Salesforce.com Inc (CRM)

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salesforce.com, inc. (CRM)

Raymond James Institutional Investors Conference

March 5, 2013 11:35 ET

Executives

Graham Smith - Chief Financial Officer

Analysts

Terry Tillman - Raymond James

Presentation

Terry Tillman - Raymond James

Okay. Why don’t we get going? I am Terry Tillman with Raymond James covering application software. And I’m really pleased to have Salesforce.com join us again; they were here last year and they are here again. I’m very pleased to have Graham Smith, who is the Chief Financial Officer and John Cummings is Director of Investor Relations here with us. I think probably a lot of you all have at least some exposure to Salesforce, so with that in mind we’re going to do a fireside chat, I’ll probably go about 20 minutes and then open it up to the audience for some questions as well. The first couple of questions though are going to be a little bit more general for some of the folks that may not actually have any knowledge or little knowledge of the story. So, with that in mind and again Graham, thanks for doing this.

Graham Smith - Chief Financial Officer

Sure.

Terry Tillman - Raymond James

One of the first questions I wanted to ask over time as you all evolve the product story and continue to progress the market. We’ve been hearing this idea of the front-office dominating the front-office. Can you give us an update on what that means in terms of Salesforce dominating the front-office?

Graham Smith - Chief Financial Officer

Sure. So, Salesforce initially were 14 years old actually this week which is a milestone for us and we started off with this idea of really just as our name describes being an application that Salesforce people used, a Salesforce of using a company to keep track of leads and pipeline and opportunities and management could look into that see what was - what business was getting closed. We’ve come a long way over the last 14 years, so today we are really what we’re trying to focus on is this idea of a customer platform, that’s really a technology platform, a software platform, that customers can use ultimately to provide capabilities in all the areas of customer-facing activities, so whether its sales than or service providing customer service to customers.

We’ve recently moved into marketing so much more on the - this sort of idea of generating leads which then clearly go into the - into the sales system, but ultimately we are trying to build this capability for customers to use for all of their what we call front-office. So, front office is anything this customer-facing clearly one of the big benefits you get from Salesforce is ultimately all of your customer-facing groups sharing all of the customer data in all the activities that they are doing.

Terry Tillman - Raymond James

Yeah, yeah. One of the statistics that you had offered up at the Analyst Day last year was that I think the large enterprise exposure for you all is about 40% or 45% around which is profound considering how much revenue you are generating now that you are still only at that level.

Graham Smith - Chief Financial Officer

Yeah.

Terry Tillman - Raymond James

Could you maybe give us an update on where large enterprise exposure is now, I know you had some acquisitions and you continue to progress since last year. So, how much of the business is large enterprise and going forward where do you see that trending maybe over the next couple of years?

Graham Smith - Chief Financial Officer

Yeah. So, Salesforce grew up really in the SMB space, so the first let’s say five years of the company’s existence Salesforce was very much focused on the small business mid-market and really its only been in the last seven, eight years that the company is focused more and more on enterprise customers. So, we’ve - traditionally when I go to the company five years ago we talked about our businesses broadly being the third in small business, third mid-market and a third from enterprise and our categories were if it was small business you are less than 200 employees and what we called enterprise was selling to customers of more than - with more than $1 billion of revenue.

What we said last year was that enterprise was a little more than a third, it - have gone to roughly 40%, we actually haven’t given a recent update that was only in September I think so it wasn’t that long ago. And I think the important thing to remember about our business model is that any changes because of our subscription model are very gradual, the percentages say we get from products or the percentage we get from certain market segments, all of those changes if they happen they happen quite gradually. So, I wouldn’t imagine its very different to 40% a few months later. And I also want to stress the people that, it’s not is if Salesforce is really all about the enterprise right now. We have a commercial sales group remember it’s still managing more than 50% of our business in total right it’s managing small and mid size customers and they did a fantastic job executing last year as well. So I’m very happy with that balance. We are not trying to force that percentage to any particular number it’s just national I think that over time because we started an SMB that enterprise will sort of grow because there is just a lot more in the end more on capped opportunities there I think in the large enterprise.

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