Morningstar | CRM Updated Forecasts and Estimates from 16 Nov 2018
After starting as a trailblazer at the genesis of the "software-as-a-service" movement, Salesforce.com has expeditiously transformed into a modern software heavyweight. The firm's amalgamation of cloud products helps clients connect with their customers, which appeals to large enterprises and serves mission-critical niches, creating durable switching costs. We think Salesforce benefits from secular tailwinds, as enterprises utilize cloud applications for rapid deployments, instant updates, and to lower the total cost of ownership for their software applications.At Salesforce's founding, its total addressable market, or TAM, was a mere $750 million. Today, it is nearly $100 billion. The firm's ability to continually target behemoth TAMs through new product launches is remarkable. Even with over $10 billion in revenue, Salesforce has continued to grow at 20%-plus, and we don’t foresee the firm's high growth slowing anytime soon.Salesforce's products run the gamut of customer relationship management, or CRM, an overarching term for functions fulfilled by several applications. Salesforce's goal is to be the one stop shop for CRM. The firm's Salesforce automation services, which is now Sales Cloud, its oldest and best-known product, is supplemented by Service Cloud, Marketing Cloud, and Platform, each generating in excess of $1 billion in annual revenue. Commerce Cloud, IoT Cloud, AI/Einstein, and MuleSoft remain nascent offerings, that give us confidence in Salesforce's long-term growth runway. Salesforce is the largest pure-play SaaS vendor and we expect additional product launches ahead.Despite expanding into new verticals (largely through acquisitions such as MuleSoft, Exact Target, and Demandware) and a growing customer footprint, the firm’s customer and dollar attrition rates have declined into the single digits, supporting the stickiness of Salesforce's applications. 51% of enterprise customers were multi-cloud in fiscal 2018 and utilized more than one product. While the firm faces entrenched competitors, we expect Salesforce to surpass $22 billion in revenue by fiscal 2022.Salesforce.Com is engaged in customer relationship management technology. The company's Customer 360 is an integrated platform that unites sales, service, marketing, commerce, integration, analytics and more to give companies a single, shared view of their customers. Through its platform and other developer tools, the company also enables third parties to develop additional functionality and applications, or apps, that run on its platform, which are sold separately from or in conjunction with the company's service offerings. The company's cloud service offerings include sales cloud, service cloud, marketing and commerce cloud, and salesforce platform and other.
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