Salesforce.com

STUDENT MANAGED INVESTMENT FUND

Table of ContentsI II III IV V VI VII

Tech Sector OutlookCompany InformationIndustry OutlookCompany DriversCompany AnalysisValuation AnalysisSummary

Technology Sector Outlook

.

Sector Performance

U.S. Economic Data

GDP Quarter Growth 2.1% Inflation Rate 0.2%Unemployment Rate 5.00% Fed Funds Rate 2015 0.25

Consumer Discretionary

Consumer Staples

Energy

Financials

Health Care

Industrials

Information Technology

Materials

Telecommunication Services

Utilities

12.69%

2.22%

-15.39%

-0.89%

4.95%

-1.85%

6.70%

-6.37%

-3.72%

-10.21%

YTD

Market Data

52–week high52-week lowPrevious CloseMarket CapOutstanding SharesBetaTTM EPSProjected EPSTrailing P/E RatioForward P/E

$82.90$53.44

53,100.1 M664.0 M

1.25(0.21)

0.73

107.78

[Ticker: CRM]Salesforce.com provides software on demand. The company supplies a customer relationship management service to businesses worldwide providing a technology platform for customers and developers to build and run business applications. Clients use Salesforce.com to manage their customer, sales and operational data.

About Salesforce.com

November-14

December-1

4

January-15

Febru

ary-15

March-15

April-15

May-15

June-15

July-15

August-15

September-15

October-1

5

November-15

-20

-10

0

10

20

30

40

CRM vs. S&P 500 Technology Index LTM

CRM US Equity SPX Index

The Product Mix

Sales Cloud Service Cloud Marketing Cloud

AppsAnalyticsCommunity Cloud

• Grow sales with the CRM platform• Salesforce IQ – The smart, simple

CRM to grow your business• Data.com – B2B prospecting and

data cleaning

• Fully customizable support and help desk

• Desk.com - All in one customer support for small businesses

• Digital Marketing Platform• Pardot - B2B Marketing automation

• Connect customers, partners and employees

• Chatter – Enterprise Social Network

• Wave Analytics – Business analytics on any data, any device

• Wave apps – Apps that drive sales, insight, and customer delight

• App Cloud – #1 platform as a service• Force.com – Lightning apps for

everyone• Heroku Enterprise – Scalable apps

for developers

CRM Industry Outlook

Salesforce is the CRM Software leader Market Share growth opportunity Larger cross selling opportunities

Salesforce.com16%

Oracle11%

SAP8%

Microsoft3%IBM

3%

other59%

CRM Market Share

Salesforce.com Oracle SAPMicrosoft IBM other

Salesforce.com

Oracle

SAP

Microsoft

IBM

$3,963

$2,686

$2,091

$731

$728

Top CRM Software Vendors

2014 Revenue (Millions)

2014 2015 F2016 F2017 F20180

5

10

15

20

25

0

5

10

15

20

25

SaaS vs. On-Premise CRM Software Spending

CRM Total SaaS On PremiseSource: IDC

SaaS (Software as a Service) Operated and managed remotely Reduced overhead No upfront license costs Up to date software updates Work anywhere

SaaS Vs. On-Premise CRM

On-Premise× High startup costs× Increased set up times× Limited software update

capability× Restricted Access

Company Drivers

Supply Chain Analysis – Hedged against China and Emerging Economies

USA & Canada:72%

Europe:18%

Asia Pacific:10%

Salesforce.com Customers

USA & Canada: Europe: Asia Pacific:

Customers Country of Domicile Relationship Value % of Salesforce Revenue

Japan Post Holdings Co Ltd Japan 47.30M 3.59%Bank of America Corp USA 36.99M 2.81%IBM USA 18.91M 1.43%Verizon Communications Inc USA 17.26M 1.31%Comcast Corp USA 16.51M 1.25%Cap Gemini SA France 15.74M 1.19%HP Inc USA 14.69M 1.11%Siemens AG Denmark 14.46M 1.10%Nestle SA Switzerland 13.90M 1.05%Home Depot Inc USA 13.43M 1.02%United Continental Holdings USA 13.36M 1.01%Mitsubishi Japan 12.79M 0.97%

80.26% of sales are to U.S domiciled companies Chinese Companies account for 1.05% of total sales

S.W.O.T. AnalysisStrengths Weaknesses

Opportunities Threats

Leadership in OnDemand Cloud Hosted CRM

Strong and Fast Growing Customer Base

Analytics to Drive Future Growth

Corporate Social Responsibility

Maturing Sales Cloud Could Potentially Slow Growth

Young High Growth Company Syndrome

Cloud Applications Outgrowing On-Premise

Strategic Acquisitions to Broaden Cloud

Growing OnDemand Market for CRM

Data Privacy and Hacking IssuesInterruptions or Delays From Third-Party Facilities

Strong Growing Competition

Salesforce Acquisitions Heroku (Announced on December 8,2010) for US$212 million- Heroku is a cloud platform that lets companies build, deliver, monitor and scale apps- Heroku is the leading Ruby application platform-as-a-service- Salesforce bought Heroku as a form of developer marketing

ExactTarget (Announced on June ,2013) for US$2.5 billion- ExactTarget makes tech for email and mobile marketing campaigns - ExactTarget now known as Salesforce Marketing Cloud - Acquired ExactTarget as a form of combining its leading digital marketing capabilities with salesforce leading sales, service and social marketing solutions

