Apr
24
2019
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Microsoft beats expectations with $30.6B in revenue as Azure’s growth continues

Microsoft reported its quarterly earnings for Q3 2019 today. Overall, Wall Street expected earnings of about $1 per share and revenue of $29.84 billion. The company handily beat this with revenue of $30.6 billion (up 14 percent from the year-ago quarter) and earnings per share of $1.14.

With Microsoft focusing heavily on its cloud business, with both Azure and its other cloud-based services, it’s no surprise that this is also what Wall Street really cares about. The expectation here, according to some analysts, was that the company’s overall commercial cloud business would hit a run rate of about $38.5 billion. Those analysts we’re off by only a tiny bit. Microsoft today reported that its commercial cloud run-rate hit $38.4 billion.

And indeed, Microsoft Azure had a pretty good quarter, with revenue growing 73 percent. That’s a bit lower than last quarter’s results, but only by a fraction, and shows that there is plenty of growth left for Microsoft’s cloud infrastructure business.

Azure’s growth slowed somewhat in recent quarters. In some ways, that’s to be expected, though. Microsoft’s cloud is now a massive business, and posting 100 percent growth when you have a run rate of almost $40 billion becomes a bit harder.

“Demand for our cloud offerings drove commercial cloud revenue to $9.6 billion this quarter, up 41 percent year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “We continue to drive growth in revenue and operating income with consistent execution from our sales teams and partners and targeted strategic investments.”

The company’s “intelligent cloud” segment, which includes Azure and other cloud- and server-based products, reported revenue of $9.7 billion, up 22 percent from the year-ago quarter.

Microsoft’s productivity applications also fared well, with total revenue up by 14 percent to $10.2 billion. Here, revenue from LinkedIn also increased by 27 percent and the company highlighted that LinkedIn sessions also increased 24 percent.

Other highlights of the report include an increase in Surface revenue of 21 percent, which was expected, given the number of new devices the company released in recent quarters.

“Leading organizations of every size in every industry trust the Microsoft cloud. We are accelerating our innovation across the cloud and edge so our customers can build the digital capability increasingly required to compete and grow,” said Satya Nadella, CEO of Microsoft.

For more financial details, you can find the full report here.

Feb
27
2019
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Box fourth quarter revenue up 20 percent, but stock down 22 percent after hours

By most common sense measurements, Box had a pretty good earnings report today, reporting revenue up 20 percent year over year to $163.7 million. That doesn’t sound bad, yet Wall Street was not happy with the stock getting whacked, down more than 22 percent after hours as we went to press. It appears investors were unhappy with the company’s guidance.

Part of the problem, says Alan Pelz-Sharpe, principal analyst at Deep Analysis, a firm that watches the content management space, is that the company failed to hit its projections, combined with weaker guidance; a tough combination, but he points out the future does look bright for the company.

Box did miss its estimates and got dinged pretty hard today; however, the bigger picture is still of solid growth. As Box moves more and more into the enterprise space, the deal cycle takes longer to close and I think that has played a large part in this shift. The onus is on Box to close those bigger deals over the next couple of quarters, but if it does, then that will be a real warning shot to the legacy enterprise vendors as Box starts taking a chunk out of their addressable market,” Pelz-Sharpe told TechCrunch.

This fits with what company CEO Aaron Levie was saying. “Wall Street did have higher expectations with our revenue guidance for next year, and I think that’s totally fair, but we’re very focused as a company right now on driving reacceleration in our growth rate and the way that we’re going to do that is by really bringing the full suite of Box’s capabilities to more of our customers,” Levie told TechCrunch.

Holger Mueller, an analyst with Constellation Research says failing to hit guidance is always going to hurt a company with Wall Street. “It’s all about hitting the guidance, and Box struggled with this. At the end of the day, investors don’t care for the reasons, but making the number is what matters. But a booming economy and the push to AI will help Box as enterprises need document automation solutions,” Mueller said.

