Insights for IT Negotiations

Workday fell short of expectations in their most recent FY23 Q4 earnings call, but their revenue was still posted as a 20% increase year-over-year and their overall growth projections throughout the next FY remain accurate. These numbers are a direct result of elongated sales cycles in an economic downturn, but Workday continues to leverage their current customer base to increase renewal rates. In this podcast, Workday Practice Leader Jeff Lazarto gives a high-level overview of the recent earnings results. He also maps out what to expect from Workday in the coming year as they continue to accelerate growth as well as how customers can prepare for their upcoming Workday negotiations and renewals given this information. Host: Jeff Lazarto: https://bit.ly/37eCXdN Workday Commercial Advisory Services: https://bit.ly/3A6KOXt

Salesforce’s Q4 FY23 revenue came in at $8.38B, up 14% year-over-year and beating guidance ($7.93B - $8.03B) and analyst expectations ($7.99B / 9.2% growth). Salesforce’s full year FY23 revenue came in at $31.B, higher than guidance ($30.9B - $31B) and represented 18% growth year-over-year. Salesforce also provided full year FY24 revenue guidance of $34.5B - $34.7B that beat what analysts were expecting, but still showed a slowing growth of around 10%. During the earnings call, Salesforce, specifically CEO Marc Benioff, made it very clear that improving profitability is Salesforce’s highest priority. The goal is to make Salesforce the largest and most profitable software company in the world. In this podcast, our Salesforce Practice Leader, Adam Mansfield, discusses what customers should expect from Salesforce during the year ahead and beyond. He also shares how customers should approach Salesforce and how best to leverage Salesforce’s clear goals during their upcoming negotiations. Host: Adam Mansfield: https://bit.ly/3rPGp8r SalesForce Commercial Advisory Services: https://bit.ly/2V78ADX

Workday announced a 3% layoff of its workforce earlier this week. While these layoffs are significantly smaller than what we have seen from other major tech companies recently, there are still some important insights to gather from this reduction to their global workforce. These layoffs primarily affected the product and technology division, but Workday mentioned their plans to hire in their marketing and sales organizations and stated they do not plan to lay off more of their workforce in the immediate future. In this podcast, our Workday Practice Leader, Jeff Lazarto, discusses what these changes mean for customers in terms of where their product dollars are going, where Workday’s current focus is, and how to navigate Workday’s inevitably aggressive sales tactics following these layoffs. Host: Jeff Lazarto: https://bit.ly/37eCXdN Workday Commercial Advisory Services: https://bit.ly/3A6KOXt

ServiceNow’s Q4 subscription revenue came in at $1.86B, representing 22% growth year-over-year even though cRPO fell short of guidance. ServiceNow pointed out during the earnings call that cRPO (revenue that will be recognized in next 12 months) was impacted by fewer early 2023 renewals than is typical in Q4. ServiceNow mentioned that they outperformed their Net New ACV and renewal ACV targets for the contracts that were expiring in Q4. ServiceNow’s full year FY22 subscription revenue also beat guidance, coming in at $6.89B, up 24% year-over-year. In this podcast, ServiceNow Practice Leader, Adam Mansfield, discusses what customers should expect from ServiceNow over the course of the upcoming year as ServiceNow works to upsell and cross sell their current customers while adding net new logos. He also shares how customers can leverage ServiceNow’s clear goals during their upcoming ServiceNow negotiations and renewals. Host: Adam Mansfield: https://bit.ly/3rPGp8r ServiceNow Commercial Advisory Services: https://bit.ly/3ls6VDt

Microsoft’s FY23 Q2 earnings came out, and total revenue was reported as $52.7B, lower than what analysts were expecting ($52.9B). This revenue represented only 2% growth year-over-year, the slowest rate of growth since 2016 . Microsoft’s net income was also down 12%. Most importantly, Microsoft Cloud revenue was reported at $27.1B, representing a 22% increase year-over-year. While the associated gross margin increased from 70% to 72%, their Cloud growth rate has been slowing. Microsoft Cloud revenue growth was 32% in FY22 Q2 and 24% in FY23 Q1. Microsoft’s go-forward success will continue to be directly tied to Microsoft Cloud, which includes Azure, Office365, LinkedIn, Dynamics 365, Power Apps, and other cloud solutions. In this podcast, our Microsoft Practice Leader, Adam Mansfield, discusses how enterprise customers can take advantage of Microsoft’s focus on helping customers realize more value from their spend. He also covers what enterprise customers should expect from Microsoft in the coming quarters as they try to accelerate cloud growth. Host: Adam Mansfield: bit.ly/3rPGp8r Microsoft Commercial Advisory Services: bit.ly/2V78ADX

