Exceeds Q2 Revenue and EPS Guidance and Raises Full Year Outlook Surpasses 800,000 subscribers and $700 Million Annual Revenue Run Rate - Record Revenue of $177M, up 49% Year-Over-Year - GAAP Net Income Surges to $3.7M, up 412% Sequentially - GAAP EPS of $0.03, Above High End of Company Guidance - Net Paying New Customers Rise a Record 3,000 to 35,300 - Two Largest Deployments Now Exceed 30,000 Subscribers Each - Record Q2 Operating Cash Flow of $35M, Up 15% Year-over-YearSAN FRANCISCO, Aug 15, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Salesforce.com
(NYSE: CRM), the market and technology leader in on-demand business services,
today announced results for its second fiscal quarter ended July 31, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050216/SFW105LOGO )
"Our business continues to show incredible momentum: a year ago, our
largest customer had roughly 7,500 subscribers. Today, our installed base
includes 2 customers with more than 30,000 subscribers; 4 customers with
20,000 or more subscribers; 5 customers with over 10,000 and a remarkable 68
customers with more than 1,000 subscribers-a greater than 40% increase in the
number of customers with 1,000 or more subscribers versus 6 months ago," said
Marc Benioff, chairman and CEO, salesforce.com. "Now with an annual revenue
run rate of more than $700 million, our company is well-positioned to take
on-demand even further into the enterprise."
Salesforce.com delivered the following results for the second fiscal
quarter 2008:
Revenue: Total Q2 revenue was $176.6 million, an increase of 49% on a
year-over-year basis and an increase of 9% on a quarter-over-quarter
basis. Subscription and support revenues were $160.0 million, an
increase of 50% on a year-over-year basis and an increase of 8% on a
quarter-over-quarter basis. Professional services and other revenues
were $16.6 million, an increase of 45% on a year-over-year basis and an
increase of 13% on a quarter-over-quarter basis.
Earnings per Share: Q2 diluted GAAP earnings per share were $0.03.
This result includes approximately $13 million in stock based
compensation and approximately $1.5 million in amortization of
purchased intangibles related to previously announced acquisitions, as
well as a 50% tax rate. Q2 diluted GAAP EPS calculations are based on
an average of 121 million diluted shares outstanding during the
quarter.
Customers: The company achieved a new record in Q2 by adding
approximately 3,000 net paying customers in a quarter for the first
time in its history. These additions pushed total net paying customers
in the second quarter to 35,300, an increase of approximately 10,500 or
42% from Q2 of the prior year, and an increase of approximately 9% from
the prior quarter. Net paying subscribers rose to more than 800,000
subscribers as of quarter end, an increase of more than 60% year over
year.
Cash: Cash from operations for the fiscal second quarter was
approximately $35 million, an increase of 15% year-over-year. Total
cash, cash equivalents and marketable securities finished the quarter
at approximately $497 million, an increase of approximately 49% or $163
million year-over-year.
Deferred Revenue: Deferred revenue on the balance sheet as of the end
of the fiscal second quarter was roughly $322 million, an increase of
59% on a year-over-year basis and 9% on a quarter-over-quarter basis.
Based on information as of August 15, 2007, salesforce.com is initiating
guidance for its third quarter, fiscal year 2008, and raising its guidance for
the full fiscal year 2008.
Q3 FY08: Revenue for the company's third fiscal quarter is projected
to be in the range of approximately $187 million to $189 million. GAAP
diluted EPS is expected to be in the range of approximately $0.01 to
$0.02. GAAP EPS estimates include the effects of stock based
compensation and the amortization of purchased intangibles. For the
third fiscal quarter FY08, stock based compensation expense is expected
to be approximately $14 million to $16 million, and the expense
associated with the amortization of purchased intangibles is now
expected to be approximately $1.5 million. For the purposes of Q3 GAAP
EPS calculation, the company is expecting an average diluted shares
count of 123 million shares, and a GAAP tax rate of 58%.
Full Year FY08: The company is raising its full fiscal year 2008
revenue and EPS outlook provided on May 16, 2007. Revenue is now
expected to be approximately $727 million to approximately $732
million. The company now expects GAAP diluted EPS to be in the range
of approximately $0.08 to $0.10. GAAP EPS estimates include the
effects of stock based compensation and the amortization of purchased
intangibles. For the full fiscal year 2008, stock based compensation
expense is expected to be approximately $55 million to $60 million, and
the expense associated with the amortization of purchased intangibles
is currently expected to be approximately $5.0 million. For the
purposes of the full fiscal year 2008 GAAP EPS calculation, the company
is expecting an average diluted shares count of 123 million shares, and
a GAAP tax rate of 58%.
Quarterly Conference Call
Salesforce.com will host a conference call to discuss its second quarter
fiscal 2008 results at 2:00 p.m. (PDT) 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 webcast
can be accessed through the same link. Participants who choose to call into
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 12424692, until midnight (EDT)
August 24, 2007.
