Reports 'Blowout' Quarter

It was clear during a conference call with analysts that CEO Marc Benioff relished the opportunity to point out his company's performance in comparison with Siebel's on-demand CRM service. He noted that Salesforce added 40,000 subscribers during the past three months, "eight times more than our largest competitor, and in fact more than that competitor has added in its entire tenure in the on-demand market." As of last month, Siebel said it had about 33,000 subscribers.

Less than a year after going public, Salesforce has proven it has legs, having posted strong growth in each of its four quarterly earnings reports. For the first quarter of fiscal year 2006, ended April 30, Salesforce posted a profit of $4.4 million, or 4 cents a share, on revenue of $64.2 million, compared with a profit of $437,000, zero cents, on revenue of $34.8 million for the same period last year. The 40,000 new subscribers brought the total number of subscribers to 267,000, up 18% from the previous quarter and 82% from a year earlier. "Ninety days ago, I couldn't have predicted 40,000 new subscribers for us," Benioff said. "This was a blowout quarter."

So much so, in fact, that Salesforce is significantly raising its guidance for fiscal 2006. Revenue for the year is expected to be between $297 million and $302 million, up from previous expectations of $282 million to $287 million. It expects second-quarter revenue to fall between $68 million and $70 million.

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