SAN FRANCISCO, Aug. 20 /PRNewswire-FirstCall/ -- Salesforce.com
(NYSE: CRM), the market and technology leader in Software as a Service (SaaS)
and Platform as a Service (PaaS), today announced results for its fiscal
second quarter ended July 31, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050216/SFW105LOGO)
"By becoming the first ever Software as a Service company to achieve an
annualized revenue run rate of one billion dollars, our second quarter
performance is a milestone for salesforce.com, and for the cloud computing
industry, " said Marc Benioff, Chairman and CEO. "Our largest customers are
increasingly becoming the best examples of what is possible using the power of
our growing portfolio of Software as a Service applications and our emerging
Platform as a Service."
Salesforce.com delivered the following results for its second quarter
fiscal year 2009:
Revenue: Total Q2 revenue was $263.1 million, an increase of 49% on a
year-over-year basis and an increase of 6% on a quarter-over-quarter basis.
Subscription and support revenues were $239.7 million, an increase of 50% on a
year-over-year basis and an increase of 6% on a quarter-over-quarter basis.
Professional services and other revenues were $23.4 million, an increase of
41% on a year-over-year basis and an increase of 5% on a quarter-over-quarter
basis.
Earnings per Share: Q2 GAAP diluted earnings per share were approximately
$0.08, including approximately $19 million in stock based compensation and
approximately $1.3 million in amortization of purchased intangibles related to
previously announced acquisitions. For the basis of Q2 GAAP EPS calculations,
there was an average of approximately 126 million diluted shares outstanding
during the quarter.
Cash: Cash from operations for the fiscal second quarter was approximately
$53 million, up 53% year-over-year, and seasonally down 37% from Q1. Total
cash, cash equivalents and marketable securities finished the quarter at
approximately $823 million, an increase of approximately $73 million from Q1
and up approximately $326 million from July 31, 2007.
Deferred Revenue: Deferred revenue was approximately $480 million as of
July 31, 2008, an increase of 49% on a year-over-year basis and up 2% on a
quarter-over-quarter basis.
Customers Additions: During the quarter net paying customers rose
approximately 4,100, a company record, to approximately 47,700. Compared with
the year ago quarter, net paying customers have grown by approximately 12,400.
InStranet Acquisition: Earlier today, salesforce.com announced the
acquisition of InStranet, the leading provider of knowledge management
technology for business to consumer call centers. The addition of this
innovative technology will increase the momentum of Salesforce CRM Customer
Service and Support in a growing market, which is currently estimated at $3.4
billion by Gartner (Gartner, Market Trends: CRM Software, Worldwide, 2007-
2012, March 31, 2008). Salesforce.com's acquisition of InStranet closed on
August 4, 2008, for approximately $31.5 million, which includes the assumption
of $4.2 million in cash on InStranet's balance sheet.
Guidance: As of August 20, 2008, salesforce.com is initiating guidance
for its third quarter, fiscal year 2009. In addition, the company is updating
its revenue and earnings per share guidance for its full fiscal year 2009.
Q3 FY09: Revenue for the company's third fiscal quarter is projected to
be in the range of approximately $273 million to approximately $274 million.
Excluding the effect of the InStranet acquisition, the company's EPS outlook
is $0.08 to $0.09. Including the effect of the InStranet acquisition,
estimated at $0.02 for the third quarter, the company is issuing guidance that
its GAAP fully diluted EPS will be in the range of $0.06 to $0.07. The GAAP
EPS estimate also includes the effects of stock based compensation and the
amortization of purchased intangibles. For the third fiscal quarter, stock
based compensation expense is expected to be approximately $20 million, and
the expense associated with amortization of purchased intangibles, including
that associated with the acquisition of InStranet, is expected to be
approximately $2.0 million. For purposes of the Q3 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 FY09: The company is raising its full year revenue guidance it
provided on May 21, 2008, with revenue now expected to be in the range of
approximately $1.070 billion to approximately $1.075 billion. Excluding the
effect of the InStranet acquisition the company's EPS outlook has improved to
$0.34 to $0.35, from its prior guidance of $0.33 to $0.34. Including the
effect of the InStranet acquisition, estimated at $0.05 for the full year, the
company is updating its fiscal FY09 GAAP fully diluted EPS guidance to be in
the range of $0.29 to $0.30. The GAAP EPS estimate includes the effects of
stock based compensation and the amortization of purchased intangibles. For
the full fiscal year 2009, stock based compensation expense is expected to be
approximately $83 million, and the expense associated with the amortization of
purchased intangibles, including that associated with InStranet, is currently
expected to be approximately $6.6 million. For purposes of the fiscal year
2009 GAAP fully diluted EPS calculation, the company is expecting an average
diluted share count of approximately 126 million shares, and a GAAP tax rate
of 48%.
