Article... Investors don't understand subscription model
Subscription businesses are forward-looking, not backward-looking. The health of the business is in what it is likely to make this year, the next year and the next, not what it has shipped, earned and spent in the past period.
If this is true why doesn't SFDC share churn rate? If we care about next quarter and next year shouldn't the best companies share number of subscribers, price per subscriber, churn rate, cost per subscriber?
SFDC stopped sharing all these numbers, they said it didn't reflect how they are doing, but the articles state investors don't understand models like wday.
Maybe SFDC does not want you to know how well they are or are not doing.
If I was investing big money like institutions I would insist on numbers that told me how the company is doing. But sales force has said no. Why?
My guess is the numbers are getting worse. The churn is getting higher, the revenue per seat getting lower, the cost per seat getting higher, run the numbers and we see why sales force keeps buying companies, if they cannot sell the seat more they lose money.
SFDC has always made their money on sales force automation, now they say cloud instead of SaaS, now the say Mobile and Social... but they don't make money in Mobile and social, just sounds good.
Investors should demand to know number of subscribers, churn rate and costs per subscriber.
So if SFDC stops selling how long before they are out of business. If they sell a 1000 seat deal, how long till it's profitable, how long will they retain the subscribers.
I find it hard to invest in a company that does not want to fool it's investor. Like Enron. No need to tell investors, we are all getting rich. So how can Fidelity invest their clients money in a subscription business when the business does not disclose how it's performing.
Subscription business is not that hard to understand as the article states, but people investing in a subscription business without knowing all the information are foolish. Tell us subscribers, cost of a subscription, revenue from a subscription, and churn.
SFDC made money from small orgs that did not have IT. Low cost of sale, high price..
Now enterprise. IT is involved, high cost of sale, low price. Big dales but they are losing money.
But Fidelity does not have more money in the 401K, it has been sitting at $150 to $160 for the last 2 years. I would think they are sick of the numbers getting worse.
Not only has it done nothing in two years, SFDC has given away around 15 million shares in that time frame. That would #$%$ me off if I was fidelity, how much does Fidelity own 20 million. So you sit on 20 million shares, while insiders cash in on 15 million new shares that have diluted your shares. Yep people are getting rich, just not investors.
They have claimed that they will make money in the future.
has not happened.
Growth will now slow over the next 12 months.
Good luck Fidelity. I would not touch this as an investment. As a trade, sure...