About Salesforce.com, Inc.

Salesforce.com could fill the sky with its clouds. The company offers cloud-based applications that manage employee collaboration as well as customer information for sales (Salesforce Sales Cloud), marketing (Salesforce Marketing Cloud), and customer support (Salesforce Service Cloud). Other products offer e-commerce, analytics, and social media tools through cloud-based applications. Salesforce counts more than 150,000 users of its customer relationship management (CRM) software, and its customers come from a variety of industries, including financial services, telecommunications, manufacturing, and entertainment. It generates most of its revenue in the US.

Operations

Besides its big three cloud products - Sales Cloud, Service Cloud, and Marketing Cloud, Salesforce.com offers several others that help companies manage their relationships with customers.

They include: Commerce Cloud, which provides e-commerce experience tools for web, mobile, social, and store environments; Community Cloud, which helps companies create and manage branded digital destinations for customers, partners, and employees; IoT (Internet of Things) Cloud, which helps companies collect information from connected devices, products, sensors, and apps; Analytics Cloud, which helps an employee across explore business data and uncover from any device; and Salesforce Quip, a productivity tool designed for teams.

Salesforce also offers consulting services for deployment, training, and design and integration.

The company runs many of its cloud services on Amazon Web Services.

Geographic Reach

About three-quarters of Salesforce.com's sales comes from customers in the Americas. The US accounts for about 96% of the Americas revenue. Customers in Europe account for about 15% of revenue and those in the Asia/Pacific region generate about 10%.

Sales and Marketing

Salesforce.com counts more than 150,000 users, from small businesses with one subscription to large enterprises with thousands. With such a large customer base, no one customer counts for more than 5% of sales.

The company uses a direct sales force made up of telephone sales reps based in regional hubs and field sales reps in territories close to their customers. It also works with consulting firms, systems integrators, and others to find customers. For successful sales, Salesforce pays a fee based on the first-year subscription revenue generated by the referred customers.

Salesforce spends about 45% of revenue on sales and marketing, a level the company expects to maintain as it seeks more customers and build awareness. The company continues to ramp up advertising spending, which has increased more than 40% in recent years.

Financial Performance

Salesforce has reported robust revenue increases over its history, but it lost money from 2012-2016. That streak ended in 2017 (ended January).

Revenue reached about $8.4 billion in 2017, a 26% increase from $6.7 billion in 2016. Subscription and support revenue jumped about 25% to $7.8 billion (more than 90 percent of total revenue) in 2017. The increase was driven by new business, which includes new customers and existing customers buying upgrades and additional subscriptions. Demandware, acquired during the fiscal year, contributed about $120 million in revenue. Revenue from professional services (8% of revenue) increased 38% in 2017.

Salesforce recorded net income of about $180 million in 2017 compared to a $4.7 million loss in 2016. The jump in revenue more than covered expenses that were higher across the board in 2017. A 34% increase in headcount (about 5,000 workers) was responsible for much of the higher expense.

Cash generated by operating activities rose to $2.2 billion in 2017 from $1.7 billion in 2016. Among the factors affecting cash flow from operations were acquisition-related transaction fees.

Strategy

In 2017 Salesforce.com's record highs in sales and profit put the company on Cloud 9. Its biggest business, Sales Cloud, accounted for $3 billion in revenue by itself, making it bigger than some independent cloud software companies. The company's other strong performer, Service Cloud, brought in another $2.5 billion. While those are the big moneymakers, Salesforce's customers generally buy more than one of the company's clouds. In the fourth quarter of its 2017 year, 80% of customers bought multiple cloud services.

To strengthen those clouds, Salesforce injected artificial intelligence into them in 2017. Called Einstein, the AI helps Salesforce's customers more effectively analyze data and draw meaningful conclusions that help them understand their customers better. Salesforce sees Einstein as an advantage in attracting new customers as well as tempting current customers to upgrade their services.

Another key move in 2017 was the acquisition of Demandware. At a price of $2.8 billion, it was Salesforce's biggest purchase in its history. The deal added e-commerce capabilities to Salesforce's offerings in addition to its customer relationship management products. Demandware was renamed Commerce Cloud in Salesforce and accounted for $120 million in revenue in less than a year. The acquisition gives Salesforce another product to offers its customers and it exposes Salesforce to another set of customers.

Mergers and Acquisitions

Salesforce.com added to its cloud products with its 2016 acquisition of Demandware for $2.8 billion. As a part of Salesforce Demandware became Commerce Cloud, an integration of its e-commerce capabilities with Salesforce's customer relationship management offerings.

Other acquisitions in the company 2017 fiscal year (ended January) were SteelBrick Inc., which automates the quote-to-cash process; MetaMind Inc., natural language processing and image recognition across the Salesforce clouds; BeyondCore Inc., smart data discovery technology for structured data sources; Quip Inc., productivity software; and Krux Digital Inc., a data management platform.

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Salesforce.com, Inc.

1 Market Ste 300
San Francisco, CA 94105-5188
Phone: 1 (415) 901-7000

Stats

  • Employer Type: Public
  • Stock Symbol: CRM
  • Stock Exchange: NYSE
  • Chairman and CEO: Marc Benioff
  • Vice Chairman, President, and COO: Keith G. Block
  • EVP and CFO: Mark J. Hawkins
  • 2017 Employees: 25,000

Major Office Locations

  • San Francisco, CA

Other Locations

  • Santa Monica, CA
  • Chicago, IL
  • Chanhassen, MN
  • New York, NY
  • Hillsboro, OR
  • Herndon, VA
  • Bellevue, WA
  • Vancouver, Canada
  • Meylan, France
  • Gurgaon, India
  • Nagoya, Japan
  • Nishi Muro-Gun, Japan
  • Osaka, Japan
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