Salesforce Rides High on Strong CRM Growth

According to Gartner’s report, sales of enterprise resource planning (ERP) systems are projected to grow 7% annually over the period 2011 through 2016 to $32.9 billion. Within the industry, the global CRM market will see strong growth at annualized rates of 9% over the period to $18.6 billion. The report also reveals that enterprise application software spending will grow annually at 6.5% over the period to $158 billion by 2016. Within enterprise application software, 20.8% of the market will be dominated by ERP systems and 12% by CRM software. SaaS-based CRM will be a big market as well. More than half of the CRM market opportunity will be SaaS based in 2016, compared with 36% during the past year. SaaS-based CRM will see annual growth rates of 15% compared with the 9% growth projected for the overall CRM market.

Salesforce’s Financials  

Salesforce.com’s (NYSE:CRM) Q4 revenues grew 32% to $834.7 million, ahead of the market’s projections of $830.9 million. EPS of $0.51 was also ahead of the Street’s target of $0.40 for the quarter.

By segment, subscription and related support revenues grew 32% to $785.4 million, and revenues from professional services and related services grew 31% to $49.1 million. Revenues from the Americas for the quarter grew 34% to $583 million. On a constant currency basis, revenues from the European markets grew 39% to $149 million, and from the Asian markets, they grew 22% to $103 million.

For the current quarter, Salesforce expects revenues of $882 million-$887 million, compared with market projections of $886.9 million. EPS of $0.40-$0.42 is just in line with the Street’s estimates of $0.42. Salesforce projects current fiscal’s revenues of $3.82-$3.87 billion, in line with analysts’ predictions of $3.85 billion.

Salesforce’s Cloud Expansion

Salesforce is addressing the growing demand for cloud-based offerings by expanding their product portfolio. During the current quarter, they released a marketing cloud service to help organizations better manage their advertising programs on  Twitter. The new Twitter ads API will help agencies build and execute real-time Twitter advertising campaigns, scale campaigns on Twitter through workflows, and improve their returns through bid and target optimization.

To address the mobile and cloud offerings simultaneously, they launched a product called Salesforce Service Cloud Mobile. The new service lets organizations deliver customer service any time and on any device. It is among the first such service that has the ability to deliver customer assistance on mobile devices using any web browser, to grant access to mobile communities to be able to chat with experts, and to enable companies to provide a single destination for customers to find solutions to their problems through both a self-service option and through interaction with experts.

Salesforce’s stock is trading at $172.51 with a market capitalization of $25.26 billion. It touched a 52-week high of $187.94 in April 2012.