Let's get ethical, says Salesforce as revenues rocket 27% – thanks in part to US Border Patrol

Benioff: CEOs just want to spend, spend, spend

Woman looking sceptical. photo by shutterstock

Salesforce is launching an office for "ethical and humane" tech less than a week after it was heavily criticised for supplying software to the US Border Patrol, which is itself overseeing an abusive immigration policy.

The cloudy CRM goliath revealed the move yesterday as it published results (PDF) for the three months ended 31 July 2018, the first since its largest-ever acquisition, the $6.5bn buy of MuleSoft, closed in May.

It's also the first since the firm rejigged its leadership structure, as founder Marc Benioff now shares the top spot with former COO Keith Block.

The exec refresh has seen Benioff take responsibility for "vision and innovation" at the firm – and in the earnings call he waxed lyrical about the spectre of unintended consequences of emerging tech like artificial intelligence and (of course) how Salesforce will fix it.

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"Now, here at Salesforce, we have determined that this ethical and humane use of technology, especially within this context of the Fourth Industrial Revolution, it must be clearly addressed, not only by us, but by our entire industry," Benioff opined, as if the issue hadn't been making headlines for months, if not years.

Salesforce's plan is to create an office for the ethical and humane use of tech, which he said was now "a strategic initiative" – although he gave no further information about the office or its agenda.

The exec claimed the newfound interest in ethics was borne out of conversations with staffers (or Ohana) – but it is perhaps also an exercise in reputation management, as it comes hot on the heels of widespread criticisms of the tech industries ties to unpalatable government agencies.

Salesforce in particular has been slammed by critics who this month pointed out that its complaints about US immigration policies ring hollow given its continued multimillion-dollar contract with the US Border Patrol.

Referencing the approach later on in the call, in answer to a question about AI, CFO Mark Hawkins said that as well as being "deeply committed" to the tech: "We're also deeply committed to the ethical and humane use of that technology [AI] that we all realise ... is developing a lot faster, going a lot farther than any of us realised."

Elsewhere on the call, execs pushed the importance of integration to customers – its Integration Cloud being created as part of the MuleSoft acquisition – and said discussions had shifted to a strategic level, with CEOs having cash to splash.

"I've never seen CEOs spend so aggressively," Benioff said. "They've benefited really dramatically from these tax cuts and also from the deregulation focus, especially in the United States."

But he added that he had worked with CEOs in Europe and Asia, and that the same was true across the board.

"I don't know a CEO who is not aggressively spending at a level that I have not seen them spend at before. And probably the number one thing that they're spending on is their own digital transformations. They are really positioning their companies for the future."

That desire to spend seems to have benefited Salesforce, which reported a 38 per cent year-on-year boost in operating cash flow to $458m, and a 27 per cent increase in revenues.

Most of the quarterly revenues came from Sales Cloud, which grew 13 per cent this quarter to bring in just over $1bn for the first time. Some $892m came from Service Cloud, and $452m came from Marketing and Commerce Cloud.

Meanwhile, API-pusher MuleSoft brought in some $122m, which was more than expected – although Salesforce said it wasn't planning to update guidance based on this, as a big chunk of cash is recognised upfront as licence revenue.

Operating expenses went through the roof to $2.317bn, up from $1.823bn, leaving Salesforce with a $115m operating profit, up from $84m in the year ago period. After accounting for income expenses and a gain on unspecificed 'strategic investments" and $68m in tax, the business made a net profit of $299m, up from $46m.

However, despite the Q2 results beating Wall Street expectations, shares fell about 4 per cent after hours – likely due to lower-than-expected guidance for the next quarter.

Its full-year guidance was as expected, and Block said in a canned statement that the firm was still on track to meet its goal of $23bn revenues in FY2022.

El Reg wonders if that revenue projection includes sales from the remainder of the US Border Controls contract, or if Salesforce's integrity means it will step away from that business altogether. ®

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