Salesforce.com (CRM - Free Report) recently entered into an agreement to acquire interactive email service provider — Rebel — to expand the capabilities of its Marketing and Commerce Cloud, for an undisclosed amount.
As part of the move, Rebel’s application programming interface-based services will be integrated into Salesforce’s Marketing Cloud platform. This move is expected to ramp up the direct marketing services by enabling recipients of interactive emails to easily take actions like writing reviews and shop.
With this acquisition, Salesforce seems to be taking further steps to enhance and expand the Marketing & Commerce Cloud, which is the smallest division of the company. The addition of the interactive email functionality will help the company cater to the needs of its current and future customers.
Efforts to Enhance Marketing & Commerce Cloud
Salesforce is focused on working on its Marketing & Commerce Cloud platform. In the last reported quarter, the company extended its strategic alliance with Alphabet’s (GOOGL - Free Report) Google to deepen the integration between Google Analytics 360 and Salesforce Marketing Cloud.
The company is also actively engaged in leveraging its Sales Cloud and Marketing Cloud, and Service Cloud and Einstein to strengthen customer-centric growth across its portfolio of brands.
In the last reported quarter, the company bolstered its partnership with Hulu, which is using its Marketing Cloud, Service Cloud and Einstein to reach more than 20 million subscribers.
Its recent acquisition of Datorama was a feather in the cap in the same quarter.
Driven by such robust efforts, Salesforce’s Marketing & Commerce Cloud grew 37% in the second quarter.
Acquisitions Bode Well for Salesforce
Acquisitions have always been one of Salesforce’s key growth strategies. Over the last two years, the company has closed a number of takeovers worth a combined deal value of more than $4 billion. In 2017 alone, the company signed as many as 13 takeover deals.
In addition to the recent acquisition of Datorama, the buyout of MuleSoft — the company’s biggest ever acquisition — is considered a major positive.
We believe that Salesforce’s sustained focus on expanding its business through strategic acquisitions and investments will drive growth over the long run.
Competition Remains an Overhang
In spite of being on the top of its game in the cloud-based CRM market, Salesforce faces stiff competition from Microsoft Corp. (MSFT - Free Report) and Oracle (ORCL - Free Report) .
Like Salesforce, Oracle has strengthened its cloud position through various strategic acquisitions. Microsoft has also added various key companies like LinkedIn to its portfolio to beef up its Dynamic CRM platform. Additionally, Microsoft offers special pricing for its Dynamics CRM Online service, which is helping it snatch Salesforce’s customers.
Competition is expected to intensify further, as Microsoft Dynamics CRM software (code-named Titan) gains ground. Titan has been designed to offer direct competition to Salesforce’s on-demand CRM software model.
Moreover, IBM is strengthening its grip on the cloud computing software market with its web-based collaboration software for businesses, including contact management, instant messaging and file sharing programs.
However, Salesforce’s strategy of frequent product launches and cloud services are helping it expand clientele, thereby driving top-line growth. The rapid adoption of the SaaS-based Salesforce platform demonstrates solid demand for the company’s cloud-based solutions, and is expected to help Salesforce maintain its strong competitive position in the market.
Salesforce currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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