Salesforce, Inc. (CRM) August 2026 Conference Transcript

We're going to kick this off. We're live once again.

I'm Brad Zelnick, software equity research here at Deutsche Bank on day two of our tech conference here in sunny Dana Point, California. Really delighted to be kicking off this session with Salesforce on such an amazing moment in time where we are delighted to have Mike Spencer, Deputy CFO, Head of Finance. Mike, thanks so much for being here.

Yeah, thank you for having me. It's great to be here.

It's anybody who's paying attention to the tape. I think Salesforce has really been very prominent, and the stock has had a nice reaction to the news that came out yesterday. Why don't we maybe start there for those that might have missed it, which I don't think there are many. Can you just share the highlights from the strong results that you put up yesterday? What would you focus people on? And very importantly, how does the shape of your acceleration journey look today versus when we first started talking about this a year ago.

Yeah, so I made a comment to Brad in the back of the room. I said it's much more fun to come do these when the stock's having a day like it is today. So, yeah, so let me first start with kind of the retrospective of last year when we made comments at Investor Day to where we are now. And I would say we've been hyper-focused on driving the execution of the business with the building blocks that we outlined last year at Investor Day. And so what you're seeing now, what we reiterated yesterday in the guidance for H2 reacceleration is a result of the last three quarters of really, really hard execution, I would say. I'm trying to drive our overall strategy. So we're super pleased with the results yesterday. I think about it kind of in two separate buckets when you look at the results yesterday. First, within the quarter, obviously, we were very pleased to beat across all the external metrics. but the metric that sticks out most at least from my vantage point is the CRPO and by way of that the net new AOV the bookings performance in Q2 which exceeded all our expectations by a long shot so and that really is a good indicator of the building momentum as we look at each to look at the guidance we provided and more importantly leads us into FY 28 so the print yesterday the guidance the raise and the guidance that we gave we were very intentional about organic versus inorganic within that guide, which I'm sure we'll get into, but all that is a result of really doubling down and hitting our commitment that we made around re-acceleration in H2 on the organic business, even with M&A as a strategic lever for us.

You were always very popular, but even more popular today, so I thank you even more so. It ebbs and flows. We'll take it. We'll take it in a moment. Well, it's really good to see you and good to have you here. And the other really exciting update was this announcement yesterday and the partnerships between Salesforce and Anthropic, which I think there was already some relationship there, but now it's culminated in Claudeforce, which I have a little bit of a tough time. It doesn't yet roll off my tongue. I'm sure it will. Can you just talk about what that offers customers and how it might differ from the relationship and what customers are doing with Salesforce and Anthropic separately today.

Yeah, definitely. I had someone last night ask who brought who to the dance with the relationship. Let me first say, just because from a level-setting standpoint, it's really important to understand our investment on the venture side of our business with Anthropic is mutually exclusive from any partnership that we've got on the commercial side. I think it's a really important ground-setting structure. So the way to think about Claude Force is think of it as it's really been an organic process of partnership with them. For those that use Slack in the room, and if you've had an opportunity to use Slackbot, Slackbot's motored by or the engine behind Slackbot is anthropic. And so we've been working with them for quite a while now in a very growing level of intensity is what I would say because Slackbot adoption has kind of started to skyrocket quite a bit, actually, within the user base. And so we've been deepening our relationship over months and months and months. And what that's led to is a lot of experimentation. We rolled out Anthropic, or Claude, I should say, with an R&D group over the last six months to really experiment and see what that could do to our product roadmap. And so there's lots of tentacles, if you will, between, and that led ultimately to this idea of ClaudeForce where we could make, and for those that use Claude, you are probably familiar with the structure, but there's a set of connectors and whatnot in there, and then there's skills that you can pre-build. And so what that's led to is a kind of think of it as an out-of-the-box capability for Salesforce users who decide that they want to do more with Claude and Salesforce that allow you to really plug and play, whether that's connecting the assets within Salesforce, Slack, selling our CRM flagship product, et cetera, as well as out-of-the-box skills of Salesforce. Think like a salesperson example of different skills that you might use when you're interacting in CRM. And so we're super excited about it. we wouldn't be doing it if we weren't hearing it from customers. So the genesis of all of this ideation that we've been doing with Anthropic is a result of customers. We do tons and tons of CABs or customer advisory boards with CIOs and execs of our customers and so this has been a call it a circular feedback loop that we've been generating with customers that's led to this moment. It's really exciting stuff.

