1. 10/21/2014
Presented By: Andy Lee, Darren Chen, Eric Laorr, Rob Bracken, and Kevin Tsai

2. Quick Overview
10/21/2014

3. Customer Relationship Management (CRM)
What is Salesforce?
Cloud Computing
Customer Relationship Management (CRM)
Data Storage
Widespread Access
Enterprise Computing and Consumer Apps
Platforms
Salesforce1
Wave
Maintains and builds business relationships
Internet of Customers
Sales, Service, Marketing, Analytics
Revenue comes from selling this service
10/21/2014

4. Why use Salesforce? Reliable Platform Integration Time efficiency
Service delivered as a highly scalable, multi-tenant app
Salesforce creates a personalized digital experience
10/21/2014

5. Price History Market Capitalization: $35.43B Beta: 1.02
Current Price: $57.24

6. Investment Thesis Current Price: $57.24 Price Target: $75 (32% upside)
Salesforce has a superior product and is the dominant player in a rapidly growing CRM marketplace
Underpenetrated Internationally
Growing Marketing Strategy
Wave, Business Intelligence growth
Concerns about profitability and overestimating the creativity of its competitors have compressed the stock price
10/21/2014

7. Cloud, Social, and Mobile Revolution
Cloud computing has changed way enterprise business apps are developed
Social networking has transformed communication (Chatter)
Customers are empowered with more devices today than ever before
Cloud expect to triple in the next 3 years
76% of companies who require IT consulting believe that spending will grow in cloud.
10/21/2014

8. Rapidly Growing CRM Market
Salesforce is the gold standard due to a superior product
Worldwide CRM market grew to $20.4 billion (13.7%)in 2013, up from $18 billion in 2012
10/21/2014

9. Unsaturated Market
10/21/2014

10. International Expansion
CEO spent much of last quarter in Europe promoting Salesforce
Only 29% of Salesforce’s revenue comes from outside of N. America
Established partnerships with large European MNCs such as Phillips, Louis Vuitton, and Roche
Goal for $1B in revenue in Germany
10/21/2014

11. ExactTarget and Salesforce1
World class marketing platform that enables Salesforce to deliver personalize marketing campaigns across all channels
Salesforce1-Platform to develop customer apps
46% of companies have plans to build app on platform
10/21/2014

12. Wave Announced at Dreamforce last weekend
Business Intelligence- $38B market
Data Revolution- 90% of world’s data created in last two years. 10x more mobile data, 19x more unstructured data, and 50x more product data by 2020
Explore and analyze massive amounts of data
Able to leverage enormous customer base in order to gain market share
Already being used by Accenture, Deloitte, GE capital, and Equinix
10/21/2014

13. Focus on Rapid Revenue Growth
Financial Statements
Focus on Rapid Revenue Growth
Increase
in Marketing
130 Billion transactions last quarter (up 52%)
AIG, Caterpillar, GE, Roche, and Yahoo! are examples of who uses CRM
Added 3M and Safeway last quarter
10/21/2014

14. Cash Flow and Balance Sheet
Huge
Growth
Increasing
CFO
M&A
Spree
10/21/2014

15. Earnings Wow 2nd Bar: Estimates; 3rd Bar: Actual
Beat Analyst Projections
Wow
2nd Bar: Estimates; 3rd Bar: Actual

16. Supply Chain Analysis

17. Comparison between Salesforce and Netsuite
10/21/2014

18. Custom Rel. Valuation

19. Valuation Bear Case: $45 (15% rev growth, 10% op. Margin)
Salesforce.com's strong July quarter results with revenue and deferred revenue above consensus underscored our belief that (1) demand for Sales Cloud remains solid in both enterprise and SMB accounts, (2) growth in Service Cloud and platform have been particularly strong, and (3) early upsell opportunities of ExactTarget have started to materialize. Furthermore, Salesforce.com’s results reinforced our theses on both
Bear Case: $45 (15% rev growth, 10% op. Margin)
Base Case: $ 75
Bull Case: $90 ( 40% rev growth, 15% op magin)
10/21/2014

20. Valuation
8x Sales gives PT of
$72
10/21/2014

21. Risks and Threats
CRM data could hacked, undermining security of the service
Not all acquisitions may be accretive
Future growth is dependent on the growth of cloud and CRM software
Competition: Oracle, Microsoft Dynamics, SAP
Salesforce has been subject to third lawsuits - infringement of proprietary rights.
10/21/2014

22. Conclusion Gold standard of the CRM market
Leader and pioneer of a Digital Disruption
Huge international potential
10/21/2014