salesforce.com (NYSE: CRM) did it again. After posting another quarter of rapid growth, management had to revisit its full-year guidance, raising its expectations for total fiscal 2018 revenue for the fourth time in a row.
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As investors consider the implications of the customer relationship management company's third-quarter results for fiscal 2018, it's worth looking at what management said in its earnings call. During the call, it emphasized the importance of AI, provided insight into how it is attracting new customers, and more.
Here are four key takeaways from the earnings call.
1. AI remains key to Salesforce's growth story
Salesforce management reiterated what it emphasized last quarter: Artificial intelligence (AI) is key to its plans to reinforce its leadership position in CRM.
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Since releasing its Einstein AI integration a year ago, AI's adoption with its customers has been "tremendous," management said. Specifically, Quip co-founder and Salesforce's new chief product officer, Bret Taylor, said (via an S&P Global Market Intelligence transcript) that AI does a great job of demonstrating the usefulness of the cloud to its customers:
I think the artificial intelligence in the features we're launching with Einstein perfectly capture the power of the cloud. Our customers don't need to buy new hardware. With every release, they get these new capabilities automatically. And that is the power of the cloud. We are constantly rearchitecting our systems to incorporate the latest and greatest technologies that our customers can use to transform their businesses.
2. Salesforce's momentum with new customers
The company has grown as rapidly as it has by continually launching new products to serve specific industries. This approach, which Salesforce refers to as "speaking the language of our customers," is giving Salesforce "incredible momentum" with customer acquisition, explained COO Keith Block. "In fact, 57% of customers who buy our industry products are brand new to Salesforce," Block said.
He went on to cite a specific example of what speaking the language of its customers looks like: "[I]n Q3, we launched the Financial Services Cloud for retail banking to enable banks to deliver highly personalized, intelligent and connected banking experiences for their consumers."
3. Gaining ground in big pharma
One industry that highlights how Salesforce is acquiring new customers and how it can evolve into the go-to cloud solution for CRM in a given industry is pharmaceuticals.
Last quarter, I mentioned that 15 of the world's 20 largest pharmaceutical companies rely on Salesforce, and this quarter, we added another marquee customer to that list. And incredibly, we deepened our relationships with 13 of those firms.
4. What's driving Salesforce's Marketing Cloud?
A key catalyst during the quarter was Salesforce's Marketing Cloud -- one of the clouds across its subscription and support segment. Subscription and support revenue increased 25% year over year, but Marketing Cloud revenue, which includes Salesforce's acquisition of Demandware last year (now called Commerce Cloud), was up 40% year over year. And as management was careful to remind investors in its third-quarter earnings call, this growth was purely organic since "it's the first full quarter comparison with Commerce Cloud in the base period."
But what's driving such rapid growth in Salesforce's marketing cloud? Taylor said Salesforce's unique ability to provide marketing platforms that simultaneously serve scalable business-to-business and business-to-consumer CRM solutions is key.
The reason our vendors -- the reason our partners are choosing us as their vendor is because we offer a platform that can do both now and also grow them in the future. And it's really unique in these capabilities to truly provide that single view of the customer whether or not you -- they bought their product directly or indirectly. And it's something I think is a real strategic advantage for our product line and the area that we're investing in primarily.
As Salesforce demonstrates strong growth in various segments, prowess in customer acquisition, and well-timed investments in growth opportunities such as AI and Marketing Cloud enhancements, the CRM giant looks poised to maintain its leadership position -- and probably continue to gain market share.
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