On the positive side, Levie pointed out that the company achieved positive non-GAAP growth rate for the first time in its 14-year history, with projections for the first full year of non-GAAP profitability for FY20 that it just kicked off.

The company was showing losses on a cost per share of 14 cents a share for the most recent quarter, but even that was a smaller loss than the 24 cents a share from the previous fiscal year. It would seem that the revenue is heading generally in the correct direction, but Wall Street did not see it that way, flogging the cloud content management company.

Chart: Box

Wall Street tends to try to project future performance. What a company has done this quarter is not as important to investors, who are apparently not happy with the projections, but Levie pointed out the opportunity here is huge. “We’re going after 40 plus billion dollar market, so if you think about the entirety of spend on content management, collaboration, storage infrastructure — as all of that moves to the cloud, we see that as the full market opportunity that we’re going out and serving,” Levie explained.

Pelz-Sharpe also thinks Wall Street could be missing the longer-range picture here. “The move to true enterprise started a couple of years back at Box, but it has taken time to bring on the right partners and infrastructure to deal with these bigger and more complex migrations and implementations,” Pelz-Sharpe explained. Should that happen, Box could begin capturing much larger chunks of that $40 billion addressable cloud content management market, and the numbers could ultimately be much more to investor’s liking. For now though, they are clearly not happy with what they are seeing.

Feb
05
2019
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Google’s still not sharing cloud revenue

Google has shared its cloud revenue exactly once over the last several years. Silence tends to lead to speculation to fill the information vacuum. Luckily there are some analyst firms who try to fill the void, and it looks like Google’s cloud business is actually trending in the right direction, even if they aren’t willing to tell us an exact number.

When Google last reported its cloud revenue, last year about this time, they indicated they had earned $1 billion in revenue for the quarter, which included Google Cloud Platform and G Suite combined. Diane Greene, who was head of Google Cloud at the time, called it an “elite business.” but in reality it was pretty small potatoes compared to Microsoft’s and Amazon’s cloud numbers, which were pulling in $4-$5 billion a quarter between them at the time. Google was looking at a $4 billion run rate for the entire year.

Google apparently didn’t like the reaction it got from that disclosure so it stopped talking about cloud revenue. Yesterday when Google’s parent company, Alphabet, issued its quarterly earnings report, to nobody’s surprise, it failed to report cloud revenue yet again, at least not directly.

Google CEO Sundar Pichai gave some hints, but never revealed an exact number. Instead he talked in vague terms calling Google Cloud “a fast-growing multibillion-dollar business.” The only time he came close to talking about actual revenue was when he said, “Last year, we more than doubled both the number of Google Cloud Platform deals over $1 million as well as the number of multiyear contracts signed. We also ended the year with another milestone, passing 5 million paying customers for our cloud collaboration and productivity solution, G Suite.”

OK, it’s not an actual dollar figure, but it’s a sense that the company is actually moving the needle in the cloud business. A bit later in the call, CFO Ruth Porat threw in this cloud revenue nugget. “We are also seeing a really nice uptick in the number of deals that are greater than $100 million and really pleased with the success and penetration there. At this point, not updating further.” She is not updating further. Got it.

That brings us to a company that guessed for us, Canalys. While the firm didn’t share its methodology, it did come up with a figure of $2.2 billion for the quarter. Given that the company is closing larger deals and was at a billion last year, this figure feels like it’s probably in the right ballpark, but of course it’s not from the horse’s mouth, so we can’t know for certain. It’s worth noting that Canalys told TechCrunch that this is for GCP revenue only, and does not include G Suite, so that would suggest that it could be gaining some momentum.

Frankly, I’m a little baffled why Alphabet’s shareholders actually let the company get away with this complete lack of transparency. It seems like people would want to know exactly what they are making on that crucial part of the business, wouldn’t you? As a cloud market watcher, I know I would, and if the company is truly beginning to pick up steam, as Canalys data suggests, the lack of openness is even more surprising. Maybe next quarter.

