Salesforce Execs Affirm Bullish Outlook on Tableau Deal

Tableau will play a critical role in Salesforce’s aggressive four-year growth plan, according to executives.
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For the third quarter, Salesforce.com (CRM) - Get Report posted adjusted earnings of 75 cents versus 66 cents expected by analysts, and revenue of $4.5 billion versus forecasts of $4.45 billion. Its guidance was lighter than expected, however, with management's fourth-quarter earnings forecast of 54 to 55 cents falling short of Wall Street's expectations of 62 cents. Shares closed Tuesday up 0.35%, but following the earnings release, dipped 1% in after-hours trade. 

On a call with shareholders, Salesforce brass reiterated what they see as strong prospects in the face of continued digital adoption worldwide. And Tableau, which it purchased in June for a whopping $15.7 billion, will round out its offerings to existing customers and grow more quickly under the Salesforce umbrella, they said.

Salesforce co-CEO Keith Block drew comparisons of Tableau to Mulesoft, which Salesforce purchased in 2018 for $6.5 billion. Mulesoft is "strategic to every conversation" at the company, Block said, and has accelerated its growth under the Salesforce umbrella. Salesforce reported that Mulesoft grew 77% year-over-year last quarter, contributing $185 million to its Platform & Other segment.

"I see a very similar opportunity with Tableau," Block said.

Earlier this year, the company laid out a target of doubling its size in the next four years, saying that it plans to reach between $34 billion to $35 billion by fiscal 2024. For its fiscal 2020, which ends in January, it's guided for $17 billion.

Salesforce shareholders are eager for more details on what specific role Tableau will play in its product plans and longer-term financial prospectus.

In addition to its usual guidance, Salesforce management also added a one-time quarterly guide for the first quarter of next year. For the upcoming quarter, Salesforce guided for $4.8 Billion to $4.835 Billion in revenue, up 28% to 29% year-over-year. CFO Mark Hawkins said the guidance is intended to help investors account for seasonality in its “recently acquired businesses, especially Tableau.”

Salesforce’s acquisition of Tableau closed in August, and executives have been quiet so far on specific plans to fold Tableau’s data visualization product into Salesforce’s core product suite.

Still, Block and other executives on the call said that Tableau would become an integral part of its Customer 360 platform, a set of tools intended to serve as a “single source of truth” for companies to understand how to track, sell and market to their customer bases.

Salesforce founder and co-CEO Marc Benioff said that Tableau “far exceeded my expectations in customer reception” during the his recent conversations with major Salesforce customers.

“With Customer 360, we’ve entered a unique position with our customers...I don’t think there’s ever been a vendor who’s tried to execute this vision before and tie it all together,” he said. “Tableau is critical as our customers want to be able to go wall to wall to understand all this data.”

At its recent investor day, Salesforce executives made the case that acquisitions such as Tableau will lower attrition and churn in its customer base and help boost margins in the long run.

"This strategy of buying companies that fill a need and improve their solutions has worked successfully for them and I believe that it will continue," added Barbara Peck, principal analyst at Nucleus Research. "I still do not have a clear understanding how Tableau will be integrated into the Salesforce platform. I believe that it will give Salesforce users improved visuals and understanding of data, and enable Salesforce to offer a more complete AI-driven analytics solution."

Salesforce shares are up 19% so far this year.