Salesforce, Inc.
Q4 2015 Earnings Call Transcript

Published: 26 Feb 2015

[Operator:]

Good afternoon. My name is Chanel and I will be your conference operator today. At this time, I would like to welcome everyone to the CRM Q4 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I will now turn the conference over to John Cummings, Vice President, Investor Relations.

[John Cummings:]

Thanks so much, Chanel, and good afternoon, everyone, and thanks for joining us for our fiscal fourth quarter and full year 2015 results conference call. Our fourth quarter results press release, SEC filings and a replay of today's call can be found on our IR website at www.salesforce.com/investor. We'll also post the highlights of today's call on Twitter at the handle @salesforce_ir. With me on the call today are Marc Benioff, Chief Executive Officer; Keith Block, President and Vice Chairman; and Mark Hawkins, Chief Financial Officer. Marc, Keith and Mark will share a few prepared remarks and then we'll open the call to questions. As a reminder, our commentary today will primarily be in non-GAAP terms. Reconciliations between our GAAP and non-GAAP results and guidance can be found in our earnings press release. During today's call, we may offer additional metrics to provide further insights into our business or results, and this detail may or may not be provided in the future. We may also reference certain unreleased services or features not yet available. We cannot guarantee the timing or availability of these services or features, so recommend customers listening today make purchase decisions based on services and features currently available. Please keep in mind that some of our comments today may contain forward-looking statements, which are subject to risks, uncertainties and assumptions. Should any of these materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. A description of our risks and uncertainties and assumptions and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Form 10-Q, particularly under the heading Risk Factors. With all that, let me turn the call over to Marc.

[Marc Russell Benioff:]

Okay. Thanks very much, John, and thanks, everyone, for joining us on the call today. We had a monster quarter and it was just a great finish to yet another year of exceptional growth and customer success. First, before I get into this I just want to congratulate all of 15,000 salesforce employees for just an amazing year. Our quarter – you just look at this year after delivering more than $5 billion in annual revenue, we're guiding now to a $6 billion annual revenue run rate in the next quarter. So this is the fastest software company to reach $5 billion and in 90 days, we're going to be on the phone with you talking about that we're the fastest software company to reach $6 billion. And if you can look at our deferred revenue and $9 billion in book business on and off the balance sheet, you can just straight line out. My dream is crystal clear to be the first soft – first one and fastest to $10 billion, first in the cloud, fastest to $10 billion in software and then onward. Now, I'd like to share the results from our fourth quarter and our fiscal 2015. As you can see, revenue for the fourth quarter has rose at 26% from a year ago to $1.44 billion. For the full fiscal year, revenue grew 32% to nearly $5.4 billion. That is just an awesome result for the year. No other software company of our size or scale is growing at this double-digit rate, and you can see all the single-digit growers in enterprise software who think that they are competitors, where they're just not able to take advantage of this opportunity. Deferred revenue grew 32% year-over-year to more than $3.3 billion. And the dollar value of book business on and off the balance sheet, as I said, is now more than $9 billion. There's no better predictor of our future revenue than looking at those numbers. And as we deliver this phenomenal pace of top-line growth, we also improved non-GAAP operating margin by 175 basis points, exceeding our guidance, and you're going to hear our commitment to continue that incredible momentum. So we're not just focused on the top-line and growing the top-line. As we've been talking about for more than a year now, we're also focused on growing the bottom-line as well. This translated into another excellent year in operating cash. We delivered more than $1 billion – $1.2 billion in operating cash flow, that's up 34% year-over-year and we're the first cloud computing company to deliver more than a $1 billion in operating cash flow. Looking to fiscal 2016, we are delighted to be raising our guidance to $6.52 billion at the high end of our range and while we're pleased to have exceeded our non-GAAP operating margin guidance last year, we're committed to improving non-GAAP operating margin moving forward. And once again, we expect to deliver an additional 125 basis points to 150 basis points of operating margin improvement despite this foreign exchange headwind that everybody is going through and to deliver another year of strong operating cash flow. Okay. So here we are. salesforce.com, now the sixth largest software company in the world, the number one cloud computing company in the world, very unique in the industry. We've got a complete, trusted Customer Success Platform built from the ground up or cloud. The social, mobile and data science world, and with six world-class apps that is we have six engines for growth. Of course, our Sales Cloud, our Service Cloud, our Marketing Cloud, our Community Cloud, our new Wave Analytics platform and our app development (6

[Unverified Participant:]

355.

