Salesforce.com Announces Fiscal 2012 Fourth Quarter and Full Year Results -- Quarterly Revenue of $632 Million, up 38% Year-Over-Year

-- Full Year Revenue of $2.27 Billion, up 37% Year-Over-Year

-- Quarterly Operating Cash Flow of $240 Million, up 45% Year-Over-Year

-- Full Year Operating Cash Flow of $592 Million, up 29% Year-Over-Year

-- Deferred Revenue of $1.38 Billion, up 48% Year-Over-Year

-- Unbilled Deferred Revenue of $2.2 Billion, up from $1.5 Billion Year-Over-Year

-- Raises FY13 Revenue Guidance to $2.92 - $2.95 Billion

-- Initiates FY13 Non-GAAP EPS Guidance of $1.58-$1.62

SAN FRANCISCO, Feb. 23, 2012 /PRNewswire/ -- Salesforce.com (NYSE: CRM), the enterprise cloud computing (http://www.salesforce.com/cloudcomputing/) company, today announced results for its fiscal fourth quarter and full fiscal year ended January 31, 2012.

(Logo:  http://photos.prnewswire.com/prnh/20050216/SFW105LOGO)

"Salesforce.com's 38% revenue growth in the fourth quarter was a spectacular finish to our fiscal year, a year in which we delivered 37% revenue growth and added nearly 2,500 employees, including nearly 2,000 in the U.S.," said Marc Benioff, Chairman and CEO, salesforce.com. "Given the strong customer response to the social enterprise, we're excited to raise our guidance today, which puts us on pace to exceed the $3 billion revenue run rate during FY13."

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

Revenue: Total Q4 revenue was $632 million, an increase of 38% on a year-over-year basis. Subscription and support revenues were $594 million, an increase of 39% on a year-over-year basis. Professional services and other revenues were $38 million, an increase of 33% on a year-over-year basis.

For the full fiscal year 2012, the company reported revenue of $2.27 billion, an increase of 37% from the prior year. Subscription and support revenues were $2.13 billion, an increase of 37% on a year-over-year basis. Professional services and other revenues were $140 million, an increase of 32% on a year-over-year basis.

Earnings per Share: Q4 GAAP net loss per share was ($0.03), and non-GAAP diluted earnings per share was $0.43. The company's non-GAAP results exclude the effects of approximately $70 million in stock-based compensation expense, approximately $20 million in amortization of purchased intangibles, and approximately $4 million in net non-cash interest expense related to the company's convertible senior notes. Non-GAAP EPS calculations are based on approximately 142 million diluted shares outstanding during the quarter, including approximately 1.7 million shares associated with the company's convertible senior notes. GAAP EPS calculations are based on a basic share count of approximately 137 million shares.

For the full fiscal year 2012, GAAP net loss per share was ($0.09), and non-GAAP diluted earnings per share was $1.36. The company's non-GAAP results exclude the effects of approximately $229 million in stock-based compensation, approximately $67 million in amortization of purchased intangibles, and approximately $12 million in net non-cash interest expense related to the convertible senior notes. Non-GAAP EPS calculations are based on approximately 142 million diluted shares outstanding during the year, including approximately 2.8 million shares associated with the company's convertible senior notes. GAAP EPS calculations are based on a basic share count of approximately 135 million shares.

Cash: Cash generated from operations for the fiscal fourth quarter was $240 million, an increase of 45% on a year-over-year basis. For the full fiscal year 2012, operating cash flow totaled $592 million, up 29% year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at approximately $1.4 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of January 31, 2012 was approximately $1.38 billion, an increase of 48% on a year-over-year basis. Current deferred revenue increased by 41% to approximately $1.29 billion, benefited in part by longer invoice durations.  Long term deferred revenue increased by 309% to approximately $89 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the fiscal year at approximately $2.2 billion, up from approximately $1.5 billion at the end of fiscal 2011.

