The US is the largest market for cloud
In the previous part of this series, we looked at the fierce competition in the CRM space. In this article, we’ll look at the geographic contribution to Salesforce’s (CRM) revenues. We’ll also discuss how in the current macroeconomic scenario, limited international exposure of Salesforce revenues is a blessing in disguise.
According to an IDC Research report released in February 2017, the United States (SPY) could be the largest market for the public cloud between 2015–2020, generating more than 60% of total global revenues. The US is followed by Western Europe and APeJ (Asia-Pacific excluding Japan), which are expected to spend $24.1 billion and $9.5 billion, respectively, in 2017.
The Americas region contributes ~70% to overall revenues
The Americas continued to make up the majority of Salesforce revenues in fiscal 2017, as the above chart shows. The company posted $6.2 billion in revenues from the Americas, while Europe (EFA) and Asia-Pacific posted ~$1.4 billion and ~$793.5 million in revenues, respectively, in fiscal 2017.
Unlike Salesforce, its peers Microsoft (MSFT), IBM, and Oracle (ORCL), generate a substantial portion of their revenues from the Americas. Although the US is the largest market for the cloud, APeJ and Latin America are expected to have the fastest spending growth, with CAGR[1. compound annual growth rate] of 28.0% and 26.6%, respectively, as reported by IDC. This explains why Salesforce is ramping up its investments in Europe and Asia to expand its footprint there.