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Form 8-K SALESFORCE COM INC For: Oct 04

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October 4, 2016 4:06 PM EDT


 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
________________________________________________________ 
FORM 8-K
________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 4, 2016
Date of Report (Date of earliest event reported)
 
__________________________________________________________
salesforce.com, inc.
(Exact name of registrant as specified in its charter) 
__________________________________________________________ 
 
Delaware
 
001-32224
 
94-3320693
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I. R. S. Employer
Identification No.)

The Landmark @ One Market, Suite 300
San Francisco, CA 94105
(Address of principal executive offices)
Registrant’s telephone number, including area code: (415) 901-7000
N/A
(Former name or former address, if changed since last report)
 ________________________________________________
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 






Item 8.01 Other Events.

On October 4, 2016, salesforce.com, inc., a Delaware corporation (the “Company”), posted to its website an investor presentation that the Company presented at its Analyst Day event held and audiocast live on its website on that date, including information regarding the Company’s financial performance, market opportunity, competitive position and economic model. A copy of the presentation is included with this Form 8-K for convenience and attached hereto as Exhibit 99.1. 

The information in this current report on Form 8-K and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
 
 
 
Exhibit No.
 
Description
 
 
99.1
 
Salesforce.com, inc. investor presentation dated October 4, 2016






SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
Dated: October 4, 2016
 
 
 
SALESFORCE.COM, INC.
 
 
 
 
 
 
 
 
By:
 
/s/ Mark J. Hawkins
 
 
 
 
 
 
Name:
 
Mark J. Hawkins
 
 
 
 
 
 
Title:
 
Executive Vice President and Chief Financial Officer





EXHIBIT INDEX
 
 
 
 
Exhibit No.
 
Description
 
 
99.1
 
Salesforce.com, inc. investor presentation dated October 4, 2016



 
Safe Harbor ​Safe harbor statement under the Private Securities Litigation Reform Act of 1995: ​This presentation contains forward-looking statements about our financial and operational results. 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, our 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 past and future acquisitions; risks associated with possible fluctuations in our financial and operating results, such as our rate of growth and anticipated revenue run rate; foreign currency exchange rates; errors, interruptions or delays in our services or our Web hosting; breaches of our security measures; the nature of our business model; our ability to continue to release, and gain customer acceptance of, new and improved versions of our services; successful customer deployment and utilization of our existing and future services; changes in our sales cycle; competition; various financial aspects of our subscription model; unexpected increases in attrition or decreases in new business; our ability to realize benefits from strategic partnerships and strategic investments; the emerging markets in which we operate; unique aspects of entering or expanding in international markets, our ability to hire, retain and motivate employees and manage our growth; changes in our customer base; technological developments; regulatory developments; litigation related to intellectual property and other matters, and any related claims, negotiations and settlements; unanticipated changes in our effective tax rate; factors affecting our outstanding convertible notes and revolving credit facility; fluctuations in the number of our shares outstanding and the price of such shares; collection of receivables; interest rates; factors affecting our deferred tax assets and ability to value and utilize them; the potential negative impact of indirect tax exposure; the risks and expenses associated with our real estate and office facilities space; and general developments in the economy, financial markets, and credit markets. ​Further information on these and other factors that could affect the financial results of salesforce.com, inc. 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, available on the SEC Filings section of the Investor Information section of our Investor Relations website. ​Any unreleased services or features referenced in this or other presentations, press releases or public statements are not currently available and may not be delivered on time or at all. Customers who purchase our services should make the purchase decisions based upon features that are currently available. Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements.

 
` Agenda Tuesday, October 4 Mark Hawkins David Havlek Alex Dayon Mike Rosenbaum Bob Stutz Stephanie Buscemi Adam Seligman John Wookey Keith Block Tyler Prince 10:00a Business Review & Q&A 11:30a Lunch 1:00p Product Q&A 2:45p Go-to- Market Q&A Parker Harris 4:15p Technology Q&A St. Regis Foyer 5:00p Reception St. Regis Terrace

 
` Agenda Wednesday, October 5 Mark Hawkins David Havlek Keith Block Tyler Prince 10:00a Business Review & Q&A 11:30a Lunch 2:45p Go-to- Market Q&A Parker Harris 4:15p Technology Q&A St. Regis Foyer 5:00p Reception St. Regis Terrace Wed. 10/5 3:30p CEO Q&A Marc Benioff Alex Dayon Mike Rosenbaum Bob Stutz Stephanie Buscemi Adam Seligman John Wookey 1:00p Product Q&A

