Salesforce.com Announces Fiscal 2013 Fourth Quarter and Full Year Results

- Quarterly Revenue of $835 Million, up 32% Year-Over-Year

- Full Year Revenue of $3.05 Billion, up 35% Year-Over-Year

- Deferred Revenue of $1.86 Billion, up 35% Year-Over-Year

- Unbilled Deferred Revenue Increases to Approximately $3.5 Billion

- Full Year Operating Cash Flow of $737 Million

- Raises FY14 Revenue Guidance to $3.82 - $3.87 Billion

- Initiates FY14 Non-GAAP EPS Guidance of $1.93 - $1.97

Feb 28, 2013, 16:05 ET from salesforce.com

SAN FRANCISCO, Feb. 28, 2013 /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, 2013.

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

"Salesforce.com had a spectacular finish to its fiscal year. We delivered more than $3 billion in revenue and constant currency revenue growth of 37%," said Marc Benioff, Chairman and CEO, salesforce.com. "Salesforce.com continues to be the fastest growing top ten enterprise software company in the world."

Salesforce.com delivered the following results for its fiscal fourth quarter and full fiscal year 2013:         

Revenue:  Total Q4 revenue was $835 million, an increase of 32% on a year-over-year basis.  Subscription and support revenues were $785 million, an increase of 32% on a year-over-year basis.  Professional services and other revenues were $49 million, an increase of 31% on a year-over-year basis. 

For the full fiscal year 2013, the company reported revenue of $3.05 billion, an increase of 35% from the prior year. Subscription and support revenues were $2.87 billion, an increase of 35% on a year-over-year basis. Professional services and other revenues were $181 million, an increase of 29% on a year-over-year basis.

Earnings per Share:  Q4 GAAP net loss per share was ($0.14), and non-GAAP diluted earnings per share was $0.51. The company's non-GAAP results exclude the effects of $108 million in stock-based compensation expense, $21 million in amortization of purchased intangibles, and $6 million in net non-cash interest expense related to the company's convertible senior notes, and is based on a non-GAAP tax rate of approximately 29%.  GAAP EPS calculations are based on a basic share count of approximately 145 million shares. Non-GAAP EPS calculations are based on approximately 153 million diluted shares outstanding during the quarter, including approximately five million shares associated with the company's convertible senior notes.    

For the full fiscal year 2013, GAAP net loss per share was ($1.92), and non-GAAP diluted earnings per share was $1.63.  The company's non-GAAP results exclude the effects of $379 million in stock-based compensation, $149 million related to the one-time tax valuation allowance established in the fiscal third quarter, $88 million in amortization of purchased intangibles, and $24 million in net non-cash interest expense related to the convertible senior notes, and is based on a non-GAAP tax rate of approximately 33%.  GAAP EPS calculations are based on a basic share count of approximately 141 million shares. Non-GAAP EPS calculations are based on approximately 149 million diluted shares outstanding during the year, including approximately four million shares associated with the company's convertible senior notes. 

Cash:  Cash generated from operations for the fiscal fourth quarter was $282 million, an increase of 17% on a year-over-year basis.  For the full fiscal year 2013, operating cash flow totaled $737 million, up 25% year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at $1.8 billion.

Deferred Revenue:  Deferred revenue on the balance sheet as of January 31, 2013 was $1.86 billion, an increase of 35% on a year-over-year basis. Current deferred revenue increased by 39% year-over-year to $1.80 billion, benefited in part by longer invoice durations.  Non-current deferred revenue decreased by 27% year-over-year to $64 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the fourth quarter at approximately $3.5 billion, up from approximately $2.2 billion at the end of the fiscal 2012. 

As of February 28, 2013, salesforce.com is initiating revenue and EPS guidance for its first quarter of fiscal year 2014, and initiating EPS guidance for its full fiscal year 2014. In addition, the company is raising its full fiscal year 2014 revenue guidance previously provided on November 20, 2012.

Q1 FY14 Guidance:  Revenue for the company's first fiscal quarter is projected to be in the range of $882 million to $887 million, an increase of 27% to 28% year-over-year.

