Q1 2022 Salesforce.Com Inc Earnings Call

[music].

Welcome to sales force in fiscal 2020 to first quarter results conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session ask a question. During the session you will need to press star 1 on your telephone please be advised that today's conference is being.

Recorded if you require any further assistance please press star zero.

Like to hand, the conference over to your Speaker, Mr. Evan Goldstein Senior Vice President of Investor Relations, Sir you may begin.

Thank you Chantelle Hello, everyone and thanks for joining us for our fiscal 'twenty 2 first quarter conference call on Evan Goldstein Senior Vice President of Investor Relations, Our press release, SEC filings and a replay of today's call can be found on our IR website at www.

Salesforce Dot com slash investor.

With me on the call today is Marc Benioff, Chairman and CEO, Amy Weaver, President and CFO, Bret Taylor, President and COO, and Gavin Patterson, President and Chief revenue 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 on our earnings press release. Some of our comments today may contain forward looking statements that are subject to risks uncertainties and assumptions in particular, our expectations around the impact of the COVID-19.

Pandemic on our business.

Acquisition results of operations and financial condition, and none of our customers and partners are uncertain and subject to change.

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 is included in our SEC filings, including our most recent report on form 10-K with that let me hand, the call Tomorrow.

Well. Thank you so much and thank you for everyone on being on the call today I mean, it's just going to be a great call. I'll tell you. This was the best quarter sales force has ever had it was just a phenomenal Q1 and everyone is so excited to do this call with you and to talk about it and also just talk about so.

Many of the things that are important to sales force.

Because everyone knows business is the greatest platform for change and we do believe that you can do well Andrew good at the same time.

And before we go into these incredible results, we just want to let everybody know that our hearts and prayers are with all of our on in India.

On our mind every day and there were so sorry for everything that they are.

Going through.

So I am now here with Amy and Bret and Gavin and Kevin as well.

I'll just tell you that we're all vaccinated, we're we're grateful that we can be together.

We're grateful that we.

In a moment, where we have been able to do that we just finished day.

2 day off site with our top managers from around the world.

This is our third Offsite, we've done we've done about 8 total management offsite.

Through the Miracle of testing and now through the miracle of vaccinations and ability to get back into business and be in person.

We're just grateful for that we definitely were missing each other.

It's been great to be able to run our business in person.

And to open our offices, Amy and I were in our offices on a.

Monday on San Francisco, together on our Ohio, Florida and it just.

What is an emotional moment to know that.

Back end that are on our or back in the offices and that we are opening back up. This is just a critical time. So it is an amazing quarter and its juxtaposed against the pandemic is not over everywhere, but it's starting to be over somewhere.

And certainly in San Francisco.

We have 850000 them.

People, but we only had a couple of dozen infections per day last week. So it's a great moment.

So we're grateful we're grateful for this incredible performance by our team.

We're grateful for the phenomenal quarter, it's far exceeded our expectations and I've just never seen a quarter like this I mean, Gavin will go into the details Bret will go into the details.

It was just incredible.

Beyond our expectation.

Not just the best first quarter, we've ever had I think it's the best quarter. We've ever had we delivered $5.96 billion in revenue. It was up 23% year over year, just the customer velocity the pipelines the growth of the company the ability for the teams to interact and have a huge impact. It was just awesome, we delivered $3.2.

On an operating cash flow and as a percentage of our revenue. It's just amazing what salesforce can do today.

Sales force of a company I said doing well on doing good I mean, here's the doing well part $3.2 billion in cash flow on $5.96 billion in revenue and Thats up 74% year over year, reflecting the strong performance. We've had since the impact of the pandemic began last year on.

Operating margin again, and huge callout here to Amy and I will talk more about <unk>.

Amazing performance of the company and how she is rebuilt this incredible operating margin model, an operating model and how she is really kind of almost redesigning the companies from the bottom up it's also on what she's been doing.

And you can see it here operating margin in the quarter was a healthy 22% and you look at the last 4 quarters now.

Now starting in Q2 of last year, Q3, Q4, and now Q1, our margin or revenue or cash flow. It's also going to see these changes that Amy has brought to the company has just inspired me now.

Now for the fiscal 2022, I'm thrilled we are raising our revenue.

Archived by $250 million.

2.6 billion. This is really 1 of the most this is 1 of the largest raises we've really ever had it represents 22% projected growth year over year, and we're not just raising revenue.

Again, thanks to Amy we are raising our operating margin to.

To 18% so that is.

Incredible and.

And on a few years, we're going to be.

Doing 50 billion and by fiscal year 'twenty 6 so that is an incredible thing I mean, we're really seeing some momentum and some cadence is very powerful for the company on the quarter. Once again demonstrates the strength and durability of our business the quality of our leadership team.

Youre going to hear that today on the call the relevance of our products the incredible demand for digital transformation, but ultimately it's been about customer success and what I can talk about some of these customers and they are amazing success with our products companies that we know like Honeywell on 3 elements. So no sin and then Theres shown us for you is just on.

Also on what are they just how this 84% growth when they went to consumer using our products. We're so grateful to them, but also youre going to see them from the core products like.

