Salesforce has agreed to buy data visualisation specialist Tableau Software for $15.7 billion in an all-stock deal. The acquisition follows Salesforce’s buyout of data integration company Mulesoft for $6.5 billion: a deal that closed in May 2018.
Salesforce executives on a conference call early Monday emphasised the complementary nature of the two acquisitions: customer data integration meeting customer data visualisation. They have been chasing the deal for some time, they admitted, saying their customers have been mentioning their use of Tableau software on a regular basis in meetings. The acquisition takes a competitor off the market as Salesforce also moves increasingly into dashboard-based data insights.
Marc Benioff, Chairman and co-CEO, Salesforce said on a conference call: “[Hooking up data] is why we bought Mulesoft. But customers want to see and understand data. Putting customer integration and data together: that’s where the magic starts to happen… Now together we have the most important products in these categories.”
Tableau has built an 86,000-strong customer base around the world, including Charles Schwab, Verizon, Schneider Electric, Southwest and Netflix. Salesforce estimates an increase of $359 million in incremental revenue through fiscal 2020 and the deal to close in October 2019, executives said on the call.
Tableau earlier this year added natural language processing to its platform with the release Ask Data, which allows users to search for – and visualise – data using natural language, rather than keywords. The release was one of two major upgrades bundled into Tableau 2019.1.
The other was dubbed Data Prep Conductor. A native integration with Tableau Server, it allows organisations to schedule and manage self-service data preparation at scale across the 65 different data sources Tableau can connect with, from Aurora to MemSQL, via Apache Drill, SAP, MongoDB, Oracle and more.
“Salesforce’s incredible success has always been based on anticipating the needs of our customers and providing them the solutions they need to grow their businesses,” said Keith Block, co-CEO, Salesforce. “Data is the foundation of every digital transformation, and the addition of Tableau will accelerate our ability to deliver customer success by enabling a truly unified and powerful view across all of a customer’s data.”
Challenged by analysts on why Salesforce made the high-valuation deal now (Tableau’s share price has more than tripled since early 2017) Salesforce CEO Marc Benioff said: “We’re excited to get a deal done when we can get a deal done. Finding two companies that can come together like this is a miracle. Finding products, culture sets, common customer bases, brand values that come together… it’s a miracle when you can make it happen.”
“Joining forces with Salesforce will enhance our ability to help people everywhere see and understand data,” said Adam Selipsky, President and CEO of Tableau. “As part of the world’s #1 CRM company, Tableau’s intuitive and powerful analytics will enable millions more people to discover actionable insights across their entire organizations. I’m delighted that our companies share very similar cultures and a relentless focus on customer success. I look forward to working together in support of our customers and communities.”
Under the agreement each share of Tableau Class A and Class B common stock will be exchanged for 1.103 shares of Salesforce common stock, representing an enterprise value of $15.7 billion (net of cash), based on the trailing 3-day volume weighted average price of Salesforce’s shares as of June 7, 2019. The transaction is intended to be tax free for Tableau stockholders (except with respect to cash for fractional shares).
Tableau will continue to be available both on-premises and across a range of public clouds, Salesforce told analysts, reassuring customers that it would not be pressuring customers off AWS, for example, and onto Salesforce Cloud.
Tableau reported GAAP operating loss for the first quarter of 2019 pf $93.2 million on total revenue for the first quarter of 2019 of $282.5 million, up 15 percent from $246.2 million for the first quarter of 2018. Subscription annual recurring revenue increased 115 percent to $510.1 million as of March 31, 2019, up from $237.5 million as of March 31, 2018.