Salesforce slightly beat expectations for Q1 of its 2021 fiscal year, reporting net income of 70 cents per share on revenue of $4.87 billion, up 30% from the prior year. The company dropped its revenue forecast for the full year by $1 billion to $20 billion.
Salesforce expects earnings between $2.93 and $2.95 per share, down from previous expectations 0f $3.10 per share.
Salesforce’s deal with AT&T (Wireless) is one of the ‘largest transactions we’ve ever done,’ says Salesforce CEO Marc Benioff.
Workday showed profits of 44 cents per share (excluding certain items) on revenue of $1.02 billion, up 23% from a year ago. It also lowered its forecast for the year.
I find it intruiging to see the two companies working together, and wonder if that collaboration might lead to bigger thing in the future.
Pleasanton, CA-based Veeva Systems, Inc., with east coast offices in Radnor, had a tremendous start to its fiscal year 2021. Revenue was up 38% from the prior year to $337.1M, while net income was $86.6 million, up 18%. Veeva benefited from customer activity created by Covid-19, the general pace of change in the industry, and the continued fleshing out of its product line.
Matt Wallach, who retired from his role as president of Veeva Systems as of June 2019, returned as a non-managerial board member in January as planned. Wallach is also involved in the startup community, such as serving on the board of HealthVerity.
Although shaken like everyone else by Covid-19, the universe of companies that have built around Salesforce, many within Salesforce’s portfolio of investments, seems to be booming, perhaps exceeding the growth of the mothership itself.
A few recent cases out of many:
New Jersey-based Cognizant Technology Solutions shares rose yesterday after the company announced that it would acquire digital marketing agency Lev Digital, based in Indianapolis. On its home page, Lev says “Lev is the most influential marketing-focused Salesforce consultancy in the world”. I don’t know how they back that up.
Lev will be Cognizant’s third recent acquisition related to its effort to expand its Salesforce business. Last month, Cognizant acquired two other Salesforce premium partners. Cognizant had previously purchased another Salesforce consulting firm in 2018.
Although Cognizant is much larger, the strategy reminds me of LiquidHub’s strategy of buying and integrating Salesforce marketing shops prior to being acquired by Capgemini in 2018. An update from Capgemini Invent, the global group established around LiquidHub and other acquisitions, says it grew 15% in 2019 and passed the $1 billion revenue mark. The LiquidHub acquisition certainly contributed a big chunk of that.
In other deals, Accenture (NYSE: ACN) completed the acquisition of the Workday, Salesforce and U.S. MuleSoft practices from Alpharetta, GA-based Sierra-Cedar. The acquisition adds to Accenture approximately 275 professionals focused on the small and medium-sized education and government markets.
And of course, Bob Moore’s Philly startup CrossBeam, in which Salesforce is an investor, is built on a Salesforce platform.
Its a good time to buy high-quality smaller firms which may not have much access to capital markets, although that may not be the reason behind these specific deals.
Advertisers are expected to spend more than $1 billion in 2020 on local TV streaming ads. NBCUniversal’s TV stations group wants to capture a greater share of that. https://t.co/RkURfZeipa via @WSJ#comcast
I found an email from 11 years ago from @chrisfralic about his excitement in @Roblox. He said, "My 9Yr old Beta Tester Max has been using it more and more, as have his buddies. Been talking to CEO David Baszucki and there *might* be a chance to join." Grateful for Max 🙏
Roblox is now valued at about $4 billion after closing a new funding round led by venture-capital giant Andreessen Horowitz. https://t.co/YTl1WO9DDY … via @WSJ
Numbers are important to OwnBackup. The company currently houses 80 employees at its headquarters, in Englewood Cliffs (possibly 200 by year’s end), and 150 worldwide.
“We have a large presence still in Tel Aviv, we have an office in London and we have 10 to 15 people scattered across the United States working remotely,” said Sam Gutmann, CEO.
In August, OwnBackup was ranked #102 on the Inc. 5000 list for 2019, and it came in at #2 when NJTechWeekly.com compiled a list of fast-growing NJ tech companies from the Inc.article,
However, as significant as these numbers are — and from Gutmann’s reaction, you know they’re extremely important — what OwnBackup is doing for its steadily increasing clientele is at the forefront of the CEO’s mind.
“We consider it backup 3.0”
Sam Gutmann, CEO of OwnBackup
“We consider it backup 3.0,” said Gutmann. “Cloud to cloud, moving data from one cloud to another. Right now, we focus on the Salesforce ecosystem, the fourth-largest enterprise software company in the world: 180,000 customers.”
How it works
He explained the process. “We generally back up customers that use Salesforce or other applications built on the Force.com platform. When a customer deploys our tool — frankly, it’s a 15-minute set-up process — we almost immediately start backing up all the data they have on the platform. Then what happens, in the event of a data loss, the first thing you need to do is understand what happened. Salesforce or anything built on the cloud now is a giant, relational database. So if you delete 100 accounts, for example, you’re just not affecting those 100 accounts; the contacts, the opportunities and the leads would also be affected. We call this ‘cascade delete.’ Our series of comparison tools allows you to compare any two points in time. And we understand what data records were added, changed or deleted. Once you understand the extent of that data loss, we have tools that will allow you to start recovering the data.”
