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Gossip Girl

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What’s going on?

Salesforce reported better-than-expected earnings earlier in the week, so now the Slack-owner can get back to doing what it does best: speculating baselessly about its colleagues’ lives.

What does this mean?

Turns out the world’s still crazy for cloud-based software solutions, even now that workers have started heading back into offices. Just look at Salesforce: revenue from its main product – a tool that helps salespeople track leads – was 17% higher last quarter than the same time last year, while revenue from its cloud customer support platform grew 20%. The software company might be glad it bought Slack in July too: the number of customers spending over $100,000 on the platform jumped 44%.

All in, Salesforce’s total revenue was up by a better-than-expected 27% last quarter. But it wasn’t all good news: the company seems worried that Covid flare-ups might lead cautious customers to wind back their spending, which might be why its profit outlook for this quarter came in worse than expected.

Why should I care?

For markets: Expectations are getting harder to hit.

Investors sent Salesforce’s stock down 6% after the update, but it’s not the only corporate software maker that’s been struggling to meet their ambitious growth expectations. In fact, data from JMP Securities showed that only 5 of the 35 tracked business software companies saw their share prices rise after they reported their latest quarterly results. And since those same stocks have fallen 13% on average since their updates, Salesforce’s 6% drop-off could be just the start…

Zooming out: Goldman baits its line.

That hasn’t put Goldman Sachs off, mind you: the investment bank announced plans earlier this week to launch its own cloud software business, offering clients access to its market data and software tools. Goldman – which is working with Amazon on the project – is hoping it’ll help institutions save time on trend analysis and more, and ultimately attract more clients to take up its services.

Originally Posted on December 1, 2021 – Gossip Girl

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