Salesforce is among the earliest and best-known cloud-based customer relationship management (CRM) platforms. The software service provider has an expansive collection of CRM products for sales, service, marketing, commerce, sustainability, safety and experiences. In addition to its variety of need-based software solutions, Salesforce offers custom packages for businesses of every size to connect marketing, sales, commerce, service and IT teams with a unified solution for every phase of their customers’ journeys. In our review, we focused on what Salesforce has defined as its Small Business Solutions – the Essentials, Sales Professional, Service Professional and Marketing Cloud Account Engagement editions. Our Professional edition demo account was built for a sales team at a small business with fewer than 20 employees who need user accounts.
|Ease of use||96|
Salesforce is among the industry leaders in cloud-based CRM solutions and has the widest variety of plans and features we’ve reviewed. Unlike the other industry giants, Salesforce gears many of its product offerings and its pricing toward small businesses that want to start with a simple and effective all-in-one sales and customer service tool. Salesforce learns and grows with your business, thanks to intelligent tools that Strengthen with each customer interaction. As a centralized source of data, Salesforce makes it easier to understand how to allocate marketing efforts and tailor messages for different customer segments with helpful AI-powered recommendations from Einstein. With easy-to-use automations, timesaving macros, AI-powered insights and detailed customer information, business owners and small sales teams can eliminate repetitive manual tasks and focus their energy on delivering personalized service and deals at the perfect times in their customers’ journeys.
Despite its potential complexity and advanced set of features, Salesforce is far from a difficult product to set up and use in a small business setting, even for first-time CRM account owners. However, if usability is your top priority, you may want to consider another CRM, such as Keap or monday.com Sales CRM, two of the top choices for ease of use (learn more in our Keap review and monday.com Sales CRM review). Once you’ve gone through the brief setup process to import your contacts and build your sales workflows, you can begin collecting new leads and making more sales with live in-product help to assist with any minor issues.
Even with Salesforce Essentials, the company’s entry-level edition, automated tools will log sales activities like emails and calendar entries with the AI-powered tool named Einstein. With all of your customer data stored in one location, it’s easy to develop effective sales strategies and keep track of every step of your customers’ journeys. On the support side, you can help your customers resolve common issues by publishing a searchable knowledge center from a readymade template.
As your small business grows, you can easily add features from the AppExchange or upgrade to a better-featured plan to suit the evolving needs of your customers and employees. All of your CRM features are available through the mobile CRM apps, letting you and your team work effectively from anywhere. [Related article: 12 Features to Look for in a CRM Solution]
You would be hard-pressed to find a popular CRM feature that’s not available with Salesforce in a standard edition or as an existing add-on. Even with the entry-level Essentials plan, you’ll have access to AI-powered features and automations with Einstein Activity Capture. These sorts of tools are typically reserved for more expensive, higher-tier plans with other service providers. All Salesforce plans include features for data syncing, sales tracking, customer support, mobile access, custom reporting, integrations and everything else you need to manage customer sales and support. We’ve highlighted a few of the features that are most effective for small business owners.
|Sales forecasting||Stay ahead of annual budgets and quarterly goals with real-time sales forecasting.|
|Lead management||Go from lead to close with automated processes and intelligent deals.|
|Social intelligence||Get insights into relevant and trending social engagement for your account.|
|Einstein recommendations||Receive AI-powered, personalized product and service recommendations at the right time.|
Salesforce provides an accurate and up-to-date view of your entire business pipeline. You can motivate your sales reps to exceed their targets with up-to-the-minute leaderboards to encourage friendly competition. You can easily identify areas where your business is struggling through an objective, data-driven point of view to make necessary adjustments and stay on track with your revenue goals. The software builds forecasts with a set of weighted variables that can include the owner, time, forecast categories, product family and territory. According to Salesforce, sales leaders can usually expect to see accuracy within 10% of their forecasted data.
You can use landing pages and email to automatically add new leads and route them to the appropriate sales representative. Your reps will automatically have all the information they need to follow up with one click to email from a personalized template or make a call with the built-in dialer. You can customize your lead’s information pages to highlight the details that matter to your business, and guide your reps on what they should focus on and accomplish next. You can automate many manual tasks and set up complex macros to handle multiple time-consuming actions quickly in a single click. With key information and helpful automations, your reps can spend more time selling and less time learning about their customers.
