What is Salesforce.com, Inc. (NYSE:CRM) getting into with SteelBrick acquisition?

What is Salesforce.com, Inc. (NYSE:CRM) getting into with SteelBrick acquisition?


Salesforce.com, Inc. (NYSE:CRM) is acquiring quote-to-cash (CPQ) software provider SteelBrick for $360 million. What is Salesforce getting into in the deal and how can it impact the company’s operating results in the coming years?

Analysts at William Blair have assessed the potential impact of the transaction on Salesforce and they believe the company is making the right move. In particular, Salesforce is set to benefit from immediate topline boost given that SteelBrick is already a revenue-generating business.

Easy integration

SteelBrick’s solutions help sales employees to easily and efficiently update prices. As a result, sales employees are able to close deals faster, thus enabling to boost their productivity. SteelBrick is natively built on Salesforce.com, Inc. (NYSE:CRM)’s platform. Because Salesforce and SteelBrick operate on familiar environments, William Blair expects the integration process to be smooth and faster.

Cross-selling opportunity

Salesforce.com, Inc. (NYSE:CRM) is acquiring SteelBrick at a time when its existing customers have recently started requesting for CPQ solutions. That means that the company already has a demand to satisfy with the technology being acquired through SteelBrick. As such, William Blair notes that the acquisition of SteelBrick will expand Salesforce’s cross-selling opportunity to existing customers, which should boost revenue flowing through each account.

Salesforce is expected to integrate SteelBrick into its Sales Cloud division. William Blair predicts that Salesforce may make more acquisition in the CPQ space.

Topline boost

It currently not clear what SteelBrick generates in terms of revenues, but William Blair is of the opinion that the company generates revenues in the band of $25-$30 million annually. That will be an incremental boost to Salesforce.com, Inc. (NYSE:CRM)’s topline numbers. As a result, the firm has adjusted its guidance for Salesforce. It expects the company to post revenue growth of 24% YoY to $6.65 billion in fiscal 2016 and adjusted EPS is expected to be $0.75 in the year.


With SteelBrick, Salesforce.com, Inc. (NYSE:CRM) will only be able to bolster its competitive edge against the competition in the CPQ space, but it will need to do more to lead the space, according to William Blair.

Although the firm expects Pros Holdings, Inc. (NYSE:PRO) to continue leading the CPQ front, it believes that Salesforce will limit the growth of Apttus with SteelBrick in its portfolio.

William Blair has Outperform rating on Salesforce.com, Inc. (NYSE:CRM).

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