I know a lot of people are focused on it. But when I think of Salesforce, I think like a lot of people, we often first think about core CRM, sales service, marketing, et cetera. But the company is now one of the largest data and infrastructure software vendors out there in the market. How does the breadth of offering help set Salesforce up for success in the AI era?

So we've morphed our message over the last couple years around Customer 360, and then we've now grounded with Informatica into the mix. We've grounded that with a dynamic called Data Foundations. Every iteration of our strategy with customers really is about creating what we call a layered cake internally. In that layered cake, you've got obviously the external model companies as a foundational element, but very closely tied to that is the Data Foundations, what we call internally the Data Foundations, which is made up of Informatica, our data cloud, our data 360 product offering, MuleSoft, which provides the connectivity, and then Tableau as the analytics engine that sits on top of it. And since the acquisition of Informatica just about a year ago, it's really been, I would call it, a fueling engine to driving and helping customers mature their overall AI strategy, which also, by the way, is leading to some of the developments you're seeing with Cloudforce. So we feel really, really confident, is what I would say right now, on the pieces coming together and filling out the portfolio both from a data foundation standpoint all the way up through the app layer or the end-use scenario, whether it's Quad Force or our own applications and meeting the customers where they're at. You'll hear us use that terminology a lot, but as you think about the evolution of our stack, that's really at the core of it is helping customers achieve what they want and how they want to work and meeting them at that particular moment. That, by the way, cuts over to our pricing and contract structure as well. We're going to get to that.

But before we do, I think over the last year, we've seen a fair amount of organizational change, leadership change at Salesforce. And I know there's a life cycle to everything, so that shouldn't surprise anybody too much for a company of such stature and significance and heritage. But I'd just be curious, any perspective that you could share on that front, just understanding how those changes enable the next phase of Salesforce's growth.

Yeah, it's, the changes, I can't even talk about the recent changes, there was changes within the last, call it six to eight months. It may, I don't want to be dismissive of it, so don't take this as being dismissive of it, but every change that's happened has been intentional, not for the reason of Mark trying to manage people out, but it's been intentional in the concept of folks retire, folks are ready for change, we want to tap folks to take on bigger opportunities. And so every single change that we've made has had rationale behind it that's aligned to the business. The most recent change, the one I would probably highlight most, is Miguel and now Alexa, our CRO, Alexa Vignone. And Alexa's a rock star on the sales side, by far and away, probably our leading sales rep, really respected leader. And so she was hungry for more and ready for more, and Mark really wanted to enable her with that. And then we also want, she still reports to Miguel, we also want to leverage Miguel more because Miguel has turned into a force of nature inside Salesforce as well. The sales engine is really, really humming right now. And so as part of that, we wanted Miguel to help us tackle kind of the next big problem that we've got. And the next big problem or next big area, I should say, of opportunity is really around consumption and adoption within our customer base. It's been a focus area for us, but now you're going to start to really see us pour the gas on the fire with that. And Miguel now has taken on professional services, customer support, and what we call our builder motions, so think FDEs in landscape speak. And so he's really, over the next, you're going to see over the next 12 to 18 months, a really, really intense focus from Miguel on that particular aspect, as well as leading the overall sales organization to drive that. The rest of the business on the product side is really where there's been more change. Two big things there. Steve Fisher retired earlier this year. He's been with Salesforce for, gosh, I don't know, 30 years.

Mark and him went to high school together. Left and came back.

Left and came back. and he'd been wanting to retire for a few years and Mark kept talking him out of it and talking him out of it and he was like, I'm just done, he's got a new grandchild at home so he was ready to go and we just hired Rohan Kumar to come in and take over the platform side of the business from Microsoft, I worked with Rohan at Microsoft when I was there he's going to be a rock star on the platform side of things and then we moved Patrick Stokes over for those that have been able to see Patrick Stokes in the past he does a lot of product demos and presentations at our big events the guy's amazing, knows our technology knows our stack upside upside down and left and right and so you'll get to see him more and more as well over the coming days so the combination of Rohan and Patrick on the app side Rohan on the platform side we think is really going to be powerful in advancing the product stack Patrick crushes he's great and looking forward to seeing all these new leaders in their new role especially out of Dreamforce in a few weeks which by the way you also come to Dreamforce if you haven't gotten a Personal invite, here's your personal invite. Thank you, awesome. I know I'll be there.

