Salesforce.com Posts Record Revenue
Salesforce.com has announced its latest financial results for the quarter ending January 31, 2005, and the short version is that the company continues to make money at a rapid pace. Revenues of $54.6 million represented 18 percent growth from the previous quarter, and nearly double the quarter of one year ago. The company turned a $3.6 million profit, and bolstered its company client rolls by 1,400 and paid seats by 32,000, for more than 10 percent growth in each category during the period.
The company also took time to crow about a recent Gartner analyst report that estimates the company's CRM revenues will overtake those enjoyed by the combined Oracle and PeopleSoft CRM product lines. "That's almost a left-handed compliment, as Oracle basically gave away CRM and PeopleSoft didn't break out [CRM revenues]," says Martin Schneider, The 451 Group's enterprise software analyst.
Although the company has its premiere enterprise clients, the bulk of Salesforce.com customers continue to be providing value in numbers. "The average deals are still around a dozen users, so they are still very much active in the midmarket, and will probably never not
be active in the midmarket," Schneider says. To stave off any loss of appetite for on-demand SFA, the company has been working to bolster its options for a more holistic solution. "The fact that they are getting into the support [market] with Supportforce.com shows that all areas of CRM are very much alive and that there are opportunities out there." As of the company's last filed quarterly report, it was not yet breaking out Supportforce.com customer figures.
To maintain its customer base, Salesforce.com will need to fend off competitive pressure from both high-end CRM vendors who will increasingly campaign veteran customers to move to more feature-filled packages, as well as lower-profile on-demand providers who can pitch significant cost savings to the smallest companies. "[Some] are saying that if they can get it a lot cheaper, say for $1,000 per year for five to six users, they don't need the stuff Salesforce.com is adding to get an enterprise look," Schneider says. "Some may defect, but when they are adding so many thousands of users per quarter and lose 20 or so every month, it's not a big deal." So far, that appears to be true. In its last filed quarterly report, Salesforce.com says it paid out $200,000 of its $600,000 budget allowance to settle service-level disputes or complaints from customers, but lost no clients due to service incidents.
Schneider says that no one should be terribly surprised by the company's continued growth. "They're a marketing machine, and they're showing it in the quarterly reports."
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