Welcome to the Cloud Wars Minute — your daily news and commentary show, hosted by Cloud Wars Founder Bob Evans. Each episode provides insights and perspectives around the “reimagination machine” that is the Cloud.
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In this Cloud Wars Minute, Bob Evans reviews Salesforce’s Q4 earnings, which suggest a 10% downshift in the company’s full-year fiscal 2024 growth rate.
Highlights
00:38 — In the greatest growth market the world has ever known, one of the companies is “downshifting significantly” — Salesforce. The company seems to be entering a new era, what CFO and president Amy Weaver called a “new day,” notes Bob, before explaining that the company is “accepting lower growth and aiming more for profits.”
01:27 — Contrary to what it may seem, Salesforce is projecting a 10% growth rate. For Q4, which ended January 31, Salesforce reported a 14% increase in revenue, to about $8.3 billion.
01:45 — “It’s the growth dynamic that has shifted here,” notes Bob. Going back three months, to the quarter that ended on Oct. 31, the growth rate was 14%. After five years of never seeing a growth rate under 20%, Salesforce has seen two consecutive quarters of 14% growth rate.
02:12 — “The growth gets even worse if we look at their guidance for Q1, which ends April 30,” says Bob, before adding that “they’re expecting growth of 10% for the full fiscal year running Feb. 1 to Jan. 31.”
02:33 — Contrast that 10% growth to that of the just-completed fiscal year 2023 of $31.4 billion, which was up 18%, says Bob.
02:48 — Looking at an indicator of future revenue, Salesforce’s remaining performance obligation (RPO) growth is up 11% to a total of $48.6 billion. In comparison to other Cloud Wars Top 10 companies, Salesforces’ numbers are striking compared to:
- Oracle: 68% RPO
- SAP: 35%
- ServiceNow: 25%
“Any way we look at this, it appears to be a whole new era for Salesforce,” says Bob.
03:49 — Bob feels that these numbers are “rather stunning” as it relates to the “steepness of the decline from Salesforce.” The company needs to hit profit goals and is shifting its focus that way.
04:16 — There are competitors to Salesforce, such as SAP — which is growing at a much higher rate — Oracle, and other smaller software companies, that will see this as an opportunity to get into the “booming CRM space” that Salesforce has dominated for years.
04:59 — Early next week, Bob will have more coverage on these numbers following the earnings call.
