CRM host Salesforce reaches 500,000 subscribers

Analysts predict further growth ahead after impressive second-quarter figures

Salesforce.com has announced it now has over half a million subscribers, continuing the vendor’s remarkable rise.

The hosted customer relationship management (CRM) pioneer notched record revenues yet again in the second quarter, reaching $118m, up 64 percent on the same period last year. The total number of subscribers was up by 57,000 to 501,000
"As we soar past the half-million paying subscriber mark, we stand on the cusp of another remarkable achievement: a half-billion-dollar annual run rate,” said Salesforce chief executive Marc Benioff.

Salesforce expects to go close to that total for fiscal 2007, and has predicted that revenue could be up to $493m.

Salesforce made a loss of $145,000 in the quarter but analysts said this related to stock-option payments and other expenses rather than any fundamental weakness.

“There is considerable unmet demand in the CRM market,” wrote David Bradshaw of analyst Ovum in a research note. “This is shown not only by Salesforce's record-breaking subscriber additions, but also by Microsoft's quarterly increase of 50,000 CRM users, announced last month. In this context, a second quarter of losses is not a concern, even if you were to ignore the cash position. Competition from SAP, Oracle and Microsoft does not seem to be casting any shadows on Salesforce's field, so the company is busy making hay while the sun shines. Its pure software-as-a-service model continues to attract ever more customers, forcing everyone in the CRM market and beyond to take this business model increasingly seriously.”