Investors introduce Salesforce to sell-off as a service

50 per cent Q2 growth won't cut it

By Ashlee Vance in Mountain View • Get more from this author

Posted in Financial News, 21st August 2008 00:36 GMT

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Software as a service poster-child Salesforce.com today dished out second quarter results that showed a massive rise in revenue, which did absolutely nothing to impress investors.

The CRM code shifter reported $263m in revenue, which marks a 49 per cent year-over-year rise. Net income came in at just $10m, but that's still miles better than last Q2's $4m.

Along with these numbers, Salesforce added 4,100 customers, bringing its total to 47,700, and upped fiscal '09 guidance to between $1.070bn and $1.075bn.

But, despite all this good cheer, investors managed to cut Salesforce shares by close to 10 per cent in after-hours trading to $59.21 at the time of this report.

"By becoming the first ever Software as a Service company to achieve an annualized revenue run rate of one billion dollars, our second quarter performance is a milestone for salesforce.com, and for the cloud computing industry, " said Marc Benioff, the Salesforce CEO. "Our largest customers are increasingly becoming the best examples of what is possible using the power of our growing portfolio of Software as a Service applications and our emerging Platform as a Service."

Breaking down Q2 - Salesforce hit $240m in subscription and support revenue, while notching $23m in professional services revenue. The company also stashed away $53m in cash, bringing total cash and equivalents up to $823m. ®

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