Oct
25
2018
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Daily Crunch: Tesla is profitable again

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here:

1. Tesla earns its first profit in two years

Tesla reported a profit in the third quarter, reversing seven consecutive quarters of losses. This is only the third time in the company’s history that it has achieved this milestone.

The turnaround was driven by sales of the Model 3. The company said customers are trading up their relatively cheaper vehicles to buy a Model 3, even though there is not yet a leasing option and the starting price was $49,000.

2. Trump has two ‘secure’ iPhones, but the Chinese are still listening

A new report by The New York Times puts a spotlight on the president’s array of devices and how he uses them. However, both Trump and a spokesperson for China’s foreign ministry have denied the story.

(BRENDAN SMIALOWSKI/AFP/Getty Images)

3. Red Dead Redemption 2 sets the bar high for the next generation of open world games

Tomorrow, Red Dead Redemption 2 goes live after months of breathless speculation. And according to Devin Coldewey and Jordan Crook, it’s as good as you’ve been hoping.

4. Facebook is building Lasso, a video music app to steal TikTok’s teens

Facebook is building a standalone product where users can record and share videos of themselves lip syncing or dancing to popular songs, according to information from current and former employees.

5. One-year-old Ribbon raises $225m to remove the biggest stress of home buying

The startup wants to replace the incredible stress of securing a mortgage during the home-buying process with a Ribbon Offer: If a buyer can’t secure a mortgage in time for close, Ribbon will pay for the house itself and give the buyer extra time to get financing.

6. Twitter beats Wall St Q3 estimates with $758M in revenue

Twitter reported a 29 percent increase in ad revenue to $650 million, and the company says total ad engagements increased 50 percent year over year. However, user growth didn’t quite match expectations.

7. Confirmed: ShopRunner acquires Spring, raises $40M

ShopRunner is announcing its first infusion of venture funding under CEO Sam Yagan, plus an acquisition of the shopping app Spring. Sources also say it’s readying a major overhaul of its mobile app.

Oct
16
2018
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Netflix shares are up after the streaming service adds nearly 7M new subscribers in Q3

After a disappointing second quarter, Netflix is back in Wall Street’s good graces. The company just released its third-quarter earnings report, and as of 5:30pm East Coast time, the stock is up 12 percent in after-hours trading.

The most important number here is subscriber growth, and that’s where Netflix came in way ahead of expectations, with 6.96 million net additions, compared to the 5.07 million that analysts predicted. The service now has a total of 137 million members, and 130 million paying members.

The company also reported earnings of 89 cents per share on revenue of $4 billion — analysts had predicted EPS of 68 cents.

In addition to reporting on the latest financials, Netflix’s letter to shareholders also offers an update on its original content strategy. It distinguishes between two different types of Netflix Originals — the ones like “Orange Is the New Black,” where Netflix gets the first window for distribution, and others like “Stranger Things,” where it actually owns the content.

The company says:

Today, we employ hundreds of people in physical production, working on a wide variety of owned titles spread across scripted and unscripted series, kids, international content, standup, docs and feature films from all over the world. To support our efforts, we’ll need more production capacity; we recently announced the selection of ?Albuquerque, New Mexico? as the site of a new US production hub, where we anticipate bringing $1 billion dollars in production over the next 10 years and creating up to 1,000 production jobs per year. Our internal studio is already the single largest supplier of content to Netflix (on a cash basis).

Netflix subscription adds Q3

Netflix also says romance has been big recently, thanks to its “Summer of Love” slate of original films, which have been watched by more than 80 million accounts. Apparently “To All The Boys I’ve Loved Before” did particularly well, becoming one of Netflix’s most-watched original films, “with strong repeat viewing.”

The service plans to release “Gravity” director Alfonso Cuarón’s new film “Roma” in December, which has already been getting rave reviews at film festivals. While Netflix’s original movies generally have a minimal presence in theaters, the company says “Roma” (like Paul Greengrass’ “22 July”) will be released on more than 100 screens worldwide — not a blockbuster rollout, but not a perfunctory release, either.

