Salesforce, Inc. · NYSE:CRM
Salesforce — Investor Day (October 2014)
58 slides from Salesforce's investor day presentation, Oct 13, 2014
Slide 1: Building on Fifteen Years of Customer Success
Building on Fifteen Years of Customer Success Salesforce Analyst Day 2014 October 13, 2014
Slide 2: Safe Harbor
Safe Harbor “Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements, the achievement or success of which involves risks, uncertainties, and assumptions. If any such risks or uncertainties materialize or if any of the a
Slide 3: Financial Review, Market Opportunity, Salesforce Advantage, Economic Model
15 years Financial Market Salesforce Economic Review Opportunity Advantage Model
Slide 4: Mark Hawkins, CFO
Mark Hawkins CFO salesforce
Slide 5: Financial Review
15 years Market Salesforce Economic Opportunity Advantage Model Financial Review
Slide 6: 15 Years of Customer Success in the Cloud
15 Years of Customer Success in the Cloud 150,000+ 15,000+ customers employees ~450B $5B+ transactions revenue Note: Represents revenue run rate as of Q2’15. Customer count includes customers on Force.com and ExactTarget. Transactions represent trailing four quarters as of Q2’15.
Slide 7: Strong and Consistent Growth to $5 Billion Plus
Strong and Consistent Growth to $5 Billion Plus $5.3B+ $1.3B+ 30%+ $893M $1.3B Q114 Q214 Q314 Q414 Q115 Q215 FY10 FY11 FY12 FY13 FY14 FY15E Quarterly Revenue Full Year Revenue Note: FY’15 estimate based on Q2’15 revenue run rate of $1.319 billion.
Slide 8: Deferred Revenue Drives Top Line Growth
Deferred Revenue Drives Top Line Growth $2.4B $5.0B $700M $1.0B FY10 FY11 FY12 FY13 FY14 Q215 FY10 FY11 FY12 FY13 FY14 Q215 Billed Deferred Revenue Unbilled Deferred Revenue Note: FY’14 Billed Deferred Revenue includes a benefit from our acquisition of ExactTarget of $99 million. Unbilled deferred r
Slide 9: Q2 FY15: Strong Growth Across the World
Q2 FY15: Strong Growth Across the World Americas EMEA APAC $941M $247M $131M +39% y/y +36% y/y +27% y/y Note: Dollars represent Q2’15 revenue dollars. Percentages represent Q2’15 Y/Y constant currency revenue growth.
Slide 10: FX is Becoming a Headwind
FX is Becoming a Headwind EUR/USD USD/JPY $1.45 ¥70 $1.40 ¥80 $1.35 ¥90 $1.30 ¥100 $1.25 ¥110 $1.20 Sep-11 Sep-12 Sep-13 Sep-14 Sep-11 Sep-12 Sep-13 Sep-14 FY16: Expecting $125M-$150M FX Revenue Headwind Y/Y Note: Data from oanda.com historical FX rates, weekly from 9/4/11-10/5/14. USD/JPY scale inv
Slide 11: Best-in-Class Gross Margin Creates Structural Advantage
Best-in-Class Gross Margin Creates Structural Advantage 81.8% 79.4% FY10 FY11 FY12 FY13 FY14 FY15 YTD Total Non-GAAP Gross Margin Note: Non-GAAP measures exclude the effects of stock-based compensation, amortization of purchased intangibles, and net non-cash interest expense. A complete reconciliati
Slide 12: Tracking to 125-150bps Y/Y Operating Margin Improvement
Tracking to 125-150bps Y/Y Operating Margin Improvement 16.5% 10.4% FY10 FY11 FY12 FY13 FY14 FY15 YTD Non-GAAP Operating Margin Note: Targeting 125-150bps non-GAAP Operating Margin improvement for full fiscal year 2015 year-over-year. Non-GAAP measures exclude the effects of stock-based compensation
Slide 13: Strong Operating Cash Flow with Consistent Yield
Strong Operating Cash Flow with Consistent Yield Percent of CapEx Spend $719M ~ 15% ~ 40% 28% 26% 24% 22% 28% OCF ~ 45% 21% Yield 7% 7% 5% 6% 5% CapEx as % 4% of Revenue FY10 FY11 FY12 FY13 FY14 FY15 YTD Leasehold Improvements Datacenters Operating Cash Flow Other Note: Percent of CapEx spend repres
Slide 14: Employee Base has More Than Tripled Since FY10