Mike, just maybe on a different topic, enterprises of all shapes and skies, various industries trying to chase this opportunity in AI. We've seen the token maxing and the spending and customers blowing through budgets prematurely. I would love to get your perspective on investor concerns that AI could potentially be crowding out other spending? Because, I mean, you guys are an AI company, but you're also an existing software company that's very well deployed. How did the balance of that all play out to be either a net headwind, tailwind, or neutral for sales?

Yeah, I think over the past – I'm going to answer it two ways. I think over the past, I would say, 12 months, let's call it, give or take a little bit, it's been more of a neutral dynamic than it has anything else. I think what you're seeing in a lot of enterprise customers, ourselves included, by the way, customers are reprioritizing spend to be able to advance the experimentation of the use of the LLMs. On our side of the house, we, roughly about six months ago, we unleashed Claude in our R&D cycle. It's part of the reason we didn't raise margin guidance on the years because we're covering some of the token spend that we've got going. And the goal of that really was to let's see what we could break. Let's see what kind of advancement our R&D teams could make on accelerating the product roadmap. Worst case scenario, we would pull back. Now we're actually in a zone where we are seeing a huge advancement in productivity, but now we're going into refinement mode. So we're going into the zone of prescription model choice for task at hand. And what that really means is you don't need to use the latest and greatest model for every single task you might want to do. Of course, it's applicable in some use cases, but for the large majority, you're totally fine with the second or third generation model that might be out there. That also includes, by the way, optimization across different vendors. So internally, we've got OpenAI, we've got Cursor, we've got Claude. So we've got a bunch of different model generators. We're starting to experiment with Grok. All of them have different cost structure. And I think we are, I think, a good representation of what we see in our customer base. There's a lot of experimentation in our customer base. And customers are in the mindset right now where two things are happening. They're experimenting, like I just described, that we're doing in Salesforce. They're also advancing or maturing their overall AI strategy, which is why we believe we're starting to see the pickup in bookings and why we think Claudeforce or the concept of Claudeforce is really going to catch momentum because that dynamic of headless, customers are starting to understand, hey, there might not be one UI across my entire user base that they all want to work under. Some want to use Claude. Some actually want to use the traditional app, et cetera. And so over time, we're pretty optimistic, I would say, at this point, that it's going to be a tailwind for overall business. But I think it's a building cadence from here. And over the last 12 to 15 months, it's been more of a neutral dynamic, is what I would say.

Makes sense. Mike, you've demonstrated very nicely for us that growth and profitability don't need to be mutually exclusive. As we look ahead, what are the largest levers that support further margin expansion? and how should investors think about the tradeoff between AI investment and profitability?

So you'll continue to see us be super aggressive from an AI investment standpoint is the first thing I would tell you, whether that's internally investing in like the R&D example I just gave, whether that's through inorganic investment, whether it's talent or tech within that bucket, but you're going to continue to see CSB really, really aggressive. And that's really a statement about how fast the technology landscape is advancing, and we want to make sure that we've got bets and that we are very diversified from a portfolio standpoint to go after that. I would say it this way. When you look at our P&L and the construct of our P&L, we've got FY30 framework guidance out there that says rule of 50 by FY30. Within that construct, you've got to obviously believe top line, which I'm sure we're going to talk a little bit more about. And then when you get on the cost side of the equation, I think the way I think about it is really in two buckets. Let's talk about gross margin line first. Within the gross margin line, we expect the cost around supplying of AI within our product set, which is already happening today, we expect to be able to stay relatively neutral on that. Some of that is through incremental premium monetization to cover some of that AI structure, some of its new SKUs coming through. Some of it is just what I called out earlier deterministic workflow, not having to ping an LLM if we don't need to to avoid the cost, and or model selection, us getting into the zone ultimately. And you can see where the train goes of us making the selection for customers on which model they're going to actually use for whatever scenario that's coming up. And so we think we've got a good formula to help control gross margins and make sure that we stay neutral and or better than where we run today. I'm not saying it's a straight line. You could see ebbs and flows like you saw this quarter versus last quarter if you're comparing quarter over quarter. But we feel like we've got the right building blocks in place. Then as you move down through the P&L, obviously, no secret to anyone in here, the next really big lever for us is going to be sales and marketing and how do we get more efficient on sales and marketing. Alexa and Miguel are very, very focused on it. We've made a little bit of incremental progress if you just follow it as a percent of revenue over the past 12 months, and I would expect that trend to continue as we move forward. The really key aspect of that is as we ramp our AI offerings, being able to hit escape velocity from a sales standpoint and increase the mix of self-serve customers, whether that's what we call customers refilling the tank, whether it's consumption-based and or self-serve customers coming through the website or those various scenarios, we do think there's a lot of opportunity to reduce the cost of sale, if you will, cost of acquisition of customers through the sales and marketing structure moving forward. Very helpful to ground us in all of that.