[Marc Russell Benioff:]

So we're going to be doing 355 events this quarter all over the world. I will be at many of them but not all of them. And I hope that you will join us, whether you are in London or Paris or New York, whether it's Melbourne or Tokyo, Amsterdam and you can experience the power of salesforce of the cloud, social, mobile world coupled with data science and analytics. I mean, this is just a sight to behold and I just want to congratulate everyone in the company for creating the first company, first cloud company to ever get to $5 billion. But we're the fastest software company ever to $5 billion and can't wait to get on the call, 90 days to tell you about, the fastest company to $6 billion. And now, let's turn it over to Keith.

[Keith G. Block:]

Thanks, Marc. There's a lot of great things to say about this quarter, but the thing I'd like to say is how proud I really am about our performance in FY 2015 and really the outstanding work that I saw in the quarter and in the year and I want to congratulate, as Marc said, just an incredibly high-performing team, a super high-performing team, once again for their, I would call, sustained excellence. As far as how we ended the year, suffice it to say that we fired another shot across the bow to the legacy antiquated on-premise software companies and our competition and, Marc, you just said this, and I absolutely agree. It was an exceptional quarter, an exceptional year, and Q4 was a capstone to this outstanding year. So this was a year in FY 2015 that we saw customers not only embracing but evangelizing our vision for the Customer Success Platform and more and more CEOs, CEOs, which is incredible, are realizing how Salesforce can help drive growth and customer success. And I will tell you, they are incredible, incredible advocates for us. And that's one of the big reasons why we signed more large deals in fiscal 2015 than in any year in the history of the company. So for fiscal 2015, we closed nearly 550 seven- and eight-figure transactions. That's roughly 100 more than it was last year. And not only is the number of large transactions getting bigger, but the value of the transactions is increasing. In fact, a number of eight-figure transactions in fiscal 2015 increased by 33% from a year ago. So no other cloud computing is closing transactions like these of this size and this scale and this volume. The execution by our teams to achieve these results has been just simply phenomenal. So we've been talking about this for a while. It's very clear to me that our customers want a more meaningful relationship with salesforce. They're not just buying a single cloud. They are betting their businesses on our vision. And we are absolutely executing at scale in every region, across every segment and in every major industry. And as our relationships are only getting stronger and more strategic, I'm going to take some examples – share some examples with you that I think you'll be excited about. ABB, Time Warner, Merck, all amazing companies, and they're all betting their businesses on us. And I'll start with one of the leading CPG companies in the world. They've been using salesforce to great success globally. After speaking with them at Dreamforce, it was pretty clear we shared a vision towards transforming the future in Q4. I'm happy to say we strengthened our partnership, we've closed one of the largest deals that we've ever done in the consumer packaged goods industry. And for the first time, they plan to bring together their entire sales and customer support teams to one platform, our Customer Success Platform, with our Service Cloud. And what's really interesting about this is that we're helping them connect their front office and their legacy back office, supply chain systems, giving them a very seamless experience. So we are moving from an integration perspective into legacy system supply chains. I don't know if anybody would have thought of Salesforce that way in the past. ABB. We've talked about them before. They are a $40 billion leader in power and automation technologies, another great example in Q4. Marc and I met with their CEO in Davos last month, and