Salesforce summer spending spree succeeds

Salesforce has reported its quarterly earnings bringing in $2.14 billion for Q3, up 25% year-on-year, as it beat market expectations.

Jamie Davies

November 18, 2016

3 Min Read
Salesforce summer spending spree succeeds

Salesforce has reported its quarterly earnings bringing in $2.14 billion for Q3, up 25% year-on-year, as it beat market expectations.

While Salesforce growth has been continuous and steady in recent quarters, there are a few industry commentators who noted increased competition could erode market dominance. Off the back of the most recent announcement, it would not appear to have stopped the CRM giant’s momentum, though the scale of acquisitions from Salesforce could indicate it is keeping a wary eye on the rest of the industry, as it marches towards the $10 billion revenue milestone in 2018.

Over the course of the summer, CEO Marc Benioff has been like a teenager with his parent’s credit card. Since May, Salesforce has acquired data-automation start-up called Implisit Insights, ecommerce platform Demandware for a whopping $2.8 billion, data analysis specialists Coolan, word processing app Quip for a cool $750 million, business analytics platform BeyondCore for a casual $110 million, messaging service Heywire and data management platform Krux for an impressive $800 million.

Benioff has not been scared about pushing his bank account to the limit and we haven’t even mentioned the $20+ billion challenge to Microsoft for LinkedIn, or the seemingly endless flirting with Twitter which has given heart palpitations to investors all over the world. It has been quite amusing to watch the market sh*t itself every time Benioff mentions Twitter, as the Salesforce share price tumbles and then rises once someone has put some distance between the two organizations. Who would have thought Twitter would have been such a poisoned chalice?

Salesforce is the leader in sales and marketing CRM solutions, but Benioff apparently knows he can’t sit back on his laurels. Salesforce rise of the top of the industry was hard and fast, it wouldn’t be unconceivable for another brand to appear and knock Salesforce off the pedestal in a short period of time considering the power of the internet (which fuelled the Salesforce ascension).

Acquisitions have spread the Salesforce remit and strengthened its capabilities in its current markets, and it seems to be paying off. The team are now forecasting revenues of $10.1 billion to $10.15 billion in 2018; not bad for a company which focuses on a relatively niche area of the market, yes the CRM segment is massive, but it’s a small part of the overall enterprise picture.

“Salesforce delivered an exceptional quarter with year-over-year revenue growth of 25% in dollars and 27% in constant currency,” said Benioff. “I’m delighted to announce that we expect to deliver our first $10 billion year during our fiscal year 2018, which puts us well on the path to reach $20 billion faster than any other enterprise software company.”

Moving forward, Benioff is seemingly convinced artificial intelligence will be the defining factor for the future of enterprise technology, as the Einstein capabilities were extremely prominent throughout the earnings call.

“I’ve met with all the tech CEOs of course, the cloud CEOs, and they all have AI,” said Benioff. “It’s table stakes AI. AI is table stakes, you all know that; everybody has got it programmatically; we’ve got the best AI, no, we’ve got the best AI, we’ve got – okay, fine; but have declaratively, through our platform, because we need to bring it to millions of people, not just a few – there’s only 15 million programmers in the world.

“We’re much bigger than that. We have to bring this to people who don’t code or low coders or citizen developers, need to have the power of our artificial intelligence, they need the power of mobility; that’s why Salesforce platform is exciting and that our core app – cloud like sales and service are built on it; that is a huge differentiator for us and it’s – you can see it just in our win rates and also our competitive position has never been stronger.”

Salesforce maybe coming under increasing pressure as the world of big business becomes smarter, connected and more digital, but Benioff isn’t going down without a fight. Organic growth is fantastic but it needs to be supplemented occasionally, and Benioff won’t be forgetting his PIN anytime soon.

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