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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