1
Forward-Looking Statements
Safe harbor statement under the Private Securities Litigation Reform Act of 1995:
This presentation contains forward-looking statements about our financial results, which may include expected GAAP and non-GAAP financial and other operating and
non-operating results, including revenue, net income, diluted earnings per share, operating cash flow growth, operating margin improvement, deferred revenue growth,
expected revenue run rate, expected tax rates, stock-based compensation expenses, amortization of purchased intangibles, amortization of debt discount and shares
outstanding. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or
uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-
looking statements we make.
The risks and uncertainties referred to above include -- but are not limited to -- risks associated with possible fluctuations in the company’s financial and operating results;
the company’s rate of growth and anticipated revenue run rate, including the company’s ability to convert deferred revenue and unbilled deferred revenue into revenue
and cash flow, and ability to maintain continued growth of deferred revenue and unbilled deferred revenue; foreign currency exchange rates; errors, interruptions or delays
in the company’s services or the company’s Web hosting; breaches of the company’s security measures; domestic and international regulatory developments, including the
adoption of new privacy laws; the financial and other impact of any previous and future acquisitions; the nature of the company’s business model, including risks related to
government contracts; the company’s ability to continue to release, gain customer acceptance of, and provide support for new and improved versions of the company’s
services; successful customer deployment and utilization of the company’s existing and future services; changes in the company’s sales cycle; competition; various financial
aspects of the company’s subscription model; unexpected increases in attrition or decreases in new business; the company’s ability to realize benefits from strategic
partnerships and strategic investments; the emerging markets in which the company operates; unique aspects of entering or expanding in international markets, including
the compliance with United States export control laws, the company’s ability to hire, retain and motivate employees and manage the company’s growth; changes in the
company’s customer base; technological developments; litigation and any related claims, negotiations and settlements, including with respect to intellectual property
matters or industry-specific regulations; unanticipated changes in the company’s effective tax rate; factors affecting the company’s outstanding convertible notes, term
loan, and revolving credit facility; fluctuations in the number of company shares outstanding and the price of such shares; collection of receivables; interest rates; factors
affecting the company’s deferred tax assets and ability to value and utilize them; the potential negative impact of indirect tax exposure; the risks and expenses associated
with the company’s real estate and office facilities space; and general developments in the economy, financial markets, credit markets, and the impact of current and
future accounting pronouncements and other financial reporting standards.
Further information on these and other factors that could affect the company’s financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings
we make with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Investor Information section of
the company’s website at www.salesforce.com/investor.
2
Durable
Growth on
the Trail to
$20 Billion
4
November 7, 2017
President & CFO
Mark Hawkins
Durable
Growth
5
Our Financial Priorities
Managing for the long-term, delivering improvement yearly
Durable Growth
Execution
Durable Growth
Leverage
Durable Growth
Economics
6
Where We’ve Been…
$5.4B
FY15
$4.1B
FY14$3.1B
FY13
$6.7B
FY16
$2.3B
FY12
$8.4B
FY17
FY22FY14 FY18
TAM: $37B
Employees: 13K
TAM: $72B2
Employees: 30K
1$10.4B based on the high-end of the guidance provided August 22nd, 2017. $12.5B based on the guidance provided
November 6, 2017. Represents the high end of Salesforce FY2019 revenue guidance of $12.45B to $12.5B based on current
US GAAP under ASC 605.2Refer to slide 12 for TAM source. Differences between information disclosed on subsequent slides
is due to rounding.
$10.4B
FY18 guidance1
7
$5.4B
FY15
$4.1B
FY14$3.1B
FY13
$6.7B
FY16
$2.3B
FY12
$10.4B
FY18 guidance1$8.4B
FY17
FY22FY14 FY18
TAM: $37B
Employees: 13K
TAM: $72B2
Employees: 30K
$12.5B
FY19 guidance1
1$10.4B based on the high-end of the guidance provided August 22nd, 2017. $12.5B based on the guidance provided
November 6, 2017. Represents the high end of Salesforce FY2019 revenue guidance of $12.45B to $12.5B based on current
US GAAP under ASC 605.2Refer to slide 12 for TAM source. Differences between information disclosed on subsequent slides
is due to rounding.
