Salesforce is now officially the first enterprise cloud computing company to hit $1 billion in annual revenues. The company announced its fourth quarter and year-end earnings. It’s quarterly revenues were up 34 percent to $290 million, bringing the total for the year to $1. 077 billion. Net income for the quarter was $13.7 million ($0.11 a share), and $43.4 million ($0.36 a share) for the year (which doesn’t sound like a lot compared to $1 billion in revenues, but it was more than double last year’s earnings). Its operating cash flow for the year was a quite healthy $230 million.
Salesforce ended the year with 55,400 corporate customers, and 1.5 million individual subscribers. And it has $883 million in the bank. Salesforce expects revenues to increase by about 30 percent this fiscal year to $1.3 billion.
Passing the $1 billion mark is a major milestone for both Salesforce and cloud computing in general. Salesforce is the first enterprise computing company to get to that size based solely on selling Web apps.
Here is the press release:
Salesforce.com delivered the following results for the fourth quarter and full fiscal year 2009:
Revenue: Total Q4 revenue was $289.6 million, an increase of 34% on a year-over-year basis and an increase of 5% on a quarter-over-quarter basis. Subscription and support revenues were $266.1 million, an increase of 35% on a year-over-year basis and an increase of 5% on a quarter-over-quarter basis. Professional services and other revenues were $23.5 million, an increase of 15% on a year-over-year basis and an increase of 2% on a quarter-over-quarter basis.
For the full fiscal year 2009, the company reported revenue of approximately $1.077 billion, an increase of 44% from the prior year. Subscription and support revenues were $984.6 million for the year, an increase of 45%, while professional services revenue rose 35% to $92.2 million.
Earnings per Share: Q4 GAAP diluted earnings per share were approximately $0.11, including approximately $21.1 million in stock based compensation expense and approximately $2.9 million in amortization of purchased intangibles related to previously announced acquisitions. For purposes of the Q4 GAAP EPS calculations, there was an average of approximately 125 million diluted shares outstanding during the quarter.
For the full year, GAAP diluted earnings per share rose approximately 130% year-over-year to $0.35, including approximately $77.4 million in stock based compensation and approximately $8.0 million in amortization of purchased intangibles related to previously announced acquisitions. For purposes of the GAAP EPS calculations, there was an average of approximately 125 million diluted shares outstanding during the year.
Customers and Paying Subscribers: Net paying customers rose approximately 3,600 during the quarter and approximately 14,400 during the year to finish at approximately 55,400. Net paying subscribers rose to greater than 1.5 million, an increase of approximately 400,000 from the prior fiscal year end.
Cash: Cash from operations for the fiscal fourth quarter was approximately $76 million, up from $17 million in the third quarter, and down 7% year-over-year. For the full year, operating cash flow totaled $230 million, an increase of 12% from the prior year. Total cash, cash equivalents and marketable securities finished the year at approximately $883 million, an increase of approximately $78 million from Q3 and approximately $213 million from the prior fiscal year end.
Deferred Revenue: Deferred revenue on the balance sheet as of January 31, 2009 was $594 million, an increase of 24% on a year-over-year basis and 27% on a quarter-over-quarter basis.
As of February 25, 2009, salesforce.com is initiating guidance for its first quarter, fiscal year 2010. For its full fiscal year 2010, the company is updating its prior revenue guidance and initiating EPS guidance.
Q1 FY10: Revenue for the company’s first fiscal quarter is projected to be in the range of approximately $304 million to approximately $305 million. GAAP diluted EPS is expected to be in the range of approximately $0.10 to approximately $0.11. Stock based compensation expense is expected to be approximately $22 million, and amortization of purchased intangibles is expected to be approximately $2.6 million. For purposes of the Q1 GAAP EPS calculation, the company is expecting an average diluted shares count of 126 million shares, a GAAP tax rate of approximately 43%, and a minority interest expense of approximately $200,000.
