Published:
Salesforce.com Announces Record Fiscal Third Quarter Results
SAN FRANCISCO, Nov. 20 /PRNewswire-FirstCall/ -- Salesforce.com
(NYSE: CRM), the enterprise cloud computing company, today announced results
for its fiscal third quarter ended October 31, 2008.
"In times like these, our value proposition of low start up cost, low
risk, and fast results is resonating like never before," said Marc Benioff,
chairman and CEO, salesforce.com. "In the third quarter, we continued to add
customers at the same record level we did last quarter, at a time when the
traditional enterprise software world was retrenching."
Salesforce.com delivered the following results for its third quarter
fiscal year 2009:
Revenue: Total Q3 revenue was $276.5 million, an increase of 43% on a
year-over-year basis and an increase of 5% on a quarter-over-quarter basis.
Subscription and support revenues were $253.4 million, an increase of 44% on a
year-over-year basis and an increase of 6% on a quarter-over-quarter basis.
Professional services and other revenues were $23.1 million, an increase of
41% on a year-over-year basis and a decrease of 1% on a quarter-over-quarter
basis.
Earnings per Share: Q3 GAAP diluted earnings per share were approximately
$0.08, including approximately $19 million in stock based compensation and
approximately $2.5 million in amortization of purchased intangibles related to
previously announced acquisitions. For the purpose of this Q3 GAAP EPS
calculation, there was an average of approximately 125 million diluted shares
outstanding during the quarter.
Deferred Revenue: Deferred revenue was approximately $470 million as of
October 31, 2008, an increase of 38% on a year-over-year basis and down
approximately 2% on a quarter-over-quarter basis. Excluding a negative
foreign currency impact of approximately $14M during the quarter, deferred
revenue grew by approximately $4 million in constant currency terms from Q2.
Cash: Cash from operations for the fiscal third quarter was approximately
$17 million, compared to $52 million in the year-ago period and $53 million in
Q2. Total cash, cash equivalents and marketable securities finished the
quarter at approximately $805 million, a decrease of approximately $19 million
from Q2 and up approximately $234 million from October 31, 2007. The
sequential decrease in cash and marketable securities was primarily due to the
company's previously announced acquisition of InStranet and to the purchase of
shares in salesforce.com's Japanese majority-owned joint venture. Together
these items reduced cash by approximately $44 million during the quarter.
Customer Additions: During the quarter net paying customers rose
approximately 4,100, and total customer count stands at approximately 51,800.
Compared with the year ago quarter, net paying customers have grown by
approximately 13,700.
Guidance: As of November 20, 2008, salesforce.com is initiating guidance
for its fourth quarter, fiscal year 2009. In addition, the company is
initiating revenue guidance for its full fiscal year 2010.
Q4 FY09: Revenue for the company's fourth fiscal quarter is projected to
be in the range of approximately $284 million to approximately $285 million.
The company expects fully diluted GAAP EPS to be in the range of $0.06 to
$0.07. The GAAP EPS estimate includes the effects of stock based compensation
and the amortization of purchased intangibles. For the fourth fiscal quarter,
stock based compensation expense is expected to be approximately $22 million,
and the expense associated with amortization of purchased intangibles,
including that associated with the acquisition of InStranet, is expected to be
approximately $4.2 million. For purposes of the Q4 GAAP fully diluted EPS
calculation, the company is expecting an average diluted shares count of
approximately 127 million shares, and a GAAP tax rate of 48%.
Fiscal FY10: The company is initiating revenue guidance for its full
fiscal year 2010 with projected revenue in the range of $1.350 billion to
$1.360 billion. The company expects to update this guidance, as well as
provide its expectations for FY10 GAAP EPS when it announces its fourth
quarter, fiscal year 2009 results planned for February, 2009.
