Salesforce.com Announces Record Fiscal First Quarter Results

First Ever Software-as-a-Service Company to Exceed $950M Annual Revenue Run Rate

- Record Revenue of $248 Million, up 52% Year-Over-Year
- Record Operating Cash Flow of $84 Million, up 128% Year-Over-Year
- GAAP EPS of $0.08, up from $0.01 Year-Over-Year
- Net Paying Customers Rise 2,600 to a record 43,600
- Total Cash and Marketable Securities Increases $303 Million Year-Over-Year to $751 Million
- Company Raises FY09 Revenue & GAAP EPS Guidance to $1.060 - $1.065 Billion and $0.33 - $0.34 Respectively

SAN FRANCISCO, May 21 /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 first quarter ended April 30, 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050216/SFW105LOGO)

"First quarter revenues were up 52% year-over-year, and well above our guidance," said Marc Benioff, Chairman and CEO. "And our growing profitability contributed to GAAP EPS of eight cents per share, up from one cent a year ago, and record operating cash of $84M, an increase of 128% from the prior year. Salesforce.com has now generated more than a quarter billion dollars of operating cash in the last 12 months alone."

Salesforce.com delivered the following results for its first quarter fiscal year 2009:

    Revenue: Total Q1 revenue was $247.6 million, an increase of 52% on a
    year-over-year basis and an increase of 14% on a quarter-over-quarter
    basis.  Subscription and support revenues were $225.3 million, an
    increase of 53% on a year-over-year basis and an increase of 15% on a
    quarter-over-quarter basis.  Professional services and other revenues were
    $22.3 million, an increase of 51% on a year-over-year basis and an
    increase of 9% on a quarter-over-quarter basis.

    Earnings per Share:  Q1 GAAP diluted earnings per share were approximately
    $0.08, including approximately $18 million in stock based compensation and
    approximately $1.3 million in amortization of purchased intangibles
    related to previously announced acquisitions.  For the basis of Q1 GAAP
    EPS calculations, there was an average of approximately 124 million
    diluted shares outstanding during the quarter.

    Customers Additions: Net paying customers rose approximately 2,600 during
    the quarter to approximately 43,600.  Compared with the year ago quarter,
    net paying customers have grown by approximately 11,300.

    Cash: Cash from operations for the fiscal first quarter was approximately
    $84 million, up 128% year-over-year, up 4% from Q4, and a company record
    for the 3rd consecutive quarter.  Total cash, cash equivalents and
    marketable securities finished the quarter at approximately $751 million,
    an increase of approximately $81 million from Q4 and up approximately
    $303 million from the year prior.

    Deferred Revenue: Deferred revenue on the balance sheet as of April 30,
    2008 was approximately $470 million, an increase of 59% on a
    year-over-year basis and a decline of 2% on a quarter-over-quarter basis.

As of May 21, 2008, salesforce.com is initiating guidance for its second quarter, fiscal year 2009. In addition, for its full fiscal year 2009 the company is raising its revenue and EPS guidance.

    Q2 FY09:  Revenue for the company's second fiscal quarter is projected to
    be in the range of approximately $258 million to approximately $259
    million. GAAP diluted EPS is expected to be in the range of approximately
    $0.07 to $0.08.  This estimate includes the effects of stock based
    compensation and the amortization of purchased intangibles.  For the
    second fiscal quarter, stock based compensation expense is expected to be
    approximately $19 million, and the expense associated with amortization of
    purchased intangibles is now expected to be approximately $1.3 million.
    For purposes of the Q2 GAAP EPS calculation, the company is expecting an
    average diluted shares count of approximately 125 million shares, and a
    GAAP tax rate of 48%.

    Full Year FY09: The company today is raising the full year revenue
    guidance it provided on February 27, 2008, with revenue now expected to be
    approximately $1.060 billion to approximately $1.065 billion.  The company
    is also raising its earnings outlook for the full year, expecting GAAP
    diluted EPS to be in the range of approximately $0.33 to $0.34.  GAAP EPS
    estimates include 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 is currently expected to be approximately $5.3 million.  For
    purposes of the full fiscal year 2009 GAAP EPS calculation, the company is
    expecting an average diluted shares count of approximately 125 million
    shares, and a GAAP tax rate of 48%.

