Salesforce, Inc. (CRM) Q4 2016 Earnings Report, Transcript and Summary

Good afternoon. My name is Ashley and I'll be your conference operator today. At this time, I'd like to welcome everyone to the sales (sic) [salesforce] (0:08) Fiscal Q4 2016 Results 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. [Operator Instructions] Thank you. And I would now like to turn the call over to our host, Mr. John Cummings. Sir, you may begin your conference.

Thanks so much, Ashley. Good afternoon, everyone, and thanks for joining us for our fiscal fourth quarter and full-year 2016 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. With me on the call today is Marc Benioff, Chairman and CEO; Keith Block, Vice Chairman, President and COO; and Mark Hawkins, CFO. 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. Some of our comments today may also contain forward-looking statements, which are subject to risks, uncertainties and assumptions. Should any of these materialize or should any of our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. A description of our risks, uncertainties, assumptions and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Forms 10-K and 10-Q. With that, let me turn the call over to Marc. Marc Russell Benioff - Chairman & Chief Executive Officer: Okay. Thanks, John. And this is our biggest call ever, we've got over 500 people around the world, who are dialed into the call. And so, we know there's a lot of interest in the quarter and we made a decision, we're going to put aside the vast majority of our script so that we can get into Q&A as fast as possible with you. Look, my number one thing I want to tell you is, this is the absolute best quarter we have ever had. It's been just an incredible quarter, way beyond our expectations. It caps an incredible fiscal year for us. I'm sure that you saw that revenue for the quarter rose to $1.8 billion, and that's up 27%, which is really just amazing. Revenue for the full fiscal year was also up 27%, $6.7 billion. So you look at those things and you go, wow, I mean, that's a very fast growth rate for a company of our size and scale. For a top-10 enterprise software company, you all know the growth rates of Microsoft, Oracle, SAP are shrinking; negative growth rates in many cases, and here we are at a 27% growth rate in this enterprise applications market. And as Keith gets into it, you're going to hear that we believe that we're selling more enterprise apps than Oracle or SAP. Deferred revenue grew to nearly $4.3 billion, which was up 31%. Quarterly operating cash flow was nearly $460 million, up 38%. That number, of course, exceeded everyone's expectation and took us by surprise as well. And we are really proud of that number, $460 million quarterly operating cash flow in the quarter. Full-year operating cash flow was $1.6 billion, up 37%. And the dollar value of booked business on and off the balance sheet, $11 billion. That is obviously a huge number for us, something that we've never had before, and it's really a huge reflection of the amount of business that has been achieved in the fiscal year and specifically, in the quarter as well. We've got great momentum going into our first quarter. We're guiding to an incredible number here, and $1.895 billion at the high end of our range. And for the full-year, we're increasing our revenue guidance to $8.12 billion. So, we are really excited and aggressive in our guidance. And, look, it was an amazing quarter. It was an amazing year. We are confident it's going to be an amazing first quarter. And no other enterprise software company of our size and scale is delivering at this level or as excited as we are, and no one else is as well positioned for this age of the customer that we are all moving into in this fourth industrial revolution. Before I hand the call now over to Keith, I just want to thank all of our customers, and I want to thank all of our partners, and I also want to congratulate all 20,000 of our employees on an amazing year. We are deeply, deeply, deeply grateful for everything that you do for us every day, and we don't forget that. For one moment, every single day with us at salesforce starts with gratitude, and we know that this is a special time and we're grateful for all the hard work that everyone has put in. Also, I know you're going to want to catch us on our World Tour that's coming up, and big events are starting next month. You'll see us at CeBIT in Germany, and then Chicago, Boston, Melbourne, Amsterdam. We'll be in Washington, D.C. as well, so come to one of our events, and we've got a great new COO here at salesforce as well. So, Keith, congratulations on your promotion. Well done. Keith G. Block - Vice Chairman, President & Chief Operating Officer: Thank you very much, Marc. Marc Russell Benioff - Chairman & Chief Executive Officer: And why don't you tell us about the quarter? Keith G. Block - Vice Chairman, President & Chief Operating Officer: Thanks, Marc. Listen, this was an amazing quarter. Our team, really the whole company, delivered the best quarter in my two years here at salesforce. It was a breakthrough quarter. It certainly was a breakthrough year for us, and it translated into some amazing results in every region, every industry and really accounted across companies of all sizes. We signed two of the largest deals that I've seen in my career. I mean absolutely fantastic. I mean, first we signed an exciting new nine-figure transaction with one of the world's most respected companies; and second, we signed the largest renewal in the history of the company; and, listen, they didn't just renew. They also significantly expanded their nine-figure relationship with us in Q4, and we are now their company-wide platform for innovation. I mean it's really amazing what