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 we expect this to be deemphasized. Leadership position in the fast-expanding customer relationship management (CRM) market, which we view as mission-critical. Presence of activist investors could prompt an aggressive pace of share repurchases Strong prospects for increased profitability and cash flow generation. Key man risk ascribed to founder and CEO Marc Benioff due to uncertain succession plans. We expect its approach to generative artificial intelligence (AI) to carve out a role for the company and be an accelerant for growth. Salesforce came under pressure from multiple activist investors over the past year, starting with affiliates of Starboard

...Salesforce Inc.'s swift response to activist investors' criticisms demonstrates good corporate governance and, at least for now, appears to have eased potential event risks that could arise in a contested proxy fight. Salesforce came under pressure from multiple activist investors over the past year, starting with affiliates of Starboard Value, who announced an undisclosed stake in the company back in October of 2022, with other activists, including Elliott Investment Management, ValueAct, and Inclusive Capital joining the list in January 2023 and Third Point and Strive Asset Management in February 2023. In response to their criticisms and looking to avoid a potential proxy fight, Salesforce took quick action, including adding three new board members and implementing various actions to increase efficiency. The company also announced that two of its most tenured directors will not seek re-election. These changes, combined with solid results in the fourth quarter of fiscal 2023 and a $10...

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