About salesforce.com
Salesforce.com is the market and technology leader in on-demand business
services. The company's Salesforce suite of on-demand CRM applications allows
customers to manage and share all of their sales, support, marketing and
partner information on-demand. The Salesforce Platform, the world's first
on-demand platform, enables customers, developers and partners to build
powerful new on-demand applications that extend beyond CRM to deliver the
benefits of multi-tenancy and The Business Web across the enterprise. The
Salesforce Platform allows applications to be easily shared, exchanged and
installed with a few simple clicks via salesforce.com's AppExchange directory,
available at http://www.salesforce.com/appexchange. Customers can also take
advantage of Successforce, salesforce.com's world-class training, support,
consulting and best practices offerings.
As of July 31, 2007, salesforce.com manages customer information for
approximately 35,300 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 including but
not limited to statements regarding our expected future revenue, GAAP diluted
earnings per share, expected tax rate, anticipated shares outstanding, further
adoption of our on-demand business services by enterprises, and the potential
market for our existing service offerings. All of our forward looking
statements involve risks, uncertainties and assumptions. If any such risks or
uncertainties materialize or if any of the assumptions proves 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 operating
results and cash flows, rate of growth and anticipated revenue run rate,
errors, interruptions or delays in our service or our Web hosting, our new
business model, our history of operating losses, the possibility that we will
not remain profitable, breach of our security measures, the emerging market
in which we operate, our relatively limited operating history, our ability to
hire, retain and motivate our employees and manage our growth, competition,
our ability to continue to release and gain customer acceptance of new and
improved versions of our service, customer and partner acceptance of the
AppExchange, successful customer deployment and utilization of our services,
unanticipated changes in our effective tax rate, fluctuations in the number of
shares 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 contained in our SEC filings, including our most recent
reports on Form 10-K and 10-Q, particularly under the heading "Risk Factors."
These documents are available in the SEC Filings portion 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.
Salesforce.com is a registered trademark of salesforce.com, and
AppExchange, The Business Web, IdeaExchange and Successforce are trademarks of
salesforce.com, Inc., San Francisco, California. Other names used 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,
2007 2006 2007 2006
Revenues:
Subscription and support $159,998 $106,663 $307,688 $201,156
Professional services and other 16,581 11,474 31,303 21,667
Total revenues 176,579 118,137 338,991 222,823
Cost of revenues (1):
Subscription and support 22,375 15,775 42,559 28,550
Professional services and other 19,037 13,356 38,020 25,141
Total cost of revenues 41,412 29,131 80,579 53,691
Gross profit 135,167 89,006 258,412 169,132
Operating expenses (1):
Research and development 15,096 11,008 29,217 19,833
Marketing and sales 90,216 59,811 174,141 111,827
General and administrative 26,508 19,466 51,593 38,871
Total operating expenses 131,820 90,285 254,951 170,531
Income (loss) from operations 3,347 (1,279) 3,461 (1,399)
Interest, net 5,615 3,170 10,622 6,149
Other income (expense) 280 137 449 (462)
Income before provision for income
taxes and minority interest 9,242 2,028 14,532 4,288
Provision for income taxes (4,653) (1,713) (8,495) (3,718)
Income before minority interest 4,589 315 6,037 570
Minority interest in consolidated
joint venture (854) (460) (1,572) (944)
Net income (loss) $3,735 ($145) $4,465 ($374)
Basic net income (loss) per share $0.03 $0.00 $0.04 $0.00
Diluted net income (loss) per
share $0.03 $0.00 $0.04 $0.00
Shares used in computing basic net
income (loss) per share 116,294 111,838 115,637 111,397
Shares used in computing diluted
net income (loss) per share 121,333 111,838 120,993 111,397
(1) Amounts include stock-based
expenses, as follows:
Cost of revenues $1,965 $1,442 $3,739 $2,596
Research and development 1,510 1,286 2,787 2,006
Marketing and sales 6,265 4,718 11,884 8,200
General and administrative 3,691 2,747 7,033 4,997
Total stock-based
expenses $13,431 $10,193 $25,443 $17,799
salesforce.com, inc.
Condensed Consolidated Statements of Operations
As a percentage of total revenues
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
2007 2006 2007 2006
Revenues:
Subscription and support 91% 90% 91% 90%
Professional services and other 9 10 9 10
Total revenues 100 100 100 100
Cost of revenues:
Subscription and support 12 13 13 13
Professional services and other 11 12 11 11
Total cost of revenues 23 25 24 24
Gross profit 77 75 76 76
Operating expenses:
Research and development 9 9 9 9
Marketing and sales 51 51 51 50
General and administrative 15 16 15 18
Total operating expenses 75 76 75 77
Income (loss) from operations 2 (1) 1 (1)
Interest, net 3 3 3 3
Other income (expense) 0 0 0 0
Income before provision for income
taxes and minority interest 5 2 4 2
Provision for income taxes (2) (2) (2) (2)
Income before minority interest 3 0 2 0
Minority interest in consolidated
joint venture (1) 0 (1) 0
Net income (loss) 2% 0% 1% 0%
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 4 4 4 4
General and administrative 2 3 2 2
Total stock-based
expenses 8% 9% 8% 8%
salesforce.com, inc.