I want to talk about Slack, if I could. If I reflect back time of the acquisition, I mean, the investor perception of Slack has really done a, I won't say a 360, I think a 180 is more appropriate. I think Mark said on the call yesterday the best acquisition we've ever done.

I don't know if I'm going to use those words, but, like, he was very bullish on it.

But it's certainly where we are today seems very, he was very prescient at the time. And I won't say lucky because I'll give him all the credit in the world. But, you know, it's now evolving to be a key engagement layer for agent force. Slack bot is really important. You gave some stats that you can remind us with just in terms of what it's done. I think with new bundles or pricing, maybe I've got that wrong.

I'm juggling a lot of things, and a lot of news came out last night.

But I would just love to hear from you as agents become more embedded in day-to-day workflows, how important it is as the employee-facing interface, and can it be a more meaningful driver of agent force adoption and monetization over time?

Yeah, I think if you fast-forward five years from now, seven years from now, Slack could be a super interesting business case in school is what I think could end up happening. And for us internally, it's been a journey. When I first got to Salesforce almost five years ago in speaking with all of you, it was brutal. It was sentiment around Slack was as negative as it could possibly be. Fast forward to where we are today and why we leaned into it so much yesterday on the call. The momentum around Slack, as you were just highlighting, is off the charts right now, and it's happening in a couple different ways. One, engagement is starting to open up a bit more. We're seeing a lot more customers come to the table being willing to experiment with Slack, even if they're a team shop. Obviously, there's antitrust pressure on Microsoft, and they're doing some breakups, especially in Europe, in standalone sales of teams. So that's certainly helping. But the experimentation coming from customer base, especially in the enterprise space, of willing and wanting to try Slack has really started to open a lot of doors, even if they already have teams in the ecosystem. And then second, from an advancement standpoint on showing the art of the possible is how we talk about it internally, but the power of AI can bring to the fold Within the Slack ecosystem, Slackbot and Headless have really lit up Slack. So Slackbot is our AI engine within Slack. For those that don't use Slack, think of it as a sidecar. So there's an icon at the top of Slack. I could be in Slack chatting. I click on the Slackbot icon, and then it presents a chat window right next to your Slack, within your Slack app, but right next to your chat window. And you can do anything in Slackbot that you could do on Anthropic today. It's not co-work, so I don't want to make it sound like co-work, but anything you want to do from a cloud chat standpoint, open AI, chat GPT standpoint, you can do in Slackbot. It's powered by Anthropic, and it is super, super powerful. Whether you want to pull up conversations that maybe you can't remember which thread it was in, and you're like, help me find the last conversation I had with Brad and what we were talking about, or a specific topic, or something as simple as a very common use case that we use it for and I use it for is something like customer prep. So I'm going to meet with XYZ customer. Tell me everything I need to know about. I met with BNY Mellon last week. Tell me everything I need to know about BNY Mellon. What's the current conversation? What's the pipeline around them? The execs I'm meeting with give me the full color, and it will spit back within seconds a full download and prep document for me heading into that meeting. I don't have to go search for anything. I don't have to go crawl into CRM or elsewhere. So it really brings the power of Slack and then the ecosystem of apps around Slack into it. That's leading to, from a metrics standpoint, as you highlighted, Slack being a really big engine to our bookings momentum that you saw. In Q2 alone, Slack was a huge portion of what was a record quarter for us from a net new AOV standpoint, and Slack was a huge contributor. If you look at the revenue growth on Slack, which flows through our platform line in our P&L, or I guess in our new construct in apps, it flows through, but in the old constructs, it flows through the platform line. um the it's been growing strong double digit growth and we're probably on five or six quarters in a row now i may not have that exactly right um so it is quickly becoming a very very meaningful growth engine for us for a company well that gets us maybe now to the part of the matter which agent force yeah um a lot of excitement a lot of anticipation around agent force and it's great to see the momentum I think the stat was $1.5 billion ARR, and if we combine that with data 360,

