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Salesforce.Com To Buy MuleSoft For 21 Times Revenue - Why?

Mar. 21, 2018 1:45 PM ETSalesforce, Inc. (CRM), MULE11 Comments
Beulah Meriam K profile picture
Beulah Meriam K


  • Salesforce.com has announced that it will buy MuleSoft for $6.5 billion, or 21 times the latter's 2017 revenue.
  • The company is willing to pay the premium because it will give them tremendous short-term and long-term gains from servicing on-premise infrastructure and conversions to cloud products.
  • The acquisition could boost Salesforce.com's chances of achieving its $20 billion annual revenue goal for 2022.

Salesforce.com (NYSE:CRM) announced yesterday that the company will be buying MuleSoft for an enterprise value of a whopping $6.5 billion, a 36% premium over Tuesday’s (March 20th) closing price. MuleSoft had reported an annual revenue of $296.46 million in 2017, which means Salesforce is buying them at nearly 21 times revenue.

The reason why Salesforce is ready to pay such a premium is because for the last two consecutive years MuleSoft has posted above 50% growth, and things are indeed looking promising for MuleSoft.

MuleSoft runs a platform that allows large enterprises to seamlessly work across multiple software applications, data and devices. As software kept developing at a fast pace, many large organizations suffered from not being able to keep up with that pace. A good example is enterprises that are still operating IT infrastructure in their own premises despite cloud infrastructure offering cost savings and other technology advancements.

Legacy software and applications will always remain a headache, slowing things down for large companies. It’s an almost tangible pain point, and one that MuleSoft addresses through its AnyPoint Platform.

“Anypoint Platform is a single, unified platform that includes the key technology components required for IT architects, developers, and systems administrators to easily build and rapidly scale their application networks. It includes a universal connectivity model, end-to-end API lifecycle capabilities, a resilient and scalable runtime engine, enterprise-grade governance and security, and a collaborative engagement exchange for self-serve discovery and reuse of IT assets. “- MuleSoft Annual Report 2017

What’s significant is that Mulesoft will bring its 1,200 customers, which include Coca-Cola (KO), Barclays (BCS), Unilever (UL), VMWare (VMW), GE (GE), Accenture (ACN), Airbus (OTCPK:EADSY), Cisco (CSCO), AT&T (ATT) and Mount Sinai. While Salesforce.com might

This article was written by

Beulah Meriam K profile picture
I do deep-dive analyses into the top companies in multiple segments, including retail, consumer goods and technology.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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