Once again this week announcements around SaaS and cloud computing brightened an otherwise bleak software outlook. The week kicked off with a strong turnout of excited customers in San Diego at travel and expense management SaaS vendor Concur's user conference. That was followed with a good showing by SaaS talent management vendor Taleo in their Q4 2008 earnings announcement. In a very anticipated announcement wednesday, the largest SaaS vendor, salesforce.com, showed that they too are seeing strength in the SaaS model as customers continue to vote with their dollars for cloud computing in its strong Q4 2008 earnings report. Finally salesforce.com ISV partner Appirio announced closing a series C round of venture funding of $10M, a vote of confidence from the VC community (GGV Capital and Sequoia Capital) for SaaS and for businesses built on PaaS in a hybrid ISV / SI model. Taken on the heels of Concur's and Netsuite's strong earnings announcements two weeks ago and the evidence is compelling that my bullishness on the business model, especially in a down economy, is not misplaced.
Looking at the salesforce.com announcement in more detail shows just how strong the results were in what arguably should be one of the worst quarters of the next two years. In the earnings call CEO and chairman Marc Benioff reported record results for both Q4 and FY 2008, with the company reaching a significant milestone of >$1B in revenue in a FY, the first SaaS vendor to break the $1B mark. The $290M in Q4 revenue represented an increase of 34% year / year and 5% quarter over quarter. This revenue mark represented an increase of ~3600 net new customers in the quarter and ~14,400 net new for the entire year. Revenue for the year was reported at $1.077B, an increase of 44% y/y. Salesforce.com also made some improvement in overall profitability, reporting an increase in GAAP EPS of ~130%. All in all a very respectable showing by the poster child of the SaaS business model.
