Marc Benioff says that coronavirus won't have a major impact on Salesforce's business because the company was built to withstand recessions and downturns (CRM)

marc benioff

  • CEO Marc Benioff said on an call with analysts Tuesday that he doesn’t expect Salesforce’s business to be affected by coronavirus.
  • While Salesforce is watching what’s happening with the coronavirus around the world, he and cofounder Parker Harris built a company that is able to withstand recessions and these kinds of crises, he said.
  • Many of Salesforce’s customers have signed long, multi-year contracts with the software maker, so the company is able to predict its revenue and growth far enough in advance, which contributes to its strength. 
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Many major tech companies are worried about how the coronavirus disease, COVID-19, is impacting their business, with Microsoft just announcing it won’t meet its sales forecast for its Windows and Surface business for the quarter and Workday and Facebook cancelling its upcoming conferences.

However, Salesforce may avoid any such impact. CEO Marc Benioff said that he doesn’t expect Salesforce’s business to be affected by coronavirus.

During a call with analysts after reporting earnings that beat estimates on Tuesday, Benioff said that while Salesforce is watching what’s happening with the coronavirus around the world, he and cofounder Parker Harris built a company that is able to withstand recessions and these kind of crises.

“When we started Salesforce, Parker and I really built a business model that was designed to transcend these situations so that we would have durable growth over time regardless of the crises. I think that really played out in a surprising way with a level of strength in 2009, ’10 and ’11 financial crisis that if you look at our revenue curves, it looks like it never happened.” Benioff said, referring to Salesforce’s performance after the 2008 recession. 

Benioff said that “our hearts go out” to the people impacted by the virus and that he has heard from customers who are impacted. These have mostly been airlines, hospitality companies and companies who have their operations primarily in China or who have significant supply chains based in China.

He added that, whether bookings are slightly up or down between quarters, the company has enough reserves and a strong enough business model to withstand it. He didn’t elaborate and say if Salesforce was seeing any changes in bookings due to the coronavirus.

He did say that many of Salesforce’s customers have signed long, multi-year contracts to use Salesforce’s software, so the company is able to predict its revenue and growth far enough in advance.

“93% of our revenue is deferred, so that just gives us tremendous visibility into the future,” he said describing the company’s model of subscription software a “key architecture of our accounting” that illustrates “our deep contractual multi-year relationships with our customers,” Benioff said. 

But there are some indications that Salesforce is feeling the effects more directly. Salesforce has turned its upcoming conference in Australia into an online only event, due to fears over the coronavirus. “Nothing is more important than the health and safety of our stakeholders. Over the last few months, we have been closely monitoring the evolving situation with the COVID-19 Coronavirus outbreak to ensure we are taking every precaution to look after our customers, partners, and employees,” it said in a statement

The annual event reportedly brings in tens of thousands of technology leaders from across the Asia-Pacific region. Salesforce said that, “going digital” will let more people participate in the event. 

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