Fourth quarter and full-year financial results top estimates, but CEO Marc Benioff admits needs more Marketing Cloud services muscle.

Doug Henschen, Executive Editor, Enterprise Apps

February 28, 2013

3 Min Read

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8 Ways An SMB Makes Most Of

8 Ways An SMB Makes Most Of image for larger view and for slideshow) reported solid financial results for its fourth quarter and fiscal year 2013 ended January 31, but if there's one area where the company needs to bulk up to keep growing quickly in the year ahead, it's in marketing.

Company CEO Marc Benioff acknowledged as much during a conference call with financial analysts after the close of the market on Thursday. Salesforce has already spent more than $1 billion acquiring Radian6 and Buddy Media, the key components of its Marketing Cloud. But with sales, service and marketing initiatives blurring and marketing spending on the rise, Benioff admitted needs to do more.

"We're trying to build a muscle at Salesforce that will enable us to talk comfortably with chief marketing officers and have a holistic conversation about how they're connecting with their customers," Benioff said. "We need to buy more marketing companies, honestly, because there's more for us to do."

Despite this weak spot, Salesforce reported strong results. Fourth quarter revenue reached $835 million, 32% over the year-earlier period and surpassing analysts' average estimate of $831 million, according to Bloomberg. Revenue for the full year reached a new company record of $3.05 billion, an increase of 35% over the prior year.

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"No other top-10 software company is growing faster than," Benioff said.

Deals with large companies helped drive the strong results. Salesforce closed more than 150 multi-million-dollar transactions, including nine eight-figure transactions during the quarter.

The strong results led the company to slightly raise its revenue guidance for fiscal year 2014 to $3.82 billion to $3.87 billion (up from $3.80 billion to $3.85 billion previously), which would mark a 25% to 27% year-over-year increase and put Salesforce on a $4 billion annual-revenue run rate by year end.

Benioff fielded plenty of questions about the company's marketing cloud in part because Oracle announced and completed its $870 million acquisition of cloud-based marketing vendor Eloqua since's last earnings call. One analyst pointedly asked whether Salesforce would add business-to -business (B2B) marketing capabilities -- a core focus for Eloqua -- and whether it would look to acquire small or large firms.

"We're going to buy small and big, we're going to be aggressive, and we're going to do a variety of things," Benioff said. "We have to look at B2B, B2C, email marketing and even aspects of social [not covered by Radian6 and Buddy]."

An obvious target for acquisition would be Salesforce partner Marketo, but such a large acquisition would put an equally large dent in the company's finances. lost money in fiscal year 2013, and the $689 million acquisition of Buddy Media didn't help. The company posted a fourth-quarter net loss of $20.8 million, compared with a $4.1 million loss a year earlier.

Benioff made no bones about his plans to keep investing to drive growth. "We have a clear vision of building a unified customer platform," he said, alluding to this week's announcement of the firm's new "become a customer company" tag line.

Responding to a question about Oracle's Eloqua buy and customer experience initiative, Benioff quipped, "Oracle wants to be the Exadata company; Salesforce wants to be the customer company."

About the Author(s)

Doug Henschen

Executive Editor, Enterprise Apps

Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of Transform Magazine, and Executive Editor at DM News. He has covered IT and data-driven marketing for more than 15 years.

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