As of February 23, 2012, salesforce.com is initiating revenue and EPS guidance for its first quarter of fiscal year 2013, and initiating EPS guidance for its full fiscal year 2013. In addition, the company is raising its full fiscal year 2013 revenue guidance previously provided on November 17, 2011.

Q1 FY13 Guidance: Revenue for the company's first fiscal quarter is projected to be in the range of $673 million to $678 million, an increase of 33% to 34%, year-over-year.

GAAP net loss per share is expected to be in the range of ($0.19) to ($0.18), while diluted non-GAAP EPS is expected to be in the range of $0.33 to $0.34. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $79 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $21 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $5 million. EPS estimates assume a GAAP tax rate of approximately 3%, and a non-GAAP tax rate of approximately 38%. For the purpose of the non-GAAP EPS calculation, assume an average fully diluted share count of approximately 145 million shares, and for the GAAP EPS calculation, assume an average basic share count of approximately 138 million shares.

Full Year FY13 Guidance: The company is raising its projected full fiscal year 2013 revenue from guidance previously provided on November 17, 2011. Revenue for the company's full fiscal year 2013 is projected to be in the range of $2.92 billion to $2.95 billion, an increase of 29% to 30%, year-over-year.

For the company's full fiscal year 2013, GAAP net loss per share is expected to be in the range of ($0.55) to ($0.51) while diluted non-GAAP EPS is expected to be in the range of $1.58 to $1.62. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $368 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $80 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $24 million. EPS estimates assume a GAAP tax rate of approximately 8%, and a non-GAAP tax rate of approximately 38%. For the purpose of the non-GAAP EPS calculation, assume an average fully diluted share count of approximately 149 million shares, and for the GAAP EPS calculation, assume an average basic share count of approximately 142 million shares.

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


Fiscal 2013


Q1

FY2013




GAAP EPS Range*

($0.19) - ($0.18)

($0.55) - ($0.51)

Plus



Amortization of purchased intangibles

$                   0.15

$                   0.54

Stock-based expense

$                   0.54

$                   2.47

Amortization of debt discount

$                   0.03

$                   0.16

Less



Income tax effect of certain Non-GAAP items

$                 (0.20)

$                 (1.04)

Non-GAAP diluted EPS

$0.33 - $0.34

$1.58 - $1.62




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

138

142

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

145

149




* For Q1 & FY13 GAAP EPS loss, basic number of shares used for calculation



Quarterly Conference Call

Salesforce.com will host a conference call to discuss its fourth quarter fiscal year 2012 results at 2:00 p.m. Pacific Time today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company's Investor Relations Web site at http://www.salesforce.com/investor. In addition, an archive of the 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 at +1 706-902-1764, passcode salesforce.com or 48589774. A replay will be available at 800-642-1687 or +1 706-645-9291, passcode 48589774, until midnight (Eastern Time) March 23, 2012.

About Salesforce.com

With 100,000+ customers, salesforce.com is the enterprise cloud computing company that is leading the shift to the social enterprise. Social enterprises leverage social, mobile and open cloud technologies to put customers at the heart of their business. Based on salesforce.com's real-time, multitenant architecture, the company's platform and application services include:


Any unreleased services or features referenced in this or other press releases or public statements are not currently available and may not be delivered on time or at all. Customers who purchase salesforce.com applications should make their purchase decisions based upon features that are currently available. Salesforce.com has headquarters in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol "CRM." For more information please visit http://salesforce.com, or call 1-800-NO-SOFTWARE.

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

The primary purpose of these non-GAAP measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash items on the company's operating performance. Non-cash stock-based compensation, amortization of acquisition-related intangible assets, and the net amortization of debt discount on the company's convertible senior notes are being excluded from the company's FY12 financial results because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but were made for the company's long-term benefit over multiple periods. While strategic decisions, such as those to issue stock-based compensation, acquire a company, or issue convertible senior notes, are made to further the company's long-term strategic objectives and impact the company's income statement under GAAP measures, these items affect multiple periods and management is not able to change or affect these items in any particular period. As such, supplementing GAAP disclosure with non-GAAP disclosure using the non-GAAP measures provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period, and management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the company's performance.

