Ho hum, Salesforce announced its quarterly earnings yesterday and the news was all good once again with revenue up 25 percent to $2.68 billion. The company has blown through its $10 billion yearly revenue goal and has boldly set one for $20 billion by FY2022. I wouldn’t put it passed them.
The company also announced some big executive moves. More on that later
Salesforce is the anti-IBM. While Big Blue has had 22 straight quarters of declining revenue, Salesforce has been on a steady increase over the last several years. The company’s quarterly revenue going back three years to Q32015 has almost doubled from $1.38B to this quarter’s $2.68B.
It has been a steady march upward, making that climb to $10B faster than any software company ever and CEO and chairman Marc Benioff had every right to crow about it in the earnings call.
“In fact as the fastest growing enterprise software company ever to reach $10 billion, we are now targeting to grow the company organically to more than $20 billion by fiscal year 2022 and we plan to do that to be the fastest enterprise software company ever to get to $20 billion,” Benioff said.
One way the company has been able to achieve that kind of growth has been through international expansion. That’s actually one place that at least one analyst, Mark Tepper of Strategic Wealth Partners said he would be watching closely to see how they were doing in that area, according to an article on CNBC.
Well, Tepper had to be pleased with what he saw. Salesforce’s Keith Block, the company’s president, vice chairman and chief operating office, said that 40% of new hires this years were outside the US and the investment seemed to be paying off with bigger growth numbers overseas than in the Americas.
Benioff also announced that Bret Taylor, who came over in the $750M Quip deal last year got a promotion when he became president and chief product officer. “Bret is going to drive our product vision, design, development and go-to-market strategy,” Benioff explained. Meanwhile Alex Dayon, who had been in the CPO role got promoted to president and Chief Strategy Officer. “Alex is going to lead strategic initiatives working more closely with our customers on product direction and transformation,” he said.
Both moves are designed to bring a new generation of leadership to the company, which should help Salesforce from stagnating or getting too comfortable with its success, but the company does have a lot of presidents with Taylor and Dayon joining Block , CFO Mark Hawkins and Chief People Officer Cindy Robbins all holding that title. President could be the new vice president at Salesforce.
Ray Wang, founder and principal analyst at Constellation Research says this isn’t so much about being top heavy as the way the company chooses to distinguish certain executive roles. “I think the way to look at it is they have a lot of CXO’s, ” he said. “The way to distinguish officers from CXO’s is the President title, but the promotions are well deserved and the title puts them on equal standing with the rest of the executive team,” he explained.
Wang also thinks that Taylor earned his way into the title by proving his mettle after the acquisition, and that Dayon was ready to try a different role. “Alex now gets to focus on strategy after years of honing his chops on product and service offerings,” Wang said.
The approach seems to be working. While the stock is down slightly this morning, it’s just under its one year high of 107.49. It’s unclear why Wall Street isn’t reacting more positively to yesterday’s report (at least temporarily), but the company continues its growth trajectory and the future looks bright.