Quarterly Conference Call
Salesforce.com will host a conference call to discuss its third quarter
fiscal 2009 results today at 2:00 p.m. Pacific Time. A live audio webcast of
the conference call, together with detailed financial information, can be
accessed through the company's Investor Relations Web site at
http://www.salesforce.com/investor. In addition, an archive of the webcast can
be accessed through the same link. Participants who choose to call in to the
conference call can do so by dialing domestically (866)-901-SFDC or
(866)-901-7332 and internationally (706)-902-1764, passcode salesforce.com or
72989815. A replay will be available at (800) 642-1687 or (706) 645-9291,
passcode 72989815, until midnight Eastern Time December 5, 2008.
About salesforce.com
Salesforce.com is the enterprise cloud computing company. The company's
portfolio of SaaS applications, including its award-winning CRM, available at
http://www.salesforce.com/products/, has revolutionized the ways that
customers manage and share business information over the Internet. The
company's Force.com PaaS enables customers, developers and partners to build
powerful on-demand applications that deliver the benefits of multi-tenancy
across the enterprise. Applications built on the Force.com platform, available
at http://www.force.com/, can be easily shared, exchanged and installed with a
few simple clicks via salesforce.com's Force.com AppExchange marketplace
available at http://www.salesforce.com/appexchange/.
As of October 31, 2008, salesforce.com manages customer information for
approximately 51,800 customers including ABN AMRO, Dow Jones Newswires, Japan
Post, Kaiser Permanente, KONE, Sprint Nextel, and SunTrust Banks. Any
unreleased services or features referenced in this or other press releases or
public statements are not currently available and may not be delivered on time
or at all. Customers who purchase salesforce.com applications should make
their purchase decisions based upon features that are currently available.
Salesforce.com has headquarters inSan Francisco, with offices inEurope and
Asia, and trades on the New York Stock Exchange under the ticker symbol "CRM".
For more information please visit http://www.salesforce.com, or call
1-800-NO-SOFTWARE.
"Safe harbor" statement under the Private Securities Litigation Reform Act
of 1995: This press release contains forward-looking statements about
expected revenue and GAAP earnings per share for the fourth fiscal quarter of
2009 and revenue for the full fiscal year 2010, and our expected tax rate,
stock based compensation expense, amortization rate, and shares outstanding,
the achievement of which involve risks, uncertainties and assumptions. If any
such risks or uncertainties materialize or if any of the assumptions prove
incorrect, our results could differ materially from the results expressed or
implied by the forward-looking statements we make.
The risks and uncertainties referred to above include -- but are not
limited to -- risks associated with possible fluctuations in our financial and
operating results, rate of growth and anticipated revenue run rate; errors,
interruptions or delays in our service or our Web hosting; breaches of our
security measures; the financial impact the acquisition of InStranet and any
future acquisitions; the nature of our business model; our ability to continue
to release, and gain customer acceptance of, new and improved versions of our
service; successful customer deployment and utilization of our existing and
future services; competition; various financial aspects of our subscription
model; the emerging market in which we operate; our ability to hire, retain
and motivate our employees and manage our growth; changes in our customer
base; technological developments; regulatory developments; unanticipated
changes in our effective tax rate; and fluctuations in the number of shares we
have outstanding, the price of such shares, foreign currency exchange rates,
interest rates, and general developments in the economy, financial markets,
and credit markets.
Further information on these and other factors that could affect our
financial results is included in the reports on Forms 10-K, 10-Q and 8-K and
in other filings we make with the Securities and Exchange Commission from time
to time, including our Form 10-Q that will be filed for the quarter ended
October 31, 2008 and our Form 10-K for the fiscal year ended January 31, 2008.
These documents are or will be available on the SEC Filings section of the
Investor Information section of our website at
http://www.salesforce.com/investor.
Salesforce.com, inc. assumes no obligation and does not intend to update
these forward-looking statements, except as required by law.