Quarterly Conference Call
Salesforce.com will host a conference call to discuss its second 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. A replay will be available at (800)
642-1687 or (706) 645-9291, passcode 59172236, until midnight Eastern Time
September 5, 2008.
About salesforce.com
Salesforce.com is the market and technology leader in Software as a
Service (SaaS) and Platform as a Service (PaaS). 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 AppExchange marketplace available at
http://www.salesforce.com/appexchange/.
As of July 31, 2008, salesforce.com manages customer information for
approximately 47,700 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 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://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 third fiscal quarter of
2009 and the full fiscal year 2009, 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
and interest rates.
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 July
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 Six Months Ended
July 31, July 31,
2008 2007 2008 2007
Revenues:
Subscription and support $239,720 $159,998 $465,061 $307,688
Professional services and other 23,357 16,581 45,638 31,303
Total revenues 263,077 176,579 510,699 338,991
Cost of revenues (1):
Subscription and support 30,668 22,375 59,378 42,559
Professional services and other 23,423 19,037 46,011 38,020
Total cost of revenues 54,091 41,412 105,389 80,579
Gross profit 208,986 135,167 405,310 258,412
Operating expenses (1):
Research and development 24,033 15,096 43,800 29,217
Marketing and sales 130,774 90,216 253,478 174,141
General and administrative 38,081 26,508 76,513 51,593
Total operating expenses 192,888 131,820 373,791 254,951
Income from operations 16,098 3,347 31,519 3,461
Interest, net 6,708 5,615 13,430 10,622
Other income (expense) (840) 280 (1,603) 449
Income before provision for income
taxes and minority interest 21,966 9,242 43,346 14,532
Provision for income taxes (10,558) (4,653) (20,869) (8,495)
Income before minority interest 11,408 4,589 22,477 6,037
Minority interest in consolidated
joint venture (1,412) (854) (2,926) (1,572)
Net income $9,996 $3,735 $19,551 $4,465
Basic net income per share $0.08 $0.03 $0.16 $0.04
Diluted net income per share $0.08 $0.03 $0.16 $0.04
Shares used in computing basic net
income per share 120,863 116,294 120,321 115,637
Shares used in computing diluted
net income per share 125,626 121,333 125,091 120,993
(1) Amounts include stock-based
expenses, as follows:
Cost of revenues $2,657 $1,965 $5,332 $3,739
Research and development 2,259 1,510 4,358 2,787
Marketing and sales 8,749 6,265 16,870 11,884
General and administrative 5,219 3,691 10,389 7,033
Total stock-based
expenses $18,884 $13,431 $36,949 $25,443
salesforce.com, inc.
Condensed Consolidated Statements of Operations
Three Months Ended Six Months Ended
July 31, July 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 13
Professional services and other 9 11 9 11
Total cost of revenues 21 23 21 24
Gross profit 79 77 79 76
Operating expenses:
Research and development 9 9 8 9
Marketing and sales 50 51 50 51
General and administrative 14 15 15 15
Total operating expenses 73 75 73 75
Income from operations 6 2 6 1
Interest, net 2 3 2 3
Other income (expense) 0 0 0 0
Income before provision for income
taxes and minority interest 8 5 8 4
Provision for income taxes (3) (2) (3) (2)
Income before minority interest 5 3 5 2
Minority interest in consolidated
joint venture (1) (1) (1) (1)
Net income 4% 2% 4% 1%
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 4 3 4
General and administrative 2 2 2 2
Total stock-based
expenses 7% 8% 7% 8%
salesforce.com, inc.