GAAP net loss per share is expected to be in the range of ($0.44) to ($0.42), while diluted non-GAAP EPS is expected to be in the range of $0.40 to $0.42.  The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $113 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $24 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $7 million.  EPS estimates assume a GAAP tax rate of approximately negative 59%, which reflects the estimated quarterly change in the tax valuation allowance, and a non-GAAP tax rate of approximately 35%.  The GAAP EPS calculation assumes an average basic share count of approximately 147 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 158 million shares.

Full Year FY14 Guidance:  Revenue for the company's full fiscal year 2014 is projected to be in the range of $3.82 billion to $3.87 billion, an increase of 25% to 27% year-over-year.

For the company's full fiscal year 2014, GAAP net loss per share is expected to be in the range of ($1.22) to ($1.18) while diluted non-GAAP EPS is expected to be in the range of $1.93 to $1.97.  The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $503 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $85 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $27 million.  EPS estimates assume a GAAP tax rate of approximately negative 54%, which reflects the estimated annual change in the tax valuation allowance, and a non-GAAP tax rate of approximately 35%. Due to the tax valuation allowance, however, the GAAP tax rate could be volatile and is therefore difficult to forecast.  The GAAP EPS calculation assumes an average basic share count of approximately 150 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 161 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 2014

Q1

FY2014

GAAP EPS Range*

 ($0.44) - ($0.42) 

 ($1.22) - ($1.18) 

Plus

Amortization of purchased intangibles

$               0.15

$               0.53

Stock-based expense

$               0.71

$               3.13

Amortization of debt discount, net

$               0.04

$               0.17

Less

Income tax adjustments**

$              (0.06)

$              (0.68)

Non-GAAP diluted EPS

 $0.40 - $0.42 

 $1.93 - $1.97 

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

147

150

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

158

161

* For Q1 & FY14 GAAP EPS loss, basic number of shares used for calculation

** The company's non-GAAP tax provision excludes the tax effects of expense items described above and certain tax items not directly related to the current fiscal year's ordinary operating results.  Examples of such tax items include, but are not limited to, changes in the valuation allowance related to deferred tax assets, certain acquisition-related costs and unusual or infrequently occurring items.

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its fourth quarter and full fiscal year 2013 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 audiocast 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 94902754.  A replay will be available at 800-585-8367 or +1 855-859-2056, passcode 94902754, until midnight (Eastern Time) March 28, 2013.

About salesforce.com

Founded in 1999, salesforce.com is the enterprise cloud computing leader. Salesforce.com's social and mobile cloud technologies enable companies to transform into customer companies by connecting with their customers, employees, partners and products in entirely new ways. Based on salesforce.com's real-time, multitenant architecture, the company's apps and platform revolutionize the way companies sell, service, market and innovate.

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 certain one-time, non-cash tax charges and other income tax adjustments.  The purpose of the non-GAAP tax rate is to quantify the excluded tax adjustments and the tax consequences associated with the above excluded non-cash 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 FY13 and FY14 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 statement of operations 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, such as certain one-time charges.  As significant unusual or discrete events occur, such as the valuation allowance against the company's deferred tax assets, the results may be excluded in the period in which the events occur. 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 FY13 and its non-GAAP estimates for Q1 and FY14:

  • 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 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 $575 million of convertible senior notes that were issued in a private placement in January 2010.  The imputed interest rate is approximately 5.9%, while the actual coupon interest rate of the notes 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.
  • One-time Tax Charge: As a result of the company assessing the realizability of its deferred tax assets, in the fiscal third quarter the company recorded a one-time, non-cash charge to income tax expense to establish a valuation allowance against a significant portion of those assets. The company applied significant judgment as part of this analysis including considering the company's past operating results, cumulative losses and forecasts of future taxable income.  As part of establishing a valuation allowance with respect to the company's deferred tax assets, the company will assess and record any necessary quarterly changes to the valuation allowance and the corresponding income tax expense or benefit.  Management believes that the exclusion of this non-cash charge is appropriate to provide investors with a better view of the company's operational performance.
  • Income Tax Effects and Adjustments: The company's non-GAAP tax provision excludes the tax effects of expense items described above and certain tax items not directly related to the current fiscal year's ordinary operating results.  Examples of such tax items include, but are not limited to, changes in the valuation allowance related to deferred tax assets, certain acquisition-related costs and unusual or infrequently occurring items.  Management believes the exclusion of these income tax adjustments provides investors with useful supplemental information about the company's operational performance