Employee Base has More Than Tripled Since FY10 15,000+ ~4,000 FY10 FY11 FY12 FY13 FY14 Q215 Employee Headcount
Slide 15: Growth / Operating Margin Framework
Growth / Operating Margin Framework High Growth Growth Low Growth Mid-30s long-term Priority Top Line Top & Bottom Line Bottom Line op margin at maturity Revenue Growth > 30% 20%-30% < 20% Op. Margin1 Flat to Up Slightly +100-300 bps +200-400 bps OCF Growth < Revenue Growth ≈ Revenue Growth > Revenu
Slide 16: Market Opportunity
15 years Financial Salesforce Economic Review Advantage Model Market Opportunity
Slide 17: CRM Market Leads Enterprise Software in Growth
CRM Market Leads Enterprise Software in Growth 16% 12% 11% 10% 10% 10% 9% 9% 8% 7% TAM (CY13) $17B $5B $4B $9B $4B $31B $2B $14B $19B $21B TAM (CY18) $35B $9B $6B $15B $7B $51B $3B $22B $28B $31B Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartner research; S
Slide 18: Consistent and Deliberate TAM Expansion
Consistent and Deliberate TAM Expansion 2008 2009 2010 2011 2012 2013 2014 Source: Salesforce company data and industry reports.
Slide 19: Salesforce Wave: First Native Cloud Analytics Platform
Salesforce Wave: First Native Cloud Analytics Platform Fast search based analytics Intuitive game-inspired user experience Connected any data from any source
Slide 20: We Have a Huge Addressable Market
We Have a Huge Addressable Market Legend TAM (CY13) TAM with TAM (CY18) Analytics CAGR (CY13-CY18) Current TAM $48B CRM Market $35B $82B $17B $62B 11% $35B 12% 16% Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartner research; Source: Gartner Forecast Enterpri
Slide 21: CRM is Only Half of the FY14 TAM Story
CRM is Only Half of the FY14 TAM Story Business Intelligence: Collaboration: $13B $3B Platform: $15B Marketing: Sales: Current TAM: $4B $5B $35B CRM: Customer $17B Service & Support: $8B CRM ($17B) Current TAM ($35B) TAM with Analytics ($48B) Calculations performed by Salesforce, Charts/graphics cre
Slide 22: Sales: Extending Our #1 Position
Sales: Extending Our #1 Position $9B by 20181 Change in Share 2013 2 41% 38% 37% Salesforce Microsoft SAP Oracle 2.9% 1.9% 0.3% 4.4% 41.1% 14.7% 9.6% 15.1% Sales Market Share2 Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartner research; Source: 1Gartner Fore
Slide 23: Service: Fast Approaching #1
Service: Fast Approaching #1 $14B by 20181 12% Change in Share 2013 2 10% Salesforce Oracle Microsoft SAP 6% 2.7% 0.5% 0.5% 0.8% 12.0% 10.5% 6.3% 13.7% Customer Service and Support Market Share2 Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartner research; So
Slide 24: Marketing: Expands Footprint
Marketing: Expands Footprint $12B by 20181 6% Change in Share 2013 2 Salesforce Adobe Oracle IBM 3% 3% 3.6% 0.9% 0.5% 0.5% 6.1% 16.7% 7.7% 14.9% Marketing Market Share2 Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartner research; Source: 1Gartner Forecast En
Slide 25: Platform: Our Largest Addressable Market
Platform: Our Largest Addressable Market $26B by 20181 Change in Share 2013 2 3% Salesforce Microsoft IBM Oracle 2% 0.9% 0.2% 0.0% 0.8% 1% 2.6% 13.9% 21.3% 16.6% Platform & Other Market Share2 Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartner research; Sour
Slide 26: We Have Runway Across Existing Markets
We Have Runway Across Existing Markets 37% 38% 41% 12% 6% 10% 3% 6% 3% 3% 2% 1% Sales Market Share Customer Service and Marketing Market Share Platform & Other Market Support Market Share Share 2011 2012 2013 Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartne
Slide 27: …And One More Thing
…And One More Thing Our clouds represent 4 of the top 8 pure-play cloud companies by revenue as of Q2 CY14 Source: company filings. Amounts in millions.
