While the IPO market is currently enjoying a surge, things were pretty grim during the first part of 2004. It was only those companies with profits, strong growth and compelling business models that had the right stuff to go public.
One such company was Salesforce.com (NYSE:CRM), a developer of customer relationship management (CRM) software that's Web-based and relies on a subscription model.
Yesterday, Salesforce.com announced its earnings. Revenues for the third quarter were $46.4 million, which is an 82% increase from the same quarter last year. During this period, profits increased 84% to $2.2 million.
The growth is not the result of acquisitions. It's actually organic. In fact, the company has about 195,000 paying subscribers. Some of the recent customer wins include Staples, Inc. (NASDAQ:SPLS), ADP (NYSE:ADP), SunGard (NYSE:SDS), and SunTrust Banks (NYSE:STI).
So, Salesforce.com, what's your secret for success? It's the on-demand software model. You use what you want, and you pay for what you use. Simple, huh?
So far, Salesforce.com is a leader in the trend toward on-demand computing. It has solutions that are flexible, customizable, and can scale for thousands of users. It's a business model that fits the company's major customers like Cinderella's glass slipper.But Salesforce.com is expecting a slowdown -- which is natural. It projects earnings for the next year of $0.10 to $0.12 per share -- below consensus expectations of $0.15 per share. Still, compared with many other software companies, such growth is to be envied.
Fool contributor Tom Taulli does not own shares in any of the companies mentioned in this article.
