How Will The Demandware Acquisition Impact Salesforce Going Forward?

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Salesforce (NYSE:CRM) announced last week that it had entered into a definitive agreement to acquire enterprise cloud commerce provider Demandware (NYSE: DWRE). The deal, worth $2.8 billion, is expected to close by the end of July.  After the completion of the acquisition, Demandware is expected to become Salesforce Commerce Cloud. Below we take a look at Demandware’s fit for Salesforce and how it could impact its results going forward.

Where Does Demandware Fit In Salesforce’s Offerings ?

The deal marks Salesforce’s entry into the e-commerce domain, a field in which the company did not previously have a major presence. Salesforce currently has almost a 20% market share in the CRM domain. Its market share has been growing year-on-year, as has its lead over competitors such as SAP and Oracle.

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SAP and Oracle have already ventured into the e-commerce domain through their acquisitions of Hybris and Art Technology Group, respectively, so the Demandware acquisition should help Salesforce continue to compete with its rivals.

Demandware has a significant presence in the retail sector, and is associated with brands such as L’Oreal, Adidas, Crocs, Puma and Callaway. The company’s revenues grew by nearly 38% during the past year, and has also expanded its presence in international markets, which will not only help Salesforce expand its customer base but also strengthen its presence in Europe.

Outlook For Fiscal 2017

Salesforce expects the acquisition to bring in new revenues of up to $10 million in the upcoming quarter and for the entire year, the company expects its revenues to increase by $100 million – $120 million. Overall, the acquisition should help Salesforce effectively foray into the e-commerce domain, and should help the company in its efforts to maintain its lead over competitors in the long run.

Have more questions on Salesforce.com (NYSE:CRM)? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Salesforce.com

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