Salesforce.com beats expectations in Q3

Venture Beat — Thu, 20 Nov 2008 20:05:35 -0500

Salesforce.com, considered the standard bearer for the software-as-a-service business model, announced unexpectedly strong third-quarter earnings today.

Total revenue was $276.5 million — a 43 percent increase from the same period last year — and total income was 8 cents per share. Revenue and income beat out analysts’ estimates of $273.6 million and 7 cents per share, respectively. That’s good news for Salesforce, of course, particularly at a time when the economy is tanking and traditional business software companies like SAP are underperforming.

That’s also a good sign for the many startups that have built their businesses around SaaS or cloud computing. After all, analysts and entrepreneurs in this space like to predict that SaaS and cloud computing may actually benefit from the downturn, or at least avoid getting hit as hard, because they provide a low-cost alternative to traditional hardware and software for businesses. It’s nice to see some numbers to back that up.

Finally, it’s a rebuke to executives, such as Oracle chief executive Larry Ellison, who say SaaS isn’t a real business model. A single quarter doesn’t really prove or disprove anything, but it’s pretty hard to find tech companies surprising analysts nowadays. Salesforce shares have increased $1.17 (more than 5 percent) in after-hours trading.

[Photo:flickr/jenn_jenn]