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8-K - FORM 8-K - SALESFORCE.COM, INC.d399908d8k.htm

Exhibit 99.1

David Havlek

salesforce.com

Investor Relations

415-536-2171

dhavlek@salesforce.com

Jane Hynes

salesforce.com

Public Relations

415-901-5079

jhynes@salesforce.com

Salesforce.com Announces Fiscal 2013 Second Quarter Results

 

   

Quarterly Revenue of $732 Million, up 34% Year-Over-Year

 

   

Quarterly Operating Cash Flow of $136 Million, up 64% Year-Over-Year

 

   

Deferred Revenue of $1.34 Billion, up 43% Year-Over-Year

 

   

Unbilled Deferred Revenue Increases to Approximately $2.8 Billion

 

   

Raises FY13 Revenue Guidance to $3.025 – $3.035 Billion

SAN FRANCISCO, Calif. – August 23, 2012 – Salesforce.com (NYSE: CRM), the enterprise cloud computing (http://www.salesforce.com/cloudcomputing/) company, today announced results for its fiscal second quarter ended July 31, 2012.

“Our second quarter revenue growth was outstanding at 34% in dollars and 37% in constant currency,” said Marc Benioff, Chairman and CEO, salesforce.com. “Salesforce.com’s social enterprise strategy is enabling companies to connect with customers, partners, and employees in completely new ways – and it’s creating new opportunities for their growth and ours.”

Salesforce.com delivered the following results for its fiscal second quarter:

Revenue: Total Q2 revenue was $732 million, an increase of 34% on a year-over-year basis. Subscription and support revenues were $687 million, an increase of 35% on a year-over-year basis. Professional services and other revenues were $44 million, an increase of 20% on a year-over-year basis.

Earnings per Share: Q2 GAAP net loss per share was ($0.07), and non-GAAP diluted earnings per share was $0.42. The company’s non-GAAP results exclude the effects of $85 million in stock-based compensation expense, $20 million in amortization of purchased intangibles, and $6 million in net non-cash interest expense related to the company’s convertible senior notes. Non-GAAP EPS calculations are based on approximately 146 million diluted shares outstanding during the quarter, including approximately 3 million shares associated with the company’s convertible senior notes. GAAP EPS calculations are based on a basic share count of approximately 139 million shares.

Cash: Cash generated from operations for the fiscal second quarter was $136 million, an increase of 64% on a year-over-year basis. Total cash, cash equivalents and marketable securities finished the quarter at $1.8 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of July 31, 2012 was $1.34 billion, an increase of 43% on a year-over-year basis. Current deferred revenue increased by 38% year-over-year to $1.27 billion, benefited in part by longer invoice durations. Non-current deferred


revenue increased by 293% year-over-year to $69 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the second quarter at approximately $2.8 billion, up from approximately $2.7 billion at the end of the fiscal first quarter.

As of August 23, 2012, salesforce.com is initiating revenue, GAAP EPS and non-GAAP EPS guidance for its fiscal third quarter of fiscal year 2013. In addition, for the full fiscal year 2013, the company is raising its revenue and non-GAAP EPS guidance previously provided on June 4, 2012, and initiating GAAP EPS guidance.

Q3 FY13 Guidance: Revenue for the company’s third fiscal quarter is projected to be in the range of $773 million to $777 million, an increase of 32% to 33% year-over-year.

GAAP net loss per share is expected to be in the range of ($0.27) to ($0.26), while diluted non-GAAP EPS is expected to be in the range of $0.31 to $0.32. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $99 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $27 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $6 million. EPS estimates assume a GAAP tax rate of approximately 37%, and a non-GAAP tax rate of approximately 35%. The GAAP EPS calculation assumes an average basic share count of approximately 142 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 151 million shares.

Full Year FY13 Guidance: Revenue for the company’s full fiscal year 2013 is projected to be in the range of $3.025 billion to $3.035 billion, an increase of 33% to 34% year-over-year.