the team has done, and how these customers have embraced us. We also drove an all-time high in the number of large transactions this year, which is incredible – more than 600, seven-figure plus transactions in the quarter. And I'll tell you, Marc said it, I'll say it again, no one in enterprise software – no one in enterprise software is developing more strategic relationships right now than salesforce. And, you know what, there's no better example of this than Unilever, which is one of the world's greatest consumer packaged goods companies. It's a great digital transformation story and a significant – significant expansion for us here in Q4. We've been delivering great levels of success with their consumer and marketing teams. We're now working across all business functions and Unilever plans to bring 95,000 of their employees onto the salesforce platform. So, that means they are empowering their digital employee strategy to new levels of engagement. Now, Charles Schwab and other great brand is an exciting new relationship in the quarter. They'll be using salesforce for their entire CRM platform. This is a great example of how Ignite, an industry team, have played a pivotal role with an important customer; as you all know, Ignite is part of our go-to-market motion. Also I think we had mentioned in Q1, if you remember, we had told you about our largest Marketing Cloud win ever then we signed an even bigger one in Q3 and in Q4 we did it again. We talked ourselves and we entered into our largest Marketing Cloud relationship ever with a large social network. In fact, Marketing Cloud continues its success and increased the number of large Marketing Cloud transactions by more than 60% in the past year. Also one of the largest retailers in the world expanded with us in the quarter and selected salesforce as their company-wide collaboration platform. And you know what, there are many, many, many more stories. These are some of the world's greatest brands, some of the greatest stories and we continue to deepen our strategic relationships with all of them. I mean, this is great momentum, it's incredible momentum and growth across all of our key industries, in all of our key markets. And I will say again, as Marc did, I'm very, very proud of the entire company for all of these accomplishments, all our outstanding results are just proof positive that our strategy is absolutely more than taking hold. I'd also like to thank our customers and our partners, because they are helping us set the standard for this industry. So with that, I'll hand it over to Mark Hawkins. Mark J. Hawkins - Chief Financial Officer & Executive Vice President: Thanks, Keith. We had an incredible financial quarter, so let me start off with some highlights. In addition to the operating cash flow results, Marc mentioned, we continue to drive increased operating leverage. For the full-year, we increased our non-GAAP operating margin by 177 basis points, this is a great result as we continue to grow our top line. Our year-over-year growth was balanced across all of our clouds and all of our regions. Sales Cloud accelerated in the quarter with 12% growth. Service Cloud grew 35%. Marketing Cloud grew 31%. And Apps Cloud and Others grew 43%. In the regions, EMEA grew 33% and APAC continues to accelerate at 26% growth, both in constant currency. We also got up to a great start in Q4. And that early quarter strength translated into strong billings and collections in the quarter and helped drive our cash flow in Q4. It also helped us drive our top line performance in Q4 and when you exclude the FX effect of $32 million, revenue was up 27% in constant currency. Supporting this great top line growth was our declining attrition rate, which remained below 9%. Our deferred revenue in the quarter reached an all-time high of $4.3 billion, this was up 31% in constant currency, when excluding an FX effect of $48 million. We also continue to drive an increase in annual billings in the quarter with 88% of all our subscription and support related invoices issued with annual terms. This benefited year-over-year deferred revenue growth in the quarter by approximately three percentage points. Moving on to guidance, coming off of strong Q4 and with our proven business model, we are raising our FY 2017 revenue guidance to $8.12 billion at the high end of the range. We're also initiating FY 2017 non-GAAP EPS guidance of $0.99 to $1.01. In context, we expect to deliver 125 basis points to 150 basis points of non-GAAP operating margin improvement in FY 2017. And this is just coming off a year where we exceeded the high end of our FY 2016 operating margin guidance. As a result of this, we continued margin expansion, we expect to drive another full-year of strong operating cash flow with year-over-year growth of 23% to 24%. For Q1, we're expecting revenue of $1.885 billion to $1.895 billion, non-GAAP EPS of $0.23 to $0.24, and year-over-year deferred revenue growth of 24% to 25%. A quick note on our Q1 guide; as all of you know, FY 2017 is a leap year. And given we recognize our revenue on a daily basis, there's an extra day of subscription revenue in the first quarter. This will benefit our first quarter revenue by approximately $20 million and will drive a slightly higher non-GAAP EPS and will reduce our deferred revenue by the corresponding amount. This is simply a timing item, that has no impact on the full FY 2017 fiscal year results, but this will have an impact on your quarterly and full-year compares in FY 2018. To close, we had an outstanding quarter and year, and we are well positioned for yet another great year in FY 2017. And at this time, I'd like to add my thanks to the entire salesforce team for these great results. With that, I'd like to open up the call for questions.

