Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Salesforce's Forecast to Double Revenue by 2024 Isn't as Exciting as It Seems

By Billy Duberstein - Dec 1, 2019 at 12:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Take Salesforce’s rosy growth forecast with a grain of salt.

Recently, leading software-as-a-service company Salesforce ( CRM -11.74% ) had its annual Dreamforce conference. At the event, management put forward some seemingly lofty goals, including a forecast to more than double Salesforce's revenue from $17 billion in 2020 to $35 billion in fiscal 2024. (Of note: Salesforce's fiscal year ends in January, so fiscal years mostly encompass results from the preceding calendar year.)

Doubling revenue over four years equates to roughly 20% compound annual growth, which is highly impressive for a company as large as Salesforce. However, there are a few big caveats you should realize about Salesforce's lofty revenue ambitions before you jump in.

A businessman in suit and tie holds a magnifying glass up to a sheet of paper laying on a wooden desk.

Is Salesforce's growth impressive? Image source: Getty Images.

Not totally organic

Impressively, Salesforce's forecast excludes any of its trademark mergers and acquisitions. That means one could think of Salesforce's growth over the next few years as totally "organic."

However, calling this 20% growth "organic" is still a bit of a red herring. That's because, over the past 3 1/2 years, Salesforce has bought a lot of companies for a lot of money and stock:

Fiscal Year


Amount Paid

Major Acquisitions

FY 20


$16.5 billion

Tableau, Clicksoftware

FY 19


$7.4 billion

Mulesoft, Datorama, Cloudcraze

FY 18


$38 million


FY 17


$4.4 billion

Demandware, Krux Quip

Data source: Salesforce annual and quarterly reports. Table by author.

As you can see, Salesforce has shelled out a whopping $28.3 billion on more than 20 acquisitions over the past 3 1/2 years. In fact, the $16.5 billion just spent during this fiscal year -- which isn't over yet -- is almost the same amount as the revenue increase Salesforce is predicting by 2024.

Considering that this is the software space, these acquisitions were not cheap. While many of the acquisitions were very high-growth companies, most of the acquirees were relatively small compared to the prices paid. Here are some of the largest acquisitions and price-to-sales ratios paid for each:

Salesforce Acquisition

Year Acquired

Purchase price

Approximate Price-to-Sales Ratio (If Public)

Tableau Software


$14.9 billion




$766 million




$6.425 billion




$2.9 billion




$742 million


Data source: Salesforce filings and news articles. Table by author.

Notably, the two largest acquisitions were still quite expensive. Mulesoft was bought at a staggering 22 times sales. Tableau, the largest to date, was bought at 13 times sales. Neither company was profitable at the time.

Obviously, there was a lot of sales growth baked into Salesforce's largest acquisitions. Thus, it would be highly suspect if Salesforce didn't grow a lot in the coming years as a result of these newly acquired assets.

A different strategy in tech, but a good one?

No doubt, Salesforce's roll-up strategy could work if the company is able to plug each acquisition into the Salesforce system, cut costs, and accelerate revenue growth. To its credit, the stock has done quite well during this tech bull market.

However, Salesforce is far, far more acquisitive than most of the other large tech giants, especially relative to Salesforce's size. That means Salesforce's growth shouldn't be viewed exactly the same way or of being the same quality as more mature companies.

While Salesforce's revenue growth and ambitions are impressive, investors should realize that this is more expensive growth than that of its large-cap tech peers. This is the reason investors should take Salesforce's lofty revenue goals with a grain of salt.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned, inc. Stock Quote, inc.
$251.50 (-11.74%) $-33.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.