According to Gartner, the content, communications, and collaboration segments are the largest SaaS revenue generators, followed by customer relationship management (CRM) with a total of $2.3 billion in revenue in 2009. SaaS has continued to represent a key driver of growth in the CRM market over the past four years, from 8% of the market in 2005 to 15% in 2007 and 20% in 2008, with about $1.9 billion in revenue. By 2011, SaaS is expected to account for 25% of the CRM market.
Salesforce.com (NYSE:CRM) is the leading CRM SaaS vendor and had 10.6% of the overall CRM market in 2008. Last week, it reported revenue of $1.3 billion in fiscal 2010, an increase of 21%, and EPS growth of 82% to $0.63. In the fourth quarter, revenue increased 22% to $354 million while EPS increased 41% to $0.16. The company’s customer count increased by 31% to 72,500. Gross margin increased to 80.8% and Salesforce.com ended the year with $1.7 billion in cash.
The company expects EPS of $0.58 to $0.60 for fiscal 2011 and raised its revenue outlook by 1% to between 16% and 17%. For the first quarter, it expects EPS of $0.12 to $0.13 on revenue of $365 to $367 million. The stock is currently trading around $68 with market cap of about $8.5 billion. It hit a 52-week high of $74.95 on December 29.
Last quarter, we saw how Salesforce.com and RightNow are embracing social networking. Consumer participation in online forums is on the rise, and social networking offers a huge opportunity for organizations to connect with their customers to impact the consumer experience as well as sales, marketing, and support. Last week, Salesforce.com announced the beta version for Chatter, its collaboration application and platform.
RightNow (NASDAQ:RNOW) is going the acquisition route with its $5.9 million acquisition of social networking company HiveLive in September. In late 2009, RightNow started rolling out Social Solution, a software program to monitor discussion threads on networks like Facebook and analyze these discussions for positive or negative sentiments. It also launched RightNow CX, the customer experience suite that addresses the three primary customer engagement points – Web, contact center, and social media.
RightNow recently reported annual revenue of $152.7 million, up 9%, and net income of $5.9 million in fiscal 2009 versus a loss of $7.3 million last year. Q4 revenue increased 15% to $41.6 million and net income was $2.6 million versus net income of $692,000 last year. The company ended the quarter with $97 million in cash.
RightNow signed 51 new customers in the quarter. It had eight deals worth over $1 million, nine deals between $100,000 and $1 million, and 435 deals worth less than $100,000. Social Solution’s technology bagged one deal above $1 million while most deals for the program ranged between $50,000 and $100,000.
For the full year 2010, RightNow expects revenue of $175 million to $180 million. For the first quarter, revenue is expected to be $42 million to $42.5 million and EPS $0.00 to $0.02. The stock is currently trading around $15 with market cap of about $490 million. It hit a 52-week high of $18.22 on December 29.
While most SaaS companies are trading close to their 52-week highs, clinical billing software maker athenahealth slid after the company delayed its fourth quarter report for the second time in a month due to an accounting review on revenue recognition. This has raised concerns about its accounting system and worries that the company might face more accounting problems in the future.
Athenahealth has been seen as a promising company benefiting from the federal drive to digitize healthcare. Its revenue in 2009 was more than $190 million, double that of revenue in 2007. The company is trading around $37 with market cap of about $1 billion. It hit a 52-week high of $47.82 on January 7.
Will it also follow in the footsteps of other leading SaaS players in consolidating? I have recently done some interviews with CEOs of healthcare companies. Kryptic, with revenue in the double digits, uses email applications to bring collaboration to the healthcare industry. Navinet has about 40% of U.S. providers using its multi-payer portal that automates health plans. Phytel with $20 million to $50 million in annual revenue, looks to motivate patients to reconnect with physicians, optimize healthcare with better decision-making data at the point of care, and extend its reach beyond the walls of a practice.
From being acquisition targets for software giants such as Oracle, all the major SaaS companies have grown to be consolidators. SuccessFactors, Taleo, and RightNow have made strategic advances with acquisitions over the past year. And last week, the remote support market leader Citrix acquired IT search and management services provider Paglo to enter the SaaS IT management market, which is expected to reach $4 billion in 2013. About a week ago I said I would like to see Citrix as a consolidator in the SaaS space. It’s also high time the big gorilla of SaaS, Salesforce.com, made some moves with its $1.7 billion pile of cash.