Filing shows Salesforce paid $419M to buy Spiff in February
Salespeople live and die by commissions, which typically form a big chunk of how they are paid. It's no surprise, then, that Salesforce paid a premium to buy a platform that helps its customers manage commissions more easily.
Several months ago, Salesforce bought Spiff to help companies build out and manage incentive-based compensation schemes. Salesforce's 10-Q filing with the SEC early on Thursday finally revealed 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 10-Q followed Salesforce's quarterly results, which it reported on Wednesday. The company's stock dropped by some 16% on Wednesday after its quarterly revenue came in below analysts' expectations for the first time in about 18 years (it last reported a revenue miss in 2006). The company recorded quarterly revenues of $9.13 billion, below analysts average estimates of $9.15 billion, per Yahoo Finance.
Given that context, an acquisition to drive more revenues down the line is not a surprise.
The $419 million price tag is a notable hike for Spiff. The startup was last valued, according to PitchBook, at $260 million as recently as May 2023 when it raised $50 million.
That was just seven months before Salesforce and Spiff announced their deal in December 2023. The deal closed in February 2024, according to the 10-Q.
Based out of Salt Lake City, Utah, Spiff had raised around $110 million in total from investors, including Salesforce, Lightspeed Venture Partners and Norwest Ventures, and a number of notable backers such as UiPath's founder Daniel Dines and Hanno Renner, the head and founder of HR startup Personio.
Spiff's acquisition and the deal's value are notable because they are very much a sign of the times.
Such a strong uptick in value close on the heels of a fundraise can be seen as a signal of how stronger companies are still commanding good prices despite wider pressure on startups.
The IPO window is still mostly closed for many mature startups, leading to a tougher funding market overall. And when we combine that with tough economic conditions that have seen companies fail to meet growth targets, we're seeing struggling startups having to settle for down-rounds, conducting fire sales and, in the worst-case scenarios, sinking in the deadpool.
That's not the case with Spiff. At the time of its last funding round a year ago, the company said its customer base had doubled to 1,000, and its revenue had risen 100% in the last year. The company was founded during the pandemic, and it says its revenue has increased 800% since then.
More recently, Spiff has been leaning into buzzy areas that Salesforce likely wants to capture: AI, and no-code, self-service solutions.
Specifically, Spiff last year launched an AI-based, no-code, self-service toolset that its customers could use to build sales commission schemes without needing developers. Extra flexibility becomes 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.
