Workers at Salesforce, all the way up to co-founder and CEO Marc Benioff, could breathe more easily this week after the business-software company posted considerably more robust earnings and guidance than analysts had estimated, prompting plaudits from Wall Street.
But challenges remain.
Like other cloud software developers that have seen their shares beaten down because of rising interest rates, Salesforce is focusing more than ever on profit. That might make it harder for the company to build technology to address emerging threats, such as the evolution of a longtime partner into a competitor.
That’s the dynamic playing out at Veeva Systems, which sells software to life sciences organizations. Veeva is also on an upswing, with shares rising 4% on Thursday after the company’s stronger-than-expected quarterly earnings.
Veeva built its core software on top of Salesforce’s app-development platform, but that will be coming to an end in 2025. The risk is that other companies built on Salesforce might be inspired to follow Veeva.
“If I was Salesforce, I would actually be worrying about the long-term implication of that,” said Rishi Jaluria, an analyst at RBC Capital Markets with the equivalent of buy ratings on both Salesforce and Veeva. Salesforce did not immediately respond to a request for comment.
Jaluria pointed to banking software maker Ncino, whose CEO, Pierre Naudé, said in 2021 that it was the largest company building on Salesforce after Veeva.
Salesforce and Veeva are closely intertwined. Peter Gassner, Veeva’s founder and CEO, ran the Salesforce platform before starting Veeva in 2007. “Peter has been an outstanding CEO,” Benioff was quoted as saying in 2017, as the two companies deepened their partnership. Veeva’s chairman, Gordon Ritter of Emergence Capital, invested in Salesforce before backing Veeva.
The agreement between the companies holds that Veeva is on the hook to pay Salesforce as Veeva customers use Salesforce’s platform — and costs have risen as more people have come to rely on Veeva. In exchange, Salesforce won’t enter Veeva’s specialized, regulated market.
That sort of arrangement might have been fine 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 capitalization. Veeva accrued about $7 million in fees payable to Salesforce in the October quarter, according to a regulatory filing.
After Veeva announced the news alongside financial results in December, Gassner and other executives spent time fielding a variety of questions from analysts about the change during a conference call. “I think overall for customers, this is a positive,” Gassner said. “It simplifies their landscape.”
Veeva, which pays Amazon Web Services for hosting capabilities, will transition its customer-relationship management software to its own Vault platform. The plan is to provide tools to help clients move over, although they have until September 2030 thanks to a five-year wind-down period specified in the agreement.
Veeva will demonstrate its software using Vault at its Commercial Summit conference in Boston in May, Paul Shawah, Veeva’s executive vice president of strategy, said on a Wednesday call with analysts.
Jaluria said he doesn’t think Salesforce will be able to compete effectively against Veeva after the agreement ends in 2025. Salesforce’s push toward increasing profits, which came about as activist investors asked questions about Salesforce’s balance of growth and margins, might not help, he said. “But even before that, Salesforce hasn’t shown us their ability to develop industry cloud organically.”
Under Benioff, Salesforce has fueled a lot of its growth through acquisitions, and there was once a time when Gassner could have ended up back at Salesforce. A Salesforce presentation that leaked in 2016 included Veeva on a list of “potential acquisition targets.”
Today that looks unlikely. Gassner is directing Veeva to move off Salesforce, and on Wednesday Benioff said that the Salesforce board has disbanded its committee on mergers and acquisitions.
Amazon logo on a brick building exterior, San Francisco, California, August 20, 2024.
Smith Collection | Gado | Archive Photos | Getty Images
Amazon representatives met with the House China committee in recent months to discuss lawmaker concerns over the company’s partnership with TikTok, CNBC confirmed.
A spokesperson for the House Select Committee on the Chinese Communist Party confirmed the meeting, which centered on a shopping deal between Amazon and TikTok announced in August. The agreement allows users of TikTok, owned by China’s ByteDance, to link their account with Amazon and make purchases from the site without leaving TikTok.
“The Select Committee conveyed to Amazon that it is dangerous and unwise for Amazon to partner with TikTok given the grave national security threat the app poses,” the spokesperson said. The parties met in September, according to Bloomberg, which first reported the news.
Representatives from Amazon and TikTok did not immediately respond to CNBC’s request for comment.
TikTok’s future viability in the U.S. is uncertain. In April, President Joe Biden signed a law that requires ByteDance to sell TikTok by Jan. 19. If TikTok fails to cut ties with its parent company, app stores and internet hosting services would be prohibited from offering the app.