For the company’s full fiscal year 2013, GAAP net loss per share is expected to be in the range of ($0.75) to ($0.72) while diluted non-GAAP EPS is expected to be in the range of $1.48 to $1.51. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $382 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $95 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $24 million. EPS estimates assume a GAAP tax rate of approximately 30%, and a non-GAAP tax rate of approximately 37%. The GAAP EPS calculation assumes an average basic share count of approximately 141 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 150 million shares.

The following is a per share reconciliation of GAAP EPS to non-GAAP diluted EPS guidance for the third quarter and full fiscal year:

 

     Fiscal 2013  
     Q3     FY2013  

GAAP EPS Range*

     ($0.27) - ($0.26)        ($0.75) - ($0.72)   

Plus

    

Stock-based expense

   $ 0.66      $ 2.54   

Amortization of purchased intangibles

   $ 0.18      $ 0.64   

Amortization of debt discount, net

   $ 0.04      $ 0.16   

Less

    

Income tax effect of certain Non-GAAP items

   $ (0.30   $ (1.11
  

 

 

   

 

 

 

Non-GAAP diluted EPS

     $0.31 - $0.32        $1.48 - $1.51   

Shares used in computing basic net income per share (millions)

     142        141   

Shares used in computing diluted net income per share (millions)

     151        150   

 

* For Q3 & FY13 GAAP EPS loss, basic number of shares used for calculation


Quarterly Conference Call

Salesforce.com will host a conference call to discuss its second quarter fiscal year 2013 results at 2:00 p.m. Pacific Time today. 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 audiocast 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 at +1 706-902-1764, passcode salesforce.com or 17262326. A replay will be available at 800-585-8367 or +1 855-859-2056, passcode 17262326, until midnight (Eastern Time) September 23, 2012.

About salesforce.com: Founded in 1999, salesforce.com is the enterprise cloud computing company that is leading customers in their transformation to become social enterprises. Social enterprises are able to connect with customers, partners and employees in entirely new ways. Based on salesforce.com’s real-time, multitenant architecture, the company’s platform and application services give customers the tools to create a true social front office and revolutionize the way they sell, service, market, collaborate, work, and innovate.

 

   

Grow your business with the world’s #1 sales app, Salesforce Sales Cloud

 

   

Deliver amazing customer service with the award-winning Salesforce Service Cloud

 

   

Listen, engage, advertise, and measure social media marketing with the Salesforce Marketing Cloud

 

   

Build social and mobile cloud apps on the Salesforce Platform and extend social enterprise success with the world’s leading enterprise app marketplace, the AppExchange

 

   

Achieve breakthrough collaboration and productivity with Salesforce Chatter

 

   

Align, motivate and drive performance with Salesforce Rypple

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 in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol “CRM.” For more information please visit http://salesforce.com, or call 1-800-NO-SOFTWARE.

###

Non-GAAP Financial Measures: This press release includes information about non-GAAP EPS and non-GAAP tax rates (collectively the “non-GAAP financial measures”). Non-GAAP EPS estimates exclude the impact of the following non-cash items: stock-based compensation, amortization of acquisition-related intangibles, and the net amortization of debt discount on the company’s convertible senior notes, as well as the tax consequences associated with these items. The purpose of the non-GAAP tax rate is to quantify the excluded tax consequences of the excluded expense items. These non-GAAP estimates are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. The method used to produce non-GAAP financial measures is not computed according to GAAP and may differ from the methods used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.

The primary purpose of these non-GAAP measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash items on the company’s operating performance. Non-cash stock-based compensation, amortization of acquisition-related


intangible assets, and the net amortization of debt discount on the company’s convertible senior notes are being excluded from the company’s FY13 financial results because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but were made for the company’s long-term benefit over multiple periods. While strategic decisions, such as those to issue stock-based compensation, acquire a company, or issue convertible senior notes, are made to further the company’s long-term strategic objectives and impact the company’s income statement under GAAP measures, these items affect multiple periods and management is not able to change or affect these items in any particular period. As such, supplementing GAAP disclosure with non-GAAP disclosure using the non-GAAP measures provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period, and management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the company’s performance.

