Thursday's Headlines: Salesforce Co-CEO to Step Down
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Workday (WDAY) +17.2%
Cloudflare (NET) +10.2%
Shopify (SHOP) +10.0%
Roku Inc. (ROKU) +9.6%
Trip.com Group (TCOM) +9.4%
Moving Down ⬇️
CrowdStrike (CRWD) -14.7%
Pure Storage (PSTG) -0.9%
Zendesk (ZEN) 0.0%
Salesforce Co-CEO to Step Down 👋
Bret Taylor is leaving Salesforce (CRM) just one year after he was made co-CEO of the business-software firm. The announcement overshadowed the company’s quarterly report that saw a 19% rise in revenue — slightly beating analyst estimates.
Mr. Taylor has been with Salesforce since 2016 when they acquired software company Quip, which he co-founded. He had previously served as president and chief operating officer of Salesforce before being elevated to co-CEO exactly one year ago.
Taylor is well regarded in the tech industry, having founded two successful businesses and been involved in the development of major innovations like Google Maps. He left Google to create FriendFeed, a real-time aggregator that was acquired by Facebook in 2009.
Last year, Taylor was named chairman of Twitter and was instrumental in forcing Elon Musk to acquire the company after Musk tried to back out of the deal.
In a statement, Taylor said that he had “decided to return to [his] entrepreneurial roots”.
Salesforce founder Marc Benioff will now serve as sole CEO.
Benioff thanked Taylor for his service but admitted his leaving was “bittersweet”. “I know he wants to go create a third great company,” he added.
This is the second time that Salesforce has experimented with a dual-CEO setup. In 2018, Keith Block was given the co-CEO role but resigned after 18 months.
Salesforce shares are currently down 6% in pre-market trading.
Snowflake Dips on Light Guidance ❄️
Shares of Snowflake (SNOW) are down in pre-market trading after last night’s earnings report. The data-warehouse pioneer saw its stock dip about 6% this morning after its revenue guidance for the coming quarter underdelivered. Management has forecast product revenue to come in between $535 and $540 million, which is well short of analyst expectations of $553 million and would represent a growth rate of 49% - 50%.
The company continues to deliver astounding revenue growth at scale, taking in $557 million this quarter, an increase of 67% year-over-year. However, this is down from the 83% increase in Q2 and may also be a factor in today’s dip, highlighting the deceleration in demand that may be worrying investors.
Despite the stock’s reaction, the business continues to operate at a high level, growing its total customer count by 34% year-over-year and posting a mouth-watering net-dollar retention rate of 165% for the quarter. Its large customer growth is even more impressive, with clients contributing $1 million or more in revenue up 94% year-over-year.
Not dissimilar to CrowdStrike yesterday, Snowflake is a victim of its own success as it deals with sky-high expectations and a valuation that matches them. With the stock already down 57% year-to-date before today’s drop, it has seen significant valuation compression in 2022 so far.
Xpeng Stock Skyrockets Off Confusing Earnings 🚗
Shares of Chinese electric vehicle (EV) manufacturer Xpeng jumped by a whopping 47% yesterday following the publication of its third-quarter earnings report before the bell yesterday. Amazingly, this surge occurred despite the firm falling short of analyst expectations for both revenue and earnings. Let’s examine exactly what happened.
Xpeng reported a net loss of 2.38 billion Chinese yuan ($335 million) against an expected loss of 2.09 billion yuan ($294 million), on revenue of 6.82 billion yuan ($961 million) versus an anticipated 7.26 billion yuan ($1.02 billion). Ordinarily, these types of worrying figures might prompt a firesale of the stock, however, there appears to be a belief that this signals the bottom of Xpeng’s falling delivery numbers.
Xpeng reported the delivery of 29,750 vehicles during the most recent quarter — a 14% decrease from the prior quarter, but a 15% year-over-year improvement. Brian Gu, the company’s president, anticipates sales to stay around the 6,000 mark for November before recovering to 10,000 for December.
Xpeng has been hit hard over the past year, with its stock currently down over 78% year-to-date despite yesterday’s sudden surge. Ongoing lockdowns in China, rising material costs, and increased competition have all conspired to punish the company. As such, any signs of a potential end to the suffering were always likely to prompt some renewed hope. However, should Xpeng continue to underperform financial expectations, these types of gains will likely cease to continue.