you're almost at $4 billion in ARR as well, $3.9 if I have that. What have been the biggest unlocks from a product or distribution standpoint that have enabled customers to accelerate production deployments and spending?

Yeah, the interesting thing about agent force and kind of where we're at in the life cycle is that we've taken a crawl-walk-run approach to driving adoption within the customer base. What I mean by that is, historically, Salesforce in the go-to-market engine has always been about AECV. Go sell the dollar to the customer, and then nine times out of ten, that AE would then move on to the next sale that he could possibly make instead of driving adoption within the customer base. About two years ago, we started to change that. In the comp plans in FY27, our current fiscal year, we actually made it part of the comp plan in a small way, but we had to get water running through the pipes to figure out how we could change the behavior of our account executives. I went through the exact same journey when I was at Microsoft and we changed the behavior of the Microsoft force for Azure at the time. To what you're going to see next year and with the change on Miguel that I mentioned earlier, FY28, you're going to see, I think, a material step change in the behavior of our account executives and our account managers in driving adoption within the customer base, which really becomes the engine for Agent Force. We are seeing an accelerating clip of customers moving from pilot into production. For customers that have already moved into production, the question, if I correlate it back to a metric that we give, which is refilling the tank, but agentic work units have started to run escape velocity. Within that is customers who have moved into full production. We're seeing them refill the tank at a faster clip. 50% of bookings the past couple of quarters have been from customers refilling the tank. AOV on those customers is escalating quite rapidly. I think the stat is roughly 2x the growth rate of those customers versus the traditional customers. So it's proven out, even though it's still a smaller cohort of the overall customers that are in the agent force that have fully moved into production and are fully ramped, but you're going to see huge focus from us going forward because that's obviously how we're going to accelerate revenue into the framework.

We're all excited for the acceleration to come. The way we've got guidance set up, I think it exists. It's modest, our expectations, and always hoping that you over-exceed them. But if we look out even further, you've got ambitious plans for an 11% compounded growth rate on revenue through fiscal 30, which takes you to $63 billion. What supports your confidence in these ambitious targets at a time when you're at significant scale and the world's, you know, changing pretty fast.

Yeah, yeah. Let me start with H2, and then I'll parlay that into 28 and beyond. We look at H2, and this came up in one of our investor meetings earlier today, and it's a very fair question. When you look at our H2 reacceleration that we're hitting in the second half of the year, we've pivoted that number every which way to Sunday. So we, in the spirit of keeping ourselves, holding ourselves accountable, If you could name an exclusion, we looked at the math, excluding licenses, fully excluding Informatica, taking obviously out Contentful and Fin, taking out even where we have headwinds in the business, where you've got Tableau and Mule and other things. I mean, you name it, we looked at it, and we're accelerating in every single scenario. So we feel really, really confident in the numbers. Most importantly to me within that is that as you look out at Q4, so it will step up in Q3, step up again in Q4, and you look out to Q4 and you look at the contributors out in Q4 to the accelerating growth that we are seeing, you look at the core, so core organic is growing despite the headwinds from the license volatility we're seeing. So if you set a different way, if I invert that, if you were to look at just the core recurring organic business, excluding licenses, it's actually performing better than when you include licenses. So licenses are weighing things down right now. They're a headwind. You then layer on Informatica. once we lap Informatica in Q4, which would be around November 15th. It is a tailwind to overall growth for the company. We're beating on Informatica, both on top line and on accretion, and we've been really successful in pouring gas on the go-to-market engine on Informatica. Then you can layer on the additional acquisitions. I'll leave those out for a moment. What we're really excited about, though, is the consumptive, and the core of your question is the consumptive nature heading into FY28. So we're at the very, I would say, early stages of whether it's headless, whether it's agent force, whether it's some of our other consumption-based tools. We do feel like we're in the very early stages of those actually becoming a meaningful tailwind overall growth. And so the question really, if you flip it around, you say, okay, you're at 7%, 8%, 9% today in H2. How do you get to 10%, 11%, 12% next year, the year after, et cetera? And that's really how I think about the equation. So license volatility will calm down. We'll start lapping, especially some of the comps that we've got going right now and license volatility, which will help. And then you start to see consumption, the spirit of customers refilling the tank, accelerate as we get more and more customers into production. And then all of a sudden you've got the building blocks to getting us to $63 billion and beyond, and some of the newer acquisitions obviously will help achieve above that.