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:  This press release contains forward-looking statements about expected GAAP and non-GAAP financial results for the first fiscal quarter and the full fiscal year of 2014, including revenue, net loss, EPS, expected revenue run rate, expected tax rates, stock-based compensation expenses, amortization of purchased intangibles and debt discount, non-cash interest expense, shares outstanding, and deferred tax asset valuation allowances.  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 the company operates; 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; factors affecting our deferred tax assets and ability to value and utilize them, including the timing of when we once again achieve profitability on a pre-tax basis; the risks and expenses associated with the company's real estate and office facilities space; 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, 2013.  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.

© 2013 salesforce.com, inc.  All rights reserved.  Salesforce, Sales Cloud, Service Cloud, Marketing Cloud, AppExchange, Salesforce Platform, and others are trademarks of salesforce.com, inc.  Other brands featured 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,

2013

2012

2013

2012

Revenues:

Subscription and support

$ 785,495

$ 594,269

$ 2,868,808

$ 2,126,234

Professional services and other

49,186

37,644

181,387

140,305

Total revenues

834,681

631,913

3,050,195

2,266,539

Cost of revenues (1)(2):

Subscription and support

132,741

100,065

494,187

360,758

Professional services and other

50,621

36,280

189,392

128,128

Total cost of revenues

183,362

136,345

683,579

488,886

Gross profit

651,319

495,568

2,366,616

1,777,653

Operating expenses (1)(2):

Research and development

121,187

80,613

429,479

295,347

Marketing and sales

435,570

327,567

1,614,026

1,169,610

General and administrative

115,369

93,765

433,821

347,781

Total operating expenses

672,126

501,945

2,477,326

1,812,738

Loss from operations

(20,807)

(6,377)

(110,710)

(35,085)

Investment income

4,041

4,965

19,562

23,268

Interest expense

(8,355)

(5,669)

(30,948)

(17,045)

Other income (expense)

(922)

(454)

(5,698)

(4,455)

Loss before benefit from (provision for) income taxes

(26,043)

(7,535)

(127,794)

(33,317)

Benefit from (provision for) income taxes

5,199

3,457

(142,651)

21,745

Net loss 

$  (20,844)

$    (4,078)

$   (270,445)

$     (11,572)

Basic net loss per share 

$      (0.14)

$      (0.03)

$          (1.92)

$          (0.09)

Diluted net loss per share 

$      (0.14)

$      (0.03)

$          (1.92)

$          (0.09)

Shares used in computing basic net loss per share

144,970

136,720

141,224

135,302

Shares used in computing diluted net loss per share

144,970

136,720

141,224

135,302

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

Cost of revenues

$   18,886

$   17,132

$       77,249

$       60,069

Marketing and sales

2,093

2,751

10,922

7,250

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

Cost of revenues

$      9,304

$      5,283

$       33,757

$       17,451

Research and development

22,593

14,670

76,333

45,894

Marketing and sales

57,212

35,706

199,284

115,730

General and administrative

18,446

14,441

69,976

50,183

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,

2013

2012

2013

2012

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

16

16

16

Professional services and other

6

6

6

6

Total cost of revenues

22

22

22

22

Gross profit

78

78

78

78

Operating expenses (1)(2):

Research and development

14

12

14

13

Marketing and sales

52

52

53

52

General and administrative

14

15

15

15

Total operating expenses

80

79

82

80

Loss from operations

(2)

(1)

(4)

(2)

Investment income

0

1

1

1

Interest expense

(1)

(1)

(1)

(1)

Other income (expense)