7
…and Where We’re Going…
$5.4B
FY15
$4.1B
FY14$3.1B
FY13
$6.7B
FY16
$2.3B
FY12
$10.4B
FY18 guidance1$8.4B
FY17
$20B-$22B
FY22 target
FY22FY14 FY18
TAM: $37B
Employees: 13K
TAM: $72B2
Employees: 30K
TAM: $120B2
Employees: >45K
$12.5B
FY19 guidance1
1$10.4B based on the high-end of the guidance provided August 22nd, 2017. $12.5B based on the guidance provided
November 6, 2017. Represents the high end of Salesforce FY2019 revenue guidance of $12.45B to $12.5B based on current
US GAAP under ASC 605.2Refer to slide 12 for TAM source. Differences between information disclosed on subsequent slides
is due to rounding.
7
…Consistent Organic Growth to $20 Billion Plus
Multiple Opportunities for Durable Growth
APAC
EMEA
Americas
Enterprise
Commercial
Sales Cloud
Service Cloud
Salesforce Platform
Small Business
Industries & Other
JAPAN
Marketing & Commerce
8
Who
CUSTOMERS
Where
GEOGRAPHIES
What
PRODUCTS
What We Sell
9
COMMUNITIES
COLLABORATION
MARKETING
SERVICE SALES
INDUSTRIES
COMMERCE
SALESFORCE PLATFORM
EINSTEINTRAILHEAD LIGHTNING ANALYTICS APPEXCHANGEHEROKUIoT
Single View of the
Customer
The Only Complete Cloud CRM Platform
10
No other company is better positioned to drive digital transformation
$72 Billion Market Opportunity Today…
Sales Service Marketing Commerce Platform & Other Analytics
$14B
$26B
$5B
$7B
$12B
$8B
CY16 TAM3
11
Calculations performed by Salesforce and graphics created by Salesforce based on Gartner research. 1Source: Sales, Service, Marketing, and Commerce per Gartner, Market Share All Software Markets, Worldwide, 2016, 4.14.17.
Platform & other and Analytics market share calculated by Salesforce using the definitions below. 2Salesforce acquired Demandware on July 11, 2016. Market share includes Demandware’s 2016 commerce contribution of
$115.8M. 3Source: Gartner Total Enterprise Software Revenue for All Software Segments and Regions, 2014-2021. Platform & Other market defined as Application Platform Software, Application Platform Software as a Service
(aPaaS), Other AD, Data Integration Tools, Business Process Management Suites, Identity Governance and Administration, Mobile Application Development Platforms, Testing, Full Life Cycle API Management, Web Access
Management. Analytics market defined as Modern BI Platforms, Traditional BI Platforms, Data Science Platforms, Analytic Applications.
4Salesforce revenue growth represents Q2 FY18 year-over-year growth. 5Represents Commerce Cloud GMV growth as of Q2 FY18.
38% 19% 11% 4% 5%CY16 Market
Share1
<1%2
…Growing to $120 Billion in 2021
Sales Service Marketing Commerce Platform & Other Analytics
$21B
$37B
$9B
$17B
$22B
$13B
Salesforce Revenue
Growth (Q2’18)4 17% 21% 36% 32%
5 32% NOT DISCLOSED
Market Growth
(CAGR 16-21)3 11% 13% 18% 15% 7% 8%
11
Calculations performed by Salesforce and graphics created by Salesforce based on Gartner research. 1Source: Sales, Service, Marketing, and Commerce per Gartner, Market Share All Software Markets, Worldwide, 2016, 4.14.17.
Platform & other and Analytics market share calculated by Salesforce using the definitions below. 2Salesforce acquired Demandware on July 11, 2016. Market share includes Demandware’s 2016 commerce contribution of
$115.8M. 3Source: Gartner Total Enterprise Software Revenue for All Software Segments and Regions, 2014-2021. Platform & Other market defined as Application Platform Software, Application Platform Software as a Service
(aPaaS), Other AD, Data Integration Tools, Business Process Management Suites, Identity Governance and Administration, Mobile Application Development Platforms, Testing, Full Life Cycle API Management, Web Access
Management. Analytics market defined as Modern BI Platforms, Traditional BI Platforms, Data Science Platforms, Analytic Applications.
