An analysis of Salesforce

1. Salesforce(CRM US)
Comment
By Stella Pan
30/08/2018

2. CRM released strong FY2019 Q1 result (April 30, 2018)
• Earnings:
• Revenue: US$3,006 million (25.9% YoY), 2.46%
surprise against guidance
• GAAP EPS: $0.49, 356% surprise
• Non-GAAP EPS: $0.76, 74% surprise
• Beat quarterly guidance and continued to increase its
annual guidance
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Salesforce Quarterly Revenue Growth
USD million and YoY%
• Well spread out across the company‘s different business
segments (Marketing and Commerce Cloud increased the
most at 9% QoQ)
• Well spread out across geographical markets, with niche
market even grew more(10% QoQ)
• Increased market share
34%
30%
20%
15%
Subscription and support revenue breakdown
Sales Cloud Service Cloud
Salesforce Platform and Other Marketing and Commerce Cloud

3. CRM S&P Nasdaq
5D 5.3% 1.9% 2.8%
1M 12.1% 4.0% 6.3%
YTD 48.26% 8.10% 19.60%
1Y 63.19% 18.57% 31.64%
2Y 108.63% 36.95% 70.08%
Source: Yahoo Finance
CRM share price outperformed the market by 44.6% in the latest year
• Price performance accompanied its revenue growth in
the past.
• Price outperformed the market as well as its main
competitors
• Technical analysis:
• About to reach the high point in the raising
channel
• RSI reached overbought zone

4. Valuation and Stock Call
CRM ORCL SAP MSFT
P/E(TTM) 241.31x 54.32x 29.41x 52.89x
PEG 2.42 1.74 2.49 2.07
EV/EBITDA 64.5x 11.63x 20.40x 17.46x
DCF 140.01 N.A N.A N.A
Share price 154.80 48.89 122.05 112.02
Source: Yahoo Finance, Invbots estimate
• Higher than average P/E and EV/EBITDA
• Strong fundamentals provide potential for its EPS
growth
• Current share price at high level in DCF estimate range
($125.3- $159.7)
 In the short term (1 month):
• 19Q2 results continue to beat guidance, showing
continuing growth momentum
• long in the short term and maybe sell in the middle of
next month
 In the long term (1 year):
• Risk due to its price over valuation
• Other potential acquisitions or cooperation may
contribute to its growth
• Hold and watch

5. Risk factor of the call
• Next quarter result may not meet market consensus, therefore cause share
price to decrease in the short term.
• The increasing momentum may be subjected to unexpected event that lead
to its slower revenue growth.
• Stiff competition from Microsoft MSFT and Oracle ORCL in the cloud-based
CRM market may threat Salesforce’s market share.

6. Salesforce(CRM US) – Key ideas
• News
• Salesforce Just Crushed Profit Estimates and Gave Wall Street More Bull Ammo
• Cloudinary Announces New Integration with Salesforce Commerce Cloud
• Salesforce expands work in healthcare
• Salesforce Set To Post Another Solid Quarter Backed By Growing Demand For Cloud-Based Products
• Could One of These 3 Companies Be Salesforce's Next Takeout Target?
• Views
• The cloud computing giant smashed Wall Street profit forecasts on Wednesday. Second quarter earnings came in at 71 cents a
share, beating forecasts for 47 cents a share. The company saw strength in all parts of its cloud business and within regions.
• Cloudinary, the end-to-end media management solution for many of the world’s top brands, has launched a new integration with
Salesforce Commerce Cloud, the fastest path to unified commerce.
• As an example, he said a provider might use Salesforce's software to alert a specific patient population about a new program
related to their health condition. A provider or payer might also use the software to review socioeconomic markers of their patient
population, such as zip code.
• The rising demand for cloud solutions and integrated end-to-end CRM solutions, coupled with a growing customer base, is likely to
drive the company’s growth for the current and forthcoming quarters.
• According to a recent regulatory filing, Salesforce holds stakes in several small- and mid-cap cloud-based companies --
including Twilio (NYSE: TWLO), Dropbox (NASDAQ: DBX), and DocuSign (NASDAQ: DOCU) -- and they could be next in line to be
acquired.