Salesforce Says Adopters Of Its Chatter App Approach 20,000 Businesses

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Salesforce CEO Marc Benioff, speaking on a conference call Thursday announcing the company's second-quarter financial results, said close to 20,000 businesses are using Chatter. "Customer response to Chatter has been nothing short of amazing," he said.

For its fiscal 2011 second quarter ended July 31 Salesforce reported sales of $394.4 million, up 25 percent from $316.1 million in the second quarter last year. Second-quarter earnings for the quarter were $14.7 million, down more than 30 percent from $21.2 million from one year earlier.

Salesforce is forecasting that sales will be in the range of $408 million to $410 million for the current third quarter, and in the range of $1.595 billion to $1.6 billion for all of fiscal 2011 that ends Jan. 31, 2011.

Customer adoption of Chatter is significant because it's Salesforce's first application designed for organization-wide use, unlike the company's salesforce and customer service management applications and Force.com development platform, which are used by specific departments or groups of employees.

"Chatter has the potential to take us enterprise-wide," Benioff said on the call. "This significantly increases our addressable market in cloud computing, one of the fastest growing segments in technology today." He also said adoption of Chatter increases Salesforce's customer retention rate.

Chatter works like consumer social collaboration sites such as Twitter and Facebook, but was designed for employee use within a business or organization. Salesforce unveiled Chatter at its Dreamforce customer conference in November and went live with the on-demand application on June 22.

Companies can turn on the Chatter service for free for employees and managers who are licensed to use Salesforce's CRM and Force.com services. Businesses can purchase additional Chatter-only licenses, for $15 per user, per month, for employees who aren't licensed to use other Salesforce products.

Benioff said about 10,000 Salesforce customers turned Chatter on in the first week of its availability. That eventually grew to about 20,000 customers, close to one-quarter of Salesforce's 82,400 customer base. The CEO said adopting companies included Sprint, Tyco, Avis, Budget, Dell and Perkin-Elmer.

Benioff said some companies purchased licenses to expand Chatter to departments that don't use the CRM or Force.com applications, including Nokia, Mitsubishi and Reed Exhibitions. But he didn't disclose how much revenue those subscriptions generated.

Salesforce said it increased its customer base by 5,100 in the second quarter, including 4,600 new customers it acquired "organically" and 500 that came with its $142-million acquisition of data services company Jigsaw. Benioff said its total customer base of 82,400 is up 19,000 from the second quarter last year.