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Salesforce tops half-million subscriber mark
Software as a service gets serious...

By Colin Barker

Published: Monday 21 August 2006

CRM company Salesforce.com has reported good figures for the second quarter of 2006 that topped analysts' expectations and revealed its subscriber base has exceeded 500,000 for the first time.

Revenue rose 64 per cent to $118m as Salesforce added 57,000 customers, helping to get the company back on track. This was a 13 per cent increase on the previous quarter.

Salesforce.com suffered a system outage in December last year that continued through to February, causing many people to question the wisdom of trusting vital customer data in their CRM system to an online system.

The issues led Salesforce to redeploy applications running on its main US server to three separate servers and since then, the company has been free of major performance issues.

Subscription revenues were up 63 per cent at $107m and professional services revenues were up 82 per cent at $11m, the company said. However, the company did make an operating loss of $1.3m compared to an operating profit of $4.2m the year before.

Ovum principal analyst David Bradshaw said: "We agree that it's not sensible to read too much into any one number. Although chief executive, Marc Benioff was clearly pleased with the subscribers crossing the half-million threshold, he tried to play down the increase itself."

Bradshaw said there was still "considerable un-met demand in the CRM market", and contrasted Salesforce's good figures with the competition from Oracle, Microsoft and SAP, which "does not seem to be casting any shadows on Salesforce.com's field", he said.

Bradshaw added: "Its pure software as a service model continues to attract ever more customers, forcing everyone in the CRM market and beyond to take this business model increasingly seriously."

Colin Barker writes for ZDNet UK