Salesforce Posts ‘Spectacular’ 2016 Q4 and FYE Results

Last week Salesforce.com (NYSE: CRM), a customer relationship management technology company, announced its fiscal 2016 fourth quarter and full year financials for the fiscal

Subscription News: Salesforce Posts 'Spectacular' 2016 Q4 and FYE Results

Source: Salesforce

Last week Salesforce.com(NYSE: CRM), a customer relationship management technology company, announced its fiscal 2016 fourth quarter and full year financials for the fiscal year ended January 31, 2016. Since then, Wall Street and the media have been abuzz with the SaaS company’s stellar results. Here are a few highlights:

  • Quarterly revenue of $1.81 billion, a 25% increase year-over-year. Subscriptions and support account for $1.68 billion of total quarterly revenue.
  • Full year revenue of $6.67 billion, a 24% increase year-over-year. Subscriptions and support account for $6.2 billion of the total year’s revenue.
  • Quarterly operating cash flow of $459 million, a 38% increase year-over-year
  • Full year operating cash flow of $1.61 billion, a 37% increase year-over-year
  • Deferred revenue of $4.29 billion, a 29% increase year-over-year
  • Unbilled deferred revenue of $7.1 billion, a 25% increase year-over-year
  • Revised FY17 revenue guidance from $8.08 billion to $8.12 billion

“By any measure, this was a spectacular finish to the year with 27% revenue growth in constant currency for the fourth quarter, and for the full year,” said Salesforce chairman and CEO Marc Benioff in a press release. “We are raising our fiscal year 2017 revenue guidance to $8.12 billion at the high end of our range — unprecedented growth for a company of our size and scale.”

“We hit an all-time high in large transactions in fiscal 2016 as more and more companies look to Salesforce as their trusted advisor,” said vice chairman, president and COO Keith Block. “The tremendous response to our customer success platform is driving exceptional growth for Salesforce across every region, every cloud and every industry.”

Additional analysis shows that subscriptions and support represent about 93% of total revenue for the quarter and the year. Professional services and “other” account for the remaining 7% of revenue. About 74% of the company’s business is in North and South America, 17% in Europe and 9% in Asia Pacific.

Subscription News: Salesforce Posts 'Spectacular' 2016 Q4 and FYE Results

Source: Salesforce

The sales cloud accounts for approximately 43% of business, followed by the service cloud at about 29%, app cloud and other around 17%, and the marketing cloud at approximately 11%. As of 1:05 p.m. Eastern today, CRM stock was at $69.13 per share, a 2.04% increase over the opening price today. In after-hours trading the day the financials were announced, Salesforce.com stock was at $66.91, according to The Street.

Why is Salesforce so successful? Jim Cramer of Mad Money fame interviewed CEO Marc Benioff last April, and Benioff told him that he is focused on the company’s stakeholders, not its shareholders. This includes employees, customers, partners, communities, the environment and more.

“To really think and be successful as a CEO today you need to think in a multi-stakeholder framework, and that is what’s important, and that is really what drives me every single day,” Benioff said.

That may be why the company was the fastest enterprise software company to hit $5 billion in annual sales, according to Cramer. Benioff is looking beyond just dollars and cents.

Insider Take:

It is hard to argue with success like this or add much to the narrative. Obviously, Salesforce.com has maximized the strengths of the subscription model to support its growth and long-term sustainability.

The company is focused on more than just the bottom line, which has contributed to its success. It has also diversified in terms of products, and it has a presence in global markets. With a solid customer base, Salesforce may not be able to sustain huge growth numbers in the future, but it looks like there may be room to expand outside of the Americas to further saturate Asia and Europe.

 

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