Im going to hit some of the key things like how added on the top 10 deals included tableau, what a successful story that acquisition has been and we all saw an exact target now it'll all work out so well for us.

This quarter is really just demonstrating that strength and durability of our business and I'll tell you. We're the leader in the CRM market. We all know that we all know we're number 1 CRM you draw everyone's to solve the IDC again ranked salesforce number 1 by market share in CRM, everyone knows the strategic nature.

CRM and this is the eighth year on the road that we're number 1 on CRM, which is awesome in last week.

<unk> also received 1 of the very highest gradients from Gartner.

As a vendor and we track that information, it's our customers talking to Gardner.

We tracked it and saw this incredibly what we call strong overall vendor rating megawatt to us.

And I'll tell you on something else it leaves a lot to us.

And this is kind of a.

<unk>.

And I think we can say this we.

We have to kind of get our head around that.

We're about to pass on SAP as the largest enterprise applications company in the world.

All the analysts have their models.

I know you're on track SAP sales force, who don't really talk so much about SAP from say, mostly exited the CRM market. So many years ago, but I will tell you that.

It's awesome to see not just the number 1 on CRM, but yes, we're going to be the number 1 enterprise software applications company in the world passing on SAP.

This is a moment, we can see it's imminent and.

This pending acquisition of Slack also I mean.

We've never been better positioned for the future.

This is all digital it's an all work from anywhere World It's made.

Our company from a sales force on cycle more important to customers than ever so bringing them together so exciting and once this merger is approved we're going be able to build slack and all of our products will all become slack first.

It's going to make our customers more productive we're going to work with software companies on building an incredible new capabilities.

We've seen these amazing examples of what <unk> can do.

Tell you.

Tom.

We're really excited about creating this number 1 enterprise applications company and I can't wait for all of us be back together with you and hopefully will be together in person at our Investor day coming up.

So of course, the real highlight of every quarter is the success of our customers customer success is 1 of our highest values trust customer success.

At innovation day.

Of use of our products.

Our quality and we just had amazing traction during the quarter across all parts of our business. We hit an all time high in 7 figure plus transactions and I hope that Gavin will talk about that.

It was really.

It's kind of.

First really quarter, where a company history more than a 120% growth year over year. These huge transactions. It really shows the whole world is going digital and customers are connecting with their customers on a new way and everyone needs CRM to do it and they need the analytics and they need integration and we are the leaders in that area and we're able to partner with them.

On to deliver this incredible capability.

On average day 7 figure transactions. They included 4 or more of our clouds. That's awesome. It really goes to show the durability of the business built by so many amazing product sales cloud services cloud marketing cloud.

Community Cloud Commerce cloud integration cloud.

On the analytics cloud with tableau is awesome and our successful integrations of exact targeted Pablo and <unk> continue to drive this incredible results from our customers. It gives us so much confidence in this pending slapper acquisition, we're seeing more and more inclusion of tableau and bill soft in our large deals as customers accelerate their digital.

Transformations.

I'm sure it will stock everyone.

The tableau tableau.

As part of 8 of our top 10 deals.

That really is evidence.

On the integration we've had with customer 360 is a success and we will solve those included 5 of these top 10 deals. It was awesome Honeywell's Great example.

I loved areas Adaptec incredible CEO, Great example of a company investing in sales force across their business they've been.

Factoring in innovative products from more than 100 years.

Creating connected customer experience breaking down silos for their 100000 employees globally, but with sales cloud Honeywell is enabling its global sales team to manage thousands of customers and sellers from anywhere and anyone who was with Brad and I in Washington D C or got to watch it on line, we went there to deal with our customers and employees.

In person and we did this incredible World tour and we have the Honeywell executives. They are talking about this incredible transformation of our global sales team I think it was.

Really cool.

Tableau dashboards with Honeywell on providing their sales teams with these key insights to improve their productivity.

And with my trailhead, which is R re skilling platform.

That's Honeywell reskilling their sales team right on their flow of work.

Increasing their performance and service cloud service cloud together with field service and experience cloud is enabling Honeywell seamlessly dispatch technicians for on site product maintenance and proactive asset management and connected service partner experiences and customer experience for scheduling appointments and instantly troubleshooting.

In fact, it was really that field service capability that helped us to amplify our relationship with Honeywell and Thats, what various on high starting to really collaborate and say Wow, we could bring this to the aviation business and Honeywell and transform how theyre doing theyre amazing jobs.

Tell you for a long time, we've had a trusted relationship with Dell technologies and their incredible founder and tremendous brand of sales force and Michael Dell last year del partnered with Salesforce professional services implemented the world's largest deployment of sales cloud to supported sales reps go to market channel partner.

I will tell you I just finished Michael bells.

New books, it's called play nice, but when and it inspired me and it really was exciting on that sale sales force Intel have this partnership that help them win.

It was powerful.

And with service cloud <unk> is also giving a service agents or 360 degree view of every customer that was so awesome to see and they're using marketing cloud for <unk> customer journeys, they're transforming their seller experience.

Incredible.

Another amazing seal that we work with Mike Roman at 3 am and for those of you, who widespread and I am Singapore, Bret and I flew to Singapore for the kickoff of the quarter.