Available as an add-on for $25 per month, the unique Social Intelligence feature helps business owners and managers harness engagement across social media networks to make better sales decisions. This social listening tool uses natural language processing to gain an understanding of trending news and business events for your accounts, competitors and industry. You can use this tool to identify new leads, set reminders to reach out to a contact, search for account names, and use keywords to surface business events and key conversations to reach your customers where they congregate online.
Salesforce’s AI-powered recommendations combine user behavior from every recorded interaction with your business’s custom rules to develop comprehensive user profiles and deliver targeted content across email and web. To build a recommendation, you’ll need to select a product or service from your catalog, determine which audience segment will receive it, and define the type of data or past outcomes Einstein will use to make a recommendation. For example, a financial institution can recommend a banking product, like an auto loan, from its Salesforce catalog to all available contacts based on their bank account activity. Depending on each contact’s bank account information, Einstein can tailor an appropriate and unique offer to entice a purchase.
The Salesforce Small Business CRM has four plans with three distinct tiers. The entry-level Essentials edition, which has a limit of 10 user accounts, includes everything you’ll need from a CRM to run your business efficiently from one cloud-based platform. For the middle-tier Professional option, you can choose between the Sales Professional and the Service Professional, based on how you interact with your customers. Rather than a per-seat price, the upper-tier Marketing Cloud Account Engagement is priced by the number of contacts you manage and includes support for 10,000 contacts.
FYI: Salesforce bases the pricing for some of its plans on the number of users, while others are priced by the number of customer contacts.
You can purchase add-ons for new features or extended capabilities for sales, service, marketing, commerce, analytics and more. Most plans require an annual payment plan.
|Plan||Starting price (per user per month)||Features|
|Essentials||$25||Lead management, duplicate blocking, web-to-lead capture, mass email, custom sales processes, mobile apps, offline functionality, custom dashboards, custom reports, file sharing, case management, 5 automation workflows per organization|
|Sales Professional||$75||Everything in Essentials, custom sales console app, collaborative forecasts, forecasting app, contrats, orders, quotes, unlimited custom apps, custom roles, developer sandbox|
|Service Professional||$75||Everything in Essentials, service contracts, entitlements, case milestone tracker, service orders, advanced case management, work order management, product tracking, custom profiles, unlimited custom apps, developer sandbox|
|Marketing Cloud Account Engagement||$1,250||Up to 10,000 contacts, email marketing, drag-and-drop content creation, Sales Cloud integration, subscriber profiles, segmentation, event-triggered communications, automated workflows, basic reporting, A/B testing, personalized communications|
The difficulty of setting up Salesforce is largely dependent on the product you select, size of your team, number of contacts and complexity of your CRM workflows. However, for a small business setting up an Essentials plan, Salesforce is considered fast and easy. The self-help resources include more than 350 YouTube videos, more than 120 webinars and a large collection of on-demand expert coaching videos to help you with everything from importing your contacts to building out automated sales processes. During the setup process, Salesforce provides to-do lists and recommended steps to help you connect to your email, set up your sales processes, customize fields, import data, and start collecting and nurturing leads.
Key takeaway: Small businesses and anyone new to CRM features should have an easy time getting their Salesforce account up and running.
Salesforce’s customer service is available 24/7 by phone, email, and chat, but finding the help you need may take some time. Salesforce prefers customers to request a support call via online form to initiate a technical support case. (This is similar to what we saw in our review of Oracle NetSuite CRM.) While this practice helps ensure the correct person is available to resolve your issue, the waiting period may be frustrating if your sales or support activities are impacted and you need an immediate resolution.
When we called for technical support outside of normal business hours, we were informed that Salesforce was experiencing high call volume and were encouraged to seek a solution on our own at Help.Salesforce.com.
Integrations on the Essentials plan are limited to DocuSign, Dropbox, HelloSign, CodeScience, ActiveCampaign and Zapier. While Zapier alone can cover many of the must-have CRM integrations, you’ll have to pay extra for a plan that offers more than 100 automated tasks per month.
The majority of Salesforce’s products require an annual subscription. Most CRM providers offer annual and monthly payment options for most of their plans (see examples in our HubSpot review and Zoho CRM review).