4Salesforce revenue growth represents Q2 FY18 year-over-year growth. 5Represents Commerce Cloud GMV growth as of Q2 FY18.
CY21 TAM3
Source: Industry analysts.
Extending our CRM Market Leadership
Taking share in the most important enterprise software market
2009 2010 2011 2012 2013 2014 2015 2016
7.2%
9.4%
18.1%
1.4%
6.3%
8.7%
11.0%
1.2%
12
Land and Expand
Benefitting from a broader product portfolio
FY18
42%
58%
77%
23%
New logos
Installed base
45%
55%
75%
25%
FY17
40%
60%
74%
26%
FY16
Note: Proportions based on sales during the trailing twelve months ended July 31 (fiscal Q2) as of the fiscal years noted.
New products into installed base
Additional seats and upgrades
into installed base
SALES CLOUD (SFA)
39%
OF NEW LOGO DOLLARS
13
Our Product Suite is Growing
Add-on products provide incremental new business opportunity
SERVICE
SALES
COMMERCE
PLATFORM
MARKETING
COMMUNITIES
ANALYTICS
CPQ
LIVEMESSAGE
SHIELD
HEALTH CLOUD
FINANCIAL SERVICES CLOUD
PARDOT
DMP
$0.69 CORE PRODUCTS $0.31 ADD-ONS
$1 New Business
FIELD SERVICE
Note: Proportions based on sales during the trailing twelve months ended Q2 FY18
14
Salesforce Platform is a Full Portfolio
Ecosystem sustains growth and expands reach
Other
10%
ISV
17%
Heroku
10% Sandbox &
Storage
18%
Salesforce
Platform
45%
~$190M
revenue run-rate
~$340M
revenue run-rate
~$310M
revenue run-rate
Platform & Other Revenue1
1Platform & Other revenue proportions and run-rates based on reported financials for Q2 FY18. Run-rate is calculated by multiplying Q2 FY18 revenue by four. 2Solutions and Installs as of
11/2/17. ISV annual revenue as of Q2 FY18. 15
~$830M
revenue run-rate
2
Installs
Solutions
ISVs with $5M+
annual revenue
5.1M
4k
11
16
Where We Sell
Gaining Share Internationally…
International markets add to our long-term growth opportunity
Americas EMEA JAPAC
$10B
$20B
$43B
CY16 TAM2
13% 7% 7%CY16 Market
Share1
Calculations performed by Salesforce and graphics created by Salesforce based on Gartner research. 1Market share source: Gartner, Market Share All Software Markets, Worldwide, 2016, 4.14.17. Note: Salesforce acquired
Demandware on July 11, 2016. Market share includes Demandware’s 2016 commerce contribution of $115.8M. 2Source: Gartner Total Enterprise Software Revenue for All Software Segments and Regions, 2014-2021. Includes
Platform & Other market defined as Application Platform Software, Application Platform Software as a Service (aPaaS), Other AD, Data Integration Tools, Business Process Management Suites, Identity Governance and
Administration, Mobile Application Development Platforms, Testing, Full Life Cycle API Management, Web Access Management. Analytics market defined as Modern BI Platforms, Traditional BI Platforms, Data Science Platforms,
Analytic Applications.
3Salesforce revenue growth represents Q2 FY18 year-over-year growth. 17
…and Growing Faster Than the Market
International markets add to our long-term growth opportunity
Americas EMEA JAPAC
$18B
$32B
$69B
Salesforce Revenue
Growth (Q2’18)3 24% 31% 27%
Market Growth
(CAGR 16-21)2 10% 10% 13%
CY21 TAM2
Calculations performed by Salesforce and graphics created by Salesforce based on Gartner research. 1Market share source: Gartner, Market Share All Software Markets, Worldwide, 2016, 4.14.17. Note: Salesforce acquired
Demandware on July 11, 2016. Market share includes Demandware’s 2016 commerce contribution of $115.8M. 2Source: Gartner Total Enterprise Software Revenue for All Software Segments and Regions, 2014-2021. Includes
Platform & Other market defined as Application Platform Software, Application Platform Software as a Service (aPaaS), Other AD, Data Integration Tools, Business Process Management Suites, Identity Governance and
Administration, Mobile Application Development Platforms, Testing, Full Life Cycle API Management, Web Access Management. Analytics market defined as Modern BI Platforms, Traditional BI Platforms, Data Science Platforms,
Analytic Applications.