Ashley, we'll take calls when you're ready.

We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Keith Weiss of Morgan Stanley. Keith Eric Weiss - Morgan Stanley & Co. LLC: Excellent. Thank you guys for taking the question, and very strong, very nice quarter. I guess the question I wanted to ask was the why – to Mr. Benioff, like you're saying not many companies at this scale actually see accelerating growth. Anything you can point just to, in terms of why you guys are seeing this now? What's really clicking on in the business that will let you guys accelerate? And then maybe if I could squeeze in one for Mr. Hawkins, just in terms of as we're thinking about FY 2017, the business is getting increasingly seasonal, so in Q1 growth would be a little bit lower and more growth in the back half of the year. Given the current sort of economic environment, how do you garner confidence in the ability to sustain this 20%-plus growth for the full-year of FY 2017? Marc Russell Benioff - Chairman & Chief Executive Officer: Well, our growth strategy is really built on having a full portfolio of products. I think you know about that in Sales, in Service, in Marketing, Community and Analytics, in Apps, in IoT, and as well as a full portfolio of geographies as well, doing business around the world like in the United States, in Japan, Europe, Australia, Canada; and in addition to doing business with enterprises and as well as small and medium businesses. And when that full portfolio accelerates, that is they all come in, in the quarter, which we really never expect, every product and every geography in both enterprise and SMB to come in, then you get this kind of accelerated revenue growth, which is what you see at this 27% number on both the year and the quarter. As I said in my opening remarks, it's the best quarter we've ever seen. We would never expect to see every product group and every geography and every sector of our business exceed our expectations. But that's what we saw in the fourth quarter and that creates this phenomenal momentum that we have now. And look at that number on and off the balance sheet, $11 billion, there's no greater predictor of our future success than this deferred revenue that we now have in place. Mark J. Hawkins - Chief Financial Officer & Executive Vice President: Great. Let me pick up the second half of that question that you directed. Just building on Marc's comments, I think you'd asked a little bit about the seasonality in FY 2017 starting with Q1. Back at our Analyst Day, Keith, I was referring to, we looked at this compounding effect and more and more of our renewals and business happening and showing up in Q4, showing up in the impact in DR and then having a quarter-on-quarter effect throughout the year. That compounding effect, in fact, is happening. We see that, and I affirm that, and you can see just a terrific Q4 result and a terrific DR performance. On the macro side, to Marc's point, when you have $11 billion of booked and billed and unbilled deferred revenue, that gives you a lot of confidence. When you see our big deals coming in, like Keith referenced, it gives you the confidence. When you see the business performing across geos, across clouds, that gives you the confidence that our book of business and what we're hearing from the customer had basically caused us to raise our guidance, and that's what we're seeing. Now we read the same newspapers as everybody else. We're not seeing an economic impact. We're seeing customers doing the kinds of things that we talked about earlier on the call. So, hopefully that helps.

Your next question comes from the line of Kash Rangan with Bank of America Merrill Lynch.

Hey, guys. Thank you for taking my question, and apologize for the background noise here. Marc, I've not heard of nine-figure deals in technology. Can you talk about what exactly, Marc Benioff, that is, or Keith, can you talk about the dynamics here? Who did you displace? What is the scope of this implementation? What is this customer looking to do with salesforce's portfolio of products, and could this be a – hopefully a leading forward indicator of what other customers could also adopt from the salesforce product family? Thanks. Congrats. Marc Russell Benioff - Chairman & Chief Executive Officer: Well, Kash, you make a very good point, which is, these are very unusual transactions and we never like to over-emphasize these transactions, because they tend to be few and far between, because they are just exceptional in size, quality and depth. But we had an incredible renewal with one of the world's largest insurance companies, and we had an incredible new transaction with one of the world's largest professional services companies. And it really, I think, is a testament to some of the processes that Keith has put into place in regards to the enterprise and I'm going to let him speak to that. And I want to also make the comment that it's not just those two large transactions, but you heard what Keith had to say about the broad range of large transactions that were seven-digit and eight-digit deals as well. And, I'll just get back to my first comment, it was across all sectors of the business in product, in geography, and in enterprise and SMB. And, Keith, will you just address Kash's question specifically, in terms of what we're seeing and how we're able to create such large transactions? Keith G. Block - Vice Chairman, President & Chief Operating Officer: Yeah. Thanks, Marc. So look, first of all, I would say that this has absolutely been an outstanding set of execution across the board, in all market segments. The broader market and the enterprise space has obviously been a focus and emphasis area for us over the past few years. If I were to characterize these two transactions in particular, I would tell you that they are CEO-level sales. We are in the boardroom. And we find ourselves in a position where customers, as Marc had indicated earlier, are looking for our help bring them into the age of the customer. They're looking to embrace the concept and notion of digital transformation. They view us as the market leader, and really the only company that is uniquely positioned to provide them with that transformation, or that level of transformation. And this is what's happening in these very large deals, it's happening in every deal, where these customers are viewing us as a trusted advisor. And that is becoming the norm. And this is something that has been happening for some period of time, and we continue to see it as we move forward. Marc Russell Benioff - Chairman & Chief Executive Officer: We're very excited about what's happening here in terms of the market dynamics.