In addition, the majority of the company’s industry peers report non-GAAP operating results that exclude certain non-cash or non-recurring items. As significant unusual or discrete events occur, the results may be excluded in the period in which the events occur. Management believes that the provision of supplemental non-GAAP information will enable a more complete comparison of the company’s relative performance.

Specifically, management is excluding the following items from its non-GAAP EPS for Q2 and its non-GAAP estimates for Q3 and FY13:

 

   

Stock-Based Expenses: The company’s compensation strategy includes the use of stock-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.

 

   

Amortization of Purchased Intangibles: The company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While it is continually viewed for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.

 

   

Amortization of Debt Discount: Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, for GAAP purposes we are required to recognize imputed interest expense on the company’s $575 million of convertible subordinated notes that were issued in a private placement in January 2010. The imputed interest rate is approximately 5.9%, while the actual coupon interest rate of the notes is 0.75%. The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management’s assessment of the company’s operating performance because management believes that this non-cash expense is not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the company’s operational performance.

 

   

Income Tax Effects: The company’s estimated non-GAAP effective tax rate excludes the tax effect of the expense items described above.

###


“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about expected GAAP revenue and GAAP and non-GAAP EPS for the third fiscal quarter of 2013 and the full fiscal year, the company’s expected revenue run rate and revenues in fiscal 2013, the company’s expected tax rates, stock-based compensation expenses, amortization of purchased intangibles and debt discount, and shares outstanding. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s 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 the company’s financial and operating results; the company’s rate of growth and anticipated revenue run rate, including the company’s ability to convert deferred revenue and unbilled deferred revenue into revenue and, as appropriate, cash flow, and the continued growth and ability to maintain deferred revenue and unbilled deferred revenue; errors, interruptions or delays in the company’s service or the company’s Web hosting; breaches of the company’s security measures; the financial impact of any previous and future acquisitions; the nature of the company’s business model; the company’s ability to continue to release, and gain customer acceptance of, new and improved versions of the company’s service; successful customer deployment and utilization of the company’s existing and future services; changes in the company’s sales cycle; competition; various financial aspects of the company’s subscription model; unexpected increases in attrition or decreases in new business; the emerging markets in which we operate; unique aspects of entering or expanding in international markets, the company’s ability to hire, retain and motivate employees and manage the company’s growth; changes in the company’s customer base; technological developments; regulatory developments; litigation related to intellectual property and other matters, and any related claims, negotiations and settlements; unanticipated changes in the company’s effective tax rate; fluctuations in the number of shares we have outstanding and the price of such shares; foreign currency exchange rates; collection of receivables; interest rates; the expenses associated with the company’s real estate and office facilities space; and general developments in the economy, financial markets, and credit markets.

Further information on these and other factors that could affect the company’s 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 the company’s Form 10-Q that will be filed for the second quarter ended July 31, 2012 and our Form 10-K filed for the fiscal year ended January 31, 2012. These documents are available on the SEC Filings section of the Investor Information section of the company’s website at 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 © 2012 salesforce.com, inc. All rights reserved. Salesforce, Chatter, Sales Cloud, Service Cloud, Marketing Cloud, Rypple, AppExchange, Salesforce Platform and others are trademarks of salesforce.com, inc. 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 July 31,     Six Months Ended July 31,  
     2012     2011     2012     2011  

Revenues:

        

Subscription and support

   $ 687,493      $ 509,279      $ 1,342,713      $ 982,783   

Professional services and other

     44,156        36,723        84,403        67,583   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     731,649        546,002        1,427,116        1,050,366   

Cost of revenues (1)(2):

        

Subscription and support

     118,519        89,144        227,263        164,387   

Professional services and other

     43,899        31,766        86,706        59,589   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     162,418        120,910        313,969        223,976   

Gross profit

     569,231        425,092        1,113,147        826,390   

Operating expenses (1)(2):

        

Research and development

     99,442        73,393        194,218        138,685   

Marketing and sales

     380,160        283,001        749,949        537,472   

General and administrative

     103,095        84,446        204,695        168,784   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     582,697        440,840        1,148,862        844,941   

