SuccessFactors' Q1 Lives Up to Its Name

SuccessFactors (Nasdaq: SFSF) offers a suite of online applications to help with employee performance and talent management. But, with the grim recession, shouldn’t business be ailing?

Not necessarily. Even in tough times, companies still need to deal with the complexities of human resources. And, for the most part, SuccessFactors has a compelling value proposition.

Look at Q1. The company posted a 50% increase in revenues of $35.2 million. The sequential increase was a healthy 7%. Cash flows from operations also came to $2.7 million. In all, SuccessFactors has $105.5 million in the bank.

Why the growth? Well, SuccessFactors has been aggressive in moving in European markets. Plus, the company has been smart with its alliances, such as with IBM. Perhaps this helps explain the traction in landing sizable deals (there were three in excess of $500,000 for Q1).

At the same time, SuccessFactors continues to focus on cost management. In fact, since going public six quarters ago, the company has pumped up gross margins from 53% to 77%.

Going forward, the company expects Q2 earnings to range from $0.05 to $0.07 per share, with revenues of $35.5 million to $35.75 million. For the full year, the forecast is for earnings of $0.18 to $0.22 per share and revenues of $145 to $146 million.