we talked about how his industry is transforming and where he wants to take the company. As part of that transformation, he's placing Salesforce at the center of his strategy to help drive top-line growth. So in the quarter, ABB decided to replace more than a dozen legacy CRM systems worldwide with Sales Cloud and Service Cloud. It was a great win against both SAP and Microsoft. Time Warner Cable, again, another great brand, very strategic win in the quarter. They've been leveraging our Service Cloud and our Salesforce1 Platform to drive their mobile strategy. In Q4, they also selected the Analytics Cloud. Marc talked about that and how excited we are. And it will give Time Warner Cable an unbelievable opportunity to have powerful insights across their enterprise. As Marc said earlier, there's enormous enthusiasm for Analytics Cloud. It's every CEO's dream to put analytics in the hands of every employee, and it's important to note that our analytics product is integrated right into our platform. That means the customers can connect any data set, whether it's SAP, Oracle, Microsoft or any other legacy technology right into the metadata layer of Salesforce platform. I will tell you in my entire career I've never seen so much enthusiasm from our customers for a solution like this or our partners. Our complete CRM and analytics platform with an open ecosystem built natively for the cloud, very exciting, people are really excited about this. Another great story is Merck in Germany, another very exciting customer expansion in the quarter for our team. They've been a Sales Cloud customer for many years. Recently, they wanted to accelerate innovation across their geographies and their businesses. So this quarter they expanded with Service Cloud, the Salesforce1 Platform and again, Analytics Cloud. And it really is enabling to build custom applications, drive collaboration across their R&D departments, and again, drive insights across the company and, by the way, right in SAP's backyard. I'm also pleased to continue to see attraction across our industry strategy particularly in financial services and again, this is all about speaking the language of the customer. In fact, this quarter, we've significantly expanded our relationship with one of the largest U.S. financial services firms. It is a premier company that is using the Customer Success Platform to make their sales teams and their wealth managers wildly more effective with their customers. So those are just a few of the wins in the quarter. There were many more at Amtrak and Boston Scientific, Fujitsu, Home Depot, Ingersoll-Rand, LinkedIn, LIXIL, MassMutual, Pearson, the Royal Bank of Canada, the State of Colorado and the list goes on and on. So I have to tell you I'm very, very proud of the team and the progress that they've made and the level of trust they're establishing with their customers. We also saw great momentum in our business globally. We accelerated our investments in Europe and Asia this year, adding more distribution capacity, and expanding our partner ecosystem. We opened up a U.K. data center and we'll have two more to follow in Germany and France as well. And it's obvious that our international investments are clearly paying off. We saw remarkable deal growth internationally. And I want to say one word about our partners. As Marc mentioned earlier, we have the largest cloud ecosystem in the world, and the largest that we did this quarter, in fact, was the signing of global agreement with one of the world's top software companies. And not only will they be using our solutions to run their business, but they're also moving their products to the cloud with Salesforce which is very, very exciting, so stay-tuned for more of that. So we're incredibly well-positioned for the future. We're well on our way to becoming the most strategic and influential technology company in the industry. And again, I want to thank everyone at Salesforce for delivering an exceptional quarter, an exceptional year, and I would like to thank our customers and our partners and our employees for their continued commitment to us. And with that, I'll turn the call over to Mark.