Our editorial team and contributing writers considered all of the major CRM software providers in 2022 for review. After performing our initial research into each platform, we selected 11 of the leading CRM solutions available today for small businesses: Salesforce, monday.com Sales CRM, Freshworks, Keap, Zoho, Oracle NetSuite, HubSpot, Insightly, Pipedrive, SugarCRM and Zendesk. After spending many hours participating in live product demos and testing each platform, we identified the best use case for 11 providers to help small businesses owners and managers choose the best CRM for their needs. We’ve also taken a deeper dive with six of our top performers, providing greater insight into the features and tools that separate these CRMs from the rest of the competition. Salesforce meets the needs of small businesses and teams with easy-to-use features to manage leads, stay on top of sales goals and automatically identify insights into the social trends that are relevant to your company. The platform’s features are expansive, ensuring you’ll always have access to the CRM tools you need as your business evolves.
No, Salesforce does not currently offer a free version of its CRM software. However, it does offer a free 14-day or 30-day trial for most products so you can test them rigorously. The lowest-priced plan offered by Salesforce, Essentials, costs $25 per user per month when billed annually and includes a 14-day free trial.
Yes. In fact, Salesforce was one of the early cloud-based software service providers. Its cloud-based software solutions cover CRM, sales, enterprise resource planning, marketing automation and analytics.
According to the customer success stories on Salesforce’s website, many global companies use the cloud-based service for sales, marketing, communications and more. Those companies include IBM, Mercedes-Benz, NBC, Herman Miller, RBC, Morgan Stanley, PayPal, AT&T, 3M, ADP, Adidas, AWS, American Express, American Red Cross and Asana.
We recommend Salesforce CRM for …
We don’t recommend Salesforce CRM for …
Salesforce has always fashioned itself as a socially responsible company, and that includes working on a Net Zero carbon emissions goal. In fact, it launched Sustainability Cloud (now called Net Zero Cloud) in 2019, a product for tracking customer Net Zero goals. This year, they are taking that idea a step further with a new product that incorporates not only the environmental pieces, but also social and governance goals, all of which fall under the ESG umbrella.
Ari Alexander, GM for Salesforce Net Zero Cloud and Net Zero Marketplace, says the idea is to take advantage of the range of Salesforce tooling from MuleSoft for connecting to data sources to Tableau for data visualization to help companies better understand their progress towards ESG goals.
“ESG is a broad and very important trend where our customers are looking for help, direction and solutions, and increasingly we started hearing that they needed help with reporting, both voluntary and regulatory,” he said.
The amount of information required to build such reports can be a daunting task for those charged with the reporting requirements. “The solution needed to reach across their business to bring in data from many different sources and streamline their reporting. And so we decided it was time to kind of bring the full power of Salesforce to that problem and extend our Net Zero Cloud to broaden into a full ESG solution.”
ESG reporting is challenging in its current state, particularly because there is no common regulatory reporting framework for all of this data, other than for greenhouse gas reporting. “Whereas the E part of ESG has the Greenhouse Gas Protocol to guide it, that’s fairly well aligned as a global standard; when it comes to ESG reporting, that is very much still an alphabet soup of voluntary frameworks,” Alexander said.
What’s more, the regulatory bodies that are there are changing their requirements frequently, and it is expected that there will be in-country requirements in the not-too-distant future.
“So the specific kinds of data that we’re talking about, whether it’s emissions data, whether it’s diversity, equity and inclusion data, whether it’s data about suppliers and whether there are any kind of human rights flags or abuses anywhere deep in your supply chain, the kinds of things that companies are collecting or looking to put in one place and one single source of truth and report out on. There isn’t yet a clean and easy way to say this is good data or this is bad data on an unstructured dataset [like this],” he said.
He says the data can be reported to third-party auditors, however, and the tool is set up to allow that. “There is increasingly pressure on companies to take the data they’re reporting out more seriously, to provide some of the kinds of audit trails, so the Big Four audit firms can come in and look at enterprise data and have a point of view on whether the data that’s being shown to them is up to a certain standard when it comes to workflows and processes, transparency and being able to explain how you get to the kinds of numbers you report out on,” he said.
The full ESG reporting product is expected to be publicly available in the next couple of months.
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Salesforce, Inc. (NYSE:CRM) put up a solid earnings card for its third fiscal quarter of FY 2023. Salesforce's revenue growth slowed compared to the previous quarter, but the company's core business segments are growing at double digits and the CRM applications provider confirmed its revenue outlook for FY 2023. Salesforce has also started to execute on its stock buyback, which could help stabilize the stock price in the coming quarters!
