Professional services are run at negative gross margins. In short, in 2022, on $2.33 billion in revenue from professional services, Salesforce reported a $208 million gross loss. In short, Salesforce runs professional services at a loss to boost its subscriptionrevenue over time since professional services are used to enhance the use and retention of the software.
The subscriptionrevenuecoststructure is quite effective. In 2022 on a $29 billion in subscriptionrevenue, the company reported $5.82B in cost of revenue (expenses related to delivering the service and providing support, including the costs of data center capacity), thus generating a $23.2 billion in gross profits, in 2023.
Marc Benioff, Co-CEO of Salesforce is the main individual shareholder, with 3% of the company’s stock. Other major individual shareholders comprise Parker Harris, Co-Founder, and Chief Technology Officer, and Bret Taylor, who is the company’s CEO. Major institutional shareholders comprise The Vanguard Group, Fidelity, and BlackRock.
Salesforce follows a SaaSbusinessmodel, offering four main categories of cloud CRM (Customer Relationship Management) services spanning the sales cloud to the marketingcloud. Where subscriptions drive the primary revenuemodel. However, the company leverages professional assistance to push the adoption of the software and retention of paying subscribers. Indeed, in 2023 Salesforce generated $29 billion from subscriptions and $2.33 billion from professional services.
In 2023 Salesforce generated $29 billion from subscriptions and $2.33 in professional services, compared to $24.66 billion in subscriptions in 2022 and $1.83 in professional services.
Professional services are run at negative gross margins. In short, in 2022, on $2.33 billion in revenue from professional services, Salesforce reported a $208 million gross loss. In short, Salesforce runs professional services at a loss to boost its subscriptionrevenue over time since professional services are used to enhance the use and retention of the software. The subscriptionrevenuecoststructure is quite effective. In 2022 on a $29 billion in subscriptionrevenue, the company reported $5.82B in cost of revenue (expenses related to delivering the service and providing support, including the costs of data center capacity), thus generating a $23.2 billion in gross profits, in 2023.
Salesforce is a cloud-based customer relationshipmanagement (CRM) provider, allowing businesses to build meaningful and sustained relationships with their customers. With robust, customizable software that integrates with social media, Gmail, and Microsoft Outlook, the Salesforce CRM platform is rated highly among businesses of all shapes and sizes. Recent data has shown that the company has captured 19.5% of the global CRM market.
Salesforce’s mission is to build bridges between companies and customers. Salesforce does that via a SaaS platform, which is enhanced via professional services offered on top of it.
Salesforce was founded in 1999 by Marc Benioff, Frank Dominguez, Dave Moellenhoff, and Parker Harris. In a relatively short time, the corporate powerhouse of enterprisesoftware has made numerous acquisitions as part of its broader growthstrategy to become a SaaS giant!
Related
subscription-revenue-and-retention/" data-a2a-title="How Salesforce Uses Professional Services To Drive Subscription Revenue And Retention">
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