In addition, the majority of the company's industry peers report non-GAAP operating results that exclude certain non-cash or non-recurring items. Management believes that the provision of supplemental non-GAAP information will enable a more complete comparison of the company's relative performance.

Specifically, management is excluding the following items from its non-GAAP EPS for Q4 and FY12 and its non-GAAP estimates for Q1 and FY13:

  • Stock-Based Expenses: The company's compensation strategy includes the use of stock-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
  • Amortization of Purchased Intangibles: The company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While it is continually viewed for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
  • Amortization of Debt Discount: Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. Accordingly, for GAAP purposes we are required to recognize imputed interest expense on the company's $575 million of convertible subordinated notes that were issued in a private placement in January 2010. The imputed interest rate is approximately 5.9%, while the coupon interest rate is 0.75%. The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management's assessment of the company's operating performance because management believes that this non-cash expense is not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the company's operational performance.
  • Income Tax Effects: The company's estimated non-GAAP effective tax rate is lower than the estimated GAAP effective tax rate due to the exclusion of the expense items described above.

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about expected GAAP revenue and GAAP and non-GAAP EPS for the first fiscal quarter of 2013 and the full fiscal year, the company's expected revenue run rate and revenues in fiscal 2013, the company's expected tax rates, stock-based compensation expenses, amortization of purchased intangibles and debt discount, and shares outstanding. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company's results could differ materially from the results expressed or implied by the forward-looking statements we make.

The risks and uncertainties referred to above include - but are not limited to - risks associated with possible fluctuations in the company's financial and operating results; the company's rate of growth and anticipated revenue run rate, including the company's ability to convert deferred revenue and unbilled deferred revenue into revenue and, as appropriate, cash flow, and the continued growth and ability to maintain deferred revenue and unbilled deferred revenue; errors, interruptions or delays in the company's service or the company's Web hosting; breaches of the company's security measures; the financial impact of any previous and future acquisitions; the nature of the company's business model; the company's ability to continue to release, and gain customer acceptance of, new and improved versions of the company's service; successful customer deployment and utilization of the company's existing and future services; changes in the company's sales cycle; competition; various financial aspects of the company's subscription model; unexpected increases in attrition or decreases in new business; the emerging markets in which we operate; unique aspects of entering or expanding in international markets, the company's ability to hire, retain and motivate  employees and manage the company's growth; changes in the company's customer base; technological developments; regulatory developments; litigation related to intellectual property and other matters, and any related claims, negotiations and settlements; unanticipated changes in the company's effective tax rate; fluctuations in the number of shares we have outstanding and the price of such shares; foreign currency exchange rates; collection of receivables; interest rates; the company's plans to build and expand its campus in San Francisco, California and the associated costs; and general developments in the economy, financial markets, and credit markets.

Further information on these and other factors that could affect the company's financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time, including the company's Form 10-K that will be filed for the fiscal year ended January 31, 2012. These documents are available on the SEC Filings section of the Investor Information section of the company's website at www.salesforce.com/investor.

Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Copyright © 2012 salesforce.com, inc. All rights reserved. Salesforce.com, Salesforce, Chatter, Sales Cloud, Service Cloud, Radian6, Jigsaw, AppExchange, Force.com, Heroku, and all associated logos are trademarks of salesforce.com, inc. in the United States and other countries. Salesforce.com offers its Siteforce products and services in Germany under the Force.com Sites trademark. 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 January 31,


Fiscal Year Ended January 31,


2012


2011


2012


2011









Revenues:









Subscription and support

$ 594,269


$ 428,534


$ 2,126,234


$ 1,551,145


Professional services and other

37,644


28,333


140,305


105,994



Total revenues

631,913


456,867


2,266,539


1,657,139









Cost of revenues (1)(2):









