Salesforce.com Reports Record 50% Jump in Q4 Revenues

Salesforce.com just keeps topping its own as well as Wall Street's expectations, reporting a 50 percent jump in fourth-quarter revenues compared with the same quarter a year ago.

The company's strong fourth-quarter and fiscal 2008 results, released on Feb. 27, prompted it to increase its guidance for the coming year.

In 2009 Salesforce.com expects to finally reach the $1 billion revenue mark—a goal it has been shooting for since 2006—and exceed that by $30 million to $35 million.

For the fourth quarter, Salesforce.com reported record revenues of about $217 million and record operating cash flow of $81 million, up 112 percent from the same year-ago period.

Subscription and support revenues were $196.5 million, an increase of 49 percent year over year, and an 11 percent increase over the third quarter. Professional services and other revenue came in at $20.4 million, an increase of 68 percent from the previous year, and 24 percent from the previous quarter. Earnings per share for the quarter finally rose out of the break-even segment from the previous quarter to top 6 cents per share.

Net paying customers rose by about 2,900 during the quarter, and by about 11,200 during the year. To date, Salesforce.com has racked up about 41,000 customers and nearly 1.1 million paying subscribers.

"By any measure, the fourth quarter was amazing," Salesforce.com CEO Marc Benioff said during a conference call with analysts. "The driver for our financial performance was the most incredible quarter for winning business in our history."

According to Benioff, Salesforce.com increased the number of subscribers by more than 450,000 to roughly 1.1 million during the year, added roughly 1,800 users every day, processed 160,000 SQL Server transactions per second and served up 130 million transactions per day in well under 1 second each, which adds up to 29 billion transactions at more than 99.999 percent uptime for the year.

Click here to see a video interview with Salesforce.com CEO Marc Benioff.

As for its development tools, which include the Apex programming language and the Force.com platform, Benioff said 1.1 billion lines of Apex code were written and 5,800 unique interfaces were developed. "Developers from around the world with just a browser and an Internet connection can use the same powerful Internet infrastructure we worked hard to develop, to build and deploy their own applications," Benioff said.

He did not, however, break out any revenue numbers for Force.com, or its corresponding marketplace, AppExchange—an issue in the past for analysts who have tried to assess the penetration (and revenue stream) of Salesforce.com's newer product lines. Benioff did say that roughly one in four customers has deployed an application from AppExchange and that there are now more than 800 applications listed on the online marketplace.

For the full fiscal year, Salesforece.com reported revenue of $748.7 million, an increase of 51 percent over the previous year. Subscription and support revenues were $680.6 million, also an increase of 51 percent. Professional services rose nearly as high to 50 percent, or $68.1 million. Earnings per share for the full year were 15 cents.

As a result of its stellar performance, Salesfore.com said its revenue outlook for 2009 would increase to between $1.03 billion and $1.035 billion. The company said previously that it expected revenue next year to come in at around $1 billion, or exceed that long-sought goal by about $2 million.

However, earnings for the year are now expected to come in at between 32 and 33 cents a share, slightly below analyst expectations of 36 cents per share.

For the current quarter, Salesforce.com said it expects revenues to total between $233 million and $235 million with earnings between 6 and 7 cents per share—above analyst expectations of earnings around $230 million for the quarter and earnings of 6 cents per share.

During the question and answer period of the call, an analyst asked Benioff whether the company generated these strong results because it is landing bigger subscriber deals, through higher than expected productivity or because of some other metric. Benioff said it was really none of those things.

"We've made investments in technology, in our data center infrastructure, in our ability to distribute our product on a global basis," Benioff said.

"When you look at the fourth quarter, we're reaping the harvest a lot of the investments we've made on in the past. This is what we've been focused on—whether it's our application strategy or our platform strategy, both are at the right place at the right time. And we're the worldwide leader at the most important time in the software industry, and we think that's what we're seeing," he said.