Your next question comes from the line of Heather Bellini with Goldman Sachs. Heather Bellini - Goldman Sachs & Co.: Great. Thank you. I was wondering, Marc Benioff, if you could talk to us a little bit about your vision for Analytics, I know the product is relatively new. I guess I'm just wondering, out of Dreamforce, if you could give us an update on the types of customer conversations you're having in regards to Analytics? And if you were to look out kind of three years to five years, how do you think about – there's obviously multiple different vendors right now that can do Analytics on top of the salesforce platform. How do you think of your own offering kind of replacing those people that are piggybacking on top of CRM deployments today? Thank you. Marc Russell Benioff - Chairman & Chief Executive Officer: Well, Heather, I think it's a great question and really a huge focus here at salesforce. Of course, Analytics applications have been an incredible part of the CRM market for a long time, and there are many vendors who offer Analytics applications on our platform. When we first introduced our Wave capability, which was just a little over a year ago, we didn't introduce applications. We introduced a platform. We introduced the ability to build Analytics applications using our Wave platform. And we said that this strategy was going be quite differentiated from others, because we were going to be platform first, we were going to build an ecosystem, and then we would later build these applications and then we would later build all of these capabilities from the platform into all of our products and into all of our ISV capabilities as well. And that's where we are today. I think that there isn't a customer or demonstration or new sale that's happening, where this Analytics capability is not a huge part of what we offer the customer. This is analytics-as-a-service. This is scalability, this runs on your phone, on your tablet. This runs on your desktop. This runs on your watch. This is a multi-tenant, fully scalable system. It has all the characteristics of every other salesforce product that you know and love. It's deeply integrated into our core platform, which is Lightning. And Wave is amazing. The growth is terrific. We're going to – I believe start to see incredible breakout this fiscal year that we're starting now. And we're just finishing our fiscal year kickoff the last two days here in San Francisco. And Wave was a huge part of the emphasis of what we're going to do this year. So, you're going to see a lot of that product. We're very excited about its capabilities. It's an incredible platform. And I will tell – yes, I'll tip my hand here that we have been demonstrating, internally here, a number of core Wave applications, including our new sales wave capability, which is our sales applications, built on Wave, Service Wave, service capabilities; Marketing Wave, marketing capabilities. And even Mark Hawkins here has built a full set of applications that help him run his entire financial business. So, it's an exciting new product. And we couldn't be more excited to be in the Analytics business.

Your next question comes from the line of Steve Ashley with Robert W. Baird. Steve M. Ashley - Robert W. Baird & Co., Inc. (Broker): Great. I have a couple quick ones. First, these nine-figure deals, how many years are these contracts over? And then secondly, with you becoming a strategic vendor, is your relationship with the IT department within these companies change? Thanks. Keith G. Block - Vice Chairman, President & Chief Operating Officer: Okay. So hi. This is Keith. So, obviously, we don't get into the term and length of these contracts, but you can imagine that if you're going to make a significant investment of nine-figures, that's probably a long-term relationship that you're talking about. And that again has been a focus area, I mentioned earlier, these are CEO-level conversations. We're in the boardroom, presenting to their boards and we're talking about transformation, which I think is something that is top of mind for all of these customers. As far as IT is concerned, you always have to talk about, and with IT, but these are transformational sales. These are conversations around growth, which is the top of mind for all Senior Executives and CEOs for sure; but, listen, in these large enterprises, the CIO is important. And by the way, we are a great platform. And CIOs and technologies are always interested in great platforms. And, again, that message certainly resonates. Marc Russell Benioff - Chairman & Chief Executive Officer: And I'll tell you that there's definitely a transformation going on at salesforce and Keith and I've had a lot of conversations about this. We've talked about it on previous calls. I would say this transformation has accelerated. And, then Keith, how many sales calls, you were at Oracle for how long? Keith G. Block - Vice Chairman, President & Chief Operating Officer: 26 years. Marc Russell Benioff - Chairman & Chief Executive Officer: 26 years. I was at Oracle, 13 years. I never made a sales call on a CEO, while I was at Oracle. I mean, there were some business development things, but never CEO buying products and being that kind of Chief Digital Officer himself or herself. Was that your experience as well? Keith G. Block - Vice Chairman, President & Chief Operating Officer: Yeah, absolutely, the world just turned. And certainly as we talked about earlier, CEOs are all about transformation. And in many ways they had become the Chief Transformation Officers for these companies, so they are personally involved. They are personally engaged and they want to talk to us. And they're very interested again in us playing the role of the trusted advisor, they're interested in our thought leadership, as you know. And listen, in the last three weeks, I've had more conversations with CEOs around transformation than in my entire career over 30-plus years. Marc Russell Benioff - Chairman & Chief Executive Officer: Yeah, and I look at the large transactions we did with the largest banks in the world, largest insurance companies in the world, largest media companies in the world, the largest technology companies in the world, which was marked throughout this whole quarter, every single transaction was done with the Chief Executive Officer. And those happened at the World Economic Forum, those happened in their offices, those happened in our offices, those happened at trade shows, but I'll tell you that Keith and I just can probably rattle off dozens of CEOs that we are having to constantly interact with and collaborate with in creating these transactions. And I think it's really unusual and I think that's why we are really selling more enterprise software than Oracle or SAP in the applications area, wouldn't you say, Keith at this point? Keith G. Block - Vice Chairman, President & Chief Operating Officer: There's no question that we are outpacing the competition in terms of enterprise application sales; there is no question. We continue to take share, and that's both market share and mind share. You and I were having a conversation just the other day about one of the world's largest financial services institution and kind of in the old world, what level we would be able to call on. And in this new world, because we were with them at the World Economic Forum, we're talking to the CEO. And their CIO and Head of Operations, that person would never have met with us before and all of a sudden they're with us all the time. In fact, we have a quote from our kickoff – we just finished our kickoff from the CEO, this particular institution saying that they view salesforce as one of their most critical strategic partners. Marc Russell Benioff - Chairman & Chief Executive Officer: And, Keith, wouldn't you say that that's really about our company being able to transform our role to becoming a trusted advisor especially in regards to these customer relationships with these companies? Isn't that's what's going on? Keith G. Block - Vice Chairman, President & Chief Operating Officer: Absolutely. And we're bringing a point of view around the industry. And one of the things, as you know that we focused on is these specific industry messages and the points of view and that resonates. When you're talking to the CEO, of course, I'm sitting next to one right now, Mr. Marc Benioff, and he wants to know the point of view in a particular industry. And those messages are absolutely resonating. And they want to make quick decisions, they want to solve business problems and they want to transform. And this is all about transformation. Marc Russell Benioff - Chairman & Chief Executive Officer: Keith, there seems like there's another level of it, which a lot of them really grill us on own business, because they're moving to subscription-based services themselves, they want to be a cloud company. They want to have Internet of Things capabilities, they want to be more connected to their customers, they want to understand how we're achieving this growth, because many of these companies want to achieve these same growth levels. How does it impact conversations? Keith G. Block - Vice Chairman, President & Chief Operating Officer: Well, it's interesting, you brought it up. There are two types of conversations that we typically find ourselves involved with. And again, this is at the C-level. And in the boardroom, number one is, you can always ask these companies, why aren't you thinking about yourself as a cloud company? Why aren't you thinking about changing your business model? And you can see the expression on their faces, because they're embracing that notion of transformation. Marc Russell Benioff - Chairman & Chief Executive Officer: Yeah. Keith G. Block - Vice Chairman, President & Chief Operating Officer: So, that is certainly one. Marc Russell Benioff - Chairman & Chief Executive Officer: Nobody wants to be Uber-ized out of the world. That's on the mind of every person out there who is a CEO. Keith G. Block - Vice Chairman, President & Chief Operating Officer: Absolutely. If you think about what's going on with the marketplace about this perfect storm of convergence of cloud and mobile and social and data science and IoT, all coming together, that creates incredible opportunities. It's a different world. And no CEO wants to be Uber-ized just like 15 years, 20 years ago, nobody wanted to be Amazon, if you were in the retail space. Marc Russell Benioff - Chairman & Chief Executive Officer: Right. And that's all about customer experience. Keith G. Block - Vice Chairman, President & Chief Operating Officer: Absolutely, which is where we're at. Marc Russell Benioff - Chairman & Chief Executive Officer: Okay. Anyway, next question?

