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Salesforce is suddenly hiring fewer people after spending nearly $4 billion buying companies this year

Aug 19, 2016, 23:00 IST

Salesforce CEO Marc BenioffRobert Galbraith/Reuters

Salesforce seems to be slowing down on hiring after spending nearly $4 billion on acquisitions this year.

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There are 30% fewer open jobs listed on Salesforce's website over the past 3 months, with most of the job reductions occurring since early July, according to a note published by market research firm Cowen & Co. on Friday.

It also notes that there have been some "travel restrictions" within the company, citing anonymous sources.

The last time Salesforce went through this type of hiring slowdown was in October 2014, when the company missed its billings target, the note adds.

It's unclear what exactly is causing this, but Cowen gives 3 possibilities:

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  • To absorb the $2.8 billion Demandware acquisition (the deal was announced on July 1)
  • Being more mindful of profit margins - in addition to spending more than $4 billion on acquisitions this year, Salesforce has also been telling investors it's paying closer attention to its operating profit margins.
  • Possible weaker quarterly revenue growth.

Slowing revenue growth would be a bit concerning, given how Salesforce has been blowing away earnings lately and is aiming to become the first cloud software company to reach $10 billion in annual revenue. Cowen notes that the pricing hike that came into play in May could have impacted its revenue growth, and as a result, it doesn't expect to see any announcements of huge customer wins this quarter - the company has highlighted some nine-figure new deals in recent quarters.

Even if there's a slowdown, however, Salesforce would probably rebound next quarter as there are a lot of deals in the works in the pipeline and the company typically sees higher revenue toward the end of the year. Also, the company's big annual conference Dreamforce, which takes place in October, could serve as a catalyst for growth, it says.

"While 2Q seems to be a weaker quarter, we want to be buyers on pullbacks as we think momentum is poised to rebound in 3Q and we think Dreamforce can be a positive sentiment catalyst for the stock," Cowen's analyst Derrick Wood wrote in the note.

A Salesforce representative wasn't immediately available for comment.

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