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.
Revenue spread geographically has remained fairly consistent in recent years, with 70% coming from customers in the Americas, nearly 20% from Europe, and the Asia/Pacific region accounting for about 10% of sales.
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.
As a pioneer in demonstrating the profitability 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 35% in fiscal 2013 (year-end January) to $3 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 $270 million in fiscal 2013 for the second year in a row due to increase in operating expenses, interest payments, and income taxes. Operating expenses increased in each area – R&D, marketing and sales, general and administrative – at a higher rate than in 2012. R&D, most notably, increased 45%.
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 38% in 2013). In response, it announced plans to build a data center in the UK with NTT Europe, a subsidiary of Japan’s Nippon Telegraph and Telephone Corporation. Scheduled for completion in 2014, the new data center will be its sixth worldwide. It also plans to add more than 750 new jobs in Europe by 2016.
Mergers and Acquisitions
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 long-time 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.
In 2011 it bolstered Salesforce Chatter with the acquisition of Dimdim, a real-time communication platform used to participate in online meetings, demos, and webinars. Salesforce combined Dimdim's cloud-based communication capabilities with Chatter to provide an integrated social networking product, similar to Facebook, for the enterprise market. Also that year it paid nearly $270 million in cash and $50 million in stock to buy Radian6, a developer of software used by corporate clients to manage and monitor social networking efforts for customer service and sales purposes.