Your next question comes from the line of Kirk Materne with Evercore ISI.

Thanks very much. Just two really quick ones and congratulations on a great fiscal year and fourth quarter. Keith, just to put a fine point on your last comment, there's a lot of discussions about IT budgets right now, what's going on with financial services. Is it fair to say, when we're thinking about salesforce, we should be thinking that you guys tap into budgets well beyond just the IT budget? That's our first question. And then second question would be, Europe is accelerating nicely right now. Can you just talk a little bit about whether or not that's sustainable? Thanks a lot. Keith G. Block - Vice Chairman, President & Chief Operating Officer: I'm sorry, but for some reason there was a garbled communication, so I'm going to have to ask you to repeat the second part of that one, okay?

Can you repeat the question again?

Your next question comes from the line of Brent Thill with UBS. Keith G. Block - Vice Chairman, President & Chief Operating Officer: We'll come back to that. Okay. Go ahead, Brent.

Hey, Marc. The App Cloud is your fastest growing cloud and it's showing really nice acceleration. Can you just give a sense of what you're seeing in some of these deals with the App Cloud? And I guess just a follow-on with Keith to the prior question, the fear of the macro has been weighing on a lot of investors, some of the comments from others, your tech brethren, and can you just give a signal – it doesn't sound like you've seen any type of slowdown, based on the result, but just give us a sense at kind of what you're seeing among some of the customer conversations as you look out the next couple quarters? Marc Russell Benioff - Chairman & Chief Executive Officer: Sure. I think number one is customers are looking to build applications faster than ever before. And customers want to build applications once and deploy them on every modern platform, which includes a watch, a phone, a tablet, a PC, and many different types of tablets and many different types of PCs, many different types of phones. And we have delivered the most modern, most incredible application development and deployment platform, I believe, in the enterprise today, which is Lightning. And you heard Accenture talked about on our February 2 launch, how it's accelerating their own ability to build applications not only internally but for their customers using our Lightning platform, because there's nothing else like it. Companies in the software industry have kind of doubled down and gone back and focused on building apps and kind of getting their apps to be kind of sexier and looking better on all these new devices. And that's a huge mistake. Because what these software companies should be focused on is building platforms that can deliver these apps. And that's what salesforce has done. We've delivered this incredible Lightning platform. I mean it is amazing. What it can do? I mean you even saw in the February 2 launch, we delivered our Lightning platform running on Microsoft Continuum before Microsoft has been able to deliver their own applications running on Microsoft Continuum, because of the kind of flexibility and the capabilities of Lightning. And also I would point out that's our strategy as to my comment with Heather on Wave that is, we have this incredible platform with Wave to build these Analytics apps. And I think you know that we have the most – the number one platform on Amazon Web Services for building applications there, called Heroku. And between Heroku, between Wave, between Lightning and other capabilities that we have, this really gives developers a fast, easy and very low cost way to build and deploy enterprise apps. And I would probably give you this great example of this company called SteelBrick, who came with a lot of momentum out of our Dreamforce Conference with this incredible application that they had built using Lightning and they ended up in my office in November and it was awesome. And I'm, like, how did you build this? And they were like, well this, we just built all this on Lightning. I mean, I saw this app was running. It's my dream that this incredible app running on the watch and the phone and the tablet and everything and making sales people more productive and more successful and customer service professionals more successful and more productive. And I said how did you build that? Lightning, Lightning, Lightning. And I'm, like, wow. And of course, I liked it so much I bought the company. And I think that – and I hope that I get to buy more Lightning companies, because within 30 days, I've already fully integrated that into my product, launched a new product, Sales Cloud Lightning, which includes the SteelBrick CPQ capability. And in addition to that, I've got a fully expanded and extended capabilities across my whole product line. So, I hope there's more Lightning ISVs that are teeing up, to come into our family, because, I mean, this is like auto integration once they get on to our Lightning platform, and then our ability to distribute that through this multi-thousand person distribution organization, with all this momentum is really an awesome thing. So, it is all about the platform. It's a key differentiator for us. Of course, we've got a great company. That's a key differentiator for us. Of course, we have our ecosystem; that's a key differentiator for us. And it's also about this robust platform, that's a key differentiator for us. And that's how we're winning all these deals. I think you're kind of figured out our secret sauce.

And your next question comes from the line of Kirk Materne with Evercore.

Thanks very much. I'll try this again. Just my question earlier was – is for Keith. Obviously, the European business is accelerating nicely over the last year. You guys put a lot of investments into that region. I was wondering if you could just talk about the momentum in that area, and the ability for that to continue into fiscal 2017? And then just a really quick follow-up to your earlier point around transformational deals. There's going to be a lot of discussion about IT budgets fluctuating in this kind of macro environment. When it comes to CRM, I think we should be thinking that you guys tap into budgets well beyond just IT now. Is that a fair comment? I think you were alluding to it earlier, but I just want to sort of clarify that as well. Thanks a lot. Keith G. Block - Vice Chairman, President & Chief Operating Officer: Yep. Let me talk to both. So, this time we can hear you loud and clear. So thanks for the question. So first of all, just on EMEA, I mean, one of our growth strategies has been international expansion, and that has certainly proven out in terms of the numbers. And that takes many forms. It's customer-facing, it's support resources, it's our data centers, it's all those sort of things that have really expanded our footprint internationally. And certainly in EMEA, that has paid out very, very well for us. Let me just give you an example. Two customers with incredible unsolicited CEO-level remarks at the World Economic Forum. We have entered into a relationship that we talked about on this call before with ABB. And at the World Economic Forum, often there are many sessions where the CEOs of these companies will host a transformational meeting that talks a little bit with other CEOs about what they're doing, what they see in the industry; and certainly, ABB was doing that. And at the end of the meeting, the CEO of ABB stood up, unsolicited, and said, listen, I am completely transforming the way that I sell and service to my customers and engage with them, because I have chosen salesforce as my trusted partner. And that, of course, is a very significant company in Europe. Schneider Electric is another – the CEO of Schneider Electric was on a panel with Marc talking about digital transformation. Unsolicited comment about Schneider Electric is transforming its service model because of the capabilities of salesforce. So, we have some of the most incredible, global companies in the world, who happen to be headquartered in EMEA, who are actually evangelizing our message in the marketplace around transformation and connecting to customers in entirely new ways. So, when you see market leaders coming out there and at the CEO-level and evangelizing our story, that certainly sends a great message to other companies, whether they're in that industry or not. So again, those are two proof points on EMEA. On the line of business question in terms of budget, look, IT organizations always have budgets. They typically range between 1% and 2% of the company revenues. But what we've been able to tap into beyond those budgets are the line of business executive's budgets and also, as we've discussed on this call, the CEO agenda. It's an amazing phenomenon when you see the CEO, who has the growth priority realign the budgets in a corporation to take on these growth initiatives, and that's what we're seeing. So, it goes well beyond IT. Certainly IT budgets are a particular component, but when the priority of a company is all about growth, you find the money to make that happen. You find the money to make those investments, and that's what we're seeing in the marketplace.

Your next question comes from the line Walter Pritchard with Citi.

