Salesforce Buys SteelBrick For $300 Million: What's It Mean?

• The share price of salesforce.com, inc. CRM has risen 31.23 percent year to date, reaching close to the 52 week high on December 4, at $82.14.
• Patrick Walravens of JMP Securities has maintained an Outperform rating and price target of $90 on the company.
• On December 23, salesforce.com entered into a definitive agreement to acquire Steelbrick for $300 million in cash.

According to the JMP report, “SteelBrick was one of the JMP Hot 100 companies and we estimate it had between $10-25M in revenue in 2015, with subscription bookings growth of over 300 percent.”

Analyst Patrick Walravens said that he liked the acquisition, since Configure, Price, Quote (CPQ) is a large market, estimated at $2.8 million, and fits in well with salesforce.com’s Sales Cloud.

“With SteelBrick and salesforce.com, users can create sales quotes without leaving the Sales Cloud,” Walravens explained.

In 2015, SteelBricks saw more than 300 percent growth in subscription bookings, expanding its customer base more than 200 percent, while the employee base grew from 50 to 150.

Walravens expects the transaction to close during salesforce.com’s F1Q, ending April 30, 2016. “Interestingly, salesforce.com rolled out a competing solution internally this year. In March 2015, salesforce.com went live on Apttus CPQ and was processing over 12,000 orders per month through that solution,” the report added.

Waqlravens believes that SteelBrick is better suited for small- and medium-sized enterprises, while Apttus is geared more towards larger businesses