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5 Interesting Learnings from Salesforce at $36 Billion in ARR | SaaStr

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So this past quarter was a big one for Salesforce.  For the first time ever, it projected next year, growth would fall to the single digits, to as low as 7%.  The markets reacted strongly, driving down the stock as much as 20%.

Salesforce is a more profitable, leaner entity than it was a few years back. It’s reacted to activist shareholder pressure, and changes in the market.

But while efficiency matters today, so does a certain amount of growth.  Salesforce’s $50 billion dollar drop in market cap shows growth is still at least twice as important as efficiency.

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5 Interesting Learnings:

#1.  Slack Still Growing 17%, and Other Big Acquistions Also Paying Off

Salesforce paid $27 Billion for Slack, $6B for Mulesoft, and over $10B for Tableau.  The deals weren’t cheap, but they are all at billions in revenue growing faster that Salesforce’s core.  Without these deals, Salesforce would be both materially smaller and growing more slowly.

#2.  Need 3x Pipeline Coverage Now, vs. 2x Before, to Hit Plan

CEO Marc Benioff was clear everyone in sales now needs 50% more pipeline than before.  They need 3x coverage, vs 2x a few years back.  That’s a big change.

#3.  Paid $419 million to buy Spiff

Saleforce has said they are putting big acquisitions on hold for now, but they did pay more than $400m to buy sales compensation management platform Spiff.

#4:  33% of Revenue Outside North America; APAC Growing Fastest

#5.  Almost Frozen Sales & Marketing Expenses — But Hasn’t Cut Them

Salesforce has done some cutting, but overall sales & marketing expenses is essentially flat.  They’ve held it to slower growth than overall revenues to get more efficient.  But they haven’t cut expenses here per se.

Salesforce keeps pushing.  But the team was clear there it isn’t getting any easier for them out there.  Deal sizes are smaller, and sales cycles are longer.  And while AI is everywhere in Salesforce, it hasn’t directly lead to a revenue bump. So for the first time ever, they are projecting single digit growth.

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