Hi. Thanks. A question for Mark Hawkins. Your guidance for the year in terms of operating margins is towards the lower end of your range of I think 100 basis points to 300 basis points of margin expansion, with your revenue growth at the lower end of that as well, can you talk about sort of how you are thinking about that prior framework for margins? And is there anything going on this year that we should think about impacting how you are adhering to that grid? Mark J. Hawkins - Chief Financial Officer & Executive Vice President: Sure, Walter. First, thanks for the question and I'm happy to address that question. We're really pleased, coming off of a great year and a great finish where we beat our operating margin guidance. We delivered 177 basis points this last year. And on top of that, to then, consistent with our revenue margin framework, go ahead and do that 125 basis points to 150 basis points for FY 2017. We feel that's really appropriate in light of our framework, it's very consistent with it. We think it's appropriate and good guide and it also allows us to propel this growth to really help our customers solve the needs that they have and invest in the future to perpetuate this performance over the long-term. So that's what I would say, Walter.

Your next question comes from the line of Mark Murphy with JPMorgan.

Yes. Thank you. I'll add my congratulations on the strong finish. Question for Marc Benioff, so we are hearing more discussion of transformational types of projects, where salesforce is displacing many legacy systems and is being used wall-to-wall. And so, there's also a view that the company has evolved from being a single engine to a three or four engine aircraft. So, I'm curious, when you look at the larger transactions, how commonly is a large deal just for a single cloud, because I think in the prior cycle – in the past, some of them were. Versus, how commonly is it viewed as really a single customer success platform and, just from the beginning, it's going to be spanning Sales, Service, Marketing platform and everything else? Marc Russell Benioff - Chairman & Chief Executive Officer: Well, I think that's a great question. And I'll tell you I believe that that's a huge growth driver for us going forward, because still, only, I think the number is, 72% of customers still use us for only one cloud. So, that is 72% of customers still only use either the Sales Cloud or the Service Cloud or the Marketing Cloud or the Platform or Analytics, or whatever. And the opportunity is to do exactly what you said, which is, to deliver a customer success platform. And we do want to go wall-to-wall with these companies, they do see that opportunity more and more. With some premium customers, we have had that opportunity. And I believe that is a huge opportunity for this company as it continues to grow and expand, that we have a rich portfolio of products to offer these customers. Even though the vast majority of the customers have only chosen one of those products, so far.

And your next question comes from the line of Karl Keirstead with Deutsche Bank.

Thank you. Question for Mark Hawkins. Mark, I wouldn't mind going back to the Q1 DR guide, which I think implies billings growth in the mid-teens level. And your seasonality question. You definitely told us before that deal activity especially renewals are skewing to 4Q, which obviously makes the sequential DR and billings growth comparison tough in 1Q. I'm just curious is this expected to be a greater than normal impact in this Q1? And are there any other issues worth flagging that are impacting Q1 DR? Thank you. Mark J. Hawkins - Chief Financial Officer & Executive Vice President: Yeah. Absolutely, Karl. Thank you for the question. I think you're hitting it right on, which is when you described it exactly right the compounding effect that we described at Dreamforce is a reality. More and more of our DR is showing up in Q4. It impacts all of the sequential growth rates more and more as we showed in that amplified set of data that we referenced. But to kind of build on your point, there is one other thing that we're trying to make sure that everyone sees and to call out. Also I appreciate your question there, and that's regarding leap year. And it seems like a simple enough point, but when you take a look at our revenue and you divide it up by day, when there's one extra day that has the effect of having $20 million of extra revenue recognition in Q1, even though it all washes out in the year, right? But, when you have one extra day of revenue, it means you have one less day of deferred revenue, effectively. And so, that's the other thing you take a look at. So, if you take a look at the compounding effect and you adjust for the leap year, which washes all out in a year, but not in the quarter. I think you'll see just a kind of an appropriate pattern there for a guide. Okay?