Full Year FY10: The company today is updating the full year revenue guidance it provided on November 20, 2008, with revenue now expected to be approximately $1.30 billion to approximately $1.33 billion. The company is also initiating its earnings outlook for the full year, expecting GAAP diluted EPS to be in the range of approximately $0.54 to approximately $0.55. Stock based compensation expense is expected to be approximately $91 million, and amortization of purchased intangibles is currently expected to be approximately $9.3 million. For purposes of the full fiscal year 2010 GAAP EPS calculation, the company is expecting an average diluted shares count of 128 million shares, a GAAP tax rate of approximately 43%, and a minority interest expense of approximately $1 million.
Wow their net income is only 4.7%
Anyone who has been able to generate these kind of topline numbers deserves respect.
As for Saleforce, like LinkedIn, they are a great example of a company that created a viable business model and then created technology to support that, instead of the other way around.
Unfortunately, “Web 2.0″ over the past 3 years has been littered with the opposite … people creating great technologies and then scramble, usually in futility, for a viable business model.
From India,
Anjali Sen
Congratulation!
You really have to hand it to sales force for performing in such a tough economy.
However, Salesforce can’t be utilized to the full extent without a system or service in place to generate more leads and qualified referrals.
Best,
Ben S.
Assistant Blog Manager
Referral Key
http://www.referralkey.com/
Your Trusted Referral Network
great execution! Congrtas Salesforce.
I wonder if they have thought about using sugarcrm to try and increase their profit.
They’ll buy SugarCRM when it becomes big enough.
The real value behind Sugar CRM is being able to host it on your own servers and tweak it to no end. Great for security crazed companies that still want a web based CRM.
Salesforce allows for customization as well, but it is a pricey service.
The real value behind Salesforce is their platform.
I’ll let Marc explain if you care: http://blog.pma...hree-kinds.html
newsflash: sugarCRM is never getting big enough
Agreed. SugarCRM had their shot. The only company that has a chance of gaining any market share is Sage. They are rolling out a hosted version…..
Sarah,
I think you’re confused on a lot of levels…and if this the real Sarah Lacey, your inability to understand even the basic tenants of interviewing and journalism make this comment no surprise to me…http://tinyurl.com/ca7luc (for reference to the 4 people that don’t already know what a clown Sarah is professionally)
I see SugarCRM’s end game as very different than Salesforce…as an open source company, they are not looking to be a billion dollar company (or maybe they are) but rather are changing the model of how companies work and run.
If SugarCRM is profitable now – after 4 years, as another commenter notes, then they are WAY ahead of salesforce.com, and with only 5% of the workforce. But that is the idea…gutting out inefficiency and giving users choice – not some lock-in model that preys on market buzzwords like “cloud computing” – a total BS phrase that means nothing.
If a lean company like Sugar gets to even 250m in top line revenue, it will be a tighter ship and generating more income than Salesforce.com ever will.
Also, as more true cloud platforms pop up – from Google, amazon, IBM, and (gasp) even Sun, companies will be deploying products like Sugar on SaaS/Cloud platforms they can actually control, for much elss money than Salesforce.com.
Simply put – Salesforce is the next Siebel, as has been noted many times in the past. The disrupter will soon be disrupted, if not by SugarCRM then by some other more efficient, faster and more robust product that costs less and doesn’t lock users in…
Yet again Sarah, you miss the boat entirely.
I think this is the only hi-tech company that hit this kind of Figures during economic downturn. Impressive!
Nat
Re: “First enterprise cloud company to hit $1bn in revenues”–this is what VMware let’s enterprises do inside their own datacenter, build a cloud. And they first hit $1bn year in 2006ish (maybe early 2007).
Disclosure: I work there; go Fusion!
I’m also surprised at the low net income.
There are 2 things that keep me away from Salesforce.com:
1. It’s just too slow. Their sales rep for South Africa claims it’s lack of broadband here. Trust me, it’s not…
2. It’s too expensive. If we want to add the “call centre” feature, the price jumps from $99 /user/year to $780 /user/year.
