Home Business Salesforce faces prospect of platform customers leaving after Veeva

Salesforce faces prospect of platform customers leaving after Veeva

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Marc Benioff, Chairman and CEO of Salesforce.com, speaks at the World Economic Forum in Davos, Switzerland on January 22, 2020.

Fabrice Coffrini | Photo AFP | Getty Images

This week, employees all the way to Salesforce co-founder and CEO Marc Benioff said the business software company had received praise from Wall Street for reporting much stronger earnings and guidance than analysts expected. , was able to take a breather.

But challenges remain.

Like other cloud software developers whose stocks have crashed due to rising interest rates, Salesforce is more profit-focused than ever. This can make it difficult to build technology to deal with emerging threats, such as longtime partners evolving into competitors.

This is the dynamic at play at Veeva Systems, which sells software to life sciences companies. Veeva is also on the upswing, with its shares up 4% on Thursday after the company’s better-than-expected strength: Quarterly earnings.

Veeva built its core software on Salesforce’s app development platform, which it plans to retire in 2025.

Rishi Jaluria, analyst at RBC Capital Markets said: Salesforce did not immediately respond to requests for comment.

Jaluria points to banking software maker Ncino. Ncino CEO Pierre Naudé said he will be the largest company built on Salesforce in 2021, second only to Veeva.

Salesforce and Veeva are closely intertwined. Veeva’s founder and CEO, Peter Gassner, ran the Salesforce platform in 2007 before he started Veeva. quote saying In 2017, the two companies deepened their partnership. Gordon Ritter, chairman of Veeva and Emergence Capital, said: Invest in Salesforce before endorsing Veeva.

Under the agreement between the two companies, Veeva is obligated to pay Salesforce when Veeva’s customers use Salesforce’s platform. More and more people rely on Veeva. But the cost has risen. And, Salesforce will not enter Veeva’s professional, regulated marketplace.

Such an arrangement might have worked well when Veeva was a startup. But it has grown into a profitable, publicly traded software company with $2 billion in annual revenue and a $28 billion market cap. Veeva said he booked about $7 million in fees owed to Salesforce in the October quarter, see submissions to regulatory authorities.

After Veeva announced the news along with its financial results in December, Gassner and other executives spent time on a conference call answering various questions from analysts about the change. “Overall, I think it’s a positive for our customers,” Gassner said. “It simplifies their landscape.”

Veeva, which pays Amazon Web Services for hosting capabilities, is moving its customer relationship management software to its own Vault platform. The plan, which will last until September 2030, thanks to his five-year phase-out period specified in the contract, is to provide tools to help clients move.

Veeva plans to demonstrate software using Vault at the company’s Commercial Summit conference in Boston in May, Paul Shawah, Veeva’s executive vice president of strategy, told analysts Wednesday. said on a conference call.

Jaluria said he doesn’t believe Salesforce can effectively compete with Veeva after the deal ends in 2025. He said. “But even before that, Salesforce hadn’t shown the ability to organically develop the industrial cloud.”

Under Benioff, Salesforce has fueled a lot of its growth through acquisitions. There was a time when Gassner could have returned to Salesforce. The salesforce presentation leaked in 2016 that Veeva was on the list of “potential acquisition targets”.

Today it looks unlikely. Gassner is directing his Veeva away from his Salesforce, and Benioff said Wednesday that the Salesforce board has dissolved its committee on mergers and acquisitions.

DELTA Data Protection & Compliance, Inc. Academy & Consulting – The DELTA NEWS – delta-compliance.com

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