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

Feb 23, 2012, 16:05 ET from salesforce.com

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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