Copyright (c) 2008 salesforce.com, inc. All rights reserved. Salesforce
and the "no software" logo are registered trademarks of salesforce.com, inc.,
and salesforce.com owns other registered and unregistered trademarks. Other
names used herein may be trademarks of their respective owners.
salesforce.com, inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
October 31, October 31,
2008 2007 2008 2007
Revenues:
Subscription and support $253,403 $176,376 $718,464 $484,064
Professional services and other 23,084 16,427 68,722 47,730
Total revenues 276,487 192,803 787,186 531,794
Cost of revenues (1):
Subscription and support 32,424 23,887 91,802 66,446
Professional services and other 23,924 20,394 69,935 58,414
Total cost of revenues 56,348 44,281 161,737 124,860
Gross profit 220,139 148,522 625,449 406,934
Operating expenses (1):
Research and development 26,270 16,892 70,070 46,109
Marketing and sales 136,452 96,216 389,930 270,357
General and administrative 41,284 29,296 117,797 80,889
Total operating expenses 204,006 142,404 577,797 397,355
Income from operations 16,133 6,118 47,652 9,579
Interest, net 3,840 6,556 17,270 17,178
Gain on sale of investment 0 1,272 0 1,272
Other income (expense) 534 285 (1,069) 734
Income before provision for income
taxes and minority interest 20,507 14,231 63,853 28,763
Provision for income taxes (8,824) (6,594) (29,693) (15,089)
Income before minority interest 11,683 7,637 34,160 13,674
Minority interest in consolidated
joint venture (1,559) (1,125) (4,485) (2,697)
Net income $10,124 $6,512 $29,675 $10,977
Basic net income per share $0.08 $0.06 $0.25 $0.09
Diluted net income per share $0.08 $0.05 $0.24 $0.09
Shares used in computing basic net
income per share 121,635 117,361 120,759 116,208
Shares used in computing diluted
net income per share 125,133 122,169 125,173 121,429
(1) Amounts include stock-based
expenses, as follows:
Cost of revenues $2,817 $2,014 $8,149 $5,753
Research and development 2,494 1,685 6,852 4,472
Marketing and sales 9,235 6,313 26,105 18,197
General and administrative 4,730 4,166 15,119 11,199
Total stock-based
expenses $19,276 $14,178 $56,225 $39,621
salesforce.com, inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
October 31, October 31,
2008 2007 2008 2007
Revenues:
Subscription and support 91% 91% 91% 91%
Professional services and other 9 9 9 9
Total revenues 100 100 100 100
Cost of revenues:
Subscription and support 12 12 12 12
Professional services and other 8 11 9 11
Total cost of revenues 20 23 21 23
Gross profit 80 77 79 77
Operating expenses:
Research and development 10 9 9 9
Marketing and sales 49 50 49 51
General and administrative 15 15 15 15
Total operating expenses 74 74 73 75
Income from operations 6 3 6 2
Interest, net 1 3 2 3
Gain on sale of investment 0 1 0 0
Other income (expense) 0 0 0 0
Income before provision for income
taxes and minority interest 7 7 8 5
Provision for income taxes (3) (3) (4) (3)
Income before minority interest 4 4 4 2
Minority interest in consolidated
joint venture 0 (1) 0 0
Net income 4% 3% 4% 2%
Stock-based expenses as a percentage
of total revenues, as follows:
Cost of revenues 1% 1% 1% 1%
Research and development 1 1 1 1
Marketing and sales 3 3 3 3
General and administrative 2 2 2 2
Total stock-based
expenses 7% 7% 7% 7%
salesforce.com, inc.
