An analysis of Salesforce's Revenue model, ama;yzing its robustness and a 3 year revenue forecast based on a breakdown of their industry and geographic sectos

1. Salesforce
Revenue Model & Forecast
Ankit Balyan Oumar Sy Sumeet Singh Mankoo

2. Agenda
1. Company Overview
2. Revenue Model – Description
3. Revenue Model – Robustness
4. Key Revenue Drivers
5. Current Revenue Breakdown
6. Revenue Forecast
A Quick Look at How Salesforce.com Makes Money

3. Support, Training,
Consulting
Digital Marketing Platform
Cloud Application
Development Platform
Fully customization support
& Helpdesk
Salesforce Automation and
CRM
Company Overview
Pioneer and Market Leader in web-based CRM Software
Revenue2
$6.6 B
Customers5
150 K
Subscribers6
4.1 M
Market Cap3
$51 B
Sales Cloud
Service
Cloud
App Cloud
Marketing
Cloud
Professional
Services
Key Offerings
Countries7
91
CRM Platform1
#1
1Source: Gartner 2014
2,3 Source: Annual Report, Salesforce.com
4 Source: Nasdaq
5 Source: Capterra
6 Source: https://www.salesforce.com/blog/2014/10/dreamforce-by-numbers.html
Salesforce
33%
Microsoft
Dynamics
22%
Oracle
11%
SAP
9%
Others
25%
Market Share (2016)

4. Revenue Model - Description
Annual Subscriptions drive 93% of the revenues with the rest 7% coming from
Professional Services
Sales Cloud
Premium Support
Service Cloud
Premium Support
App Cloud
Premium Support
Marketing Cloud
Premium Support
Professional
Services
Annual Subscription Fee
Service Fee (One-off)

5. 1. Strong Customer Retention: 60% of customers have never changed their CRM
software1; 91% of Salesforce Customers renew their subscriptions2
2. Customers like to run asset-light and fast3: Salesforce requires customers to own no
hardware4; 35% of salesforce implementations are completed in under 6 months5
3. Customer-data is locked-in to the salesforce ecosystem6
4. Customers satisfaction improves with duration of ownership, making them more
likely to renew subscriptions7
1. Customers spread over 91 countries8
2. No single customer accounts for more
than 5% of the revenue9
1. Beat SAP in 2012 to become the market leader in web-based CRM; Product launches
since then: Microsoft Dynamics, Oracle, SAP
2. Consistently launching new features and product categories, which keeps customers
engaged, and has been difficult for the competition to emulate
Revenue Model - Robustness
The Revenue Model is Responsive, Agile, and Fairly Robust
1,3,5,7 Source: Capterra, 2016
2,6,9 Source: Annual Report, Salesforce.com
8 Source: https://www.salesforce.com/blog/2014/10/dreamforce-by-numbers.html
Business Environment
Surviving Competitive Attacks
Risk Diversification
1. Reputation and security perception
play a huge role in sales
2. Single product category; changing
Strong Weak
VeryRobustMediumRobust

6. Drivers of Revenue Growth
1. Growth in Revenues (hence
operations/staff) of Customers
2. Growth in IT spending of customers
3. Growth in share of IT budget allocated to
CRM software
Most of the Revenues Come from the Americas Region and the Retail Sector
1 Source: Annual Report, Salesforce.com
2 Source: Capterra, 2016
18%
10%
8%
7%
6%
Retail
Business Services
Technology
Banking/Insurance/Finance
Manufacturing
Top Customer Segments2
Americas
72%
Europe
18%
APAC
10%
Revenue by Region1
1. Acquisitions
2. New Product Launches
UnforeseeableForeseeable

7. Current Revenue Break-down by Region & Sector (2016)
Most of the revenues come from the Americas region and the Retail Sector
Source: Annual Report, Salesforce.com
Americas Europe APAC
$855
$475
$380
$333
$285
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
$4.7B (72%) $1.2B (18%) $0.7B (10%)
Revenue from Top 5 Sectors Revenue from Top 5 Sectors Revenue from Top 5 Sectors
$214
$119
$95
$83
$71
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
$119
$66
$53
$46
$40
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing

8. Revenue Forecast (2017)
Considering the Impact of Forecasted Growth in Consumer Segment Sectors
Americas Europe APAC
$4.8B (72%) $1.2B (18%) $0.7B (10%)
Revenue from Top 5 Sectors Revenue from Top 5 Sectors Revenue from Top 5 Sectors
Sector Growth IT Spending Growth CRM Spending Growth
Total So Far: $7.2 B
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
$872
$492
$404
$337
$ 292
Retail
Business…
Technology
Banking/In…
Manufactur…
$215
$124
$99
$83
$72
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
$69
$125
$56
$50
$42
Source: Euro monitor, Bloomberg, World Bank, Gartner, Statista

9. Revenue Forecast (2017)
Considering the Impact of Forecasted Growth in IT Spend Across Sectors
Americas Europe APAC
$5.1B (72%) $1.2B (18%) $0.7B (10%)
Revenue from Top 5 Sectors Revenue from Top 5 Sectors Revenue from Top 5 Sectors
Sector Growth IT Spending Growth CRM Spending Growth
Total So Far: $7.7 B
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
$935
$528
$433
$362
$313
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
$232
$134
$106
$90
$78
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
$134
$74
$60
$45
$53
Source: Euro monitor, Bloomberg, World Bank, Gartner, Statista

