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Eight eye-openers from Salesforce.com's annual report

Chris Kanaracus | March 10, 2014
Last week, Salesforce.com reported its fourth-quarter and year-end fiscal 2014 results, announcing a major bump in revenue and even raising its guidance significantly. But the fast-growing cloud vendor is also continuing to post significant losses as it spends big on sales, marketing and acquisitions.

Salesforce.com has typically stressed it is focused on improving brand awareness and increasing top-line revenue for now. The company is putting plenty of money behind that goal. In its fiscal 2014, marketing and sales costs accounted for 53 percent of its total revenue, the same as in fiscal 2013, according to the annual report. Marketing and sales costs will "continue to represent a substantial portion of total revenues in the future," Salesforce.com said.

Innovation investments: Salesforce.com spent $623.8 million on research and development in its fiscal 2014. That works out to 15 percent of total revenue, a total that compares favorably to the likes of rival Oracle, which spent 14 percent of revenue or $1.27 billion on research and development in its quarter ended Nov. 30.

Headcount heats up: Salesforce.com had 13,300 employees as of Jan. 31, compared to 9,800 one year prior. That's a 36 percent increase.

Salesforce.com's number of customer support and professional services employees grew by 58 percent during its fiscal 2014, "to meet the higher demand for services from our customers, of which the majority was due to the acquisition of ExactTarget," according to the annual report. General increases in hiring for sales and marketing during the year also accounted for the growth.

Campus crunch: Salesforce.com bought 14 acres of undeveloped land in San Francisco in 2010 with plans to build a major new headquarters, but subsequently put the effort on ice. The land is now worth some $321.1 million as of Jan. 31, according to the annual report. But there's little indication that Salesforce.com will ramp up work again on the project.

In fact, it is continuing to "evaluate its future needs for office facilities space and its options for the undeveloped real estate, which may include selling a portion of or all the real estate holdings, or suspending pre-construction activity for several more years," the annual report states.

Disaster planning: While Salesforce.com has data centers in both the U.S. and other countries, and recently announced plans to open three more in Europe, for disaster recovery purposes. "Our production environment and all of our customers' data is currently replicated in near real-time in a facility located in the United States," according to the annual report.

Salesforce.com may find itself compelled to shift disaster-recovery efforts to foreign data centers, in order to appease non-U.S. customers with heightened concerns over data privacy following the revelations about U.S. National Security Agency domestic surveillance programs leaked by former NSA contractor Edward Snowden.

 

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