The net profit is halved, and the world's number one SaaS giant can't do it? The opportunity for Ali and Tencent is coming Tiger Financial Report Hot Review

If you want to select the hottest financing track at present, the Value Research Institute must vote for SaaS.

Under the background of digital transformation from all walks of life, SaaS service providers focusing on cloud computing, big data and intelligent services have become the objects sought after by capital. In the past month alone, many start-ups have obtained financing:

  • On December 1 ST, the clinical research SaaS cloud platform "One Linyun" completed tens of millions of yuan of A-round financing, which was exclusively invested by Kangjun Capital;
  • On November 26, Jingying Technology, a commercial content creation service platform, completed the seed round financing of 10 million yuan, and the funds obtained will be mainly used to improve its SaaS creation platform;
  • On November 11th, Seconds Technology, a prefabricated built-in SaaS platform service provider, announced that it had completed the A round of financing of tens of millions of yuan, and well-known institutions such as Oasis Capital, Gaochun Capital and Wuyuan Capital were all on the list of shareholders.

According to the statistics of iResearch, as of the first half of this year, the number of SaaS track financing reached 173, and the enthusiasm of capital obviously exceeded that of last year-the number of financing in 2020 was only 237.

However, objectively speaking, the domestic SaaS industry started late, the track is too scattered, and there is still a certain gap between the market maturity and that of European and American countries.For many domestic start-ups, it is an important task to learn from predecessors' experience and narrow the gap as soon as possible.

One of the most worthy of reference and learning objects, of course, is (Sai Shi Fu), who dominates one side.

Net profit plummeted year-on-year. Are there other bright spots in's financial report?

On December 1, Beijing time,, the world's largest CRM software service provider, announced its financial report for the third quarter of fiscal year 2022. The data shows that's total revenue in the third quarter was 6.863 billion US dollars, a year-on-year increase of 27%; Excluding the impact of exchange rate changes, the year-on-year increase was 26%.

In addition,'s GAAP operating profit rate in the third quarter was 0.6%, and its non-GAAP operating profit rate was 19.8%, which basically met market expectations.

Driven by the revenue growth in the third quarter, raised its revenue forecast in the fourth quarter to 7.224-7.234 billion US dollars, and raised its revenue forecast in fiscal year 2022 to 26.39-26.4 billion US dollars.

(Image from Financial Report)

From the overall revenue point of view,'s third-quarter financial report has many bright spots.

First, it is the steady increase of revenue scale and year-on-year growth rate.

No matter from the perspective of month-on-month or year-on-year,'s revenue growth rate in the third quarter has improved. In the second quarter of fiscal year 2022,'s total revenue was 6.34 billion US dollars, a year-on-year increase of 23%; Revenue and year-on-year growth in the same period last year were USD 5.419 billion and 20% respectively. listed several reasons for the increase in revenue growth in the third quarter,However, in the view of the Value Institute, Slack's performance deserves our special attention.

In July this year, invested 27.7 billion yuan in Slack, a corporate communication software, and completed the largest acquisition since the establishment of the group.

Slack, who dared to challenge Microsoft at the beginning, naturally had his own confidence. On the one hand, Slack's customers, including, IBM, CNN and other industry giants, are also existing customers of, which can be described as mutually beneficial.

On the other hand, Slack also has the ability to absorb gold. Long before the acquisition, Chief Financial Officer Amy Weaver predicted that the integration of Slack's business with's own business structure would drive the latter's annual sales growth by more than 25%.

Data show that in the third quarter, Slack's subscription and support business alone contributed $276 million in revenue to, occupying the main force in its platform and other revenue modules.

From the financial report data of the third quarter, although there is still a certain distance from the growth target of 25%, the potential of Slack is undoubtedly worth looking forward to.

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(Image from Financial Report)

Secondly, it is a healthy and benign revenue structure-the main business is increasing steadily, and the new business is growing rapidly.

In terms of revenue structure, the status of subscription and support business is unshakable. The revenue in the third quarter reached 6.379 billion US dollars, up 25% year-on-year, accounting for 93%, with little change compared with the previous quarter. Revenue from professional services and other businesses rose 45% to 4.84% compared with the same period of last year.

There are bright spots, but there are also shortcomings. According to the Value Research Institute,'s transcript did not fully meet the market expectations-after the financial report was released, fell more than 6% after the US session, which is the best evidence.

(Photo from Futu Niu Niu)

Wall Street predators seem to complain about's performance in the third quarter.The biggest dissatisfaction is believed to come from the sharp decline in net profit year on year.

Data show that's net profit in the third quarter was only US $468 million, a sharp drop of 57% compared with US $1.081 billion in the same period last year. By lengthening the timeline, we can also find that's net profit has been in a downturn since the net profit dropped to 290 million US dollars in the fourth quarter of fiscal year 2021, which is far from being compared with the peak period.