 
IoT Scaling to $20B and Beyond Salesforce Investor Day October 4, 2016

 
Competitive Advantage with Strong Core ​MARK HAWKINS CFO

 
` 1All references to operating margin refer to non-GAAP operating margin. Non-GAAP operating margin excludes the effects of stock-based compensation, amortization of purchased intangibles, lease termination resulting from purchase of office building, and the potential impact of FX and M&A. A complete reconciliation of GAAP to non-GAAP measures can be found in the Appendix and at www.salesforce.com. Growth/Margin Framework is Our Compass… ​Balancing growth with improving profitability PRIORITY REV. GROWTH NON-GAAP OP. MARGIN OCF GROWTH Top Line > 30% Flat to Up Slightly < Revenue Growth Top & Bottom Line 20%-30% +100-300 bps ≈ Revenue Growth Bottom Line < 20% +200-400 bps > Revenue Growth HIGH GROWTH GROWTH LOW GROWTH 1 Mid-30s percent LONG-TERM OP. MARGIN AT MATURITY

 
…and We’re on the Right Path ​Strong core performance Note: FY17 estimates represent guidance ranges provided August 31, 2016. 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 atwww.salesforce.com. $4,071M $5,374M $6,667M $8,275M- $8,325M 8.9% 10.7% 12.4% 13.1% FY14 FY15 FY16 FY17E Revenue Non-GAAP Operating Margin $884M $1,181M $1,672M $2,000M+ FY14 FY15 FY16 FY17E Operating Cash Flow REVENUE FY14 – FY17E OCF FY14 – FY17E 20%- 21% Y/Y EST.

 
Positioned for $20 Billion and Beyond Fourth largest enterprise software company Note: Salesforce consensus based on FY17 and FY18 analyst estimates per FactSet. All other consensus estimates represent annualized CY2016 and CY2017 per FactSet. Welcome to Base Camp MT. REVENUE Rank Company FY17 Consensus FY18 Consensus YoY Growth Rate 1 Microsoft $93.3 B $97.2 B 4% 2 Oracle $37.5 B $38.2 B 2% 3 SAP $24.3 B $25.8 B 6% 4 Salesforce $8.3 B $10.1 B 22% 5 VMware $7.0 B $7.3 B 4%

 
$7B $8B $9B $10B $11B $12B $13B $15B $17B $19B $26B $28B $30B $32B $34B $7B $8B $10B $12B $14B $14B $15B $17B $18B $19B $5B $6B $6B $7B $8B $70B $78B $86B $95B $105B 2016 2017 2018 2019 2020 Total Market 11% 19% CAGR % CY16-20 15% 8% 8% 13% 12% Current Products Support $20 Billion Objective Massive and growing TAM Calculations performed by Salesforce and charts/graphics created by Salesforce based on Gartner research. Source: Gartner Forecast Enterprise Software Markets, Worldwide, 2013-2020, 3Q16 Update; Sales Cloud market defined as Sales; Service Cloud market defined as Customer Service and Support; Marketing Cloud market defined as Marketing; Commerce Cloud market defined as Digital Commerce Platforms; Analytics Cloud market defined as Modern BI Platforms, Traditional BI Platforms, Analytic Applications and Performance Management, and Advanced Analytics Platforms; App & Other market defined as Application Platform Software, Other AD, Application Platform as a Service (aPaaS), Business Process Management Suites, Data Integration Tools, Identity Governance and Administration, Mobile App Development Platforms, Testing, Web Access Management (WAM), Application Services Governance, Collaboration/Social Software Suites, and Portal and Digital Engagement Technologies. Annual totals and CAGRs are based on actual numbers and not on rounded numbers shown above. COMMERCE ANALYTICS MARKETING APP & OTHER SERVICE SALES

 
Consistent Share Gain Extending our #1 CRM market share position Source: Industry analysts, market research and Salesforce estimates. CRM market includes sales, customer service and support, and marketing software. 5.7% 4.3% 12.6% 7.8% 14.3% 10.2% 10.6% 19.7% FY11 FY12 FY13 FY14 FY15 FY16

