Marc Benioff, co-founder and CEO of Salesforce, attends the 50th World Economic Forum in Davos, Switzerland, on Jan. 21, 2020.
There was a moment, during the pandemic-fueled growth days of 2020, when Salesforce surpassed Oracle by market cap. Marc Benioff had finally toppled his protege, Larry Ellison.
That moment is long gone.
Salesforce's stock price has dropped 25% this year, the worst performance in large-cap tech and the second-steepest decline in the Dow, beating only UnitedHealth . Meanwhile, Oracle has jumped 34%, outperforming most of its peers and well outpacing the major indexes.
The two companies that were once about even by valuation are now separated by about $400 billion. Oracle is worth $630 billion, and Salesforce has dropped to $239 billion. Ellison now ranks second behind Elon Musk on the Bloomberg Billionaires Index, with a $278 billion net worth. Benioff sits in 318th place at $10.4 billion.
Investors are eager to hear how Benioff plans to right the ship when Salesforce reports quarterly results after the close on Wednesday.
Sales growth has been mired in the single digits for four straight quarters as the company reckons with the challenges of saturation in its key market of customer relationship management software. That streak is expected to continue, with analysts estimating revenue growth of 8.7% to $10.1 billion, according to LSEG.
During the April period, about a quarter of Salesforce's $9.3 billion in subscription and support revenue came from products related to customer service, its biggest category. The company charges for its Service Cloud offering based on the number of agents who use the software.
With the rapid rise of artificial intelligence, some analysts predict more inquiries will be handled through automation, posing a risk to Salesforce.
Benioff is well aware of the challenge. He said in June that AI is already handling about 30% to 50% of the company's work. It's a big reason why Salesforce reportedly slashed 1,000 jobs earlier this year.
When it comes to customers, Salesforce now sells Agentforce, an AI system for answering customer support requests. After becoming available in October, Agentforce was delivering $100 million in annualized revenue, Benioff told analysts on a conference call in May.