Subscription and support services make up most of Salesforce.com revenues
As we saw in Part 1 of the series, Salesforce.com (CRM) generated ~93% of its fiscal 1Q16 revenue from subscription and support fees associated with cloud services. This demonstrates the extent to which the company is invested in cloud-based application services.
The chart below shows how the firm’s various offerings contributed toward subscription revenues in 1Q16.
Performance by offering
In 1Q16, revenues from subscriptions to the firm’s Sales Cloud and Service Cloud came in at ~$630 million and $408 million, respectively.
The Salesforce1 Platform and ExactTarget Marketing Cloud—Salesforce.com acquired ExactTarget in 2013—generated revenues of ~$224 and $143 million, respectively. For more on ExactTarget, read Acquisitions are significant in Salesforce.com’s revenue growth.
Technology players are taking advantage of growth in the cloud space
Salesforce.com has a leadership position in the CRM (customer relationship management) space. Yet, it appears it’s not the only company benefitting from the growth in the SaaS (software-as-a-service) market. Indeed, Salesforce.com is seeing more and more competition from other leading players in cloud computing technology.
In fiscal 3Q15 ending March 31, 2015, Microsoft’s (MSFT) commercial cloud business reported 106% growth. Meanwhile, Oracle’s (ORCL) SaaS and PaaS (platform-as-a-service) business grew by 30% in fiscal 3Q15 ending February 28, 2015. IBM (IBM) also saw its cloud service register 65% growth in its recent fiscal quarter ending March 31, 2015.
For diversified exposure to Salesforce.com, you can invest in the Technology Select Sector SPDR Fund (XLK). XLK invests about 1.07% of its holdings in Salesforce.com.