Slide 28: Shift to the Cloud Expands the Market
Shift to the Cloud Expands the Market Five Year TCO per User 1.8x software market multiplier 48% Total Cost Savings Services 59% Services 16% Infrastructure 21% Software as a 36% Service Software 20% On Premise Cloud Source: IDC, September 2012. IDC custom research for salesforce. Infrastructure inc
Slide 29: No One is Better Positioned in the Cloud…
No One is Better Positioned in the Cloud… 100% 10% 7% 5% Salesforce Microsoft SAP Oracle Quarterly Cloud Subscriptions as a Percentage of Total Revenue Source: Salesforce Q2’15 earnings press release; Oracle Analyst day 2014. Microsoft Q4 FY14 earnings press release. SAP Q2 FY14 press release. Micro
Slide 30: David Havlek, SVP, Finance and Strategy
David Havlek SVP, Finance and Strategy
Slide 31: Salesforce Advantage
15 years Financial Market Economic Review Opportunity Model Salesforce Advantage
Slide 32: Salesforce: The CRM Standard
Salesforce: The CRM Standard Sales Service Analytics Marketing Community Platform The Customer Success Platform
Slide 33: Destination for Top Industry Talent
Destination for Top Industry Talent World’s #1 CRM company World’s most admired software company #1 most admired #7 best company in software to work for World’s most innovative company 2011 • 2012 • 2013 • 2014 4TH YEAR IN A ROW! *Source: IDC Worldwide Semiannual Software Trackers for 1H 2013 and 2H
Slide 34: Proven and Trusted Global Infrastructure
Proven and Trusted Global Infrastructure Japan Datacenter: Live in 2011 Canada Datacenters: Announced 2014 Germany Datacenter: UK Datacenter: Scheduled to go Scheduled to go live in 2015 live in 2014 France Datacenter: Scheduled to go live in 2015
Slide 35: Unmatched Customer Success in the Cloud at Scale
Unmatched Customer Success in the Cloud at Scale 99.98% Transaction Volume 130B Q2’15 availability Transaction Growth: 52% y/y Average Page Time: 217ms Custom Applications: ~500,000 Q411 Q412 Q413 Q414 Q215 Note: Data as of Q2’15.
Slide 36: Leading Cloud Developer and ISV Ecosystem
Leading Cloud Developer and ISV Ecosystem 2,500+ AppExchange Apps 1.7M next gen developers on our platform Launch 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 37: Cloud Fueling Next Generation Partner Ecosystem
Cloud Fueling Next Generation Partner Ecosystem 82% Q2’15 y/y growth in Cloud Sherpas + CipherCloud joint sales with SIs1 Deloitte + Apttus 68% Q2’15 y/y growth in Etherios + Conga Accenture + certifications at SIs FinancialForce 1Represents Q2’15 y/y growth in dollars of new business. ***Represent
Slide 38: Customer Evangelism Drives Growth and Value
Customer Evangelism Drives Growth and Value 20% 85% of customers 150,000+ would customers recommend to others1 10% 0% Q411 Q412 Q413 Q414 Q215 Dollar Attrition Note: Chart of dollar attrition as a percentage of revenue when compared to the year-ago period for Sales Cloud, Service Cloud and the Force
Slide 39: Significant Opportunity in the Enterprise
Significant Opportunity in the Enterprise Revenue by Customer Segment $82B 70% 50:50 $41B 30% 2011 2018 SMB Enterprise SMB Enterprise Salesforce’s TAM by Customer Segment Source: Salesforce company data and industry reports. SMB represents companies with less than 1,000 employees. Enterprise represe
Slide 40: Enterprise Traction With More Room to Grow
Enterprise Traction With More Room to Grow ~800 Top 100 Customers as a Percent of Total Revenue customers pay us ~20% more than $1M annually Top 100 Remaining
Slide 41: Land and Expand: 4x
Land and Expand: 4x Example: Annual revenue from a Financial Services customer $9.7M $2.4M FY11 FY12 FY13 FY14 Current Note: Amounts represent expected annual revenue contribution as of June 30 for the respective fiscal year.
