Strong Growth In SaaS CRM

According to research firm Gartner, SaaS within the customer relationship management (CRM) industry is expected to exceed $4 billion in total software revenue in 2014, representing more than 32% of the overall CRM market. Salesforce.com, the pioneer of SaaS CRM, recently reported strong sales and said it expected cross the $2 billion revenue milestone this year.

Salesforce.com
Salesforce.com (NYSE:CRM) recently reported fourth quarter revenue of $457 million, up 29%, and EPS of $0.08, down 50%. Non-GAAP EPS was up 3% year-over-year at $0.31. Analysts expected non-GAAP earnings of $0.26 on revenue of $453 million. The company ended the quarter with $1.4 billion in cash. For full fiscal 2011, Salesforce reported revenue of $1.66 billion, an increase of 27% from the prior year, and EPS of $0.47, down 25% from the prior year.

Subscription and support revenue in the fourth quarter was $429 million, up 31%, while professional services and other revenue was up 6% to $28 million. Salesforce added 5,100 customers, bringing its total customer count to 92,300, up 27% or 19,800 from last year.

More than 85% of its customers have deployed Chatter since the application’s release in June of last year. Salesforce has invested heavily in Chatter, which provides a private social network for users of any Salesforce.com product.

Salesforce.com recently acquired Dimdim, which makes software for real-time communications online for $31 million, to add online meeting and seminar abilities to the Chatter service. During the earnings call, CEO Marc Benioff said:

“The goal is to make Chatter a communication utility for clients and deliver a blow to companies such as Cisco Systems Inc. (CSCO) and Citrix Systems Inc. (CTXS) and their respective Internet meeting products WebEx and GoToMeeting.”

Earlier this month, Salesforce announced that it purchased social productivity startup Manymoon. Analysts say the price of the acquisition was in the range of $25 million to $35 million. Manymoon makes one of the more popular tools on Google’s apps platform and offers an online collaboration app that businesses and consumers can use to organize that are often done through e-mail or other software.

Last month Salesforce also bought Heroku Inc., which makes software for running applications written in the Ruby programming language over the Internet, for $212 million.

For the first quarter, Salesorce.com expects revenue in the range of $480 million to $482 million, EPS of negative $0.01 to negative $0.02 and non-GAAP EPS of $0.26 to $0.27. It raised its fiscal 2012 revenue guidance to a range of $2.03 billion to $2.05 billion from its earlier guidance of $1.97 billion to $2.0 billion. It initiated EPS guidance of $0.08 to $0.11 and non-GAAP guidance of $1.35 to $1.38 for the full year. The stock is trading around $139 with market cap of about $18 billion. It hit a 52-week high of $151.26 on December 9.

RightNow
Another SaaS CRM company, RightNow, recently reported fourth quarter revenue of $51.4 million, up 24%. Net income was $23.5 million or $0.64 per share versus $2.6 million or $0.08 per share last year. Non-GAAP EPS was $0.17. Analysts were expecting earnings of $0.16 on revenue of $50.75 million.

For the full year, revenue was $185.5 million, up 22%, and net income was $28.4 million, or $0.83 per share, compared to net income of $5.9 million, or $0.18 per share, in 2009.

RightNow also announced that it has completed its $34 million acquisition of Q-go.com B.V., a natural language search solutions provider. It expects the acquisition to add $1 million of revenue in the first quarter and about $8 million revenue in 2011. The company ended the quarter with about $182 million in cash and investments.

RightNow signed 18 deals over $1 million in the quarter. For the first quarter, RightNow expects revenue to be about $52 million, EPS of negative $0.04 and non-GAAP EPS of $0.08. Analysts were expecting earnings of $0.09 on revenue of $52.68 million. For the full year 2011, RightNow expects revenue of $225 million and EPS of $0.06.

The stock is trading around $27 with market cap of $882 million. It hit a 52-week high of $28.55 on January 19.

The SaaS CRM sector has seen strong growth over the years, and vendors are embracing the social networking trend. This trend is not limited to SaaS CRM; rather, it includes the entire CRM industry. Gartner expects social CRM to account for $1 billion in sales by 2012.