[Mark J. Hawkins:]

Great. Thanks, Keith. We had a great quarter to finish off a very strong year as you just called out. (19

[Operator:]

Your first question is from the line of Mark Murphy with JPMorgan. Please go ahead with your question.

[Mark R. Murphy:]

Yes. Thank you very much. A question for Marc Benioff. I, of course, saw your commentary about reaching $5 billion in revenue faster than any other enterprise software company, and aspiring to be the fastest to reach $10 billion. And meanwhile there are so many signs of accelerating momentum, looking through the billings growth, the deferred revenue growth, the Service Cloud growth, the platform growth; they're all actually accelerating and those markets are very large. So I'm wondering if the current offerings can carry you to $10 billion or even $15 billion in revenue. And if you have ever sketched out a path to a level beyond that, what else do you think could logically fit into the portfolio? And perhaps is it possible you would define e-commerce as a part of the CRM stack at some point?

[Marc Russell Benioff:]

I really appreciate that question and I think you really don't have to go any farther than looking at our book business on and off the balance sheet at $9 billion to ask yourself the question are we going to $10 billion? I mean $10 billion will be fueled primarily by that. I can tell you more or less where revenue will be a year from now or even two years from now because you can kind of look at deferred. We don't do that because there can be changes in foreign exchange, there can be changes in other characteristics of the business, but if you look back now, Salesforce has been a public company for over 10 years. You can see how our deferred model has played out with the kind of consistent revenue growth, even through 2008 or even through dark times, the deferred continue to pay out on to the top-line. So I don't think the question is about are we – certainly my – (27

[Operator:]

Your next question is from the line of Rick Sherlund with Nomura. Please go ahead with your question.

[Rick Sherlund:]

Yeah. Thanks so much and good quarter. First, Keith, I wonder if you could talk about verticals. You had mentioned that at Dreamforce that we'll be hearing more soon about your approach to addressing vertical markets. As I recall, Siebel Systems had about 22 verticals that they addressed, and right now you guys kind of have only one or so verticals. And also, maybe for Mark Hawkins, on the sequential increase in the Sales Cloud, I heard your comments on FX. It looks like it was up only about 1% sequentially. That even if I assumed it's flat, and take that on the first year-over-year number, we're going to have, which is April, it's still about 10%. So is it fair to assume that when we start getting the numbers – year-over-year numbers that Sales Cloud's still going to be, on a constant currency basis, a double-digit growth business?

[Mark J. Hawkins:]

So do you want to take the verticals first, and maybe the...

[Keith G. Block:]

Yes. Why don't I do that? So, Rick, thanks for asking the question. So we're very excited about our industry strategy, and it takes many flavors. I think the reason why the company continues to get such traction with these enterprise customers and really customers of any size and any geography is because when we talk to these customers, we are speaking in the language of the customer. So that's kind of point number one. We are focused really on six industries right now. And all of that is equipping our folks with the solutions and the messages that our customer's really demanding and asking for. So we're listening to our customers. And we will be making some announcements shortly about some exciting stuff that we're doing with the products around our industries but we also – and I want to go back to a point that Marc made about our AppExchange and our ecosystem. We have the largest ecosystem in the world for the cloud. And we are driving incredible success with a number of our ISVs who have taken our platform because they obviously have confidence in that platform. And they are building their solutions around industries. We signed up some pretty strategic partnerships this fiscal year. We continue to do it. You look at the statistics on our AppExchange, several of those are also vertically oriented. So we are really driving industry messaging into the marketplace, whether it's our own industry messaging, our organic product, the highly configurable cloud solutions that we have, whether it's our AppExchange and our ISVs and our ecosystems. This really resonates with customers. And this is something that Siebel never had. They never had a – as you know, they were not a platform company. They were never in a position where they could drive an ecosystem with vertical extensions the way that we're able to do it. So we're getting a lot of traction, and we're really excited.

[Mark J. Hawkins:]

So let me take the second part of the question, Rick. In terms of the sales revenue by cloud, a couple of different things. First of all, foreign exchange, yes, there's an impact there. To your point, what we're assuming right now is sequential performance right now. And I'm looking forward to it into Q1. You'll be able to see the year-on-year and, of course, you'll see that with all the dynamics that are going on there including whatever foreign exchange is there. So I think I can get to the spirit of the question that you're asking. The spirit of the question is the SFA market is a double-digit market, according to Gartner, it's been that way – projected to be that way for a long period of time. We have not only done well in that market with a double-digit growing market but we've also put share for the last decade consistently. And so that's what's happened historically. We don't guide by cloud. But that's a very effective market as Marc has talked about, and we'll know – you'll be able to see a lot more when we anniversary the actual revenue by cloud. Hope that helps, Rick.

[Operator:]

Your next question is from the line of Brent Thill with UBS. Please go ahead with your question.

[Brent John Thill:]

Good afternoon. Keith, a question for you on the traction with the larger enterprise deals. I'm just curious if you could give us a little more color. You have some phenomenal logos that you're reading through. But is there anything quantitatively you can share with us what you're seeing in the success of – as you've gone upstream?

