Salesforce.com Passes $1 Billion Annual Revenue Mark

Salesforce.com reported second-quarter sales of $263.1 million Wednesday, proclaiming itself the first software-as-a-service vendor to reach the $1 billion threshold in annual sales. The company also disclosed that earlier this month it acquired InStranet, a developer of business-to-consumer call center software, for $31.5 million.

Salesforce.com said sales in the quarter ended July 31 increased 49 percent year-over-year while earnings soared 167 percent to just under $10.0 million. Subscription and support revenue was up 50 percent to $239.7 million while professional services and other revenue increased 41 percent to $23.4 million.

Despite the sales growth that exceeded Wall Street's expectations, financial analysts raised red flags over what a report from Wedbush Morgan Securities described as Salesforce.com's "potentially weak bookings growth" and "lower-than-expected sequential deferred revenue growth" during the quarter.

The company said it expects revenue in the range of $273 million to $274 million for the third quarter. For all of fiscal 2009 the company is projecting revenue in the range of $1.070 to $1.075 billion.

The acquisition of InStranet provides Salesforce.com with that company's patented Dimensions knowledge base technology that makes it easier for call center representatives to find information they need to respond to customer queries. Dimensions adds customer context data, such as geography and product used, to a company's knowledge base to help call center workers find accurate information more quickly. Market research firm Gartner puts the customer service and support market at $3.4 billion annually.

Salesforce.com is adding the InStranet technology to its Salesforce CRM Customer Service & Support offerings, augmenting its call center and customer portal applications.