The company is forecasting the addition of 9.4 million new members in the fourth quarter.

Aug
16
2018
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Cisco’s $2.35 billion Duo acquisition front and center at earnings call

When Cisco bought Ann Arbor, Michigan security company, Duo for a whopping $2.35 billion earlier this month, it showed the growing value of security and security startups in the view of traditional tech companies like Cisco.

In yesterday’s earnings report, even before the ink had dried on the Duo acquisition contract, Cisco was reporting that its security business grew 12 percent year over year to $627 million. Given those numbers, the acquisition was top of mind in CEO Chuck Robbins’ comments to analysts.

“We recently announced our intent to acquire Duo Security to extend our intent-based networking portfolio into multi- cloud environments. Duo’s SaaS delivered solution will expand our cloud security capabilities to help enable any user on any device to securely connect to any application on any network,” he told analysts.

Indeed, security is going to continue to take center stage moving forward. “Security continues to be our customers number one concern and it is a top priority for us. Our strategy is to simplify and increase security efficacy through an architectural approach with products that work together and share analytics and actionable threat intelligence,” Robbins said.

That fits neatly with the Duo acquisition, whose guiding philosophy has been to simplify security. It is perhaps best known for its two-factor authentication tool. Often companies send a text with a code number to your phone after you change a password to prove it’s you, but even that method has proven vulnerable to attack.

What Duo does is send a message through its app to your phone asking if you are trying to sign on. You can approve if it’s you or deny if it’s not, and if you can’t get the message for some reason you can call instead to get approval. It can also verify the health of the app before granting access to a user. It’s a fairly painless and secure way to implement two-factor authentication, while making sure employees keep their software up-to-date.

Duo Approve/Deny tool in action on smartphone.

While Cisco’s security revenue accounted for a fraction of the company’s overall $12.8 billion for the quarter, the company clearly sees security as an area that could continue to grow.

Cisco hasn’t been shy about using its substantial cash holdings to expand in areas like security beyond pure networking hardware to provide a more diverse recurring revenue stream. The company currently has over $54 billion in cash on hand, according to Y Charts.

Cisco spent a fair amount money on Duo, which according to reports has $100 million in annual recurring revenue, a number that is expected to continue to grow substantially. It had raised over $121 million in venture investment since inception. In its last funding round in September 2017, the company raised $70 million on a valuation of $1.19 billion.

The acquisition price ended up more than doubling that valuation. That could be because it’s a security company with recurring revenue, and Cisco clearly wanted it badly as another piece in its security solutions portfolio, one it hopes can help keep pushing that security revenue needle ever higher.

Aug
09
2018
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Dropbox is crashing despite beating Wall Street expectations, announces COO Dennis Woodside is leaving

Back when Dennis Woodside joined Dropbox as its chief operating officer more than four years ago, the company was trying to justify the $10 billion valuation it had hit in its rapid rise as a Web 2.0 darling. Now, Dropbox is a public company with a nearly $14 billion valuation, and it once again showed Wall Street that it’s able to beat expectations with a now more robust enterprise business alongside its consumer roots.

Dropbox’s second quarter results came in ahead of Wall Street’s expectations on both the earnings and revenue front. The company also announced that Dennis Woodside will be leaving the company. Woodside joined at a time when Dropbox was starting to figure out its enterprise business, which it was able to grow and transform into a strong case for Wall Street that it could finally be a successful publicly traded company. The IPO was indeed successful, with the company’s shares soaring more than 40 percent in its debut, so it makes sense that Woodside has essentially accomplished his job by getting it into a business ready for Wall Street.

“I think as a team we accomplished a ton over the last four and a half years,” Woodside said in an interview. “When I joined they were a couple hundred million in revenue and a little under 500 people. [CEO] Drew [Houston] and Arash [Ferdowsi] have built a great business, since then we’ve scaled globally. Close to half our revenue is outside the U.S., we have well over 300,000 teams for our Dropbox business product, which was nascent there. These are accomplishments of the team, and I’m pretty proud.”