[Keith G. Block:]

Yeah, listen – thanks for the question. I think – first of all, I think that the numbers were astounding. We're incredibly proud. I'm certainly proud of the work that the team has done, and I think it is proof positive about the relationships that we're building strategically with these customers. You don't do these types of deals at scale and volume unless you're successfully getting mind share and building those great relationships. We've got – over the year and certainly in the quarter, we've done some wonderful work with some of the best brands and the best companies in the world. Like 3M and ABB, Time Warner I mentioned, obviously. And some of these I could not mention before by name. But there are just many, many examples of us doing an incredible job, building more and more traction and becoming more meaningful. And now, I have to tell you part of this comes from the opportunity for us to really unshackle either legacy SAP environments or have – give customers the opportunity to transform their business models, because they've really been shackled by legacy technology for years. And with this absolute convergence of cloud and social and mobile, it really gives us an opportunity to talk about what our Customer Success Platform can do for them, generally speaking. I mean, Marc and I had the opportunity to spend some time with Brian Moynihan in Davos and we talked about how CFAs (34

[Operator:]

Your next question is from the line of Terry Tillman with Raymond James. Please go ahead with your question.

[Terry F. Tillman:]

Hey, guys. Good afternoon. Thanks for taking my question. I guess my question is on the Wave Analytics product. I know it's still early but in terms of the deals that you're signing or the deal opportunities, are you seeing large enterprise deals? Or are these still more try it before you really buy it kind of departmental level deals? And then typically are you replacing something that's a legacy DI (35

[Marc Russell Benioff:]

Well, first of all, we've never seen a product take off with these kind of numbers before. In the fourth quarter which was the first quarter that we sold the Wave Analytics Cloud. We saw a lot of very large transactions, probably the very largest transactions that happened in the analytics industry happened on our platform. And we were really taken aback by that. We've decided to focus with dedicated distribution personnel this fiscal year because of that. We've also made a very significant investment and upgrade and the number of people working on the product. And this is the real deal. I mean we really have a world-class product on our hands. And in our minds the way we think is, we only want to focus on those multi-billion dollar opportunities or as we call them clouds. And there's just no doubt in our mind that this is – has all the makings of that. And of course, we keep track of what all the startups are doing and we're very friendly with them, and even a part of our ecosystem or attend our trade shows. They cannot even – their bookings can't even compare to what our team did in the fourth quarter. So very excited about that and when I look at some of the names that closed in the fourth quarter on the Analytics Cloud the one that I love that I've profiled at Dreamforce which is GE Capital, and if you get and watch that video that's on YouTube, I mean, what they say is true. You just can't run your business without this product. This is just one – this is the greatest product, I think, salesforce has ever built and it's going to just transform the way our customers run their business, not just run their sales, service and marketing. I mean this is a enterprise-wide, enterprise-grade capability to fuel the analytical corporation. And it's not just an app. It's a platform. It's going to have a robust ecosystem. It's got – every characteristic that we like to make our bookings and revenues happen in our largest and most important customers. And to that end, it's not just enterprise and very large enterprise deals, it's also, yes, departmental deals, it's even deals in non-profits and NGOs. I mean it's amazing the democratic nature of the pipeline and deal flow already. Do you want to talk about any of the deals that you closed in the fourth quarter on the Analytics Cloud?

[Keith G. Block:]

Yeah. Again, I'm going to go back to a comment that I made earlier. In my entire career, I've never seen as much excitement, both internally and externally about a product launch. I mean, again, I'll go back to Davos. We had a nice little area in Davos. It was overrun with customers and prospects, and you know the type of people who attend Davos. And they all had incredible interest of looking at what Analytics Cloud meant and what it could do for them. And Marc did plenty of demos, I did plenty of demos, and we signed up some great companies. I mean Merck is obviously a great global brand. In the quarter, they went with the Analytics Cloud, Time Warner Cable went with the Analytics Cloud, (38

[Operator:]

Your next question is from the line of Karl Keirstead with Deutsche Bank. Please go ahead with your question.