Salesforce generated $7.84B in revenues in FQ3'23, showing 14% year-over-year growth with solid growth extending to all of the firm's core product categories. However, Salesforce's consolidated revenue growth slowed down from the previous quarter, which is when the CRM company saw 22% year-over-year revenue growth.
The disaggregation of Salesforce's revenues shows that Platform revenues once again grew the fastest in the last quarter. Salesforce's Platform business chiefly supports customers in creating scalable, custom-build applications. The segment saw its revenues grow 18% year-over-year to $1.5B, a record for the company and it likely won't be the last one.
Salesforce's Sales and Service segments generated 12% year-over-year revenue growth each and they remained, from a total dollar contribution perspective, the two largest segments for Salesforce. Given the momentum in the Platform segment, however, I believe it will overtake the other segments in the next 1-2 years and become Salesforce's fastest-growing and biggest core business.
Although Salesforce's top-line growth is slowing due to customers delaying software purchases due to growing economic uncertainty, the long-term growth outlook for the CRM industry is highly attractive. This is especially true for Salesforce because the company is the uncontested market leader in its business: the company had a CRM market share of 23% in the first half of 2022 and is far ahead of even its closest rival.
Salesforce's total addressable market ("TAM") is expected to grow to more than $290B by FY 2026, which reflects a growth rate of approximately 13% annually from FY 2022 onwards. All major categories of Salesforce's business -- Sales, Services and Platform -- are set for sustained growth in the coming years and even a slowdown in the broader economy is unlikely to change this trajectory. This is because customers are adopting Salesforce's product suite rapidly to scale their digital transformations and offer their customers a personalized experience.
The guidance for FY 2023 -- which ends at the end of January for Salesforce -- was confirmed this week. Salesforce lowered its revenue forecast in FQ2'23 because it was taking customers longer to make software purchase decisions. Salesforce reduced is FY 2023 top line forecast from $31.7-31.8B to $30.9B-31.0B in FQ2'23 and the confirmed revenue guidance for FY 2023 implies 17% year-over-year growth.
Salesforce announced the authorization of a $10B stock buyback in FQ2'23 -- which is the first-ever stock buyback for Salesforce -- and the company has started to execute on this. In FQ3'23, Salesforce repurchased $1.7B worth of shares, and more buybacks are set to follow in the coming quarters. I believe this is a good time for Salesforce to commit to stock buybacks, largely because the stock has revalued 42% to the downside in 2022, so every dollar in stock buybacks has more value for investors than a comparable buyback last year would have had.
Salesforce operates in a rapidly expanding addressable market, has a leading position in the industry, as shown above, and is profitable. Additionally, shares of the CRM company are trading at a P/E ratio of 26.1 X, which is about 24 % below the 1-year average P/E ratio of 34.2 X. Since Salesforce is expected to grow its top line near-20% this year, I believe the risk profile at this valuation is still skewed to the upside.
Salesforce currently has two big commercial risks: (1) The firm's top line growth is slowing and may continue to slow going forward as Salesforce's customers delay software purchases during a recession; and (2) The strong USD has taken a bite out of Salesforce's top line growth.
A strong USD is making non-USD profits less valuable for U.S. companies. However, the USD has most recently shown signs of weakness which could provide relief to Salesforce's revenue growth. In the last quarter, the strong USD took 5 PP off of Salesforce's top line growth. Since the company generates 32% of its revenues outside of North America, a weakening USD could actually result in stronger consolidated revenue growth going forward.
Salesforce is a top growth stock and although the company's revenue growth is slowing down after the pandemic, the CRM applications provider is set to continue to grow going forward, just not as quickly as it used to. Two positives in Salesforce's FQ3'23 earnings sheet were the start of stock buybacks and the confirmed guidance for FY 2023. For long term investors, I believe Salesforce's expanding TAM and strong core business momentum, especially in the Platform business, are good reasons to buy the stock!
Salesforce is in the midst of a serious brain drain at the highest levels. Last week, co-CEO Bret Taylor made the surprise announcement that he'd be departing the company.
Shortly afterwards came the news that Mark Nelson, the CEO of Salesforce subsidiary Tableau, and Steven Tamm, a CTO at the cloud tech giant, are also departing. In November, the company also said Gavin Patterson, the company's chief strategy officer who had previously been its chief revenue officer will depart at the end of January.
