Whatās Going On Here?Salesforce reported better-than-expected earnings earlier in the week, so now the Slack-owner can get back to doing what it does best: speculating baselessly about its colleaguesā lives. What Does This Mean?Turns out the worldās still crazy for cloud-based software solutions, even now that workers have started heading back into offices. Just look at Salesforce: revenue from its main product ā a tool that helps salespeople track leads ā was 17% higher last quarter than the same time last year, while revenue from its cloud customer support platform grew 20%. The software company might be glad it bought Slack in July too: the number of customers spending over $100,000 on the platform jumped 44%.
All in, Salesforceās total revenue was up by a better-than-expected 27% last quarter. But it wasnāt all good news: the company seems worried that Covid flare-ups might lead cautious customers to wind back their spending, which might be why its profit outlook for this quarter came in worse than expected. Why Should I Care?For markets: Expectations are getting harder to hit.
Investors sent Salesforce's stock down 6% after the update, but itās not the only corporate software maker thatās been struggling to meet their ambitious growth expectations. In fact, data from JMP Securities showed that only 5 of the 35 tracked business software companies saw their share prices rise after they reported their latest quarterly results. And since those same stocks have fallen 13% on average since their updates, Salesforceās 6% drop-off could be just the start...
Zooming out: Goldman baits its line.
That hasnāt put Goldman Sachs off, mind you: the investment bank announced plans earlier this week to launch its own cloud software business, offering clients access to its market data and software tools (tweet this). Goldman ā which is working with Amazon on the project ā is hoping itāll help institutions save time on trend analysis and more, and ultimately attract more clients to take up its services. | 