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, October 26, 2016. brings together an unprecedented group of top leaders CEOs, founders, pioneers, investors and celebrities to explore emerging technology opportunities around the world.
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Chaos at the upper echelons at Salesforce doesn’t sit well with Wall Street.
On Monday, the company announced the departure of Slack CEO Stewart Butterfieldwho joined Salesforce last year as part of it Biggest acquisition ever. Last Wednesday, Bret Taylor, the Salesforce co-CEO who orchestrated the Slack deal, said he was leave —exactly one year after being promoted to share top work with Marc Benioff.
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In the three trading days since the Taylor news came out with Salesforce’s third quarter earnings report, the stock had two of its three worst days of the year, falling 8.3% and 7.4%, respectively. Salesforce has now lost 47% of its value for the year, compared with Nasdaq’s 28% drop, and is trading at its lowest level 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 “decided to go back to the roots of his business.” Benioff said on the earnings call, “We have to let him go, let him go, and I understand, but I don’t like that.”
Butterfield has made it clear that he is leaving for different reasons.
“I’m not going to do anything business,” Butterfield wrote in a Slack message seen by CNBC. “It sounds a bit confusing, but I’m actually going to spend more time with my family (as well as doing some personal projects, focusing on health, and generally spending time on things that don’t matter). [are] harder to do when one is leading a large organization).”
Though Taylor and Butterfield are the most famous, they’re not alone in Salesforce’s executive ranks.
Last month, Salesforce speak Gavin Patterson, president and chief strategy officer, is leaving in January, and on Thursday, Mark Nelson, Salesforce’s president and CEO of Tableau product, tweeted that it was his last day.
Along with Butterfield, Slack is losing its chief product officer Tamar Yehoshua and Jonathan Prince, senior vice president of marketing, branding and communications, people familiar with the matter previously told CNBC. Noah Weiss, Slack’s senior vice president of product, will succeed Yehoshua, Butterfield said in a Slack message. Butterfield is being succeeded by Lidiane Jones, the executive vice president of Salesforce, who joined in 2019.
Salesforce’s three-day drop
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‘Two elephants in the room’
Slack is a pandemic-inspired acquisition. With workers forced to communicate remotely, Slack’s popular chat app has exploded. In a series of tweets on March 25, 2020, Butterfield said the company was experiencing “early signs of a spike in groups created and new paying customers unlike any other.” nothing we’ve ever seen,” adding that the move from email to chat channels, “which we believed was inevitable in 5-7 years was only fast-forwarded after 18 months.”
Salesforce was so excited about Slack’s expansion that it paid over $27 billion to the company for a futures price-to-sales ratio of 24, one of the highest multiples ever in the software space. . Taylor’s name appears in every deal, even though he’s not yet a co-CEO. Taylor contacted Butterfield several times in August and September 2020 about a possible acquisition, and the two negotiated throughout the process, culminating in an agreement announced on December 1 of that year, follow a filed with the SEC.
Salesforce buys Slack close the door in July 2021, and its stock peaked four months later at nearly $310. Since then, it has lost 57% of its value, closing on Monday at $133.93.
Like other high-value tech companies, Salesforce has been hurt this year by soaring inflation and soaring interest rates, which has pushed investors into parts of the market seen as safe. more secure during a recession. Salesforce’s results didn’t help. Last week, the company reported third-quarter revenue growth of 14%, the slowest growth in any period since the company’s IPO in 2004. The company’s forecast for the fourth quarter is up. growth from 8% to 10%.
Contrary to the tradition of the third quarter, Salesforce omitted to provide guidance for the next financial year.
Analysts at Guggenheim wrote in a report that there were “two elephants in the room.” The first is to skip the guidelines for next year.
“The second elephant in the room is why Bret Taylor decided to step down from her famed co-CEO and vice president positions after just one year,” wrote Guggenheim analysts, who have equivalent stock holding rating. Analysts remind clients that three years ago, Keith Block resigns as co-CEO after 18 months, and wrote that “the company seems to have struggled since then.”
Following Taylor’s announcement last week, Wedbush analysts wrote, “The street will take this as a shock given that Taylor is one of the pillars of the CRM strategy.”
A Salesforce spokesperson declined to comment repeat a statement the company had sent earlier about Butterfield’s departure.
On Thursday, Wolfe Research downgraded Salesforce stock to the equivalent of a hold from buy. They write that the company is moving into “a new and difficult chapter” following execution failures, the departure of big names and slowing revenue growth.
The only day in 2022 that Salesforce stock was hit harder than a Thursday or Monday was at the start of the year. On January 5, UBS downgraded Sales force and adobetold clients that corporate technology spending has been impacted by the pandemic, resulting in consistently slower growth rates for the two companies.
CLOCK: Salesforce shares under pressure after co-CEO Bret Taylor resigns
