Two numbers to keep in mind: $4.8208 billion and $5.25 billion. The first number is the revenue reported by Nash-Finch. According to Wikipedia and Fortune magazine, the company is based in Edina, Minnesota, near Minneapolis. It is involved in “Food distribution to private companies, primarily independent supermarkets, and military commissaries; and the operation of retail stores,” according to its Wikipedia page. According to Fortune, the company was number 498 on its list of 500 largest American companies in 2012. In 2013, it ranked number 500.
The second number is the low end of the fiscal year 2015 guidance just offered up by Salesforce.com in a conference call with analysts and a press release from earlier this week. If you can do a little math and draw a straight line or two, this data would suggest that a year from now Salesforce will occupy at least the number 500 position in Fortune’s vaunted list. But keep in mind that there are other companies out there with similar stories.
So this is no time to estimate chicks by counting eggs in the incubator, if you know what I mean. But for armchair prognosticators, it strongly suggests that absent a major stumble, well, you know. One thing that bolsters the company’s chances even more than my simple assumptions is the amount of uncounted (but NOT unaccounted) cash on the books. According to the press release, the company has:
- Deferred Revenue of $2.52 Billion, up 35% Year-Over-Year
- Unbilled Deferred Revenue of Approximately $4.50 Billion, up 29% Year-Over-Year
These measures are a testament to the power of the subscription model and one reason I have been such a fan of it. Subscription revenues get recognized as they are billed or, if the revenue is deferred, each month when the bills go out, the customer’s balance is dinged (that’s a technical term). Deferred revenue refers to cash on the books and in the bank that will be dinged. Unbilled deferred revenue refers to cash under contract that has not been either billed or collected because it is accounted for in a future fiscal year. Think of it as ding-able in the future.
No matter how you slice it, Salesforce has a lot of momentum with most recent Quarterly Revenue of $1.15 Billion, up 37% Year-Over-Year, a forecast that is amazing, and lots of cash in the bank. These results and the forecast show what a good job the company has done in building a repeatable business and the power of the subscription model when done right. I don’t think there will be any escaping the speculation about the Fortune 500 this year, which might put a little pressure on everyone at One Market Street in San Francisco. But by now, they’re used to it.
(Cross-posted @ Beagle Research, LLC)