Salesforce.com Reports Quarterly Profit
With one of the noisiest "quiet periods" in IPO history behind it, Salesforce.com has quietly gone about the business of making more money. The on-demand CRM vendor announced quarterly results for the first time as a public company, booking strong growth and even a small profit. For the quarter ending July 31, Salesforce.com collected $40.6 million in revenue, nearly twice the income of the year-ago period. The quarter was net-positive for the company, ringing up $1.2 million over expenses.
Not counting the flood of nearly $114 million to the company's coffers from selling its stock to the public, Salesforce.com has added about $11 million to its cash treasury over the past year. Although Salesforce.com grew its payroll significantly during the quarter, adding 76 full time employees since April, there has not yet been a sign of an itch to spend that money. "They have plans for that, no doubt, but they obviously haven't made any major acquisitions," says Chris Selland, Aberdeen Group vice president of sell-side research. "When they're growing this fast, I don't see why they would."
The company logged more than $75 million in total revenues in the February-through-July time period, compared with less than $41 million in the same period a year ago. Revenues related to services and consulting in that time frame grew at a faster pace than license and subscription fees. For its fiscal year ending January 31, 2005, the company projects total revenues between $165 and $170 million.
Some 22,000 users are currently excluded from the company's reporting. About 20,000 subscriptions are held by a "national professional organization" and offer limited functionality at a discounted price, while income from the remainder is being withheld on the books, pending the delivery of new Salesforce.com features.
While growth in Europe and Asia/Pacific has continued, four of every five dollars spent on Salesforce.com still comes from North and South America. In all, 21,000 paid seat licenses were added during the quarter, along with 1,300 new corporate accounts. All told, Salesforce.com now claims 168,000 paid subscribers. "[Many] publicly traded software companies don't make money at all and a lot are shrinking," Selland says, "so to compare [Salesforce.com] to their peer group, they are growing and profitable, showing that the model is being accepted.
"Have they taken over the world? Are they bigger than Siebel?" Selland asks. "No, but it looks solid."
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