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Are Cloud CRM Offerings 50%, 70% or 90% of Salesforce.com's Stock?

Salesforce.com (NYSE: CRM) makes money through the sale of software for customer relationship management (CRM), and competes with Adobe, Oracle, Intuit, and SAP, among others. Trefis highlights the various segments that constitute Salesforce.com’s Revenues in an interactive dashboard along with our forecast for the next couple of years. We conclude that nearly 70% of the company’s revenues come from its cloud-based CRM offerings.

Notably, Salesforce.com is one of the most well-known cloud CRM companies, and has grown considerably over the years through several targeted acquisitions. While this has driven revenue growth, we believe that the risk in the company has also expanded significantly.

 

A Quick Look At Salesforce.com Revenues

Salesforce.com’s has 3 Operating Segments:

  • Cloud-Based CRM Software Division: Revenues are derived from the sale of Sales Cloud (sales leads to invoice lifecycle management), Service Cloud (personalized customer service and support) and Marketing and Commerce Cloud (campaign to consumption management).
  • Cloud Software Division: Revenues are derived from the sale of Salesforce Platform which includes Platform-as-a-Service tools, MuleSoft Anypoint Platform, Quip Collaboration Platform among others.
  • Consulting & Services Division: Revenues are derived from the sale of technical assistance towards deployment and maintenance of systems.

 

Salesforce.com’s Revenue grew 58.3% over 2017 to 2019 to $13 billion and is expected to increase 42% to nearly $19 billion by 2021.

(1) Cloud-Based CRM Software Division revenue growth of $3 billion over the next two years is likely to be driven by the increased demand for cross platform offerings to enable last mile (IoT) driven consumption.

(2) Cloud Software Division revenue growth of $2 billion over the next two years is likely to be driven by growing requirements of collaboration and integration among systems and people.

(3) Consulting & Services Division revenue growth of $0.3 billion over the next two years is likely to be driven by growth in the company’s overall software business.

Actual revenues for each of these segments over the last 3 years along with our forecast for the next 2 are available in our interactive dashboard.

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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.

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