Salesforce.com Continues To Benefit From Rise Of Cloud

Salesforce.com continued to reap rewards from the rapid growth of the enterprise cloud software business as it reported record full year revenue for fiscal 2010 of $1.3 billion (£848m), a 21 percent year over year increase.

The company’s total $1.4 billion run rate made Salesforce.com the “first enterprise cloud computing company to ever reach this scale,” said chairman and chief executive Marc Benioff.

Salesforce.com generated record yearly and quarterly revenue despite the prolonged recession that has put the breaks on sales for many other IT companies. “While most software companies are trying to forget the past year our fiscal 2010 looks perhaps like our most memorable and exciting year ever,” Benioff said. He claimed that the 21 percent annual growth rate represented “the fastest growth of any comparably-sized software company in the world,” he said.

It wasn’t just revenue that grew rapidly in the fiscal year. The on-demand customer relationship and sales force management software company now has 72,000 customers world wide, a net increase of 17,000 or 31 percent year over year. The company also reported that it now has 2 million individual subscribers, a net increase of more than 500,000 over the past year. For the quarter, Salesforce.com added 4,600 new customers, or 31 percent year over year.

These results coupled with a second consecutive quarter of improved business growth convinced Salesforce.com to continue hiring new employees at least through the rest of this year, he said.
Furthermore Benioff claimed that its growth was achieved in part through competitive sales successes over its major competitors in the CRM software market, Oracle – Benioff’s former employer, Microsoft and SAP.

Benioff said he the company is looking forward to “massive” growth opportunities in future years because it has diversified it Web-based software portfolio way beyond its original sales force automation applications to what it is calling its Sales Cloud, Service Cloud, which is a range of customer service applications and analytics along with the Custom Cloud, which are tools for rapidly building new applications and customizing existing ones.

All three of these product areas produced “exceptional growth” during the previous year and represent the company’s “three pillars of growth” in the years ahead long with its Force.com application development platform, he said.

The company has also started a private beta of its Chatter business collaboration platform in February, but Benioff said that won’t contribute significantly to revenue growth until it goes into production later this year.  When it goes into production it will represent an important fourth pillar of future growth for the company.

With these products in plans it means “every business, of every size and every industry with access to the internet through any device is now” a prospective Salesforce.com customer, Benioff said.

For its fourth fiscal quarter than Jan. 31, 2010, Salesforce.com reported $354 million in revenue, an increase of 22 percent and operating cash flow totaled $92 million up 21 percent over the year ago quarter. This generated earnings per share of 16 cents per share up 41 percent over the year ago quarter.

For the full fiscal year Salesforce.com produced earnings per share of 63 cents per share up 82 percent over fiscal 2009 with operating cash flow totaling $271 million up 18 percent over the previous year.
Deferred revenue, or revenue in the pipeline from continuing subscriptions and licenses, an important measure in the software industry, totaled $704 million a 19 percent year over year increase.