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Deals are now reviewed by senior management salesforce the register


Salesforce said last night that sales cycles are stretching and that it is taking a “very deliberate” approach to hiring after it missed analysts’ expectations for revenue growth.

The SaaS CRM giant posted revenue of $7.72 billion in the second quarter, up 22 percent from the same period last year. Net income fell to $68 million from $535 million in the year-ago quarter, but the company embarked on a sales and marketing spending spree that rose to $3.4 billion from $2.7 billion.

But it was the forecasts for future earnings that irked investors, inciting a 5.5 percent drop in the company’s valuation after sales forecasts were trimmed.

Salesforce said it would post revenue of between $7.82 billion and $7.83 billion in the third quarter. Though that could represent a 14 percent increase from a year earlier, it was lower than analysts’ expectations of $8.05 billion. according to Bloomberg.

The company — an early adopter of the SaaS model in 1999 — lowered its revenue guidance for the year to $31 billion from $31.8 billion.

Speaking to investors, Salesforce execs attributed the cut to two things: the dollar’s strength against other currencies — so-called headwinds — and more caution on the part of buyers.

Marc Benioff, Co-Founder and CEO, said: “We are seeing customers becoming more measured in their purchasing decisions. Sales cycles can be lengthy. Deals are reviewed by higher levels of management. All of this we began to realize in July. Almost everyone I’ve spoken to takes a more measured approach to their business. We expect these trends to continue in the near future and we have taken this into account in our forecast.”

Bret Taylor, co-CEO, said that while customers remain “digital transformation” a priority, they are shifting focus “sensibly to productivity, efficiency and time-to-value.”

Amy Weaver, CFO, said Salesforce is also being a bit more cautious about its spending, particularly when it comes to hiring. The company is holding on to its margins with a “more disciplined approach.”

“In terms of specific drivers, we will definitely continue to take a measured and very deliberate approach to hiring. We prioritize customer-centric travel. And again, we continue to benefit from some of the decisions we’ve made in real estate over the last few years,” she said.

The CRM giant decided to lease 40 percent of its Salesforce West building at 50 Fremont Street lately, a whopping 350,000 square feet of office space that appears to “fit about 1,750 workers.” Also last year, the company canceled its lease for about 325,000 square feet in the unfinished Parcel F tower and leased portions of its Salesforce East tower at 350 Mission Street to Yelp and cosmetics chain Sephora, among others, according to real estate database Wrangler at costar.

Back in February 2021Brent Hyder, Salesforce President and Chief People Officer, said, “Employee experience is about more than ping-pong tables and snacks,” as he announced an end to the assumption that most employees would work from the office and introduced a flexible work schedule .

The pressure on Salesforce didn’t impact all enterprise technology spend, however.

Snowflake, the cloud-centric data warehouse company, raised its guidance for the third quarter. After second-quarter revenue of $497.2 million, an 83 percent increase from a year earlier, the company said product revenue could be as high as $505 million in the following quarter, compared to an estimated 501.1 million dollars compiled by Bloomberg. ® Deals are now reviewed by senior management – Salesforce • The Register

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Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.