Then, earlier this week, Insider reported that Stewart Butterfield, CEO of Slack — the workplace chat app that Salesforce acquired in 2021 for $27.7 billion —will be leaving the company in the new year. Tamar Yehoshua, Slack's chief product officer, is also resigning, as is Slack senior VP of communications Jonathan Prince.
It's not clear if the timing of all these departures is anything more than coincidence: In a memo to employees, Butterfield wrote that his plans to depart have nothing to do with Taylor's, as Insider earlier reported.
Still, it comes at a critical moment for Salesforce and its now-sole CEO Marc Benioff. The company's stock is down some 48% from the beginning of the year, as the larger tech downturn takes its toll on the markets. Salesforce has warned investors that a slowing economy is making it more difficult to close deals as IT spending stalls out, even as investors push Benioff to demonstrate a commitment to improving its profit margins.
And the specific executives who are hitting the exits represent some of Salesforce's biggest bets on the future. Taylor himself was seen as a product visionary who would help Salesforce break into new markets, as seen when he masterminded the Slack acquisition. Indeed, Slack and Tableau represented Salesforce's two largest acquisitions in its history, as it invested in new lines of business.
The departures of Taylor, Butterfield, and Nelson come as Salesforce's strategy comes under the microscope on Wall Street.
With Slack and Tableau, Salesforce already had a lot to prove. Wall Street thought that the $27.7 billion it paid for Slack and the $15 billion for Tableau was far too steep given the company's financial situation. The scrutiny hasn't stopped.
"Growth has been slowing for years," Bernstein analysts wrote in a recent note to clients. "But that has not been readily apparent due to the cadence of large acquisitions which generate a multiyear tailwind to growth due to acquisition accounting."
Taylor, who had been COO of Salesforce before becoming co-CEO in 2021, championed the two as key to a strategy of building the company's platform into an all-in-one tool for sales, to service, to marketing and commerce, to data analysis. Slack would be the "digital HQ" where work gets done, while Tableau helps customers crunch the massive amounts of data stored in the Salesforce platform and turn it into useful insights.
Neither Slack nor Tableau is going anywhere. Salesforce has already said that Lidiane Jones, an executive VP, will take over for Butterfield as Slack CEO. She'll be working with Cal Henderson, Slack's CTO and cofounder, who remains in his role. And Salesforce has said that in the wake of Nelson's departure, Tableau will be rolled more closely into Salesforce's engineering organization.
What it does mean, however, is that Salesforce, Slack, and Tableau are all losing the biggest champions of the integrated product strategy right as the company faces hard questions.
Amid the chaos, however, some on Wall Street thinks there may be an opportunity.
While some of Salesforce's most experienced execs remain on Benioff's leadership team, including CFO Amy Weaver and COO Brian Millham, analysts think Benioff needs to recruit new leadership.
Now could be a good time to recruit talent from a smaller rival or startup, Jaluria told Insider. The relative stability of Salesforce compared to a smaller startup during an uncertain economic environment would be a major draw.
"You need leadership that's focused on the next chapter of Salesforce and the way things should be done, not necessarily the way things have been done from the get go," RBC analyst Rishi Jaluria said last week at the time of Taylor's announcement.
Salesforce (CRM 1.89%) posted its latest quarterly report on Nov. 30. For the third quarter of fiscal 2023, which ended on Oct. 31, the cloud-based software company's revenue rose 14% year over year (and grew 19% in constant currency terms) to $7.84 billion and surpassed analysts' estimates by $10 million. Its adjusted earnings increased 10% to $1.40 per share and also cleared the consensus forecast by $0.18.
Salesforce's growth rates seemed stable, but they didn't impress the bulls. Its stock remains down nearly 40% this year and continues to trade at a discount to many of its cloud-based peers. Is it finally time for investors to take the contrarian view?
Salesforce operates the world's largest cloud-based customer relationship management (CRM) platform. It also provides additional cloud-based marketing, commerce, analytics, and data visualization services.
For many years, Salesforce benefited from the digitization of large businesses. It locked in its customers with sticky subscriptions and its own proprietary apps, and it repeatedly expanded by gobbling up smaller companies. Its business model remained resilient during the pandemic, which drove companies to accelerate their digital transformations and accommodate the shift toward hybrid and remote work.