Awesome. I mean, I think we all love ambitious targets and, to your words, like to see accountability and holding yourselves to account. At the same time, if I zoom out and I think of the Salesforce journey from 27 years ago when Mark started the company, how do we ensure that these targets, I mean, we're in the midst of this amazing paradigm shift. How do we ensure that those targets are not constraining you to be as successful and relevant for the next 27 years?

Yeah, it's a totally fair question, and how I'll give you on that is it's a little bit of our inorganic. strategy right now. Part of our inorganic strategies is our AI investment thesis is that we've got to place a number of bets, not only organically but inorganically as well, to make sure that we're keeping pace in the landscape, to your question. That includes talent, that includes tech, it includes established products within the customer base that are seeing adoption. FIN is probably the poster child of this right now. FIN, for as well-established as Service Cloud is, FIN is an amazing product. They've got a very loyal customer base. If you haven't seen the demos of it, you can go on the website and look at it. The FIN technology and their agent and the capabilities of their agent is amazing for as small of a company as they are. So you're going to see us, the reason I'd give you that color is you're going to see us continue to make bets across both organically, you're going to see AI infused across all of our product set, you're going to see us continue to bring on inorganic bets. And we think we've got, especially with headless in the mix now, we've got the right combination. I think, to fuel us into the future. The one thing I would tell you, and we were talking a little bit about this earlier, is Mark is a force of nature, and he is spending an inordinate amount of time right now really, really studying the landscape to ensure that we don't miss something. And he's got him and his product leadership team really, really focused on that. Mark is constantly looking at companies to learn about technologies, look at partnerships, look at targets, Look how he can influence the internal product roadmap. It's also why I said earlier we adopted Anthropic internally in our R&D group is because we're really focused on accelerating the product roadmap to make sure that we keep pace.

So I would say we're as optimistic as we can be about being able to keep pace with the market right now. It's a fair way to frame it. I think Mark gets credit for a lot of things, and being on the forefront, I mean, he was the first one to really talk about agents, frankly, in this AI journey. and many more to come. I think you also, you talked about Slack. We'll give them a lot of credit for identifying assets out there that make a lot of sense. We were familiar with FIN pre-acquisition and very impressive customer success, underlying technology, a lot of good things happening there. So maybe if we can pull on that thread a little bit. How do you see FIN expanding Salesforce's addressable market? Where do you see the greatest opportunity for cross-sell monetization across, you know, Service Cloud, Data Cloud, Agent Force, the entire portfolio?

Yeah, FIN is a unique asset in that it is super complementary for Service Cloud. Think of Service Cloud as the enterprise kind of heavier construct of driving a gentic structure and think of FIN as kind of the lightweight, out-of-the-box plug-in-and-go for the lower end of the market. I think there's two things that are going to happen. First, on FIN itself, we've created a structure inside of our R&D organization called Salesforce Labs. And the goal of Salesforce Labs, we kept a guy by the name of Mon. I'm blanking on Mon's last name now. Alex will keep me honest. But he was the CEO of Regrello. He's come on. He's running Salesforce Labs for us. And the goal of that is to incubate the businesses. So within Salesforce Labs, at least right now, is going to be FIN, Qualified, and Regrello. And the goal is to really incubate them and not crush them, if you will, with the weight of Salesforce to make sure that we get those businesses running down the path of the M&A plan that we put together to justify the acquisition. Then the second phase of it is going to be, and by the way, that includes go-to-market magic that we tend to do with all acquisitions. Take that one step further. The next phase of that is really going to be taking FIN and then infusing FIN into service cloud structure as well. There certainly is opportunity to help service cloud within that. And how do we start to help Finn move up the stack? The example I love to give folks is one of Finn's biggest customers is actually Anthropic. And so Anthropic's in a massive growth phase. And so at some point, we're going to have to figure out how to help them mature through the life cycle of becoming a larger tech company with Finn, because they're not going to want to move off of Finn. And so they're already active work stream on that, trying to figure out what that path looks like. And you can imagine a hybrid world and or a migration path into service cloud or graduation path into service cloud full steam. So that's kind of how we look at it. We do think it's very, very complementary because service cloud in an S&B space is not super strong right now. So we do feel like at least near term you're going to see a lot of synergy.

