Salesforce Marketing Cloud Up 31% in Fourth Quarter

Total Quarterly Revenue Was up 25% to $1.81 Billion

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Salesforce Chairman-CEO Marc Benioff.
Salesforce Chairman-CEO Marc Benioff. Credit: David Paul Morris/Bloomberg
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Salesforce's marketing cloud revenue grew 31% to $184 million in the fourth quarter of its fiscal 2016 year, ending Jan. 31, 2016, the company said Wednesday. For the full fiscal year, the marketing cloud operation expanded revenue 29% to $654 million.

The marketing cloud, which is the unit that helps clients use software and CRM data to support their marketing and now ad-buying efforts, increased its number of seven-figure transactions by 60% this year, the company said.

"In Q1, we had the largest marketing cloud win ever," said Salesforce Chairman and CEO Marc Benioff on the call. "Then we signed an even bigger one in Q3. In Q4, we did it again. We entered into the largest marketing cloud relationship ever with a large social network."

Salesforce reported a net loss of $25.5 million in the quarter, an improvement on its net loss of $65.8 million during the same period last year. For the year, the company's net loss was $47.4 million, compared to $262.7 million the previous year.

Non-GAAP net income was $129.7 million for the quarter, up from $92.8 million during the same period last year. For the year, it was $506.8 million, up from $341.6.

Growth for companies like Salesforce comes as marketers and agencies are increasingly investing in more sophisticated technology that captures and analyzes data then used to automatically serve ads to existing and new potential customers.

In 2015, Salesforce's marketing cloud expanded its ad-buying operation and reach by inking new partnerships with ad-tech firms. At the same time, the company announced better integration between its separate divisions. Previously, the marketing, sales and services clouds and capabilities weren't so aligned, and the company had only dabbled in media buying on social media platforms Facebook, Twitter and LinkedIn.

Salesforce also signed two nine-figure deals as it continues to push for deals that encompass more than one of its "cloud" offerings, said Mr. Benioff. One was a new account, and the other a nine-figure renewal and expansion effort for an existing client. And it disclosed a deal it signed with Unilever in the fourth quarter.

"We've been delivering great levels of success to [Unilever's] marketing team globally with marketing cloud and sales cloud," said Marketing Cloud CEO Scott McCorkle, responding to a follow-up question about his team's role in the account. "Now they're bringing the entire company with 95,000 people onto Salesforce to power their Digital Employee strategy and enable new levels of engagement."

Salesforce's total quarterly revenue was up 25% to $1.81 billion, compared to the same period last year. Full-year revenue was up 24% to $6.67 billion. "This was the best quarter we've ever had," said Mr. Benioff during the call.

While the company is continuously trying to drive more multi-cloud pacts that it describes as "wall-to-wall" deals, 72% of its customers are still using Salesforce for only one function, be it sales, service, marketing or analytics.

"There's an opportunity to deliver a customer success platform," said Mr. Benioff. "There's a huge opportunity for this company as it continues to grow and expand."

Salesforce "remains as a leader in the field of applying technology to companies' customer-focused marketing-related activities, especially through its sales, service and marketing cloud product lines," Pivotal Research Senior Analyst Brian Wieser wrote in a note to investors. "With substantial top and bottom-line growth ahead - more for [Salesforce] over the long-run than for any other company we follow - we continue to view [Salesforce] favorably."

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