3Salesforce revenue growth represents Q2 FY18 year-over-year growth. 17
Top Nine Countries are 80% of our Global TAM
Expanding market coverage in top cities around the world
Rank Metro Rank Metro
1 New York 14 Philadelphia
2 London 15 Melbourne
3 Paris 16 Atlanta
4 San Francisco 17 Seattle
5 Los Angeles 18 Amsterdam
6 Tokyo 19 Munich
7 Chicago 20 Miami
8 Boston 21 Minneapolis
9 Sydney 22 Zurich
10 Houston 23 Madrid
11 Washington DC 24 Milan
12 Dallas 25 Phoenix
13 Toronto
Top CitiesTop Countries
18Source: Salesforce estimates based on internal research and industry analysts. Top countries and top cities based on the size of the market opportunity.
Closer to Customer
Evolving Our Coverage Model
Local empowerment makes us fast and agile
Centralized Regional Cities
Empowered Specialized Fast & Agile
19
International Headcount
29%
CAGR FY14 to FY18
Regions ProServ Investments International Datacenter
LocationsEMEA
APAC
JAPAN
Note: International headcount growth from Q2 FY14 through Q2 FY18.
6
20
Who We Sell To
Portfolio Provides Solutions for All Customers
Enterprise and commercial represent ~80% of the market opportunity
Enterprise Commercial SMB PubSec
$10B
$5B
$32B
$25B
CY16 TAM
Source: Salesforce estimates based on internal research and industry analysts. 21
17% 7% 25% 2%
CY16 Market
Share
Portfolio Provides Solutions for All Customers
Enterprise and commercial represent ~80% of the market opportunity
Enterprise Commercial SMB PubSec
$16B
$10B
$53B
$40B
Source: Salesforce estimates based on internal research and industry analysts.
CY21 TAM
21
Market Growth
(CAGR 16-21)
10% 11% 15% 9%
Multi-Cloud Remains a Large Opportunity
Our portfolio of products addresses all key markets
ENTERPRISE
CUSTOMERS
COMMERCIAL &
SMB CUSTOMERS
Note: Proportions as of Q2 for the fiscal years noted. “Multi-cloud” defined as customers who are using two or more clouds.
49%
multi-cloud
FY14
14%
multi-cloud
FY18
51%
multi-cloud
22
25%
multi-cloud
We’ve Become Mission Critical
Approximately 1,600 customers pay us more than $1 million annually
$20M+
24
3
8x
$10M+
~100
~20
5x
$5M+
~260
~70
4x
$1M+
~1,600
~700
2x
Note: Customer count as of Q2 for the fiscal years noted.
FY14 FY18
CUSTOMER COUNT BY ANNUAL REVENUE
23
Expanding With Our Top Customers
Increasing our relationships and reach across multiple industries
Represents new customers since FY14
Entry bar has more
than doubled
B
A
AB
GFinServe
Technology
G
D
E
F
C
H
I
J
Technology
FinServe
C Technology
Technology
H
D
K
L
M
N
Technology
Technology
Technology
Technology
FinServe
Logistics
Conglomerate
Technology
Retail
Telco
Conglomerate
FinServe
Technology
Internet
TOP 10 Q2 FY14 TOP 10 Q2 FY18
Note: Represents annualized revenue as of Q2 for the fiscal years noted.
24
$42M
$13M
$76M
$31M
Industries Strategy Drives TAM Penetration
Top six industries represent ~80% of the market opportunity
FinServe Mfg Media & Comms HLS Public Sector Retail
$4B
$10B
$8B
$10B
$13B$14B
CY16 TAM
Source: Salesforce estimates based on internal research and industry analysts.
