Salesforce.com breaks $1 billion revenue barrier
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Subscription model paying off for software-as-a-service pioneer but recession knocks forecast
On-demand software provider Salesforce.com earned revenues of $1.08 billion in its last financial year, the company revealed yesterday. That represents a 44% increase on the previous year, a significant milestone in the story of software-as-a-service and an endorsement of the subscription model.
The company withstood the economic calamity of the tail end of 2008 well – revenues for its final quarter of the financial year, ending 31 January 2009, were $290 million, up 33% from the same quarter the previous year.
However, the company does anticipate some impairment as a result of the recession, and downgraded its predicted revenues for the coming year from around $1.55 billion to around $1.33 billion. "There's increasing uncertainty out there,” CFO Graham Smith told investment analysts.
Profitability is on the rise at Salesforce.com. Net income for the most recent quarter was $13.8 million, nearly twice the figure earned in the last quarter of the previous year.
But that remains a comparatively small margin for the software industry. Earlier this month, for example, security vendor Verisign reported net income of $39 million on quarterly revenues of $240 million, while data integration vendor Informatica earned net income of $19.9 million on revenues of just $124 million in its most recent quarter.
Larry Ellison, Oracle CEO and Salesforce.com investor, famously derided the profitability of the SaaS model last year, saying “If you look at the [SaaS] leader, Salesforce.com, they don’t make very much money and they’ve been at it for almost ten years”.