The stock initially exploded in extended trading by rising more than 7 percent, though even prior to the market close and the company reporting its earnings, the stock had risen as much as 10 percent. But following that spike, Dropbox shares are now down around 5 percent. Dropbox is one of a number of SaaS companies that have gone public in recent months, including DocuSign, that have seen considerable success. While Dropbox has managed to make its case with a strong enterprise business, the company was born with consumer roots and has tried to carry over that simplicity with the enterprise products it rolls out, like its collaboration tool Dropbox Paper.

Here’s a quick rundown of the numbers:

  • Q2 Revenue: Up 27 percent year-over-year to $339.2 million, compared to estimates of $331 million in revenue.
  • Q2 GAAP Gross Margin: 73.6 percent, as compared to 65.4 percent in the same period last year.
  • Q2 adjusted earnings: 11 cents per share compared, compared to estimates of 7 cents per share.
  • Paid users: 11.9 million paying users, up from 9.9 million in the same quarter last year.
  • ARPU: $116.66, compared to $111.19 same quarter last year.

So, not only is Dropbox able to show that it can continue to grow that revenue, the actual value of its users is also going up. That’s important, because Dropbox has to show that it can continue to acquire higher-value customers — meaning it’s gradually moving up the Fortune 100 chain and getting larger and more established companies on board that can offer it bigger and bigger contracts. It also gives it the room to make larger strategic moves, like migrating onto its own architecture late last year, which, in the long run could turn out to drastically improve the margins on its business.

“We did talk earlier in the quarter about our investment over the last couple years in SMR technology, an innovative storage technology that allows us to optimize cost and performance,” Woodside said. “We continue to innovate ways that allow us to drive better performance, and that drives better economics.”

The company is still looking to make significant moves in the form of new hires, including recently announcing that it has a new VP of product and VP of product marketing, Adam Nash and Naman Khan, respectively. Dropbox’s new team under CEO Drew Houston are tasked with continuing the company’s path to cracking into larger enterprises, which can give it a much more predictable and robust business alongside the average consumers that pay to host their files online and access them from pretty much anywhere.

In addition, there are a couple executive changes as Woodside transitions out. Yamini Rangan, currently VP of Business Strategy & Operations, will become Chief Customer Officer reporting to Houston, and comms VP Lin-Hua Wu will also report to Houston.

Dropbox had its first quarterly earnings check-in and slid past the expectations that Wall Street had, though its GAAP gross margin slipped a little bit and may have offered a slight negative signal for the company. But since then, Dropbox’s stock hasn’t had any major missteps, giving it more credibility on the public markets — and more resources to attract and retain talent with compensation packages linked to that stock.

“Our retention has been quite strong,” Woodside said. “We see strong retention characteristics across the customer set we have, whether it’s large or small. Obviously larger companies have more opportunity to expand over time, so our expansion metrics are quite strong in customers of over several hundred employees. But even among small businesses, Dropbox is the kind of product that has gravity. Once you start using it and start sharing it, it becomes a place where your business is small or large is managing all its content, it tends to be a sticky experience.”

Aug
06
2018
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Twilio came ahead of expectations and the stock is going nuts

Twilio today reported a positive quarter that brought it to profitability — on an adjusted basis — ahead of schedule for Wall Street, sending the stock soaring 16 percent in extended hours after the release came out.

While according to traditional accounting principles Twilio still lost money (this usually includes stock-based compensation, a key component of compensation packages), the company is still showing that it has the capability of being profitable. Born as a go-to tool for startups and larger companies to handle their text- and telephone-related operations, Twilio was among a wave of IPOs in 2016 that has more or less continued into this year. The company’s stock has more than doubled in the past year, and is up nearly 170 percent this year alone. Twilio also brought in revenue ahead of Wall Street expectations.