[Karl E. Keirstead:]

Thanks. Question for Marc or Keith on the Service Cloud. It's now 27% of your subscription revenues, your fastest growing segment. Your partners are quite positive about it. I just wanted to ask, is this really a function of salesforce on the sales execution front doing a better job selling it into your Sales Cloud customer base? Has the product improved? What's the key driver of that growth? And then a follow-up for Mark Hawkins. You gave your April quarter DR guide of mid- to high-20% range. I presume that's U.S. dollars. Just curious what you're assuming in terms of a likely FX hit in the April quarter on DR? Thank you.

[Marc Russell Benioff:]

Well, I think I just want to make some initial comments and then I'll let Keith chime in. And the first thing is you look at our competitors and their work in good customer service area. Number one, Oracle, they bought right now – they have their own Fusion service product. They took Fusion, they turned it into confusion. Oracle keeps saying they're growing more quickly than anyone else in the cloud. Well, that's very easy to do when you're starting at zero. And Service Cloud from Oracle, that's a great example. This is not a multibillion dollar business for Oracle like it is for us. They have not been able to execute. They don't have a multi-tenant shared, scalable, mobile, social, integrated analytics customer Service Cloud and then move on to SAP. They will just come into customers and say just use Hana. And it's like but for what and how? And unload the software into your company. First of all, I think the number one thing about this customer service revolution that's going on and why Service Cloud is delivering phenomenal results is the traditional keepers of the customer service information for these customers, Oracle and SAP, have just not delivered. And we have. We have a very clear vision that we want to transform how our customers not only grow their top-line with our Sales Cloud, which we've done unbelievably well, and you can see it into the multiple billions of dollars. But now, we have this second huge multibillion dollar growth engine with Service Cloud. And our competitors have not been able to execute. They just don't have – they're delivering new versions when our customers want new visions. And that is where we are right now in the customer service marketplace. And why Gartner says we have the number one customer service product. But anyway, Keith, maybe you can tell us – you're out there every day selling that product with the customers. What's your perspective?

[Keith G. Block:]

Yeah. I think what's interesting is that many companies want to differentiate themselves with service. And they're looking for incredible capability to do that. And obviously, we have a very compelling story, and if I just look at some of our top wins, I would say at least half of these top wins had Service Cloud. And so if I think about Amtrak or ABB, Boston Scientific, Ingersoll-Rand, Merck, Pearson; these are all Service Cloud wins. So this is a compelling product. It's a compelling solution. It's actually the source of quite a few of our competitive takeouts, particularly in kind of legacy providers whether it's SAP or Oracle. There's a lot of Siebel replacements going on right now. So this is a great product and it's a great solution and our customers love it.

[Mark J. Hawkins:]

Okay. Let me talk about the last part. (42

[Operator:]

Your next question is from the line of Joel Fishbein with BMO Capital. Please go ahead with your question.

[Joel P. Fishbein:]

Thank you for taking my question. I just wanted to take it up more from a bigger perspective in terms of – we looked at these six engines of growth

[Marc Russell Benioff:]

Well, I think that's really a great point. Keith and I have been talking a lot about that. Because in this quarter, what Keith and I were really struck by is in all of our very largest transactions, we were not dealing with the CIO in the company, or the head of sales or the head of service or the head of marketing. We were dealing with the Chief Executive Officer in the company. And that was a huge shock to us. We really either keep their eye on (44

[Keith G. Block:]

Yeah. I think that it's pretty clear. And I don't think this will be a surprise to anybody that the agenda of a CEO is growth. And our message is all about growth. So there's a natural synergy there. And when we had talked to these customers, they – ABB is a classic example. Marc mentioned it. But there are countless examples whether it's financial services institutions, again, we talked about Bank of America earlier. It really is about solving a customer problem, speaking the language of industry, and it's not about one Sales Cloud, one Service Cloud. It's about a Customer Success Platform and it's a platform discussion. And again, it fits the growth agenda. So that's why CEOs seemed to be getting more and more involved in this. If I go back to the example that I gave earlier in the call about the strategic agreement that we signed in the quarter, that was a CEO agenda. That's all about growth. So I think the sun and the star and the moon are all aligning here as it relates to the agenda of a CEO and what our messaging is all about. And it's showing up in our results.

