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Salesforce Announces Record Fourth Quarter and Full Year Fiscal 2018 Results

Feb 28, 2018

Raises FY19 Revenue Guidance by $150 Million to $12.60 Billion to $12.65 Billion
- Fourth Quarter Revenue of $2.85 Billion, up 24% Year-Over-Year, 21% in Constant Currency
- Full Year Revenue of $10.48 Billion, up 25% Year-Over-Year, 24% in Constant Currency
- Deferred Revenue of $7.09 Billion, up 28% Year-Over-Year, 25% in Constant Currency
- Unbilled Deferred Revenue of Approximately $13.3 Billion, up 48% Year-Over-Year
- Fourth Quarter Operating Cash Flow of $1.05 Billion, up 49% Year-Over-Year
- Full Year Operating Cash Flow of $2.74 Billion, up 27% Year-Over-Year

SAN FRANCISCO, Feb. 28, 2018 /PRNewswire/ -- Salesforce (NYSE: CRM), the global leader in CRM, today announced results for its fiscal fourth quarter and full fiscal year ended January 31, 2018.

Salesforce (PRNewsFoto/salesforce.com) (PRNewsfoto/Salesforce)

"We had an outstanding quarter of growth that propelled Salesforce over the $10 billion revenue milestone for the year," said Marc Benioff, chairman and CEO, Salesforce. "No other enterprise software company has achieved this scale faster than Salesforce. Our relentless focus on customer success continues to strengthen our position as the global leader in CRM."

Salesforce delivered the following results for its fiscal fourth quarter and full fiscal year 2018:

Revenue: Total fourth quarter revenue was $2.85 billion, an increase of 24% year-over-year, and 21% in constant currency. Subscription and support revenues were $2.66 billion, an increase of 26% year-over-year. Professional services and other revenues were $196 million, an increase of 7% year-over-year.

Full fiscal year 2018 revenue was $10.48 billion, an increase of 25% year-over-year, and 24% in constant currency. Subscription and support revenues were $9.71 billion, an increase of 25% year-over-year. Professional services and other revenues were $769 million, an increase of 21% year-over-year.

Earnings per Share: Fourth quarter GAAP diluted earnings per share was $0.09, and non-GAAP diluted earnings per share was $0.35. Earnings per share benefitted by $0.02 related to net realized gains from strategic investments in the fourth quarter. For the full fiscal year 2018, GAAP diluted earnings per share was $0.17, and non-GAAP diluted earnings per share was $1.35.

Cash: Cash generated from operations for the fourth quarter was $1.05 billion, an increase of 49% year-over-year. Cash generated from operations for the full fiscal year 2018 was $2.74 billion, an increase of 27% year-over-year. Total cash, cash equivalents and marketable securities finished the fourth quarter at $4.52 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of January 31, 2018 was $7.09 billion, an increase of 28% year-over-year, and 25% in constant currency. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the fourth quarter at approximately $13.3 billion, up 48% year-over-year.

As of February 28, 2018, the company is initiating revenue, earnings per share, and deferred revenue guidance for its first quarter of fiscal year 2019. In addition, the company is raising its full fiscal year 2019 revenue guidance previously provided on November 21, 2017. The company is also initiating earnings per share guidance and operating cash flow guidance for its full fiscal year 2019. The guidance below does not reflect the impact of new accounting standards ASC 606, ASC 340-40 and ASU 2016-01[1] and is based on estimated GAAP tax rates that reflect the company's currently available information, including its anticipated impact of the new Tax Act and interpretations thereof, as well as other factors and assumptions.

Q1 FY19 Guidance: Revenue is projected to be $2.925 billion to $2.935 billion, an increase of 23% year-over-year.

GAAP diluted earnings per share is projected to be $0.09 to $0.10, while non-GAAP diluted earnings per share is projected to be $0.43 to $0.44.

On balance sheet deferred revenue growth is projected to be 23% to 24% year-over-year.

Full Year FY19 Guidance: Revenue is projected to be $12.6 billion to $12.65 billion, an increase of 20% to 21% year-over-year.

GAAP diluted earnings per share is projected to be $0.61 to $0.63, while non-GAAP diluted earnings per share is projected to be $2.02 to $2.04.

Operating cash flow growth is projected to be 20% to 21% year-over-year.