Several key executives are leaving Salesforce, including Co-CEO Bret Taylor, Slack CEO Stewart Butterfield, Tableau CEO Mark Nelson and Chief Strategy Office Gavin Patterson. This substantial executive level exodus is certainly catching the attention of investors, Salesforce competitors and customers. In this podcast, our Salesforce Practice Leader, Adam Mansfield, shares his thoughts on the executive departures and provides insights on what customers should do to get ahead of any impact they may have on their relied upon Salesforce solutions. Host: Adam Mansfield: https://bit.ly/3rPGp8r SalesForce Commercial Advisory Services: https://bit.ly/2V78ADX

Salesforce’s Q3 FY23 total revenue came in at $7.84B, slightly higher than the expected $7.82B, and represented 14% growth year-over-year. However, Salesforce provided Q4 FY23 revenue guidance that came up short of what was previously expected, while also mentioning they were not yet ready to give FY24 guidance. Additionally, it was announced that Salesforce’s co-CEO, Bret Taylor, will be stepping down at the end of January 2023 (Salesforce’s year-end), stating that he wants to return to his "entrepreneurial roots.” In this podcast, our Salesforce Practice Leader, Adam Mansfield, discusses what customers should expect from Salesforce leading up to their year-end and beyond. He also shares how customers should approach Salesforce and how best to leverage Salesforce’s clear goals during their upcoming negotiations. Host: Adam Mansfield: https://bit.ly/3rPGp8r SalesForce Commercial Advisory Services: https://bit.ly/2V78ADX

ServiceNow’s Q3 subscription revenue came in at $1.742B, representing 22% growth year-over-year but lower than the expected $1.85B. ServiceNow also lowered their full year subscription revenue guidance from a midpoint of $6.92B to a midpoint of $6.86B, while maintaining an expected subscription gross margin of 86%. ServiceNow now has 1,530 customers paying them over $1M per year, with the average annual spend among that group coming in at $4M. Eighteen of the top 20 deals in the quarter contained 5 or more products, which is another key metric for ServiceNow because it demonstrates their ability to sell a wide set of solutions to their customers, especially solutions outside of the core Technology Workflows product set like Employee, Customer and Creator. In this podcast, ServiceNow Practice Leader, Adam Mansfield, discusses what customers should expect from ServiceNow as ServiceNow’s year-end fast approaches. He also shares how customers can leverage ServiceNow’s clear goals during their upcoming ServiceNow renewal negotiations. Host: Adam Mansfield: https://bit.ly/3rPGp8r ServiceNow Commercial Advisory Services: https://bit.ly/3ls6VDt

In their most recent earnings call, Microsoft beat revenue expectations but posted the lowest rate of revenue growth in five (5) years. Microsoft’s FY23 Q1 total revenue was $50.1B, up 11%. Microsoft Cloud revenue grew 24% to $25.7B, and for the first time exceeded 50% of Microsoft’s overall company revenue. Their go-forward success will continue to be directly tied to Microsoft Cloud, which includes Azure, Office365, LinkedIn, Dynamics 365, Power Apps, and other cloud solutions. In this podcast, our Microsoft Practice Leader, Adam Mansfield, discusses how customers can leverage Microsoft’s clear focus on getting more adoption and utilization of Microsoft’s cloud, security solutions, Teams, Dynamics 365, and LinkedIn. He also explains why more customers should push for the more costly all-in cloud bundle, Microsoft 365 E5. Lastly, he covers what customers need to do to ensure they appropriately prepare for their upcoming renewal negotiations. Host: Adam Mansfield: https://bit.ly/3rPGp8r Microsoft Commercial Advisory Services: https://bit.ly/2V78ADX

Salesforce’s Dreamforce Conference is a massive event filled with celebrity appearances, sessions, dinners, and hallway meetups. But for many attendees, it can be an overwhelming experience. In this video, our Salesforce Practice Leader, Adam Mansfield, shares his thoughts on how attendees and the companies they represent can get the most out of their time at Dreamforce while also using the event as an opportunity to gain leverage during the next Salesforce renewal negotiation. Host: Adam Mansfield: https://bit.ly/3rPGp8r SalesForce Commercial Advisory Services: https://bit.ly/37hFkMV Related Blog: https://bit.ly/3d7xDj2