Salesforce’s bet on ExactTarget starts to pay off Inc. CEO Marc Benioff’s bet that his customers are seeking marketing tools alongside customer-management software is starting to pay off.

Salesforce, which acquired Indianapolis-based e-mail marketing provider ExactTarget Inc. in July for $2.5 billion, issued third-quarter sales and earnings forecasts on Thursday that topped analysts’ estimates and raised guidance for the year.

Salesforce shares rose more than 13 percent in Friday morning trading, to about $49.50 per share.

Benioff is adding to his sales and customer-support products as he seeks to expand beyond $4 billion in sales this year. He’s pushing the San Francisco-based company’s presence in online software that companies pay to use on an annual basis, getting regular updates and new features, instead of installing programs on personal computers and servers.

The ExactTarget deal will add $140 million to $145 million in revenue this year, according to the firm.

“In terms of foreseeing the future and making the right bets, Benioff’s truly been vindicated,” said Pat Walravens, an analyst at JMP Securities LLC, who has a market outperform rating on the shares, the equivalent of a buy.

“Benioff has repositioned Salesforce as the customer company. He loves having Burberry up on stage with him,” and selling online marketing tools to Coca-Cola Co. and others, Walravens said. ExactTarget adds customers including Nike Inc. and Gap Inc.

Salesforce is increasingly targeting “the largest and most important companies in the world” with its software, Benioff said on a conference call with analysts Thursday.

The ExactTarget deal has also led to “synergies” that have resulted in about 200 job losses throughout Salesforce’s global operations, IBJ reported Thursday.

An ExactTarget spokesman described the impact at his company, which employs about 1,000 people in Indianapolis and more than 800 elsewhere, as “minimal.” ExactTarget has more than 100 job openings, he noted.

Salesforce revenue for the period ending in October will be $1.05 billion to $1.06 billion and profit excluding some items will be 8 cents to 9 cents a share, the company said in a statement Thursday. That compared with analysts’ average estimate for profit of 7 cents on sales of $1.04 billion, according to data compiled by Bloomberg.

Salesforce raised its full-year sales forecast to a range of $4 billion to $4.03 billion, up from $3.96 billion to $4 billion.

“We’re having an outstanding year of growth,” Benioff told analysts. “But one thing has never fully optimized for is enterprise distribution, and the ability to reach the largest customers.”

Salesforce surged 13 percent, to $49.26, at 9:57 a.m., after earlier reaching $49.49, the highest price since its initial public offering in June 2004. The stock had climbed 3.9 percent this year through Thursday, trailing the 9.5-percent return of the Standard & Poor’s 500 Information Technology Index.

“More and more IT budget dollars will flow to the chief marketing officer over time and has decided to target that person,” said Steven Ashley, an analyst at Robert W. Baird & Co., who has an outperform rating on the shares, the equivalent of a buy. “Marketing generates leads and hands them to sales, then they become customers and need service.”

For the fiscal second quarter through July, sales rose 31 percent, to $957.1 million, compared with analysts’ average estimate of $938.9 million. Profit excluding some items was 9 cents a share, compared with analysts’ 7-cent projection.

Salesforce reported net income of $76.6 million, which included a $133.4 million tax gain. Analysts had predicted a $90 million loss.

ExactTarget helped to lift Salesforce’s revenue result and outlook, although Benioff probably had to pay a premium to buy the company, Walravens said.

“This is one area where it took him a while to figure it out, and as a result, he had to pay more money than we probably would have liked,” Walravens said.

In addition to ExactTarget, Salesforce has bought social-media marketing companies Buddy Media Inc. for $689 million last year, and Radian6 Technologies Inc. for $326 million in 2011. When Salesforce announced the ExactTarget deal in June, Benioff told analysts buying smaller companies was taking too long to tack on revenue.

Benioff is competing in the cloud-computing software market with companies including Oracle Corp., SAP AG and Workday Inc. Oracle CEO Larry Ellison in June hosted a conference call with Benioff as the companies mended fences. Salesforce signed a long-term deal to use Oracle’s software and Exadata computers, and Oracle began using Salesforce’s customer-management software. A former Ellison deputy, Benioff later became a competitor in customer-relationship software.

Salesforce surpassed SAP this year as the top seller of customer-relationship management software, according to market researcher Gartner Inc. In June, Salesforce hired Keith Block, a former Oracle sales executive, as president and vice chairman.

Salesforce plans to hold its annual Dreamforce user conference in San Francisco starting Nov. 18. Speakers include Yahoo! Inc. CEO Marissa Mayer and Facebook Inc. Chief Operating Officer Sheryl Sandberg, according to Salesforce’s website.

Please enable JavaScript to view this content.

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets in {{ count_down }} days.