9% 10% 9% 10%
CY16 Market
Share 2% 15%
25
Market
Growth
(CAGR 16-21)
11% 10% 12% 11% 9% 10%
Industries Strategy Drives TAM Penetration
Top six industries represent ~80% of the market opportunity
FinServe Mfg Media & Comms HLS Public Sector Retail
$6B
$16B
$13B
$17B
$20B
$24B
Source: Salesforce estimates based on internal research and industry analysts.
CY21 TAM
25
Traction in Target Industries
40% of account executives are aligned by industry
1Represents top 10 U.S. banks and top 10 European banks. 2Vertical products include Financial Services Wealth Management, Financial Services Retail Banking, and Health Cloud.
Financial Services
17 OF 20
Top U.S. & European
Banks1
Manufacturing
8 OF 10
Top Discrete
Manufacturers
HLS
15 OF 20
Top Global
Pharmaceutical Companies
Communications & Media
7 OF 10
Top Global
Telecom Companies
Retail
10 OF 20
Top Global
Retailers
Consumer Goods
11 OF 15
Top CPG
Companies
Travel, Transport & Hospitality
7 OF 10
Top Hospitality
Companies
High Tech
8 OF 10
Top Tech
Companies
57% of customers
who buy vertical
products are net
new to Salesforce2.
26
Top SIs are Investing in Salesforce
Salesforce is the highest growth practice for top system integrators
27
EVERY TOP SI RUNS
ON SALESFORCE
CERTIFIED PROFESSIONAL
GROWTH (FY14-FY18)1
20x
6x
12x
225x
7x
1Change in certified professionals as of Q2 FY14 through Q2 FY18. 2Based on new business over the first half of FY18 (Q1 & Q2).
50%
OF NEW BUSINESS
IS GENERATED
WITH PARTNERS2
The Foundation of Durable Growth
APAC
EMEA
Americas
Enterprise
Commercial
Sales Cloud
Service Cloud
Salesforce Platform
Small Business
Industries & Other
JAPAN
Marketing & Commerce
28
Who
CUSTOMERS
Where
What
PRODUCTS
GEOGRAPHIES
Expanded TAM from $700M in 1999 to $120B in 2021
Drivers for Durable Growth
$10.4B
FY18 guidance1
$20B-$22B
FY22 target
$12.5B
FY19 guidance1
1$10.4B based on the high-end of the guidance provided August 22nd, 2017. $12.5B based on the guidance
provided November 6, 2017 and based on current US GAAP under ASC 605. 2Refer to slide 12 for TAM source. 29
$5.4B
FY15
$4.1B
FY14$3.1B
FY13
$6.7B
FY16
$2.3B
FY12
$8.4B
FY17
Rewriting enterprise software history
• Most complete product portfolio
• Large and growing TAM
• Moving up market
• Expanding internationally
• Robust ecosystem
EVP, Deputy CFO
David Havlek
Durable Growth
Leverage &
Economics
30
The SaaS Model: A Simple Formula
The foundation for understanding growth and leverage
A B C D- + =
Beginning
ARR
Ending
ARR
31
Net-New ARR
ARR
Attrition
New
ARR
Two Types of Leverage in a Subscription Model
32
Model leverage
Occurs when revenue growth is
faster than New ARR growth at
constant CTB, CTS, and attrition
G
rowth
R
at
e
Margin
Two Types of Leverage in a Subscription Model
32
Model leverage
Occurs when revenue growth is
faster than New ARR growth at
constant CTB, CTS, and attrition
G
rowth
R
at
e
Margin
Two Types of Leverage in a Subscription Model
32
Operating leverage
Occurs when CTB, CTS or
attrition improve
Model leverage
Occurs when revenue growth is
faster than New ARR growth at
constant CTB, CTS, and attrition
G
rowth
R
at
e
Margin
Meet Three Companies
Company’s growth strategy defines the leverage opportunity
33
The Camper
New ARR:
Constant Dollar Adds
The Explorer
Net-New ARR:
Constant Dollar Adds
The Trailblazer
Net-New ARR:
Constant Growth Rate
(net of attrition) (net of attrition)
Camper: Constant New ARR Dollars
Model leverage high: revenue growth far exceeds new ARR growth
34
Beginning
ARR
ARR
Attrition
New
ARR
Ending
ARR
Ending
ARR
Ending
ARR
Ending
ARR
$169
$18 $16
$15
$20
$100
$30
$30
$30
$30
$120 $138 $154
$230
revenue in 10 years