 
` Competitive Advantage Product Strength and Innovation Large, Loyal Installed Base World-Class Team and Culture Cloud Mobile Social IoT AI

 
17 Years of Unmatched Customer Innovation ​Leader in capitalizing on key technology shifts Multi-tenant Cloud Thunder IoT Cloud AppExchange 2005 Force.com 2007 Chatter 2009 Salesforce1 2013 Lightning Platform 2014 Salesforce IQ 2015 1999 Wave Analytics Cloud Cloud Socia l Mobile IoT AI 2016 Salesforce Einstein

 
Undisputed CRM Product Leader Community Cloud App Cloud Service Cloud Sales Cloud Marketing Cloud CommerceC loud Industry-Leading Products Sources: Industry analyst reports. Innovator of the Decade MT. PRODUCT

 
Strategy Focused on the Front Office Everything we do is about the customer Assisted Service Smart Apps Connected Products Intelligent Communities Actionable Analytics Guided Sales Unified Commerce Predictive Marketing

 
M&A Strategy is Two-Fold Augments existing clouds or accelerates new product initiatives Minhash Sales Service Marketing Community Analytics Platform & Apps Commerce

 
Einstei n Lightning force.com Heroku AppExchange Thunder Sale s Service Marketing Community Analytics Apps Commerce IoT Predictive Analytics Machine & Deep Learning Natural Language Processing & Generation Platform Applications Email, Calendar & Social Data CRM Data IoT Events Quip The World’s Smartest CRM Platform

 
` Rank Company Annual Revenue Run Rate1 Growth Rate YoY 1 Sales Cloud $3,020 M 13% 2 Service Cloud $2,302 M 29% 3 App Cloud & Other $1,414 M 43% 4 Workday $1,225 M 37% 5 ServiceNow $1,163 M 45% 6 Marketing Cloud $810 M 28% 7 NetSuite $721 M 28% 8 Ultimate Software $634 M 27% 9 Veeva $421 M 40% 10 Medidata Solutions $387 M 15% by revenue as of Q2 2016 1 …and Salesforce powers 5 of the top 10 pure-play public cloud companies… Our clouds represent 4 o 1Figures represent annualized subscription and support revenue run rate for the most recently completed quarterly filings as of Q2 CY2016. All amounts in millions. Source: FactSet. We Own The Top Three Pure-Play Clouds ​Multiple drivers of customer and shareholder value

 
` ` 1Represents percentage of new business in which partners were involved during H117. 2Represents the increase in certified consultants during FY16 Unparalleled Cloud Ecosystem ​Partners accelerate our value and opportunity 49% Partner involvement in new business +30% Number of certified consultants 4M Appexchange installations 1 2

 
` Competitive Advantage Cloud Mobile Social IoT AI World-Class Team and Culture Large, Loyal Installed Base Product Strength and Innovation

 
1M Completed Badges Trailhead Creates Customer Advocacy ​Trailhead makes it fun and easy to learn Salesforce TRAILS 32

 
` 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.com Platform. Numbers represent the second quarter for each respective year. $500 million run-rate savings is calculated by applying the difference in attrition rate from Q211 to Q217 by FY16 annual revenue. Customer Loyalty Drives Declining Attrition ​Attrition rate is down 45% since FY11 0% 10% 20% Q211 Q212 Q213 Q214 Q215 Q216 Q217 run-rate savings ~$500M dollar attrition <9%

 
Installed Base is an Important Growth Asset ​150K+ customers and growing Note: Ratios are based on annual revenue contribution for the four fiscal quarters ending Q217. 40% 60% 70% 30% ADD-ONS & UPGRADES NEW PRODUCTS

 
Core Strength Reflected in Top Accounts… ​Customer count and value continue to increase 11 20 39 57 84 Q213 Q214 Q215 Q216 Q217 Note: Amounts represent annual revenue contribution, or expected annual revenue for FY17, as of Q2 for the respective fiscal year. Customer Count ~500 ~700 ~800 ~1,000 ~1,300 Q213 Q214 Q215 Q216 Q217 Customer Count $1M+ Annual Revenue $10M+ Annual Revenue Y/Y increase in value of all contracts over $1 million 30%