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its first 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 46678383, until midnight Eastern Time June 13, 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 April 30, 2008, salesforce.com manages customer information for approximately 43,600 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 second 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 impact of 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; 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 April 30, 2008 and our Form 10-K for the fiscal year ended January 31, 2008. These documents are 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 April 30,
                                                     2008              2007

    Revenues:
        Subscription and support                   $225,341          $147,690
        Professional services and other              22,281            14,722
            Total revenues                          247,622           162,412

    Cost of revenues (1):
        Subscription and support                     28,710            20,184
        Professional services and other              22,588            18,983
            Total cost of revenues                   51,298            39,167

    Gross profit                                    196,324           123,245

    Operating expenses (1):
        Research and development                     19,767            14,121
        Marketing and sales                         122,704            83,925
        General and administrative                   38,432            25,085
            Total operating expenses                180,903           123,131

    Income from operations                           15,421               114

    Interest, net                                     6,722             5,007
    Other income (expense)                             (763)              169

    Income before provision for income
     taxes and minority interest                     21,380             5,290

    Provision for income taxes                      (10,311)           (3,842)

    Income before minority interest                  11,069             1,448

    Minority interest in consolidated
     joint venture                                   (1,514)             (718)

    Net income                                       $9,555              $730

    Basic net income per share                        $0.08             $0.01

    Diluted net income per share                      $0.08             $0.01

    Shares used in computing basic net
     income per share                               119,778           114,987

    Shares used in computing diluted net
     income per share                               124,414           120,635


    (1) Amounts include stock-based
        expenses, as follows:
            Cost of revenues                         $2,675            $1,774
            Research and development                  2,099             1,277
            Marketing and sales                       8,121             5,619
            General and administrative                5,170             3,342

                 Total stock-based
                  expenses                          $18,065           $12,012



    salesforce.com, inc.
    Condensed Consolidated Statements of Operations
        As a percentage of total revenues:
        (Unaudited)

                                                  Three Months Ended April 30,
                                                     2008               2007
    Revenues:
        Subscription and support                       91%               91%
        Professional services and other                 9                 9
            Total revenues                            100               100

    Cost of revenues:
        Subscription and support                       12                12
        Professional services and other                 9                12
            Total cost of revenues                     21                24

    Gross profit                                       79                76

    Operating expenses:
        Research and development                        8                 9
        Marketing and sales                            50                52
        General and administrative                     15                15
            Total operating expenses                   73                76

    Income from operations                              6                 0

    Interest, net                                       3                 3
    Other income (expense)                              0                 0

    Income before provision for income
     taxes and minority interest                        9                 3

    Provision for income taxes                         (4)               (2)

    Income before minority interest                     5                 1

    Minority interest in consolidated
     joint venture                                     (1)               (1)

    Net income                                          4%                0%



    Stock-based expenses as a percentage
     of total revenues, as follows:
            Cost of revenues                            1%                1%
            Research and development                    1                 1
            Marketing and sales                         3                 3
            General and administrative                  2                 2

                 Total stock-based
                  expenses                              7%                7%



    salesforce.com, inc.
    Condensed Consolidated Balance Sheets
    (in thousands)

                                                April 30,        January 31,
                                                  2008              2008
                                               (unaudited)
    Assets
    Current assets:
       Cash and cash equivalents                $378,548          $279,095
       Short-term marketable securities          116,535           171,748
       Accounts receivable, net                  143,909           220,061
       Deferred commissions                       34,937            35,679
       Deferred income taxes                       7,310             7,173
       Prepaid expenses and other
        current assets                            32,170            27,055