Subscription and support

100,065


61,116


360,758


208,243


Professional services and other

36,280


31,195


128,128


115,570



Total cost of revenues

136,345


92,311


488,886


323,813









Gross profit

495,568


364,556


1,777,653


1,333,326









Operating expenses (1)(2):









Research and development

80,613


57,530


295,347


187,887


Marketing and sales

327,567


233,217


1,169,610


792,029


General and administrative

93,765


74,200


347,781


255,913



Total operating expenses

501,945


364,947


1,812,738


1,235,829









Income (loss) from operations

(6,377)


(391)


(35,085)


97,497









Investment income

4,965


9,426


23,268


37,735

Interest expense

(5,669)


(3,290)


(17,045)


(24,909)

Other expense

(454)


(1,366)


(4,455)


(6,025)









Income (loss) before benefit (provision) for income taxes and noncontrolling interest

(7,535)


4,379


(33,317)


104,298









Benefit (provision) for income taxes

3,457


6,491


21,745


(34,601)









Consolidated net income (loss)

(4,078)


10,870


(11,572)


69,697









Less: Net loss attributable to noncontrolling interest

0


43


0


(5,223)









Net income (loss) attributable to salesforce.com

$   (4,078)


$   10,913


$    (11,572)


$      64,474









Basic net income (loss) per share attributable to salesforce.com common shareholders

$     (0.03)


$       0.08


$        (0.09)


$          0.50









Diluted net income (loss) per share attributable to salesforce.com common shareholders

$     (0.03)


$       0.08


$        (0.09)


$          0.47









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

136,720


132,344


135,302


130,222









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

136,720


140,199


135,302


136,598


















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










Cost of revenues

$   17,132


$     5,721


$      60,069


$      15,459



Marketing and sales

2,751


1,146


7,250


4,209









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










Cost of revenues

$     5,283


$     3,541


$      17,451


$      12,158



Research and development

14,670


6,778


45,894


18,897



Marketing and sales

35,706


19,955


115,730


56,451



General and administrative

14,441


11,440


50,183


32,923



salesforce.com, inc. 








Condensed Consolidated Statements of Operations
















As a percentage of total revenues:








(Unaudited)













Three Months Ended January 31,


Fiscal Year Ended January 31,


2012


2011


2012


2011

Revenues:









Subscription and support

94%


94%


94%


94%


Professional services and other

6


6


6


6



Total revenues

100


100


100


100









Cost of revenues (1)(2):









Subscription and support

16


13


16


13


Professional services and other

6


7


6


7



Total cost of revenues

22


20


22


20









Gross profit

78


80


78


80









Operating expenses (1)(2):









Research and development

12


13


13


11


Marketing and sales

52


51


52


48


General and administrative

15


16


15


15



Total operating expenses

79


80


80


74









Income (loss) from operations

(1)


0


(2)


6









Investment income

1


2


1


2

Interest expense

(1)


(1)


(1)


(2)

Other expense

0


0


0


0









Income (loss) before benefit (provision) for income taxes and noncontrolling interest

(1)


1


(2)


6









Benefit (provision) for income taxes

0


1


1


(2)









Consolidated net income (loss)

(1)


2


(1)


4









Less: Net loss attributable to noncontrolling interest

0


0


0


0









Net income (loss) attributable to salesforce.com

(1%)


2%


(1%)


4%

























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










Cost of revenues

3%


1%


3%


1%



Marketing and sales

0


0


0


0














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










Cost of revenues

1%


1%


1%


1%



Research and development

2


1


2


1



Marketing and sales

6


4


5


3



General and administrative

2


3


2


2



salesforce.com, inc. 






