Underneath the Dreamforce pomp, Salesforce flexes its financial muscle

Last week, investors got a taste of Salesforce's post-Slack future. And despite looming risks, Wall Street appears to be buying it.

Marc Benioff in front of a sign for Dreamforce International Park

Dreamforce is a chance for customers to come together and celebrate everything Salesforce.

Photo: Salesforce

It's easy to forget that Dreamforce serves an important purpose for Salesforce beyond turning downtown San Francisco into a "Burning Man for people with jobs."

The annual conference is, of course, a chance for customers to come together and celebrate everything Salesforce in an environment that can feel like a cult gathering. In past years, attendees would stand in lines to get their own face imposed over Marc Benioff's latest book release cover or rush to take pictures with one of the multitude of dancing cartoon characters that serve as Salesforce mascots, including a literal "Customer 360" wheel.

This year was no different, despite a largely virtual audience. Attendees got the chance to see celebrities like Will Smith, watch a private Foo Fighters concert and listen to Benioff wax philosophically about the need for "trusted enterprises." All things considered, a pretty standard Dreamforce.

But behind the pomp and frill, Salesforce had a lot to brag about. While in the past the company put its product releases at center stage at Dreamforce, this year those announcements took a backseat as executives addressed key questions about the future of one of enterprise software's biggest names during a presentation for investors last week. And Wall Street appears to be buying the vision.

"We now view the stock as one of the lowest-risk, highest-reward trades in enterprise software," Wolfe Research's Alex Zukin wrote in a note to clients following the event.

Dreamforce 2021 was the company's first major in-person gathering after its blockbuster $27.7 billion purchase of Slack in 2020. As it looks to quickly absorb the company, Salesforce touted the success of other megamergers, including its $15.7 billion deal to buy Tableau in 2019. The data visualization software contributed $394 million in revenue in the first fiscal quarter of this year, a 38% rise.

And while the new capabilities introduced between Slack and Salesforce were lackluster and largely focused on simply bringing the instant-messaging platform into the Salesforce universe, executives like Benioff and COO Bret Taylor painted a strong vision ahead for supporting the new "digital HQ" — a surprising pivot for a company whose physical office eclipses the entire Bay Area skyline.

"Now, if I were starting a company, I would start it in Slack," Taylor told investors. "Most people's engagement is going to be over these new digital technologies."

Benioff struck a similar tone, telling the Wall Street audience that Salesforce's "digital headquarters are more important than our physical headquarters."

Salesforce upped its revenue forecast for next year, an announcement that helped drive the stock up to what one trader labeled a "ridiculous" amount. (Shares were down slightly in Monday trading.)

The company also largely ruled out any "significant" acquisitions, though Salesforce has been known to make similar promises in the past before announcing multibillion-dollar deals. Benioff and others repeatedly stressed that strategic pivot in discussions about "organic innovation," a departure from Salesforce's past, when it largely pursued new product offerings through pricey mergers.

But perhaps most noteworthy, Benioff declined to directly address increasingly rampant rumors that his departure from Salesforce — or at least, as CEO — is coming soon. Benioff recounted a conversation when director Sandy Robertson told him to stay forever: "That seems like a very long time. So, I don't know."

Showcasing the torchbearers

Despite the ambiguity over his future, it's clear Benioff was eager to showcase a revamped leadership team that increasingly looks like the anointed torchbearers for whenever he does decide to step aside.

Among them is, of course, Taylor, who appears increasingly likely to serve as the next CEO. But it was also a time to shine for newly-minted CFO and rising star Amy Weaver, along with CRO Gavin Patterson, CMO Sarah Franklin and Slack CEO Stewart Butterfield. The rise of those new leaders also pushed down the prominence of others: If you blinked, you probably missed new Tableau CEO Mark Nelson's presence at the conference.

"This conference is a manifestation of the last 18 months of work and the fundamental transformation of the entire organization. How we run it ... who is running it, how it is run," Benioff said. "Now we have probably the best management team we have ever had."

But while Salesforce may have presented a rosy image to Wall Street, that doesn't mean the company is without risks. The CRM market — Salesforce's core segment — is becoming increasingly competitive as Microsoft and upstarts like Freshworks and C3.ai all try to steal share from the industry leader.

And Salesforce's key areas of expansion moving forward pit them against very formidable opponents. The company, for example, plans to launch a customer data platform in late 2022, an already crowded space with providers like Adobe and Segment taking an early lead.

It's also slated to release an "all-digital contact center" product next year, again veering into a territory dominated by the likes of Genesys, Nice inContact and Five9. (Taylor also squashed speculation that Salesforce was a mystery bidder for Five9.)

Despite growing competition, Salesforce appears to be firing on all cylinders. And as Benioff enters what could become the twilight of his tenure at the helm of the company he co-founded in 1999, you can bet he's going to try to end it on a bang.


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