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Salesforce slurps up Demandware for $2.8bn

Just when you thought it was about to turn a profit...

Marc Benioff of Salesforce. Pic: Techcrunch

Cloudy CRM biz Salesforce has slurped up e-commerce provider Demandware for $2.8bn (£1.9bn) in a bid to broaden its portfolio.

Salesforce has rarely turned a profit in its last 17 years, preferring to prioritise growth - a strategy its newest acquisition will reinforce.

For its full-year ending January 31, Salesforce posted $6.67bn (£4.6bn) in total revenue - an increase of 24 per cent on the previous year. Profit before tax moved into the black at $64m, compared with a loss of $213m the previous year.

Last year Demandware increased revenue by 48 per cent to $237.3m. It made a loss of $42m - and increase from its loss of $28m the previous year.

Paul Hamerman, Forrester Research VP, said the move will enable Salesforce to sell directly to e-commerce customers.

"Salesforce has been a very successful company growing [at a] sustained rate of 25-30 per cent for many years. It's been more focused on growth rather than margins and profitability. This investment could deter its profitability - but that's probably not a concern to Salesforce which is still growing and requiring market share."

He added future acquisitions may involve buying some of its partners who have built Enterprise Resource Planning (ERP) systems on its existing platform. "That would be a natural path for growth," he said.

It follows an announcement by the biz last week that it will will start to run some of its software in Amazon Web Services.

"Demandware is an amazing company — the global cloud leader in the multi-billion dollar digital commerce market," gushed Marc Benioff, CEO of Salesforce.

"With Demandware, Salesforce will be well positioned to deliver the future of commerce as part of our Customer Success Platform and create yet another billion dollar cloud."

The transaction is expected to close in the second quarter of Salesforce's fiscal year 2017, ending July 31, 2016. ®

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