Earlier this week, quarterly results from public cybersecurity companies left us wondering why there aren’t more venture capital investments piling into security startups. In an environment where it is difficult to generate revenue, prominent technology sectors should surely sail with the wind if there is a lot of proven demand?
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This morning I want to broaden our perspective and take advantage of new quarterly results from a more diverse group of companies to say that things are not actually so bad for technology companies. New data from Salesforce, Zuora, Okta, Nutanix and Snowflake make it clear that several technology sectors are doing better than many people expected.
This has understandably lifted the share prices of some key comparable startups and provided better vibes for tech valuations in general. Let’s talk about turkey:
Salesforce reported revenue of $8.72 billion in the third quarter of its fiscal 2024, in line with analyst expectations. That resulted in an 11% profit at the SaaS giant, which isn’t a surprising figure, especially since the company expects to generate revenue of $9.18 billion to $9.23 billion in the current quarter, which equates to an increase of approximately 10%.
So why is Salesforce stock up more than 9% this morning? It beat earnings expectations for the third quarter, forecast fourth-quarter revenue largely in line with estimates and raised its profitability forecast for the full fiscal year.
Salesforce may no longer be the growth giant it was, but it is a cash-generating machine that is investing its excess capital in buying back its shares, and investors are interested in its improving profitability.