Loss from operations

     (13,466     (15,748     (35,715     (18,551

Investment income

     7,173        5,112        11,634        13,167   

Interest expense

     (8,033     (3,846     (14,403     (7,517

Other income (expense)

     294        (3,231     (416     (4,031
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before benefit from income taxes

     (14,032     (17,713     (38,900     (16,932

Benefit from income taxes

     4,203        13,445        9,596        13,194   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (9,829   $ (4,268   $ (29,304   $ (3,738
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net loss per share

   $ (0.07   $ (0.03   $ (0.21   $ (0.03

Diluted net loss per share

   $ (0.07   $ (0.03   $ (0.21   $ (0.03

Shares used in computing basic net loss per share

     139,425        135,093        138,789        134,273   

Shares used in computing diluted net loss per share

     139,425        135,093        138,789        134,273   

 

(1)    Amounts include amortization of purchased intangibles from business combinations, as follows:

       

Cost of revenues

   $ 17,668      $ 16,373      $ 35,116      $ 25,468   

Marketing and sales

     2,407        2,306        5,834        3,546   

(2)    Amounts include stock-based expenses, as follows:

       

Cost of revenues

   $ 7,864      $ 4,379      $ 15,117      $ 8,030   

Research and development

     16,089        11,188        31,756        19,027   

Marketing and sales

     44,781        27,114        86,768        50,901   

General and administrative

     16,683        11,913        33,042        24,194   


salesforce.com, inc.

Condensed Consolidated Statements of Operations

As a percentage of total revenues:

(Unaudited)

 

     Three Months Ended July 31,     Six Months Ended July 31,  
     2012     2011     2012     2011  

Revenues:

        

Subscription and support

     94     93     94     94

Professional services and other

     6        7        6        6   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     100        100        100        100   

Cost of revenues (1)(2):

        

Subscription and support

     16        16        16        15   

Professional services and other

     6        6        6        6   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     22        22        22        21   

Gross profit

     78        78        78        79   

Operating expenses (1)(2):

        

Research and development

     14        13        14        13   

Marketing and sales

     52        52        53        52   

General and administrative

     14        16        14        16   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     80        81        81        81   

Loss from operations

     (2     (3     (3     (2

Investment income

     1        1        1        1   

Interest expense

     (1     (1     (1     0   

Other income (expense)

     0        0        0        0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before benefit from income taxes

     (2     (3     (3     (1

Benefit from income taxes

     1        2        1        1   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (1 %)      (1 %)      (2 %)      0
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)    Amortization of purchased intangibles from business combinations as a percentage of total revenues, as follows:

       

Cost of revenues

     2     3     2     2

Marketing and sales

     0        0        0        0   

(2)    Stock-based expenses as a percentage of total revenues, as follows:

       

Cost of revenues

     1     1     1     1

Research and development

     2        2        2        2   

Marketing and sales

     6        5        6        5   

General and administrative

     2        2        2        2   


salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     July 31,
2012
     January 31,
2012
 
     (unaudited)         

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 1,000,730       $ 607,284   

Short-term marketable securities

     106,933         170,582   

Accounts receivable, net

     446,917         683,745   

Deferred commissions

     94,921         98,471   

Deferred income taxes

     56,723         31,821   

Prepaid expenses and other current assets (see additional metrics)

     146,901         80,319   
  

 

 

    

 

 

 

Total current assets

     1,853,125         1,672,222   

Marketable securities, noncurrent

     696,602         669,308   

Property and equipment, net (see additional metrics)

     556,776         527,946   

Deferred commissions, noncurrent

     77,010         78,149   

Deferred income taxes, noncurrent

     108,031         87,587   

Capitalized software, net (see additional metrics)

     173,456         188,412   

Goodwill

     840,531         785,381   

Other assets, net (see additional metrics)

     148,039         155,149   
  

 

 

    

 

 

 

Total assets

   $ 4,453,570       $ 4,164,154   
  

 

 

    

 

 

 

Liabilities, temporary equity and stockholders’ equity

     

