salesforce
Bulletins

Skeptical Salesforce investors now have a leader as Starboard discloses stake

Activist investor Starboard Value now holds a significant stake in Salesforce, a year after it took aim at Box.

Marc Benioff, co-chief executive officer of Salesforce.com Inc., left, and Bret Taylor, co-chief executive officer of Salesforce.com Inc., during a keynote at the 2022 Dreamforce conference in San Francisco, California, US, on Tuesday, Sept. 20, 2022. Tens of thousands of techies will frolic through kitschy national park-themed decorations in San Franciscos downtown this week as Salesforce Inc.s annual Dreamforce conference returns in full after two pandemic years. Photographer: Marlena Sloss/Bloomberg via Getty Images

Starboard's stake in Salesforce could signal a push for changes after a mixed few months for the SaaS giant.

Photo: Marlena Sloss/Bloomberg via Getty Images

Salesforce’s stock went up more than 7% on Tuesday, after activist investor Starboard Value revealed a significant stake in the company, according to CNBC. Starboard founder Jeff Smith told CNBC he remains confident in Salesforce’s ability to deliver value, and plans to invest in the company long term, but said the company has a "subpar mix of growth and profitability."

The move should make the last quarter of 2022 a little more interesting for Salesforce's executive leadership. During last quarter’s earnings call, Salesforce announced 26% year-over-year revenue growth, but also lowered its full-year guidance.

Then, during its flagship Dreamforce conference in September, the company announced new Slack features and the real-time customer data platform Genie, which were intended to push the company toward its $50 billion revenue goal.

But investors were skeptical that Genie was a real engine for growth. Although Salesforce has been a darling of the investor community based on its past performance, concerns about the company’s customer data platform vision, the price tag attached to the Slack deal, and its lack of profitability made more than one investor question the SaaS giant’s ambitions.

“I don’t see how they hit that $50 billion … It’s just not gonna happen,” Guggenheim Partners analyst John DiFucci told Protocol last month. “We can’t get there. I wish.”

And just weeks later, the company laid off a number of workers and implemented a hiring freeze through January 2023. At least 90 contractors were impacted by the layoffs, according to sources.

All of those developments sent Salesforce’s stock tumbling. So far this year, the SaaS giant’s stock is down more than 40%, making Tuesday's gains rather notable.

But Salesforce has a rocky road ahead as investors pressure the company to transition away from growth mode. Activist investors have a mixed track record in forcing tech companies to make big changes, but there's no question their presence makes the C-suite nervous; at least Salesforce has two people in the role to share the burden.

 Aisha Counts

Aisha Counts (@aishacounts) is a reporter at Protocol covering enterprise software. Formerly, she was a management consultant for EY. She's based in Los Angeles and can be reached at acounts@protocol.com.

salesforce
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