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Salesforce CEO Marc Benioff has a close eye on Palantir, acknowledging the market’s bullish sentiment towards the data management and analytics firm.
“Oh my gosh. I am so inspired by that company,” Benioff stated at Goldman Sachs’ Communacopia+Technology conference in San Francisco. “I mean, not just because they have 100 times multiple on their revenue, which I would love to have that too. Maybe it’ll have 1000 times on their revenue soon.”
While Salesforce maintains a significant revenue lead, reporting over $10 billion in the latest quarter, Palantir’s growth trajectory is noteworthy. Palantir is growing 48%, compared with 10% for Salesforce.
Benioff also pointed out Palantir’s premium pricing strategy, stating their prices are “the most expensive enterprise software I’ve ever seen,” and adding, “Maybe I’m not charging enough.” This remark hints at a potential re-evaluation of Salesforce’s pricing models in response to competitive pressures. The comment highlights the ongoing debate within the SaaS industry regarding pricing strategies – whether volume-based competitive pricing or value-based premium pricing is more sustainable in the long run. Palantir’s focus on securing high-value, long-term contracts with government and enterprise clients seemingly justifies its higher price points.
This isn’t the first time Benioff has commented on Palantir. He previously noted Palantir’s “extraordinary” prices, contrasting it with Salesforce’s “very competitive product at a much lower cost.”
Palantir CEO Alex Karp responded, stating, “We are very focused on value creation, and we ask to be modestly compensated for that value.” This statement underscores Palantir’s emphasis on providing customized data solutions and high-impact results, particularly in sectors like defense and intelligence, where the cost of failure is significantly higher than the price tag of the software.
Competition between the two companies also extends to government contracts, where Salesforce recently secured a U.S. Army deal, edging out Palantir.
Founded in 2003, Palantir went public in 2020. Palantir’s market capitalization stands at $406 billion, while Salesforce is worth $231 billion. Trading volumes for Palantir remain high.
Salesforce shares are down 27% this year, the worst performance in large-cap tech.
Salesforce and Palantir year to date stock chart.
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