Salesforce.com champions the power of the social enterprise. The company offers Internet-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), providing clients with a rapidly deployable alternative to traditional, more time-consuming and user-maintained software installations. Salesforce.com counts more than 100,000 customers for 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 revenues from the US.
The company also offers Force.com, part of its vision to not only be the leader in enterprise-targeted social applications, but also a platform for developing and offering such applications for its customers. Force.com provides the tools for application creation, customization, integration, deployment (through its AppExchange marketplace), and integration.
Having spent some $640 million, Salesforce in late 2014 acquired a former TIAA-CREF office building at 50 Fremont St. in downtown San Francisco to expand its global headquarters.
The geographic spread of Salesforce.com's revenue has remained fairly consistent in recent years, with 71% coming from customers in the Americas, about 18% from European customers, and those in the Asia/Pacific region accounting for about 11%.
Sales and Marketing
Salesforce.com counts more than 100,000 customers in all shapes and sizes, from small businesses with one subscription to large enterprises with hundreds of thousands. With such a large customer base, no one 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. Just over 50% of revenue goes to sales and marketing, a level the company expects to maintain as it seeks more customers and build awareness.
As a pioneer in demonstrating the sales potential and scalability of the Software-as-a-Service (SaaS) business model, Salesforce.com's revenues have grown substantially every year. Sales in both subscriptions and services grew 33% in fiscal 2014 (ended January) to $4 billion thanks to new customers wins, upgrades and additional subscriptions from existing customers, and improved renewal rates. Despite the increase in revenue, the company posted a net loss of $232 million in fiscal 2014. It was the third year in a row with a net loss because of an increase in operating expenses, interest payments, and income taxes. The 2013 net loss was $270 million. Operating expenses increased in each area – R&D, marketing and sales, general and administrative – at a higher rate than in 2013. R&D, most notably, increased 45%. Cash flow from operations increased to $875 million in 2014 from $737 million in 2013 due to higher net income after adjusting for depreciation and amortization and stock-based compensation.
Acquisitions and partnerships help drive growth, but Salesforce.com also relies on internal development. The company expanded its social networking and collaboration capabilities with Chatter, which began as an enterprise instant messaging-style application for sharing updates and data within organizations on people, projects, groups, and documents.
While its largest market is the US, the company is looking to Europe for growth. (Sales there grew 41% in 2013). In response, it opened a data center in the UK with NTT Europe, a subsidiary of Japan’s Nippon Telegraph and Telephone Corporation. It is Salesforce.com's sixth data center worldwide. Saleforce.com also plans to open a data center in France with Interxion as the service provider. Salesforce.com has two more data centers in its plans for Europe, where it intends to add about 500 jobs in 2015.
Mergers and Acquisitions
In 2014, Salesforce.com paid $390 million for RelateIQ, a Palo Alto, California, start-up with a CRM product that automates sales priorities.
In 2013 Salesforce.com acquired, in a $2.5 billion transaction, cloud marketing platform ExactTarget. The deal expands its CRM capabilities, adding marketing expertise to its sales, service, and cloud platforms. Also that year it entered into a nine-year partnership with Oracle through which the enterprise software giant will integrate some of its programs with Salesforce.com products; Salesforce.com will also increase its use of Oracle products.
In 2012 it bought longtime partner Model Metrics, which provides consulting services for mobile and cloud computing. The acquisition of Model Metrics provides Salesforce.com with a workforce experienced in mobile and social design conception, business process alignment, and other mobile and cloud services. In another deal that year, Salesforce.com acquired Rypple, which provides a cloud-based social performance management application. Additionally, it paid about $690 million for Buddy Media, a provider of social media marketing software. Buddy Media's technology complements Salesforce.com's Salesforce Marketing Cloud.
Also that year it partnered with business information provider Dun & Bradstreet(D&B) to provide Salesforce.com customers access to D&B's global company information database. The partnership not only offers access to one of the leading databases of company information in the world, but also to one of the most widely-recognized, proprietary business entity identifiers, the D-U-N-S number. In a similar move in 2011, it bought business contact data provider Jigsaw for about $140 million to expand its cloud computing offerings and extend its reach into the business-to-business data service market.