Still, as a services business, Twilio has to show that it can continue to scale its business while absorbing the cost of the infrastructure required and acquire new customers. It also has to ensure that those customers aren’t leaving, or at least that it’s bringing on enough new developers more quickly than they are leaving. Larger enterprises, as a result, can be more attractive because they’re more predictable and can lead to bigger buckets of revenue for the company — and, well, most larger companies still need communications support in some way still today.

On an adjusted basis, Twilio said it earned 3 cents per share, ahead of the loss of 5 cents that analysts were expecting. It said it brought in $147.8 million in revenue compared to $131.1 million analysts were expecting, so it’s a beat on both lines, and more importantly shows that Twilio may be able to morph its toolkit into a mainline business that can end up as the backbone of any company’s communication with their customers or users.

Jun
15
2018
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Adobe could be the next $10 billion software company

Adobe reported its Q2 FY’18 earnings yesterday and the news was quite good. The company announced $2.2 billion in revenue for the quarter up 24 percent year over year. That puts them on an impressive $8.8 billion run rate, within reach of becoming the next $10 billion software company (or at least on a run rate).

Revenue was up across all major business lines, but as has been the norm, the vast majority comes from the company’s bread and butter, Creative Cloud, which houses the likes of Photoshop, InDesign and Dreamweaver, among others. In fact digital media, which includes Creative Cloud and Document Cloud accounted for $1.55 billion of the $2.2 billion in total revenue. The vast majority of that, $1.30 billion was from the creative side of the house with Document Cloud pulling in $243 million.

Adobe has been mostly known as a creative tools company until recent years when it also moved into marketing, analytics and advertising. Recently it purchased Magento for $1.6 billion, giving it a commerce component to go with those other pieces. Clearly Adobe has set its sights on Salesforce, which also has a strong marketing component and is not coincidentally perhaps, the most recently crowned $10 billion software company.

Moving into commerce

Adobe CEO Shantanu Narayen speaking to analysts on the post-reporting earnings call sees Magento as filling in a key piece across understanding the customer from shopping to purchase. “The acquisition of Magento will make Adobe the only company with leadership in content creation, marketing, advertising, analytics and now commerce, enabling real-time personalized experiences across the entire customer journey, whether on the web, mobile, social, in-product or in-store. We believe the addition of Magento expands our available market opportunity, builds out our product portfolio, and addresses a key underserved customer need,” Narayen told analysts.

If Adobe could find a way to expand that marketing and commerce revenue, it could easily surpass that $10 billion revenue run rate threshold, but so far while it has been growing, it remains less than half of the Creative revenue at $586 million. Yes, it grew at an 18 percent year over year clip, but it seems as though there is potential for so much more there and clearly Narayen hopes that the money spent on Magento will help drive that growth.

Battling with Salesforce

Even while it was announcing its revenue, rival Salesforce was meeting with Marketing Cloud customers in Chicago at the Salesforce Connections conference, a move that presented an interesting juxtaposition between the two competitors. Both have a similar approach to the marketing side, while Salesforce concentrates on the customer including CRM and service components. Adobe differentiates itself with content, which shows up on the balance sheet as the majority of its revenue .

Both companies have growth in common too. Salesforce has been on quite a run over the last five years reaching $3 billion in revenue for the first time last quarter. Adobe hit $2 billion for the first time in November. Consider that prior to moving to a subscription model in 2013, Adobe had revenue of $995 billion. Since it moved to that subscription model, it has reaped the benefits of recurring revenue and grown steadily ever since.

Each has used strategic acquisitions to help fuel that growth with Salesforce acquiring 27 companies since 2013 and Adobe 13, according to Crunchbase data. Each has bought a commerce company with Adobe buying Magento this year and Salesforce grabbing Demandware two years ago.

Adobe has the toolset to keep the marketing side of its business growing. It might never reach the revenue of the creative side, but it could help push the company further than it’s ever been. Ten billion dollars seems well within reach if things continue along the current trajectory.

