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Salesforce co-CEO Marc Benioff. Photo by Bloomberg.

Why Salesforce Trades Like Oracle—Investors Fear Benioff’s Next Big Deal

Photo: Salesforce co-CEO Marc Benioff. Photo by Bloomberg.

If you want an example of just how much more weight investors are placing on profits than on revenue growth, take a look at Salesforce and Oracle. On one side is Salesforce, whose top line has grown at a remarkably stable rate, averaging 26% over the past seven fiscal years. On the other is aging software giant Oracle, whose revenue averaged growth of 1.6% in the same period.

And yet amid the stock sell-off since November, shares of Oracle have fallen half as much as those of Salesforce. In the past week, each stock has been trading at close to six times the next 12 months’ revenue. Why? For a start, Oracle’s profit margins are nearly twice Salesforce’s. Investors appear to be sending Salesforce co-CEO Marc Benioff a message: We’re fed up with your reliance on profit-sapping acquisitions.

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