Salesforce.com Profit Surges,
Bucking Trend in Software Sales
By DON CLARK
Staff Reporter of THE WALL STREET JOURNAL
August 20, 2004; Page B3
Salesforce.com said second-quarter profit rose sharply on an 88% jump in revenues, evading a recent slowdown afflicting many companies that sell business software.
The San Francisco company, besides reporting quarterly results for the first time as a publicly held company, also raised its guidance for sales and earnings in the fiscal ending in January.
Salesforce.com offers Web-based services that carry out similar functions as a variety of business software that is known by the phrase customer-relationship management, or CRM. The company reported net income for the fiscal period ended July 31 of $1.2 million, or one cent a share, compared with earnings in the year-earlier period of $122,000, or break-even on a per-share basis. Revenue rose to $40.6 million from $21.6 million.
Marc Benioff, the company's chief executive officer, argued that the results point to the appeal for companies of Web-based services, rather than installing CRM software on their own computers. "Our customers are more averse to buying enterprise software than ever before," Mr. Benioff said in an interview. "They like the on-demand model."
Salesforce went public in June, in a high-profile initial public offering that was delayed because of Mr. Benioff's participation in a New York Times article that ran afoul of restrictions on pre-offering publicity. The stock jumped 56% in its market debut, but experienced a 27% drop in July after the company projected fiscal 2005 results that were less than some analysts had expected.
Thursday, the company boosted those predictions. It put revenue for the year ending in January at $165 million to $170 million, up from a prior range of $160 million to $165 million. The company estimated annual earnings of two cents to four cents, compared with a prior estimate of break-even to two cents.
Salesforce put revenue in the current quarter, which ends in October, at $43.0 million to $45.0 million, but did not give an earnings estimate for the period. Analysts polled by Thomson First Call, on average, had predicted earnings of 1 cent per share and revenue of $44.1 million.
In 4 p.m. trading Thursday, The company's shares traded at 4 p.m. at $12.17, up 22 cents, before the announcement.
Write to Don Clark at don.clark@wsj.com |
