The future is looking good
The forecast for the full year was up to $6.65 billion and in 2017 Salesforce expect to achieve $8.1 billion. The profitability has grown for six consecutive quarters and Block shared that even when renewals kicked in the margin would still be a healthy mid 30%. Benioff believes that it will not be long before they achieve a $10 billion revenue figure, and while he stopped short of announcing that it would be 2018, one suspect that he hopes it will be.
Benioff was also proud that Salesforce are now No.1 in the Gartner magic quadrant for Sales, Service and Marketing cloud solutions. With companies often looking at the quadrants for advice this is a tectonic shift in the industry and should set Salesforce well on the way to achieve the $10 billion figure. The key thing is whether they can achieve the relationships needed in those large enterprises to capture the deal at the right point in time.
The challenge they may face is that Oracle and SAP have complete ERP solutions and if Salesforce can combine with companies like Workday and Netsuite is it possible to see a world where either Oracle and/or Sap are significantly reduced in size.
It was during the Q&A session afterwards that Benioff finally gave his view on those two companies saying: “There is no doubt We are at a tipping point in cloud platforms… companies who have been cloud deniers like SAP and Oracle are paying a horrible price in single digit and negative growth because companies are not buying their product because they are not modern and not built in this modern architecture.”
Conclusion
Strong results from Salesforce make interesting reading. If the tipping point of cloud is reached then Salesforce are in position to clean up provided they can convince the larger corporates to back them. With Aniel Bhusri, CEO Workday texting Benioff during the investor call, there is clearly a strong personal relationship between them. It will be interesting to see how the business relationship between the two companies develops over the next few months in cracking open the oligopoly that Oracle and SAP have enjoyed.
The future of Salesforce is healthy. It now seems unlikely that they will seek a buyer as they were hunting for a few months ago. If they aren’t then what are their long term plans?
Benioff didn’t seem interested in expanding the company beyond a SaaS vendor and at some point in the future this may leave them vulnerable, but that is a long way off.