And we are there in Singapore, and we are live with our customers and with our own employees and everybody and government leaders.

Well, we had the opportunity to talk to Mike Roman <unk> from the iconic innovator at the center of efforts to combat COVID-19, and we were so happy to partner with them and.

And today <unk> is using customer 360 across 83 countries.

And when Mike realize there were counterfeit mass that werent, providing the protection of a 3 MFS they.

Partnering with us to make sure we can immediately deliver fraud reported center with service cloud and we did it it was an awesome story and we had to do it instantly immediately but theres been so many stories like that.

Especially in our governments.

You'll see it on what happened.

Or what is going on right now in Australia in Melbourne.

Again, relying on sales force as contact tracing system to resolve this breakout theyre all locked down I hope that they'll be able to identify everyone quickly on open back up quickly and I know they've got the infrastructure to do it with sales force work Dot Com. It's incredible story, that's going on down there.

3 of them getting back to that well. We're also piloting tableau to create a single dashboard for their entire business tableau continues to be a strategic part of so many of our customers' business.

And we're working with the pioneer in online mortgage lender rocket mortgage to make complex transactions like buying a home or a car and evaluating personal loan I mean, it's amazing what's going on with rocket mortgage I'll tell you I've really enjoyed working with that company and their inspiring because they themselves are just such tremendous.

S K.

Tremendous innovators and if you know their CEO, Jay Farner, well, you'll understand how they are using our financial services cloud and marketing cloud to deliver a source of truth for all their customers data and drive personalized engagement at scale.

Jim is incredible and during the quarter. They also selected meal soft integrated across all of their various systems.

Of course, I mentioned, so notes before it was incredible story, they went digital direct to their consumer.

Bill.

Grew their business, 84% year over year and with marketing cloud. So those connected with their customers through E mail from global through social channels. They built the customer 360 day started pioneering in a single source of truth and it continues to scale. This business, David even invested very deeply on e-commerce with sales force as well as Tom.

Hello, Greg.

So great story and I'll tell you.

Those stories.

I just mentioned like what's happened in the Melbourne, well, that's all about our public sector business or the country of Japan with our vaccine cloud.

So many places here in the United States by Clayton County.

It's been an unbelievable year, it's been an unbelievable quarter.

It really has been a lot about doing well and doing good it's been about really showing our sales force is.

The business.

You know that business can be the greatest platform for change now.

Now I am telling us something that's really exciting on something new and I couldnt be more excited to tell you. This and we're going to take another huge step forward here now I have been telling you that we've been doing a number of office sites.

Our executives together, we've opened our offices now we have our employees back and we're about to take another huge leap forward. We're taking the hugely forward because dream force is coming back in person in 2021 to San Francisco as well as simultaneously in New York, Paris, London, It's going to be a global Dream force and we're going to balance.

The people at every venue.

We're going to work closely with local officials and we're going to do an amazing show I Hope all of you will be there September 'twenty, 1 'twenty 3 it's going to be the first global Dream Force and we're going to host groups Trailblazers and COVID-19, Safe places along with tens of millions online it's going to be a hybrid event.

And digital now we're going to follow these public health guidelines for every city and I expect all of you to follow up from as well and in the U S. We're going to require attendees to be fully vaccinated to attempt that is.

Going to be a critical part and it's how our core epidemiologists and medical teams at Salesforce have decided that we can do this amazing reopening Dream force.

We've worked with our longtime partner and customer Marriott, we've worked with leaders in this and our local medical communities and University, including Dr. Larry brilliant it's been a great friend of our company a tremendous epidemiologist to follow these best practices and create this amazing New Dream Force So Dream Force 2021.

It is going to be the most inclusive the most successful.

Dream Force ever it is going to bring the magic of Dream force anyone everywhere anywhere.

It's going to be great to be back together and deal with all of you it's going to be a family reunion.

Accretable family room.

And I'm also thrilled that earlier this month, we opened Salesforce tower as I mentioned, Amy and I were together in San Francisco was also opened in London.

It's great to be back to work and we want to do we want to we want to be the pioneers and back to work.

Know that people are going to still be working at home.

With me on the office too and we're going to be doing this all sides from events and get Togethers and collaborations and we're even going to have this incredible new training facility a cultural immersion facility.

A place where we could bring large groups of our employees or even customers and their families together with Salesforce ranch and we couldnt be more excited about that and we see those 4 things together in the office.

And home.

Events like Offsite Dream Force and even this incredible new training facility I mean, it's really inspired by general electric and I went to close the bill when I worked so closely with GE on their digital transformation.

Was wondering why would we ever have something like this I never saw the need why would sales force neither crotonville, but today, we knew because so many of our employees are at home how are we going to immerse them in our values. How are we going to educate them on our products. How are we going to show them. What it sales force is really all about.

And Thats why this incredible facility will be so important to us and we're looking forward to talking about that.

Over the last 22 years, we built an amazing culture Amazing company.

Seem to be the number 1 enterprise applications company in the world already the number 1 CRM on the world.

Now I'll tell you when we started this business we had 3 <unk>.

Create a new technology model, we call that the cloud a new business model subscription, we all understand that now and a third model.

