Salesforce sales up

But outlook disappoints

Pay-as-you-go customer relationship management software provider Salesforce.com has posted an 80 per cent rise in revenues and new customers.

In its third fiscal quarter, the company posted net income of $2.2m, or $0.02 per share, down from $3.8m, or $0.04 a share, a year earlier when it reported a $4.3m non-cash gain. Along with the 43 per cent dip in net profits, revenue was up by 80 per cent in the three months to the end of October, hitting $46.4m.

Salesforce sells an online customer relationship management (CRM) package, which is a new model for software delivery. Subscribers buy a level of service to match their needs, unlike traditional CRM offerings, which are charged for on a licensed basis or as a once-off fee. Some in the tech industry see the Salesforce model as the future of computing, predicting an environment where practically any software package - or even computing power and data storage - can be delivered on an "on demand" basis.

Salesforce has proven that there is at least interest in the model and reported yesterday that it now has 195,000 paying subscribers, up 27,000 from the previous quarter and up from 107,000 a year earlier. In a separate announcement, the company said that US office equipment supplier Staples had signed a new contract that included 1,500 subscriptions for Salesforce.com's CRM product.

"We are pleased with the continued momentum we are seeing in our customer and subscriber base," said Marc Benioff, chairman and CEO. "The growing acceptance of the on-demand computing model is clear, from the smallest to the largest companies in the world. With our recent Winter05 release, we have set the stage to become the platform of choice for on-demand applications."

In its results, Salesforce boosted its outlook for the current fiscal year ending on 31 January, predicting earnings of $0.04 per share to $0.05 per share on revenue between $172m and $174m. Still, analysts were unimpressed with the company's outlook for fiscal 2006, which included a prediction of 66 per cent revenue growth and a doubling or tripling of earnings, which is less than some market watchers had expected.

In other Salesforce.com news yesterday, the firm announced the appointment of Edmund Ang as the company's senior vice president and general manager, Asia Pacific. Ang joins Salesforce.com from Genesys, an Alcatel company.

Copyright © 2004, ENN

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