Can Salesforce’s Acquisition of Tableau Reduce Annual Operating Expense In the Next 3 Years?

Trefis estimates that the Tableau acquisition will decrease Salesforce.com‘s (NYSE: CRM) Operating expenses (after adding Tableau) to a total of $155 million over the next 3 years. We will discuss this below in detail. You can view our interactive dashboard analysis – Can Salesforce’s acquisition of Tableau reduce annual Operating Expense by $155 million in the next 3 years? In addition, here is more Information Technology Data.

Trefis estimates that the acquisition will potentially increase Salesforce.com’s revenue to more than $24 billion by FY 2022 (ended January 2022). As the acquisition will be completed at the end of Q3 2020 (ended October 2019), we expect a synergy gain of 0.5% of Combined total revenue in FY 2020. For details of Revenue forecast please click here.

Trefis estimates that Salesforce.com’s Gross Profit after acquisition will increase by an additional $1 billion over the estimated Gross Profit of the combined entity as we Expect Gross Margin Gains due to Acquisition will occur. For details of Gross Profit forecast please click here.

 How have Salesforce’s operating expenses trended over recent years?

• Sales and Marketing form the highest among Operating expenses for Salesforce.com (64.3 % to 65.2%) over the last 3 years. It has increased from $3.9 billion in FY 2017 to $6.1 billion in FY 2019.
• Research and Development expenses have increased from $1.2 billion in FY 2017 to $1.9 billion in FY 2019 while General and Administrative expenses have increased from $1 billion in FY 2017 to $1.3 billion in FY 2019.

How have Tableau’s operating expenses trended over recent years?

• Sales and Marketing form the highest among Operating expenses for Tableau (53.9 % to 54.9%) over the last 3 years. It has increased from $476 million in FY 2017 to $593 million in FY 2019.
• Research and Development expenses have increased from $302 million in FY 2017 to $383 million in FY 2019 while General and Administrative expenses have increased from $88 million in FY 2017 to $125 million in FY 2019.

How are the operating expense streams likely to change over the next three years?

Trefis estimates Salesforce will have a gain in Total Operating expenses after the acquisition by 0.1% in FY 2020, 0.4% in FY 2021, and 0.5% in FY 2022 over the current forecast of Total Operating Expenses of both companies together.

Expected gain in Operating Expenses due to acquisition is expected to be more than $155 million over the next 3 years as Tableau combines with Salesforce.com.

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