[Marc Russell Benioff:]

Yes. I wanted to also mention, I misspoke. It's not a – ABB is a Zurich – is based in Zurich, Switzerland, near Davos and not in Germany.

[Operator:]

Your next question is from the line of Phil Winslow with Credit Suisse. Please go ahead with your question. Philip Alan Winslow - Credit Suisse Securities (USA) LLC (Broker) Hi. Thanks, guys, and congrats on showing upside both on the billings and bookings line, but also just on operating margin line. It's kind of like the Lego quarter, movie quarter. Everything is awesome. So within sort of in that context, question for both Marks here. Marc B, just from your standpoint, wonder if you could kind of walk through how you sort of imagine, I guess, the evolution of the company here because you've laid out these longer-term revenue targets, but then also on this call, you focused a lot in your prepared remarks on margins. Just from sort of the CEO's perspective, how do you sort of see that give and take there? And then for Mark Hawkins, obviously, at Analyst Day, you laid out the framework for growth and margins. Wonder if you could kind of just reiterate that for everyone, but also put the 20 – sorry, fiscal 2016 guidance sort of in the context of that?

[Marc Russell Benioff:]

Great. Well, I think first and foremost, our shareholders have spoken that they want us to keep our non-GAAP operating margin in mind. And for us to – as we work on our revenue growth plans to have clarity and mindfulness about delivering not just the phenomenal pace of top-line growth, which we certainly have done, but also improve the non-GAAP operating margin as you saw this year by 175 basis points. And that's why this year we're coming in and saying that we're expecting to deliver another 125 basis points to 150 basis points of operating margin while continuing the strong top-line growth. And I think both of these things are now important for salesforce. And we obviously know how to do that. We did it this year. And we plan to do it again in the coming year as well.

[Mark J. Hawkins:]

And let me just add on to that, Phil. Appreciate the comments about the quarter. I think the guidance when you look at the revenue, 20% to 21%, which is the implied guidance here for the revenue growth in U.S. dollars, plus a headwind that we talked about of $175 million to $200 million, you quickly get a sense of what the constant currency growth rate is. You can see that's matched right in to our revenue margin framework. I think the operating margin to expand that 125 basis points to 150 basis points again after a year that we've just exceeded of 175 basis points plus with the headwind of 25 basis points to 50 basis points due to foreign exchange, it's right in the exact ZIP code of where we want to be. We feel like it's excellent balance in terms of the top-line that Marc talked about, the bottom-line that we talked about and the cash flow (51

[Operator:]

Your final question today will come from the line of Bhavan Suri with William Blair. Please go ahead with your question.

[Bhavan S. Suri:]

Hey, guys. Just one for Keith, and congrats, too. But, Keith, just a little bit of color if you could give us on sort of the contribution of the influence of the large SIs like Accenture, Deloitte, KPMG. And then as you look at the concept of the data driven organization and the ability to build some custom (51

[Keith G. Block:]

Yeah, listen – thanks. That's a great question. Thank you for the question. As I mentioned earlier, we're obviously very, very excited about the launch of analytics, and our partners are as well. So we have worked very, very hard over the last 12 months to strengthen our relationships with the strategic influencers in the market, be it Accenture or PwC or Deloitte, or cloud sharers (52

[Operator:]

Thank you for your questions. I will now turn the conference back to John Cummings for closing comments.

[John Cummings:]

All right. Well, thanks, everyone, for joining us today. We really appreciate the time and, of course, just to remind everyone that Marc Benioff here will be keynoting the Morgan Stanley Technology Conference on Monday, March 2. So look forward to seeing many of you there. Of course, you can always refer questions to us in the interim at Investor at salesforce.com, and of course, we look forward to updating you on our progress this year on – in May. So thanks very much for joining us.

[Operator:]

Thank you, everyone, for joining today's conference call. You may now disconnect.