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August 21, 2015

Marc Benioff: Salesforce will be world’s 4th biggest software firm

Chief executive of SaaS pioneer is targeting $10bn in annual revenues.

By Jimmy Nicholls

Salesforce predicted it will rise to be the fourth largest software company in the world next year as it lines up behind SAP, Oracle and the still dominant Microsoft.

In a conference call on Thursday Marc Benioff, the founder and chief executive of the firm, told investors that profits and revenue turned out better than expected for the quarter.

As such forecasts for annual revenues went up for the third time this year, and are now expected to top $6.6bn in the fiscal year ending January 2016.

"We’ll go from being the sixth largest software company in the world to the fourth largest next year," Benioff said.

Quarterly revenues at the firm rose by a 24% year-on-year to $1.63bn, slightly beating analysts’ predictions of $1.6bn, with $1.52bn of the money from software subscriptions and support.

Professional services and other income comprised a much smaller portion of quarterly revenues at $113m, but increased 31% year-on-year, compared to 23% for software subscriptions and support.

Quarterly net losses for the firm, which is spending generously on sales and marketing to boost market share, declined to $852,000, a sharp decrease from $61.1m from the previous year.

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"We are well on our way to accomplishing our goal of being the fastest company ever to $10bn in revenue," Benioff added.

For the former Oracle executive beating the estimates of analysts will come as further vindication of his software-as-a-service (SaaS) model, in which corporate software is accessed and maintained through the Internet rather than being installed on site.

Currently the company is developing software clouds targeted towards industries such as healthcare and retail, in a partial reversal of a previous strategy that merely maintained a broad platform customised by customers.

A spokesman from Salesforce told CBR: "We’re building out key industries with targeted solutions, such as wealth and health – but we will still be a great ecosystem partner for those companies who want to build amazing industry-specific apps."

Keith Block, president of Salesforce, also pointed to the emerging Service Cloud handling customer service as proof the firm is expanding out from sales force automation (SFA), its traditional strength, though it will remain a core focus for the firm.

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