Salesforce CEO Marc Benioff’s Roadmap To ‘The New Normal’

In a Q1 earnings call, Benioff said the cloud giant is prepared to enter ‘stage 2’—a safe reopening of the economy. Despite the challenges of the last quarter brought on by the coronavirus crisis, Salesforce continues to invest in innovation, along with protecting its employees, customers and communities in unprecedented times

Salesforce CEO Marc Benioff laid out the company’s three-stage roadmap toward “the new normal” in the company’s first-quarter fiscal 2021 earnings call on Thursday.

Noting he was speaking from his home rather than the top floor of Salesforce Tower in San Francisco, Benioff told investors the COVID-19 pandemic has revealed the culture and core values of all companies.

As the outbreak ravaged the global economy over the last fiscal quarter, Salesforce rapidly took action to invest in aiding all its stakeholders, Benioff said.

[Related: Strong Q4 Financials Cap Keith Block’s Tenure As Salesforce Co-CEO]

By mid-March, the CRM giant had pivoted operations to address three priorities: keeping employees healthy and safe, guiding customers to navigate incredibly challenging situations, and supporting its communities around world, Benioff said.

That first 90 days was all about rapid response. That meant closing 160 offices around the world at a moment’s notice and guiding 52,000 employees to work from home while pledging no significant layoffs across that workforce. As a cloud-first company, the transition was extremely smooth, and Salesforce leaders quickly saw they could run the company from anywhere, he said.

The country is now entering the second phase of that process—reopening safely.

“As the economy is starting to come back to life, Salesforce is starting to reopen its offices,” he said, with the process first starting in Asia. “It has to be done safely. It has to be done responsibly.”

That includes transitioning major events, like the Dreamforce conference slated for November, to a virtual affair. (Salesforce CFO Mark Hawkins noted that all event contracts that included cancellation fees--at a cost of roughly $65 million--were expended in the second quarter, weighing on profits. Salesforce is working to renegotiate some contracts and could get some of that money back.)

The third phase, which Benioff said he believes we will start entering next year, “is about a new normal.”

“Everybody is going to have to adopt new ways” of running their businesses, he said, from customer relationships to sales motions to back-end operations.

“Every company is going to need to digitally transform,” Benioff added.

But as Salesforce transitioned to navigating a crisis, and it shifted focus to coronavirus-related projects like Work.com and Salesforce Care, it never slowed investing in its core technologies and empowering customers.

“Even with employees working at home, our culture of innovation continues to thrive,” Benioff said. Salesforce continues deploying new products to help customers at an extremely challenging time for them.

Benioff said he’s inspired by how his teams have delivered strong bookings and pipeline numbers through difficult times, including a large deal with AT&T.keith b

“This was the best of Salesforce,” he said. “This is the best I’ve ever seen Salesforce perform.”

But the financials for the quarter ended April 30 weren’t as pleasing to Wall Street.

While Salesforce revenue grew 30 percent to $4.87 billion, largely in line with forecasts, the company offered weaker guidance—between $4.89 and $4.90 billion—than investors had hoped for.

The stock closed Thursday at $181.10 before dropping to a low $173.00, then recovering above $175.

Non-GAAP earnings-per-share of 70 cents were a smidge higher than the 69 cents predicted by a FactSet survey of analysts.

Salesforce stock sank 3.12 percent in after-hours trading Thursday to $175.45.

Benioff noted that the coronavirus crisis has been unique in how it has unevenly impacted various sectors of the economy, with it likely to take “some time” for some industries to recover while others are seeing acceleration.

Benioff also welcomed to the earnings call Gavin Patterson, a former BT Group plc CEO who was named president and CEO of Salesforce International in February. Patterson was recently named Salesforce president, filling a position held by Keith Block, who stepped down in February.

[Editor’s Note: An earlier version of this story misidentified the financial results as Salesforce’s second-quarter financials.]