May
30
2018
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Salesforce keeps revenue pedal to the metal with another mammoth quarter

Salesforce just keeps on growing revenue. In another remarkable quarter, the company announced 3.01 billion in revenue for Q1 2019 with no signs of slowing down. That puts the CRM giant on a run rate of over $12 billion with the company’s most optimistic projections suggesting it could go even higher. It’s also the first time they have surpassed $3 billion in revenue for a quarter.

As you might expect Salesforce chairman and CEO Marc Benioff was over the moon about the results in the earnings call with analyst yesterday afternoon. “Revenue for the quarter rose to more than $3 billion, up 25%, putting us on $12 billion revenue run rate that was just amazing. And we now have $20.4 billion of future revenues under contract, which is the remaining transaction price, that’s up 36% from a year ago. Based on these strong results, we’re raising our full year top line revenue guidance to $13.125 billion at the high end of our range, 25% growth for this year,” Benioff told analysts.

Brent Leary, an analyst who has been watching the CRM industry for many years, says CRM in general is a hot area and Salesforce has been able to take advantage. “With CRM becoming the biggest and fastest growing business software category last year according to Gartner, it’s easy to see with these number that Salesforce is leading the way forward. And they are in position to keep moving themselves and the category forward for years to come as their acquisitions should continue to pay off for them,” Leary told TechCrunch.

Bringing Mulesoft into the fold

Further Benioff rightly boasted that the company would be the fastest software company ever to $13 billion and it continued on the road towards its previously stated $20 billion goal. The $6.5 billion acquisition of Mulesoft earlier this year should help fuel that growth. “And this month, we closed our acquisition of MuleSoft, giving us the industry’s leading integration platform as well. Well, integration has never been more strategic,” Benioff stated.

Salesforce CEO Marc Benioff Photo: TechCrunch

Bret Taylor, the company’s president and chief product officer, says the integration really ties in nicely with another of the company’s strategic initiatives, artificial intelligence, which they call Einstein. “[Customers] know that their AI is only as powerful as data it has access to. And so when you think of MuleSoft, think unlocking data. The data is trapped in all these isolated systems on-premises, private cloud, public cloud, and MuleSoft, they can unlock this data and make it available to Einstein and make a smarter customer facing system,” Taylor explained.

Leary thinks there’s one other reason the company has done so well, one that’s hard to quantify in pure dollars, but perhaps an approach other companies should be paying attention to. “One of the more undercovered aspects of what Salesforce is doing is how their social responsibility and corporate culture is attracting a lot of positive attention,” he said. “That may be hard to boil down into revenue and profit numbers, but it has to be part of the reason why Salesforce continues to grow at the pace they have,” he added.

Keep on rolling

All of this has been adding up to incredible numbers. It’s easy to take revenue like this for granted because the company has been on such a sustained growth rate for such a long period of time, but just becoming a billion dollar company has been a challenge for most Software as a Service providers up until now. A $13 billion run rate is in an entirely different stratosphere and it could be lifting the entire category says Jason Lemkin, founder at SaasStr, a firm that invests in SaaS startups.

“SaaS companies crossing $1B in ARR will soon become commonplace, as shocking as that might have sounded in say 2011. Atlassian, Box, Hubspot, and Zendesk are all well on their way there. The best SaaS companies are growing faster after $100m ARR, which is propelling them there,” Lemkin explained.

Salesforce is leading the way. Perhaps that’s because it has the same first-to-market advantage that Amazon has had in the cloud infrastructure market. It has gained such substantial momentum by being early, starting way back in 1999 before Software as a Service was seen as a viable business. In fact, Benioff told a story earlier this year that when he first started, he did the rounds of the venture capital firms in Silicon Valley and every single one turned him down.

You can bet that those companies have some deep regrets now, as the company’s revenue and stock price continues to soar.  As of publication this morning, the stock was sitting at $130.90, up over 3 percent. All this company does is consistently make money, and that’s pretty much all you can ask from any organization. As Leary aptly put it, “Yea, they’re really killing it.”

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