Maybe thinking, Mike, about getting all these great technologies and capabilities, you know, delivering the last mile to the customer, and specifically as we think agent force, And I know it's not just agent force, but as adoption expands, how important is the forward-deployed engineering motion and partner ecosystem in helping customers bridge the gap between AI experimentation all the way through to enterprise-wide deployment, and how far along are you in building out the FDE capacity?

So I'll share a funny story with you all. It was probably, gosh, it was probably a year ago now, I don't even remember, And I was flying, there was a number of us flying with Mark, and Mark's obviously got his own plane. And so we were flying with Mark, and we, for four hours, on the plane with Mark, flying from, I think we were going to New York, San Francisco, or something like that. It sounds like it's fun, but I think it's got its perks, but it's, you know, it can be challenging. But the reason I share that story is because he's got two TVs on his plane, and he literally on full steam or full blast on both TVs for four hours had Palantir Alex Karp preaching about FDEs on stage across various different presentations that he did for four straight hours. And I've never gotten more education in such a compacted amount of time on FDEs. And I share that because that's a little bit of a lens into Mark's mindset right now on how critical and important driving customer adoption is, especially in a world where customers need the help, frankly. That's the feedback we get constantly from customers is there's just so much tech that they're trying to swallow and digest right now that they need help. They don't know where to start. They don't know where to go, et cetera. We're going through it, by the way, with our own adoption of Claude and OpenAI internally where we're trying to roll out Claude. And, like, I have Claude Cowork. Most of my organization does not have it yet, but even then, would I consider myself an expert prompter? Would I consider the different use cases? So there's a lot of education that needs to occur, and for us, and why we made the change with Miguel, really getting embedded with the customers, think of it almost as kind of the old SI consulting model where you actually put a team in the customer, and you're sitting side by side with the customer, helping them solve the problems, get it launched, et cetera, and handhold them through the process. And so you're going to see right now, internally, we've actually got a bunch of different flavors. We call it builders. So FDEs, builders, it's a synonymous term. But we've got a number of different flavors. We've got solution engineers. We actually have the formal term of FDEs. We've got our professional service organization. Then we actually have developers inside our customer success organization. So we actually have flavors of different FDEs across the ecosystem, And we're actually working really hard to consolidate them and get them into one motion and how we invest in customers. Now we're actually starting to look at it more as an investment as part of larger contracts that customers are doing. So you're going to see us really contemplate tradeoffs of, hey, can we put a few more FDU resources on the customer in exchange for a bigger Salesforce commit or a customer making a bigger commitment to Salesforce, I should say, over time? because the payoff of accelerating adoption and consumption is going to far outweigh us trying to monetize a few people for, you know, a couple hundred thousand dollars near term.

Awesome. Switching to a different topic. You touched on this a little bit earlier, but I want to dig deeper just into the way that customers buy and pay Salesforce. How should investors think about the evolution from subscription paid in advance to consumption, maybe AWUs, agentic work units that you talked about, and ultimately what Finn was doing, outcome-based pricing. How do we think about that continuum and what needs to happen before those models become material contributors?