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


Fiscal 2019



Q1

FY2019






GAAP diluted EPS range* 

 $0.09 - $0.10 

 $0.61 - $0.63 


Plus




Amortization of purchased intangibles

$             0.09

$             0.35


Stock-based expense

$             0.34

$             1.47


Amortization of debt discount, net

$             0.01

$             0.01


Less




Income tax effects and adjustments**

$           (0.10)

$           (0.42)


Non-GAAP diluted EPS***

 $0.43 - $0.44 

 $2.02 - $2.04 






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

730

742


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

757

763






* The Company's GAAP tax provision is expected to be 20.0% for the three months ended April 30th, 2018 and 18.5% for the twelve months ended January 31st, 2019. The Company's GAAP diluted EPS excludes the effect of ASU 2016-01.




** The Company's Non-GAAP tax provision uses a long-term projected tax rate of 21.5%, which reflects currently available information and could be subject to change.




*** The Company's Non-GAAP diluted EPS excludes the effect of ASU 2016-01.




For additional information regarding non-GAAP financial measures see the reconciliation of results and related explanations below.

Quarterly Conference Call
Salesforce will host a conference call at 2:00 p.m. (PT) / 5:00 p.m. (ET) today to discuss its financial results with the investment community.  A live web broadcast of the event will be available on the Salesforce Investor Relations website at www.salesforce.com/investor.  A live dial-in is available domestically at 866-901-SFDC or 866-901-7332 and internationally at 706-902-1764, passcode 9190744.  A replay will be available at (800) 585-8367 or (855) 859-2056 until midnight (ET) Mar. 30, 2018.

About Salesforce
Salesforce, the global leader in CRM, empowers companies to connect with their customers in a whole new way. Salesforce 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 about Salesforce, visit: www.salesforce.com.

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:  This press release contains forward-looking statements about our financial results, which may include expected GAAP and non-GAAP financial and other operating and non-operating results, including revenue, net income, diluted earnings per share, operating cash flow growth, operating margin improvement, deferred revenue growth, expected revenue growth, expected tax rates, stock-based compensation expenses, amortization of purchased intangibles, amortization of 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 the effect of general economic and market conditions; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our business strategy and our plan to build our business, including our strategy to be the leading provider of enterprise cloud computing applications and platforms; the pace of change and innovation in enterprise cloud computing services; the competitive nature of the market in which we participate; our international expansion strategy; our service performance and security, including the resources and costs required to prevent, detect and remediate potential security breaches; the expenses associated with new data centers and third-party infrastructure providers; additional data center capacity; real estate and office facilities space; our operating results and cash flows; new services and product features; our strategy of acquiring or making investments in complementary businesses, joint ventures, services, technologies and intellectual property rights; the performance and fair value of our investments in complementary businesses through our strategic investment portfolio; our ability to realize the benefits from strategic partnerships and investments; our ability to successfully integrate acquired businesses and technologies; our ability to continue to grow and maintain deferred revenue and unbilled deferred revenue; our ability to protect our intellectual property rights; our ability to develop our brands; our reliance on third-party hardware, software and platform providers; our dependency on the development and maintenance of the infrastructure of the Internet; the effect of evolving domestic and foreign government regulations, including those related to the provision of services on the Internet, those related to accessing the Internet, and those addressing data privacy and import and export controls; the valuation of our deferred tax assets; the potential availability of additional tax assets in the future; the impact of new accounting pronouncements and tax laws, including the U.S. Tax Cuts and Jobs Act, and interpretations thereof; uncertainties affecting our ability to estimate our non-GAAP tax rate; the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; factors related to our outstanding convertible notes, revolving credit facility, term loan and loan associated with 50 Fremont; compliance with our debt covenants and capital lease obligations; current and potential litigation involving us; and the impact of climate change.

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.  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.

© 2018 salesforce.com, inc.  All rights reserved.  Salesforce and other marks are trademarks of salesforce.com, inc.  Other brands featured herein may be trademarks of their respective owners.

Non-GAAP Financial Measures:  This press release includes information about non-GAAP diluted earnings per share, non-GAAP tax rates, non-GAAP free cash flow, and constant currency revenue and constant currency deferred revenue growth rates (collectively the "non-GAAP financial measures"). These non-GAAP financial measures are measurements of financial performance that are not prepared in accordance with U.S. generally accepted accounting principles and computational methods may differ from those 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. Management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the company's performance.