Current liabilities:

     

Accounts payable

   $ 69,339       $ 33,258   

Accrued expenses and other liabilities (see additional metrics)

     482,888         502,442   

Deferred revenue

     1,268,407         1,291,622   

Convertible senior notes, net

     508,533         496,149   
  

 

 

    

 

 

 

Total current liabilities

     2,329,167         2,323,471   

Income taxes payable, noncurrent

     47,165         37,258   

Long-term lease liabilities and other

     49,790         48,651   

Deferred revenue, noncurrent

     68,777         88,673   
  

 

 

    

 

 

 

Total liabilities

     2,494,899         2,498,053   
  

 

 

    

 

 

 

Temporary equity

     66,357         78,741   
  

 

 

    

 

 

 

Stockholders’ equity:

     

Common stock

     139         137   

Additional paid-in capital

     1,742,286         1,415,077   

Accumulated other comprehensive income

     19,730         12,683   

Retained earnings

     130,159         159,463   
  

 

 

    

 

 

 

Total stockholders’ equity

     1,892,314         1,587,360   
  

 

 

    

 

 

 

Total liabilities, temporary equity and stockholders’ equity

   $ 4,453,570       $ 4,164,154   
  

 

 

    

 

 

 


salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

     Three Months Ended July 31,     Six Months Ended July 31,  
     2012     2011     2012     2011  

Operating activities:

        

Net loss

   $ (9,829   $ (4,268   $ (29,304   $ (3,738

Adjustments to reconcile net loss to net cash provided by operating activities:

        

Depreciation and amortization

     49,999        40,239        99,440        69,832   

Amortization of debt discount and transaction costs

     6,371        2,077        11,040        4,332   

Amortization of deferred commissions

     35,783        24,916        72,029        49,591   

Expenses related to stock-based plans

     85,417        54,594        166,683        102,152   

Excess tax benefits from employee stock plans

     (14,702     (2,086     (25,745     (4,120

Changes in assets and liabilities:

        

Accounts receivable, net

     (75,522     (66,076     237,138        90,051   

Deferred commissions

     (35,222     (26,137     (67,340     (46,641

Prepaid expenses and other current assets

     (35,747     (9,611     (56,096     (18,994

Other assets

     (891     (1,913     864        (4,626

Accounts payable

     49,586        4,121        36,081        2,984   

Accrued expenses and other current liabilities

     78,485        47,624        (52,270     (18,017

Deferred revenue

     2,469        19,453        (43,111     (355
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     136,197        82,933        349,409        222,451   
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing activities:

        

Business combinations, net of cash acquired

     (10,078     (285,335     (58,991     (298,670

Land activity and building improvements

     —          (5,422     (4,106     (6,436

Strategic investments

     (1,129     (7,782     (3,794     (13,215

Changes in marketable securities

     412,797        21,662        38,215        148,120   

Capital expenditures

     (29,304     (45,051     (74,025     (72,365
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     372,286        (321,928     (102,701     (242,566
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities:

        

Proceeds from equity plans

     33,824        42,282        127,391        74,568   

Excess tax benefits from employee stock plans

     14,702        2,086        25,745        4,120   

Contingent consideration payment related to prior business combinations

     —          (13,400     —          (16,200

Principal payments on capital lease obligations

     (7,479     (10,549     (15,053     (14,111
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     41,047        20,419        138,083        48,377   
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes

     10,415        3,758        8,655        (2,760
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     559,945        (214,818     393,446        25,502   

Cash and cash equivalents, beginning of period

     440,785        664,612        607,284        424,292   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,000,730      $ 449,794      $ 1,000,730      $ 449,794   
  

 

 

   

 

 

   

 

 

   

 

 

 


salesforce.com, inc.

