All About the Cloud: Blows Out Financials

Cloud computing services continue to fuel IT growth and that isn’t going to change any time soon.'s performance is proof of that.

Elliot Markowitz

March 5, 2013

3 Min Read
All About the Cloud: Blows Out Financials

Cloud computing services continue to fuel IT growth and that isn’t going to change any time soon. Industry pundits, expert bloggers, analysts and researchers have overstated during the past two years that cloud computing will be the driver behind IT growth. It is the undercarriage to mobile apps and device management, network integration and management, storage and backup and so on.

Even research icon Gartner late last year came out with a report stating that worldwide cloud services market would pass $109 billion in 2012. It forecast the cloud services market to grow nearly 20 percent last year to almost $110 billion, led by business process-as-a-service (BPaaS), which represents the largest market segment, and infrastructure-as-a-service (IaaS), which represents the fastest-growing area. Software-as-a-service (SaaS) is the second-largest segment but not growing as fast as IaaS. Further, Gartner said it expects the public cloud services market to reach $206.6 billion by 2016.

Now all the predictions and forecasts don’t really amount to a hill of beans without proof. Enter (NYSE: CRM) and its latest quarterly and fiscal year earnings and revenue report. Salesforce blew out its numbers, to put it mildly. The company is clearly eating Oracle’s, Microsoft’s and SAP’s lunch in pure cloud services, mainly because it is not tied to any real physical product it's still trying to support. Its entire business model is based on a hosted environment.

Let’s revisit its results. The company’s sales were $835 million for its fourth quarter ended Jan. 31, up 32 percent over the year-ago quarter. This was also higher than $831 million that most analysts expected. And to be sure, their expectations were very high to begin with. Even more impressive were its earnings. Earnings per share on a non-GAAP basis were 51 cents, 11 cents higher than the 40 cents per-share expected.

For fiscal 2013, Salesforce recorded more than $3 billion in sales, up 35 percent year-over-year. Company CEO Marc Benioff, known for his boldness, publically set that revenue goal and the organization responded. Salesforce also had full year operating cash flow of $737 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the fourth quarter at approximately $3.5 billion, up from approximately $2.2 billion at the end of the fiscal 2012.

After the financial release, Salesforce gave guidance for its first quarter of fiscal year 2014 and full fiscal year for 2014. Revenue for the company’s first fiscal quarter is projected to be in the range of $882 million to $887 million, an increase of 27 percent to 28 percent year-over-year. Revenue for fiscal 2014 is projected to be in the range of $3.82 billion to $3.87 billion, an increase of 25 percent to 27 percent year-over-year.

So solution providers take notice: This is just the beginning and there is a silver lining in cloud services.

Knock 'em alive!

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About the Author(s)

Elliot Markowitz

Elliot Markowitz is a veteran in channel publishing. He served as an editor at CRN for 11 years, was editorial director of webcasts and events at Ziff Davis, and also built the webcast group as editorial director at Nielsen Business Media. He's served in senior leadership roles across several channel brands.

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