Salesforce Delivers on Profits, but Growth Is Not What It Was

It was a relaxed Marc Benioff who addressed Wall Street analysts on Wednesday afternoon, after Salesforce reported its July-quarter earnings. Not only did he tease a couple of his top executives on the call, but he waxed lyrical about his experience using Google’s Bard chatbot and talked up the potential of AI startups to revive San Francisco’s downtown. And of course, there was the usual Benioff serving of superlatives about Salesforce’s “transformation”, etc.

No doubt the Salesforce chief’s mood was buoyed by a 6% lift in the company’s stock price in after-hours trading, as investors applauded its improved profit margins, a result of cost cutting in recent months. That’s a real achievement: Headcount has dropped to 70,456 at the end of July from 79,390 at the end of January. Salesforce’s operating margin in the quarter was 17%. That’s not spectacular compared to, say, that of Microsoft (which for the past three years has reported 42%). But it’s solid for Salesforce, given that a year ago the same metric was 2.5%.