President-elect Donald Trump could rescue TikTok from a potential U.S. ban. He promised on the campaign trail that he would “save” TikTok, and said in a March interview with CNBC’s “Squawk Box” that “there’s a lot of good and there’s a lot of bad” with the app.
In his first administration, Trump had tried to implement a TikTok ban. He changed his stance around the time he met with billionaire Jeff Yass. The Republican megadonor’s trading firm, Susquehanna International Group, owns a 15% stake in ByteDance, while Yass has a 7% stake in the company, NBC and CNBC reported in March.
— CNBC’s Jonathan Vanian contributed to this report.
A worker delivers Amazon packages in San Francisco on Oct. 24, 2024.
David Paul Morris | Bloomberg | Getty Images
Amazon on Thursday announced Prime members can access new fixed pricing for treatment of conditions like erectile dysfunction and men’s hair loss, its latest effort to compete with other direct-to-consumer marketplaces such as Hims & Hers Health and Ro.
Shares of Hims & Hers fell as much as 17% on Thursday, on pace for its worst day.
Amazon said in a blog post that Prime members can see the cost of a telehealth visit and their desired treatment before they decide to proceed with care for five common issues. Patients can access treatment for anti-aging skin care starting at $10 a month; motion sickness for $2 per use; erectile dysfunction at $19 a month; eyelash growth at $43 a month, and men’s hair loss for $16 a month by using Amazon’s savings benefit Prime Rx at checkout.
Amazon acquired primary care provider One Medical for roughly $3.9 billion in July 2022, and Thursday’s announcement builds on its existing pay-per-visit telehealth offering. Video visits through the service cost $49, and messaging visits cost $29 where available. Users can get treatment for more than 30 common conditions, including sinus infection and pink eye.
Medications filled through Amazon Pharmacy are eligible for discounted pricing and will be delivered to patients’ doors in standard Amazon packaging. Prime members will pay for the consultation and medication, but there are no additional fees, the blog post said.
Amazon has been trying to break into the lucrative health-care sector for years. The company launched its own online pharmacy in 2020 following its acquisition of PillPack in 2018. Amazon introduced, and later shuttered, a telehealth service called Amazon Care, as well as a line of health and wellness devices.
The company has also discontinued a secretive effort to develop an at-home fertility tracker, CNBC reported Wednesday.
Former U.S. Army intelligence analyst Chelsea Manning says censorship is still “a dominant threat,” advocating for a more decentralized internet to help better protect individuals online.
Her comments come amid ongoing tension linked to online safety rules, with some tech executives recently seeking to push back over content moderation concerns.
Speaking to CNBC’s Karen Tso at the Web Summit tech conference in Lisbon, Portugal, on Wednesday, Manning said that one way to ensure online privacy could be “decentralized identification,” which gives individuals the ability to control their own data.
“Censorship is a dominant threat. I think that it is a question of who’s doing the censoring, and what the purpose is — and also censorship in the 21st century is more about whether or not you’re boosted through like an algorithm, and how the fine-tuning of that seems to work,” Manning said.
“I think that social media and the monopolies of social media have sort of gotten us used to the fact that certain things that drive engagement will be attractive,” she added.
“One of the ways that we can sort of countervail that is to go back to the more decentralized and distribute the internet of the early ’90s, but make that available to more people.”
Nym Technologies Chief Security Officer Chelsea Manning at a press conference held with Nym Technologies CEO Harry Halpin in the Media Village to present NymVPN during the second day of Web Summit on November 13, 2024 in Lisbon, Portugal.
Asked how tech companies could make money in such a scenario, Manning said there would have to be “a better social contract” put in place to determine how information is shared and accessed.
“One of the things about distributed or decentralized identification is that through encryption you’re able to sort of check the box yourself, instead of having to depend on the company to provide you with a check box or an accept here, you’re making that decision from a technical perspective,” Manning said.
‘No longer secrecy versus transparency’
Manning, who works as a security consultant at Nym Technologies, a company that specializes in online privacy and security, was convicted of espionage and other charges at a court-martial in 2013 for leaking a trove of secret military files to online media publisher WikiLeaks.
She was sentenced to 35 years in prison, but was later released in 2017, when former U.S. President Barack Obama commuted her sentence.
Asked to what extent the environment has changed for whistleblowers today, Manning said, “We’re at an interesting time because information is everywhere. We have more information than ever.”
She added, “Countries and governments no longer seem to invest the same amount of time and effort in hiding information and keeping secrets. What countries seem to be doing now is they seem to be spending more time and energy spreading misinformation and disinformation.”
Manning said the challenge for whistleblowers now is to sort through the information to understand what is verifiable and authentic.
“It’s no longer secrecy versus transparency,” she added.