Salesforce, Inc.

CRM Details

Salesforce, Inc. (NYSE: CRM) is a global leader in customer relationship management (CRM) technology, bridging the gap between organisations and customers. It was initially known as Salesforce.com, Inc. Its client 360 platform brings together customer data from various systems, apps, and devices into a single source of truth, allowing businesses to sell, service, and do business from anywhere. The options available are Care Cloud for customer service, Marketing Cloud for digital marketing campaigns, Commerce Cloud for e-commerce, and MuleSoft for data integration.

Latest News:

• Adding Value for Customers: On May 04, 2022, UPST, a leading artificial intelligence (AI) lending platform, announced on Salesforce AppExchange Upstart AI Lending for Salesforce. This integration, which aims to introduce AI-enabled lending to the financial services industry, can assist financial institutions in modernizing lending, staying competitive, and delivering better client service. With Upstart AI Lending for Salesforce, bank and credit union employees can provide customers with an AI-enabled digital lending experience across any interaction–whether in person with a banker at a local branch, over the phone with a call centre agent, or via a QR code scan–all from within Salesforce Financial Services Cloud.

FY22 Results:

• Growth in Topline: CRM'S Total revenues for FY22 (ended January 31, 2022) were USD 26.49 billion, up 24.66% from FY21's USD 21.25 billion, attributable to 23.43% growth in Subscription and support segment.
• Decrease in Net Income: However, despite surge in revenue, CRM witnessed a decline in net income to USD 1.44 billion in FY22 vs. USD 4.07 billion in FY21.
• Healthy Balance Sheet: As of January 31, 2022, the company had a cash balance of USD 10.54 billion with total debt of USD 10.59 billion.

Key Risk:

• Dependence on Third-Parties: Customers in the United States and other countries are currently served via third-party data centre hosting facilities and cloud computing platform providers. It also uses computer equipment purchased or leased from third parties and software licenced from third parties to provide its services. Any disruption, damage, or failure of the company's systems, including third-party platform suppliers, could result in service outages, resulting in revenue and cash flow loss.
• Currency Fluctuation Risk: CRM is active in several global marketplaces, 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.

Outlook:

Q1FY23 and FY23 Guidance (Source: FY22 Earnings Release, March 1, 2022)

Valuation Methodology: Price/Earnings 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' stock price has fallen 46.18% in the past six months and has made a new 52-week low today. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 161.27.

Considering the significant correction in the stock price, industry above margins, low debt, current valuation, and associated risks. We recommend a "Buy" rating on the stock at the closing price of USD 161.27, down 3.52% as of May 11, 2022.

Three-Year Technical Price Chart (May 11, 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. 

Note 3: The report publishing date is as per the Pacific Time Zone.