How Salesforce Could Grow Revenue 500%
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Enterprise software company Salesforce (NYSE: CRM) told analysts in early 2018 that it has set a new goal it wants to reach in 16 years. CEO Marc Benioff & Co. are known for setting their sights high, but this target may be the most difficult one yet.
Salesforce told analysts that its goal is to hit $40 billion in annual revenue by 2028 and $60 billion by 2034. That second figure would represent a nearly 500% increase from revenue of $10.5 billion in the 2018 fiscal year that ended at the end of January and a compound annual growth rate of nearly 12% in the next 16 years. That would also make Salesforce one of the largest software companies in the world, rivaling enterprise giants like Microsoft and Oracle.
You might be skeptical of this target, because the current goal of $20 billion a year by 2022 hasn't been reached yet. Benioff said his company is well-positioned to meet that milestone, though, so management is already gearing up for the next big push.
Image source: Getty Images.
Is it possible?
It will be difficult, but yes, it's possible. Growing at a double-digit pace year after year is a rare accomplishment for a company the size of Salesforce, but it is showing few signs of slowing down anytime soon.
| Year | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 Guidance |
|---|---|---|---|---|---|---|
| Revenue | $4.07 billion | $5.37 billion | $6.67 billion | $8.39 billion | $10.48 billion | $12.60 billion to $12.65 billion |
| % Increase over previous year | 33% | 32% | 24% | 26% | 25% | 20% to 21% |
Fiscal years end in January of the year given. Data source: Salesforce.
If it is to pull off its goal of $20 billion in revenue -- which would make it the fastest enterprise software company to ever do so -- and hit the $60 billion milestone in 2034, several growth engines that the company has put in place will need to continue working. First, new business needs to keep rolling in. Relationship management software is in high demand around the globe, and Salesforce has been the primary beneficiary as the leader in the industry. The company sees the need for relationship management rising from a $72 billion global market today to some $120 billion in the next four years.
Even within the limits of what's already out there, though, Salesforce has room to expand. Thus, its second driver -- expanding services to existing customers -- is another key area of emphasis. Outside of enterprise software for sales support, Salesforce still has a very small presence in other areas related to relationship management.
Image source: Salesforce.