We re-established a position in Cloud computing pioneer, Salesforce.com (CRM, Financial), during the quarter. Salesforce is the world’s largest pure-play Cloud software company, led by a visionary and inspiring CEO in Marc Benioff.
The company offers leading Cloud applications for salesforce automation, customer service, performance management and marketing, as well as an application development and hosting platform (known as platform-as-a-service, or PaaS).
Salesforce serves a vast addressable market, and we see a path toward $10 billion of annual run rate revenues based on the company’s current set of products. Secular adoption of Cloud computing has tipped, in our view, but remains a small part of overall software spending.
Salesforce is highly innovative and has steadily added to its portfolio of Clouds through both acquisitions and organic development. Most recently, the company launched Wave, its analytics cloud, further expanding its addressable market.
Salesforce is becoming an increasingly strategic vendor to clients, leading to more senior relationships, greater adoption and growing deal sizes. Most Salesforce products are sold on a subscription basis, leading to strong visibility. Retention rates are currently in the high 80s% range, but have been trending steadily upward as management actively focuses on attrition.
We expect the company to be able to achieve 30% EBITDA margins and strong FCF generation as growth slows.