Condensed Consolidated Balance Sheets
(in thousands)
July 31, January 31,
2008 2008
unaudited
Assets
Current assets:
Cash and cash equivalents $427,043 $279,095
Short-term marketable securities 151,298 171,748
Accounts receivable, net 146,982 220,061
Deferred commissions 35,751 35,679
Deferred income taxes 7,906 7,173
Prepaid expenses and other
current assets 33,148 27,055
Total current assets 802,128 740,811
Marketable securities, noncurrent 245,076 218,957
Fixed assets, net 56,643 41,380
Deferred commissions, noncurrent 14,615 16,435
Deferred income taxes, noncurrent 34,989 26,512
Capitalized software, net 24,218 23,061
Goodwill 8,556 8,556
Other assets, net 17,318 13,881
Total assets $1,203,543 $1,089,593
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $14,428 $7,478
Accrued expenses and other
current liabilities 117,180 125,996
Income taxes payable 1,269 3,622
Deferred revenue 466,948 468,821
Total current liabilities 599,825 605,917
Income taxes payable, noncurrent 10,289 8,465
Long-term lease abandonment
liability and other 2,986 2,136
Deferred revenue, noncurrent 12,598 12,073
Minority interest 11,869 8,943
Total liabilities 637,567 637,534
Stockholders' equity:
Common stock 121 119
Additional paid-in capital 568,078 471,802
Accumulated other comprehensive
loss (4,188) (2,276)
Retained earnings (deficit) 1,965 (17,586)
Total stockholders' equity 565,976 452,059
Total liabilities and stockholders'
equity $1,203,543 $1,089,593
salesforce.com, inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
2008 2007 2008 2007
Operating activities:
Net income $9,996 $3,735 $19,551 $4,465
Adjustments to reconcile net
income to net
cash provided by operating
activities:
Minority interest 1,412 854 2,926 1,572
Depreciation and amortization 8,870 6,045 17,028 10,893
Amortization of deferred
commissions 13,907 9,644 28,630 18,683
Expenses related to stock-based
awards 18,884 13,431 36,949 25,443
Excess tax benefits from
employee stock plans (11,843) (8,920) (24,541) (15,206)
Changes in assets and
liabilities 11,849 9,865 56,364 25,634
Net cash provided by
operating activities 53,075 34,654 136,907 71,484
Investing activities:
Changes in marketable securities (25,118) (13,735) (8,578) (47,947)
Capital expenditures (13,036) (10,104) (37,213) (26,061)
Net cash provided by
investing activities (38,154) (23,839) (45,791) (74,008)
Financing activities:
Proceeds from the exercise of
stock options and warrants 22,525 15,404 34,010 23,704
Excess tax benefits from employee
stock plans 11,843 8,920 24,541 15,206
Principal payments on capital
lease obligations (6) (5) (163)
Net cash provided by
financing activities 34,368 24,318 58,546 38,747
Effect of exchange rate changes (794) 324 (1,714) 118
Net increase in cash and
cash equivalents 48,495 35,457 147,948 36,341
Cash and cash equivalents,
beginning of period 378,548 87,492 279,095 86,608
Cash and cash equivalents, end of
period $427,043 $122,949 $427,043 $122,949
salesforce.com, inc.
Additional Metrics
(Unaudited)
Jul 31, Apr 30, Jan 31, Oct 31, Jul 31, Apr 30,
2008 2008 2008 2007 2007 2007
Full Time
Equivalent
Headcount 3,046 2,864 2,606 2,461 2,302 2,243
Financial data
(in thousands):
Cash, cash
equivalents
and marketable
securities $823,417 $750,633 $669,800 $571,003 $497,191 $448,071
Deferred
revenue,
current
and non-current $479,546 $470,297 $480,894 $340,808 $321,852 $295,672
Three Months Ended Six Months Ended
July 31, July 31,
2008 2007 2008 2007
Revenues by geography (in
thousands):
Americas $188,563 $133,343 $366,934 $257,795
Europe 49,356 29,160 94,520 54,734
Asia Pacific 25,158 14,076 49,245 26,462
$263,077 $176,579 $510,699 $338,991
As a percentage of total
revenues:
Revenues by geography:
Americas 72% 76% 72% 76%
Europe 19 16 19 16
Asia Pacific 9 8 9 8
100% 100% 100% 100%