Third model based on 111, 1% of our equity 1% of our time our products.

And that's become the business is the greatest platform for change we couldnt be more excited.

And I'll tell you 6 million employee volunteer hours well. That's evidence that this is working $450 million on grant so far 51000 nonprofits running on our service for free it's more evidence I'm happy to get this testimony that our culture has enabled us.

To create an amazing company, but also to attract entertain amazing talent.

And I'm enormously proud that fortune just ranked us as 1 of the best places to work in the World again, I think this year on number 2 but is that 13th year that we've been on this list.

It's really evidenced that.

We can all do more business, we can do well and we can do good and before I turn this over to Amy I want to make sure you know about 2 amazing re imagine events that are also coming up this month, we're going to have connections on June 2nd our digital marketing have ended the year and on June 23rd Trailhead Dx I hope youre going to be.

With us for both of those I hope you'll be with US for Dream Force. We're so grateful for her incredible partnership during this year and we are delighted to deliver the best quarter, we've ever delivered and now a key part of that.

Amy go ahead.

Thank you Mark and good afternoon, everyone.

Appointment in Q1 was perfect in process across all financial metrics.

It's a record level for Q1, new business performance and strength across all products regions and customers.

Importantly, we were able to achieve growth while also delivering profitability.

Let me. Thank you for your kind of on the results for Q1 fiscal 2010.

Again with topline commentary.

Total revenue for the first quarter was $5.9 6 billion up 23% year over year or 20% in constant currency.

The strong new business pipeline that we discussed last quarter enabled us to deliver these results.

While we had a favorable comparison for Q1 or 2 year new business tanker also illustrates the continued strength.

A few areas to highlight as Mark mentioned, we saw a record number of Q1 setting second bill.

Not only with each day.

David on multi cloud transformation with.

On average more than fourfold from Clinton Tony.

Our vertical cavity continues to align our products Keith strategic industry.

In particular, we saw strength from the public sector, which continues to accelerate as governments around the world trying to calculate from Asia.

Service cloud demonstrating another quarter of incredible growth.

With Q1 revenue of 1.5 billion.

Selling 20% year over year.

<unk> and <unk> continues to perform well.

We are pleased with progress on the integration for example on Q1 cash flow within our top 10 deals for the company and in more than 60% of our 7.

Tom.

Revenue attrition in Q1 with between 9 and Alan half percent.

We continue to be pleased with the progress made on our cash.

John.

Our remaining performance obligation representing all future revenue under contract ended Q1 at approximately 35 billion up 19% year over year.

Current Rene Liu performing capital from North Sea, RPM, which represents all future revenue under contract that is expected to be recognized revenue on the next 12 months was approximately $17.8 million.

Up 23% year over year or 20% in constant currency.

Turning to operating margin Q1, non-GAAP operating margin was 22% largely driven by revenue outperformance and and connects all expense efficiency.

Q1, GAAP EPS was <unk> 57, and non-GAAP EPS was $1.21.

The outperformance in the quarter was primarily due to higher revenue and expense efficiency as well as realized and unrealized gains on our strategic investment portfolio.

These mark to market adjustments benefited GAAP EPS by approximately 23.

Non-GAAP EPS by approximately 20 points.

Turning to cash flow operating cash flow in the first quarter with $3.2 billion.

At 74% year over year.

As a reminder, last year's cash flow seasonality with impact that impacted by our decision to provide temporary financial flexibility in some of our customers during the pandemic.

And we continue to expect cash flow seasonality Steve.

Higher in Q1.

Capex for the quarter with $171 million, leading to free cash flow of $3.1 billion up 99% year over year.

Okay.

Before moving on to guidance I'd like to update you on the status of the clat transaction.

We remain on track to closing SKU count.

As we've refined our Q2 and full year guidance. We have also refined our expectation on the closing date, which we now expect to be near.

So Gary and so on.

Let me emphasize on our guidance from Ken's involve changes involving slack are completely on track.

Turning to guidance.

We expect Q2 revenue of $6, 6 Q3 volume or approximately 21% growth year over year. This guidance assumes no contribution from block.

For Q2, we expect to deliver CRP or growth of approximately 20%.

As a reminder, Q2 fiscal 'twenty Wang benefited from strong Taylor.

On that.

We expect Q2 GAAP loss per share of negative 10 chance to negative non cash and non-GAAP earnings per share at <unk> 90.192.

Our assumptions on credit in mind, Tom impact from block, primarily driven by E on transaction and integration.

Now moving to fiscal 'twenty 2 that day.

As a result of our tier 1 for final.

We're raising our fiscal 'twenty 2 revenue guidance by 215 million to $25.9 billion to 26 billion or approximately 22%.

Year over year.

This guidance incorporates an expected revenue contribution of 500 million from slack do you get the changes and then from cannot close timing from Canada.

Our guidance continues to include 190 million from occupancy.

Net of the revised block contribution this represents a $350 million based on our core business.

Our decision to raise fiscal 'twenty 2 back again is reflective of our Q1 performance and our confidence in our ability to execute from Iraq.

Yes.

We are also raising our fiscal 'twenty non-GAAP operating margin to 18% an expansion of 30 basis points year over year.