That's why Salesforce's revenue and adjusted earnings per share (EPS) rose 24% and 65%, respectively, in fiscal 2021 (which ended on Jan. 31, 2021). In fiscal 2022, its revenue grew another 25%, but its adjusted EPS dipped 3% against its bigger investment-related gains in the previous year.
However, Salesforce's year-over-year revenue growth decelerated throughout the first three quarters of fiscal 2023 as it faced two major challenges.
First, macro headwinds caused large companies to rein in their spending and postpone big software deals. Second, the rising dollar -- which was bolstered by higher interest rates -- generated tough currency headwinds.
As a result, Salesforce expects its reported revenue to only rise 17% for the full year, as its adjusted EPS grows 3%. That slowdown isn't disastrous, but it raises some questions regarding the company's long-term goal of generating $50 billion in annual revenue in fiscal 2026. To achieve that goal, it would need to grow its top line at a compound annual growth rate (CAGR) of 17% between fiscal 2023 and 2026 -- which assumes its deceleration this year won't lead to a deeper slowdown.
But analysts aren't as optimistic. They expect Salesforce's revenue to rise 17% in fiscal 2023, 14% in fiscal 2024, and 16% in fiscal 2025. We should be skeptical of those expectations, but that slowdown could certainly occur if the current macro headwinds lead to a full-blown recession.
The bears will also point out that Salesforce still faces lots of competition from Microsoft's (MSFT 1.75%) Dynamics CRM, as well as Adobe's (ADBE 1.27%) e-commerce and marketing tools. They'll also claim that Salesforce's heavy dependence on acquisitions could "diworsify" its business and squeeze its margins. Co-CEO Bret Taylor's recent decision to leave Salesforce, which will leave founder Marc Benioff as the only CEO, raises additional questions regarding its future.
However, the bulls will argue that Salesforce's recent acquisitions -- including Tableau, Mulesoft, and Slack -- have increased the overall stickiness of its cloud-based ecosystem. They'll also claim that economies of scale are boosting its margins as it expands: Salesforce expects its adjusted operating margin to expand 200 basis points to 20.7% for the full year, and to exceed 25% by fiscal 2026.
Lastly, Salesforce's stock looks fairly cheap at 31 times next year's earnings and four times next year's sales. Its smaller healthcare-oriented CRM peer Veeva (VEEV 3.12%), which is growing at a similar rate, trades at 40 times forward earnings and 12 times next year's sales. ServiceNow (NOW 3.62%), the cloud-based digital workflow company which is growing slightly faster than Salesforce, trades at 43 times forward earnings and 10 times next year's sales. That's probably why the value-oriented activist hedge fund Starboard Value acquired a significant stake in Salesforce this October.
Salesforce will likely remain in the penalty box until the macro situation improves and its revenue growth accelerates again. That said, I'm still optimistic about Salesforce's long-term prospects as large companies continue to digitally optimize their operations.
Therefore, I believe Salesforce is still a good long-term investment at these levels -- but investors shouldn't expect the bulls to rush back until some of these near-term headwinds dissipate.
Leo Sun has positions in Adobe, Salesforce, and Veeva Systems. The Motley Fool has positions in and recommends Adobe, Microsoft, Salesforce, ServiceNow, and Veeva Systems. The Motley Fool recommends the following options: long January 2024 $420 calls on Adobe and short January 2024 $430 calls on Adobe. The Motley Fool has a disclosure policy.
Few could have predicted the effects Marc Benioff would have on the tech industry when he left Oracle to found Salesforce (NYSE: CRM), the first software-as-a-service (SaaS) company revolving around customer relationship management (CRM).
So successful was Salesforce that it became an industry-leading company that later joined the Dow Jones Industrial Average. But despite that achievement, the CRM industry continues to innovate, which leaves plenty of opportunity for investor gains. Given its innovation and size, the CRM stock of the future just might be HubSpot (NYSE: HUBS).
CRM connects departments such as marketing, sales, and customer service. Under this cohesive system, departments could work together more easily and avoid redundant tasks, significantly increasing operational efficiency.
To be sure, Salesforce is a tough competitor, and its tool stands out for its granular forecasting. And HubSpot's $14 billion market cap is slightly above one-tenth of Salesforce's, a situation that could leave HubSpot vulnerable without a meaningful competitive advantage.
