Salesforce.com, Inc.
CRM Details
Salesforce.com, Inc. (NYSE: CRM) is the world's most popular customer relationship management (CRM) software, connecting companies with customers. Its consumer 360 platform integrates customer data from many systems, apps, and devices to establish a single source of truth, allowing businesses to sell, service, and do business from anywhere. There are solutions for customer service, marketing, e-commerce, and data integration, including Support Cloud for customer service, Marketing Cloud for digital marketing campaigns, Commerce Cloud for e-commerce, and MuleSoft for data integration.
Latest News:
- Launch of LaborForce: On April 19, 2022, Infosys launched LaborForce, a fully integrated, cloud-native Platform as a Service (PaaS) Unemployment Insurance (UI) system. Infosys LaborForce is a tax, benefits, appeals, and workforce solution built on the Salesforce Platform to help state governments construct digital and durable user interface systems. The customer-centric solution provides states with enhanced CRM and analytics capabilities and a lower long-term cost of ownership, and more resiliency, all of which can improve employee experiences in the United States.
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 several international markets, including the Americas, Europe, and the Asia Pacific, with most of its transactions taking place in foreign currencies. Because it does business and invests in other currencies, it is susceptible to foreign currency risk.
- Product Concentration Risk: CRM corporate cloud computing programme subscriptions account for a sizable percentage of the company's revenue, which it expects to maintain indefinitely. Its finances could suffer if it cannot develop new features for existing or new services that keep up with rapid technology advancements.
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 34.64% 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 405.54.
Considering the significant correction in the stock price, strong fundamentals, recent collaboration, associated risks, and current valuation. We recommend a "Buy" rating on the stock at the current price of USD 191.07, up 2.16% as of April 19, 2022, at 08:34 AM PDT.
Three-Year Technical Price Chart (as on April 19, 2022, at 08:34 AM PDT). 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.
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