SaaSpocalypse Is ‘Nonsense’ Says Salesforce CEO Amid Earnings Beat and Anthropic Partnership
This week, Salesforce proved that AI doomsayers may have gotten carried away with their SaaSpocalypse woes. The company's stock soared more than 20% Thursday after it posted fiscal second-quarter earnings Wednesday that beat Wall Street expectations and announced an expanded partnership with Anthropic. CEO Marc Benioff's take on the SaaSpocalypse? It's "nonsense."
"This is not the SaaSpocalypse," he said on a post-earnings call with analysts. "We have been hearing about this for the last two quarters, these dire predictions about the end of software and how the models eat everything. But none of them have come true for us."
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The San Francisco-based company posted revenue of $11.35 billion, an 11% jump from the same time period last year and above the $11.32 billion analysts had been estimating. Adjusted earnings per share were $5.90, significantly above the $3.27 expectations. The company also raised its revenue guidance.
But it was "Claudeforce," a plugin that brings Salesforce's tools to Anthropic's Claude system, that stole the show. Earlier this year, worries that AI agents will replace human software users contributed to a stock-market wipeout of nearly $1 trillion from software and service stocks. Now, the marriage of one of the top software companies and one of the most valuable AI companies is yet another signal to investors that those concerns may have been overblown:
"Importantly, management highlighted that many of the leading AI companies are themselves large Salesforce customers, arguing that frontier models are increasingly consuming CRM systems rather than replacing them," BMO Capital Markets analyst Keith Bachman noted in a report.
Benioff said that customer attrition is near its lowest level ever, even as the company was told to expect customers to abandon it. "AI is a technology paradigm shift that all software companies need to embrace, and while it presents material risk to many names, it's not likely to be a death knell," Guggenheim analyst John DiFucci wrote in a note . (DiFucci previously called the most pessimistic view of the SaaSpocalypse "a hallucination.")
Software Sells: Salesforce wasn't the only software company to get a boost from the strong earnings report. The iShares Expanded Tech-Software Sector ETF (IGV), which is commonly used as a representative for the software industry at large, jumped 8% for the day. ServiceNow and Adobe's stocks climbed 10% and 6%, respectively.
