The subscription revenue cost structure is quite effective. In 2022 on a $29 billion in subscription revenue, 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.
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 subscription revenue over time since professional services are used to enhance the use and retention of the software. Related Visual Stories
Salesforce main revenue generation strategy is based on a subscription-based cloud service. Over 92% of Salesforce revenues come from four categories of cloud CRM (Customer Relationship Management) services, that span from the sales cloud to marketing cloud. The remaining revenues are primarily driven by professional services. In 2017 the company generated $8.39 billion in revenues.
Salesforce is a cloud-based customer relationship management (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 was founded in 1999 and has grown to become the largest software vendor in the world. The company’s mission is to help businesses create meaningful connections with their customers. The Salesforce mission statement is primarily supported by core values related to innovation that facilitate stronger relationships between clients and customers in a variety of contexts. In the future, the company believes this ability to forge meaningful connections will hold it in good stead. Supporting the company mission statement to a lesser extent are trust, transparency, and equality at the company and customer level. In addition to its SaaS product, Salesforce offers a professional services solution where it helps enterprises reach global objectives and accelerate their development.
Salesforce was founded in 1999 by Marc Benioff, Frank Dominguez, Dave Moellenhoff, and Parker Harris. In a relatively short space of time, the corporate powerhouse of enterprise software has made numerous acquisitions as part of its broader growth strategy.
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