- Salesforce’s third quarter earnings were the company’s first since acquiring Tableau earlier this year, but it’s still unclear how exactly Tableau will be integrated and what impact it will have on the company’s bottom line.
- Co-CEO Keith Block said on the earnings call with investors that Salesforce intends to use the same playbook to integrate Tableau as it did with MuleSoft. “We are just beginning this integration process, but we have clear synergies from a distribution, product development and cultural standpoint,” Block said.
- However, that integration might be more challenging than expected, says Daniel Newman, the founding partner and principal analyst at Futurum Research. He highlights Tableau’s legacy on premise nature versus Salesforce’s cloud first beginnings as a potential hurdle in integrating the two platforms.
- Newman further highlights that, overall, acquisitions like Tableau will be important to fuel the company’s growth going forward if it wants to meet its goal of doubling the company in five years.
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Salesforce delivered its first quarterly report card since it closed the biggest acquisition in its history, and questions about Tableau — the analytics firm Salesforce bought for $15.3 billion — were a big focus of Tuesday’s earnings conference call.
While Saleforce’s Q3 results beat on the top and bottom lines, expenses from the acquisition of Tableau weighed slightly on the company’s results. More importantly, analysts are still trying to get a sense of how Tableau will fit into the company’s product line and help Salesforce achieve ambitious growth targets announced to great fanfare last month.
Coming off the heels of its annual Dreamforce conference in San Francisco last month, co-CEO Marc Benioff said on an earnings call with investors that he was surprised at the customer reception to Tableau he saw there.
“So many of our customers have Tableau, I could not believe it,” Benioff said on the call. “They don’t have a direct relationship with Tableau … the number of chief executive officers and CIOs who will directly came to me and my management team and ask us to go wall-to-wall with Tableau has far exceeded any expectations that we could have had.”
Salesforce acquired Tableau for $15.3 billion earlier this year — the company’s largest acquisition ever, with the goal of adding data analytics and visualization capabilities to its product offerings. This was a year after it acquired MuleSoft for $6.5 billion.
On the earnings call, co-CEO Keith Block highlighted the importance of collecting and analyzing data from systems that collect it, and said Tableau will help provide that service to Salesforce customers.
Tableau is different than Mulesoft
However, that integration might be more challenging than expected, Daniel Newman, the founding partner and principal analyst at Futurum Research, told Business Insider. While Salesforce was created as a cloud company, not requiring a heavy infrastructure lift, Tableau is different, he said.
More than two-thirds of Tableau’s customers still use an on premise model as opposed to using its service in the cloud, Newman said. Therefore the integration might be harder than expected and require more investment than its acquisition of Mulesoft, which was more of a logical acquisition, he added.
Some observers found reassurance in Tableau’s performance in the quarter. Rob Oliver, a senior research analyst at Baird Equity Research, told Business Insider that Tableau came in above expectations this quarter, given that the two companies have just started integrating.
On Tuesday’s earnings call, Block said Salesforce intends to run the same playbook for Tableau as it did with the Mulesoft acquisition. He also highlighted the impact Tableau is having on customers like Nissan, Morgan Stanley and Home Depot and the potential opportunity there.
“We are just beginning this integration process, but we have clear synergies from a distribution, product development and cultural standpoint,” Block said.
Tableau brought an additional $308 million in revenue to Salesforce’s subscription and support services for the quarter, which totaled $4.24 billion.
Overall, acquisitions like Tableau will be important to fuel the company’s growth going forward, Futurum Research’s Newman said. During its investor day last month, Salesforce said it intends to double the company’s size in five years, forecasting $35 billion in revenue for FY 2024.
Although the company is growing and delivering earnings that are consistently slightly beating estimates, that alone is not enough to provide the necessary growth Newman said. “Ambitions to double the company, will be heavily dependent on the company making additional acquisitions,” he said.
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