Will Asia Drive The Next Wave Of Growth For Salesforce?

Cloud computing behemoth Salesforce (NYSE:CRM) continues to grow at a rapid pace, with a notable portion of its growth coming from the Americas. However, despite the increased focus on international markets, Europe and Asia collectively account for less than 30% of Salesforce’s net revenues. The company’s performance in Asia has been a little surprising, considering that its revenues from the region have grown at a slower pace than many other markets, despite Asia’s huge potential for cloud computing growth. Below we take a look at Salesforce’s presence in the Asian Market.

Salesforce’s Rapid Growth

In the past three years, the company’s revenues have grown at more than 25% annually. In the first two quarters of the current fiscal year, revenues increased 25% over the prior year to $3.9 billion and the company expects to meet its annual target of $8.27 billion to $8.32 billion. The continued focus on the Americas region has yielded positive results for the company, with the region contributing more than 70% to Salesforce’s annual revenues in each of the past three years. The trend has continued this year as well, with the region contributing 73% to the company’s total revenue in the first six months.

International Markets

In the past few years, Salesforce has opened data centers in the U.K., Germany, France and Japan, increasing its focus on international markets. Despite this renewed focus, Europe and Asia’s revenue contribution is still relatively low.

Asia’s Potential

Per Gartner, the CRM market grew 12.3% over the prior year to $26.3 billion in 2015. The Asia-Pacific and China markets grew the fastest at 21.7% and 18.4%, respectively, significantly outpacing the growth in other regions. ^[1]. Going forward, the Asia Pacific market is expected to grow at 12% and reach $11.5 billion by 2018. ^[2] Additionally, per a report by the U.S Department of Commerce, Japan, India and China are expected to be among the top global markets for cloud computing. ^[3]. Retaining its focus on the Asia-Pacific market can help drive the next wave of growth for Salesforce.

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1. Gartner CRM Growth, Gartner, May 25 2016 [↩]
2. Public Cloud Services In Mature Asia Pacific and Japan Forecast To Reach $7.4 Billion in 2015, Gartner, January 15, 2015 [↩]
3. 2015 Top Markets Report – Cloud Computing, U.S. Department of Commerce, July 2015 [↩]