This continues to include an expected 160 basis point headwind from sloppy market on continued investments in our corporate cash and the module moderate increase of travel.

Thank you.

We are raising fiscal 'twenty, 2 GAAP diluted EPS of <unk> 22 cents to <unk> 24.

And non-GAAP diluted EPS to $3.79 to $3.81.

We expect recent M&A will be an approximately 53% headwind to non-GAAP diluted EPS.

Please recall that our Hawaii and EPS guidance assumes no contribution from mark to market of counsel as requirements on <unk>.

John.

We are also raising fiscal 'twenty operating cash flow guidance on couponing.

Now expecting 12% to 15% growth year over year the.

The increase from our previous guidance, primarily driven by revenue performance and by the referral kind of ex Pats.

Question on Hawaii.

The diluted cash flow impact on slack and Archie now represents a hotline to our year over year growth of approximately 8 points.

We continue to expect Capex to be approximately 3% of revenue in fiscal 2000 accounts, resulting in a free cash flow growth rate of approximately 12% to 13% for the fiscal year.

Excluding the anticipated impact of MLR on a previous unguarded dissipate with the 2018 to penetrate Murray.

To close our impressive start to fiscal 'twenty, 2 positions us well for the rest of the year and keeps us on track to achieve our goal of a 50 billion from effects.

It really was a terrific quarter and I'm grateful to our employees for their focus on both growth and description today John.

Weiner.

Finally, it has been a pleasure to meet many of our shareholders over the past few months here I wanted to thank all of you for your continued from point a point.

And with that let's open up the call for questions.

Thanks.

As a reminder to ask a question.

On Star 1 on your telephone to withdraw your question comes from pounder Husky. Please limit yourself to 1 question. Thanks for everyone's questions. Please standby.

On the Q&A roster.

Our first question comes from cash.

Brandon with Goldman Sachs. Your line is open.

Alright. Thank you very much congratulations to the team. My first question is for Amy Amy Nice Nice nice work on the margins and Tony Mark talked about how you're managing the company from us from a fundamental level can you just talk about.

1 of the things that youre working on that.

Give you the right balance between growth, which is great and the <unk>.

Margin expansion.

Sneak in 1 for Mark if you look on the future of work.

Does the position for Salesforce Dot Tom as you look at that.

But that <unk> our sales force.

Positioned to take advantage of what do you believe it appears from work on whatever that is.

Thank you.

Yes, hi, cash thanks for the question.

When I look at the balance between sales and profitability I wanted to be clear that growth remains our number 1 priority on investing into growth, especially in this demand environment is simply the best thing we can gain from the company.

That said I on the big believers that would focus on discipline mark for a stronger and larger company over the long term I believe we need to be able to deliver Michael.

Our cash and I really appreciate your question and we have a tremendous vision for the future work its sales force.

Future of our own business like I've mentioned that homeworkers or an office workers.

The ability to meet and have off sites and events and programs and.

Large cultural facilities like we talked about but we believe there is a fundamental technology platform that is needed to bring all this together.

And we also believe that we also have to include all stakeholders, not just our company, but our customers and our partners and even consumers.

<unk>.

And I think that Bret has created an incredible vision.

For the future of work and an incredible platform and when you think about as well what with 5 is going to do in terms of transforming our company on each 1 of our clouds becomes slack first well there.

That I think is a huge accelerate on all this so Bret would you just kind of tell us what what is the future work.

It's a great question and more importantly, it's a question on the mind of every CEO and every single 1 of our customers.

When you look at the trends of this past year that wonderful Honeywell story that Mark mentioned.

His script, they shifted 7000 salespeople from in person to virtual customer meetings.

Customer meetings arent going back to conference rooms, only theyre going to stay on zoom as companies like ours, just realize that we can execute as well as ever before on this digital environment. The contact centers that moved from being buildings to be in the cloud based on power service cloud, they're not going back to buildings anymore.

Think about the move from doctors' offices to telemedicine, you look across our portfolio of the move to digital commerce and digital marketing in an incredible cyber week numbers, we talked about last quarter.

We really think that this digital customer 360. This platform, we've built and built in is an absolutely crucial part of the future of work for every single 1 of our customers in particular, because things arent going to snap back to the way. They were it's also as Mark mentioned I think on 1 of the reasons. We're so excited about the prospect of closing this block transaction.

When you think about what does it mean to succeed in the all digital work anywhere World. It's customer 360, which enables you to digitize the entire customer experience and get back to growth in this incredible economy and it's the digital HQ from slots, which enables you to connect all of your employees all of your partners on all of your customers together and.

This incredible new engagement platform and we think the 2 together represent an incredible opportunity that I think is truly the operating system for growth for every company embracing this new way of working and getting back to growth on this new normal.

Our next question comes from Brent <unk> with Piper Sandler Your line is open.

Thank you for taking my question I guess first great to hear this new concept from a regionally in person Dream force looking forward to an in person we're using here.

I guess for maybe Marc or or Brad here.

Sales force has by far the broadest portfolio of different cloud applications. Today I was hoping you could parse out what customers are asking for what cloud application could see the highest uptick and interest. If you look at the pipeline you mentioned tableau being a meaningful part of the large deal pipeline, but.

