![]() Perhaps one bright spot in the earnings report is the slight acceleration of revenue growth in the Data platform category, which primarily includes Mulesoft and Tableau. Salesforce is notoriously slow integrating large scale acquisitions into their core product offering and decelerating revenue growth in their war with Microsoft Teams would be particularly alarming for an acquisition with this price tag. This is perhaps the most alarming datapoint when looking at revenue across each individual product - despite this category seeing 32% YOY gains, we saw a YOY deceleration compared to Q3, when they grew revenues across Slack and Platform 18%.Īs pressure mounts from activist investors, a chief criticism is the $28B purchase of Slack. In Q4, Slack and Platform revenue reached $1.6B, signifying a YOY gain of 15%. Slack & Platform revenue was the fastest growing area of Salesforce's business in Q3 by a large margin - revenue increased to $1.5B, up 18% YOY compared to 12% increases across most other product areas. Similar to core Sales and Service Cloud revenues, we saw Marketing & Commerce expand slightly with 13% YOY growth in Quarterly revenue for a total of $1.2B. Total revenue for these products stood at $1.8B and $1.9B, respectively. We saw core product revenue accelerate slightly across Sales Cloud and Service Cloud, both up 13% YOY compared to a 12% increase in Q3. Overall, the numbers came in about as expected but that's not necessarily a good thing as Salesforce faces down serious headwinds in the macroeconomy on top of everything else. Q3 was one of their worst Quarters on record for growth with $7.84B in revenue, up only 14% YOY - compared to 22% YOY growth in Q2 and 24% YOY growth in Q1 revenue figures. Heading into Q4, they projected revenue of $7.9B-$8B, which would have been 8%-10% YOY growth and ended up coming in with Q4 revenue of $8.38B. Let's take a look at the core business itself, which got lost amidst the broader circus surrounding the CRM market leader. Younger, high growth vendors tend to spend significantly more in this category, since they are capturing new market share at an aggressive rate - both Hubspot and Snowflake re-invest roughly 51% of total revenue into Sales & Marketing but it's justified by the fact they are growing at a significantly faster rate.Īs Salesforce continues to defend their ground against the likes of Hubspot, it's good to see them continue spending into growth rather than pull back and rely on their customer base as the only moat they need to remain on top. ![]() Salesforce has long been known to make aggressive investments in Sales & Marketing, an approach that tends to soften as companies reach maturity in their market.įor context, Salesforce invested 42.5% of total revenue into Sales & Marketing in Q3 and 40% in Q4.īy comparison, market leaders SAP and Oracle spend roughly 28% and 18% of total revenue on Sales & Marketing, respectively. Other questions that were top of mind heading into this earnings report: Leadership Changes? Additional Layoffs are coming at Salesforce? Salesforce might divest from Slack? Professional Services Losses? Mounting Sales & Marketing Expenses They also announced an expansion to their share buyback program with up to $10B allocated to that purposes. Salesforce beat expectations across the board and showed a significant improvement in operating margins, cutting losses from $98m in Q422 to $28m in Q423. Overall, the market responded favorably as the stock jumped 14% in after-hours trading. The stock is down 20.5% in the past year (along with virtually everything else in the Technology sector) and activist investors have poured in, pushing Salesforce to cut spending and increase profit margins.Īs a recent TechCrunch article notes, this is truly unprecedented - seeing this many high-profile investors rush in to demand change within the same company has sounded alarm bells about what they may demand other than seats on the Board of Directors. Since then, it has been a very different story. For the past 20+ years, Salesforce has been the darling of Enterprise SaaS.Ĭompany growth was explosive and the stock ( $CRM) was up 400% over the 5 years preceding their peak share price of $306.65 in November, 2021.
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