Fortunately, HubSpot has the attention of small and medium-sized businesses. It attracted this cohort with its "freemium" pricing model. Unlike Salesforce, it offers a level of service at no charge, bringing these clients into the HubSpot ecosystem. From there, it sells a premium package that adds functionality and drives revenue for the company.
Additionally, for marketing automation, HubSpot is the industry leader. According to Datanyze, it claims a 39% market share in marketing automation software. All other peers -- including Salesforce and Oracle -- had market shares in the single digits.
As of the end of the third quarter, HubSpot claimed almost 159,000 customers, a 24% increase year over year. Customers are also spending more on the platform, increasing their average subscription by 7% over the same period to more than $11,200.
That increased use, along with the growing customer base, significantly boosted HubSpot's financials. In the first nine months of 2022, revenue came in at almost $1.3 billion, rising 35% compared with the same period in 2021. Still, both the cost of revenue and operating expenses increased at a faster rate than revenue, leading to a loss of $97 million in the first three quarters of 2022. In comparison, HubSpot lost $61 million during the same timeframe in 2021.
HubSpot also remains in the clutches of the bear market. Its stock dropped by close to 65% over the last year.
However, its price-to-sales (P/S) ratio now sits around 8. While that comes in significantly higher than Salesforce at 4 times sales, it is also the lowest sales multiple since the March 2020 sell-off in stocks. Such a move could indicate limited near-term downside for the CRM stock.
With that historically low valuation, investors may want to buy hand over fist. Even though Salesforce may outperform HubSpot on granularity, the freemium approach did not impede paid subscription growth. HubSpot's lead in market automation should also hold it in good stead.
Moreover, investors should pay close attention to its growth potential. The smaller market cap implies more possible upside, increasing the likelihood of outsized investor profits over time.
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Marc Benioff, co-founder and chief executive officer of Salesforce.com Inc., speaks during the WSJDLive Global Technology Conference in Laguna Beach, California, U.S., on Wednesday, Oct. 26, 2016. The conference brings together an unmatched group of top CEOs, founders, pioneers, investors and luminaries to explore tech opportunities emerging around the world.
Patrick T. Fallon | Bloomberg | Getty Images
Turbulence in the upper ranks at Salesforce isn't sitting well with Wall Street.
On Monday, the company announced the departure of Slack CEO Stewart Butterfield, who joined Salesforce last year as part of its biggest acquisition ever. Last Wednesday, Salesforce co-CEO Bret Taylor, who orchestrated the Slack deal, said he was leaving —exactly a year after getting promoted to share the top job with Marc Benioff.
In the three trading days since the Taylor news landed alongside Salesforce's third-quarter earnings report, the stock has had two of its three worst days of the year, plunging 8.3% and 7.4%, respectively. Salesforce has now lost 47% of its value for the year, compared to the Nasdaq's 28% drop, and is trading at its lowest since March 2020, the early days of the Covid-19 pandemic.
Taylor, who joined Salesforce in 2016 through the acquisition of his startup Quip, said he'd "decided to return to my entrepreneurial roots." Benioff said on the earnings call, "We have to let him be free, let him go, and I understand, but I don't like it."
Butterfield made it clear that he's leaving for different reasons.
"I'm not going to do anything entrepreneurial," Butterfield wrote in a Slack message that was viewed by CNBC. "As hackneyed as it might sound, I really am going to spend more time with my family (as well as work on some personal projects, focus on health and generally put time into those things which [are] harder to do when one is leading a large organization)."
While Taylor and Butterfield are the highest-profile exits, they're far from alone among Salesforce's executive ranks.
Last month, Salesforce said Gavin Patterson, the president and strategy chief, would be leaving in January, and on Thursday Mark Nelson, president and CEO of Salesforce's Tableau product, tweeted that it was his last day.
Along with Butterfield, Slack is losing product chief Tamar Yehoshua and Jonathan Prince, senior vice president in charge of marketing, brand and communications, people familiar with the matter previously told CNBC. Noah Weiss, senior vice president of product at Slack, will succeed Yehoshua, Butterfield said in a Slack message. Butterfield is being succeeded by Lidiane Jones, an executive vice president at Salesforce who joined in 2019.