Would love to just better understand what what cloud applications, specifically are wrapping the most here in this kind of post vaccine era that we're entering.

Yes. Thank you for the question.

I think 1 of the things that you see the numbers the strength is really across the portfolio.

When we talk about the fact that.

The 7 figure deals on average included more than 4 of our cloud.

Not selling individual products, we're selling a customer 360 solution to really transform the entire customer experience.

Last quarter I talked a lot about the amazing growth in marketing and ecommerce due to cyber week, it's really heartening to see just all aspects of the economy on our portfolio growing 1 of the most fun for me this quarter.

We're seeing over 5 million opportunities created every day that is almost a 20% increase over last quarter. This is every BW selling team in the world investing in growth again, recognizing the demand environment, we see an economy on every single part of our customer base. Another. Great example of this is and I don't even know this mark but in April.

Einstein started doing over 100 billion predictions per day.

It is a great example of these platform investments that we did multiple years ago that our customers that the whole economy goes digital is really are really benefiting from when you think about what does that mean it means that every email you get is more personalized it means that every E. Commerce, you've hedged is suited to your interest and your needs driving growth and success for our customers.

But really represents I think the importance of these foundational technology investments.

Great example of this mark talked about customer 360 analytics and tableau integration with Neusoft.

And the importance of that.

That technology Foundation as it relates to these customer 360, multi cloud deployments you'll.

<unk> is now doing the $4.8 6 billion integration transactions every day that is up 28% quarter over quarter.

And sort of the boring, but important part of this customer 360, integrating all of those legacy system. So our customers can move faster in the face of an economy.

Shifting even more rapidly than ever before and really I think shows the importance of our acquisitions as it relates to our overall value proposition of customer 360.

Our next question comes from Keith Weiss with Morgan Stanley. Your line is open.

Excellent. Thank you guys for taking the question.

Great start to the year it looks like there's a ton of momentum at sales force right now neither 1 question from Mark and 1 for Amy.

Marc there's been some investor debate on sort of to what degree digital transformations are really accelerating a lot of other companies had.

More mixed or difficult Q1, you guys seem to.

Really hit it out on the Parkman. This Q1, Keith kind of your view on sort of how your customers are changing their investment profiles and when is that going to Keith that's something that is really a 2021 event or because of the the big strategic nature of these deals Steve could take some time to flush.

So I guess I'm asking has the pipeline looking for the big strategic deals and then the question for Amy.

We were impressed with when you sort of stuck it was 17, 5% operating margins with the initial FY 'twenty to guide now youre raising it on another 50 basis points can you talk to us about does that come from sort of expenses being pushed out.

Or is it just kind of.

Is there actual kind of more efficiencies that you're finding in the business that enable you to.

You raised the operating margin guide here. Thank you.

We're also excited that Youre excited about these new model. So I mean I by the way also.

She I think cash said it well she is re imagined the business she has rebalanced.

Our ratios she's figured out how to take these kind of changes that have occurred in the pandemic, which is less travel and less real estate unless events and kind of rebuilt the company from the bottom up and I think that's where we're really starting to see <unk> genius kind of take place which.

Is that.

You know when I look at the revenue.

596 up 23% to 20% in constant currency.

The cash flow of $3.3 but then when I really get down into this operating.

Margin at 22%, but also the ability to raise for the year. It really gets down to this new model that she is really pioneered and is installed on the company and its given us a fresh look at how we run our business and what we're going to do on the future. How we think about the right balance between revenue and cash flow and margin.

And the pandemic gave all of us the ability to reset our lives, but also our businesses and when we look at resetting our businesses. We also have to reset our.

Financial models and I think that this is the result of.

Now for amazing quarters of this financial model emerging.

I think we're going to see that continue to pay out for the rest of the year in future years as well that we will benefit from this and I don't think its something thats getting pulled forward or pushed back or this or that its all zero base from a box. So that's what's exciting and it's a commitment that we have on new model on a new approach.

And also this idea that it's a new way to work now on regards to the customer focus.

I think we just.

Have never seen customer demand like this and.

Yes.

Certain applications that we've been asked not to profile on the call. For example in regards to some things that the U S. Government has done in terms of making sure that stimulus gets to the right place at the right time.

And we were asked to do things in a matter of weeks.

It's not just limited to our government other governments.

Their businesses.

I've never seen and I said this in the last couple of calls so many what I would call emergency deployments, usually the day, we'd like to have that from 6 months 12 months. The most 18 months. So that's 1 of the reasonably come to Salesforce.

3 fast time to value. This is critical but for us they want instant Panthers.

We have to build within the book.

We've got a goat alright, we'll go we'll build it will deliver this will make this happen for you and.

I've been so fortunate to have Gavin really by buy side. During all of this I mean, everybody knows Gavin is tremendous.

Lineage and Gavin worked and I worked together, but France from more than a decade, but of course at the Bto has always admired his business processing business practice and his ability to.

Bring discipline, but now Washington have run on our customer organization on what he has done now over the last year. That's just been shocked me, but Gavin I think you should just kind of come in here because it's not just Amy is re imagined the financial model you've re imagine the entire customer model on how we're going to market and the balance of sales.