Additional Metrics

(Unaudited)

 

     Jul 31,
2012
     Apr 30,
2012
     Jan 31,
2012
     Oct 31,
2011
     Jul 31,
2011
     Apr 30,
2011
 

Full Time Equivalent Headcount

     8,765         8,335         7,785         6,953         6,352         5,513   

Financial data (in thousands):

                 

Cash, cash equivalents and marketable securities

   $ 1,804,265       $ 1,657,089       $ 1,447,174       $ 1,296,693       $ 1,286,658       $ 1,522,285   

Deferred revenue, current and noncurrent

   $ 1,337,184       $ 1,334,716       $ 1,380,295       $ 917,821       $ 935,266       $ 915,133   

Selected Balance Sheet Accounts (in thousands):

 

     Jul 31,
2012
    Jan 31,
2012
 

Prepaid Expenses and Other Current Assets

    

Deferred professional services costs

   $ 7,825      $ 10,399   

Prepaid income taxes

     24,007        12,785   

Prepaid expenses and other current assets

     115,069        57,135   
  

 

 

   

 

 

 
   $ 146,901      $ 80,319   
  

 

 

   

 

 

 

Property and Equipment, net

    

Land

   $ 248,263      $ 248,263   

Building improvements

     49,572        43,868   

Computers, equipment and software

     280,868        232,460   

Furniture and fixtures

     29,402        25,250   

Leasehold improvements

     148,470        137,587   
  

 

 

   

 

 

 
     756,575        687,428   

Less accumulated depreciation and amortization

     (199,799     (159,482
  

 

 

   

 

 

 
   $ 556,776      $ 527,946   
  

 

 

   

 

 

 

Capitalized Software, net

    

Capitalized internal-use software development costs, net of accumulated amortization

   $ 53,999      $ 41,442   

Acquired developed technology, net of accumulated amortization

     119,457        146,970   
  

 

 

   

 

 

 
   $ 173,456      $ 188,412   
  

 

 

   

 

 

 

Other Assets, net

    

Deferred professional services costs, noncurrent portion

   $ 2,101      $ 3,935   

Long-term deposits

     13,293        13,941   

Purchased intangible assets, net of accumulated amortization

     41,311        46,110   

Acquired intellectual property, net of accumulated amortization

     15,841        15,020   

Strategic investments

     51,276        53,949   

Other

     24,217        22,194   
  

 

 

   

 

 

 
   $ 148,039      $ 155,149   
  

 

 

   

 

 

 

Accrued Expenses and Other Current Liabilities

    

Accrued compensation

   $ 192,776      $ 228,466   

Accrued other liabilities

     150,149        121,957   

Accrued income and other taxes payable

     68,519        100,471   

Accrued professional costs

     24,026        21,993   

Accrued rent

     47,418        29,555   
  

 

 

   

 

 

 
   $ 482,888      $ 502,442   
  

 

 

   

 

 

 

Selected Off-Balance Sheet Accounts

Unbilled Deferred Revenue, a non-GAAP measure

Unbilled deferred revenue was approximately $2.8 billion as of July 31, 2012 and $2.2 billion as of January 31, 2012. Unbilled deferred revenue represents future billings under our non-cancelable subscription agreements that have not been invoiced and, accordingly, are not recorded in deferred revenue.

Supplemental Revenue Analysis

 

     Three Months Ended July 31,     Six Months Ended July 31,  
     2012     2011     2012     2011  

Revenues by geography (in thousands):

        

Americas

   $ 507,974      $ 366,916      $ 992,927      $ 706,934   

Europe

     124,609        102,056        242,903        196,451   

Asia Pacific

     99,066        77,030        191,286        146,981   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 731,649      $ 546,002      $ 1,427,116      $ 1,050,366   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of total revenues:

        

Revenues by geography:

        

Americas

     69     67     70     67

Europe

     17        19        17        19   

Asia Pacific

     14        14        13        14   
  

 

 

   

 

 

   

 

 

   

 

 

 
     100     100     100     100
  

 

 

   

 

 

   

 

 

   

 

 

 


    Three Months Ended
July 31, 2012
compared to
Three Months Ended
July 31, 2011
    Three Months Ended
April 30, 2012
compared to
Three Months Ended
April 30, 2011
    Three Months Ended
July 31, 2011
compared to
Three Months Ended
July 31, 2010
 

Revenue constant currency growth rates (as compared to the comparable prior periods)

     

Americas

    38     43     34

Europe

    40     33     36

Asia Pacific

    28     30     33

Total growth

    37     39     34

We present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect at the end of each quarter for growth rate calculations presented, rather than the actual exchange rates in effect during that period.

