Mr. Smith: The company was founded nine years ago with the idea of delivering business applications over the Internet, originally in the area of sales force automation and over the period of time, the company has introduced additional applications. We're now really known as the leader in CRM, customer relationship management; but all of the functionality, all of the applications are delivered over the Internet in the Software as a Service model. More recently we have introduced, in addition to the business application side, a development platform for people to develop and run any business application over the Internet. We call this platform Force.com and it's a relatively new offering that was introduced last year. Our 2008 fiscal year, which ended January 31, 2008, was really an amazing performance for the company. Our revenue growth for the year was over 50%, and note that we have a ratable revenue recognition model because we're providing a service. We recognize revenue over the period of our subscription agreements. We saw very strong revenue growth in all regions including Europe and Asia and we also saw significantly improved profitability. As important, our operating cash flow was very, very strong. We generated more than 200 million of operating cash flow on a revenue number of just around 748 million.
TWST: What have been the principal drivers of the company's success both over
time and during the last year?
Mr. Smith: Most important, we have a very focused model around customer success.
If you look at our relationship with our clients from the beginning, it's
essentially a low-risk proposition for a customer to sign up for the service. We
don't require large upfront investments in hardware or software from a client.
Instead, we offer a pay as you go or subscription model. Essentially, we have to
earn our customers' business every day. Clients need to trust that we can
deliver. That differentiates us from some of the traditional software vendors
that typically require large upfront payments, and once they get that money,
they're not so focused on that customer's success. Secondly, I think our
technology model, based on multi-tenancy, is really innovative. Because we are
multi-tenant, all of our customers are on the same version of the product; it is
similar to a utility model where new users simply plug in. We lead the market in
CRM functionality. In Gartner's analysis of the CRM market we are recognized as
the market leader. and I think we've been able to deliver a lot of innovation in
the CRM market. We're on the 25th version of our service and customers
continuously receive new functionality and improvements. We typically do three
to four releases a year. Finally, businesses are able to scale very easily on
our service. What that means is not only can they add a lot of users over time
to take advantage of the scalability and infrastructure that we provide, but we
are able to offer the capability for them to customize the application through
the underlying platform, Force.com. Right now, there are more than 8 million
customizations that have been made by salesforce.com customers. That's a very
powerful way for us to differentiate ourselves. Customizing the service offering
that we provide and integrations with other applications are extremely easy for
customers. It is really those three things.
Tickers included in this excerpt: CRM
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