According to the recently released Gartner report, Market Share Analysis: Customer Relationship Management Software, Worldwide, 2013, the global CRM market grew 14% over the year to $20.4 billion last year. The researcher found that 41% of the CRM systems sold last year were SaaS-based offerings and Salesforce (NYSE:CRM) led the market with a 16.1% market share. SAP was a distant second with 13% market share followed by Oracle’s 10% share.
Salesforce.com recently reported strong quarterly results as well. Q1 revenues grew 37% over the year to $1.23 billion, ahead of the market’s projections of $1.21 billion. On a Non GAAP basis, Salesforce earned $0.11 per share compared with the Street’s expectations of earnings of $0.10 per share. But on a GAAP basis, the company continued to report losses and ended the quarter with a loss of $0.16 per share compared with a loss of $0.12 per share a year ago. Salesforce’s continued losses are attributed to the rising spend on sales and marketing and R&D expenses. Research and development expenses for the quarter grew 43% to $188.3 million and sales and marketing costs increased 37% to $639.3 million.
During the quarter, revenues from Subscription and Support services grew 36% over the year to $1.15 billion and revenues from Professional Services and Other segment increased 58% to $79 million.
For the current quarter, Salesforce projected revenues of $1.285-$1.290 billion with an EPS of $0.11-$0.12. The market was modeling revenues of $1.27 billion with an EPS of $0.12. Salesforce increased their annual projections and now expects to end the year with revenues of $5.30-$5.34 billion and an EPS of $0.49-$0.51. The market was projecting revenues of $5.29 billion with an EPS of $0.49 for the year.
Salesforce’s Continuing Market Expansion
Salesforce continues to build on its lead by launching mobile based products and expanding their international presence. Within the mobile segment, Salesforce released Salesforce1 Service Cloud SOS, an innovative solution for mobile devices. Salesforce1 is Salesforce’s mobile app development platform. The Service SOS will be evoked by putting an SOS button on a mobile app and it will lead the user directly to either live video or on-screen support to enable instant and personalized customer service.
Earlier this month, Salesforce also announced the capability to integrate Salesforce1 with Heroku. Through the integration, companies will be able to connect customer data in Salesforce with next-generation customer apps. Heroku Connect will not only provide companies with the ability to build and deploy engaging consumer apps at a faster speed but also ensure that these apps are integrated seamlessly with the back-end business processes to allow real-time workflow and data analysis.
Salesforce is also growing their international presence. Last quarter they added to their senior management in Japan by hiring ex-HP Japan head, Shinichi Koide, as the CEO of Japan. They plan to grow their presence in Europe and are looking at creating 500 new jobs in the region by opening data centers in the U.K., France and Germany.
Their stock is trading at $52.89 with a market capitalization of $32.27 billion. It touched a life high of $67.00 in March this year.