Salesforce Posts Big Q3 Revenue Growth

Cloud-based enterprise software provider Salesforce reported strong revenue growth for the third quarter and raised its revenue guidance for the full year. Here are the details.

Jessica Davis, Senior Editor

November 19, 2015

3 Min Read
<p align="left">(Image: Danil Melekhin/iStockphoto)</p>

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If there was any question about the momentum of cloud-based business, Salesforce (CRM) has eliminated it with recent earnings announcements, and yesterday's was no exception. The cloud-based software giant posted third quarter revenue of $1.71 billion, up 24% year-over-year, and deferred revenue of $2.85 billion, up 28% year-over-year.

Salesforce also raised its revenue guidance for the full year to $6.65 billion from $6.64 billion.

Salesforce reported a net loss of $27.2 million in Q3 compared to $39 million in the same quarter last year.

The strong top-line growth stands in contrast to other players in the enterprise software market that have built their businesses on on-premises deployments and haven't been as quick to move to the cloud. Oracle's most recent earnings for the quarter ended August 31 had a total revenue decline of 2% year-over year. SAP reported a total revenue increase of 17% year-over-year for its most recent quarter ended September 30. SAP and Oracle also have larger total revenue than Salesforce, so it's more challenging for them to post dramatic growth numbers.

[Looking for more from the Salesforce World Tour? Read Salesforce Adds New Predictive Analytics To Marketing Cloud.]

Salesforce chairman and CEO Marc Benioff, talking to analysts during the company's earnings call November 18, said the age of cloud has arrived.

"There is no doubt, we are at a tipping point in cloud platforms," Benioff said. "And companies who have been cloud deniers like SAP and Oracle are paying a horrible price in single-digit and negative growth, because companies are not buying their products, because they are not modern, and they are not built in this kind of modern architecture."

Benioff clearly has those larger companies in his sights. He said that Salesforce expects to deliver $8.1 billion in revenue at the high-end of the company's forecast range for next year.

"As many of you are predicting, Salesforce will be indeed the fourth largest enterprise software company in the world next year, behind only Microsoft, Oracle, and SAP," he told analysts during the call. "… Salesforce continues to be the fastest growing of the top 10 enterprise software companies."

The earnings announcement and call capped off a day of presentations at the Salesforce World Tour in New York where the company showcased new product capabilities and staged presentations by prominent customers and partners including Accenture, Mattel, Western Union, and American Express.

Keith Block, Salesforce vice-chairman and president, told analysts during the earnings call the company's vertical market efforts are paying off.

"Financial services is very strong, healthcare and life sciences is very strong, retail is really picking up," he said.

Customer Focus

Benioff told analysts that the next 10 years will be the age of the customer, and all other technology investments and achievements will be about that age.

"During the quarter I met with hundreds of CEOs around the world," Benioff said. "They are not that interested in talking about honestly about the cloud or about social or mobile. They want to talk about their customers and they want to talk about their topline, they want to talk about how they're going to grow that topline, and this is the really, really exciting thing that's going on, which is this customer revolution."

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About the Author(s)

Jessica Davis

Senior Editor

Jessica Davis is a Senior Editor at InformationWeek. She covers enterprise IT leadership, careers, artificial intelligence, data and analytics, and enterprise software. She has spent a career covering the intersection of business and technology. Follow her on twitter: @jessicadavis.

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