Supplemental Diluted Share Count Information

(in thousands)

 

     Three Months Ended July 31,      Six Months Ended July 31,  
     2012      2011      2012      2011  

Weighted-average shares outstanding for basic earnings per share

     139,425         135,093         138,789         134,273   

Effect of dilutive securities (1):

           

Convertible senior notes

     2,542         2,753         2,665         2,581   

Warrants associated with the convertible senior note hedges

     866         1,160         1,037         919   

Employee stock awards

     3,361         4,450         3,711         4,563   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share

     146,194         143,456         146,202         142,336   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and six months ended July 31, 2012 and 2011 because the effect would have been anti-dilutive.

Supplemental Cash Flow Information

Free cash flow analysis, a non-GAAP measure

(in thousands)

 

     Three Months Ended July 31,     Six Months Ended July 31,  
     2012     2011     2012     2011  

Operating cash flow

        

GAAP net cash provided by operating activities

   $ 136,197      $ 82,933      $ 349,409      $ 222,451   

Less:

        

Capital expenditures

     (29,304     (45,051     (74,025     (72,365
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 106,893      $ 37,882      $ 275,384      $ 150,086   
  

 

 

   

 

 

   

 

 

   

 

 

 

Our free cash flow analysis includes GAAP net cash provided by operating activities less capital expenditures. The capital expenditures balance does not include any costs related to the purchase and activities related to the building of our campus and strategic investments.

Comprehensive Income (Loss)

(in thousands)

 

     Three Months Ended July 31,     Six Months Ended July 31,  
     2012     2011     2012     2011  

Net loss

   $ (9,829   $ (4,268   $ (29,304   $ (3,738

Other comprehensive income, before tax and net of reclassification adjustments:

        

Foreign currency translation and other gains (losses)

     10,135        5,858        6,947        (1,219

Unrealized gains (losses) on investments

     (961     2,052        159        2,745   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income, before tax

     9,174        7,910        7,106        1,526   

Tax effect

     359        (767     (59     (1,026
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income, net of tax

     9,533        7,143        7,047        500   
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ (296   $ 2,875      $ (22,257   $ (3,238
  

 

 

   

 

 

   

 

 

   

 

 

 


salesforce.com, inc.

GAAP RESULTS RECONCILED TO NON-GAAP RESULTS

The following table reflects selected salesforce.com GAAP results reconciled to non-GAAP results

(in thousands, except per share data)

(Unaudited)

 

     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2012     2011     2012     2011  

Gross profit

        

GAAP gross profit

   $ 569,231      $ 425,092      $ 1,113,147      $ 826,390   

Plus:

        

Amortization of purchased intangibles (a)

     17,668        16,373        35,116        25,468   

Stock-based expenses (b)

     7,864        4,379        15,117        8,030   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 594,763      $ 445,844      $ 1,163,380      $ 859,888   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

GAAP operating expenses

   $ 582,697      $ 440,840      $ 1,148,862      $ 844,941   

Less:

        

Amortization of purchased intangibles (a)

     (2,407     (2,306     (5,834     (3,546

Stock-based expenses (b)

     (77,553     (50,215     (151,566     (94,122
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating expenses

   $ 502,737      $ 388,319      $ 991,462      $ 747,273   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

        

GAAP loss from operations

   $ (13,466   $ (15,748   $ (35,715   $ (18,551

Plus:

        

Amortization of purchased intangibles (a)

     20,075        18,679        40,950        29,014   

Stock-based expenses (b)

     85,417        54,594        166,683        102,152   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from operations

   $ 92,026      $ 57,525      $ 171,918      $ 112,615   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-operating income (c)

        

GAAP non-operating income (loss)

