Cloud companies are no longer on the horizon, they are right overhead, with Salesforce.com replacing ExxonMobil in the 30-member Dow Jones Industrial Average from next week.

Its shares popped 4 per cent on Monday’s news, but that was nothing compared to today’s reaction to Salesforce’s latest earnings report overnight. The cloud business software company’s stock is up more than 25 per cent today after a blowout quarter, inevitably boosted by the working-from-home trend in this time of coronavirus.

Analysts at Cowen said second-quarter bookings growth of around 30 per cent was well above their 6 per cent estimate, with large government, cloud services and cloud commerce deals standing out. “Management seemed to carry a new level of confidence, with a sizeable bump in guidance,” they said. Stifel analysts added: “Salesforce is impressively positioned for the digital transformation revolution.”

Revenues climbed 29 per cent in the quarter to July 31 to $5.15bn, with Wall Street expecting $4.9bn. Founded in San Francisco in 1999, Salesforce is a veteran among software-as-a-service companies and its stock had already risen 27-fold since the depths of the financial crisis in 2009.

The impact of newer cloud companies is reflected in the IPO prospectuses revealed this week for Snowflake and Asana. Snowflake could be worth as much as $20bn when it lists and revenues have soared 132 per cent in the first half of this year. It allows users to analyse data across multiple cloud platforms, including those from Amazon, Microsoft and Google.

Asana, started by Facebook co-founder Dustin Moskovitz in 2008, sells cloud collaboration software to businesses. It will float on the New York Stock Exchange in a direct listing, which raises no money for the company but allows shareholders to sell stock on the open market. JFrog and Sumo Logic are two smaller cloud companies announcing IPO plans.

But Salesforce is the cumulonimbus of cloud software and ex-Oracle executive and Salesforce CEO Marc Benioff has seen his company overtake his former employer this year, with a market capitalisation now approaching $250bn.

Line chart of Market cap ($bn) showing Salesforce plays catch-up with the rest of the surging software sector

The Internet of (Five) Things

1. Palantir’s Silicon Valley rant
The data analytics company whose work on counter-terrorism has made it one of Silicon Valley’s most controversial tech concerns, has sought to draw a clear line between its own business and what it dismissed as the “idiosyncrasies and excesses” of the rest of the valley, as it announced plans for a stock market listing. “We seem to share fewer and fewer of the technology sector’s values and commitments,” said chief executive Alex Karp. Lex says the hype around Palantir seems to exceed its real breadth and scale. 

2. Huawei loses landmark patent case
Huawei has lost a lawsuit over technology licensing in a landmark Supreme Court ruling that could turn London into a hub for global patent litigation. Huawei brought the long-running court case in 2014 when it was accused of infringing intellectual property belonging to US company Unwired Planet, which had acquired a clutch of patents covering wireless connectivity from Ericsson.

3. Transformed Ant has high hopes
Jack Ma's Ant Group has changed beyond all recognition in the five years since it was first reported to be seeking an IPO, reports our Beijing team. It still dominates mobile payments in China, but instead of competing with the financial sector, it has become a digital supermarket of others’ offerings, letting users buy on credit, invest in mutual funds, and find insurance through established players.

Alipay, Ant Group's flagship superapp

4. Napster sold for a song
Napster, the file-sharing business that devastated the music industry at the turn of the century, has been sold to UK tech company MelodyVR in a $70m deal. The acquisition from US company RealNetworks is the latest attempt to transform the brand, with the aim being to combine a fledgling virtual live music business with Napster’s streaming operation. In other online music news, K-Pop superstars BTS are breaking all records with their new single Dynamite.

5. Netflix partners with Secret Cinema
UK immersive cinema company Secret Cinema will partner with Netflix for its first US screening, which will be a drive-in showing of the sci-fi drama series Stranger Things in a disused downtown Los Angeles car park. About 26 cars will be able to drive around different locations to watch scenes from the series that will also be acted out around them. Netflix had earlier been investing in physical cinemas with its acquisition of the Paris Theatre in New York and the Egyptian Theatre in Los Angeles.

Tech tools — Asus ZenFone 7

Asus caused a stir a year ago with the introduction of an innovative flip-up camera in the ZenFone 6 and its successor, the ZenFone 7, has been unveiled today. There is a bunch of new features including an extra zoom lens in the camera array and a new OLED display with a 90Hz refresh rate, according to The Verge.

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