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Salesforce (CRM) to Acquire Another Start-up Twin Prime


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Making a strong push toward enhancing its machine learning capabilities, the world's leading CRM platform provider, salesforce.com, Inc. CRM recently entered into a definitive agreement to acquire a tiny start-up called Twin Prime. The deal was announced through a blog by co-founder of Twin Prime, Kartik Chandrayana on the company's website.

The financial terms of the deal haven't been disclosed. However, according to Business Insider it won't be a big amount as Salesforce has not filed an 8-K with the Securities and Exchange Commission.

Citing Pitchbook, which provides merger & acquisitions, private equity and venture capital database, the financial news agency also revealed that since its inception, Twin Prime has got a total funding of $11.5 million and was last valued at approximately $25 million.

About Twin Prime

Headquartered in California, Twin Prime was founded in 2011 by Chandrayana and Satish Raghunath. The start-up has developed a technology, which helps organizations in resolving the inherent volatility and diversity among devices and networks, thereby increasing their user engagement.

Chandrayana in his blog says that "We built Twin Prime with our outstanding team, bringing together mobile, networking and data science expertise. The result was a solution that leverages machine learning techniques to analyze real-time network data, identify and prioritize performance gaps in mobile apps, and then optimize mobile performance so companies can deliver content faster to any location, device and network. In collaboration with our customers and partners, we've been able to help solve mobile performance problems across almost every network and geography in the world."

Further Push into Machine Learning

Machine learning is currently a hot trend in the tech space and several big technology companies like Facebook FB , Microsoft MSFT and Alphabet GOOGL are striving to grab a share of the pie either through acquisitions or in-house research.

In the last two years, Salesforce has been investing heavily to enhance its machine learning capabilities. The company took a major step in 2014 when it acquired RelateIQ, which specializes in making predictive tools.

Last year's acquisitions of start-ups like Tempo and MinHash further enhanced the company's AI capabilities. Moreover, this year, Salesforce took over two another start-up in the machine learning space, PredictionIO, which has developed an open source-based machine learning software and MetaMind, which is specialize in offering deep-learning services.

Bottom Line

Acquisitions have always been one of Salesforce's key growth strategies. In the last one and half years, the company has closed a number of takeovers worth over $4 billion.

This year alone, the company has completed or is in the middle of as many as twelve acquisition deals. These also include its biggest ever buyout - Demandware - concluded this July.

The successful integration of Twin Prime should enable the company to concentrate more on its core business, translating into new products and a more focused sales team.

We believe that Salesforce's sustained focus on expanding its business through strategic acquisitions and investments will drive growth over the long run.

However, continued weakness in Europe, currency headwinds and increased investments in research & development will keep margins under pressure.

Notably, Salesforce has underperformed the Zacks categorized Computer Software-Service industry on a year-to-date basis. The stock has lost 9.1% of its value in the year so far while the Computer Software-Service industry has gained 12.1% during the same time frame.

Currently, Salesforce has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: MSFT , CRM , FB , GOOGL



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