+20% +15% +12%
14%
Revenue CAGR
(10%)
Net ARR CAGR
0%
New ARR CAGR
+10%
10%
Attrition
Explorer: Constant Net-New ARR Dollars
Model leverage moderate: revenue growth exceeds new ARR growth
Beginning
ARR
ARR
Attrition
New
ARR
Ending
ARR
Ending
ARR
Ending
ARR
Ending
ARR
$20
$20
$20
$20
35
$180$100 $120 $140 $160
$300
revenue in 10 years
16%
Revenue CAGR
0%
Net ARR CAGR
6%
New ARR CAGR
10%
Attrition
+20% +17% +14% +13%
Trailblazer: Constant Net-New ARR Growth Rate
No model leverage: revenue growth equal to new ARR growth
Beginning
ARR
ARR
Attrition
New
ARR
Ending
ARR
Ending
ARR
Ending
ARR
Ending
ARR
$24
$29
$35
$20
36
$208$100 $120 $144 $173
$620
revenue in 10 years
20%
Revenue CAGR
20%
Net ARR CAGR
20%
New ARR CAGR
10%
Attrition
+20% +20% +20% +20%
Growth Strategy Impacts Leverage Opportunity
CAMPER EXPLORER TRAILBLAZER
GROWTH STRATEGY New ARR: Constant Dollar Addition
Net-New ARR:
Constant Dollar Addition
Net-New ARR:
Constant Growth Rate
REVENUE GROWTH Decelerate until 0% Decelerating to approach 0%
Flat growth in
perpetuity
SUSTAINABILITY OF
REV GROWTH
No No Yes
37
Function of
growth
Function of
efficiency
MODEL LEVERAGE High Moderate Low
OPERATING LEVERAGE
(CTB/CTS)
High Moderate Low
RISK OF
UNDERINVESTMENT
High Moderate Low
Decelerating Growth Drives Model Leverage
0%
70%
140%
FY13 FY14 FY15 FY16 FY17
SaaS A
SaaS B
SaaS C
SaaS D
38Note: Data represents subscription and support revenue for each company as of their most recently completed fiscal years. Market capitalization as of November 3, 2017.
Re
ve
nue G
ro
wth
Ra
te
Proven Durable Growth
FY14 FY15 FY16 FY17 FY18E
25%27%27%
33%34%
$10,400M
$8,392M
$6,667M
$5,374M
$4,071M
Q214 Q215 Q216 Q217 Q218
26%26%29%
31%34%
$4,819M
$3,824M
$3,035M
$2,353M
$1,790M
Revenue Deferred Revenue
Annual Revenue Deferred Revenue
C/C Revenue Growth1
1FY18 constant currency growth rate represents the constant currency growth for the first half of fiscal 2018. Non-GAAP revenue constant currency growth rates as compared to the comparable prior
period. We present constant currency information for revenue to provide a framework for assessing how our underlying business performed excluding the effects of foreign currency rate fluctuations. To
present constant currency revenue, current and comparative prior period results for entities reporting in currencies other than the United States dollars are converted into United States dollars at the
weighted average exchange rate for the quarter being compared to for growth rate calculations presented, rather than the actual exchange rates in effect during that period.
Salesforce’s consistent growth profile is unique
39
Delivering Consistent Margin Improvement
Profitability driven by both operating leverage and model leverage
FY14 FY15 FY16 FY17 FY18E
14.7%13.2%12.4%10.7%8.9%
$10,400M
$8,392M
$6,667M
$5,374M
$4,071M
Investment Areas
Infrastructure (+240bps)
R&D (flat)
Leverage Areas
G&A (-420bps)
S&M (-410bps)
Revenue
Non-GAAP Op. Margin
Note: FY18 estimates represent guidance ranges provided August 22, 2017. Non-GAAP operating margin excludes the effects of stock-based compensation, amortization of purchased intangibles, and lease
termination resulting from purchase of office building. A complete reconciliation of GAAP to non-GAAP measures can be found in the Appendix and at www.salesforce.com. 40
Historical Growth-Margin Framework
We are a different company today than in FY12
Priority
Rev. Growth
Non-GAAP
Op. Margin
OCF Growth
Growth
Top & Bottom Line
20-30%
+100-300 bps
~Revenue Growth
1Represents the high-end of Salesforce's FY18 revenue guidance provided August 22, 2017.
