Salesforce.com May Acquire Concur

Last quarter, Salesforce.com’s stock tumbled to a 52-week low due to disappointing billings growth. But this quarter, its stock is climbing after the company reported strong growth in sales and deferred revenue. The company says its success in closing deals this quarter was powered by the momentum of its social enterprise strategy.

Salesforce.com (NYSE:CRM) recently reported fourth quarter revenue of $632 million, up 38%. Net loss was $4.08 million or $0.03 per share compared to net income of $10.87 million or $0.08 per share last year. Non-GAAP EPS was to $0.43, beating analyst estimates of $0.40 on revenue of $624.1 million. Non-GAAP gross margin remained unchanged at 82% compared to last quarter and the year-ago quarter. The company ended the quarter with a $1.4 billion cash balance.

For the full fiscal year 2012, revenue was up 37% to $2.27 billion. Net loss $11.57 or $0.09 per share compared to net income of $69.69 million or $0.50 per share. Salesforce.com’s total employee base is nearly 7,700, up 47%. They added approximately 2,500 employees in fiscal year 2012, including nearly 2,000 in the U.S. About 550 employees were added through acquisitions.

During the fourth quarter, subscription and support revenue was $594 million, up 39% y-o-y, while professional services and other revenue was up 33% y-o-y to $38 million. Deferred revenue was $1.38 billion, an increase of 48% y-o-y. During the quarter, Salesforce.com closed deals with large enterprises like HP, BMW, AT&T, Time Warner, Activision and Sony.

On a regional basis, all regions posted revenue growth. Revenue in the Americas grew 41% to $436 million. European revenue of $108 million rose 30% year-over-year. Asian revenue of $88 million increased 34%. The company said their Japanese business continued to improve when compared with the first half of the year.

For the first quarter, Salesforce.com expects revenue in the range of $673 million to $678 million, an increase of 33% to 34% y-o-y. GAAP net loss per share is expected to be in the range of $0.19 to $0.18, while non-GAAP EPS is expected to be in the range of $0.33 to $0.34. Analysts expect first quarter earnings to be $0.36 on revenue of $663.5 million.

For full fiscal year 2013, the company is raising revenue guidance to a range of $2.92 billion to $2.95 billion, an increase of 29% to 30%. Analysts predict 2013 revenue to be $2.91 billion and EPS of $1.63. The stock is trading around $131 with a market cap of about $18 billion. Its 52-week range is $109.22 to $160.12.

Salesforce.com, the pioneer and leader in the SaaS CRM market, said during its recent earnings call that it has displaced SAP as the No.2 provider in the $18 billion overall CRM market. There is increased focus on SaaS by Oracle and SAP over the past few months. Oracle in October agreed to buy SaaS CRM vendor RightNow for $1.5 billion, which can be seen as a move to gain market share against Salesforce.com in the expected $3.8 billion SaaS CRM market. Then in early December, SAP agreed to buy SaaS talent management company SuccessFactors for $3.4 billion. The focus on SaaS strategy by these two giants is increasing the competitive pressure on Salesforce.com and in mid-December, Salesforce agreed to buy the cloud-based social performance management company Rypple for $65 million. Early in February of this year, Oracle agreed to buy Taleo, a SaaS talent management vendor for $1.9 billlion.  The talent management market, worth about $3 billion, is a worthy new market for Salesforce.com to tap into, but the competition from Oracle and SAP will be challenging.

Meanwhile, Concur remains independent, and they are a company close to Salesforce.com. Concur and Salesforce.com have been working closely and have recently collaborated to deliver Concurforce built on Force.com. Concur is a SaaS vendor in the niche area of expense management with annual revenue of $349.5 million and market cap of about $3.3 billion. According to TechNavio, the global SaaS expense management market is expected to reach $1.33 billion in 2014: another new area for Salesforce.com to tap into.