Salesforce just debunked an idea that was driving the entire tech market down

Salesforce CEO Marc BenioffJustin Sullivan/Getty ImagesSalesforce CEO Marc Benioff

February has been a tough month for the enterprise tech market.

Companies like LinkedIn and Tableau saw their stock prices hit their worst declines in history after giving weak earnings and guidance numbers. That fuelled an industry-wide meltdown, causing the tech-heavy Nasdaq to reach its lowest levels since October 2014.

A lot of the tech companies seemed to blame a weaker macro environment for the downturn. That sparked concerns that corporate IT spending would decrease, fanning fears of a broader industry slowdown.

But Salesforce, the largest cloud enterprise software maker with a $45 billion market cap, may have just debunked those concerns.

When asked about the economic environment during Wednesday’s earnings call, Salesforce’s CFO Mark Hawkins simply answered, “We read the same newspapers as everybody else. We’re not seeing an economic impact.”

Salesforce’s numbers back up his claims. The cloud software maker just delivered another strong quarter that topped Wall Street estimates. And execs raised revenue guidance. The company was even able to sign two deals worth more than $100,000 during the quarter. That’s in addition to
600-plus deals worth $1 million or more across multiple industries and regions, including Asia and Europe.

“This is the absolute best quarter we’ve ever had,” Benioff said.

Deutsche Bank took note of this in a report published Thursday, writing, “Against a backdrop of several technology vendors calling out ‘macro’ growth pressures, Salesforce posted strong [fourth quarter] numbers…Salesforce gave no hint that they’re incorporating any ‘macro’ caution in their 1Q deferred revenue guide and in fact said that they’re not seeing any ‘macro’ demand pressure.”

Stifel also wrote, “Of note, Salesforce’s revenues in Europe and APAC grew 32% and 26% y/y on a constant currency basis in the quarter, an encouraging figure considering recent macro-concerns weighing on those regions.”

There may be a lot of reasons for this, including Salesforce’s broader product portfolio and richer history. It also plays in the customer relationship management (CRM) software space, that’s increasingly moving to the cloud recently.

But one big reason is also because of the different sales approach Salesforce has been taking, according to Salesforce CEO Marc Benioff and COO Keith Block. They said they’re now selling directly to the CEOs, something they haven’t done in the past, allowing them to go beyond the traditional IT budget.

“It’s an amazing phenomenon when you see the CEO, who has the growth priority, realign the budgets in a corporation to take on these growth initiatives,” Block said during the earnings call. “Certainly IT budgets are a particular component, but when the priority of a company is all about growth, you find the money to make that happen.”

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