28 Feb Revenue growth of 34% shows businesses are buying SaaS despite of, and perhaps because of, tight IT budgets.
There are spots of trouble, however.
As the largest provider of software as a service, Salesforce.com’s financial performance is a bellwether for how well SaaS is doing in the tough economy. The answer: very well, but with a few areas of concern.
Salesforce announced net income of $13.8 million for its fourth quarter ended Jan. 31, up from $7.4 million last year. Total revenue was $289.6 million for the quarter, an increase of 34% over last year’s fourth quarter. And despite a plunging economy that hit many IT budgets the hardest in late 2008, Salesforce increased its revenue by 5% over the preceding third quarter.
The revenue growth suggests that SaaS is attractive to businesses with tight IT budgets, as the up-front costs are substantially lower than licensed software.
“Salesforce.com was not impervious to the toll of the global recession in the second half of 2008, but the company’s 4Q08 results prove SaaS continues to be a winning technology in the down economy,” wrote Technology Business Research analyst Melissa Grady in a report issued Wednesday evening.
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