Combine 1&2 and the cost to company is simply too high, especially in developing countries.
I’m using NetSuite’s ecommerce system and it’s pretty good. It has some rough edges (lots of them), and it’s expensive for what amounts to a Yahoo Store + integrated Quickbooks, but I see the promise in it.
Just like Salesforce adding any kind of Advanced Module starts to jack the prices through the roof. From the time we had a sales meeting and I signed a contract some of the things I had been told were included in the core application had been dropped out and made into pay-to-play options!
But I can really see the promise in their system. It’s fairly robust, and has the power to scale a company from 300 SKUs to 300,000 SKU.
My real wish is that Apple would buy it and streamline the user experience.
I thought you guys were supposed to write about Start-ups? I guess SalesForce was a start-up 10 years ago, eh?
“In addition to covering new companies, we profile existing companies”
http://www.tech...out-techcrunch/
I was once a part of a company which had a lot of hardware in it and less software (I was a key part of their software group). We had revenues in billion dollar range in a year with a net of 7.x% and I hated that and the negatives with it were due to hardware the OPEX and CAPEX were high. The famous phrase was “if we are all software then we would be 30%-40% net”. Now we see the poster-child of success in SaaS scrambling at 4% net with a billion in revenues. This is scary for all the SaaS businesses out their.
-S-
I wonder why the margins are so low. Maybe its because of the heavy development cost for the new products such as Force.com which probably do not generate much revenue yet.
it’s low because they burn lots of money on marketing and salespeople.
My friends that work there say the pay is fantastic, but their options are currently underwater.
The net is low because salesforce continues to aggressively market and hire people.
Sometimes I think Benioff is a jack ass, but he is using this economic slowdown as an opportunity to grow his global market share. Brilliant!
@Henk
I agree with the high call center offering cost. The only way to justify such cost would be with a full blown integrated telephony call center offering. If there is any place salesforce is missing the boat..it is here. I would have thought salesforce would have acquired a call center provider. But, Benioff only likes to acquire companies that are less than $10M. A good hosted call center provider will cost $50M+.
They could easily be operating at 15-20% (or more) net income if they weren’t growing for the future with R&D and sales/marketing investments. Take a look at the cash generation of $230 M on the $1 B of revenue, that’s very healthy. I don’t think the street will pinish them for “only” 4.7%, they will cheer an outstanding quarter.
Well executed internet company with a solid business plan… very rare!
Congrats to Salesforce.com! Partnering with Salesforce has been a terrific benefit for EchoSign electronic signature.
In terms of metrics, look at balance sheet and cash flow as much as margins … nature of deferred revenue …
1 billion… That’s a lot of money, but the shares don’t get much of it…
someday I actually have to understand what salesforce is.
true, I have even worked with SFDC but still don’t understand..
like Act or Goldmine on steroids – on the web (not desktop)
helps companies keep the sales pipeline in order for sales mostly
Salesforce.com is a good computing company.
I no wonder if this company can reach revenue of approximately $1.077 billion.
Maybe it’s the best one in this world.
Amazing results.
Salesforce is definitely a bellwether.
Good Luck
They remind me of GOOG. They keep making profits against all odds, mainly because they generate value people don’t know about in a way people don’t understand. Therefore they are highly profitable, experience unusual growth, and have little viable competition. The results speak for themselves. However, there have been security issues with other forms of cloud computing. I use justaskgemalto for reviewing security issues.
Sarah,
Why you selling SugarCRM short? They are profitable and picking up a lot of SFDC former customers, with a comparable product for much cheaper. My company made the switch and is pretty happy about it.
I went to the developer conference couple weeks back and was really impressed. If you are a startup and can get 600+ people to a convention in this economy, you got to be doing something right.
in a time crisis , got job for salesforce!
http://www.heal...tedirectory.com
I’ve used SalesForce in the past and their services worked out pretty well for me. Another company that that. Another company that provides good service is http://www.24conference.com, the offer services such as teleconferencing, video conferencing, etc.