Recovery time for OwnBackup global clients depends on extent of the data corrupted. “We really want to provide the [100% Software-as-a-Service solution] tools, so you, the client, can understand what exactly was affected in a surgical way, and put the database back together, precisely the way you think it should be,” said Gutmann.
OwnBackup, minus its current name, was started as a part-time project in 2013 in Israel by Gutmann’s friend and colleague, current CTO Ariel Berkman. In mid-2014, Berkman landed a large enterprise customer in the United States, which encouraged the company to think more globally and changed the part-time project into a full-time venture. The latter involved bringing in a management team, and that’s when Gutmann got involved.
Born and raised in Bergen County, Gutmann lived in Manhattan for 10 years, but he’s now back in the New Jersey suburbs. “Frankly, [I] almost always worked in Jersey, even when I lived in the city. I did the reverse-commute.” Though only a stone’s throw from the George Washington Bridge and the business mecca that is Manhattan (and the rest of New York City), office space in his locale is a third as expensive, he said.
“We attract great talent right where we are,”
Sam Gutmann, CEO of OwnBackup
Gutmann and OwnBackup have just moved into a bigger space in Englewood Cliffs, and Gutmann noted that commuting daily to a New Jersey office is easier than crossing the Hudson. “We attract great talent right where we are,” he said, adding that there are two shuttles that transport Gotham residents to the company offices.
The search for talent
OwnBackup is on the lookout for talented folks. “If you’re amazing, and you want to join an amazing fun, fast-growth tech company, we are very, very much hiring,” said Gutmann. He explained that there are currently 39 open positions to fill, including those for account executives, sales development representatives and marketing specialists. “[Bergen County] is a great place. We are one of the fastest-growing tech companies in Bergen County, or perhaps the fastest-growing, and we want to continue to grow here. We look forward to continuing our involvement in the community and to continuing to build a great company.”
Gutmann also stressed that office camaraderie is crucial. “We are very proud of the team we’ve built. Culture is extremely important to us. The two most important things that I do is help hire and attract amazing people and help foster a culture where everyone is working together towards our mission and our vision, but having fun while we do it.”
The absolute number-one challenge? “Hiring amazing people. We have hired slowly and methodically, and there’s a lot of great people out there, but sometimes they take a little time to find. Our growth is certainly dependent on our ability to ramp up the team, and we’ve done a great job at it, but we’ve got a long way to go.”
I’ve been wondering for some time whether Salesforce’s (NYSE: CRM) growth would falter, but it really hasn’t yet in a big way. Though a string of acquisitions have had a dilutive effect, investors have rewarded it with a growth premium in terms of a higher Price to Earnings (PE) ratio. Its somewhat akin to what happened last year when Netflix briefly surpassed Comcast in market value. Such a PE advantage, though tenuous, gives Salesforce a strong currency for acquiring others.
Salesforce may be on the verge of becoming a more powerful enterprise player than the possibly capital-constrained SAP, under pressure from an activist investor, in spite of its considerably smaller revenue & profit base.
Comparative share prices: Salesforce (light blue) vs SAP (dark blue) Past 5 years
CRM Mkt cap
$146.8B
SAP SE Mkt cap
$162.4B
In 2018, SAP redesigned & retargeted its CRM, but its way too early to measure how effective that relaunch has been.
SAP CRX ( Qualtrics): The acquisition of Qualtrics opens up an adjacent market to CRM that Salesforce isn’t much of a player in today.
Salesforce could move more into SAP’s space:
Salesforce Options
Buying WorkDay would appear financially feasible, though WDAY founders control voting stock (they won’t allow another Peoplesoft). WDAY brings Financial ERP as well as HCM.
Continue partnerships or consolidate RootStock & Financial Force (manufacturing & financial ERP)
Buy Zoho if available. Threat to cannibalize Salesforce’s own core business, but could be like Microsoft’s Great Plains acquisition
Salesforce acquisition target list leaked in 2016 – What’s happened since
Adobe Mkt cap 134.91B, essentially the same as CRM
LinkedIn . Acquired by MSFT for $26.2 billion
Workday . Mkt Cap $39.9 billion
ServiceNow . Mkt Cap $50.8 billion
Netsuite . Acquired by Oracle for ~$9.3 billion
Tableau Acquired by Salesforce for $15.7 billion
Pegasystems . Mkt Cap $5.7 billion
Qlik Acquired by Thoma Bravo for $3 billion
Veeva . Mkt Cap $21.7 billion
Box . Mkt Cap $2.6 billion; Recent activist stake
Demandware . Acquired by Salesforce for $2.8 billion
Zendesk Mkt Cap $8.6 billion
Marketo Acquired by Adobe for $4.8 billion
Hubspot . Mkt Cap $6.8 billion
Salesforce’s Mulesoft acquisition last year was totally off the chart. SAP owns no equivalent.
Salesforce needs to decide whether to build a strategy around smaller customers, or double down on larger customers.
Salesforce is also likely looking at ways to accelerate its CRX ambitions.
Another possibility is a dead stop to Salesforce’s organic growth, but that seems unlikely given the size and projected growth of the market
Not discounting Oracle at all, but see it more as a hard engineering company, inconsistent in end user applications.
