4 ms·

> Oh, you mean like Salesforce? No, wait, they had an IPO and they still only rarely show a profit. This is a very common argument. It's also wrong. Salesforc

by calcsam 10y ago

> Oh, you mean like Salesforce? No, wait, they had an IPO and they still only rarely show a profit. This is a very common argument. It's also wrong. Salesforce earned $6.7B of revenue in 2015^. It spent $3.2B of that revenue on sales and marketing, in other words getting new customers. It made $100M total profit. If Salesforce stopped caring about acquiring new customers, it could cut sales and marketing spend by 90%, down to $300M. It would then have $3B of profits. Financials (see page 7): http://s1.q4cdn.com/454432842/files/doc_financials/2016/Q4/CRM-Q416-Earnings-Press-Release-w-financials-(1).pdf http://s1.q4cdn.com/454432842/files/doc_financials/2016/Q4/C... ^ Technically between Feb 1, 2015 and Jan 31, 2016, and labeled in the report as Fiscal Year 2016.

qaq 10y ago
Hard to tell there are a lot ways to inflate revenue via creative "marketing". VZW & Comcast do cross promos where they are hiding deep discounts as marketing expenses.
- jamespo 10y ago
  cough Autonomy
- argonaut 10y ago
  You haven't actually provided a reason this applies to Salesforce. All you've done is insinuate something unsubstantiated.
  - qaq 10y ago
    Financial "Engineering" applies to all public companies across the board. What applies to SalesForce is the part of the statement "it's hard to tell" :) (Given the level of detail they provide on their filings about the Marketing/Sales spending it's very hard to tell :)
    - deleted 10y ago
      [deleted]
Retric 10y ago
There are a lot of accounting games you can play with 6.7B of revenue and 0.1B in profit plus rapid growth and a history of losses. I don't know if they are, but just because the numbers look good does not mean much.
wpietri 10y ago
This seems to assume that the number of customers would stay steady if marketing costs drop to zero. That strikes me as implausible. It's sort of like saying, "If we stop investing in R&D and machine maintenance, our factory will be much more profitable." In an accounting sense, yes, sort of. But in reality, no, because you're eating your seed corn. I grant that Salesforce is still in a "let's buy market share" mode, so we shouldn't expect to see a profit. So they could be just growing happily. But they also could be in a highly competitive market without much competitive advantage. Or it could be that they are using marketing spending to boost revenues well beyond what's sustainable. From the numbers, we can't tell. Which, I believe, was ericabiz's point.

by calcsam 10y ago

qaq 10y ago

Hard to tell there are a lot ways to inflate revenue via creative "marketing". VZW & Comcast do cross promos where they are hiding deep discounts as marketing expenses.

jamespo 10y ago
cough Autonomy
argonaut 10y ago
You haven't actually provided a reason this applies to Salesforce. All you've done is insinuate something unsubstantiated.
- qaq 10y ago
  Financial "Engineering" applies to all public companies across the board. What applies to SalesForce is the part of the statement "it's hard to tell" :) (Given the level of detail they provide on their filings about the Marketing/Sales spending it's very hard to tell :)
  - deleted 10y ago
    [deleted]

Retric 10y ago

There are a lot of accounting games you can play with 6.7B of revenue and 0.1B in profit plus rapid growth and a history of losses. I don't know if they are, but just because the numbers look good does not mean much.

wpietri 10y ago

This seems to assume that the number of customers would stay steady if marketing costs drop to zero. That strikes me as implausible. It's sort of like saying, "If we stop investing in R&D and machine maintenance, our factory will be much more profitable." In an accounting sense, yes, sort of. But in reality, no, because you're eating your seed corn. I grant that Salesforce is still in a "let's buy market share" mode, so we shouldn't expect to see a profit. So they could be just growing happily. But they also could be in a highly competitive market without much competitive advantage. Or it could be that they are using marketing spending to boost revenues well beyond what's sustainable. From the numbers, we can't tell. Which, I believe, was ericabiz's point.