Marc Benioff’s cloud software company Salesforce.com is starting to emphasise big name city addresses for its operating hubs. Just six weeks ago the company signed a lease to take over half the space, or 714, 000 square feet, in a new office tower going up in San Francisco.
The new south financial district tower there will a new hub for the cloud computing company’s burgeoning west-coast urban campus, as well as its corporate headquarters.
With the execution of the new 15 year lease, which is the largest office lease ever signed in San Francisco, the developers agreed to assign naming rights for the building to their new tenant, and it will now be called the Salesforce Tower.
Salesforce Tower London
Now they are doing it again in London. Salesforce.com is already a major tenant in the new landmark Heron Tower, a major building in London’s central financial district, in Bishopsgate around the corner from St. Paul’s Cathedral and developed by Gerald Ronson’s Heron International Group.
Heron has now just announced that Salesforce.com will be taking another 50, 000 square foot of space in the building and that it had been granted naming rights for the building as well. No-one will be surprised therefore to learn that the name of the building will become “Salesforce Tower London, ” as well, mirroring the San Francisco property.
Now on a foggy day the company’s executives’ heads will literally be in the clouds in both cities as they design the latest generations of their collaborative, cloud-based, customer relationship management and marketing tools for their customers.
The landmark property branding concept is very smart idea as a form of marketing, and certainly makes a forceful statement that Salesforce.com has arrived. As the company is only leasing the property, too, the company should not suffer from the hubris of head-office real estate over-investment syndrome that occasionally afflicts companies just before their business takes a big dive.
With the additional space the San Francisco company will be the London building’s largest single tenant, spread over six floors from the 26th to the 31st floor.
Heron said they had set out to create an iconic building that would set new standards for innovation and quality in commercial office space with the new tower, and are delighted that the concept has been so fully embraced by Salesforce.com.
With 40 occupiable stories and with about 450, 000 square feet of office space, plus three floors and part of the ground floor dedicated to restaurant and other public spaces, the building is one of the tallest in London. Gerald Ronson commenced construction in 2008 in the teeth of the recession, and for a time came close to losing it before successfully refinancing the property a few months ago at the beginning of October 2013. Barry Sternlicht’s Starwood Capital participated with a substantial US$467 million piece of the total US$ 629 million of new financing made available.
After a very slow start the iconic new building is now thought to be about 90% leased, or under offer, and the remaining available space should obtain some very good rents moving forward as business in the City of London for commercial leasing is believed to have considerably improved of late.
Salesforce.com Financial Results
At the same time as the news of the new leasing success in London, Salesforce.com also yesterday issued its 2014 first quarter results for the period ending April 30th, 2014. Total first quarter revenue was US$1.23 billion, an increase of 37% year-over-year.
On a full US GAAP basis the company made a small loss of (US$0.16) per share for the quarter, and its diluted non-GAAP earnings per share was a small profit of US$0.11 per share.
However cash generated from operations grew substantially, totalling US$473 million at the end of the first quarter, an increase of 67% year-over-year. Accordingly, total cash, cash equivalents and marketable securities at April 30th, 2014 was $1.53 billion.
Looking forward Marc Benioff’s management is providing guidance for the company’s full fiscal year 2015, with revenues projected to be around US$5.3 billion, an increase of about 30% year-over-year.
The companies full US GAAP loss per share is expected to be in the range of ($0.49) to ($0.47) while diluted non-GAAP earnings per share is expected to be in the range of US$0.49 to US$0.51.
The quarter’s results and the forward guidance both seem to be respectable sets of numbers for a rapidly growing tech company, however after the announcement yesterday the shares fell initially about 4%, only to climb back to where they were again today, giving the company a market capitalisation of US$31.6 billion therefore, as at the time of writing.
About Marc Benioff
Marc Benioff, 48, was born in 1964 and was raised in the San Francisco metropolitan area. He graduated from Burlingame High School in 1982 and then studied for, and received in 1986, a Bachelor of Science in Business Administration at the University of Southern California.
Prior to founding Salesforce.com, Benioff was at Oracle Corporation for 13 years. At 23, he was named Oracle’s Rookie of the Year and three years later he was promoted to vice president, the company’s youngest person to hold that title.
Marc & Lynne Benioff
Before joining Oracle, Benioff had worked as an assembly language programmer at the Macintosh Division of Apple Computer, where he was inspired by the company and its co-founder, Steve Jobs. He went out on his own and founded Salesforce.com in 1999 which has since rapidly grown to become a major corporation in its own right.
According to the Forbes billionaires list Marc Benioff has a personal net worth estimated at US$3 billion as at April 2014. Even so he recognizes the importance of giving back, and just a few days ago he and his wife Lynne made second a donation of US$100 million to the San Francisco children’s hospital – doubling up a previous donation of the same amount.
About Gerald Ronson
Gerald Ronson, 74, is today one of the UK’s most successful businessmen and respected property developers of his generation.
He started working for his father at the age of 15, joining Heron Homes, which became one of the biggest house builders in Southern England. In 1956, at the age of 17, Gerald founded Heron Group – now called Heron International – of which he is Chief Executive.
Gerald Ronson is also a major philanthropist, having helped to raise over GB£100 million (US$162 million) for which he received a CBE last year. He has donated himself more than GB£30 million (US$48 million) to a variety of charities.
He has also established The Gerald Ronson Foundation, whose purpose is to carry on his charitable work and to which he has bequeathed all his shares in Heron International.
About Heron International
Gerald Ronson has been developing property since the 1960’s and has been a pioneer in the sector within the UK and European property markets. As a result Heron International became the second largest private company in Britain and has to date developed 160 buildings in nine countries, 10 million square feet of commercial and retail property and over 15, 000 residential units in the UK, US and continental Europe.
In London, recent developments include Heron Tower, the 46-storey office building in the City of London completed in March 2011 which offers flexible and sustainable world class office space; and The Heron, a development of 285 luxury apartments above new facilities for the Guildhall School of Music & Drama.
Heron International was also one of the earliest to introduce self-service petrol stations in the UK and, since 1966, has built nearly a thousand of them all across the country.