Gossip Girl

Image source: Unsplash - @nextiva

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 (tweet this). 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 as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Friends EU-nited

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.