Condensed Consolidated Balance Sheets






(in thousands)






















January 31,



January 31,







2012



2011







(unaudited)














Assets









Current assets:










Cash and cash equivalents



$    607,284



$    424,292


Short-term marketable securities



170,582



72,678


Accounts receivable, net



683,745



426,943


Deferred commissions




98,471



67,774


Deferred income taxes




31,821



27,516


Prepaid expenses and other current assets (see additional metrics)


80,319



55,721











Total current assets




1,672,222



1,074,924











Marketable securities, noncurrent



669,308



910,587

Property and equipment, net (see additional metrics)


527,946



387,174

Deferred commissions, noncurrent



78,149



48,842

Deferred income taxes, noncurrent



87,587



41,199

Capitalized software, net (see additional metrics)


188,412



127,987

Goodwill





785,381



396,081

Other assets, net (see additional metrics)



155,149



104,371











Total assets





$ 4,164,154



$ 3,091,165











Liabilities, temporary equity and stockholders' equity






Current liabilities:









Accounts payable




$      33,258



$      18,106


Accrued expenses and other liabilities (see additional metrics)


502,442



345,121


Deferred revenue




1,291,622



913,239


Convertible senior notes, net



496,149



0











Total current liabilities




2,323,471



1,276,466











Convertible senior notes, net




0



472,538

Income taxes payable, noncurrent



37,258



18,481

Long-term lease liabilities and other


48,651



25,487

Deferred revenue, noncurrent


88,673



21,702

Total liabilities





2,498,053



1,814,674











Temporary equity




78,741



0











Stockholders' equity:









Common stock




137



133


Additional paid-in capital




1,415,077



1,098,604


Accumulated other comprehensive income


12,683



6,719


Retained earnings




159,463



171,035











Total stockholders' equity




1,587,360



1,276,491











Total liabilities, temporary equity and stockholders' equity


$ 4,164,154



$ 3,091,165



salesforce.com, inc. 









Condensed Consolidated Statements of Cash Flows









(in thousands)







(Unaudited)


























Three Months Ended January 31,


Fiscal Year Ended January 31,








2012


2011


2012


2011

Operating activities:









Consolidated net income (loss)


$   (4,078)


$   10,870


$ (11,572)


$    69,697

Adjustments to reconcile net income (loss) to net









    cash provided by operating activities:










Depreciation and amortization


45,901


23,738


157,286


75,746


Amortization of debt discount and transaction costs


3,877


1,982


10,347


19,621


Amortization of deferred commissions


30,742


22,605


107,195


80,159


Expenses related to stock-based awards


70,100


41,714


229,258


120,429


Excess tax benefits from employee stock plans


4,994


10,777


(6,018)


(35,991)


Changes in assets and liabilities:











Accounts receivable, net


(365,099)


(169,833)


(244,947)


(102,507)



Deferred commissions


(86,947)


(56,004)


(167,199)


(121,247)



Prepaid expenses and other current assets


(777)


8,464


(10,736)


2,001



Other assets


2,816


(365)


2,883


(9,770)



Accounts payable


3,716


(5,254)


12,644


1,246



Accrued expenses and other current liabilities


72,628


36,684


67,692


132,004



Deferred revenue


462,474


240,384


444,674


227,693































Net cash provided by operating activities


240,347


165,762


591,507


459,081















Investing activities:









Business combinations, net of cash acquired


(57,914)


(247,994)


(422,699)


(403,331)

Land activity and building improvements


(6,565)


(269,944)


(19,655)


(277,944)

Strategic investments


(2,647)


(13,605)


(37,370)


(20,105)

Changes in marketable securities


(45,608)


179,346


141,679


(270,287)

Capital expenditures


(44,602)


(30,576)


(151,645)


(90,887)































Net cash used in investing activities


(157,336)


(382,773)


(489,690)


(1,062,554)















Financing activities:









Purchase of subsidiary stock


0


(19,721)


0


(171,964)

Proceeds from equity plans


26,203


44,406


116,565


160,402

Excess tax benefits from employee stock plans


(4,994)


(10,777)


6,018


35,991

Contingent consideration payment related to prior business combinations


0


0


(16,200)


0

Principal payments on capital lease obligations


(8,737)


(3,198)


(30,533)


(10,355)































Net cash provided by financing activities


12,472


10,710


75,850


14,074















Effect of exchange rate changes


8,814


290


5,325


2,385















Net increase (decrease) in cash and









cash equivalents


104,297


(206,011)


182,992


(587,014)















Cash and cash equivalents, beginning of period


502,987


630,303


424,292


1,011,306















Cash and cash equivalents, end of period


$ 607,284


$ 424,292


$ 607,284


$  424,292



salesforce.com, inc.













