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.

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