We issued an updated research report on Salesforce.com, Inc. CRM on Apr 7, 2015 following the company’s mixed fourth-quarter fiscal 2015 results.
Although Salesforce reported adjusted loss in the fourth quarter, it fared better than the year-ago quarter. Moreover, the company’s robust top-line performance was an encouraging. Revenues surpassed the consensus mark and increased on a year-over-year basis, primarily backed by growth across all its business segments and Salesforce ExactTarget Marketing Cloud platform. The company provided positive first-quarter and fiscal 2016 guidance.
The higher number of deal wins was encouraging as were the geographical contributions. We consider the rapid adoption of Salesforce1 Customer Platform to be a positive. Overall, the company’s diverse cloud offerings and considerable spending on digital marketing are the catalysts.
Furthermore, Salesforce is focusing on strategic acquisitions to expand its market share. In fiscal 2014, it completed three acquisitions and in fiscal 2013 five other companies were acquired of which the most prominent was ExactTarget. The company took over ExactTarget for approximately $2.5 billion in Jul 2013 to expand its cloud-based platform. We believe that these buyouts will add value to Salesforce’s existing portfolio and the resultant synergies will benefit it over the long run.
In view of the increasing customer adoption and satisfactory performances, market research firm Gartner acknowledged Salesforce as the leading social CRM solution provider. We believe that the rapid adoption of Salesforce’s platforms indicate solid growth opportunities in the ever-growing cloud computing segment.
Although the company is growing reasonably in the cloud market, growth prospects have been rationalized to a considerable extent due to intensifying competition from International Business Machines Corp. IBM, Oracle Corp. ORCL and SAP SE SAP. Moreover, currency fluctuations and increase in investments in international expansions and data centers could impact near-term results.
Salesforce has a Zacks Rank #3 (Hold).
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