FY12 FY18 FY22
Revenue $2.3B $10.4B1 $20-$22B
TAM $26B $72B $120B
Clouds 3 8 ?
Employees 8k 30K >45K
Past and Future:
Durable growth
Consistent operating leverage
Modest model leverage
41
42
Durable Growth
Economics
Balancing Near- and Long-Term Goals
Subscription economics guide our execution
43
Where Who
What
One P&L
Enables speed and
agility at scale
Optimization Model:
Near-term:
Durable growth
with leverage
Long-term:
Strong unit economics
and lifetime value
Key inputs:
Operating margin
Hiring capacity
Subscription Economics
(CTB/CTS/Attrition)
Vary by product, geo
and customer size
Subscription Economics Vary by Cloud
Sales Cloud
Service Cloud
Salesforce Platform
Marketing & Commerce
44
SALES CLOUD
~30%
ESTIMATED ECONOMIC
MARGIN TODAY1
Sales Cloud delivering mature margin today
1Economic margin calculations based on assumptions regarding unit lifetime revenue and subscription economics, including cost to book, cost to serve, and attrition dynamics.
Economic margin is not an operating margin. The Company maintains one consolidated statement of operations. The “long-term margin” considers a low-single-digit growth rate, and
the “current margin” is based off of FY17 reported Sales Cloud revenue growth rates.
SALES CLOUD
~40%
ESTIMATED ECONOMIC
MARGIN LONG-TERM1
Subscription Economics Vary by Region
AMERICAS’ COST TO BOOK
15%-30%
LOWER THAN OTHER REGIONS1
45
International scale creates opportunity
1Cost to book calculations based on assumptions regarding unit lifetime revenue and subscription economics, including cost to book, cost to serve, and attrition dynamics
APAC
EMEA
Americas
JAPAN
Subscription Economics Vary by Market
Investing in long-term enterprise opportunity
ENTERPRISE
~40%
46
1Economic margin calculations based on assumptions regarding unit lifetime revenue and subscription economics, including cost to book, cost to serve, and attrition dynamics.
Economic margin is not an operating margin. The Company maintains one consolidated statement of operations. The “long-term margin” considers a low-single-digit growth rate.
ESTIMATED ECONOMIC
MARGIN LONG-TERM1
Enterprise
Commercial
Small Business
Industries & Other
Subscription Economics Guide Our Path
47
0%
60%
0% 40%
Subscription Economics
>35%
ESTIMATED ECONOMIC
MARGIN LONG-TERM
G
rowth
R
at
e
Margin
Lifetime Revenue
Cost to Book
Cost to Serve
$1/ Attrition
S&M / Est. New ARR
(Subs. COGS + R&D + G&A) / Subs. Rev
Less
Margin at Maturity
1Economic margin calculations based on assumptions regarding unit lifetime revenue and subscription economics, including cost to book, cost to serve, and attrition dynamics.
Economic margin is not an operating margin. The “long-term margin” considers a low-single-digit growth rate.
Economic Margin
48
49
Appendix
GAAP to Non-GAAP Reconciliation
50
(in 000's)
Non-GAAP income from operations 1H FY18 FY17 FY16 FY15 FY14
GAAP income (loss) from operations $41,911 $64,228 $114,923 ($145,633) ($286,074)
Plus:
Amortization of purchased intangibles 148,276 225,277 158,070 154,973 146,535
Stock-based expenses 508,054 820,367 593,628 564,765 503,280
Less:
Operating lease termination resulting from purchase
of 50 Fremont 0 0 (36,617) 0 0
Non-GAAP income from operations $698,241 $1,109,872 $830,004 $574,105 $363,741
As Margin %
Total revenues $4,949,168 $8,391,984 $6,667,216 $5,373,586 $4,071,003
Non-GAAP operating margin 14.1% 13.2% 12.4% 10.7% 8.9%