CRM - Salesforce: Improving Profitability And Robust Cash Flows

2024-05-02 17:27:12 ET

Summary

• Salesforce's gross margins have remained stable at an average of 74.4% over the past 10 years, which is high but indicates a lack of benefit from economies of scale.
• However, the company's strategic partnerships and extensive sales channel partner network have contributed to a decline in SG&A expenses as a percentage of revenue, increasing its operating margins.
• Additionally, Salesforce has strong free cash flows and has conducted significant share buybacks, further enhancing its profitability and cash flow per share.

In our previous analysis of Salesforce, Inc. ( CRM ), we underscored the benefits of incorporating AI into CRM systems, highlighting its role in streamlining operations and boosting efficiency. We forecasted a robust growth rate of 14.7% for the CRM market, primarily fueled by the widespread adoption of AI technologies. Specifically focusing on Salesforce, we observed a comprehensive integration of AI functionalities spanning sales, marketing, and customer service, facilitated by strategic acquisitions. Looking ahead, we had anticipated Salesforce's continued growth in the CRM market....

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