Salesforce has been on a tear recently, gobbling up lesser companies and generally making the headlines—often! But that hasn’t translated much into profits. A recent earnings call by the cloud-based software company, was met with less than accepting sentiments by investors who subjected the Salesforce share price to a virtual beating. And all this with the company set to break the $2.3 billion revenue barrier. The obvious questions is “Why the poor reaction?”
It has to do with the rate that Salesforce is growing; many analysts had expected a much faster growth in revenue than what has been produced so far and the markets naturally took their cue from this expectation. The sticking point was the quarter’s billings which saw a 3% fall-off in deferred revenue plus billing of $567 million. This 3% fall-off was $20 million off the expected amount and so the shares took a hammering.Salesforce CEO, Marc Benioff, was quick to reassure the markets and investors that Salesforce might be slow in growing, but it is headed for heights unforeseen by competing cloud-based software companies. The ace up Benioff’s sleeve is of course the $2.3 billion sales revenue barrier which no-one has managed to break thus far—Saleforce is on course to shatter that barrier in the coming months.
Is Salesforce using the wrong strategy for growth? Let us know what you think in the comments below.
Source: http://www.sitetrail.com/2011/11/22/salesforce-to-break-2.3-billion-revenue-barrier/