    Total current assets                         713,409           740,811

    Marketable securities, noncurrent            255,550           218,957
    Fixed assets, net                             56,816            41,380
    Deferred commissions, noncurrent              15,104            16,435
    Deferred income taxes, noncurrent             32,301            26,512
    Capitalized software, net                     22,969            23,061
    Goodwill                                       8,556             8,556
    Other assets                                  14,888            13,881

    Total assets                              $1,119,593        $1,089,593

    Liabilities and stockholders'
     equity
    Current liabilities:
       Accounts payable                          $19,315            $7,478
       Accrued expenses and other
        current liabilities                      102,596           125,996
       Income taxes payable                        1,155             3,622
       Deferred revenue                          457,913           468,821

    Total current liabilities                    580,979           605,917

    Income taxes payable, noncurrent               9,511             8,465
    Long-term lease abandonment
     liability and other                           3,195             2,136
    Deferred revenue, noncurrent                  12,384            12,073
    Minority interest                             10,457             8,943

    Total liabilities                            616,526           637,534

    Stockholders' equity:
       Common stock                                  120               119
       Additional paid-in capital                514,621           471,802
       Accumulated other comprehensive
        loss                                      (3,643)           (2,276)
       Accumulated deficit                        (8,031)          (17,586)

    Total stockholders' equity                   503,067           452,059

    Total liabilities and stockholders'
     equity                                   $1,119,593        $1,089,593



    salesforce.com, inc.
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
    (Unaudited)

                                                  Three Months Ended April 30,
                                                      2008               2007
    Operating activities:
    Net income                                       $9,555              $730
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
       Minority interest                              1,514               718
       Depreciation and amortization                  8,158             4,848
       Amortization of deferred
        commissions                                  14,723             9,039
       Expenses related to stock-based
        awards                                       18,065            12,012
       Excess tax benefits from employee
        stock plans                                 (12,698)           (6,286)
       Changes in assets and liabilities             44,515            15,769


          Net cash provided by operating
           activities                                83,832            36,830

    Investing activities:
    Changes in marketable securities                 16,540           (34,212)
    Capital expenditures                            (24,177)          (15,957)


          Net cash used in investing
           activities                                (7,637)          (50,169)

    Financing activities:
    Proceeds from the exercise of stock
     options and warrants                            11,485             8,300
    Excess tax benefits from employee
     stock plans                                     12,698             6,286
    Principal payments on capital lease
     obligations                                         (5)             (157)


          Net cash provided by financing
           activities                                24,178            14,429

    Effect of exchange rate changes                    (920)             (206)

    Net increase in cash and
     cash equivalents                                99,453               884

    Cash and cash equivalents, beginning
     of period                                      279,095            86,608

    Cash and cash equivalents, end of
     period                                        $378,548           $87,492



    salesforce.com, inc.
    Additional Metrics
    (Unaudited)

                                      April 30,    Jan 31,   Oct 31,   Jul 31,
                                        2008        2008      2007      2007

    Full Time Equivalent Headcount      2,864       2,606     2,461     2,302


    Financial data (in thousands):
      Cash, cash equivalents
       and marketable  securities    $750,633    $669,800  $571,003  $497,191
      Deferred revenue, current
       and non-current               $470,297    $480,894  $340,808  $321,852


                                       Apr 30,     Jan 31,   Oct 31,
                                        2007        2007      2006

                                        2,243       2,070     1,807


                                     $448,071    $412,512  $371,278
                                     $295,672    $284,063  $219,431




                             Three Months Ended April 30,
                                2008             2007
    Revenues by geography
    (in thousands):
      Americas                $178,371         $124,452
      Europe                    45,164           25,574
      Asia Pacific              24,087           12,386

                              $247,622         $162,412
    As a percentage of total
     revenues:
    Revenues by geography:
      Americas                      72%              77%
      Europe                        18               16
      Asia Pacific                  10                7

                                   100%             100%

SOURCE salesforce.com, inc.
05/21/2008
/CONTACT: 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
Web site: http://www.salesforce.com
(CRM)