0

0

0

0

Loss before benefit from (provision for) income taxes 

(3)

(1)

(4)

(2)

Benefit from (provision for) income taxes 

1

0

(5)

1

Net loss 

(2)%

(1)%

(9)%

(1)%

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

Cost of revenues

2%

3%

3%

3%

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

3

2

3

2

Marketing and sales

7

6

7

5

General and administrative

2

2

2

2

salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)

January 31,

January 31,

2013

2012

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$               747,245

$          607,284

Short-term marketable securities

120,376

170,582

Accounts receivable, net

872,634

683,745

Deferred commissions

142,311

98,471

Deferred income taxes, net

7,321

31,821

Prepaid expenses and other current assets (see additional metrics)

125,993

80,319

Total current assets

2,015,880

1,672,222

Marketable securities, noncurrent

890,664

669,308

Property and equipment, net (see additional metrics)

604,669

527,946

Deferred commissions, noncurrent

112,082

78,149

Deferred income taxes, noncurrent, net

19,212

87,587

Capitalized software, net (see additional metrics)

207,323

188,412

Goodwill

1,529,378

785,381

Other assets, net (see additional metrics)

149,748

155,149

Total assets

$            5,528,956

$       4,164,154

Liabilities, temporary equity and stockholders' equity

Current liabilities:

Accounts payable, accrued expenses and other liabilities (see additional metrics)

$               597,706

$          512,260

Deferred revenue

1,798,640

1,291,622

Convertible senior notes, net

521,278

496,149

Total current liabilities

2,917,624

2,300,031

Income taxes payable, noncurrent

49,074

37,258

Long-term lease liabilities and other

126,658

72,091

Deferred revenue, noncurrent

64,355

88,673

Total liabilities

3,157,711

2,498,053

Temporary equity

53,612

78,741

Stockholders' equity:

Common stock

146

137

Additional paid-in capital

2,411,332

1,415,077

Accumulated other comprehensive income 

17,137

12,683

Retained earnings (accumulated deficit)

(110,982)

159,463

Total stockholders' equity

2,317,633

1,587,360

Total liabilities, temporary equity and stockholders' equity

$            5,528,956

$       4,164,154

salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Three Months Ended January 31,

Fiscal Year Ended January 31,

2013

2012

2013

2012

Operating activities:

Net loss

$  (20,844)

$    (4,078)

$ (270,445)

$  (11,572)

Adjustments to reconcile net loss to net

cash provided by operating activities:

Depreciation and amortization

57,395

45,901

216,795

157,286

Amortization of debt discount and transaction costs

6,575

3,877

24,086

10,347

Amortization of deferred commissions

43,719

30,742

154,818

107,195

Expenses related to employee stock plans

107,555

70,100

379,350

229,258

Excess tax benefits from employee stock plans 

13,972

4,994

(14,933)

(6,018)

Changes in assets and liabilities, net of business combinations:

Accounts receivable, net

(454,044)

(365,099)

(183,242)

(244,947)

Deferred commissions

(117,000)

(86,947)

(232,591)

(167,199)

Prepaid expenses and other current assets

(4,134)

(777)

(20,840)

(10,736)

Other assets

3,483

2,816

11,122

2,883

Accounts payable, accrued expenses, deferred income taxes and other liabilities

73,604

76,344

193,358

80,336

Deferred revenue

571,292

462,474

479,419

444,674

Net cash provided by operating activities

281,573

240,347

736,897

591,507

Investing activities:

Business combinations, net of cash acquired

(4,994)

(57,914)

(579,745)

(422,699)

Land activity and building improvements

0

(6,565)

(4,106)

(19,655)

Strategic investments

(4,244)

(2,647)

(9,695)

(37,370)

Changes in marketable securities

(118,558)

(45,608)

(169,771)

141,679

Capital expenditures

(50,522)

(44,602)

(175,601)

(151,645)

Net cash used in investing activities

(178,318)

(157,336)

(938,918)

(489,690)

Financing activities:

Proceeds from employee stock plans

147,492

26,203

351,366

116,565

Excess tax benefits from employee stock plans

(13,972)

