UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended October 31, 2004
OR
| ¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File Number: 001-32224
salesforce.com, inc.
(Exact name of registrant as specified in its charter)
| Delaware | 94-3320693 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
The Landmark @ One Market, Suite 300
San Francisco, California 94105
(Address of principal executive offices)
Telephone Number (415) 901-7000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨ No x
As of October 31, 2004, there were approximately 103.1 million shares of the Registrant’s Common Stock outstanding.
INDEX
2
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
(in thousands)
| October 31, 2004 |
January 31, 2004 |
|||||||
| (unaudited) | (audited) | |||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 22,756 | $ | 10,463 | ||||
| Short-term marketable securities |
91,641 | 25,349 | ||||||
| Accounts receivable |
37,535 | 26,536 | ||||||
| Deferred commissions |
6,843 | 8,266 | ||||||
| Prepaid expenses and other current assets |
4,145 | 3,532 | ||||||
| Total current assets |
162,920 | 74,146 | ||||||
| Marketable securities, noncurrent |
70,617 | — | ||||||
| Restricted cash |
2,927 | 3,912 | ||||||
| Fixed assets, net |
6,525 | 5,069 | ||||||
| Deferred commissions, noncurrent |
1,936 | 2,890 | ||||||
| Other assets |
1,778 | 1,494 | ||||||
| Total assets |
$ | 246,703 | $ | 87,511 | ||||
| Liabilities, convertible preferred stock and stockholders’ equity (deficit) |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 3,844 | $ | 2,035 | ||||
| Accrued expenses and other current liabilities |
26,755 | 17,682 | ||||||
| Income taxes payable |
414 | 534 | ||||||
| Deferred revenue |
74,240 | 49,677 | ||||||
| Current portion of capital lease obligation |
561 | 78 | ||||||
| Total current liabilities |
105,814 | 70,006 | ||||||
| Capital lease obligations, net of current portion |
862 | — | ||||||
| Long-term lease abandonment liability and other |
1,642 | 1,830 | ||||||
| Minority interest |
1,030 | 775 | ||||||
| Total liabilities |
109,348 | 72,611 | ||||||
| Commitments and contingencies |
||||||||
| Convertible preferred stock |
— | 61,137 | ||||||
| Stockholders’ equity (deficit): |
||||||||
| Common stock |
103 | 32 | ||||||
| Additional paid-in capital |
213,870 | 35,580 | ||||||
| Deferred stock-based compensation |
(6,734 | ) | (8,251 | ) | ||||
| Notes receivables from stockholders |
(1,748 | ) | (1,674 | ) | ||||
| Accumulated other comprehensive income |
38 | 10 | ||||||
| Accumulated deficit |
(68,174 | ) | (71,934 | ) | ||||
| Total stockholders’ equity (deficit) |
137,355 | (46,237 | ) | |||||
| Total liabilities, convertible preferred stock and stockholders’ equity (deficit) |
$ | 246,703 | $ | 87,511 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Three months ended October 31, |
Nine months ended October 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Subscription and support |
$ | 41,465 | $ | 22,480 | $ | 108,598 | $ | 58,994 | ||||||||
| Professional services and other |
4,896 | 2,954 | 13,183 | 6,976 | ||||||||||||
| Total revenues |
46,361 | 25,434 | 121,781 | 65,970 | ||||||||||||
| Cost of revenues (1): |
||||||||||||||||
| Subscription and support |
3,546 | 2,143 | 8,527 | 5,559 | ||||||||||||
| Professional services and other |
5,359 | 2,525 | 14,923 | 6,292 | ||||||||||||
| Total cost of revenues |
8,905 | 4,668 | 23,450 | 11,851 | ||||||||||||
| Gross profit |
37,456 | 20,766 | 98,331 | 54,119 | ||||||||||||
| Operating expenses (1): |
||||||||||||||||
| Research and development |
2,462 | 1,880 | 6,663 | 4,805 | ||||||||||||
| Marketing and sales |
24,940 | 14,597 | 67,880 | 37,458 | ||||||||||||
| General and administrative |
8,281 | 4,320 | 20,489 | 11,736 | ||||||||||||
| Lease abandonment (recovery) |
— | (4,342 | ) | — | (4,342 | ) | ||||||||||
| Total operating expenses |
35,683 | 16,455 | 95,032 | 49,657 | ||||||||||||
| Income from operations |
1,773 | 4,311 | 3,299 | 4,462 | ||||||||||||
| Interest income |
989 | 89 | 1,486 | 258 | ||||||||||||
| Interest expense |
(14 | ) | (5 | ) | (20 | ) | (20 | ) | ||||||||
| Other income (expense) |
(176 | ) | (38 | ) | (151 | ) | 207 | |||||||||
| Income before provision for income taxes and minority interest |
2,572 | 4,357 | 4,614 | 4,907 | ||||||||||||
| Provision for income taxes |
342 | 455 | 614 | 526 | ||||||||||||
| Income before minority interest |
2,230 | 3,902 | 4,000 | 4,381 | ||||||||||||
| Minority interest in consolidated joint venture |
(77 | ) | (113 | ) | (240 | ) | (102 | ) | ||||||||
| Net income |
$ | 2,153 | $ | 3,789 | $ | 3,760 | $ | 4,279 | ||||||||
| Basic net income per share |
$ | 0.02 | $ | 0.13 | $ | 0.06 | $ | 0.15 | ||||||||
| Diluted net income per share |
0.02 | 0.04 | 0.03 | 0.04 | ||||||||||||
| Weighted-average number of shares used in per share amounts: |
||||||||||||||||
| Basic |
102,337 | 29,906 | 66,183 | 29,267 | ||||||||||||
| Diluted |
116,176 | 95,521 | 108,701 | 98,975 | ||||||||||||
| (1) | Amounts include stock-based expenses, as follows: |
| Three months ended October 31, |
Nine months ended October 31, | |||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||
| Cost of revenues |
$ | 172 | $ | 177 | $ | 529 | $ | 490 | ||||
| Research and development |
77 | 109 | 246 | 353 | ||||||||
| Marketing and sales |
386 | 529 | 1,208 | 1,564 | ||||||||
| General and administrative |
556 | 194 | 1,185 | 730 | ||||||||
| $ | 1,191 | $ | 1,009 | $ | 3,168 | $ | 3,137 | |||||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Three months ended October 31, |
Nine months ended October 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Operating activities |
||||||||||||||||
| Net income |
$ | 2,153 | $ | 3,789 | $ | 3,760 | $ | 4,279 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
| Minority interest in consolidated joint venture |
77 | 113 | 240 | 102 | ||||||||||||
| Depreciation and amortization |
800 | 631 | 2,227 | 1,956 | ||||||||||||
| Amortization of deferred commissions |
4,255 | 2,232 | 11,723 | 5,483 | ||||||||||||
| Lease abandonment (recovery) < | ||||||||||||||||