When the company reports on Wednesday it is expected to report earnings of around $0.01 per share on revenue of $174m, according to analyst estimates. In the year-ago quarter it managed to break even on revenue of $118m. Salesforce.com has forecast something between breakeven and a profit of $0.01 on revenue in the range $171m to $173m.
Salesforce.com is entering a challenging period in its life cycle. Having invested heavily in technology and building its subscriber base, it is now at the stage where it needs to start generating profits.
This has proved more tricky that anticipated in some areas, particularly around the partner-based AppExchange. Although there is no charge for a basic listing on AppExchange, Salesforce.com introduced a voluntary scheme earlier this year that was geared towards creating additional revenue for itself.
Partners who paid 10% of the first-year revenue made from from sales enabled by AppExchange, or Salesforce.com’s direct sales staff, received sales and marketing help. The company was expected to raise the fee to as much as 25%. Following disquiet from some partners it has opted for a pay-as-you-go model instead.
The company has also had other issues including the loss of a few of its executives in recent months. Chief accounting officer Bill Dewes departed after a nine month tenure; Salesforce.com’s director of treasury also left. On the operational side Rene Bonvanie, who was tasked with developing ISV partnerships, resigned four months after joining the company.
Earlier this month chief marketing officer Phill Robinson left to take up a CEO position elsewhere. Robinson was one of Salesforce.com’s most effective evangelists and had been with the company since its early days, having defected from Siebel.
Peter Goldmacher, an analyst at Cowen & Co, has noted that the fundamental backdrop for Salesforce.com is becoming more challenging. Increased competition from Microsoft and Oracle is playing a part. He also pointed to a lack of mega deals, a hiring freeze and a smattering of lay-offs as being less than positive.
On the positive side, it is still pulling in subscribers, it has a wealth of new opportunities resulting from the Apex launch, and further monetization opportunities as a result of a significant deal with Google.
