Summary
Salesforce, Inc. (CRM) filed an 8-K on March 20, 2018, to announce a significant event: the entry into an Agreement and Plan of Merger to acquire MuleSoft, Inc. This strategic acquisition is expected to bolster Salesforce's integration capabilities and expand its platform. In conjunction with this announcement, Salesforce has revised its long-term revenue target for the fiscal year ending January 31, 2022, increasing it by $1 billion to a new range of $21 billion to $23 billion. The company also provided insights into the expected impact on its near-term profitability targets. Salesforce anticipates a reduction in its non-GAAP operating margin improvement target for fiscal year 2019 due to the acquisition. While previously guiding for a 125-150 basis point improvement, the company now aims to maintain or modestly improve its non-GAAP operating margin for FY2019 compared to FY2018. Additionally, Salesforce indicated upcoming guidance updates to reflect the adoption of new accounting standards (ASC 606 and ASC 340-40) and the integration of MuleSoft.
Key Highlights
- 1Salesforce announced its agreement to acquire MuleSoft, Inc., a key player in the integration and API space.
- 2The acquisition is expected to increase Salesforce's long-term revenue target for FY2022 by $1 billion, raising it to $21-$23 billion.
- 3Salesforce's non-GAAP operating margin improvement target for FY2019 will be reduced due to the MuleSoft acquisition.
- 4The company now aims to maintain or modestly improve its non-GAAP operating margin in FY2019.
- 5Upcoming guidance updates for Q1 and full-year FY2019 will account for new accounting standards (ASC 606 and ASC 340-40).
- 6Further guidance updates, incorporating the MuleSoft acquisition and new accounting standards, will be provided in the Q1 FY2019 earnings call and post-closing of the acquisition.