10. Revenue Forecast (2017)
Considering the Impact of Forecasted Growth in CRM Spend
Americas Europe APAC
$5.6B (72%) $1.3B (18%) $0.8B (10%)
Revenue from Top 5 Sectors Revenue from Top 5 Sectors Revenue from Top 5 Sectors
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Sector Growth IT Spending Growth CRM Spending Growth
Total Revenue in 2017: $8.2 B (+25%)
$1004
$566
$465
$388
$336
$248
$144
$114
$96
$84
$143
$80
$64
$57
$48
Source: Euro monitor, Bloomberg, World Bank, Gartner, Statista

11. Revenue Forecast (2018)
Considering the Impact of Forecasted Growth in CRM Spend
Americas Europe APAC
$6.6B (71%) $1.6B (18%) $0.9B (11%)
Revenue from Top 5 Sectors Revenue from Top 5 Sectors Revenue from Top 5 Sectors
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Sector Growth IT Spending Growth CRM Spending Growth
Total Revenue in 2018: $9.8 B (+26%)
$1175
$674
$567
$453
$396
$288
$173
$137
$112
$98
$173
$96
$79
$71
$59
Source: Euro monitor, Bloomberg, World Bank, Gartner, Statista

12. Revenue Forecast (2019)
Considering the Impact of Forecasted Growth in CRM Spend
Americas Europe APAC
$7.7B (71%) $1.9B (18%) $1.2B (11%)
Revenue from Top 5 Sectors Revenue from Top 5 Sectors Revenue from Top 5 Sectors
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Retail
Business Services
Technology
Banking/Insurance/…
Manufacturing
Sector Growth IT Spending Growth CRM Spending Growth
Total Revenue in 2019: $11.6 B (+26%)
$1377
$802
$693
$528
$466
$288
$173
$137
$112
$98
$173
$96
$79
$71
$59
Source: Euro monitor, Bloomberg, World Bank, Gartner, Statista

13. Consolidated Revenue Forecast
Cost of Subscriber Acquisition $350
2016 2017 2018 2019
Subscription $ 6,205.59 $ 7,740.01 $ 9,150.31 $ 10,816.13
Retail $ 1,117.01 $ 1,395.47 $ 1,636.60 $ 1,920.66
Business Services $ 620.56 $ 789.75 $ 943.46 $ 1,127.77
Technology $ 496.45 $ 643.51 $ 783.00 $ 953.31
Banking/Insurance/Finance $ 434.39 $ 542.13 $ 635.33 $ 745.28
Manufacturing $ 372.34 $ 468.12 $ 552.52 $ 652.59
Others $ 3,102.80 $ 3,901.03 $ 4,599.40 $ 5,416.53
Professional Services $ 461.61 $ 541.80 $ 640.52 $ 757.13
Total Revenue $ 6,667.20 $ 8,281.81 $ 9,790.83 $ 11,573.26
Avg. Subscription Price1 $ 150.00
Total No of Subscribers 4,137,060 5,160,005 6,100,207 7,210,756
Attrition2 8.5%
Retention Rate3 91.5%
Lost to Attrition 351,650 438,600 518,518
Retained Subscribers 3,785,410 4,721,405 5,581,690
New Subscribers 1,374,595 1,378,803 1,629,067
Marketing & Sales Budget4 $ 4,140.90 $ 4,895.42 $ 5,786.63
Cost of Acquisition $ 301.25 $ 355.05 $ 355.21
1Source: Capterra
2Source: Annual Report, Salesforce.com
3Source: Annual Report, Salesforce.com
4Source: Annual Report, Salesforce.com

14. Questions?

15. thank y u

16. Industry Size, IT Investment & CRM Spend Growth Rates
Industry Growth
US EU APAC
Retail 2.00% 1.00% 5.00%
Business Services 3.60% 5.20% 5.00%
Technology 6.30% 4.50% 6.10%
Banking/Insurance/Finance 1.50% 0.75% 8.00%
Manufacturing 2.50% 1.95% 6.20%
Others 2.50% 1.95% 6.20%
IT Investment Growth
US EU APAC
Retail 7.20% 7.20% 7.20%
Business Services 7.20% 7.20% 7.20%
Technology 7.20% 7.20% 7.20%
Banking/Insurance/Finance 7.20% 7.20% 7.20%
Manufacturing 7.20% 7.20% 7.20%
Others 7.20% 7.20% 7.20%
CRM Spend Growth
(Enterprise Software)
US EU APAC
Retail 7.3% 7.3% 7.3%
Business Services 7.3% 7.3% 7.3%
Technology 7.3% 7.3% 7.3%
Banking/Insurance/Finance 7.3% 7.3% 7.3%
Manufacturing 7.3% 7.3% 7.3%
Others 7.3% 7.3% 7.3%
Source: Euro monitor, Bloomberg, World Bank Source: Gartner
Source: Statista

17. Which CRM do you currently use? Is your CRM web-based or on-premise?
Were you using a different CRM before purchasing your
current software?
Satisfaction rate by length of CRM use

18. Which departments use CRM software?