Salesforce on Track to be a $3 Billion Company This Year
Salesforce.com, which generated $788 million in revenues during its fiscal year 2013 third quarter, up 35 percent over the same period last year, expects to break the $3 billion revenue mark by the time the fiscal year ends in January.
Marc Benioff, chairman and CEO of Salesforce, used words like “awesome” and “fantastic” in an earnings conference call Nov. 20 to describe the results in his usual bombastic way.
“Salesforce has always been a catalyst and an evangelist for changing enterprise software and we have pioneered the shift to cloud, we’ve pioneered the shift to social and we’ve pioneered the shift to mobile,” Benioff said.
The company, which delivers software-as-a-service (SaaS) to business and enterprise customers, reported a net loss of $220.3 million, or $1.55 a share based on generally accepting accounting principles (GAAP). However, it earned 33 cents a share on a non-GAAP basis in which certain exceptions are factored in, such as $149 million for a tax valuation allowance and $105 million in stock options expense.
Salesforce exceeded Wall Street analyst estimates of $777 million in revenue and 32 cents in non-GAAP earnings per share (EPS).
The company anticipates revenue of between $825 million and $830 million in the current fourth quarter of its fiscal year, which ends Jan. 31, 2013. The revenue forecast is about 31 percent greater than in the year ago quarter. Salesforce anticipates non-GAAP EPS of 38 to 40 cents a share. For all of fiscal 2013, Salesforce forecasts a non-GAAP profit of $1.50-$1.52 a share on revenue of $3.041 billion to $3.046 billion, an increase of 34 percent year-over-year.
Benioff was eager to point out that the cloud-based software company—facing growing competition from legacy on-premise vendors such as SAP, Oracle and Microsoft, which are also pursuing the cloud market—expects to pass the $3 billion revenue mark this fiscal year.
“We’re one of a small number of software companies to ever achieve this milestone, and this financial achievement also demonstrates the massive shift to social and mobile cloud computing,” Benioff said during the conference call. "No other enterprise software company of our size is growing faster than Salesforce."
The company’s official guidance for its fiscal year 2014 is for revenue of between $3.80 billion and $3.85 billion, although Benioff expects that Salesforce will build revenue at a “run-rate” exceeding $4 billion.
He outlined six major Salesforce product areas that he expects will move the company forward: sales; customer service; a new marketing offering; social with Salesforce Chatter; Work.com for social-based employee evaluations; and the Salesforce platform-as-a-service offering. All of these were touted at the Dreamforce 2012 conference that Salesforce hosted in San Francisco in September.
Salesforce shares were trading up by close to 2 percent in after-hours trading at $148.61 a share.
Salesforce’s largely positive results stood in sharp contrast to that of its Silicon Valley neighbor Hewlett-Packard, which took an $8.8 billion charge against earnings for the 2011 acquisition of the UK enterprise software company Autonomy. HP cited “serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy that occurred prior to HP’s acquisition of Autonomy” for the hit to its earnings.