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Salesforce.com Reports Profitability, Unveils Alliances

By Dan Muse     Feedback

The Web-based CRM ASP generates a profit in its first quarter of 2003, announces strategic alliances with Dell, TIBCO, Genesys Telecommunications Laboratories and others.

On the day of its S3 introduction, Salesforce.com also laid claim to 95 percent year-to-year growth and its first quarter of profitability.

According to the San Francisco-based ASP, it ended its first quarter with $19.1 million in revenue, a 22 percent increase over its previous quarter ($15.7 million), according to the company. Salesforce.com also reported that it has almost doubled its year-to-year revenue ($9.6 million in the first quarter of 2002).

The customer relationship management (CRM) service provider reported that it has generated a profit of $188,000 — about 1 percent of overall revenue. The privately held, venture capital-backed company describes that figure as unaudited. Salesforce.com also reports that it generated more than $3.7 million dollars in additional cash during the quarter, and now has more than $48 million in total deferred revenue.

"Salesforce.com is the first software-as-a-service company to reach the profitability milestone," said Salesforce.com CFO Steve Cakebread. "Revenues have increased dramatically year over year and we have a solid pipeline of deferred revenues."

Cakebread also said that the company has been cash-flow positive for the last year. While company isn't yet profitable overall, he said that the company has made steady progress since its inception. "We're in our fourth year. We lost $30 million our first year, $20 million our second year, $9.5 million last year and are profitable in our first quarter of 2003."

In addition to its first quarter of profitability, Salesforce.com also announced several alliances and partnerships centered around its introduction of S3, its newest edition of its CRM service.

Through an alliance with system manufacturer Dell Salesforce will later this year offer S3 as an on-demand application on Dell's small business solutions Web site.

Salesforce.com reports that it has installed more than 40 Dell PowerEdge servers running Red Hat Linux its data center to run the new service and support up to 100 million transactions per month..

"Dell Xeon-based servers running Red Hat Linux are well-suited to our on-demand architecture and meet our high scalability and reliability demands," said Salesforce.com CIO Jim Cavalieri.

Salesforce.com also announced a strategic alliance with business integration software provider TIBCO Software to integrate Salesforce.com S3 with software from Siebel, SAP, Oracle , PeopleSoft and Lotus.

"Many of our customers are trying to salvage their investments in their existing client/server applications. Via this partnership with TIBCO, we now offer an out-of-the-box integration solution with the leading client/server applications," Salesforce.com chairman and CEO Marc Benioff said.

The TIBCO-powered Salesforce.com Integration Server is scheduled for release later this quarter and designed to eliminate the need for customers to write custom code to integrate Salesforce.com S3 with back-end systems.

In other alliance news of the day, Salesforce.com and Alcatel subsidiary Genesys Telecommunications Laboratories announced a strategic relationship to support integration between S3 and Genesys contact center software. The goal of the alliance is to enable joint customers to leverage pre-integrated CRM and contact center software for telesales and telemarketing activities, which is designed to reduce the time and costs associated with traditional CRM and contact center implementations and provide advanced communications via phone, e-mail or Web for both inbound and outbound customer interactions.

"Salesforce.com has proven to be an extremely valuable partner for Genesys," Genesys CEO Ad Nederlof said. "Together we will continue to deliver new ways for our customers to create more efficient, customer-centric operations while keeping costs low."

Salesforce.com S3 is built on sforce, the company's recently announced client/service application system, allowing the application to customized using tools from BEA, Borland, Microsoft and Sun. (See Salesforce.com Unveils sforce Online Application Development Utility).

This article was originally published on June 23, 2003
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