Analysis of Salesforce’s Troop.Ai Acquisition

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Earlier this week, Salesforce (NYSE: CRM) announced results for a strong first-quarter that continued to surpass market expectations. The company is adding to its strong enterprise offerings through acquisitions and partnerships.

Salesforce’s Financials

Salesforce’s revenues for the first quarter grew 24% to $7.41 billion, above analyst estimates of $7.37 billion. Adjusted earnings of $0.98 per share were also better than the market’s forecast of $0.93 per share.

By segment, Subscription and support revenues grew 24% to $6.86 billion, and Professional services and other revenues grew 30% to $560 million.

For the second quarter, Salesforce forecast revenues of $7.69-$7.70 billion and an EPS of $1.01-$1.02. The market was looking for revenues of $7.74 billion and an EPS of $1.11. Salesforce expects to end the current fiscal year with revenues of $31.7-$31.8 billion and an EPS of $4.74-$4.76. The market was looking for revenues of $31.57 billion and an EPS of $4.63 for the year.

Salesforce’s Troops.ai Acquisition

Recently, Salesforce announced its acquisition of New York-based Troops.ai, a leading provider of a revenue communications solution, for an undisclosed sum. Founded in 2016, Troops helps streamline the data management process and provide users with real-time insights gathered from various systems of record including tools like Salesforce, Hubspot, and Zendesk. It helps migrate this data into other communication tools like Slack and Microsoft Teams using software bots.

Prior to the acquisition, Troops.ai had raised $19.4 million, including investment from Slack’s own venture fund. Its valuation and financial details are not disclosed. Salesforce had added to its messaging capabilities when it acquired Slack in 2020 for an estimated $27.7 billion. Salesforce plans to integrate Troops.ai into Slack to strengthen the Slack offering. Salesforce already expects Slack to bring in $1.5 billion in sales in 2023. Addition of Troops.ai will help meet those targets.

Salesforce’s Expanding Analytics Tools

Salesforce also announced a partnership with AWS that creates Data Lake for Nonprofit Cloud, a new offering that allows Salesforce Nonprofit Cloud customers to easily transform their data into actionable insights with visual analytics to drive more informed decisions and better outcomes. The solution will be available on GitHub as an open-source offering and will allow nonprofits to customize the cloud to their specific needs and improve the technology over time. According to Salesforce’s research, 76% of non-profit organizations do not have a data strategy. This offering will help these organizations build such a strategy.

Overall, Salesforce had another stellar quarter. The lower-than-expected outlook for the current quarter was primarily on account of foreign exchange headwinds. The Japanese market was a big factor in the movement as the company continues expansion in the region. Salesforce is also mindful of the macroeconomic environment and is now looking to modify its selling strategy. It is going to focus more on how it can improve productivity for its customers while lowering costs.

Salesforce’s stock is trading at $176.07 with a market capitalization of $174.9 billion. It hit a 52-week high of $311.75 in November last year and a 52-week low of $154.55 earlier this month.

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

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