Whatās Going On Here?Salesforce posted better-than-expected quarterly results earlier this week, but the future looks dicey. What Does This Mean?At first glance, Salesforce impressed across the board last quarter: revenue from its āplatforms and otherā segment ā which includes Slack ā was up 53% from the same time last year, āsalesā was up 15%, and āservice subscription and supportā was up 14%. That helped the company bring in revenue that was a better-than-expected 22% higher than the same time in 2021.
The problem is the impending economic slowdown. Salesforceās customers are increasingly letting their agreements expire, while those that renew them are so tentative that itās taking longer than normal to get across the line. Throw in the fact that the strong dollar is dragging down the value of the money Salesforce generates overseas, and it follows that the companyās outlook for this quarter came in worse than expected. Why Should I Care?For markets: Slack just got pricier.
Investors sent Salesforceās stock down 7% on the news, meaning itās now down more than 30% this year ā over twice as much as the wider market. The companyās hoping its first ever share buyback program ā to the tune of $10 billion ā will help turn things around, reducing the number of its shares in circulation and pushing up the value of those left over. It even announced a price hike for Slack, which will be a first in the platformās eight-year history.
Zooming out: What would Snowflake do?
This is where Snowflakeās business model gives it the edge: the Buffett-backed software company doesnāt charge a flat fee, but bills customers according to how much they use its data storage and analytics products. That flexibility might be why it increased its customer count ā which includes BlackRock and Kraft Heinz ā to nearly 7,000 last quarter, and why the company gave a better-than-expected sales outlook too. Thatās investorsā kind of update: they sent Snowflakeās shares up 17%. | 