How Will Salesforce.com's Gross Profits Be Impacted Due to Tableau Acquisition?
On June 10, 2019, Salesforce.com ( 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 .
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.
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