Salesforce.com, Inc. Set to Deliver 20%-Plus Growth

April 7, 2017

Bhavan Suri, Partner and Co-Group Head at William Blair & Company, says Salesforce.com, Inc. offers the most compelling opportunity for investors to get into the cloud computing space, as the company could deliver 20%-plus growth over the next couple of years.

Salesforce is a roughly $10 billion business growing probably in the mid-20% range when all is said and done. And that is an incredibly healthy growth rate with nice margin expansion, growing free cash flow very, very nicely.

What we see there is a large available market where the leading provider continues to take share from the legacy vendors with multiple products to drive growth. So not just in sales cloud, but also with service cloud, which has been doing very well, and the marketing cloud — now augmented by e-commerce with the Dware purchase — and the Force.com platform.

Coupled with artificial intelligence and analytics, we believe Salesforce.com could deliver sustainable 20%-plus growth over the next couple of years along with margin expansion. I think that’s rarified air, and so certainly one we think investors could get involved in. Even at these multiples, which for Salesforce at 23 times 2018 free cash flow, it’s very reasonable given FCF growth of close to 30%. So that’s one certainly that I think looks very interesting from a large-cap perspective.

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