Signs of improvement
The Morgan Stanley report said that conversations with partners showed stabilisation in Salesforce's business.
"While partners noted a modest pause in deal activity resulting from stress in the Financial Services sector in March, customer engagements appeared to normalise in April," according to Morgan Stanley.
"Partners continue to highlight increased budget scrutiny, escalation of deal signings to the CFO's office, and modestly longer sales cycles relative to recent years; however, we were encouraged to hear no incremental worsening of trend relative to deal elongation from FY23."
Even with the layoff of 7,000 Salesforce employees this year, partners told Morgan Stanley about "limited disruption in customer engagements on the back of the early FY24 headcount reductions."
Partners even "spoke to beliefs further headcount reductions could be conducted without sacrificing productivity."
The firm said that "importantly, partners called out early signs of Salesforce benefitting from an increase in customer propensity to consolidate IT wallets to fewer, more strategic vendors."
Morgan Stanley predicts Salesforce to report remaining performance obligation (RPO) of more than $23bn, up 10 per cent year over year, a little less than what Salesforce forecasted.
The firm expects current RPO (cRPO) growth of 11.7 per cent year over year and for Benioff and his executives to raise 2024 fiscal year revenue guidance above 10 per cent year over year, according to the report.
