- December 11, 2020
CRM is a mature market segment. In the face of fierce competition from legacy giants, such as Microsoft, Oracle, and SAP, Salesforce can still maintain growth and leadership, which we believe is attributable to its successful “technology + product” strategic M&A roadmap. Specifically, technology acquisition enables it to obtain R&D capabilities in the shortest time, such as social media, AI & big data; product acquisition can help it meet booming demand with great agility. This is a successful SaaS business model. On the one hand, acquisition boosts organic growth, and on the other hand, the cost synergies from the acquisition continue to increase the company’s operating leverage, which generates strong cash flow ready for new acquisitions. Now, Salesforce’s revenue growth stays above 20% with an operating margin close to 20%. According to its latest guidance, total revenue is expected to grow 23% YoY/21% YoY in FY21/22, OCF/FCF will grow 12%-13%/15%-16% in FY21, respectively, with a capex ratio of 3%.