So as a finance guy and owning FP&A, I've got product finance under me. I can tell you it is an anxiety-filled architecture right now of different pricing structures and contract frameworks. We've been very, as most of you know, very intentional about experimentation with customers. A lot of that is fed from our different advisory boards that we operate with customers and experimenting on what works well and what doesn't as customers kind of go on their own journey of how they want to consume AI. For us, I think about it in two buckets. There is the actual pricing structure and then there's the contract structure. On the contract structure side of the equation, we have a couple flavors happening right now. We've got our traditional way where customers will make a commitment. They'll pay us annually, et cetera. Works well. The second one is what we call AILAs. You heard Miguel talk about that last year, I think, at Investor Day. I think of that as the all-you-can-eat contract for customers where they sign on. They're like, hey, I want Sales Cloud, Slack, et cetera, et cetera. We'll let you kind of go to an all-you-can-eat buffet. The latest one that we've actually been trialing, and you're going to see us start to lean into it a bit more, is what we call Salesforce Commit. Salesforce Commit is more the traditional hyperscaler model. where customers can say, hey, I'm going to spend $10 million over three years, and then they can consume it as they go. They can buy seats. They can buy flex credits, et cetera. It can be consumption. It can be seat-based. But it's customers getting a discount for the overall spend, but not necessarily having to have it all mapped out on day one. It's very much how the hyperscalers operate, so customers are very accustomed to it, but it's a new muscle for Salesforce. Then I switch to the pricing side of things. There's a few things in motion. We have traditional seat-based pricing. We've got consumption-based pricing, and you're going to hear that more in the form of flex credits is the way we'll talk about it. And then we are actually experimenting right now with outcome-based pricing. FIN is outcome-based pricing. And so you're going to see us really start to experiment with that more. The key with outcome-based pricing, which many of you are probably familiar with, is you've got to be very objective about the measurements that are driving the outcomes. And that always tends to be the challenge. When you're a smaller startup like FIN, it's easier to manage. When you get into the broader ecosystem, outcome-based pricing gets a lot more complex. The way if I compare and contrast you look at Sierra, Sierra does outcome-based pricing today, but they actually only give you a couple different flavors of the outcomes that you can price your contract around. That's how they keep it contained. So you'll see some experimentation around that as we look to expand it. On the consumption side of things, we are moving quickly towards trying to figure out and provide consumption-based structure across a lot of our portfolio, at least where applicable, outside of the seats. For Claudeforce that we just launched, it's probably going to be more premium mix. You can get it as part of Agent Force 1 edition or you can buy an add-on, but you could also buy it full consumption if you wanted. We think it's going to be more limited adoption on a full consumption basis, but you can buy it that way. Over time, most of the revenue today is still ratable. When I say most, 95-plus percent is still ratable today. I think to being in a zone where consumption is a more material portion of overall revenue mix, I think you're looking at probably three to five years still from now. I don't really anticipate it changing materially in the near term. You'll see more and more consumption come into the fold, but to be an overall material mix of our revenue long term, I think it's probably three to five years away. Mike, this has been awesome.

It's just about the right time to start, but to end it here. But before I do, in closing, what should we be most excited about heading into Dreamforce?

I think there's – I'll speak from a personal standpoint. I think there's a few things. I think you're going to see a lot of really, really great technology at Dreamforce this year. It happens to be the case every year, but I feel like this year we're kind of at an inflection point, especially with headless coming to the fold. You're going to see some things that I personally would say will probably blow your mind a little bit on how AI is being infused into the product set. Whether that's Slack bot and the capabilities of Slack bot, whether it's headless, whether it's some of our newer acquisitions, but we've got a lot of bets that we're really, really excited about, and you're going to see that come into the fold. The other thing that I think might be just as powerful is we're being very intentional this year at Dreamforce on bringing in external voices. Mark touched on it on the call yesterday. Dario's going to be there. Sam Altman's going to be there. Jensen's going to be there, plus a number of broader tech, landscape names, bigger names that you're going to be familiar with. And part of the goal there is to really get the ecosystem around us speaking just as much as you hear from us. Us getting on stage and just evangelizing how strong we think we're in from a position standpoint, we think can be echoed just as loudly and maybe be more powerful if it's coming from the external landscape. So we're really excited about it. But, again, if you're not making plans or you want to come, just reach out, and we're happy to give you guys a pass, and you can come to our investor day as well.

If there are hotel rooms left in San Francisco.

I can't speak to that. I'll let Anna leave on our team speak to that, but that's out of my pay grade.

Well, listen, again, always great to see you. Thanks so much for being here.