 
…and is Matched by Strength in SMB ​Revenue from SMB customers has grown >30% annually Note: Amounts represent annual revenue contribution, or expected annual revenue for FY17, as of Q2 for the respective fiscal year. Q217 SMB annual revenue contribution more than three times larger than Q213 SMB annual revenue contribution. SMB is defined as customers with up to 3,500 employees. 8% 11% 15% 19% 22% 92% 89% 85% 81% 78% Q213 Q214 Q215 Q216 Q217 Proportion of Revenue from Customers Paying >$1M annually Proportion of Revenue from Customers Paying <$1M annually SMB Annual Revenue Contribution 3X

 
` ` Portfolio Fuels Customer Success and Growth ​More customers are using more clouds Q2’13 Top 40 customers 13% using 4+ clouds Q2’16 Top 100 customers 20% using 4+ clouds Q2’17 Top 200 customers 75% using 4+ clouds 3+ clouds: 46% 2+ clouds: 76% 3+ clouds: 75% 2+ clouds: 97% 3+ clouds: 95% 2+ clouds: 99%

 
` Competitive Advantage Product Strength and Innovation World-Class Team and Culture Large, Loyal Installed Base Cloud Mobile Social IoT AI

 
` Salesforce Core Values ​Our culture is a competitive advantage Salesforce has its customers in its DNA. The laser focus on customer value is unrelenting. I love it. SAIDEEP RAJ MANAGING DIRECTOR, ACCENTURE “ ” “ We wouldn’t be able to serve this many communities if it weren’t for Salesforce. JAY BANFIELD EXECUTIVE DIRECTOR, YEAR UP BAY AREA ” It’s an awesome product that helps you do awesome things. GITA BOROVSKY DIRECTOR OF CRM,AMERICAN RED CROSS “ ” This place oozes energy and passion … that energy makes this place different. TAYLOR HILFICKER BUSINESS MANGER, BRAND, SALESFORCE “ ”

 
Unique Investments in Our Culture… ​Creates customer and employee advocacy Equality for All Women’s Leadership Environment Women in tech Equa l pay Net-Zero by 2020 98% more carbon efficient Tony Prophet as new Chief Equality Officer $3M salary adjustment for equal pay 1% Time 1% Equity 1% Product

 
4K 6K 9K 13K 15K 18K 23K Q211 Q212 Q213 Q214 Q215 Q216 Q217 …Make us a Destination Employer… ​San Francisco’s largest technology employer Full-Time Headcount

 
… and a Magnet for Proven and Visionary Leaders Neelie Kroes Former VP of the European Commission, Board Member Bob Stutz CEO, Marketing Cloud & Chief Analytics Office Tony Prophet Chief Equality Officer Bret Taylor CEO, Quip Richard Socher Chief Scientist

 
Scaling to $20B and Beyond $100B TAM Large, Loyal Installed Base Customer Focused Culture Track Record of Innovation Industry Leading Products

 
Benefits of Scale with Strong Economics ​DAVID HAVLEK EVP, Finance

 
Benefits of Scale P&L Balance Sheet & Cash Flow Long-term Economics

 
` 1All references to operating margin refer to non-GAAP operating margin. Non-GAAP operating margin excludes the effects of stock-based compensation, amortization of purchased intangibles, lease termination resulting from purchase of office building, and the potential impact of FX and M&A. A complete reconciliation of GAAP to non-GAAP measures can be found in the Appendix and at www.salesforce.com. Growth/Margin Framework is Our Compass ​Balancing growth with improving profitability PRIORITY REV. GROWTH NON-GAAP OP. MARGIN OCF GROWTH Top Line > 30% Flat to Up Slightly < Revenue Growth Top & Bottom Line 20%-30% +100-300 bps ≈ Revenue Growth Bottom Line < 20% +200-400 bps > Revenue Growth HIGH GROWTH GROWTH LOW GROWTH 1 Mid-30s percent LONG-TERM OP. MARGIN AT MATURITY

 
` Note: FY17 estimate represents revenue guidance range provided August 31, 2016. *The FY17 constant currency growth rate represents the constant currency growth rate for the first half of fiscal 2017. 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 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. Sustained Growth at Scale ​Forms the foundation for $20 billion objective $1,657M $2,267M $3,050M $4,071M $5,374M $6,667M $8,275M- $8,325M 28% 35% 37% 34% 33% 27% 27%* FY11 FY12 FY13 FY14 FY15 FY16 FY17E Annual Revenue C/C Growth Rate (1H FY17)

