Salesforce Scampers Past 2Q Estimates

Larry Barrett

Updated · Aug 19, 2010

SaaS pioneer Salesforce had no trouble exceeding analysts' estimates in its second quarter today, posting a profit of $14.7 million, or 29 cents a share, excluding one-time charges and expenses.

For the quarter, Salesforce (NYSE: CRM) recorded sales of $394 million, up 25 percent from the $293 million it posted in the year-ago quarter.

A survey of analysts by Thomson Reuters pegged Salesforce for a profit of $0.27 a share and sales of $385 million.

“Our second results speak for themselves and reflect the continued to shift to enterprise cloud computing,” CEO Marc Benioff said during a conference call with analysts. “Our revenue growth rate is accelerating. In fact, the 25 percent improvement this quarter is the fastest growth rate in six quarters and it marks our third quarter in a row that we've increased our growth rate.”

The on-demand customer relationship management (CRM) application provider raised its third-quarter sales target to between $408 million and $410 million and now expects to return a profit of between $0.30 a share and $0.31, well above current analyst estimates.

For the rest of fiscal 2011, San Francisco-based Salesforce is now expect total sales of roughly $1.6 billion and net earnings of between $1.15 a share and $1.17 a share.

Last quarter, Salesforce earned $17.7 million, or $0.21 a share, on sales of $377 million.

The stellar second-quarter results mark the sixth time in the last eight quarters that it has exceeded analysts' estimates.

Company officials said it added more than 5,100 new customers in the quarter, bringing its total customer count to more than 82,000, up 30 percent from the same period last year.

Benioff told analysts that he was perhaps most pleased by customers' rapid adoption of the company's Chatter social networking platform. He said more than 20,000 customers, roughly one quarter of its total customer base, have subscribed to Chatter since its February release.

“Response has been nothing short of amazing,” he said. “It's a huge milestone for us and we think it represents the most successful new software release ever.”

Benioff said customers such as Dell, Tyco, Dow Jones & Co. and Hitachi have deployed Chatter in the enterprise and, perhaps more important, some customers are using the social networking tool for departments other than sales and customer service.

“[Chatter's success] is an important part of our overall growth strategy,” Benioff said. “Customers are seeing increased value in our products. Chatter is our first enterprise-wide app and we're so excited to see this early momentum.”

The company exited the quarter with more than $1.9 billion in cash and reported that deferred revenue surged to $683 million, up 24 percent from the second quarter of last year.

Salesforce is poised for continued growth according to the latest enterprise SaaS report from Gartner. The IT research firm recently forecast global sales of software-as-a-service (SaaS) in the enterprise application segment will jump more than 14 percent to $8.5 billion this year, a spike attributed largely to the business community's growing endorsement of cloud computing.

Salesforce shares closed off $2.92, or 3 percent, to $96.41 ahead of the earnings report before recovering most of the losses in after-hours trading.

Twenty-two of the 36 analysts following stock maintain either a “buy” or “strong buy” recommendation.

Larry Barrett is a senior editor at, the news service of, the network for technology professionals.

  • CRM
  • News
  • Read next