The Six Five team discusses Zoho Days 2022.
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Transcript:
Patrick Moorhead: Now, why it’s called Zoho Day when it’s two to three days, I don’t know. But Daniel, what happened at their analyst conference here in Austin, Texas?
Daniel Newman: Yeah. So what’s that now? Not this week, but last week we had so much hit the wire last week with our Earnings Palooza that we had to back this one out a week, but I don’t think it was that time sensitive. But you and I in Austin, thank you Zoho, had the opportunity to attend Zoho Day and get an update. Now, Zoho, for those that are unfamiliar, is a high growth basically business application suite. Zoho One is what it’s most appropriately titled as, but it has somewhere around 50 different applications that companies, and I would say it was historically SMB, but it’s grown to be really more SME and now even a little more ME, and that was one of the big takeaways is the company, because it’s been with its customer for many years now, are starting to go up market as it diversifies its offering.
So we’re talking about having ERP and CRM and project management and having Zoho meetings, having analytics, AI, embedded, collaboration, marketing, stack, this is really the full turnkey offering for that sort of mid-size company. Can work for very small, and now, as I suggested, it also can work for very large. We heard from the CEO, we heard from the founders, we heard from the executives. And the company I thought did a nice job of giving a little bit of an under the hood look. As you know, Zoho’s a private company. Private companies don’t have to disclose anything, so we didn’t get necessarily the specifics of the revenue the specifics of the revenue that we could actually do any comparison, but we did get some interesting growth comparisons as you’re flashing up here on the screen right now, for those not on the visual podcast and watching, where Zoho was basically able to show that it was growing very quickly, specifically against some of the other competitors in this space. It looked at Atlassian, Freshworks, HubSpot, Microsoft, Oracle, Salesforce. It was interesting, Pat, because I remember I raised my hand and said, “Can we share this?” And they said, “Absolutely.”
And so, usually, that kind of stuff surprises me. The company has been able to show some consistent growth in its revenue. It’s saying over 35%, which is impressive. It’s growing more along with the newer IPOs and newer companies. And it’s outpacing the growth, at least as it provided in its comparisons. Now, Pat, you and I have not validated this data. So I want to say we’re using their data right now. But based upon the reviews of earnings that we have done, I can speak for Salesforce and Oracle, these are pretty, pretty right on about overall revenue growth. But I think Oracle would raise its hand a little bit in debate if you got into NetSuite, which is probably more the direct comparison, and that’s been growing closer to 30% continuously over the last several quarters that I’ve analyzed.
But I guess, Zoho, there was so much content, a couple things I’ll point out. One is really interesting debate, can’t say much specifically about it, about why the company has decided to remain private. Company does a lot of things in ESG, has a very strong stance on privacy, and their CEO basically shared with us that, yes, that’s been a consideration that going public has been something the company has looked at, obviously a high-growth subscription-based service would make for an attractive public company. But due to how the company wants to prioritize itself, it has opted not to take that route and I’ll just touch on one other thing. This is really a global company. They shared some data. I mean, this company has, I believe it’s more than a dozen offices distribute around the world. They have a pretty significant customer growth rate, a low churn rate in terms of its customers. And really it does set itself out to be easy to use.
And so, again, private companies, Pat, always create a little bit more of a challenge for us to try to really provide our analysis on their performance. In terms of the solution set, though, we all know that there’s only 500 Fortune 500 companies. And so, while so many technology companies build their products to support that group and the group that is near-sized to that group, Zoho really feels different in the fact that really it was purpose-built to serve that small and mid-market, it’s growing up and becoming bigger, and as always, it’s always enjoyable to hear from the company. But without more actual revenue data, it’s hard to say exactly how well the company is doing.
Patrick Moorhead: Good assessment, Daniel. Yeah. Zoho is a very interesting anomaly in the world of SaaS applications, right? It has a very good growth, but it has zero aspirations of going public. And it’s funny when you step back and listen to the key leadership talk about why it doesn’t want to, it’s very clear. I mean, it says it will have to do things that it wouldn’t want to do because they know they would have to satisfy shareholders.
The only thing I want to point out though, is that the company’s strategy that it laid out close to a decade ago, ironically, is the strategy that all of the biggest B2B ecosystems are headed down, whether it’s Google, Microsoft, or Salesforce. And that’s this notion of a full stack approach that goes all the way from hardware, the infrastructure to those SaaS applications at the very end and everything in between. Now, Salesforce won’t ever get there on their own, unless they would buy an infrastructure company as they’re leveraging Azure and AWS for their infrastructure.
But when I look at Google and Microsoft, that says this is exactly what they’re doing and striving for. This is an interesting thing. Microsoft doesn’t actually have a consistent infrastructure that sits on with its SaaS apps. Office 365 is in a different infrastructure as is Teams, and its video properties because it was built up, there’s some history there, and they had different teams working on it. So I guess, as I’m backing into this, maybe only Zoho and Google have a consistent infrastructure that it’s sitting upon. And why does that matter? Other than just having a bullet point, is you have one throat to choke, right? If you own every part of the stack, you can optimize your experience, right? If you have some challenges on the software side, you can make it up on the hardware side. If you have challenges on the hardware side, you can make it up on the software side, and you can look your customers straight in the eye and say, “Yes, I know exactly what’s going on here. And this is why I think I could deliver you a better experience.”
So very similar, Daniel shared with you some of the things that were public. But Daniel and I both saw NDA slides. We saw 13 years of registrations. We saw eight years of paid customers. We saw nine years of revenue growth. We saw monthly churn. We saw geo revenue diversity. I can’t share any of it with you, but I just want to tell you that it is impressive. The one thing though, Daniel, and I’ll reiterate that we don’t have the actual dollar number. And I don’t know why that matters. Maybe it should, maybe it doesn’t, but we are very inquisitive people.
So, overall, a good conference. I got to talk to number one, I got to talk to the CEO like you did, and got to talk to most of the executive staff there. The access was great. You could just bump… Sridhar wasn’t in the country, unfortunately, but that was the only senior executive that I wanted to talk to face-to-face that I didn’t get to talk to. Good job, Zoho. Keep up the good work. And by the way, Zoho has been part of the Six Five Summit for a couple years, and be sure to check that out.
Daniel Newman: Appreciate the partnership.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
