Pacific Crest’s software analyst Brent Bracelin recently said that we’re entering the “click to commute” era, in which a shift from client / server computing to cloud computing is picking up speed.
Based on feedback from 16 companies at a Pacific Crest IT conference last week, writes Bracelin, the enterprise IT market has seen “the rise of shadow IT, where business users are directly consuming cloud resources and bypassing traditional internal IT,” and “there has been a noticeable change in acceptance of cloud / SaaS at the Fortune 1000 in the last six months.”
Companies such salesforce.com, inc. (NYSE:CRM), SciQuest, Inc. (NASDAQ:SQI) , and Aspen Technology, Inc. (NASDAQ:AZPN) are set to benefit from application software, writes Bracelin:
Through 2012, application software grew better than infrastructure software. Historically, in an economic slowdown, application software has been more adversely affected than infrastructure software. salesforce.com, inc. (NYSE:CRM), SciQuest, and AspenTech’s Q4 strength provided further evidence of the resiliency of application software, and we believe that it is likely to continue through 2013.
In this post I will dig deeper into the Q4 results and the future growth drivers of the three companies Bracelin mentioned.
1. salesforce.com, inc. (NYSE:CRM)
Company Overview: salesforce.com, inc. (NYSE:CRM) is an enterprise cloud computing company that provides business software on a subscription basis. The company is best known for its on-demand Customer Relationship Management (CRM) solutions.
Earnings and Guidance: The company reported $0.51 earnings per share for the fourth quarter, beating the analysts’ consensus estimate of $0.40 by $0.11. The company had revenue of $835.00 million for the quarter, compared to the consensus estimate of $830.85 million. During the same quarter in the previous year, the company posted $0.43 earnings per share. The company’s revenue for the quarter was up 32.1% on a year-over-year basis.
salesforce.com, inc. (NYSE:CRM) has set its Q1 guidance at $0.40-0.42 EPS and its FY14 guidance at $1.93-1.97 EPS. Analysts expect that Salesforce.com will post $1.96 EPS for the current fiscal year.
Growth Driver: Saleforce has just reached an annual revenue run rate of $3 billion. The company now has the product breadth to become a $10 billion revenue company with its six product lines — sales force automation, customer service, marketing, collaboration, human capital management, and cloud development platforms. The company has expanded its “total available market” to greater than $40 billion.
salesforce.com, inc. (NYSE:CRM) has recently acquired Buddy Media, a social enterprise software unit that enables clients to listen, engage, gain insight, publish, advertise and measure social marketing programs. Buddy Media had a run rate of about $100 million in annual revenue before it was acquired.
2. SciQuest, Inc. (NASDAQ:SQI)
Company Overview: SciQuest, Inc. is a company that provides an integrated, web-based end-to-end e-procurement solution.
Earnings and Guidance: SciQuest reported $0.07 earnings per share for the fourth quarter, beating the analysts’ consensus estimate of $0.06 by $0.01. The company had revenue of $19.70 million for the quarter, compared to the consensus estimate of $20.31 million. During the same quarter in the previous year, the company posted $0.09 earnings per share. The company’s revenue for the quarter was up 38.7% on a year-over-year basis.
SciQuest has set its Q1 guidance at $0.06-0.07 EPS and its FY13 guidance at $0.34-0.38 EPS. On average, analysts predict that SciQuest will post $0.37 earnings per share for the current fiscal year.
Growth Driver: Expanding the commercial presence remains SciQuest’s most prominent near-term goal. The 2012 acquisitions of Upside and Spend Radar are helping to establish a broader footprint in the commercial space.
3. Aspen Technology, Inc. (NASDAQ:AZPN)
Company Overview: Aspen Technology provides software and services to process industries. The company began more than 30 years ago in a lab at MIT.