And your next question comes from the line of Tom Roderick with Stifel. Tom Roderick - Stifel, Nicolaus & Co., Inc.: Hi, guys. Good afternoon. Thanks for taking my question. Let me direct this question to Marc Benioff and to Keith as well. You both talked about the role of systems integrators both as partners and customers during the quarter. I'd love to hear the role that those SIs are playing in bigger enterprise deals? And I'd be even more interested to hear to the extent that you do have some systems integrators, partners that are consuming a lot of salesforce.com. How are they doing so internally and how that's shaping their practice? Marc Russell Benioff - Chairman & Chief Executive Officer: Well, I think there hasn't been a conversation this quarter that has not evolved around the incredible success that we've had with Accenture. We're not only Accenture's fastest growing business unit, but also they've now deployed already 25,000 users of salesforce inside Accenture. You've heard their CIO and their CEO come to our launch on February 2 and give personal testimonial to the success that they've had, that their only regret is they didn't go faster with salesforce, that they're transforming their customer relationships at unheard of rates and this is having a broad ripple effect through the SI community, where I think that honestly they're all asking themselves why are they not all using salesforce, building apps on salesforce and selling salesforce and having the same great success that Accenture has had. Some of these SIs are kind of prima donnas, who have held on to the path too long and has affected their growth rates and their ability to work with customers, and in some cases, dislodged them from strategic customer situations because they were not able to move fast enough to understand these customers' needs and got displaced by Accenture, and we're seeing that as in mass. And for sure, it's a shot across the bow of the SI community that they better go faster or there's going be a broad shakeup in regard to the transformations that are happening underway in regards to these next generation implementations specifically those regarding salesforce and our product line. Keith? Keith G. Block - Vice Chairman, President & Chief Operating Officer: Yeah, great question. So first and foremost, I think we all recognize that these SIs, many of them, certainly the upper tier of the SIs are very strategic influencers in the boardroom and at the CEO-level and speaking transformation for these lines of business executives. Part of our strategy has been to really strengthen these relationships over time, because we know that they bring expertise and access. And they can also drive most importantly the customer success. The observation I would give you is that the most successful SIs are the ones who are very focused on salesforce and the ones who actually run their business on salesforce. Marc has just given that example. And we are establishing what I would call a 360-degree relationship with these SIs. So, we go to market with these SIs. They run their business on salesforce. And in the case of Accenture, they're actually building product, they become an ISV and those are the strategic sort of relationships that we're trying to build here. And we've been very, very successful and the ones who get it are growing. I had a conversation last week with a CEO of a pretty major consulting organization, who was lamenting about their lack of growth, generally speaking. And my comment to this person was quite candidly, you're not focused enough on salesforce, because if you were focused on salesforce your business would be growing. And I got this look of acknowledgment and it's absolutely true. The success stories in these consulting practices is about their salesforce practice. So, they've been a big part of our growth strategy. They're starting to – virtually all the large ones are running their business on salesforce. They've made their commitments and they're a big part of our future and our ecosystem strategy.

And your final question comes from the line of Alex Zukin with Stephens.

Hey, guys. Thanks for squeezing me in. Marc, there's been some investor and customer dialog lately touching on the theme that salesforce is becoming a little bit more like Oracle. As you continue your drive to be the largest software company in the world, how does salesforce aspire to be different from them and others going forward, while balancing your various constituencies? Marc Russell Benioff - Chairman & Chief Executive Officer: Well, I think that's a great question, and something that we think about every day at salesforce and something that we talk about every day at salesforce, which is what kind of a company is this? And what is our culture? Who are we? And what is it that we do? And we've talked a lot about that on the call already that is, we have a radically different technology model than the technology model that has been in place at Oracle or SAP or even Microsoft. We have a – which is our multi-tenancy system built on our metadata model. We have a radically different customer model, which is a model built on customer success. And we have a radically different philanthropic model that we talked about, which is our focus on 1% of our equity, our profit, and our employees' time go into our salesforce.org. So, we've, of course, done about 1.3 million hours of community service. I believe we'll do even more community service this year than Microsoft, which is a company 10 times our size, because we're just very committed to volunteerism. We run over 25,000 non-profits and NGOs for free, which have been a gift of over $250 million in services to the non-profit community. And we've given away over $100 million in grants as well. I think also we're out there fighting for equality where we can. You saw that with our focus on equal pay for women. We were just at the White House speaking about that, adjustments that we've made to our own financials, so that we can pay women the same that we pay men here at salesforce. You saw us fight in Indiana against discrimination of our employees and we're looking squarely at what's going on in Georgia with House Bill 757, which means that we may have to reduce our investments in the State of Georgia based on what we're seeing with the state government there as well. And I hope that they see the light the way that the State of Indiana did. And in addition, I think that you see salesforce trying to create a culture in an environment, where we reflect what we think the future of the world is, a world where there needs to be more equality, a world where there needs to be more focus on sustainability and where there needs to be a world focused on companies that are becoming platforms for change. And that the business is improving the state of the world. Those are the things that are really important to us. I think also you probably noticed that we opened up this call saying thank you. It's really important to us that we have a sense of gratitude, when we address our employees and our customers and our partners. That's a huge part of our culture. And at the end of the day, it's deeply a part of customer success as well that is because of our business model we're only successful if our customers are successful. So, these are the things that I think that are actually somewhat different than when we were at Oracle, the narrative there and the actions, the behavior was rewarded differently, the things that we were encouraged to do and compensated for and what we told our employees to do and what we were directing to do is different than what we do at salesforce. And I hope that we can be an example of a benevolent company that does well and does good.

I would now like to turn the call back to John Cummings for closing remarks.

Thanks so much, Ashley. And I'd like to thank everyone again for joining us on the call today. You can catch up with us next week. We'll be at several technology conferences, including... Marc Russell Benioff - Chairman & Chief Executive Officer: And also I'm about to go on Mad Money with Jim Cramer in a few minutes. I'm about to go next door to the studios, so you'll see me at Mad Money on CNBC, and I think Jim's show, which I think actually just started.

Yeah, well, we'll see you there, Marc. And then well as I said, we'll be at several tech conferences next week. Morgan Stanley, Pacific Crest, JMP Securities. As Marc mentioned earlier, catch us at one of our World Tours. If not, we'll update you on our next quarter call in May. Thanks so much. Marc Russell Benioff - Chairman & Chief Executive Officer: Yeah, thanks.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.