The primary purpose of using non-GAAP measures is to provide supplemental information that may prove useful to investors and to enable investors to evaluate the company's results in the same way management does. Management believes that supplementing GAAP disclosure with non-GAAP disclosure provides investors with a more complete view of the company's operational performance and allows for meaningful period-to-period comparisons and analysis of trends in the company's business. Further, to the extent that other companies use similar methods in calculating non-GAAP measures, the provision of supplemental non-GAAP information can allow for a comparison of the company's relative performance against other companies that also report non-GAAP operating results.

Non-GAAP diluted earnings per share excludes, to the extent applicable, the impact of the following items:  stock-based compensation, amortization of acquisition-related intangibles, amortization of acquired leases, the net amortization of debt discount on the company's convertible senior notes, gains/losses on conversions of the company's convertible senior notes, gains/losses on sales of land and building improvements, gains/losses on company-initiated acquisitions of entities in which the company held an equity investment, and termination of office leases, as well as income tax adjustments.  These items are excluded because the decisions that give rise to them are not made to increase revenue in a particular period, but instead for the company's long-term benefit over multiple periods. 

Specifically, management is excluding the following items from its non-GAAP earnings per share, as applicable, for the periods presented in the Q4 FY18 financial statements and for its non-GAAP estimates for Q1 and FY19:

  • 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 and Acquired Leases:  The company views amortization of acquisition- and building-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, and acquired lease intangibles, as items arising from pre-acquisition activities determined at the time of an acquisition.  While these intangible assets are continually evaluated 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 $1.15 billion of convertible senior notes due in April 2018 that were issued in a private placement in March 2013.  The imputed interest rate was approximately 2.5% for the convertible notes due 2018, while the actual coupon interest rate of the notes is 0.25%.  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. 

  • Gains on Acquisitions of Strategic Investments: The company views gains on sales of its strategic investments resulting from acquisitions initiated by the company in which an equity interest was previously held as discrete events and not indicative of operational performance during any particular period. 

  • Income Tax Effects and Adjustments: The company utilizes a fixed long-term projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of items such as changes in the tax valuation allowance and tax effects of acquisitions-related costs, since each of these can vary in size and frequency. When projecting this long-term rate, the company evaluated a three-year financial projection that excludes the direct impact of the following non-cash items: stock-based expenses, amortization of purchased intangibles and acquired leases, amortization of debt discount, and gains on acquisitions of strategic investments. The projected rate also assumes no new acquisitions in the three-year period, and considers other factors including the company's expected tax structure, its tax positions in various jurisdictions and key legislation in major jurisdictions where the company operates. For fiscal 2018, after evaluating the impact of the 2017 U.S. Tax Cuts and Jobs Act ("Tax Act") for the period from enactment of the Tax Act on December 22, 2017 to fiscal year end, the company concluded that its previously disclosed non-GAAP tax rate of 34.5 percent remained appropriate. For fiscal 2019, the company has determined that its projected non-GAAP tax rate will be 21.5 percent, which reflects currently available information, including the anticipated impact of the Tax Act and interpretations thereof, as well as other factors and assumptions. The non-GAAP tax rate could be subject to change for a variety of reasons, including the company's ongoing analysis of the Tax Act over the measurement period, the rapidly evolving global tax environment, significant changes in the company's geographic earnings mix including due to acquisition activity, or other changes to the company's strategy or business operations. The company will re-evaluate its long-term rate as appropriate.

The company defines the non-GAAP measure free cash flow as GAAP net cash provided by operating activities, less capital expenditures.  For this purpose, capital expenditures does not include our strategic investments, nor does it include any costs or activities related to our purchase of 50 Fremont land and building, and building - leased facilities.












1 Accounting Standards Codification ("ASC") 606 "Revenue from Contracts with Customers,"

ASC 340-40 "Other Assets and Deferred Costs – Contracts with Customers" and Accounting Standards Update 2016-01 "Financial Instruments" (ASU 2016-01), which will be effective as of the beginning of Fiscal 2019.

 

salesforce.com, inc.

Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)






Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Revenues:








Subscription and support

$

2,655,000



$

2,110,651



$

9,710,538



$

7,756,205


Professional services and other

196,003



183,337



769,474



635,779


Total revenues

2,851,003



2,293,988



10,480,012



8,391,984


Cost of revenues (1)(2):








Subscription and support

548,475



463,271



2,033,457



1,617,315


Professional services and other

189,317



162,686



740,065



616,724


Total cost of revenues

737,792



625,957



2,773,522



2,234,039


Gross profit

2,113,211



1,668,031



7,706,490



6,157,945


Operating expenses (1)(2):








Research and development

396,547



344,192



1,553,073



1,208,127


Marketing and sales

1,364,305



1,089,243



4,829,291



3,918,027


General and administrative

274,490



257,941



1,088,358



967,563


Total operating expenses

2,035,342



1,691,376



7,470,722



6,093,717


Income (loss) from operations

77,869



(23,345)



235,768



64,228


Investment income

11,779



3,627



35,848



27,374


Interest expense

(21,561)



(24,323)



(86,943)



(88,988)


Other income (1)

20,130



20,572



17,435



9,072


Gains from acquisitions of strategic investments

0



0



0



13,697


Income (loss) before benefit from (provision for) income taxes

88,217



(23,469)



202,108



25,383


Benefit from (provision for) income taxes

(20,662)



(27,971)



(74,630)



154,249


Net income (loss)

$

67,555



$

(51,440)



$

127,478



$

179,632


Basic net income (loss) per share

$

0.09



$

(0.07)



$

0.18



$

0.26


Diluted net income (loss) per share

$

0.09



$

(0.07)



$

0.17



$

0.26


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

724,127



700,994



714,919



687,797


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

749,464



700,994



734,598



700,217


_______________

(1)

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






Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Cost of revenues

$

38,866



$

43,214



$

165,545



$

127,676


Marketing and sales

30,066



31,000



121,340



97,601


Other non-operating expense

315



564



1,433



2,491




(2)

Amounts include stock-based expense, as follows:




Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Cost of revenues

$

32,748



$

30,545



$

129,954



$

107,457


Research and development

62,653



63,323



259,838



187,487


Marketing and sales

112,015



113,422



468,553



388,937


General and administrative

30,266



37,097



138,668



136,486



 

salesforce.com, inc.

Consolidated Statements of Operations

(As a percentage of total revenues)

(Unaudited)






Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Revenues:








Subscription and support

93

%


92

%


93

%


92

%

Professional services and other

7



8



7



8


Total revenues

100



100



100



100


Cost of revenues (1)(2):








Subscription and support

19



20



19



19


Professional services and other

7



7



7



8


Total cost of revenues

26



27



26



27


Gross profit

74



73



74



73


Operating expenses (1)(2):








Research and development

14



15



15



14


Marketing and sales

48



48



46



47


General and administrative

9



11



10



11


Total operating expenses

71



74



71



72


Income (loss) from operations

3



(1)



3



1


Investment income

0



0



0



0


Interest expense

(1)



(1)



(1)



(1)


Other income (1)

1



1



0



0


Gains from acquisitions of strategic investments

0



0



0



0


Income (loss) before benefit from (provision for) income taxes

3



(1)



2



0


Benefit from (provision for) income taxes

(1)



(1)



(1)



2


Net income (loss)

2

%


(2)

%


1

%


2

%

_______________

(1)

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




Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Cost of revenues

1

%


2

%


2

%


2

%

Marketing and sales

1



1



1



1


Other non-operating expense

0



0



0



0




(2)

Stock-based expense as a percentage of total revenues, as follows:




Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Cost of revenues

1

%


1

%


1

%


1

%

Research and development

2



3



2



2


Marketing and sales

4



5



4



5


General and administrative

1



2



1



2


 

salesforce.com, inc.

Consolidated Balance Sheets

(in thousands)

(Unaudited)



January 31,
 2018


January 31,
 2017

Assets




Current assets:




Cash and cash equivalents

$

2,543,484



$

1,606,549


Marketable securities

1,978,221



602,338


Accounts receivable, net

3,917,401



3,196,643


Deferred commissions

460,887



311,770


Prepaid expenses and other current assets

390,378



279,527


Total current assets

9,290,371



5,996,827


Property and equipment, net

1,946,527



1,787,534


Deferred commissions, noncurrent

413,375



227,849


Capitalized software, net

146,065



141,671


Strategic investments

677,283



566,953


Goodwill

7,314,096



7,263,846


Intangible assets acquired through business combinations, net

826,445



1,113,374


Other assets, net

395,640



486,869


Total assets

$

21,009,802



$

17,584,923


Liabilities, temporary equity and stockholders' equity




Current liabilities:




Accounts payable, accrued expenses and other liabilities

$

2,010,096



$

1,752,664


Deferred revenue

7,094,705



5,542,802


Current portion of debt

1,024,717



0


Total current liabilities

10,129,518



7,295,466


Noncurrent debt

694,781



2,008,391


Other noncurrent liabilities

793,140



780,939


Total liabilities

11,617,439



10,084,796


Temporary equity:




Convertible 0.25% senior notes due April 2018

3,867



0


Stockholders' equity:




Common stock

730



708


Additional paid-in capital

9,752,340



8,040,170


Accumulated other comprehensive loss

(27,142)



(75,841)


Accumulated deficit

(337,432)



(464,910)


Total stockholders' equity

9,388,496



7,500,127


Total liabilities, temporary equity and stockholders' equity

$

21,009,802



$

17,584,923


 

salesforce.com, inc.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)






Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Operating activities:








Net income (loss)

$

67,555



$

(51,440)



$

127,478



$

179,632


Adjustments to reconcile net income (loss) to net cash provided by operating activities:








Depreciation and amortization

187,689



180,766



752,600



632,245


Amortization of debt discount and issuance costs

8,002



9,207



31,267



30,541


Gains from acquisitions of strategic investments

0



0



0



(13,697)


Amortization of deferred commissions

132,975



101,014



464,662



371,541


Expenses related to employee stock plans

237,682



244,387



997,013



820,367


Changes in assets and liabilities, net of business combinations:








Accounts receivable, net

(2,397,485)



(1,905,275)



(720,019)



(628,477)


Deferred commissions

(426,591)



(235,065)



(799,305)



(462,030)


Prepaid expenses and other current assets and other assets

190,924



(3,127)



24,140



(28,850)


Accounts payable, accrued expenses and other liabilities

347,945



325,011



308,225



49,953


Deferred revenue

2,702,624



2,040,668



1,551,904



1,210,973


Net cash provided by operating activities

1,051,320



706,146



2,737,965



2,162,198


Investing activities:








Business combinations, net of cash acquired

(5,610)



(360,629)



(25,391)



(3,192,739)


Purchases of strategic investments

(103,350)



(44,495)



(216,438)



(110,329)


Sales of strategic investments

74,834



53,836



130,732



80,342


Purchases of marketable securities

(569,397)



(83,550)



(2,003,115)



(1,070,412)


Sales of marketable securities

121,366



78,252



558,614



2,005,301


Maturities of marketable securities

36,034



2,713



79,123



67,454


Capital expenditures

(137,759)



(143,974)



(534,027)



(463,958)


Net cash used in investing activities

(583,882)



(497,847)



(2,010,502)



(2,684,341)


Financing activities:








Proceeds from term loan, net

0



0



0



495,550


Proceeds from employee stock plans

165,514



85,616



650,300



401,481


Principal payments on capital lease obligations

(23,006)



(24,397)



(105,896)



(98,157)


Proceeds from revolving credit facility

0



748,824



0



748,824


Payments on revolving credit facility

0



(550,000)



(200,000)



(550,000)


Payments on convertible senior notes

(123,179)



0



(123,179)



0


Net cash provided by financing activities

19,329



260,043



221,225



997,698


Effect of exchange rate changes

(15,120)



(7,529)



(11,753)



(27,369)


Net increase in cash and cash equivalents

471,647



460,813



936,935



448,186


Cash and cash equivalents, beginning of period

2,071,837



1,145,736



1,606,549



1,158,363


Cash and cash equivalents, end of period

$

2,543,484



$

1,606,549



$

2,543,484



$

1,606,549


 

salesforce.com, inc.

Additional Metrics

(Unaudited)



Jan 31,

2018


Oct 31,
2017


Jul 31,
2017


Apr 30,
2017


Jan 31,
2017


Oct 31,
2016

Full Time Equivalent Headcount

29,401



28,527



27,155



26,213



25,178



23,939


Financial data (in thousands):












Cash, cash equivalents and marketable securities

$

4,521,705



$

3,628,665



$

3,501,245



$

3,219,550



$

2,208,887



$

1,751,130


Strategic investments

$

677,283



$

670,406



$

657,687



$

639,191



$

566,953



$

555,968


Deferred revenue

$

7,094,705



$

4,392,082



$

4,818,634



$

5,042,652



$

5,542,802



$

3,495,133


Unbilled deferred revenue, a non-GAAP measure (1)

$

13,300,000



$

11,500,000



$

10,400,000



$

9,600,000



$

9,000,000



$

8,600,000


Principal due on our outstanding debt obligations (2)

$

1,726,821



$

1,850,000



$

1,850,000



$

1,850,000



$

2,050,000



$

1,850,000



(1) 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. The amount of unbilled deferred revenue may change from quarter to quarter for several reasons, including the specific timing, duration and size of customer subscription agreements and the timing of customer renewals.


