Customer relationship management platform company saleforce.com (CRM 0.50%) just reported another expectation-crushing quarter. With better-than-expected revenue, earnings per share, and guidance, the company continues to prove its knack for rapid growth. Fourth-quarter revenue and non-GAAP EPS soared 24% and 25%, respectively, and management set its sights on a $20 billion to $22 billion annual revenue target by fiscal 2022.
But for investors looking for an edge in understanding Salesforce, management provided plenty more insight into the business during its fiscal 2018 fourth-quarter earnings call. Here's a look at three important topics discussed during the call.
Salesforce's Einstein's daily AI predictions have crossed 1 billion. Image source: Salesforce.
1. Momentum in artificial intelligence
One area in which Salesforce has been making big efforts to up its game is artificial intelligence (AI). And nowhere in its business is this more evident than with its ongoing deployment and integration of Einstein, a smart assistant built into the company's cloud services.
About the significant traction Salesforce is seeing with Einstein AI, COO Keith Block said, "[W]e are seeing tremendous momentum [with Einstein AI] and we just hit an incredible milestone, producing over a billion predictions in a single day and nobody but Salesforce can deliver these deep customer insights at scale so it's very, very exciting with that momentum."
CEO Marc Benioff noted that its rapid deployment of Einstein AI architecture makes the company "highly differentiated against our competition, who has yet to be able to put in artificial intelligence to the quality, capability, and scale that we have."
2. Salesforce's three growth levers
Though the business stretches across all aspects of customer relationship management, the company has its most significant growth drivers pinned down to three areas of opportunity.
According to Block, "When you think about our industry specialization, when you think about our international expansion, when you think about our partner ecosystem, these are three growth levers that have propelled us past the $10 billion mark -- we're hurtling down the highway toward $20 billion -- and these are foundational things that help us turn the corner."
To this end, one major partner it landed recently was Alphabet (GOOGL 1.00%) (GOOG 0.98%), whose Google Cloud and Google Analytics recently connected with Salesforce to create a smarter and more collaborative customer experience. This partnership also put the spotlight on Salesforce's international expansion, because part of the collaboration included an agreement for Salesforce to use the Google Cloud Platform as part of its international infrastructure expansion.
Highlighting how impactful some of these partnerships can be, Google Cloud CEO Diane Greene called the partnership "a big win" for its customers and partners.
3. Understanding Salesforce's strong growth in service cloud revenue
With a reacceleration of Salesforce's service cloud revenue to a year-over-year growth rate of 28% in Q4, the revenue segment has now achieved an impressive run rate of $3.1 billion. Block explained that growth in service cloud has been driven by its clients seeking out the best platforms to help them stand out when it comes to customer service. He said, "If you think about how companies are differentiating themselves, they differentiate with service and we have the leading solution in service, we're the market leader, we continue to separate and take market share in Service Cloud, we've had very, very strong execution."
Bret Taylor, Salesforce's chief product officer, added that "increasingly, your brand is defined by your customer service, and that's really what this product represents."
Image source: Getty Images.
Overall, these three topics highlighted reasons for investors to be optimistic. Salesforce's strong execution in AI and service cloud is solidifying its leadership position in customer relationship management, and all three of Salesforce's major growth drivers -- industry specialization, international expansion, and partner ecosystem -- remain intact.