 
Scale Benefits Margin Improvement ​Absorbing M&A and investing in growth Note: 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 atwww.salesforce.com. 5% 10% 15% 0 2,000 4,000 FY12 FY13 FY14 FY15 FY16 1H FY17 Organic Hiring Acquired Headcount NG Operating Margin bluetail Minhash Net H e a d c o u n t Add iti o n s No n -GA A P Ope rat in g Ma rg in

 
` Scale Helps Navigate Through Variability Managing through FX volatility USD / JPY EUR / USD GBP / USD

 
International Growth Outpacing Americas ​Increasing investment in datacenters and headcount Note: Revenue growth rates represent constant currency revenue growth. 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 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. 21% 3 year headcount CAGR 30% 3 year headcount CAGR 27% 3 year headcount CAGR 24% Q217 revenue growth 32% Q217 revenue growth 29% Q217 revenue growth Americas 1999+ EMEA 2014 2015 2015 APAC 2011

 
Foreign Currency Landscape 4 Regional Hubs USD CAD GBP EUR AUD JPY USD 3 Functional Currencies Multiple Billing Currencies USD

 
FX Impacts to Growth and Margin Example of a European contract TRANSLATIONAL FX TRANSLATIONAL FX TRANSACTIONAL FX Billing Currency Functional Currency Consolidated Currency DR and Revenue Expenses

 
Benefits of Scale P&L Balance Sheet & Cash Flow Long-term Economics

 
Subscription Model Strength ​Creates revenue visibility and predictability $3.8B $1.3B $11.8B Q210 Q211 Q212 Q213 Q214 Q215 Q216 Q217 Total Billed Deferred Revenue Total Unbilled Deferred Revenue annual revenue under contract at start of the year ~80%

 
Multiple Factors Impact Deferred Revenue ​Creates growing invoicing seasonality as we scale Co-terming (Seasonality) Compounding (Seasonality) Amortization (Consistent)

 
Scale Impacts Deferred Revenue Seasonality ​Q1 seasonality evolving -10% -5% 0% 5% 10% 15% 20% Q105 Q106 Q107 Q108 Q109 Q110 Q111 Q112 Q113 Q114 Q115 Q116 Q117 Seq u e n ti a l g rowt h

 
Scale Impacts Deferred Revenue Seasonality ​Q2 seasonality evolving -10% -5% 0% 5% 10% 15% 20% Q205 Q206 Q207 Q208 Q209 Q210 Q211 Q212 Q213 Q214 Q215 Q216 Q217 Seq u e n ti a l g rowt h

 
Scale Impacts Deferred Revenue Seasonality ​Q3 seasonality evolving 1Q3’17 deferred revenue guidance as of August 31st, 2016. -10% -5% 0% 5% 10% 15% 20% Q305 Q306 Q307 Q308 Q309 Q310 Q311 Q312 Q313 Q314 Q315 Q316 Q317 Seq u e n ti a l g rowt h Guide1

 
Scale Impacts Deferred Revenue Seasonality ​Q4 seasonality evolving $0M $1,000M $2,000M $3,000M $4,000M 0% 15% 30% 45% 60% Q405 Q406 Q407 Q408 Q409 Q410 Q411 Q412 Q413 Q414 Q415 Q416 Seq u e n ti a l g rowt h $4.3B Annual invoicing* Impact of 1% change in sequential DR ~$1M ~$7M ~$28M Sequential Change Billed Deferred Revenue *Company implemented annual invoicing policy and benefitted from a multi-year invoice.

 
` Deferred Revenue Seasonality Continues to Deepen ​Result of invoice compounding and amortization of larger and larger base -20% -10% 0% 10% 20% 30% 40% 50% 60% Q1 Q2 Q3 Q4 Q1 FY06 FY11 FY15 FY16 Seq u e n ti a l g rowt h

 
` Q405 Q406 Q407 Q408 Q409 Q410 Q411 Q412 Q413 Q414 Q415 Q416 Operating Cash Flow Indexed Sequential Growth Note: chart represents indexed sequential growth since Q105. Cash Flow Seasonality Also Evolving ​Result of collections compounding and quarterly cash expenses on larger base In d e x e d Se q u e nt ia l Growt h

