Is it the quarter? The execution? The environment? The products? The moment?
Everyone on the Salesforce.com (CRM) conference call struggled with these issues last night in a way I have never heard in any conference call I have ever been on.
It was almost as if this strange creature had been born, something no one had ever seen, a creature where you could point out so many metrics -- my favorite was the 48% growth in unbilled deferred revenue because as a subscription guy from TheStreet I know that's the best predictor of revenue going forward -- and the analysts, amid endless and deserving approbation were simply too stunned to get their heads around it.
I have parsed every Salesforce.com quarter for a decade now. I always try to approach things methodically, the craft, let's look at what the analysts are modeling, let's check to see what they are really modeling, who is setting the company up for a fall with too high a number, who is a straight-shooter of extrapolation -- just get it out there. That's the art and science of it; some data that gets spun in positive or negative ways depending upon your viewpoint.
The number comes out, you compare line by line, and you say "hmm, that's better, that's okay, alright now bad, gotta like that figure." And so on.
That was not the case here. It was like looking at the quarter you expected maybe four quarters from now. Maybe five. A bear could say six.
I struggled to remember when I have seen a company -- not just cloud company, not just enterprise software company -- grow like this, even a company with one-tenth, no one-twentieth the size. So, did the analysts. Out loud. It was an amazing display of astonishment with some very hard-bitten analysts actually dropping their guard and offering out and out adulation.
Okay, go listen. Enough of the positives. Here's where I come out.
We are in the first stages of digitization for whole parts of this world. Companies are taking their cash and giving it to Marc Benioff and company and saying "will you please help us to find out what our customers really want from us because we trust you."
Companies have more cash than they have had in ages to do so, particularly American companies from tax reform and European companies from economic expansion.
These companies don't know how to marry artificial intelligence with their own data. But Salesforce does.
These companies don't know how to keep their customers as happy as the other guy without Salesforce's help.
And these companies know that they aren't going to be betrayed by Salesforce because the culture at Salesforce has no room for it.
Marc uses terms like Ohana. He runs his company with a team that believes. He understands what younger people get: there's something bigger going on. He doesn't love authenticity. He is authenticity. And he despises those who sacrifice truth and faith on the altar of higher gross margins, which we know is being done in social media every day.
Why does that matter?
I will tell you why. In an ear, for example, where the financial companies are now able to focus on innovation not just regulation, they are free to innovate. But these kinds of companies have historically trusted no one. They won't let them in. They are secretive. They fear. They are cowardly at times. And they don't think of their customers first.
Salesforce is upending that ridiculous, foolish, 20th century obnoxious paradigm. And it's doing so by teaching these companies they have to be better. The way they do it? By making it clear that the CEOs have to trust Salesforce to do it right, do it better, and in a more trustworthy way than THE CEOS themselves.
That's the real secret. Sure, business is the best it has ever been both for Salesforce and for tech because of the fourth industrial revolution as Marc calls it. More important, though, digitization has allowed for personalization with the customer at an unheard-of level and Salesforce is pioneering it in a way that the CEOs know they have to learn and understand.
They want to be part of the Ohana. My daughter lived in Hawaii. She taught me the concept of Ohana. It didn't mean family. It meant the yearning and joy that comes from being in the heart of the community.
It's way too ethereal. But in a cynical, polarizing, tawdry, meretricious, unsympathetic, nihilistic moment, it's transcendant.
That's why the quarter was a blow out. Ohana per share?
Yeah, ohana per share.