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- Balance of Risk and Stability: Salesforce
Balance of Risk and Stability: Salesforce
Salesforce is considered to be an ancestor of SaaS model when the software is sold on subscription-based model compared to on-time corporate license sale. The SaaS model generates stable and predictable income that is highly honored by Wall Street. Salesforce’s reputation, together with its diverse product portfolio, boosted its market cap to $188 billion. Only giants like Microsoft, Oracle, and SAP could challenge the company in terms of various products.
CRM stocks have dropped by 25% since the beginning of 2022. That does not mean that the company’s business has become less sustainable. The target market is estimated by the company at $284 billion, while the annual revenue of Salesforce is at $31 billion. This means that the company occupies only 10% of the market.
Any company that needs a CRM-like solution is likely to look at Salesforce, not only because it’s prominent, but also because of the wide variety of other related products that could be installed later. Salesforce’s products are paid for by customers and therefore the company grows as its customer base expands. Such a business model makes customers likely to stay with one company as changing CRM technical solutions could be costly and require a change of the entire business process.
Salesforce’s revenue grew by 24% year-on-year to $7.41 billion in the Q2 2022. The company is actively involved in M&A deals as it is looking for perspective peers in the market. Acquiring perspective companies allows CRM to keep its growth rates high. One of its recent acquisitions, Slack, continues to expand rapidly. Such tactics allow Salesforce to attract the attention of investors who are considering CRM stocks as a low-risk perspective investment and this continues to help businesses worldwide to go digital.
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