On June 10, 2019, Salesforce.com (NYSE: CRM) entered into a definitive agreement with Tableau to acquire the company in an all stock transaction representing an enterprise value of $15.7 billion (net of cash). This converts to approximately $170 worth of Salesforce.com’s shares for each share of Tableau.
Trefis estimates that the acquisition will potentially increase Salesforce.com’s revenue to more than $24 billion by FY 2022 (ended January 2022). As the acquisition will be completed at the end of Q3 2020 (ended October 2019), we expect a synergy gain of 0.5% of Combined total revenue in FY 2020. For details of the Revenue forecast please click here.
Trefis estimates that in the next 3 years, Salesforce.com’s Gross Profit after acquisition will increase by an additional $1 billion more than the forecast before acquisition for Salesforce.com and Tableau together. We will discuss this below in detail. You can view our interactive dashboard analysis – How will the Tableau acquisition impact Salesforce.com’s gross profits over the coming years? In addition, here is more Information Technology Data.
How have Gross Profit and Gross Margin for Salesforce.com and Tableau changed over recent years?
- Salesforce’s Gross Profit has increased at a good pace from $6.2 billion in FY 2017 to $9.8 billion in FY 2019. The company’s Gross margins have been steady around 73%-74%.
- Tableau’s Gross Profit has also increased at a good pace from $0.7 billion in FY 2017 to $1 billion in FY 2019. The company’s Gross margins are comparatively higher at 87%-88%.
- If we combine these entities the gross margin would be around 75%. Thus after the acquisition we can expect Salesforce’s Gross Margin to increase.
Salesforce.com’s Gross Margin should grow at a higher rate due to synergies:
- Trefis estimates the company will have a gross margin gain due to acquisition of 0.2% for the first year as the acquisition will complete in the 3rd quarter. Post that we expect a gross margin gain due to acquisition of 0.8% in both FY 2021 and FY 2022.
- Thus, after the expected improvement in gross margin gain due to acquisition, we expect nearly $1 billion higher gross profit in total over the next 3 years.