One thing you haven’t seen much of this earnings season as the US economy slows at the hands of tariff policy concerns: guidance raises from Corporate America.
Salesforce co-founder and CEO Marc Benioff apparently missed that need to be conservative on the guide memo.
The company beat on earnings after the close on Wednesday, and hiked its full year sales and profit outlooks.
Benioff tells me the business is strong enough as to support a guidance raise despite the economic headwinds.
“Everything went well for us this quarter. We had bookings go well, revenue went well and currency went well,” Benioff said.
Salesforce shares rose 1% in after-hours trading.
While Salesforce’s earnings will get their usual fair share of scrutiny, investors are still digesting Benioff dusting off his often aggressive M&A playbook.
On Tuesday, Salesforce announced its first big acquisition since buying Slack for $27.7 billion in 2020.
The tech giant — which has taken a break from its trademark deals to focus on margins — said it will buy Informatica for $8.8 billion. Amongst other synergies, the deal is expected to boost Salesforce’s efforts in deploying AI agents inside of companies. Informatica’s technology is seen as key to companies getting their data in a format and location that is compatible for AI agents to work their magic.
The vibe on Wall Street was mostly positive on the deal, though there were a few detractors.
“Investors have enjoyed the margin expansion and focus on organic product development and have not been enthusiastic about the prospect of another deal spree,” said KeyBanc analyst Jackson Ader.
Salesforce over the past decade has spent close to $50 billion to acquire Slack, Mulesoft, and Tableau. Although the businesses have added to Salesforce’s tech prowess with customers, integrations have proven challenging and have often weighed on margins.
“Pro forma growth dilution aside, We believe Salesforce faces material integration risks (if it couldn’t integrate past integrations well, why should it this time?), losing INFA’s Switzerland status, and potential increased churn,” explained Guggenheim analyst Howard Ma.
By “Switzerland Status”, Ma is referring to Informatica being an independent third party. That has allowed it to provide its services to the likes of Oracle (ORCL), Amazon (AMZN) AWS, DataBricks and others. Said independence would go away as the company comes under Salesforce’s wings, which may lead to customer loss.
Benioff says he is open to doing more deals, but will maintain the company’s newfound financial discipline.