 
Benefits of Scale P&L Balance Sheet & Cash Flow Long-term Economics

 
Prof. Havlek Office hours: M-W-F, 8:00am- 10:00 Am

 
Lifetime Unit Economics 301 Subscription economics applied to the business lifecycle 2014: Lifetime Unit Economics Lifetime Revenue (LTR): Cumulative value of $1 annuity over expected life (Value = $1 / attrition) Cost to Book (CTB): Cost to acquire $1 annuity Cost to Serve (CTS): Cost to serve $1 annuity over expected life Attrition: Defines expected life of $1 of annuity Unit Lifetime Value Drivers 2015: Lifetime Unit Economics

 
Lifecycle Stage Impacts Growth and Margin At maturity, companies approach their life-time margin potential G r o w t h Start-Up Growth Mature Choice enables top- and Bottom-line Growth time

 
High Low T 0 G r o w t h r a t e Example: Acme Cloud Company time

 
High Low T 0 Revenue New business G r o w t h r a t e Example: Acme Cloud Company T 1 time Velocity = b r /R r where b r = new business rate and R r = Revenue rate

 
High Low T 0 Revenue G r o w t h r a t e Example: Acme Cloud Company T 1 time T 1 Velocity = b r /R r where b r = new business rate and R r = Revenue rate New business

 
Low T 0 Example: Acme Cloud Company T 1 G r o w t h r a t e time High Revenue If CTB is flat, S&M expense grows at the same rate as new business T 1 New business

 
High Low T 0 Example: Acme Cloud Company S&M Expense (CTB FLAT) time G r o w t h r a t e Revenue T 1 T 1

 
High Low T 0 Example: Acme Cloud Company T 1 CTB Margin Pressure time G r o w t h r a t e S&M Expense (CTB FLAT) Revenue T 1

 
High Low T 0 Example: Acme Cloud Company T 1 CTB Margin leverage time G r o w t h r a t e S&M Expense (CTB FLAT) Revenue T 1

 
High Low T 0 Example: Acme Cloud Company CTB margin leverage G r o w t h r a t e time CTS creates incremental leverage S&M Expense (CTB FLAT) Revenue T 1 T 1

 
Margin Leverage Reinvestment Sustains Growth time New Clouds New Geos New Verticals New Innovation Reinvestment is critical to sustaining growth

 
Scale Benefits Near- and Long-Term Performance Fueling top and bottom line performance time PRIORITY REV. GROWTH NON-GAAP OP. MARGIN OCF GROWTH Top Line 30 0/0 Flat to Up Revenue Growth Bottom Line 20 0/0 +200-400 bps Revenue Growth HIGH GROWTH LOW GROWTH Growth Top & Bottom Line 20 0/0 – 30 0/0 +100-300 bps ≈ Revenue Growth Mid-30s Long-term op. margin at maturity

 
thank y u

 
Appendi x

 
GAAP to Non GAAP Reconciliation (in 000's) Non-GAAP income from operations 1H FY17 FY16 FY15 FY14 FY13 FY12 GAAP income (loss) from operations 84,537$ 114,923$ (145,633)$ (286,074)$ (110,710)$ (35,085)$ Plus: Amortization of purchased intangibles 86,296 158,070 154,973 146,535 88,171 67,319 Stock-based expenses 371,229 593,628 564,765 503,280 379,350 229,258 Less: Operating lease termination resulting from purchase of 50 Fremont 0 (36,617) 0 0 0 0 Non-GAAP income from operations 542,062$ 830,004$ 574,105$ 363,741$ 356,811$ 261,492$ As Margin % Total revenues 3,953,221$ 6 ,667,216$ 5 ,373,586$ 4 ,071,003$ 3 ,050,195$ 2 ,266,539$ Non-GAAP operating margin 13.7% 12.4% 10.7% 8.9% 11.7% 11.5%

 
` Finance Q&A Mark Hawkins CFO David Havlek EVP, Finance

 
` Salesforce Analyst Day will return at 1:30 p.m. PT

 
` Product Q&A Alex Dayon President, Products Mike Rosenbaum Sales Cloud & Service Cloud Bob Stutz Marketing Cloud Stephanie Buscemi Analytics Cloud Adam Seligman Platform Cloud John Wookey Vertical Clouds

 
` Go-to- Market Q&A Keith Block Vice Chairman, President, COO Tyler Prince EVP, WW Alliances

 
` Technolog y Q&A Parker Harris Co-Founder and CTO

 

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