During its recent investor day presentation, Salesforce.com (NYSE:CRM) detailed how much of the company’s growth has come from customers increasing their adoption of its cloud services. In fiscal year 2022, the majority of the company’s annual recurring revenue is from customers with four or more clouds.
In this episode of “Beat & Raise” on Motley Fool Live, recorded on Sept. 27, Fool.com contributor Brian Withers takes us through the company’s impressive land and expand story.
Brian Withers: I’m going to move on to the power of customers 360 because it really builds on what they’ve just talked about. This is the number of customers. You can see how many Clouds they’ve implemented. They didn’t even have seven back in FY ’18 when they were tracking this. You can see this purple bar is the five Clouds, that’s getting significantly bigger, so 5, 6, and 7 now make up a majority. See this, this is almost 2/3 of the revenue here. Then they said 97 times the growth in six plus. From this little teeny sliver to the green and the blue here over time. This is a great land and expand slide. Here’s another one, and this is one that I wanted to point out that the size of Salesforce here is. When you look at these numbers that show up on this enterprise expansion chart, this is annual recurring revenue, it starts at 10 million of annual recurring revenue. If you compare to a company like Asana, Asana actually starts at $5,000 a year. The size of the customers that are represented on this chart are massive. You can see just continuing to grow and grow their footprint over time, these large enterprise customers are extremely important to Salesforce. They talked about expanding into the industries, they have 12 different industry Clouds. As Slack comes out, one of the things that they mentioned was even during the process, the period of time where they were waiting for everything to get approved, they were partnering with Salesforce as if they were a third party. Salesforce actually did some development work on their side of the software platform using Slack’s APIs or their application programming interfaces and they built Slack plug and play templates for each of the different industries and made it easy to connect into Salesforce. Even before they were officially merged together, there was a ton of work on the Salesforce side to take advantage of the Salesforce platform. Here’s an example, customer, you start with one Cloud and it adds overtime, and then this bar shows you the annual recurring revenue going from two million to 77 million. But it also works if the customers sign up for all the Clouds in the beginning. They’re seeing some of this happen, where as users add and they unlock function over time, that increases revenue as well. There’s so much going on here. But generally, it’s cool. You can look at land and expand over three years and how many are new companies coming on versus existing companies where they’re expanding, multi-Cloud adoption and international. Both of these continue to be massive opportunities for them going forward.
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