The Power of SaaS - Salesforce.com powers ahead
No business or business model is recession-proof, but Salesforce.com is making a pretty good case for itself and software as a service (SaaS). Despite frightful business conditions, the pioneering SaaS CRM provider reported record results for the fiscal quarter and full year that ended 31 January 2009. It posted dramatic increases in customers, subscribers and net income, and delivered on its promise to become the first SaaS company to surpass $1 billion in annual revenues. Its fourth-quarter results showed it isn’t completely immune to the steep global downturn, but they were still stronger than those of its largest competitors – an indication that the pressures facing customers tend to favor SaaS over conventional, on-premise solutions.
Strong performance on multiple fronts, despite difficult times
Salesforce.com posted fourth-quarter revenues of $289.6 million, up 34% over the year-earlier period, and annual revenues of $1.08 billion, up 44%. Net income for the quarter rose 86% to $13.75 million, while the yearly total rose 136% over fiscal 2008 to reach $43.43 million.
Salesforce.com’s results compare quite favorably to those of competitors that rely mainly on on-premise solutions. Its customer base grew by about 14,400 during the year to a total of more than 55,000, while paying subscribers grew nearly 27% to about 1.5 million. It claimed significant wins against all three of its largest rivals and grew existing accounts such as Aon, FirstData and Symantec, with help from new enterprise license agreements introduced in fiscal 2009.
The company reported no significant change in average selling prices during the year – no small achievement at a time when vendors’ struggles are giving customers added negotiating power. Customers face their own pressures, of course, but the SaaS pay-as-you-go model is attractive because it lets them add new IT capabilities quickly, without the hefty upfront costs and long deployments of on-premise applications.
Source : Ovum