Salesforce to Buy Public Service Affiliate for New Markets

(Bloomberg) -- Salesforce.com Inc., the market leader in software for managing customer relationships, said it would acquire its affiliate, Salesforce.org, in a bid to enter the market for education and nonprofit software.

The San Francisco-based software maker will pay $300 million for Salesforce.org, which is currently a “California public benefit” corporation, the company said Monday in a statement. Salesforce said the combination will boost its fiscal 2020 revenue by $150 million to $200 million, and now sees adjusted profits of $2.54 to $2.56 per share.

Salesforce.org, often mistaken for a philanthropic organization, will become a vertical within the software maker, giving its new parent company products for nonprofit and educational institutions.

Salesforce, co-founded by billionaire Marc Benioff, has said that its dedication to corporate philanthropy and volunteer hours makes it a good corporate citizen. Now, the company is trying to generate revenue from its efforts to help organizations that provide benefits to society.

Salesforce.org booked $250 million in sales in its last fiscal year and revenue has grown about 38 percent per year, Salesforce Chief Financial Officer Mark Hawkins said during a call with analysts. The service-focused organization has a total addressable market of $13 billion, Hawkins added.

The company said it would continue Salesforce.org’s practice of giving nonprofit groups free or discounted software and donating money in the form of grants.

(Updates with details on Salesforce.org revenue in fifth paragraph.)

To contact the reporter on this story: Nico Grant in San Francisco at ngrant20@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack, Alistair Barr

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