Salesforce, AT&T strike a deal for Salesforce Customer 360

Yahoo Finance's Alexis Christoforous, Brian Sozzi, and Emily McCormick discuss the AT&T-Salesforce deal, and Salesforce's latest earnings report.

Video Transcript

ALEXIS CHRISTOFOROUS: AT&T and Salesforce have struck a deal for the telecom giant to use Salesforce's 360 Truth cloud technology. Emily McCormick is back to break this one down for us. So, Emily, how is this going to change AT&T? What does it mean for the telecom company?

EMILY MCCORMICK: Well, Alexis, the AT&T deal was one of the big wins that Salesforce landed in its reported quarter. And with this deal, AT&T will be using Salesforce's Customer 360 product for virtually every customer touchpoint.

So just to illustrate how comprehensive this deal is, Salesforce CEO Marc Benioff said during the earnings call yesterday the AT&T truck pulls up to my office or my home. That's going to be Salesforce. And I walk into the AT&T store, and that's going to be Salesforce. You're getting an email from AT&T. That's also going to be Salesforce. So really, as you can see, a very comprehensive view of the customer experience now being funneled through the Salesforce platform.

And the company really touted this as an example of a major customer accelerating its plans for a digital-first, [? work-from-home/anywhere ?] environment, and something that Salesforce is anticipating will inform some of its deals and that pipeline going forward for the second half of the year. Alexis.

BRIAN SOZZI: Yeah, Emily, Marc Benioff, the Salesforce founder, he's a master showman. He's known as a master showman, master salesman. But lost in that earnings call last night, they cut their outlook.

EMILY MCCORMICK: Absolutely. Absolutely, Brian. So, I mean, that is what really is driving that decline that we're seeing in the stock today, although it still is up for the year to date and outperforming the broader market.

And just to run through those numbers, we saw that Salesforce lowered its guidance to now see adjusted earnings per share of as much as $2.95 on revenue of $20 billion. That's down from a previous view for adjusted EPS of as much as $3.18 on revenue of up to $21.1 billion. Now, this really reflects new business expectations amid the pandemic, although Salesforce did say that it's seeing improving trends within its deal pipeline and close rates today, particularly in April and early May versus what they saw in March.

I also want to point out that they saw their revenue attrition rate actually decline year over year to less than 9% at the end of the first quarter, and they're not anticipating that much customer churn will factor into their outlook. And, really, the cause for this lowering of their outlook is because they aren't expecting that the IT spending environment will normalize until next year. So that will continue to weigh. Brian and Alexis.

ALEXIS CHRISTOFOROUS: All right, thanks a lot, Emily.