Business Context and Reporting Period
This Form 8-K Current Report was filed by Salesforce, Inc. on August 7, 2019. The filing discloses a material event regarding the acquisition of ClickSoftware Technologies Ltd., a provider of field service management solutions. The transaction is expected to close during the fiscal quarter ending October 31, 2019, subject to customary closing conditions including regulatory approvals.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period, as this is a disclosure of a corporate event rather than a periodic financial report. Key financial terms of the transaction include:
- Acquisition Price: Approximately $1.35 billion, net of shares currently owned by Salesforce.
- Payment Structure: A mix of cash and Salesforce common stock, including the assumption of outstanding equity awards held by ClickSoftware employees.
- Potential Tax Impact: A potential one-time income tax charge may be recorded based on an assumed Israeli statutory tax rate of 23 percent applied to transferred intangibles. The exact amount is uncertain.
Material Changes
The primary material change is the definitive agreement to acquire ClickSoftware. Management stated that the acquisition is not expected to result in any material change to the revenue or non-GAAP operating margin guidance previously provided on June 10, 2019. However, the potential one-time tax charge, if recorded, would increase the U.S. GAAP provision for income taxes and decrease earnings per share. Any payment of this charge would reduce operating cash flow in the period of payment.
Guidance, Outlook, and Risks
Guidance and Outlook: Salesforce intends to update its full fiscal year guidance (ending January 31, 2020) during its earnings call on August 22, 2019. This update will include the impact of both the ClickSoftware and Tableau Software acquisitions. The company plans to fully integrate ClickSoftware's operations following the closing.
Risks and Contingencies:
- Regulatory Approval: Closing is subject to the expiration of the Hart-Scott-Rodino waiting period and Israeli antitrust clearance.
- Tax Uncertainty: The timing and amount of the potential Israeli tax charge depend on integration plans, valuations, tax rates, and potential negotiations or litigation with taxing authorities.
- Integration Risks: Risks include the ability to realize expected synergies, integrate operations, and manage transaction costs.
- Market and Operational Risks: General risks include negative effects on stock price, unknown liabilities, litigation, geopolitical events, and currency fluctuations.
Investor Verification Checklist
- Verify the final closing date and confirmation of regulatory approvals (Hart-Scott-Rodino and Israeli antitrust).
- Monitor the August 22, 2019 earnings call for updated full-year fiscal 2020 guidance incorporating the acquisition.
- Assess the final determination of the one-time Israeli income tax charge and its impact on GAAP earnings per share.
- Review the integration progress of ClickSoftware's field service management solutions into Salesforce's platform.
- Confirm the final purchase price adjustments and the exact mix of cash versus stock used in the transaction.