Salesforce (CRM) had a tremendous 2021. Salesforce’s revenues grew for four straight quarters in 2021.
For example, Salesforce (NYSE: CRM) began 2021 with a revenue growth rate of 19.91% for the quarter ending on 31 January 2021. The revenue growth rate grew to 22.57% in the quarter ending on 30 April 2021, and 23.08% in the quarter ending on 31 July 2021. Salesforce’s revenues grew by 26.65% in the quarter ending on 31 October 2021 and 25.94% in the quarter on 31 January 2022.
Moreover, Salesforce is making more money. Its quarterly gross profits grew from $3.933 billion on 31 January, 2021 to $5.076 billion on 31 January, 2022. Conversely, Salesforce’s quarterly operating income fell from $193 million on 31 January, 2021 to -$176 million on 31 January 2022.
What Value does Salesforce offer?
Salesforce (CRM) gained a lot of value in 2021. For example, Salesforce’s Total Assets grew from $66.301 billion on 31 January 2021 to $95.209 billion on 31 January 2022.
In contrast, Salesforce finished 2021 with less cash. The cash and short-term investments fell from $11.966 billion on 31 January, 2021 to $10.537 billion on 31 January, 2022.
Similarly, Salesforce’s quarterly operating cash flow fell from $2.388 billion on 31 January 2021 to $2.176 billion on 31 January 2022. In contrast, the quarterly ending cash flow fell from $2.471 billion on 31 January 2021 to $711 million on 31 January 2022.
Conversely, Salesforce can generate enormous amounts of cash. It reported a quarterly ending cash flow of $8.544 billion on 30 April 2021.
Thus, Salesforce is a growing cash-rich company. Yet Salesforce’s debt is growing. Its total debt grew from $6.409 billion on 31 January 2021 to $13.981 billion on 31 January 2022. Salesforce can borrow enormous amounts of money. It reported a quarterly financing cash flow of $8.24 billion on 31 July 2021.
How Much Money can Salesforce Make?
Salesforce (NYSE: CRM) is a leading player in a growing business. For instance, Spring Edge estimates Salesforce had a 19.8% share of the global CRM market in March 2022.
Statista estimates worldwide customer relationship management (CRM) software revenues grew from $24.004 billion in 2015 to $46.447 billion in 2021. Statista forecasts global CRM software revenues will grow to $47.237 billion in 2022, $48.04 billion in 2023, $48.856 billion in 2024, and $49.597 billion in 2025. Thus, Salesforce’s customer base is growing if Statista’s forecast is correct.
Interestingly, Salesforce’s customers could include most business. For instance, Findstack estimates 65% of businesses adopt CRM technology within five years of launch. Plus, Grand View Research estimates 91% of companies with over 10 employees use CRM software to communicate with customers.
Additionally, Findstack estimates 11% of corporate managers report dissatisfaction with their current CRM software. Plus, Zendesk estimates 80% of companies report having had to change support technology in 2020. Plus, Zendesk claims 64% of customers added new customer service channels in 2020.
The importance of CRM is growing. Forbes estimates salespeople spend 18% of their time using CRM apps. Conversely, HubSpot estimates 22% of salespeople do not know what CRM is.
Is Salesforce worth over $200?
I think Mr. Market fairly priced Salesforce at $211.11 on 23 March 2022. Interestingly, Salesforce’s share price grew from $215.17 on 22 March 2022.
Salesforce’s share price hit a high of $309.71 on 9 November 2021. Hence, Salesforce (CRM) is a growth stock with a growing stock price.
However, Salesforce’s has some limitations. For instance, Salesforce pays no dividends. Despite that, Salesforce is a cash-rich growth stock.
I consider Salesforce a growing value investment in software. I classify Salesforce as a value investment because it makes an unsexy product for which there is a vast demand: CRM software. In today’s world, all businesses need CRM software. That guarantees Salesforce a large growing market.
I think demand for Salesforce’s products will keep growing and Salesforce’s value will grow with it. If you want a growth stock in tech, I think Salesforce is worth examining.
Originally published at https://marketmadhouse.com on March 23, 2022.