Salesforce hits 500,000-user milestone

After being hit by performance issues over Christmas, the on-demand CRM firm sees revenues rise 64 percent year-on-year in second quarter
Written by Colin Barker, Contributor

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

Revenue rose 64 percent to $118m (£62m) as Salesforce added 57,000 customers, helping to get the company back on track. This was a 13 percent 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 re-deploy 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 percent at $107m and professional services revenues were up 82 percent 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.

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

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

"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," Bradshaw explained.

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