Additional Metrics













 (Unaudited)






























Jan 31,


Oct 31,


Jul 31,


Apr 30,


Jan 31,


Oct 31,




2012


2011


2011


2011


2011


2010















Full Time Equivalent Headcount


7,785


6,953


6,352


5,513


5,306


4,758





























Financial data (in thousands):














Cash, cash equivalents and marketable securities


$ 1,447,174


$ 1,296,693


$ 1,286,658


$ 1,522,285


$ 1,407,557


$ 1,802,440


Deferred revenue, current and noncurrent


$ 1,380,295


$    917,821


$    935,266


$    915,133


$    934,941


$    694,557





























Selected Balance Sheet Accounts (in thousands):
















Jan 31,


Oct 31,


Jan 31,










  2012


  2011


  2011








Prepaid Expenses and Other Current Assets














    Deferred professional services costs


$      10,399


$      13,563


$      17,908








    Prepaid income taxes


12,785


13,137


720








    Prepaid expenses and other current assets


57,135


52,728


37,093










$      80,319


$      79,428


$      55,721






















Property and Equipment, net














    Land


$    248,263


$    248,263


$    248,263








    Building improvements


43,868


34,974


10,115








    Computers, equipment and software


232,460


223,288


115,736








    Furniture and fixtures


25,250


24,622


20,462








    Leasehold improvements


137,587


125,838


100,380










687,428


656,985


494,956








    Less accumulated depreciation and amortization


(159,482)


(152,158)


(107,782)










$    527,946


$    504,827


$    387,174






















Capitalized Software, net














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


$      41,442


$      35,475


$      29,154








    Acquired developed technology, net of accumulated amortization


146,970


163,938


98,833










$    188,412


$    199,413


$    127,987






















Other Assets, net














    Deferred professional services costs, noncurrent portion


$        3,935


$        5,707


$      10,201








    Long-term deposits


13,941


13,887


12,114








    Purchased intangible assets, net of accumulated amortization


46,110


45,410


31,660








    Acquired intellectual property, net of accumulated amortization


15,020


13,895


5,874








    Strategic investments


53,949


55,035


27,065








    Other


22,194


22,484


17,457










$    155,149


$    156,418


$    104,371




































Accrued Expenses and Other Current Liabilities














    Accrued compensation


$    228,466


$    145,116


$    148,275








    Accrued other liabilities


121,957


134,741


112,840








    Accrued income and other taxes payable


100,471


78,819


49,135








    Accrued professional costs


21,993


22,836


12,548








    Accrued rent


29,555


27,638


22,323










$    502,442


$    409,150


$    345,121





















Selected Off-Balance Sheet Accounts




























Unbilled Deferred Revenue, a non-GAAP measure



Unbilled deferred revenue was approximately $2.2 billion as of January 31, 2012 and $1.5 billion as of January 31, 2011. Unbilled deferred revenue represents future billings under our non-cancelable subscription agreements that have not been invoiced and, accordingly, are not recorded in deferred revenue. 















Supplemental Revenue Analysis

















Three Months Ended January 31,


Fiscal Year Ended January 31,








2012


2011


2012


2011





Revenues by geography (in thousands):














Americas


$    436,237


$    308,526


$ 1,540,289


$ 1,135,019






Europe


108,141


82,933


408,456


291,784






Asia Pacific


87,535


65,408


317,794


230,336






















$    631,913


$    456,867


$ 2,266,539


$ 1,657,139



















As a percentage of total revenues:



























Revenues by geography:














Americas


69

%

68

%

68

%

68

%





Europe


17


18


18


18






Asia Pacific


14


14


14


14






















100

%

100

%

100

%

100

%



































Three Months Ended


Three Months Ended


Three Months Ended




January 31, 2012


October 31, 2011


January 31, 2011




compared to Three Months


compared to Three Months


compared to Three Months




Ended January 31, 2011


Ended October 31, 2010


Ended January 31, 2010

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





















Americas


41%


36%


26%


Europe


32%


29%


41%


Asia Pacific


28%


31%


35%


Total growth


38%


34%


30%















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





























Supplemental Diluted Sharecount Information













(in thousands)
















Three Months Ended January 31,


Fiscal Year Ended January 31,








2012


2011


2012


2011




















Weighted-average shares outstanding for basic earnings per share


136,720


132,344


135,302


130,222






Effect of dilutive securities (1):














Convertible senior notes


1,700


2,421


2,263


1,561






Warrants associated with the convertible senior note hedges


0


696


553


0






Employee stock awards


3,407


4,738


4,177


4,815






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


141,827


140,199


142,295


136,598



















(1)

The effects of these dilutive securities were not included in the GAAP calculation of diluted earnings/loss per share for the three and twelve months ended January 31, 2012 because the effect would have been anti-dilutive.





























Supplemental Cash Flow Information



























Free cash flow analysis, a non-GAAP measure





(in thousands)






























Three Months Ended January 31,


Fiscal Year Ended January 31,








2012


2011


2012


2011






Operating cash flow-














GAAP net cash provided by operating activities


$    240,347


$    165,762


$    591,507


$    459,081






Less:














Capital expenditures


(44,602)


(30,576)


(151,645)


(90,887)






Free cash flow


$    195,745


$    135,186


$    439,862


$    368,194



















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



salesforce.com, inc.









GAAP RESULTS RECONCILED TO NON-GAAP RESULTS









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







(in thousands, except per share data)









(Unaudited)






















Three Months Ended
January 31,


Fiscal Year Ended
January 31,




2012


2011


2012


2011


Gross profit










GAAP gross profit


$                  495,568


$                  364,556


$               1,777,653


$               1,333,326


Plus:










Amortization of purchased intangibles (b)


17,132


5,721


60,069


15,459


Stock-based expenses (c)


5,283


3,541


17,451


12,158












Non-GAAP gross profit


$                  517,983


$                  373,818


$               1,855,173


$               1,360,943












Operating expenses










GAAP operating expenses


$                  501,945


$                  364,947


$               1,812,738


$               1,235,829


Less:










Amortization of purchased intangibles (b)


(2,751)


(1,146)


(7,250)


(4,209)


Stock-based expenses (c)


(64,817)


(38,173)


(211,807)


(108,271)












Non-GAAP operating expenses


$                  434,377


$                  325,628


$               1,593,681


$               1,123,349












Income from operations










GAAP income (loss) from operations


$                    (6,377)


$                       (391)


$                  (35,085)


$                    97,497


Plus:










Amortization of purchased intangibles (b)


19,883


6,867


67,319


19,668


Stock-based expenses (c)


70,100


41,714


229,258


120,429












Non-GAAP income from operations


$                    83,606


$                    48,190


$                  261,492


$                  237,594












Non-operating income (a)










GAAP non-operating income (loss)


$                    (1,158)


$                      4,770


$                      1,768


$                      6,801


Plus:  Amortization of debt discount, net


4,144


2,430


12,335


19,079












Non-GAAP non-operating income


$                      2,986


$                      7,200


$                    14,103


$                    25,880












Net income attributable to salesforce.com










GAAP net income (loss) attributable to salesforce.com


$                    (4,078)


$                    10,913


$                  (11,572)


$                    64,474


Plus:










Amortization of purchased intangibles


19,883


6,867


67,319


19,668


Stock-based expenses


70,100


41,714


229,258


120,429


Amortization of debt discount, net


4,144


2,430


12,335


19,079


Less:










Income tax effect of Non-GAAP items


(28,419)


(18,854)


(103,730)


(57,544)


