Salesforce.com on Thursday will roll out its second quarter results and inevitably talk a lot about Chatter, its social enterprise effort. However, analysts are doubtful that Chatter is driving a lot of new licenses.
The on-demand CRM software provider is expected to report earnings of 27 cents a share on revenue of $384.7 million and analysts will be closely watching bookings. Demand in Europe will also be closely watched.
However, the big debate around Salesforce.com revolves around Chatter. Will Chatter drive future business.
Jefferies analyst Ross MacMillan said in a research note:
We conducted 15 conversations with Salesforce.com customers that have deployed chatter. Only 1 customer in our sample planned to roll out Chatter specific licenses to non existing users. In addition 1 customer decided to switch Chatter off as they felt it was being used for non work-related conversations and was not adding to productivity. Overall we view Chatter as an interesting collaboration concept that may in time drive additional usage. But for now, we think SFA (salesforce automation), Service and Platform seats will continue to drive the majority of usage.
If you recall, Chatter is a free feature for existing customers. But Chatter will cost you $15 a month if you're not already a Salesforce.com customer. Salesforce.com executives say that Chatter can bring in more people to the ecosystem, but analysts seem to dispute that notion. It may be too early to gauge Chatter's ultimate impact, but the commentary ahead of Salesforce.com's quarter is notable.
William Blair analyst Laura Lederman concludes that it's too early to tell whether Chatter will help Salesforce.com's quarter. Lederman said in a research note that Chatter's real impact may be as a conversation starter. She said:
There is also real interest in Chatter. One systems integrator (SI) said that the interest has been higher than expected. We have also heard that Chatter is driving discussions for enterprise license agreements.
Wedbush analyst Michael Nemeroff argues the same point. He sees Chatter helping sales growth because Salesforce.com salespeople have something to talk about and can cross sell.