Salesforce: “Actually, Things Are Now Slowing Down a Bit — At Least in Some Places”

#SmallBusiness

Workday: “There’s no slowdown at all”

Salesforce: “We’re finally seeing slowdown now in our commerce, media, telecom, and SMB segments”

It’s still a tale of multiple worlds out there pic.twitter.com/dRPuWG5iZe

— Jason 2022 SaaStr Annual Sep 13-15 Lemkin (@jasonlk) August 26, 2022

So when Salesforce announced its last quarter, everything was still humming.  While the stock price was hit along with everyone else, the business wasn’t.  Benioff noted he just wasn’t seeing any slowdown.

Well, now he is.  Salesforce had another blow-out quarter. hitting almost $31 Billion in ARR and growing a still stunning 22% at this scale.  Breathtaking.

But, it’s gotten a bit harder, in some segments at least:

“Sales cycles can get stretched, deals are inspected by higher levels of management and all of this we began to start to see in July,” Benioff said. “Nearly everyone I’ve talked to is taking a more measured approach to their business. We expect these trends to continue in the near term, and we’ve reflected this in our guidance.” – per CNBC

Salesforce saw demand from SMBs slow, and demandslow in retail, consumer and communications / media.  But support and sales clouds remained strong, with little impact on demand.  And it saw Slack accelerating to $1.5 Billion in revenue.  A great barometer that collaboration software remains on fire, with little downturn there (see also, Monday, Asana, etc).

Salesforce really now plays in all key categories, from commerce to infrastructure, from sales to support, and more.

Perhaps it’s a good look at what’s happening overall.  Tech infrastructure spend like Snowflake and Datadog and Cloudflare appear to have no downturn at all.  Workday by contrast this week announced it was seeing no downturn at all.  And at the other end of the spectrum, folks at the intersection of commerce and SMB like Shopify have taken the biggest hit to post-Covid growth.

It’s good for everyone to track Salesforce.  Even if you don’t use it, partner with it, or develop on its platform, Salesforce at $31B ARR is about 15% of all the $200B of pure SaaS revenue (using one Gartner estimate).  That means in many ways, Salesforce is SaaS.  It’s our #1 largest vendor, and it’s in so many category.

So they are a great canary in the coalmine.  And Salesforce says collaboration software and infrastructure remain on fire.  But e-commerce, media / comms, and SMB are under pressure.

We sort of knew that.  But Salesforce confirms it.

 

And how about you?  Over 1,000 of you answerd our survey.  Only 22% of your thought things were tougher than a few months ago.  38% said stronger / better, and 39% said about the same:

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Jason Lemkin, Khareem Sudlow