Cloud CRM juggernaut, Salesforce.com (“SFDC”) recently reported strong Q2 results that beat analyst expectations. SFDC’s Q2 revenue grew an impressive 24% year-over-year, coming in at $1.6B. Along with this impressive upfront revenue growth, SFDC was also able to increase year-over-year deferred revenue and unbilled deferred revenue 29% and 24% respectively, both key indicators or future success.
During the recent earnings call, SFDC also raised its guidance for fiscal year 2016 and set some pretty lofty revenue goals in the process. Specifically, SFDC expects to be the 4th largest enterprise software company in the world and the fastest one to grow to $10B in revenue.
Moving forward, UpperEdge expects prospective and existing customers to experience an even more aggressive SFDC sales team focused heavily on getting renewals signed early, closing more net-new opportunities and adding more cloud offerings to the organization’s current portfolio of cloud solutions. Most specifically, we expect SFDC to heavily push one of their recently released industry-specific solutions such as Finance Services Cloud or Health Cloud. SFDC understands that both of these industries have a strong competitive landscape so we fully expect SFDC to pull out all the stops to close deals and gain user adoption. We also expect SFDC to promote the adoption of one of their Service and/or Marketing Cloud solutions. SFDC will look to its current Sales Cloud customers and heavily push for executive buy-in to expand the SFDC footprint to include these additional cloud solutions.
We have already seen, in working with many organizations; proposals submitted by SFDC that include significant upfront discounts in order to meet their aggressive sales targets. This is especially the case where SFDC is competing against other large enterprise software companies such as Microsoft, SAP, and Oracle. It will be important for all prospective customers to be aware of the intent behind these initial deep upfront discounts and make sure they are ensuring optimal and market competitive future price protections.
If you would like to better understand how we have been able to help companies achieve best-in-class agreements and pricing with SFDC, please do not hesitate to contact me at [email protected]. As always, please feel free to leave your comments and feedback as well.