Salesforce.com, Inc.

CRM Details

Salesforce.com, Inc. (NYSE: CRM) is the world's leading customer relationship management (CRM) software, bridging the gap between businesses and their customers. Its customer 360 platform connects customer data across systems, apps, and devices to create a single source of truth, allowing companies to sell, service, and conduct business from any location. Service Cloud for customer service, Marketing Cloud for digital marketing campaigns, Commerce Cloud for e-commerce, and MuleSoft for data integration are available solutions.

Latest News:

Collaboration with Holiday Inn Club : On February 07, 2022, MuleSoft, a CRM platform, announced a partnership with Holiday Inn Club Vacations Incorporated, a tour and travel company, to create a single vacation booking system that provides digital experiences for the company's members.

FY22 Results:

• Growth in Revenues: The company's total revenues in FY22 (ended January 31, 2022) were USD 26.49 billion, a 24.66% rise from USD 21.25 billion in FY21. Growth in revenue can be attributed to significant growth in both the segments.
• Decline in Net Income: The company reported an decline in net income to USD 1.44 billion in FY22 from USD 4.07 billion in FY21.
• Improvement in Headcount: CRM's full-time equivalent headcount increased by 5.77% to 73,541 as of January 31, 2022, up from 69,530 as of October 31, 2021, owing to the acquisition of Slack.
• Cash and Debt Position: As of January 31, 2021, the company had cash & cash equivalents (including short-term investments) of USD 10.54 billion and total debt of USD 10.59 billion.

Key Risk:

• Currency Fluctuation Risk: CRM operates in many global markets, including the Americas, Europe, and the Asia Pacific, with most of its transactions conducted in foreign currencies. It is exposed to foreign currency risk due to doing business and investing in other currencies.
• Product Concentration Risk: CRM corporate cloud computing application subscriptions make up a significant portion of the company's revenue, which it intends to keep for the foreseeable future. It could harm its financials if it cannot provide new features for existing or new services that keep pace with rapid technological advances.

Outlook:

Q1FY23 and FY23 Guidance (Source: Earnings Release, FY22)

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

CRM's stock price has fallen 19.18% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 184.44 to USD 311.75. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 255.06.

Considering the correction in the stock price, strong fundamentals, recent collaboration, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 210.41, up 2.35% as of March 17, 2022.

Three-Year Technical Price Chart (March 17, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.