Salesforce.com Grows on Big Deals (And Small Ones Too)
Benioff highlights eight- and nine-figure deals, though he says Salesforce remains committed to chasing them all.
The cloud is big business for Salesforce.com. Salesforce (NYSE:CRM) reported its fourth quarter and full fiscal 2012 results late Thursday showing double digit revenue growth coming from clients both big and small.
For the fourth quarter, Salesforce reported revenue of $632 million for a 38 percent year-over-year gain. For the year, revenue came in at $2.27 billion, 37 percent higher than the 2011 number. Earnings Per Share (EPS) on a non-GAAP basis were 43 cents for the quarter and $1.36 for the full year.
Moving forward, Salesforce provided full-year fiscal year 2013 revenue guidance in the range of $2.92 billion to $2.95 billion, which would be a 30 percent annual gain.
"Our outstanding financial success this quarter was powered by the momentum of our social enterprise strategy, which has differentiated us in the market and is driving our ability to become a more strategic partner to our customers," Salesforce CEO Marc Benioff said during the company's earnings call.
That social enterprise strategy led to Salesforce signing more than 100 seven-figure transactions and nine even larger deals in the fourth quarter. Salesforce also signed its first ever nine-figure transaction in Q1, Benioff reported.
One of Salesforce's big wins in the fourth quarter was with HP, a company that has been undergoing a great deal of leadership and organizational change. Benioff noted that HP embarked on a transformation to become a more social enterprise, connecting employees, customers and partners using the Salesforce Sales Cloud, Service Cloud, Chatter and Force.com.
"When Meg Whitman announced that she had gone to Salesforce.com at her sales kickoff, she got a standing ovation," Benioff said. "They could not wait to get off the Seibel."
While big deals like the one with HP are good for Salesforce, Benioff downplayed the idea that his company only focuses on big deals. “Here's the beautiful thing about this business; the deals don't matter to us," he said. "We don't really care about the big deals. It's just icing on the cake."
Benioff stressed that Salesforce is all about transactions and throughput. His company serves a wide portfolio of customers of all sizes.
“The most important thing is that we have a broad book of business, and that we're not dependent on any one transaction or any one customer as part of who we are as a company," Benioff said. "We're not all about the enterprise and the high end.e're not all about the small business and the low end. We're about including everyone. We want to get everyone in the social enterprise boat. That's really our goal."
Several brokerages, including ThinkEquity, Wunderlich, Ciitigroup and FBR Capital, responded by raising their price targets for Salesforce. Not all brokerages are so bullish, however. Global Equities Research reiterated its downgrade of Salesforce to an “underweight” rating, with the firm’s Trip Chowdhry saying the social analytics business touted by Benioff remains “highly fragmented, with no clear winner.”
As for Benioff’s talk about “the social enterprise,” Chowdhry said, “Our research is not picking this up. We think Salesforce is trying to reposition its company and move away from cloud positioning as VMWare seems to be gaining the thought leadership position in cloud computing.” Salesforce is losing platform-as-a-service business to both VMWare and Red Hat, Chowdhry said.