What is there to say about Salesforce.com’s Q214 results? Once again revenue was up strongly (31% yoy to $957m) but it dragged operating costs up with it (increased 34%) and they now account for 81% of total revenue, while net loss increased from $9.8m to $76.6m (see here for Q213 results). The operating loss was $39.9m vs. $13.5m. Nevertheless, gung-ho investors pushed shares up by c7% in after-hours trading.
There is no doubt that adoption is still roaring ahead, although Q2 was helped on its way by the $2.5bn Exact Software acquisition which closed in July (see here), and the company is heading towards its first $1bn quarter in Q3 which is a great achievement. Deferred revenue and billings are heading upwards strongly which is as it should be for a SaaS company.
The thing about Salesforce.com is that despite on-going high levels of revenue growth, it still has the potential for plenty more. More detail on its marketing cloud subscriptions would be useful but customer adoption references suggest it is really starting to take off, while the platform is gaining more traction and playing a part in business transformation within the customer base. And with the market as a whole only really at the start of the mobile and social adoption curve, Salesforce.com has a portfolio that is wedded to the developments in these areas.
Then there is the very large enterprise market. Although the company has been pulling in some $100m+ deals, it admits its ability to reach this upper segment of the market has been weak. So in June it took on ex-Oracle executive Keith Block to head up enterprise distribution with a remit to attract the very large, global businesses who demand the ability to customise and have not considered Salesforce.com as appropriate to their needs. If it can pull it off (even if it ‘only’ secured business in the front office), opening this sector of the market up would take Salesforce.com – and the cloud movement – to a whole new level. There is a lot more to come from Salesforce.com but it will continue to be expensive.