Service and you've re imagine the level of management that we have and where we're putting that management level of capacity. The relevance the participation I mean, the enablement of these things that you've laid out so could you just tell us give us what's happening on the customer side and how do you how do you see the market today.

Thanks Mark.

As you say, it's been an absolutely stellar quarter, an incredible quarter.

And 3 words come to mind for me relevance.

Our relevance.

And execution.

Relevance is I think really really clear on what we offer at the moment these swaps.

<unk> on the wells be those.

Companies on governments.

It's what they're looking for to manage that business and we see that in the new business pipeline is extraordinarily strong, yes, we havent favorable compare.

<unk>.

If you look at the 2 year performance, it's really really strong and that's the key number to look at we're not dissuaded by just the year on year it needs to be the 2 year performance with an easy compare.

So I think taking advantage of the economy the strength of.

Investment going into the economy in many places around the world.

Perfect place to take advantage of that.

I think the second thing is about investment so.

Mid part of last year, when we were restructuring the business. We also put in your investment back into the business, particularly with capacity and we're seeing the benefits of that now as we come into the year really strong ready to take advantage of the.

The strong economies, we're seeing around the world, so being able to invest when others work I think is a significant factor.

And then the final thing is around execution.

Had a really strong.

I think quarter because of the execution in the grip that we've got on the on the sales and services organization and then we had a digital looks this year.

We got all the crisis deployed data quickly, we got more selling days into the quarter. We got a flatter organization now so that's really clear accountability throughout the business.

That said great results.

Great results both in terms of the.

Run rate business, but also.

<unk> strong results in the big deals and Mark to assessment of those numbers. So the business is really humming pipeline is super strong it's across all clouds.

Across all geographies and a real strong focus on the industries as well and on the business is really really pumping alright, I really wanted to ask a follow up question Gavin because you mentioned this but I think it's important to illuminate this.

As.

Q1 was very much frictionless.

We decided we're going to do digital kickoffs were going to get all of these quotas.

Territory assignments out as quickly as possibly has really led this amazing program.

To do this and to make sure. We had this fast start to the first quarter into the fiscal year.

Brought a level of discipline into the sales org I've never seen.

Before so.

I never really understood how the British did it so.

Let me just.

Bill in the detail there in terms of the velocity of the distribution organization is just incredible I think this is 1 of the.

1 of the silver clouds coming out of the pandemic is that we couldnt meet face to face.

So we have to do everything digitally.

But that meant we got out of the blocks really really fast.

We were able to compress.

<unk> of the year.

Into about a week you gave us more selling days made sure everybody was clear what they have to achieve that goal we deployed earlier in.

In the year and that meant we were able to focus on our customers and that's the most important thing we do and.

When the demand is there which is the case at the moment there.

There is undoubtedly a demand for our products.

Keith making sure that Tom to.

To your customers and helping them solve their problems.

It's been about execution, it's inspiring Gavin and I will tell you. We've got a lot of great distribution leaders in our company and a lot of great people.

On my side over the last 2 decades to have been running this distribution organization, but you've just done an incredible job and I just want to congratulate you on it not only a great year last year, but now just is amazing in the first quarter and the execution you've done it Amy do you want to just come in here enough Bill on the details because this philosophy that Gavin has given us well now you're really.

Paying it out with this new model on chip.

Thanks for taking Keith Thanks for the question and he is very very please to range from 17, 7 <unk> sat with Tony.

30 points David.

Good point improvement for the year.

This is not a push out at what it really is it's a combination of a few things first it's a great quarter that Gavin just described and having such a terrific revenue that's really different from additional room to operate from tier it's on.

Also a focus on your work with <unk>.

Inc.

We're working.

We learned a lot over the past year, Gavin pointed out having a virtual CK Alan kickoff I would like to difference.

Please ask I'd like to Steven and then finally, it is we need to focus on efficiencies.

Okay.

Our next question comes from Brent Thill with Jefferies. Your line is open.

Maybe a question for Gavin the Americas saw an acceleration the Europe and APAC saw a slight dip.

Deceleration and I know Thats reported revenue, but I'm just curious if you could talk to what youre seeing outside the us from the recovering obviously the lag would makes sense there what youre, what youre seeing in pipeline beyond the U S.

Look the recovery from the pandemic is not at the same stage in every market and I think that's fair to say.

But our business is.

Strong new business has been strong across the board they.

There might be a point to 2 different region by region, but there were no what I would call weaknesses.

Across.

On a global organization. So we do see strength across the board and we see strong pipeline importantly across the board so I wouldn't read into it.

Anything different.

A different tier of that I'm very confident that this growth.

In the U S. But also outside the U S and around the world and I'll give you a point of evidence on that which is that.

Gavin and I brought our top distribution leaders together in person last week with Bret.

And we can't bring them all in person. So some of them are just not allowed in the United States. We just can't get them here, but for the ones that can come in like Galvin for example.

Or.

Others.

Bring them some of our European executives.

<unk>.

Wow I mean, it was really a position of confidence it was feeling like there is a tremendous market that has built over the last year that I think people realized that they must be digital but they must be digital with their customer.

It's not just digital transformation.

