Salespeople live and die by commissions, which typically form a big chunk of how they are paid, so it’s no surprise that Salesforce paid a premium to buy a platform to manage this for customers more easily. Several months ago, it acquired Spiff, to help companies build out and manage incentive-based compensation schemes. Salesforce’s 10-Q filing with the SEC early Thursday finally reveals the price it paid: $419 million all-in.
That price, described as acquisition date fair value, includes $374 million in cash, the filing said.
The details were revealed in the 10-Q filing related to Salesforce’s results, which were published on Wednesday. The public company’s stock dropped by some 16% after those came out after Salesforce recorded its first revenue miss in nearly 20 years (2006). The company recorded quarterly revenues of $9.13 billion per the 10-Q; analysts per Yahoo Finance were expecting $9.15 billion on average; some were looking for a figure as high $9.37 billion.
In that context, making an acquisition to drive more revenues down the line is not a surprise.
The $419 million pricetag is a notable hike for Spiff. The startup was last valued, according to PitchBook data, at $260 million as recently as May 2023 when it raised $50 million.
That was just seven months before the acquisition deal was announced in December 2023, with the close of the deal coming February 2024, according to the 10-Q.
Based out of Salt Lake City, UT, Spiff had raised in all around $110 million from investors that include Salesforce itself, Lightspeed Venture Partners, Norwest Ventures, and a number of notable individual backers such as Daniel Dines (the founder of Romanian RPA darling UiPath, who this week jumped back in as CEO as the company tumbled in the markets; and Hanno Renner (the head and founder of another major European tech player, the HR startup Personio).
The acquisition and price are notable because they are very much a sign of the times.
The strong deal, coming so quickly on the heels of a fundraise, can be seen as a signal of how stronger companies are still commanding big prices, despite the wider pressure on startups right now.
The still-mostly-closed IPO window for the most mature companies has led to a tougher funding market overall. Combined with economic conditions that have seen companies fail to meet growth targets, for those struggling the most, this is resulting in down rounds, fire sales, and in the worst-case scenarios, more startups sinking in the deadpool.
Not so the case with Spiff. In its last funding round a year ago, the company noted that it had doubled customers to 1,000 and grown revenues 100% in the last year. It was founded during the pandemic, and in its short life so far said last year that it had grown revenues 800% since then.
More recently, it’s been leaning into buzzy areas where Salesforce likely wants to do more to grow its own revenues: AI and no-code, self-service solutions.
Specifically, Spiff last year launched an AI-based no-code, self-service toolset to help customers build sales commission schemes without the need of developers. Extra flexibility is especially a priority when the economy is not at its strongest, and that’s where Spiff was aiming its new technology.
“We’ve seen a lot of commission plans change,” Jeron Paul, Spiff’s founder and CEO, told TechCrunch in an interview last year. “Incentives end up driving a lot of the behavior of your go-to-market motion, so when you hit recessions, and whatever we’re in right now, that go-to-market motion changes a lot, which means your commission plans change a lot.”
To that end, Salesforce said it is recording $323 million of goodwill covering “assembled workforce and expanded market opportunities.”
Salesforce also noted in the 10-Q that it is ascribing $52 million in “intangible assets” in the value of the Spiff deal, which includes nine years of life for the startup’s existing technology, and a further five years for its existing customer book.