Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Can Grow Into a $10 Billion Company?

Shares of cloud software company got a bit of a jolt today, as an analyst made the case that the company could continue growing like crazy through the year 2019.

Salesforce shares rose by 85 cents, or more than 1.5 percent, to $54.57. The shares have had a busy year, rising by more than 29 percent this year, and splitting four-for-one in April.

Other cloud companies benefited from Salesforce’s good fortunes, too. Workday and NetSuite rose by about one percent each.

In a note to clients today, Joel Fishbein of BMO Capital argued that Salesforce could book about $10 billion in recurring revenue by the time of its 2019 fiscal year (which begins in early 2018). That would almost double the $5.2 billion in revenue that Salesforce says it expects in fiscal 2015, working out to a compound annual growth rate north of 22 percent.

Salesforce, he says, is essentially staking out territory in four areas of cloud software: Salesforce automation (the original product), customer service, marketing (Radian6 and ExactTarget and Buddy Media), and cloud platform (products like Heroku).

And, more often than not, Salesforce customers are taking two or more products. Fishbein analyzed its deals from fiscal 2013. Most of them — 76 percent — included two or more services, and nearly half included three or more. Of the last 40 significant deals, 80 percent included the original Salesforce product, 70 percent included the service, 60 percent included platform, and 20 percent included marketing.

While the sales cloud will continue to be the big dog and bring in roughly two-thirds of revenue, the marketing (worth about $100 million in 2013 before acquisitions) and service clouds (about $475 million in 2013) could each account for $1 billion in sales each year within two years, Fishbein says.

If Salesforce can repeat with service and marketing what it did with the sales cloud, it will be hard to knock it off its growth pace, Fishbein writes. “ is already the number one CRM vendor and continues to take significant market share. We see continued diversification of the business as the non-Sales Cloud business is 40% or more of new business.”

Latest Video

View all videos »

Search »

First the NSA came for, well, jeez pretty much everybody’s data at this point, and I said nothing because wait how does this joke work

— Parker Higgins via Twitter