   $ (566   $ (1,965   $ (3,185   $ 1,619   

Plus: Amortization of debt discount, net

     6,207        2,712        11,090        5,470   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP non-operating income

   $ 5,641      $ 747      $ 7,905      $ 7,089   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

        

GAAP net loss

   $ (9,829   $ (4,268   $ (29,304   $ (3,738

Plus:

        

Amortization of purchased intangibles

     20,075        18,679        40,950        29,014   

Stock-based expenses

     85,417        54,594        166,683        102,152   

Amortization of debt discount, net

     6,207        2,712        11,090        5,470   

Less:

        

Income tax effect of Non-GAAP items

     (41,154     (28,635     (74,249     (49,926
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 60,716      $ 43,082      $ 115,170      $ 82,972   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

        

GAAP diluted loss per share (d)

   $ (0.07   $ (0.03   $ (0.21   $ (0.03

Plus:

        

Amortization of purchased intangibles

     0.14        0.13        0.28        0.20   

Stock-based expenses

     0.58        0.38        1.14        0.72   

Amortization of debt discount, net

     0.04        0.02        0.08        0.04   

Less:

        

Income tax effect of Non-GAAP items

     (0.27     (0.20     (0.50     (0.35
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted earnings per share

   $ 0.42      $ 0.30      $ 0.79      $ 0.58   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing diluted net income per share

     146,194        143,456        146,202        142,336   

a)      Amortization of purchased intangibles were as follows:

        
     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2012     2011     2012     2011  

Cost of revenues

   $ 17,668      $ 16,373      $ 35,116      $ 25,468   

Marketing and sales

     2,407        2,306        5,834        3,546   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 20,075      $ 18,679      $ 40,950      $ 29,014   
  

 

 

   

 

 

   

 

 

   

 

 

 

b)      Stock-based expenses were as follows:

        
     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2012     2011     2012     2011  

Cost of revenues

   $ 7,864      $ 4,379      $ 15,117      $ 8,030   

Research and development

     16,089        11,188        31,756        19,027   

Marketing and sales

     44,781        27,114        86,768        50,901   

General and administrative

     16,683        11,913        33,042        24,194   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 85,417      $ 54,594      $ 166,683      $ 102,152   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

c) Non-operating income consists of investment income, interest expense and other income (expense).
d) Reported GAAP loss per share was calculated using the basic share count.
     Non-GAAP diluted earnings per share was calculated using the diluted share count.


salesforce.com, inc.

COMPUTATION OF BASIC AND DILUTED GAAP AND NON-GAAP NET INCOME (LOSS) PER SHARE

(in thousands, except per share data)

(Unaudited)

 

     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2012     2011     2012     2011  

GAAP Basic Net Loss Per Share

        

Net loss

   $ (9,829   $ (4,268   $ (29,304   $ (3,738

Basic net loss per share

   $ (0.07   $ (0.03   $ (0.21   $ (0.03

Shares used in computing basic net loss per share

     139,425        135,093        138,789        134,273   
     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2012     2011     2012     2011  

Non-GAAP Basic Net Income Per Share

        

Non-GAAP net income

   $ 60,716      $ 43,082      $ 115,170      $ 82,972   

Basic Non-GAAP net income per share

   $ 0.44      $ 0.32      $ 0.83      $ 0.62   

Shares used in computing basic net income per share

     139,425        135,093        138,789        134,273   
     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2012     2011     2012     2011  

GAAP Diluted Net Loss Per Share

        

Net loss

   $ (9,829   $ (4,268   $ (29,304   $ (3,738

Diluted net loss per share

   $ (0.07   $ (0.03   $ (0.21   $ (0.03

Shares used in computing diluted net loss per share

     139,425        135,093        138,789        134,273   
     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2012     2011     2012     2011  

Non-GAAP Diluted Net Income Per Share

        

Non-GAAP net income

   $ 60,716      $ 43,082      $ 115,170      $ 82,972   

Diluted Non-GAAP net income per share

   $ 0.42      $ 0.30      $ 0.79      $ 0.58   

Shares used in computing diluted net income per share

     146,194        143,456        146,202        142,336