Condensed Consolidated Balance Sheets
(in thousands)
October 31, January 31,
2008 2008
unaudited
Assets
Current assets:
Cash and cash equivalents $382,314 $279,095
Short-term marketable securities 219,144 171,748
Accounts receivable, net 157,680 220,061
Deferred commissions 35,355 35,679
Deferred income taxes 14,319 7,173
Prepaid expenses and other
current assets 39,747 27,055
Total current assets 848,559 740,811
Marketable securities, noncurrent 203,148 218,957
Fixed assets, net 66,833 41,380
Deferred commissions, noncurrent 13,909 16,435
Deferred income taxes, noncurrent 36,258 26,512
Capitalized software, net 31,950 23,061
Goodwill 27,699 8,556
Other assets, net 47,375 13,881
Total assets $1,275,731 $1,089,593
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $20,875 $7,478
Accrued expenses and other
current liabilities 134,600 125,996
Income taxes payable 1,923 3,622
Deferred revenue 458,044 468,821
Total current liabilities 615,442 605,917
Income taxes payable, noncurrent 10,834 8,465
Long-term lease abandonment
liability and other 6,150 2,136
Deferred revenue, noncurrent 11,490 12,073
Minority interest 13,428 8,943
Total liabilities 657,344 637,534
Stockholders' equity:
Common stock 122 119
Additional paid-in capital 613,768 471,802
Accumulated other comprehensive
loss (7,592) (2,276)
Retained earnings (deficit) 12,089 (17,586)
Total stockholders' equity 618,387 452,059
Total liabilities and stockholders'
equity $1,275,731 $1,089,593
salesforce.com, inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
October 31, October 31,
2008 2007 2008 2007
Operating activities:
Net income $10,124 $6,512 $29,675 $10,977
Adjustments to reconcile
net income to net cash provided
by operating activities:
Gain on sale of investment 0 (1,272) 0 (1,272)
Loss on securities 2,052 0 2,052 0
Minority interest 1,559 1,125 4,485 2,697
Depreciation and amortization 7,910 6,758 24,938 17,651
Amortization of deferred
commissions 14,784 11,044 43,414 29,727
Expenses related to
stock-based awards 19,276 14,178 56,225 39,621
Excess tax benefits from
employee stock plans (17,706) (9,298) (42,247) (24,504)
Changes in assets and
liabilities (20,878) 22,951 35,486 48,585
Net cash provided by
operating activities 17,121 51,998 154,028 123,482
Investing activities:
Purchase of subsidiary stock (16,693) 0 (16,693) 0
Business combination, net of
cash acquired (27,344) 0 (27,344) 0
Changes in marketable
securities (30,263) (35,140) (38,841) (83,087)
Capital expenditures (11,614) (9,122) (48,827) (35,183)
Proceeds from sale of investment 0 1,659 0 1,659
Net cash used in investing
activities (85,914) (42,603) (131,705) (116,611)
Financing activities:
Proceeds from the exercise
of stock options 6,595 20,586 40,605 44,290
Excess tax benefits from
employee stock plans 17,706 9,298 42,247 24,504
Principal payments on capital
lease obligations (286) (6) (291) (169)
Net cash provided by
financing activities 24,015 29,878 82,561 68,625
Effect of exchange rate changes 49 (1,461) (1,665) (1,343)
Net (decrease) increase in cash
and cash equivalents (44,729) 37,812 103,219 74,153
Cash and cash equivalents,
beginning of period 427,043 122,949 279,095 86,608
Cash and cash equivalents,
end of period $382,314 $160,761 $382,314 $160,761
salesforce.com, inc.
Additional Metrics
(Unaudited)
Oct 31, July 31, April 30, Jan 31, Oct 31, July 31,
2008 2008 2008 2008 2007 2007
Full Time Equivalent
Headcount 3,318 3,046 2,864 2,606 2,461 2,302
Financial data
(in thousands):
Cash, cash equivalents
and marketable
securities $804,606 $823,417 $750,633 $669,800 $571,003 $497,191
Deferred revenue,
current and
non-current $469,534 $479,546 $470,297 $480,894 $340,808 $321,852
Three Months Ended Nine Months Ended
October 31, October 31,
2008 2007 2008 2007
Revenues by geography
(in thousands):
Americas $200,143 $141,682 $567,076 $399,477
Europe 48,076 33,880 142,597 88,614
Asia Pacific 28,268 17,241 77,513 43,703
$276,487 $192,803 $787,186 $531,794
As a percentage of
total revenues:
Revenues by geography:
Americas 72% 73% 72% 75%
Europe 17 18 18 17
Asia Pacific 11 9 10 8
100% 100% 100% 100%
SOURCE Salesforce.com
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