Special Report: Benioff boasts of Salesforce.com enterprise growth

CEO Marc Benioff talks up Salesforce.com and dismisses the competition as the SaaS giant posts a second-quarter profit.

By Stuart Lauchlan, news and analysis editor

With its annual user jamboree less than a month away, Salesforce.com has posted a second-quarter profit, reversing a small year-ago loss as revenue rose 50 percent on strong customer growth.

For the quarter ended July 31, the company earned $3.7 million, or 3 cents per share, up from a loss of $145,000, or break-even per share, in the same period a year earlier. Revenue jumped to $176.6 million from $118.1 million. Europe did particularly well as revenue rose 65 percent from last year and 14 percent from Q1 to $29.2 million.

The company said it passed the 800,000 subscriber mark with larger deployments becoming more common. It now has two customers with more than 30,000 subscribers; four with 20,000 subscribers; and five with more than 10,000 subscribers.

“After taking roughly seven years to achieve our first 400,000 subscribers, we have more than doubled that total in the past six quarters,” says CEO Marc Benioff. “Not only are we adding record customer numbers in all areas of our business, but our customers are getting larger, too. A year ago, our largest customer had roughly 7,500 subscribers.

"Not only are we adding record customer numbers in all areas of our business, but our customers are getting larger, too." Marc Benioff, CEO, Salesforce.com

“Today, our installed base includes two customers with more than 30,000 subscribers, four customers with 20,000 or more subscribers and five customers over 10,000 and a remarkable 68 customers with more than 1,000 subscribers. That last number represents an increase of more than 40 percent over the number of customers with 1,000 or more subscribers that we reported just six months ago. Nothing says more about enterprise adoption than this explosive growth.”

Interestingly, the largest deal in the quarter was not for the traditional CRM-type of deployment most associated with the firm. “Internationally, one of our largest financial services customers has selected the Salesforce platform to build and run a custom application that they have developed in their organisation,” explains Benioff. “With our platform edition, they have expanded their deployment to more than 35,000 users, making them the largest implementation in our history. There is no other platform that offers the customisation, integration, scalability and reliability of ours.”

Assaults on the competition

Benioff was in upbeat mood, launching his usual assaults on the efforts of the competition. “When I meet analysts, I like to play a little game with them, and I say ‘look, can you tell me the names of two or three or more Salesforce.com customers off the top of your head?'” he says. “Then I ask them, ‘now tell me, who's the top SAP CRM customer? Who's the top Oracle CRM customer? Who's the top Microsoft CRM customer, on-demand?’. Because you don't hear those names, and because you don't see those subscriber and user counts, they are missing out on just a tremendous market right now and tremendous momentum.

“The competition continues to struggle with how to build, sell and deploy multi-tenant shared solutions and their underlying business model,” he adds. “For entrenched legacy vendors like SAP, Oracle and Microsoft, to truly adopt this model is unthinkable. SAP's largest European customer, Siemens, selected Salesforce for CRM in the second quarter. Of course, we already have SAP's largest global customer, DuPont. We also won IMS Health, Mercedes-Benz and Corning against SAP. These new accounts join a long list of legacy SAP accounts that are now using Salesforce.com, including Motorola, Symbol Technologies, Air Products, Ashland, Shell Energy, Chevron and many others.

“We continue to see similar success against Oracle. In the US, we doubled our subscriber deployment at Cisco, a legacy Siebel account, by adding our PRM offering. We won an exciting opportunity at American Express in another head to head battle with Oracle.

“Microsoft also returned to its summer pastime, announcing its intention to one day deliver a centralised multi-tenant on-demand service. But after a flurry of announcements and PR hype, there are no customers on this mythical service and no URL where you can try out the service for free. That's why Microsoft customers like Dialogic, Bracco Imaging, Standard Duplicating Machines, International Turnkey Systems all selected Salesforce.com over Microsoft CRM this quarter. Microsoft's strategy of an inferior product at an inferior price promises to do for on-demand what Zune has done for music players.”

Benioff also contested a claim made by Oracle during its latest results announcement that it had stolen ADP as a customer from Salesforce.com. “Oracle cited on their earnings call that they had acquired ADP as an on-demand CRM customer, which surprised us,” says Benioff. “It also surprised the President of ADP when I called him to ask him about that. It turns out that they bought a company in Atlanta, Georgia called Sterling Tax or something like this that had 10 users. They felt that was material enough to put it on their earnings call. I think that's evidence of where Oracle is in on-demand CRM. They have to somehow position that they won ADP when they have a little Sterling Tax division in Atlanta that ADP bought recently with 10 users. I think that speaks to their success.

“So we feel pretty good about our ability to compete against Oracle CRM and the Siebel business unit. As evidence of that, of course, we expanded Cisco and we had another head to head win with them at American Express and many other organisations around the world. We of course follow them, SAP and Microsoft very closely. We just don't see the traction and the adoption or the customer base. Maybe one day we will, but I think that if they got as much code as they had rhetoric, they could actually maybe be doing something out there.”

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