CRM platform provider
) recently announced that it will open two data centers in Canada,
which will cater to international customers, thereby strengthening
its presence in the country. The opening of data centers in Canada
will help Salesforce to reach small and medium businesses in the
country as well as meet the growing demand for cloud-based
Firms like Manulife Financial Corp and Bombardier Recreational
Products (BRP) are using Salesforce's best-in-class cloud, social
and mobile solutions to enhance user satisfaction. The breadth of
its offerings has helped Salesforce to expand its customer base and
Salesforce's investments in Canada come at the right time as a
study by Gartner forecasts that the software market in the country
is expected to increase 8.7% in 2014. Moreover the study also
revealed that data center revenues will amount to $3.4 billion in
2014. We believe that the company's entry into new markets like
Canada would provide a significant opportunity to grow beyond U.K.,
France and Germany, which have already reached saturation.
Considering the increasing customer adoption of its products and
satisfactory performances, market research firm Gartner
acknowledged Salesforce as the leading social CRM solutions
provider in Canada based on total software revenue in 2013 ($13.1
billion). We believe that the rapid adoption of Salesforce'
platforms demonstrates its growing opportunities in the
ever-growing cloud computing segment.
Moreover, the data centers would enable the company to increase its
international revenues, going forward. Notably, in first-quarter of
fiscal 2015, Salesforce witnessed revenue growth of 39.0% in the
Americas while revenues from Europe and Asia increased 42.0% and
21.0%, respectively, on a year-over-year basis.
We remain encouraged by the rising number of deal wins at
Salesforce and the rapid adoption of the company's cloud-based
solutions. Overall, the company's diverse cloud offerings and
strong spending on digital marketing remain positives. Moreover,
the company's strategic acquisitions and the resultant synergies
are expected to remain long-term positives.
Although, the company is growing reasonably in the cloud market,
growth prospects have been rationalized by competition from
International Business Machines
). Currency headwinds and an increase in investments could pose
Currently, Salesforce has a Zacks Rank #3 (Hold).
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