Salesforce CEO Marc Benioff has just delivered fantastic news for Palantir -Investors

• Salesforce for a long time dominated the landscape of the Enterprise Software, given its extensive series of analysis tools.

• Palantir has made a splash in this market in recent years, thanks to the Artificial Intelligence (AI) platforms of the company.

• Benioff had a number of options when he spoke about Palantir at a recent technology conference.

• 10 shares that we like than Palantir Technologies ›

Marc Benioff is the charismatic and sometimes provocative CEO of Enterprise Software Giant Salesforce. During a recent interview with CNBC, Benioff made a pointed comment about one of the most important competitors, Data Mining Darling Palantir Technologies (Nasdaq: PLTR).

Let’s look at what Benioff had to say about the rival of Salesforce, and why it could spell encouraging news for Palantir investors in the long term.

In the video clip Zeroes below on two aspects about Palantir: the exalted rating and the steep price tag that is linked to the software suite, including the Platforms Foundry, Apollo and Gotham.

Given the subtle grin, I saw Benioff’s remark as a sarcastic shot than a serious criticism. This is hardly unusual in the world of the rivalry of companies. Palantir’s own CEO, Alex Karp, is also Unapological Bot in his public comments about competitors.

Benioff seemed to imply that Palantir’s products are priceless – to ensure that a recent army deal that won Salesforce against the company emphasizes. Although that is impressive, I would fail if I did not mention that Palantir would recently close another deal with the US Army – reportedly worth $ 10 billion in the following decade.

For me, a further reading of the words of Benioff can emphasize the price force of Palantir – a sign of strength instead of weakness.

The business model of Palantir revolves around signing multi -year subscriptions with government agencies and large companies. These contracts often encounter hundreds of millions, or even billions of dollars.

Long -term obligations give the company something that every company desires: visibility of income. Investors pay a premium for predictability and Palantir delivers a growing backlog of remaining performance obligations (RPO) that offer a clear facial line in future cash flow.

There is also a profit margin story here. Like most software-as-a-service (SaaS) companies, Palantir shoulders meaningful development and implementation costs in advance. But once the systems have been used, the incremental costs of maintaining or scaling them are nominal. This dynamic leads to a steady gross margin extension over time.

Finally, Palantir benefits from a powerful stickiness factor. The platforms weave deep in customer workflows, operations and decision -making processes. With data pipelines and analysis models fully embedded, the costs and complexity of switching to a rival is impractical.

In my opinion, these are exactly the dynamics that Benioff’s Quip unintentionally underlined: Palantir can recommend Premium prices because the software pivotel has become indispensable in the digital age. By doing this, Palantir locks an attractive long -term unity economy for the company and, more importantly, for shareholders.

Although the nuclear strength of Salesforce lies in Software Customer Relationship Management (CRM), the company has steadily extended to adjacent arenas such as data analysis and agent artificial intelligence (AI).

If Salesforce Palantir sees as a real competitive threat, the logical result is that both companies will double the product development. This type of competing market often speeds up innovation – a dynamic that benefits customers and can improve the appreciation of both companies in the long term.

From my perspective, Benioff’s comments serve as an unintended approval of Palantir’s canal. The possibility to charge premium rates and yet to win multi -year contracts with an increasing number of the world’s most advanced organizations is a welcome validation, even if it is wrapped in a little sarcasm.

When trying to proclaim the high appreciation and prices of Palantir, Benioff has also strengthened the story that Palantir wants the market to buy: the software is unique, deeply integrated and worth the investment, which explains why the company has disrupted the company’s business landscape. For Palantir investors that is ultimately good news.

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Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions and recommends Palantir Technologies and Salesforce. The Motley Fool has a disclosure policy.

Salesforce CEO Marc Benioff has just delivered fantastic news for Palantir Investors was originally published by The Motley Fool