RelateIQ (Announced on July 10,2014) for US$390 million- RelateIQ uses large-scale data-mining technologies to automate relationship tracking in the enterprise and CRM world- RelateIQ now known as SalesforceIQ - Acquisition of RelateIQ will extend the value of Salesforce #1 CRM apps and platform with a new level of intelligence across sales, service and marketing

Making the World a Better Place – Salesforce.com’s 1/1/1 Model

1% Time

- Salesforce.com employees are awarded 6 paid days of volunteer time to use over the course of a year- To date, 178,000 hours of volunteer time has been donated by employees

1% Product

- The Salesforce.com Foundation facilitates the donation and discount of Salesforce CRM licenses to nonprofits- 8,000 nonprofits in 70 countries are benefiting from these licenses today

1% Equity

- Using 1% of founding stock to offer grants focused on technology innovation and youth development programs- Salesforce.com has given nearly $20 million in grants to qualified nonprofits

Awards & Recognition

San Francisco Business Times

Community Commitment Award 2011

100 Best Companies to

Work For 2012, 2013, 2014 -

FORTUNE

World’s Most Innovative Company

2011, 2012, 2013, 2014 -

FORBES

Company Analysis

FY2011 FY2012 FY2013 FY2014 FY2015 *FY2016 $-

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

Sales Revenue

FY2013 FY2014 FY2015 *FY2016 *FY2017 *FY20180

20

40

60

80

100

120

140

160EV / EBITDA

Solid sales growth Broke into positive net income Decreasing EV/EBITDA ratio

Growth Outlook

FY2013 FY2014 FY2015 LTM *FY2016 *FY2017Net Income (Loss)

$(400.00)

$(200.00)

$-

$200.00

$400.00

$600.00

$800.00

$(96.40) $(232.60) $(262.60)

$(87.70)

$494.70

$666.80

Net Income

Comparable Companies AnalysisManagement Effectiveness CRM Comps Ranked by

Market ShareNarrow Industry

CompetitorsIndustry

ROA -0.86% 6.97% -6.66% 3.48%

ROE -2.05% 33.97% -16.78% 5.61%

ROC -8.76% 10.12% -14.31% 4.50%

Financial Strength CRM Comps Ranked by Market Share

Narrow Industry Competitors

Industry

Quick Ratio 0.61 1.93% 2.04 1.70

Current Ratio 0.74 2.12 2.19 1.97

Total Debt to Total Equity 27.11% 115.00% 32.13% 42.89%

Profitability Ratios CRM Comps Ranked by Market Share

Narrow Industry Competitors

Industry

EBITDA Margin 10.38% 26.98% -2.56% 16.53%

Gross Margin 75.25% 66.73% 76.28% 76.10%

Operating Margin 2.54% 20.03% -10.23% 8.87%

Pre-Tax Margin 2.53% 18.93% -11.37% 7.94%

Comps Ranked by Market Share

1. IBM2. Microsoft3. SAP4. Oracle

Narrow Industry Competitors

1. Netsuite 2. Workday3. Qlik Technologies4. Tableau Software

When compared to Narrow Industry Comps, Salesforce is favorable

Fundamental Analysis FY 2012 FY 2013 FY 2014 FY 2015 LTM

Profitability

Gross Margin 78.43% 77.59% 76.21% 76.01% 76.11%

EBITDA Margin 10.12% 8.55% 6.83% 10.43% 12.66%

Operating Margin -1.55% -3.63% -7.03% -2.71% 3.4%

Pretax Margin -1.47% -4.19% -8.79% -3.97% 2.06%

Net Profit Margin -0.51% -8.87% -5.70% -4.89% -1.45%

Management Effectiveness

Return on Equity -0.79% -13.40% -8.54% -7.46% -2.05%

Return on Assets -0.32% -5.58% -3.16% -2.65% -0.86%

Return on Capital -0.03% -9.90% -4.65% -4.18% -4.04%

Debt

Total Debt/Equity 29.78% 21.98% 61.14% 34.48% 28.82%

Young high growth company syndrome

Significant Improvement in LTM metrics

Decreasing use of debt

Valuation

DCF AssumptionsWACC 10.6%

Perpetuity Growth Rate 3.5%

Exit EV/EBITDA Multiple 42.0x

Average

Comps P/B

Comps P/CF

EV / EBITDA Comps

DCF EBITDA Exit Multiple

DCF Perpetuity Method

$70.0 $80.0 $90.0 $100.0 $110.0 $120.0 $130.0 $140.0

Salesforce.com Valuation Method's Analysis

Current Price: $79.96

Target Price:

$104.75

Upside: 31%

BUY

Analyst Recommendations

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100%Buy and Sell Recommendations vs. Price and Target Price

Buys Holds Sells Tgt Price Price

Measure CRM US Comp AvgConsensus Rating 4.58 3.89

Buys 87.5% 51.96%

Holds 6.25% 41.56%

Sells 6.25% 6.48%

Firm RecommendationJ.P. Morgan OverweightUBS BuyBarclays OverweightGoldman Sachs BuyRBC Capital Markets BuyCredit Suisse OutperformRaymond James Strong Buy

BUYCurrent Price: $79.96Target Price: $104.75

Upside: 31%

Summary

“It doesn’t take a data science degree, it takes 5 buttons”

-Salesforce.com

Strong Growth Outlook Increased Industry Demand Hedged Global Supply Chain

Diversified Product Mix