Slide 42: Land and Expand: 10x
Land and Expand: 10x Example: Annual revenue from a Media/Communications customer $15.4M $1.4M FY11 FY12 FY13 FY14 Current Note: Amounts represent expected annual revenue contribution as of June 30 for the respective fiscal year.
Slide 43: Land and Expand: 30x
Land and Expand: 30x Example: Annual revenue from a $16.2M Manufacturing customer $0.5M FY11 FY12 FY13 FY14 Current Note: Amounts represent expected annual revenue contribution as of June 30 for the respective fiscal year.
Slide 44: Expanding Within Our Top Customers
Expanding Within Our Top Customers “Seven- and eight-figure transactions are great. But we also really want nine-figure relationships.” 3x -Keith Block FY11 FY12 FY13 FY14 FY15 Annual revenue generated by cohort of our top 50 customers as of Q2 FY15 who have been customers since at least Q2 FY11.
Slide 45: Industry Verticals Drive Strategic Value
Industry Verticals Drive Strategic Value $20B • Target largest industries • Focus on industry knowledge sales enablement $15B • ISV and SI partner momentum • Develop industry specific product extensions $10B $5B $0 Salesforce 2018 TAM by Industry Source: Salesforce company data and industry reports.
Slide 46: Lots of Room to Grow in the Americas
Lots of Room to Grow in the Americas The U.S. application software market is larger than the next 17 Americas: countries, combined, $19B CY13 opportunity1 and represents 44% of $44B CY18 opportunity1 global total.3 14% Americas share in 20132 Calculations performed by Salesforce, Charts/graphics cre
Slide 47: Potential Billion Dollar Geographies
Potential Billion Dollar Geographies EMEA: APAC: $10B CY13 opportunity1 $5B CY13 opportunity1 $24B CY18 opportunity1 $12B CY18 opportunity1 8% APAC 6% share EMEA in 20132 share in 20132 Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartner research; Source: 1Ga
Slide 48: Targeting the Most Important Software Markets
Targeting the Most Important Software Markets 74% of global enterprise app software spending represented by our top eight countries. Calculations performed by Salesforce, Charts/graphics created by Salesforce based on Gartner research; Source: Gartner Market Databook, 3Q14 Update; IT Spending Foreca
Slide 49: Economic Model
15 years Financial Market Salesforce Review Opportunity Advantage Economic Model
Slide 50: Economic Drivers of Lifetime Value
Economic Drivers of Lifetime Value Cost to Book What does it “cost to book” $1 of recurring (CTB) revenue? What’s the expected lifetime revenue from Attrition $1 recurring revenue? Cost to Serve How much does it “cost to serve” the lifetime (CTS) revenue?
Slide 51: Lifetime Economics
Lifetime Economics Cumulative Profit Total CTB Time Attrition Breakeven
Slide 52: Effects of Lower Cost to Book
Effects of Lower Cost to Book Cumulative Profit Total CTB Time Attrition Breakeven
Slide 53: Effects of Lower Attrition
Effects of Lower Attrition Cumulative Profit Total CTB Time Attrition1 Attrition2 Breakeven
Slide 54: Effects of Lower CTS or Add-On/Upgrade
Effects of Lower CTS or Add-On/Upgrade unit economics support Mid-30s Cumulative long-term Profit op margins Total CTB Attrition Time
Slide 55: Uniquely Positioned for Industry-Leading Growth
Uniquely Positioned for Industry-Leading Growth 15 years Strong Huge Growth Compelling Financial Model Market Opportunity Advantage Unit Economics
Slide 56: Thank You
@ Thank You
Slide 57: Appendix
Appendix dreamforce
Slide 58: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (in 000's) FY15 (YTD) FY14 FY13 FY12 FY11 FY10 Non-GAAP gross profit GAAP gross profit $ 1,945,187 $ 3,102,575 $ 2,366,616 $ 1,777,653 $ 1,333,326 $ 1,047,658 Plus: Amortization of purchased intangibles 49,943 109,356 77,249 60,069 15,459 8,010 Stock-based expenses 24