<unk> digital customer transformation, that's where the power is I believe in the market, especially right now and I love that story, because it's kind of evidence on that would you agree yeah, absolutely. So on our story is a perfect case study in many ways and I think it demonstrates the ability.

Keith Rose to help customers transform quickly I mean this was.

Pivot soon as needed to make right at the height of the pandemic and we were able to help them.

So on that business and manage through the pandemic and come out stronger a stronger business.

Set to their customers.

On the extremely well placed to continue to grow.

And the next few quarters.

Our next question comes from Alex Zukin with Wolfe Research Your line is open.

Alex Your line is open.

Hey, Steve Sorry, I was on mute guys. Thanks for taking the question and congrats on a great quarter, maybe Amy first for your re imagined the operating model and rebuild it from the ground up as Mark said, we're if you found the lowest hanging fruit from an operational efficiency perspective that youre looking to leverage going forward and from Mark.

<unk> been through recoveries before you've been through downturns before how stronger the demand right now versus the past recoveries you've seen in your best guess looking on a global basis, how long it lasts.

So thanks for the question I think the lowest hanging fruit clearly on a different.

And how we are working right now Alex Smith, our digital work from anywhere and probably the easiest part on that is the different from Janney.

Tom laid out we are assuming for purposes of guidance.

Tom modest return for travel in the second half of this year, but it will be nowhere near where we were pre pandemic was simply learned how to work effectively and how to serve our customers effectively without getting on a plane.

Well I'll tell you that.

Youre right I mean, this was the best quarter, we've ever had and.

I can tell you from bringing these distribution leaders and I've never seen a pipeline like this or.

The ability in every market to execute with such robustness and.

I think that Ceos, and I will tell you from my own obviously, we invested last year, we didnt pullback. We knew we had to go for it and we have to go all out and.

It's it's counterintuitive the world is ending and you have to say well, we got to go all out and realize that the world is not going to be and even on a year from now and it's hardwood and earn on it because people start to pay I think it's a number on.

It's a normal human reaction I mean, we've been at executive sales force, who came in and said Oh, We've got a cut we've got to do this we have to do that we reshaped. So theres no question, we did some slight reshaping, but we didn't we didn't do any massive layoffs or anything like that of any consequence that I would say Oh, we really tried to cut.

Dramatically in some area or whatever it was like we need to reshape to grow we need to invest to grow we need to do the things that we need to do as a company and that's.

A year ago, a year ago it was decision.

A decision based on experience that as we have seen it whether it was the recession of 2001 or the financial disasters of 2008.

Those are just moments there are moments in time, but in the <unk>.

History of the company or if you look at the history of the equity from 2004. When we went public you got to keep going and at that moment. It's the time to go because in many cases your competitors are pulling back because they are afraid and when your competitors are afraid that's when you need to invest and Thats, where you really need to grow grow in and I'll tell you I think.

That's what Gavin Bill Galvin came in on an E reshaped took out some.

It took out some costs.

Advanced certain areas, we rebalanced as Oregon.

He was able to provide greater market coverage and expanding its capacity capability.

Bank at levels I haven't seen in a long time. So do you want to just fill in the details.

Well.

In many ways I think you've made the point very very well there mark.

It was.

The <unk>.

Probably the most difficult point in the last 12 months and where everybody else was making cuts we reshape the business and created more capacity knowing that the demand would come back and it takes it takes a few months for new capacity to come on line and become productive.

What that decision allowed us to do is enter the year with.

Really strong market coverage up significantly year on year.

I think it helps us get off to a really strong stuff.

And take advantage of the demand that is definitely therefore for the customer 360 <unk>.

I will tell you I think to add to that I mean, you look at what Brad has done this year.

Bret Bret really led an executed this amazing reshaping plan Inc.

<unk> to kind of the company.

Overall really looking at where are we balancing our resource.

And also Architected, our slack acquisition now Brent was Bret Brad was at the tip of the spear on both of those making sure that we're prepared for the future with.

The business plan on the reshaping play on that we needed and the technology play them on the technology Vision, then Amy came in and she said now we're going to bill rebuild the fundamental financial plan as well and we're going to put a couple of that financial plan from the bottom up and build a new revenue plan and the new cash flow and marketing plan and you'll see that now.

We had GAAP and come in and say this is how we're going to rebuild the distribution organization and I think these 3 tiers all coming together really are what you see today and when you look at these numbers. When you look at a company that's going to do now over $26 billion in revenue. This year look there's only been a couple of enterprise software company.

On the history, we've done that.

And this is a big moment for us $26 billion, but you know because you have your models and you have your spreadsheets of your formulas and you see our growth rates you can start to project out and see where we're going with not only this year next year, but as were projecting out to our $50 billion number which obviously.

We're excited.

Sure.

Next question.

Ladies and gentlemen, we have reached the end of the allotted time for questions and answers I will turn the call back over to Evan Goldstein for closing remark.

Thank you for joining us on the call today, if you have any follow up questions. Please email at investor at Salesforce Dot Com look forward to speaking with you next quarter. Thank you and see a dream force everyone Bye bye.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

[music].

Okay.

[music].

Bill.

Tom.

Bill.

[music].