Companies are moving toward on-demand computing because it tends to be cheaper and easier to use. Instead of paying a lump-sum payment, a company can pay based on a subscription. And, since the software is delivered via the Web, updates are seamless.
On the news of Salesforce.com's latest earnings report, investors pushed up the stock 13% to $15.95. In the fourth quarter, revenues surged 82% to $54.6 million. The sequential increase was 18%. Net income was $3.6 million in the fourth quarter, which was up from a loss of $765,000 in the same period in 2003. The fourth quarter also brought $21.1 million in operating cash flow, which was a 244% increase from the same period in 2003.
Salesforce.com certainly knows how to sell; in the fourth quarter, the company added 1,400 new customers and 32,000 new paying subscribers. In all, there are 13,900 customers and 227,000 paying subscribers.
The customer acquisitions are not small time; rather, Saleforce.com has made serious inroads in major enterprise accounts. Recent customer wins include Business Objects
Moreover, Salesforce.com provides customers the ability to customize their CRM (customer relationship management) applications with its sforce product. For example, Time Warner
Salesforce.com upped its guidance for 2005, with earnings per share at $0.11 to $0.13 and revenue from $282 million to $287 million.
Many enterprise software companies want a piece of the on-demand computing space, which is expected to be a big growth area. Despite investments and marketing -- such as from IBM
Fool contributor Tom Taulli does not own shares in the companies mentioned in this article.