Twenty years ago this month, Salesforce.com (NYSE: CRM) opened for business, and in so many ways, it was a company ahead of its time. It offered cloud-based solutions for customer relationship management (CRM) before "the cloud" was part of the mainstream lexicon or even tech jargon.
The company now sports a $119 billion market cap, achieved in large part by pioneering the software-as-a-service (SaaS) business model. And even after gaining all its wisdom from being around so long, the company still refuses to act its age.
In the company's 2019 fourth-quarter results, revenue rose to $3.6 billion, a 26% increase year over year, and non-GAAP earnings per share grew to $0.70, a 49% increase year over year. The strong growth comes from Salesforce consistently focusing its efforts on helping other companies work through their digital transformations, a process that co-CEO Marc Benioff says is only gaining steam.
Salesforce pioneered offering software on the cloud. Image source: Getty Images.
A dominant position
Salesforce now commands 20% of the CRM market, more than the next three competitors combined. Every day:
- More than 3.2 million sales leads are created in its Sales Cloud;
- More than 9.7 million customer support cases are logged on Service Cloud;
- More than 1.9 billion emails are sent from Marketing Cloud.
Its dominance is the direct result of continuing to offer innovative digital solutions, and never getting complacent. Three ways Salesforce is now accomplishing this is through the launch and evolution of its Salesforce Einstein, Salesforce Customer 360, and Salesforce Lightning platforms. Here's how each of the three contribute to strong top-line growth, 20 years after the company's founding.
1. Bringing a genius idea to the cloud
Einstein AI is an artificial intelligence assistant that can be applied across Salesforce's different cloud solutions. According to the company's annual 10-K filing with the Securities and Exchange Commission, Einstein AI "automatically discovers relevant insights, predicts future behavior, proactively recommends best next actions, and automates tasks." Introduced in 2016, the growth of the Einstein application has been phenomenal. The platform now makes more than 6 billion predictions, and Einstein Analytics generates 44 million reports daily.
In the company's fourth-quarter conference call, Bret Taylor, Salesforce's chief product officer, said, "First and foremost, our strategy with Einstein is to improve the value that our customers are getting from our products." For instance, one of Einstein's applications Taylor mentioned is on Salesforce's Commerce Cloud, where it ranks products and offers suggestions that directly lead to increased sales. Einstein also offers voice capabilities to Salesforce's customers, so that "very soon" -- in Taylor's estimation -- all users will be able to update company data using voice commands.
2. A 360-degree view of the customer
The Salesforce Intelligent Customer 360 platform gives companies a unified view of their customers, across the fields of data they collect from different sources. Traditionally, companies have found it difficult -- whether using Salesforce products or those of its competitors -- to integrate data from diverse sources, meaning the information from a company's retail operations might be different from the information its marketing department has on the same customer. In the conference call, Taylor said: "I think historically, people have thought of things like commerce and marketing as separate. But with the intelligent Customer 360, we think of them in a very integrated way."
As a practical example, think of shoppers logging into a company's website and placing products in a virtual shopping cart but abandoning the purchase before finalizing it. With Customer 360, Salesforce's Commerce Cloud can notify its marketing cloud to send those shoppers marketing emails for the specific products, or similar ones, that they just abandoned.
3. Lightning in a bottle
Finally, Salesforce Lightning provides low-coding answers for businesses that might not have the in-house expertise needed for many of today's digital solutions. As Benioff explained:
Take Salesforce Lightning. We've revolutionized the Salesforce user experience with a redesigned intelligent and intuitive new platform that is now making millions of users more productive. And Lightning makes it easy for them to build incredible innovation, customer experience, with clicks, not code. With Salesforce Essentials, we're now making it possible for millions of small businesses to tap into this innovation and deliver incredible customer experiences.
What that means for clients is that software solutions that were previously beyond the capability of small businesses are now possible with the help of Salesforce's platform.
Salesforce's long runway for growth
This SaaS pioneer seems to have plenty of gas left in the tank. The company is projecting 21% revenue growth this year, and believes it can organically double its revenue in the next four years. Given its track record of introducing innovative products and making smart acquisitions, it wouldn't be surprising to see the company exceed its own guidance, and continue to be a market-beating investment for years to come.
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