerce are also experiencing significant growth. I've mentioned Heroku; while it doesn't get reported, it's an essential part of our platform and a strong business. We have an outstanding integration business, as well as an impressive analytics cloud. Our industry-specific solutions, like Financial Services and Health Cloud, are also thriving. Additionally, our acquisition of Bret Taylor’s company Quip is noteworthy. This company recently secured a major deal with Citibank, demonstrating how it's helping Citibank employees collaborate better globally. Congratulations to Bret and Kevin for enhancing productivity in this environment. I use this product daily; it’s utilized by companies like Amazon, Apple, and Citibank for managing productivity. We presented Quip Slides at Dreamforce, which is remarkable. Ultimately, our main focus is the customer. We operate in various segments, but there are competitors in service and marketing. Our unique approach is to integrate everything to provide a comprehensive view of the customer. This sets Salesforce apart. Every company has its guiding principles, and as you know, ours centers around the customer. Bret, would you like to add anything?

Yes. I think Marc put it exactly right. The backdrop that I’m excited about is not just the total addressable market, but also just seeing the motion of change in each of these businesses and how we can help our customers navigate these technology changes happening around them.

Great. Thank you. Let me add my congratulations. MuleSoft is clearly proving to be a great decision for you. What sorts of things might make sense for Salesforce to buy next? And then, Marc, I'd love to hear your thoughts if it fits in there on SAP's acquisition of Qualtrics.

I can just tell you that there is a lot of things that Salesforce can do, because the customer opportunity is much bigger and more exciting than anyone ever really realized. For MuleSoft, it’s the company that I loved for years. It's the company that I helped lead our early investment in and then helped go public. While I wanted to buy them for years, unfortunately I have a very strong management team that's sitting around the table and they don't make it easy for me to do what I want to do. But I did get that one over the line; thanks a lot for that. There are a lot of others that I would like to see that our customers would love to have more tightly integrated, more a part of our product; really important. Other companies; I don't know if you’ve seen the front page of the Wall Street Journal lately, but with sort of market share graph, CRM on the cover of the Wall Street Journal? We also put it in our slide deck here for you; hopefully we did. It’s our number one marketing graphic. Not everyone is doing as well as we are in CRM; not everyone is doing as well as we are in cloud; and you know that. Every year, I've got some new thing, whatever and I can't follow them all because they’re also difficult; they buy companies I've never heard of. So, I can't really comment on them. But, God bless them, and I hope that they're successful in CRM because it's good for us.

Hey, guys. Let me add my congratulations for the quarter. I want to ask the question about verticals. Maybe for Keith, you talked about the amazing success in financial services. The big deal with the financial institution with the success being driven by Financial Services Cloud, which we also picked up in our field work. I guess, I wanted to understand: could you talk about what is the incremental kind of value prop and features that are available to customers that go from generic Service Cloud to Financial Services Cloud, and any commentary on the financial uplift that Salesforce sees through those migrations would be appreciated.

Hi, Alex. I'm happy to do a feature-function conversation with you if you like. But here's the way I'd think of our Financial Services Cloud. In the beginning of time there was the Service Cloud. Right. And then, on the seventh day, God created something else and said it was Financial Services Cloud. Financial Services Cloud started on wealth management; then it went from wealth management to retail banking, consumer banking, and commercial banking; the list goes on and on. By the way, Financial Services Cloud has made great integration points with partners. Those are compelling solutions for our customers. This capability is something that customers want to buy off-the-shelf software. They don't want to customize and build their own capabilities because in a sense, it’s just repainting what they have; they’re just doing a tech refresh but really are not retiring their legacy debt. Customers want these capabilities embedded in our technology, and that’s exactly what we’re doing. We’re responding to our customers in these industries by providing rich functionality that is specific to what those customers are looking for. And that’s been the strategy. We can do that in two ways: One is that we can enhance our product so that these customers get commercially available off the shelf software, or we can partner with an ISV, to provide those capabilities. You can see the results; if you think about the pace of Financial Services Cloud, arguably it's the most successful cloud that we've ever launched. It has established very deep and meaningful relationships with our customers. The roster of financial services companies that we're doing business with now, they all want Financial Services Cloud, and we just continue to win, and that's faith. It’s very exciting for us.

As we bring our call to a close, I want to thank everybody for participating on today’s call. As I opened the call, I also mentioned our hearts remain with everyone who suffered during the horrible fires. I’d like to bring your attention to our local organization that is doing so much and has done so much support already, which is our North Valley Community Foundation, which is providing tremendous support for the campfire relief. If you could support them, we would appreciate it. It’s nvcf.org as Nancy, Victor, Charlie, Frank.org, North Valley Community Foundation. Our hearts are looking out for the entire community of Paradise and the surrounding areas affected by the campfire. We would love for you to please consider a tax-deductible donation to the campfire relief fund to assist the many community organizations who are serving evacuees, and especially our tremendous first responders. So, thank you, everybody, and we look forward to talking again next quarter.