Wall Street analysts are trying to track Salesforce.com’s (News - Alert) subscription business model, according to recent reports, as the company has developed an innovative way to sell its software that is piquing the interest of high-end executives watching the company.

An analyst at BMO Capital Markets, Karl Keirstead, noted that Salesforce’s potential for growth is more manageable to understand when one considers the amount of new business the company bills in one quarter. Unfortunately for those close onlookers, Salesforce only releases revenue which includes profits from long-term contracts. Keirstead, among others, can only speculate on which business for Salesforce is new in a quarter versus what revenue comes from existing customers.

Keirstead stated, "Billings are the best proxy we have for sales during a quarter. Everyone understands that this is the metric the Street cares about."

Salesforce’s market cap has extended to $19 billion, and it is generally thought to be growing drastically, especially taking into consideration its 34 percent increase in revenue announced last quarter. As the leader in CRM cloud computing and customer service software, Salesforce sells subscriptions to customers for online software access, and the customers then, in turn, pay either annually or monthly for this daily service, depending on their contracts with Salesforce.

Keirstead postulated that Salesforce puzzles analysts by holding the subscription fee from some customers as deferred revenue on its balance sheets to account for the gap between payment and delivery. This tactic prevents analysts from truly knowing how much income on each statement is actually from that quarter or held over from previous quarters. He went so far as to estimate that 60 percent of Salesforce’s revenue on income statements comes from previous quarters.

While analysts continue to apply for bookings and billings models from Salesforce, they are all apparently in agreement that Salesforce’s accounting in legitimate, yet slightly antiquated. But hey, the cloud computing giant seems to be doing something right, and if it ain’t broke, don’t fix it.

Juliana Kenny graduated from the University of Connecticut with a double degree in English and French. After managing a small company for two years, she joined TMC (News - Alert) as a Web Editor for TMCnet. Juliana currently focuses on the call center and CRM industries, but she also writes about cloud telephony and network gear including softswitches.

Edited by Rich Steeves