Salesforce's $5.7 billion Braze acquisition at a 50% premium targets a weak marketing/AI offering; the strategy makes sense but is pricey and may not solve its problems. The stock is near its level 6 years ago amid SaaS fears and maturity, with 10-11% revenue growth expected this fiscal year.

This is Salesforce. Salesforce today announced, in a surprise move, its acquisition of Braze for approximately $5.7 billion. So, Matt, can you explain to me what you do and why you think Salesforce needs it?

The Salesforce Marketing Cloud platform is much weaker than its competitors in the field of modern interaction with mobile devices. That's absolutely true. Salesforce has a huge marketing department, but it is not very good at AI-powered marketing, personalized marketing, or advanced technology marketing.

She is trying to improve her performance in this key area to support her business. A 50% premium in a cash deal, so it's clear that Salesforce believes it needs to close this deal.

But the market did not receive it entirely positively. I think the stock price before the market opened was down about 2.5%, and that's what we're hinting at. Whether Salesforce needed it or not, they paid a hefty premium for it , and as you said, Lou, it addresses a weakness in their products.

So, just thinking about Salesforce, we find that investing in it has gone through fluctuations, but I think its stock price is now close to its level 6 years ago. This was not the expected performance for this type of stock.

So, what exactly did Salesforce suffer from, and is this the ideal solution?

I mean, I'm referring to two things. The first is what is known as "the end of SaaS". This is the most obvious concern, meaning there are fears that artificial intelligence systems will replace human employees.

Salesforce relies heavily on a user licensing model. The second point is that the company has reached a stage of maturity in many respects over the past two years. They expect revenue growth of only 10-11% in the current fiscal year .

It's not that the company is performing badly, but rather that it's a giant corporation going through a transitional phase between growth and maturity.

correct. I think talk of the collapse and disappearance of Software as a Service (SaaS) companies is exaggerated, but I wonder: Do we really need these comprehensive and integrated enterprise programs in a world where artificial intelligence improves the performance of specialists?

I think this is the fundamental question . This is what Braze represents for Salesforce right now. Salesforce couldn't be more flexible. She is not in a position to split the company.

Therefore, the second best option , or even the ideal option, is to be the best in its category in all of its products. This means acknowledging that it is not the best in some areas, and then acquiring the best.

Therefore, I think this deal makes sense for them. I don't know if this will solve their problems, but I think it's the right strategy as a reaction to what's going on around them.

Overall, it seems like a relatively good deal, although perhaps a little overpriced, but it's probably a price Salesforce has to pay.