If the sharp decline in net profit in the second quarter can be attributed to the pain caused by the sky-high purchase of Slack, it is difficult to convince investors with the same reasons in the third quarter. I believe this is also an important reason why the stock price kept rising after the financial report of the last quarter was announced, but this time it fell sharply.

In fact, intentionally or unintentionally downplayed the hard injury of cost control in its financial report.

Data show that its operating expenditure in the third quarter was 4.981 billion, and its marketing and sales expenditure was 3.111 billion, up 31.04% and 30.88% respectively. In addition, the revenue ratio of these two expenditures increased compared with the same period of last year. said last year that the proportion of marketing expenses will remain high for a long time to come, "because the company is still seeking to continuously expand the number of customers, sell more products to existing customers and continue to build brand recognition."

From the financial report of the third quarter, the high operating cost has become an important reason for lowering the profit rate-the operating profit rate in this quarter was as low as 0.6%, compared with 4.1% in the same period last year. Under the premise that the high investment policy remains unchanged, it is still difficult for to make a breakthrough in its net profit for some time to come. is still an object worth learning from domestic counterparts

Despite the stock price drop and net profit drop, executives are full of confidence in the company's prospects.

Marc Benioff, chairman of, said:

"We have completed another extraordinary quarter and recorded strong revenue growth. As companies accelerate their digital transformation journey,'s strategic value is higher than ever before. With the strong potential of 360 customer platform and Slack, we are expected to achieve revenue of 50 billion US dollars in fiscal year 2026."

We have no comment on Marc Benioff's pie for investors.However, I have to admit that is still the industry benchmark in terms of business layout and overall service level-at least much more successful than domestic SaaS service providers.

Some advantages of are beyond the envy of domestic counterparts-such as the word-of-mouth benefits brought by the first-Mover advantage and the market share accumulated by years of painstaking efforts.

According to the report of IDC, a data organization, has been rated as the number one SaaS service provider in the world for seven consecutive years, and its market share in many sub-sectors also ranks first.

In the most brilliant year of 2019, SalesfOrce's dominance in many SaaS segments has reached its peak:

CRM (Customer Relationship Management System) application market revenue share reached 18.4%, sales staff productivity and management application service market share was 39.2%, customer service application market share was 45%...

On these sub-tracks, giants such as Oracle and SAP, which are behind, can't even see the taillights.

(Image from IDC)

In the last two years, although's dominance has declined, it is still one of the industry leaders-even if we look at the whole SaaS market.

According to Synergy's latest report, as of the second quarter of this year,'s market share in the whole SaaS market was 11%, second only to Microsoft's 19%, and it beat many strong rivals such as Adobe, Oracle and SAP.

(Image from Synergy)

Naturally, the first-Mover advantage can't be learned, but can climb to today's high position not only because he was born early-in the process of its rise, there are still many advantages, which are worth learning from and learning from latecomers.

The first is to build a complete product/service system to create a feeling that " is enough" for customers.

At present, has built a product system integrating front-end and back-end, taking into account upstream and downstream. Front-end services, such as marketing cloud, sales cloud, customer service cloud, e-commerce cloud, back-end platform cloud, artificial intelligence service platform, etc., can meet almost all the needs of customers' digital operation., who made his fortune by CRM at first, did not ascend to heaven in one step. Nowadays, we can build an incomparably perfect service and product system, relying on bit by bit accumulation.

Among them, making up for the gap in the industrial chain through mergers and acquisitions is the most skillful trick for

In addition to the aforementioned Slack, has made several key acquisitions in the past. For example, in 2019, acquired Tableau, a data analysis and business intelligence BI software service provider, which made up for its disadvantages in big data analysis.

With Slack in the bag, has filled the gap in the field of chat tools, and its service coverage has been further expanded, which will further erode Microsoft's market share.

(Photo from official website,

Second, is actually far-sighted in its development, and can always seize the window of technological change at the first time.

For example, after the acquisition of Mulesoft in 2018, obtained the technical support of upper-level data analysis, and made sufficient preparations for the data of local applications, IoT and other businesses to go to the cloud. At that time, IoT had just started, and it had not been killed into a Red Sea as it is now. obviously tasted a wave of dividends.

Judging from a series of recent developments and acquisition plans of, big data, cloud computing and AI are all important outlets of SaaS market in the future. Especially in the Chinese market, after the outbreak, thousands of enterprises are accelerating digital transformation, which is undoubtedly a great benefit for SaaS industry.

However, in the promising Chinese market,, a leading enterprise, has less dominant power.

The potential of domestic SaaS industry is being released is not invincible. In the case of large-scale entry into overseas markets, the phenomenon of acclimatization also occurs from time to time.

On November 17, Tableau, a subsidiary of, announced its withdrawal from the Chinese market and will terminate its services to existing partners in Chinese mainland on January 31 next year. As soon as this news came out, there were endless discussions about's acclimatization and Tableau's increased losses.