Condensed Consolidated Balance Sheets
(in thousands)
July 31, January 31,
2007 2007
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $122,949 $86,608
Short-term marketable securities 184,881 165,816
Accounts receivable, net 114,046 128,693
Deferred commissions 25,150 22,072
Deferred income taxes 2,106 228
Prepaid expenses and other current assets 28,039 15,679
Total current assets 477,171 419,096
Marketable securities, noncurrent 189,361 160,088
Fixed assets, net 36,690 30,155
Deferred commissions, noncurrent 8,675 9,478
Deferred income taxes, noncurrent 22,620 20,625
Capitalized software 23,956 10,983
Goodwill 6,705 6,705
Other assets 10,601 7,702
Total assets $775,779 $664,832
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $7,215 $8,870
Accrued expenses and other
current liabilities 81,358 77,327
Income taxes payable 1,689 6,739
Deferred revenue 321,852 284,063
Total current liabilities 412,114 376,999
Income taxes payable, noncurrent 5,007 0
Long-term lease abandonment
liability and other 1,371 1,408
Minority interest 6,231 4,634
Total liabilities 424,723 383,041
Stockholders' equity:
Common stock 117 115
Additional paid-in capital 384,510 319,496
Accumulated other comprehensive loss (2,094) (2,187)
Accumulated deficit (31,477) (35,633)
Total stockholders' equity 351,056 281,791
Total liabilities and stockholders' equity $775,779 $664,832
salesforce.com, inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
2007 2006 2007 2006
Operating activities:
Net income (loss) $3,735 ($145) $4,465 ($374)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Minority interest 854 460 1,572 944
Depreciation and amortization 6,045 3,103 10,893 5,428
Amortization of deferred
commissions 9,644 5,651 18,683 10,778
Expenses related to stock-based
awards 13,431 10,193 25,443 17,799
Excess tax benefits from
employee stock plans (8,920) (3,328) (15,206) (5,928)
Changes in assets and
liabilities 9,865 14,088 25,634 13,791
Net cash provided by
operating activities 34,654 30,022 71,484 42,438
Investing activities:
Business combination 0 0 0 (15,502)
Purchase of subsidiary stock 0 0 0 0
Changes in marketable securities (13,735) (14,151) (47,947) 13,057
Capital expenditures (10,104) (2,818) (26,061) (5,413)
Net cash used in investing
activities (23,839) (16,969) (74,008) (7,858)
Financing activities:
Proceeds from the exercise of
stock options and warrants 15,404 5,388 23,704 10,891
Excess tax benefits from employee
stock plans 8,920 3,328 15,206 5,928
Principal payments on capital
lease obligations (6) (153) (163) (304)
Repurchase of unvested shares 0 (10) 0 (10)
Net cash provided by
financing activities 24,318 8,553 38,747 16,505
Effect of exchange rate changes 324 (187) 118 (935)
Net increase in cash and
cash equivalents 35,457 21,419 36,341 50,150
Cash and cash equivalents,
beginning of period 87,492 128,573 86,608 99,842
Cash and cash equivalents, end of
period $122,949 $149,992 $122,949 $149,992
salesforce.com, inc.
Additional Metrics
(Unaudited)
July 31, April 30, Jan 31,
2007 2007 2007
Full Time Equivalent Headcount 2,302 2,243 2,070
Financial data (in thousands):
Cash, cash equivalents
and marketable securities $497,191 $448,071 $412,512
Deferred revenue $321,852 $295,672 $284,063
Oct 31, July 31, April 30,
2006 2006 2006
Full Time Equivalent Headcount 1,807 1,625 1,480
Financial data (in thousands):
Cash, cash equivalents
and marketable securities $371,278 $334,107 $298,313
Deferred revenue $219,431 $202,836 $182,036
Three Months Ended July 31, Six Months Ended July 31,
2007 2006 2007 2006
Revenues by geography
(in thousands):
Americas $133,343 $92,553 $257,795 $175,578
Europe 29,160 17,624 54,734 32,574
Asia Pacific 14,076 7,960 26,462 14,671
$176,579 $118,137 $338,991 $222,823
As a percentage of total revenues:
Revenues by geography:
Americas 76 % 78 % 76 % 79 %
Europe 16 15 16 15
Asia Pacific 8 7 8 6
100 % 100 % 100 % 100 %
SOURCE salesforce.com, inc
David Havlek, Investor Relations, +1-415-536-2171, dhavlek@salesforce.com; or Jane
Hynes, Public Relations, +1-415-901-5079, jhynes@salesforce.com, both of
salesforce.com
http://www.salesforce.com/