Salesforce's three-day plunge
Slack was a pandemic-inspired acquisition. With workers forced to communicate remotely, Slack's popular chat app blew up. In a series of tweets on March 25, 2020, Butterfield said the company had experienced "early signs of a surge in teams created and new paid customers unlike anything we had ever seen," adding that the shift from email to chat channels, "which we believed to be inevitable over 5-7 years just got fast-forwarded by 18 months."
Salesforce was so jazzed about Slack's expansion that it paid over $27 billion for the company at a forward price-to-sales ratio of 24, one of the highest multiples ever in software. Taylor's name was all over the deal, even though he wasn't yet co-CEO. Taylor reached out to Butterfield multiple times in August and September 2020 about a possible acquisition, and the two negotiated throughout the process, which culminated in an agreement announced on Dec. 1 of that year, according to a filing with the SEC.
Salesforce's purchase of Slack closed in July 2021, and its stock peaked four months later at almost $310. Since then, it's lost 57% of its value, closing on Monday at $133.93.
Like its high-valued tech peers, Salesforce has been hurt this year by soaring inflation and rising interest rates, which have pushed investors into parts of the market deemed safer in a slowdown. Salesforce's results haven't helped. Last week, the company reported third-quarter revenue growth of 14%, the slowest expansion for any period since the company's IPO in 2004. Its forecast for the fourth quarter is for growth of 8% to 10%.
In a break from third-quarter tradition, Salesforce neglected to provide guidance for its next fiscal year.
Analysts at Guggenheim wrote in a report that there were "two elephants in the room." The first was omitting guidance for the coming year.
"The second elephant in the room is why Bret Taylor decided to supply up his high-profile co-CEO and vice chair position after only a year," wrote the Guggenheim analysts, who have the equivalent of a hold rating on the stock. The analysts reminded clients that three years ago, Keith Block resigned as co-CEO after 18 months on the job and wrote that "the company seems to have struggled since."
After Taylor's announcement last week, Wedbush analysts wrote that, "the Street will view this as a shocker with Taylor one of the mainstays in the CRM strategy."
A Salesforce spokesperson declined to comment beyond reiterating a statement the company sent earlier regarding Butterfield's departure.
On Thursday, Wolfe Research downgraded Salesforce stock to the equivalent of hold from a buy. They wrote that the company is moving into "a new and difficult chapter" after execution errors, big-name departures and slowing revenue growth.
The only day in 2022 that Salesforce's stock has been hit harder than it was Thursday or Monday was at the very beginning of the year. On Jan. 5, UBS downgraded Salesforce and Adobe, telling clients that enterprise tech spending was pulled forward by the pandemic, leading to slower continued growth for the two companies.
New Delhi [India], December 10 (ANI/ATK): Nelson Mandela once said, “Education is the most powerful weapon which you can use to change the world.” All humans have a fundamental right to education. It has been the only reliable means of escaping poverty, reducing child labour, removing social evils. Education boosts creativity and imagination.
India’s disadvantaged people, especially children and women are not getting proper education which means they are being prevented from participating actively in nation-building. There has been a significant decline in the quality of education in India’s government schools and colleges over the past two decades, requiring immediate attention.
This is a grave concern from the standpoint of the country’s progress and thankfully there are many social activists, educationists, and even entrepreneurs, who are now coming forward to address the issue of poor quality education for the marginalized.
Divyaedu.org is one such Non-Government Organization led by Divya Chauhan which is sincerely working on improving basic education in government schools and colleges and also offering free Salesforce training to underprivileged children and women so that they can strive for a brighter future.
The goal of the NGO is to get children and women from downtrodden backgrounds to get acquainted with technical skills alongside formal education that in turn will allow them to break free from the imprisonment of narrow-mindedness, broaden their perspectives, let them have professional experience and eventually build their careers in Salesforce and liberate then from the gloomy world of poverty.
divyaedu.org is taking forward the country’s SKILL INDIA Campaign by running computer literacy programs in government schools and colleges for the deprived children and women of India and helping them secure a far better tomorrow.
Divya Chauhan is a Salesforce Architect. She is the head of NGO – Divyaedu.org which provides free computer training to underrated and underserved students, connecting young people to Salesforce technology, and allowing them to access entry-level jobs in Salesforce.
This story has been provided by ATK. ANI will not be responsible in any way for the content in this article. (ANI/ATK)
This story is auto-generated from a syndicated feed. ThePrint holds no responsibility for its content.
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