(2) Our outstanding debt obligations include our 0.25% Convertible Senior Notes, the loan assumed on 50 Fremont, and the Term Loan. The principal due on our 0.25% Convertible Senior Notes of approximately $1.0 billion as of January 31, 2018 is payable in April 2018.


 

Selected Balance Sheet Accounts (in thousands):



January 31,
 2018


October 31,
 2017


January 31,
 2017

Prepaid Expenses and Other Current Assets






Prepaid income taxes

$

33,523



$

43,301



$

26,932


Other taxes receivable

32,692



33,099



34,177


Prepaid expenses and other current assets

324,163



393,546



218,418



$

390,378



$

469,946



$

279,527


Property and Equipment, net






Land

$

183,888



$

183,888



$

183,888


Buildings and building improvements

626,062



626,168



621,377


Computers, equipment and software

1,628,827



1,600,783



1,440,986


Furniture and fixtures

139,299



132,374



112,564


Leasehold improvements

824,470



776,396



627,069



3,402,546



3,319,609



2,985,884


Less accumulated depreciation and amortization

(1,456,019)



(1,454,718)



(1,198,350)



$

1,946,527



$

1,864,891



$

1,787,534


Intangible Assets Acquired Through Business Combinations, net






Acquired developed technology

$

349,563



$

388,346



$

514,232


Customer relationships

471,936



501,500



589,579


Other

4,946



5,922



9,563



$

826,445



$

895,768



$

1,113,374


Other Assets, net






Deferred income taxes, noncurrent, net

$

36,523



$

31,596



$

28,939


Long-term deposits

23,518



23,979



23,597


Domain names and patents, net

22,779



26,811



39,213


Customer contract assets

170,921



201,357



281,733


Other

141,899



141,145



113,387



$

395,640



$

424,888



$

486,869


Accounts Payable, Accrued Expenses and Other Liabilities






Accounts payable

$

76,465



$

120,019



$

115,257


Accrued compensation

960,453



622,419



730,390


Non-cash equity liability

0



49,435



68,355


Accrued income and other taxes payable

305,861



193,693



239,699


Capital lease obligation, current

102,539



114,147



102,106


Other current liabilities

564,778



586,695



496,857



$

2,010,096



$

1,686,408



$

1,752,664


Other Noncurrent Liabilities






Deferred income taxes and income taxes payable

$

115,717



$

117,193



$

99,378


Financing obligation - leased facility

198,226



198,903



200,711


Long-term lease liabilities and other

479,197



420,774



480,850



$

793,140



$

736,870



$

780,939



 

Supplemental Revenue Analysis




Subscription and support revenue by cloud service offering (in millions):

Three Months Ended January 31,


Fiscal Year Ended January 31,



2018


2017


2018


2017


Sales Cloud

$

931.8



$

804.9



$

3,554.3



$

3,060.6



Service Cloud

789.3



615.3



2,877.1



2,320.7



Salesforce Platform and Other

536.3



391.7



1,929.2



1,441.6



Marketing and Commerce Cloud

397.6



298.8



1,349.9



933.3




$

2,655.0



$

2,110.7



$

9,710.5



$

7,756.2





Total revenues by geography (in thousands):

Three Months Ended January 31,


Fiscal Year Ended January 31,



2018


2017


2018


2017


Americas

$

2,042,184



$

1,718,197



$

7,579,116



$

6,224,971



Europe

535,806



360,876



1,903,524



1,373,547



Asia Pacific

273,013



214,915



997,372



793,466




$

2,851,003



$

2,293,988



$

10,480,012



$

8,391,984












Total revenues by geography as a percentage of total revenues:

Three Months Ended January 31,


Fiscal Year Ended January 31,



2018


2017


2018


2017


Americas

72

%


75

%


72

%


74

%


Europe

19



16



18



16



Asia Pacific

9



9



10



10




100

%


100

%


100

%


100

%


 

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

Three Months Ended
January 31, 2018
compared to Three Months 
Ended January 31, 2017


Three Months Ended
October 31, 2017
compared to Three Months 
Ended October 31, 2016


Three Months Ended
January 31, 2017
compared to Three Months 
Ended January 31, 2016


Americas

19%


21%


29%


Europe

31%


33%


26%


Asia Pacific

26%


27%


30%


Total growth

21%


23%


28%



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 weighted average exchange rate for the quarter being compared to for growth rate calculations presented, rather than the actual exchange rates in effect during that period.


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

January 31, 2018
compared to
January 31, 2017


October 31, 2017
compared to
October 31, 2016


January 31, 2017
compared to
January 31, 2016

Total growth

25%


24%


29%


We present constant currency information for deferred revenue to provide a framework for assessing how our underlying business performed excluding the effects of foreign currency rate fluctuations.  To present the information above, we convert the deferred revenue balances in local currencies in previous comparable periods using the United States dollar currency exchange rate as on the most recent balance sheet date.

 

Supplemental GAAP and Non-GAAP Diluted Share Count Information

(share data in thousands)



Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Weighted-average shares outstanding for basic earnings per share

724,127



700,994



714,919



687,797


Effect of dilutive securities:








Convertible senior notes

5,798



1,642



4,672



1,906


Employee stock awards

16,945



8,567



14,163



10,514


Warrants

2,594



0



844



0


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

749,464



711,203



734,598



700,217


 

Supplemental Cash Flow Information

Free cash flow analysis, a non-GAAP measure

(in thousands)



Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Operating cash flow








GAAP net cash provided by operating activities

$

1,051,320



$

706,146



$

2,737,965



$

2,162,198


Less:








Capital expenditures

(137,759)



(143,974)



(534,027)



(463,958)


Free cash flow

$

913,561



$

562,172



$

2,203,938



$

1,698,240


 

Comprehensive Income (Loss)

(in thousands)

(Unaudited)



Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Net income (loss)

$

67,555



$

(51,440)



$

127,478



$

179,632


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








Foreign currency translation and other gains (losses)

23,882



(14,547)



52,072



(43,070)


Unrealized gains (losses) on marketable securities and strategic investments

(55,702)



(6,461)



(4,497)



14,500


Other comprehensive income (loss), before tax

(31,820)



(21,008)



47,575



(28,570)


Tax effect

1,124



8,110



1,124



2,646


Other comprehensive income (loss), net of tax

(30,696)



(12,898)



48,699



(25,924)


Comprehensive income (loss)

$

36,859



$

(64,338)



$

176,177



$

153,708



 

salesforce.com, inc.

GAAP Results Reconciled to non-GAAP Results

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

(in thousands, except per share data)

(Unaudited) 



Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Non-GAAP gross profit








GAAP gross profit

$

2,113,211



$

1,668,031



$

7,706,490



$

6,157,945


Plus:








Amortization of purchased intangibles (a)

38,866



43,214



165,545



127,676


Stock-based expense (b)

32,748



30,545



129,954



107,457


Non-GAAP gross profit

$

2,184,825



$

1,741,790



$

8,001,989



$

6,393,078


Non-GAAP operating expenses








GAAP operating expenses

$

2,035,342



$

1,691,376



$

7,470,722



$

6,093,717


Less:








Amortization of purchased intangibles (a)

(30,066)



(31,000)



(121,340)



(97,601)


Stock-based expense (b)

(204,934)



(213,842)



(867,059)



(712,910)


Non-GAAP operating expenses

$

1,800,342



$

1,446,534



$

6,482,323



$

5,283,206


Non-GAAP income from operations








GAAP income (loss) from operations

$

77,869



$

(23,345)



$

235,768



$

64,228


Plus:








Amortization of purchased intangibles (a)

68,932



74,214



286,885



225,277


Stock-based expense (b)

237,682



244,387



997,013



820,367


Non-GAAP income from operations

$

384,483



$

295,256



$

1,519,666



$

1,109,872


Non-GAAP non-operating income (loss) (c)








GAAP non-operating income (loss)

$

10,348



$

(124)



$

(33,660)



$

(38,845)


Plus:








Amortization of debt discount, net

6,674



6,344



25,943



25,137


Amortization of acquired lease intangible

315



564



1,433



2,491


Less:








Gains from acquisitions of strategic investments

0



0



0



(13,697)


Non-GAAP non-operating income (loss)

$

17,337



$

6,784



$

(6,284)



$

(24,914)


Non-GAAP net income








GAAP net income (loss)

$

67,555



$

(51,440)



$

127,478



$

179,632


Plus:








Amortization of purchased intangibles (a)

68,932



74,214



286,885



225,277


Amortization of acquired lease intangible

315



564



1,433



2,491


Stock-based expense (b)

237,682



244,387



997,013



820,367


Amortization of debt discount, net

6,674



6,344



25,943



25,137


Less:








Gains from acquisitions of strategic investments

0



0



0



(13,697)


Income tax effects and adjustments

(117,894)



(77,743)



(447,415)



(533,984)


Non-GAAP net income

$

263,264



$

196,326



$

991,337



$

705,223


 


Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Non-GAAP diluted earnings per share








GAAP diluted net income (loss) per share

$

0.09



$

(0.07)



$

0.17



$

0.26


Plus:








Amortization of purchased intangibles

0.09



0.10



0.39



0.32


Amortization of acquired lease intangible

0.00



0.00



0.00



0.00


Stock-based expense

0.32



0.34



1.36



1.17


Amortization of debt discount, net

0.01



0.01



0.04



0.04


Less:








Gains from acquisitions of strategic investments

0.00



0.00



0.00



(0.02)


Income tax effects and adjustments

(0.16)



(0.10)



(0.61)



(0.76)


Non-GAAP diluted earnings per share

$

0.35



$

0.28



$

1.35



$

1.01


Shares used in computing Non-GAAP diluted net income per share

749,464



711,203



734,598



700,217




a)

Amortization of purchased intangibles were as follows:




Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Cost of revenues

$

38,866



$

43,214



$

165,545



$

127,676


Marketing and sales

30,066



31,000



121,340



97,601



$

68,932



$

74,214



$

286,885



$

225,277




b)

Stock-based expense was as follows:




Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Cost of revenues

$

32,748



$

30,545



$

129,954



$

107,457


Research and development

62,653



63,323



259,838



187,487


Marketing and sales

112,015



113,422



468,553



388,937


General and administrative

30,266



37,097



138,668



136,486



$

237,682



$

244,387



$

997,013



$

820,367




c)

GAAP non-operating income (loss) consists of investment income, interest expense, other income (expense) and gains from acquisitions of strategic investments.

 

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 January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

GAAP Basic Net Income (Loss) Per Share








Net income (loss)

$

67,555



$

(51,440)



$

127,478



$

179,632


Basic net income (loss) per share

$

0.09



$

(0.07)



$

0.18



$

0.26


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

724,127



700,994



714,919



687,797











Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Non-GAAP Basic Net Income Per Share








Non-GAAP net income

$

263,264



$

196,326



$

991,337



$

705,223


Basic Non-GAAP net income per share

$

0.36



$

0.28



$

1.39



$

1.03


Shares used in computing basic Non-GAAP net income per share

724,127



700,994



714,919



687,797











Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

GAAP Diluted Net Income (Loss) Per Share








Net income (loss)

$

67,555



$

(51,440)



$

127,478



$

179,632


Diluted net income (loss) per share

$

0.09



$

(0.07)



$

0.17



$

0.26


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

749,464



700,994



734,598



700,217











Three Months Ended January 31,


Fiscal Year Ended January 31,


2018


2017


2018


2017

Non-GAAP Diluted Net Income Per Share








Non-GAAP net income

$

263,264



$

196,326



$

991,337



$

705,223


Diluted Non-GAAP net income per share

$

0.35



$

0.28



$

1.35



$

1.01


Shares used in computing diluted Non-GAAP net income per share

749,464



711,203



734,598



700,217


 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/salesforce-announces-record-fourth-quarter-and-full-year-fiscal-2018-results-300606071.html

SOURCE Salesforce

John Cummings, Salesforce, Investor Relations, 415-778-4188, jcummings@salesforce.com; Gina Sheibley, Salesforce, Public Relations, 917-297-8988, gsheibley@salesforce.com

Contact us

Salesforce Tower
415 Mission Street
San Francisco, CA 94105
Tel: +1-415-536-6250
investor@salesforce.com

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