Salesforce Co-CEO Marc Benioff: Our Business Model Has ‘Resilience and Durability’
Wade Tyler Millward
“We‘ve delivered really strong revenue growth, profitability and cash flow, showing yet again the resilience and durability of our business model in this economic environment,” Salesforce co-CEO Marc Benioff said on an earnings call this week.
Salesforce co-CEO Marc Benioff used his company’s quarterly earnings call this week to detail a more “measured” customer buying environment, drum up interest for his marquee Dreamforce conference, hint at future acquisitions and defend the “resilience and durability” of his company’s business model.
The San Francisco-based front-office software vendor expects to keep benefitting from the ongoing rush of business-customers adopting digital transformation tools, Benioff said – a trend that has also benefited partners of Salesforce and other software vendors.
“You saw the results for the quarter,” Benioff said on an earnings call Wednesday. “We‘ve delivered really strong revenue growth, profitability and cash flow, showing yet again the resilience and durability of our business model in this economic environment.”
What Did Marc Benioff Say On Salesforce’s Earnings Call?
On the plus side, during the second quarter of Salesforce’s fiscal year – a quarter that ended June 30 – Slack’s $381 million in total revenue was better than expected. The “professional services and other” segment beat expectations with $577 million. And Salesforce had its fifth consecutive quarter with 40-plus percent growth in the number of 100,000-plus customers on Slack.
But Tableau saw decelerated growth, Salesforce executives cut their guidance around what revenue to expect for the fiscal year and they said customers are in a “more measured buying environment,” with longer sales cycles, more layers for getting deals approved by customers, deal compression and weakness among small and midsize businesses.
His words and Salesforce’s performance appear to have kept up some investment banks’ good feelings toward the company.
“Front office software will clearly see some demand hits around the edges given the macro and CRM‘s (Salesforce’s) guidance will be scrutinized on the Street as possibly the first shoe to drop in a broader slowdown in the software world over the next 6 to 9 months given the macro,” investment bank Wedbush said in a report. “That said, we believe this is more of a modest resetting of expectations given the macro and is a prudent approach given the Rubik’s Cube backdrop that could prove to be a conservative outlook from CRM.”
According to a report from Morgan Stanley, a survey the investment bank did during the second quarter “supports the notion Digital Transformation initiatives remain high on the CIO priority list (#4 overall), largely focus on front office,and is expected to be amongst the most defensible projects (#3 most defensive),” good news for Salesforce and its partners.
“This gives credence to Salesforce‘s argument the demand didn’t go away, but is just taking longer to convert,” according to the Morgan Stanley report.
Likewise, Gireesh Sonnad, CEO of New York-based Salesforce partner Silverline, told CRN in a recent interview that a new practice around the media and entertainment industry and growth in Canada have contributed to 20-plus percent growth in sales year over year expected by Silverline.
“We’re having a really, really nice growth year, which we’re excited about,” Sonnad said. “We’re surpassing the growth of last year, which is exciting. And really feeling like we’re coming out of some of the stickiness that we saw in the last couple of years, if you will, which has been great.”
Here’s more of what Benioff had to say on the call.