Salesforce Inc.

Overview Key strengths Key risks Consistent track record of strong revenue growth due to a recurring subscription business model. Aggressive acquisition strategy, although company is willing to use equity as part of a purchase. Leadership position in the fast-expanding customer relationship management (CRM) market, which we view as mission-critical. Lower profit margin than that of peers primarily due to higher sales and marketing expenses. Salesforce increased revenues 25% year over year to $26.5 billion in fiscal 2022 (ended Jan. 31) and has doubled revenues over the past three years, primarily through organic growth. Given its highly recurring revenue base, we believe management?s goal of reaching $50 billion in revenues by fiscal 2026 is achievable with subscription revenues representing more than

...We expect Salesforce Inc.'s growth to remain robust through macroeconomic downturns. Salesforce increased revenues 25% year over year to $26.5 billion in fiscal 2022 (ended Jan. 31) and has doubled revenues over the past three years, primarily through organic growth. Given its highly recurring revenue base, we believe management's goal of reaching $50 billion in revenues by fiscal 2026 is achievable with subscription revenues representing more than 90% of total revenues, continuing share gains across its core CRM offerings that we view as mission-critical, and an ongoing digital transformation, which continues to accelerate the adoption of software-as-a-service (SaaS) offerings by enterprises. Over the near term, based on its remaining performance obligation (RPO) of nearly $42 billion, we believe the company can expand 20% in fiscal 2023 to over $31 billion in revenues despite the challenging macroeconomic outlook, with free operating cash flow (FOCF) over $6 billion and good growth across...

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