How will Salesforce.com’s gross profits be impacted as a result of the Tableau acquisition?

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On June 10, 2019, Salesforce.com (NYSE: 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 equates to roughly $ 170 in Salesforce.com shares for every Tableau action.

Trefis estimates that the acquisition will potentially increase Salesforce.com’s revenue to more than $ 24 billion by fiscal 2022 (ended January 2022). As the acquisition will be finalized at the end of the third quarter of 2020 (completed in October 2019), we expect a synergy gain of 0.5% of total combined sales in fiscal 2020. For more details for revenue forecasts, please click here.

Trefis estimates that over the next 3 years, Salesforce.com’s gross profit after acquisition will increase by an additional $ 1 billion from the pre-acquisition forecast for Salesforce.com and Tableau combined. We will discuss this in detail below. You can check out our interactive dashboard analysis – How will the acquisition of Tableau impact Salesforce.com’s gross profits in the years to come? Plus, here’s more data on information technology.

How has the gross margin and gross margin of Salesforce.com and Tableau evolved over the past few years?

  • Salesforce’s gross margin grew at a good pace, from $ 6.2 billion in fiscal 2017 to $ 9.8 billion in fiscal 2019. The company’s gross margins are remained stable around 73% to 74%.
  • Tableau’s gross margin also grew at a good pace, from $ 0.7 billion in fiscal 2017 to $ 1 billion in fiscal 2019. The company’s gross margins are comparatively high. higher, at 87% -88%.
  • If we combine these entities, the gross margin would be around 75%. So, after the acquisition, we can expect Salesforce’s gross margin to increase.

Salesforce.com gross margin is expected to grow at a higher rate thanks to synergies:

  • Trefis estimates that the company will have a gross margin gain from the acquisition of 0.2% for the first year, as the acquisition will be finalized in the 3rd quarter. Post that we expect gross margin gain from the 0.8% acquisition in both FY2021 and FY2022.
  • Thus, after the expected improvement in gross margin gain through the acquisition, we anticipate an increase of nearly $ 1 billion in total gross margin over the next 3 years.

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