Salesforce Acquires Traction on Demand
Deal Financials : Undisclosed
- On February 25, 2022, Salesforce (NYSE: CRM) announced it would acquire Traction on Demand.
- Traction on Demand is a golobally active Salesforce partner with over 1500 employees, headquartered in Canada, and offices in the United States, India, Australia, and New Zealand.
- Traction Sales and Marketing Inc., doing business as Traction on Demand, is a Salesforce consulting and software development partner firmly established in the North American Salesforce ecosystem.
- Traction on Demand will be integrated into the Salesforce Professional Services to accelerate CRM integration.
Salesforce Directs Attention to Professional Services
- Salesforce had been inactive in the M&A market despite successfully converting Slack into a strategic acquisition in December 2020.
- This acquisition indicates a clear investment in their Professional Services division, which is considerably underdeveloped when compared to subscriptions.
- Traction on Demand will assist with existing operations in multi-cloud deployments, Salesforce application recommendations, and global adoption programs.
- Traction on Demand will be utilized as direct consulting with existing and prospective subscribers and providing advanced education.
- Furthermore, Traction on Demand will provide Salesforce with greater diversification in alternative services, with Salesforce dependency on subscriptions.
Salesforce Financials: Subscription vs Professional Services Revenue
- Salesforce subscription revenue increased 25% over the last year, indicating that the software giant is well-positioned in the prospective cloud-based CRM space
- Professional services had greater revenue growth for Q3 2022 were $0.48 billion, an increase of 45% year-over-year
- In 2021 Salesforce reported Professional Services cost of revenue of $1.284 billion with only $1.276 of revenue in this portion of their business
- Additionally, Professional Services composed a meager 6% of total revenue for both FY 2020 and 2021
- The acquisition of partner Traction on Demand conceivably offers more utility in expanding Salesforce’s application across industries, rather than generating substantial revenue from Professional Services contracts
- In acquiring Traction on Demand, Salesforce will also gain software development support along with existing software offerings including:
- Traction Enable: collaborative work management platform for Salesforce solutions
- Traction Complete: data and analytics for the account matching and routing in customer outreach
- Traction X-Ray: digital transformation platform optimization
- Traction Steps: improves customer service leveraging Salesforce AI
TBP’s Experience in the Salesforce Ecosystem
- Recognize investment in AST Corporation
- Simplus Raises $20m Series C and Acquires Sqware Peg
- Infosys Acquires Simplus in a $200m Deal
- Salesforce Ventures and Delta V Invest in OSF Commerce’s Commitment to Innovation
- OSF Digital Announces $43 Million in New Funding
- Togetherwork acquires Fonteva
- AST Corporation acquires Serene
- Enquero acquired by Genpact
Salesforce Compared to Competitors
Relevant M&A Transactions Within Salesforce Ecosystem
True Blue Partners is a boutique M&A advisory firm that serves lower mid-market enterprise software, service and solutions companies. It brings the rigorous strategic and financial perspective of bulge bracket firms with a company building approach and a steadfast partnership that only an independent boutique firm can deliver. For more information please visit www.truebluepartners.com or email us at email@example.com.