Salesforce.com maintains profitability and growth

Salesforce.com Inc. on Thursday released its first quarterly results since going public, posting income of $1.2 million on revenue of $40.6 million for the three months ended July 31.

The San Francisco-based hosted CRM (customer relationship management) services vendor added 21,000 paying subscribers during the quarter, bringing its total to 168,000, from 11,100 companies. That growth prompted the company to slightly raise its revenue expectations for its 2005 fiscal year, which ends Jan. 31, 2005. Salesforce.com now anticipates revenue of $165 million to $170 million.

The second-quarter results edged past the $39.7 million in revenue consensus estimate of analysts polled by Thomson First Call. Salesforce.com met per-share earnings expectations, with earnings of $0.01.

The newly public company has an outsized impact on the CRM market: While its sales are small compared to those of market leaders like Siebel Systems Inc., Salesforce.com targets the rapidly growing market of small companies shopping for sales and customer support management software. Its growth, shadowed by that of rivals like NetSuite Inc. and Salesnet Inc., has prompted nearly every vendor in the CRM market to reevaluate how it approaches small and mid-size businesses.

Salesforce.com Chairman and Chief Executive Officer Marc Benioff took a few jabs at the company’s competitors on a conference call with analysts, commenting that Salesforce.com’s growth during the quarter stood “in stark contract to traditional enterprise software companies, who continue to struggle.”

He also criticized Salesforce.com’s most visible rival, Siebel, for not disclosing its customer base and growth. Siebel, which holds the largest share of the traditional CRM software market, started a hosted subscription service last year, Siebel CRM OnDemand, to compete head-to-head with Salesforce.com.

Siebel does not officially discuss its CRM OnDemand results, and company spokespeople refuse to release customer numbers, but Siebel Executive Vice President David Schmaier said in May that the service had signed on 1,400 companies.

Benioff said Salesforce.com rarely encounters Siebel while competing for new business.

“They’ve run a huge advertising campaign, but they just have not delivered, in our market or — so far as I can tell — in any other market,” Benioff said.