(By Richard Holway 5.00pm 26th Feb 09) It feels like we, and a lot of others, have been referring to revenues at Salesforce.com as $1b+ for some time now. Now it’s official. Revenues for year to 31st Jan 09 were up 44% at $1.08b. In Q4, revenues grew 34% to $289.6m. Deferred revenues, perhaps an even better indicator, grew a bit more slowly – by 26% to $594m.Salesforce.com is, perhaps, the bellwether of cloud computing or at least the SaaS bit of it. Given the new product licence sales at SAP and Oracle, Salesforce.com does show how resilient the model is in a downturn. Users benefit because they have lower upfront costs on both licences and the hardware needed to run them. In a downturn, that’s pretty attractive. It doesn’t help those with existing systems much though. Having made the upfront investment, it is cheaper to stick with it in the short term. Hence, in this climate, the incumbent software providers retain customers for longer but win far fewer new customers.
This loyalty seems to afflict Salesforce clients too though. They claim an attrition rate of <1% and now have over 55,000 customers. (14,000 more than a year back) Conversely, the other issue is that Salesforce.com users (over the medium term) only pay for what they use. So if their staff numbers reduce, ultimately the user pays less. (Salesforce’s contract doesn’t make that immediate though) Maybe in recognisition of that, Salesforce.com has lowered guidance for 2010. But, even then, it’s a still pretty impressive 20% growth to $1.3b.
Concerns over the model and some recent senior executive departures had spooked investors. Salesforce shares have more than halved in the last year. Even these results have failed to shift the shares today.
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