The modern tech landscape has given rise to some real juggernauts. From little search engines that could, to massive social media outlets, new companies have come from small beginnings to become huge corporations in their own right. One such tech explosion has been with the company Salesforce. This Thursday the company reported first quarter earnings and their market power is becoming a serious reality.
The company posted earnings for the quarter just below two and a half billion dollars. This puts the fabulously successful SaaS company on track to record a stunning $10+ Billion dollars. The revenue comes largely from their cloud based systems which include some of the most state of the are offerings. As company CEO Benioff said, “We have an integrated platform. And that integrated platform is exciting, not only is it the number one sales cloud in the world…. But it has all these other capabilities: Mobility, AI, analytics, and so forth. And so I think that, when I look at the most incredible things our customers have done, they weave these things together in really smart and creative ways.” Clearly the company sees that the interconnection of customers with really smart tech solutions is the space where they’re going to see the greatest revenue.
Just to gain some perspective on how huge this announcement is, Adobe, Workday, and Box earnings combined are less than Salesforce, and by a huge margin. The company has taken 17 years to reach these levels (IPO was in 2004), but the stunning growth is really linked to the willingness to hit the market at the right time, and maintain the stability of company goals and direction in spite of the really scary playing field they’ve been in.
What’s more, the company has spent some of the huge capital they’ve amassed buying up smaller companies. The last year saw Salesforce buy out a remarkable eleven companies, including some really huge sales like Demandware at $2.8 billion and Krux for $800 million. As the CRM colossus has purchased these firms, they have also purchased market share, talent, and revenue stream. The purchases have been carefully done, and have resulted in a fantastic revenue growth that has already almost replenished the company’s capital reserves. In fact, they are within $50 million of their pre-acquisition cash balance. This is stunning given that they’ve paid out nearly $5 billion to garner their position.
This news may scare some players out of the market, but the reality is that cloud-based SaaS is still a wide open playing field and the market is growing rapidly. Other cloud service companies can rest assured that the market for SaaS is huge and that there’s always a piece of the pie that’s free. And for non-tech companies, the time is ripe for capitalizing on the explosive growth and huge competition in the market. Things will continue to move this way for some time, and good investment choices and smart shopping will produce some really good deals.