TBP Spotlight – Salesforce.com Acquires Vlocity

Salesforce.com Acquires Vlocity

Yet another Force.com unicorn success story

Deal Financials

Implied Enterprise Value ($m): $1,330.0
EV/Revenue: 10.0x+


Transaction Overview

  • On February 25, 2019, Salesforce.com announced its acquisition of Vlocity, a Force.com native industry-specific cloud and mobile software provider headquartered in San Francisco, California, in an all-cash deal.
  • A year prior, Vlocity received $60m from its Series C at a valuation of $940m. Salesforce Ventures and Sutter Hill Ventures led the deal, with participation from Accenture, Bessemer Venture Partners, and New York Life Enterprises.
  • The table on the next page outlines the various growth round of Vlocity since its launch in 2014.

David Schmaier and the Vlocity Story

  • The fable of Vlocity is well documented. David Schmaier had been a seasoned executive at Oracle and was part of the founding team executives at Siebel.
  • While working with Genstar, Schmaier had tracked the success of Veeva, which had built a vertically focused Force.com native offering for the pharmaceutical, biotechnology, and life sciences industry.He attended Dreamforce 2013 and was on the lookout for a vertically focused Force.com native company but did not find any.
  • So Schaimer got together with some former colleagues and instead of focusing narrowly, like Veeva did, or on more than 20 industries, like he had done with Siebel, Schmaier decided Vlocity would customize Salesforce for a diverse but focused collection of some of the largest industries around, including telecommunications, insurance, and healthcare.
  • Since 2014, Vlocityhas raised $163m in four rounds of equity financingfrom repeat investors like Salesforce Ventures and Accenture. Notably, Salesforce led its Series A-1 round and participated in all subsequent rounds.
  • With its raised capital to fuel product development and its global support team, Vlocity reached the $100m revenuemark in less than 5 years, establishing itself as the fastest-growing company ever built on the Salesforce Platform.

Veeva Systems Inc. (NYSE:VEEV) Financials

Enterprise Value: $20.8 billion
Enterprise Value / LTM Revenue: 20.3x
Enterprise Value / ARR: 18.5x
Annualized Recurring Revenue: $1.1 billion
YoY Growth Rate: 25.6%
Gross Margin: 73.3%

Vertically Focused Software is a Priority for Salesforce

  • In our spotlight on Salesforce Q4 FY19 results, we identified Keith Block’s renewed focus on vertical solutions. In 2019 alone, Salesforce launched its Manufacturing Cloud, Consumer Goods Cloud, and insurance-focused enhancements as an extension to Financial Services Cloud. We believe the momentum behind this trend will continue to grow.
  • Recently True Blue Partners led a multi-million dollar growth equity syndicate investment in Fonteva, the largest vertically focused offering on Salesforce.com for membership and events.

Billion Dollar+ Transactions by Salesforce.com

  • As Salesforce has grown to become a nearly $20bn ARR company, it has gotten more aggressive on its acquisitions. Its last few $1bn+ transactions include:

Vlocity Funding Rounds

About True Blue Partners, LLC
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 info@truebluepartners.com.

TBP was NOT an advisor to this transaction.