In fact, despite the adjustment of the Group's business strategy and Tableau's own defects,'s experience in Asia-Pacific, especially in the Chinese market, is far less successful than that in European and American markets.

According to the third-quarter financial report, SaaS's business revenue in America is 4.638 billion US dollars,The revenue of European business was US $15.81, up 23.42% and 37.60% respectively over the same period of last year. The business revenue in the Asia-Pacific market is 644 million, which is the lowest.

It is understandable that is acclimatized in the Chinese market. After all, domestic B-end business is not easy to do.

As for Tableau's withdrawal, the Value Research Institute believes that,After the successful acquisition of Slack in the second quarter, re-integrated its resources and abandoned some marginal markets & amp; Business, completely understandable.Moreover, Tableau is not completely withdrawn, and its Chinese business will be integrated into the cooperative relationship between and Alibaba Cloud. The channel will be owned by Ali, and the after-sales team of Tableau will be responsible for it.

However, for a number of SaaS service providers in China,'s withdrawal undoubtedly provides them with a good opportunity to be superior.

Compared with foreign countries, although the domestic SaaS market started late and its penetration rate is low, it has great growth potential and its industrial scale is constantly improving.

According to the data provided by Haibi Research Institute, by 2020, the enterprise SaaS market in China will reach 49.8 billion, with a year-on-year growth rate of 37.6%. In addition, the market size of public cloud SaaS has reached 28 billion, which has maintained a year-on-year growth rate of over 30% since 2015.

(Image from Prospective Industry Research Institute)

At present, the users in the domestic SaaS market are mainly medium and large enterprises, and nearly 130,000 of the newly added 180,000 users in 2020 are medium and large enterprises. However, with the digital wave sweeping the world and the repeated business pressure brought by the epidemic, I believe more small enterprises will actively embrace the SaaS market.

Ali and Tencent, two giants, have been locked in the SaaS field.

In June this year, the industry's first large-scale SaaS connector was released at the Ecological Summit. The main selling point is to realize data exchange based on unified data standards. China Business Accounting Society, Kingdee and other institutions and enterprises have taken the lead in joining. Tencent certainly does not show weakness. As of the third quarter of this year, Tencent Cloud has launched more than 400 digital solutions in more than 30 industries, and continues to deepen the SaaS field.

According to the Value Institute,Whether Tencent or Ali, the ultimate goal is not just SaaS-taking digital services as an incision, building a digital industrial chain integrating SaaS, PaaS and IaaS is their ultimate vision.

In fact, in fact, the

Goldman Sachs Huateng mentioned in a research report that with the expansion of cloud computing business from IaaS to SaaS + PaaS, Tencent's related business revenue can achieve a compound annual growth rate of 52% from 2020 to 2023, and its potential can never be ignored.

Of course, thanks to the growing industrial scale, besides Ali and Tencent, other SaaS service providers in China can also find their own living space.

For example, Kingdee, Jinshan Office and UFIDA, which have strong comprehensive strength, have long been regarded as strong competitors for the title of "Chinese version of". Another example is Youzan, which focuses on the platform service mode, E-signing treasure, which is deeply involved in the field of electronic signing, and easy sales, which focuses on CRM market, etc., all of which have laid a solid foundation in their respective vertical fields.

However, in terms of market value and revenue, there is a gap of ten times or even one hundred times between domestic SaaS service providers and

According to the closing price as of Tuesday, among the domestic SaaS service providers mentioned above, Jinshan Office has the highest market value, reaching US $19.37 billion, Kingdee and CHINA YOUZAN are US $10.2 billion and US $1.55 billion respectively. But Salseforce's market value is as high as nearly $280 billion.

There is certainly a reason why the overall performance of Chinese enterprise service companies is not as good as that of their American counterparts.

The main reason is that,There is still a big gap between China's B-end enterprises and the United States,The starting point of domestic enterprise-level service market is low, and many enterprises directly skip informationization and enter the industrial Internet era.

As China's SaaS service market enters a period of rapid growth, we believe that more opportunities will emerge in the future. Now let's see if you can seize these opportunities.

Write at the end

Time is set back to 2015. At that time, the news of's acquisition was rampant, and Alphabet, Microsoft and HP Inc were all regarded as takeover targets.

But now SaaS is booming, and has surpassed Oracle and Adobe to become the industry leader, and all unfavorable news and acquisition rumors have vanished.'s experience tells us that the potential of SaaS market is huge, and the huge investment in the early stage will inevitably bring heavy pressure. Only by overcoming these difficulties can we usher in a wider world.

At present,'s main battlefield is still in North America. As for who can successfully chew the big cake of domestic SaaS market, it depends on who can improve their competitiveness and make up for their shortcomings by absorbing the experience and lessons of predecessors.$$$Alibaba(BABA)$$TENCENT(00700)$

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