2018 Vault Rankings
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.
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.
Most of the company’s revenue comes from its subscription and support segment, which accounts for nearly 95%, while the rest comes from professional and other services.
The company runs many of its cloud services on Amazon Web Services, Google, and IBM in international markets.
More than two-thirds of Salesforce.com’s sales come from customers in the US with other countries in the Americas supplying about 7%. Customers in Europe account for about 20% 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 builds awareness. The company continues to ramp up advertising spending, which has increased about 20% in recent years.
Salesforce capped a decade of rising revenue with a 25% increase to $10.5 billion in 2018 (ended January) from 2017. The increase was paced by a 25% jump in subscription and support revenue driven by increases in new business, which includes new customers and upgrades and additional subscriptions from existing customers. Demandware, acquired in July 2016, contributed about $288 million in 2018 compared to $120 million in half of 2017. Professional services revenue rose 21% in 2018 from 2017 because of an increase in the number of customers. Geographically, sales were higher in all regions.
Salesforce kept 2018 costs in line with 2017 as a percentage of revenue, but paid more in taxes in 2018 than 2017. That reduced net income to about $127 million in 2018 from about $180 million the year before.
Cash on hand totaled about $2.5 billion in 2018 compared to about $1.6 billion in 2017.
In 2018 Salesforce.com’s record high in sales put the company on Cloud 9. Its biggest business, Sales Cloud, accounted for $3.5 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 $2.8 billion. While those are the big moneymakers, Salesforce’s customers generally buy services from more than one of the company’s clouds.
To strengthen those clouds, Salesforce has injected artificial intelligence into them. Called Einstein, the AI helps Salesforce’s customers more effectively analyze data that help them better understand their customers. Salesforce sees Einstein as an advantage in attracting new customers as well as tempting current customers to upgrade their services.
A key move, made 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 about $288 million in revenue in its first full year as part of Salesforce. The acquisition gave Salesforce another product to offer its customers and it exposed the company to another set of customers.
Mergers and Acquisitions
In 2017 Salesforce.com agreed to buy Mulesoft, which develops software for linking applications, for about $6.5 billion. With the addition of Mulesoft's technologies, Salesforce can help its customers connect information throughout their companies across public and private clouds and data sources. Mulesoft, which went public in 2017, has posted higher annual revenue but has not made a profit. The deal, Salesforce's most expensive, was expected to close in mid-2018.
Salesforce 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.
1 MARKET STE 300
San Francisco, CA 94105-5188
Phone: 1 (415) 901-7000
Employer Type: Publicly Owned
Stock Symbol: CRM
Stock Exchange: , NYSE
Chairman and CEO: Marc Benioff
Vice Chairman, President, and COO: Keith G. Block
President and Chief Strategy Officer: Alexandre Dayon
Employees (This Location): 600
Employees (All Locations): 35,000
San Francisco, CA
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