Shackled for three years by the necessary overhaul of Salesforce’s profitability, products, and people, Marc Benioff shook off those constraints during Salesforce’s Q3 earnings call last week and, for the first time in 12 quarters, unmistakably showcased vigorous growth as his #1 priority.
While it’s unquestionably true that the CEO of a 25-year-old company with a market cap of close to a quarter-trillion dollars owes shareholders healthy and sustainable profit margins, a serious side-effect of the lengthy but essential renovations Benioff has had to champion over the past few years was the slashing of growth rates from 20%-24% to 8%.
That’s an ugly trend in any market, but particularly so in the hyper-competitive Cloud Wars, which is — in case you haven’t heard — the greatest growth market the world has ever known.
So, during Salesforce’s Q3 earnings call, I was greatly relieved to hear Benioff’s exuberance over:
- Big new RPO numbers: current RPO up 11% to $29.4 billion, and total RPO up 12% to $59.5 billion
- Huge jumps in Agentforce consumption (details below)
- Aggressive demand from customers for the newly christened Data 360 (formerly Data Cloud)
- Feisty growth projections for newly integrated Informatica
And that relief came out of concern not so much for Salesforce as a corporate entity but rather as a primary category creator of the incredibly successful SaaS industry, and as an ambitious and often agitating force that drove healthy change and controversy and innovation across the entire software industry.
Over the past few years, as Benioff had to step away from that role of lightning-catcher so he could appease institutional investors forcing him to shift his focus from innovation and growth to margins and profits, I often felt like I was watching a fully grown tiger fitfully pacing in the throttling confines of a third-rate zoo.
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But, on last week’s Q3 earnings call, it was clear that the tiger had been unleashed and is hungry and on the prowl.
Some examples of prime Benioff growth mindset from the call:
Ramping Agentforce to $500-million run rate: “In just a year since we introduced Agentforce, we’ve closed more than 18,500 Agentforce deals, and 9,500 of those are paid transactions. It’s up 50% quarter-over-quarter. All of our reps now have the acuity, they’ve got the nomenclature, and they’re enabled. That was a huge lift for us to start to bring the whole company into this AI revolution and give them the tools and now these great customer examples.”
“A global phenomenon:” “And it’s happening around the world. I just got back from Japan, and I saw it there; I was in the U.K., and I saw it there; and I’ve seen it obviously throughout the whole United States. It’s really a global phenomenon.”
Let’s get techy and talk tokens: “In October alone, token usage was nearly 540 billion, up 25% month-over-month. And I just don’t think any other enterprise software company has stats quite like this.”
Agentforce driving customer transformations: “Six of our top 10 deals in the quarter were companies that just want to transform with Agentforce. And that’s a big thought because a year ago, we were basically just starting to ship the product — it was just coming out of beta. It was a very strong V1, but now it’s much more than a strong V1.”
Customers racing from trials to strategic deployment: “Customers in production with Agentforce have jumped 70% quarter over quarter. That’s the type of stat we’re looking for!” And the reason Benioff called out that particular metric is that it has profound implications for the big-time commitments customers are making: “Yes, I’m going to use this now. I’m going to put in my customer agents, I’m going to put in my employee agents, I’m going to get my omnichannel supervisor, I’m going to harmonize my data and I’m going to federate my data and I’m going to upgrade my apps.”
Existing customers catching AI Fever: “In the quarter, more than 50% of new Agentforce bookings as well as 50% of Data 360 bookings came from existing customers expanding their investment, which was awesome and really showed adoption. And we are very focused on adoption more than ever before, especially in Agentforce and Data 360, which is the foundation for every Agentforce deployment. And it’s accelerating.”
Final Thought
As I’ve said 748 times in the past few years, the biggest winners in the Cloud Wars are alway — always! — the customers, because they benefit from the vicious competition among the Cloud Wars Top 10 companies by being able to reap all the world-shaping innovation that pours out of those companies because of all that competitive energy.
So in that context, it’s great to see Benioff and Salesforce return to the ranks of the lusty carnivores. I’ve got nothing against healthy profits — in fact, as a 2-time founder, I value them greatly.
But the Cloud Wars is a growth game, and that means profits and margins need to be a byproduct of growth and innovation and powerful appetites and ambition, rather than as a precondition that serves to throttle those animal spirits.
So welcome back, Marc Benioff, to the growth mindset that powered your company to great heights and has the potential to do so again here in the frothy early days of the AI Revolution.