Non-GAAP net income attributable to salesforce.com


$                    61,630


$                    43,070


$                  193,610


$                  166,106












Diluted earnings per share










GAAP diluted earnings (loss) per share (d)


$                      (0.03)


$                        0.08


$                      (0.09)


$                        0.47


Plus:










Amortization of purchased intangibles


0.14


0.05


0.47


0.14


Stock-based expenses


0.49


0.30


1.62


0.88


Amortization of debt discount, net


0.03


0.01


0.09


0.14


Less:










Income tax effect of  Non-GAAP items


(0.20)


(0.13)


(0.73)


(0.41)


Non-GAAP diluted earnings per share attributable to salesforce.com


$                        0.43


$                        0.31


$                        1.36


$                        1.22












Shares used in computing diluted net income per share


141,827


140,199


142,295


136,598





















a)

Non-operating income consists of investment income, interest expense and other income (expense)



























b)

Amortization of purchased intangibles were as follows:












Three Months Ended January 31,


Fiscal Year Ended January 31,




2012


2011


2012


2011












Cost of revenues


$                    17,132


$                      5,721


$                    60,069


$                    15,459


Marketing and sales


2,751


1,146


7,250


4,209




$                    19,883


$                      6,867


$                    67,319


$                    19,668





















c)

Stock-based expenses were as follows:












Three Months Ended January 31,


Fiscal Year Ended January 31,




2012


2011


2012


2011












Cost of revenues


$                      5,283


$                      3,541


$                    17,451


$                    12,158


Research and development


14,670


6,778


45,894


18,897


Marketing and sales


35,706


19,955


115,730


56,451


General and administrative


14,441


11,440


50,183


32,923




$                    70,100


$                    41,714


$                  229,258


$                  120,429











d)

Reported GAAP loss per share was calculated using the basic share count.








Non-GAAP diluted earnings per share was calculated using the diluted share count.  











salesforce.com, inc.








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








(in thousands, except per share data)








(Unaudited)










Three Months Ended
January 31,


Fiscal Year Ended
January 31,



2012


2011


2012


2011











GAAP Basic Net Income (loss) Per Share


















Net income (loss) attributable to salesforce.com

$ (4,078)


$ 10,913


$ (11,572)


$   64,474











Basic net income (loss) per share attributable to salesforce.com common stockholders

(0.03)


0.08


(0.09)


0.50











Shares used in computing basic net income (loss) per share attributable to salesforce.com common stockholders

136,720


132,344


135,302


130,222






























Three Months Ended
January 31,


Fiscal Year Ended
January 31,



2012


2011


2012


2011











Non-GAAP Basic Net Income Per Share


















Non-GAAP net income attributable to salesforce.com

$ 61,630


$ 43,070


$ 193,610


$ 166,106











Basic Non-GAAP net income per share attributable to salesforce.com common stockholders

0.45


0.33


1.43


1.28











Shares used in computing basic net income per share attributable to salesforce.com common stockholders

136,720


132,344


135,302


130,222






























Three Months Ended
January 31,


Fiscal Year Ended
January 31,



2012


2011


2012


2011











GAAP Diluted Net Income (loss) Per Share


















Net income (loss) attributable to salesforce.com

$ (4,078)


$ 10,913


$ (11,572)


$   64,474











Diluted net income (loss) per share attributable to salesforce.com common stockholders

(0.03)


0.08


(0.09)


0.47











Shares used in computing diluted net income (loss) per share attributable to salesforce.com common stockholders

136,720


140,199


135,302


136,598






























Three Months Ended
January 31,


Fiscal Year Ended
January 31,



2012


2011


2012


2011











Non-GAAP Diluted Net Income Per Share


















Non-GAAP net income attributable to salesforce.com

$ 61,630


$ 43,070


$ 193,610


$ 166,106











Diluted Non-GAAP net income per share attributable to salesforce.com common stockholders

0.43


0.31


1.36


1.22











Shares used in computing diluted net income per share attributable to salesforce.com common stockholders

141,827


140,199


142,295


136,598



SOURCE salesforce.com



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