(4,994)

14,933

6,018

Contingent consideration payment related to prior business combinations

0

0

0

(16,200)

Principal payments on capital lease obligations

(9,037)

(8,737)

(31,754)

(30,533)

Net cash provided by financing activities

124,483

12,472

334,545

75,850

Effect of exchange rate changes 

(2,213)

8,814

7,437

5,325

Net increase in cash and cash equivalents

225,525

104,297

139,961

182,992

Cash and cash equivalents, beginning of period

521,720

502,987

607,284

424,292

Cash and cash equivalents, end of period

$ 747,245

$ 607,284

$  747,245

$ 607,284

salesforce.com, inc.

Additional Metrics

(Unaudited)

Jan 31,

Oct 31,

Jul 31,

Apr 30,

Jan 31,

Oct 31,

2013

2012

2012

2012

2012

2011

Full Time Equivalent Headcount

9,801

9,319

8,765

8,335

7,785

6,953

Financial data (in thousands):

Cash, cash equivalents and marketable securities 

$ 1,758,285

$ 1,416,050

$ 1,804,265

$ 1,657,089

$ 1,447,174

$ 1,296,693

Deferred revenue, current and noncurrent

$ 1,862,995

$ 1,291,703

$ 1,337,184

$ 1,334,716

$ 1,380,295

$    917,821

Selected Balance Sheet Accounts (in thousands):

Jan 31, 

Oct 31,

Jan 31,

2013

2012

2012

Prepaid Expenses and Other Current Assets

     Deferred professional services costs

$         3,522

$         4,974

$       10,399

     Prepaid income taxes

21,180

17,526

12,785

     Prepaid expenses and other current assets

101,291

95,100

57,135

$    125,993

$    117,600

$       80,319

Property and Equipment, net

     Land

$    248,263

$    248,263

$    248,263

     Building improvements

49,572

49,572

43,868

     Computers, equipment and software

328,318

305,216

232,460

     Furniture and fixtures

38,275

34,093

25,250

     Leasehold improvements

193,181

172,569

137,587

857,609

809,713

687,428

     Less accumulated depreciation and amortization

(252,940)

(225,874)

(159,482)

$    604,669

$    583,839

$    527,946

Capitalized Software, net

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

$       59,647

$       57,866

$       41,442

     Acquired developed technology, net of accumulated amortization

147,676

167,271

146,970

$    207,323

$    225,137

$    188,412

Other Assets, net

     Deferred professional services costs, noncurrent portion

$         1,077

$         1,573

$         3,935

     Long-term deposits

13,422

14,425

13,941

     Purchased intangible assets, net of accumulated amortization

49,354

51,447

46,110

     Acquired intellectual property, net of accumulated amortization

13,872

14,851

15,020

     Strategic investments

51,685

50,251

53,949

     Other

20,338

21,253

22,194

$    149,748

$    153,800

$    155,149

Accounts Payable, Accrued Expenses and Other Current Liabilities

     Accounts payable

$       14,535

$       57,940

$       33,258

     Accrued compensation

311,595

230,662

228,466

     Accrued other liabilities

138,165

142,647

121,957

     Accrued income and other taxes payable

120,341

75,468

100,471

     Accrued professional costs

10,064

13,044

21,993

     Accrued rent

3,006

9,154

6,115

$    597,706

$    528,915

$    512,260

Selected Off-Balance Sheet Accounts

Unbilled Deferred Revenue, a non-GAAP measure

Unbilled deferred revenue was approximately $3.5 billion as of January 31, 2013, $3.0 billion as of October 31, 2012 and $2.2 billion as of January 31, 2012. 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, 

2013

2012

2013

2012

Revenues by geography (in thousands):

Americas

$    583,410

$    436,237

$ 2,123,736

$ 1,540,289

Europe

148,610

108,141

525,304

408,456

Asia Pacific

102,661

87,535

401,155

317,794

$    834,681

$    631,913

$ 3,050,195

$ 2,266,539

As a percentage of total revenues:

Revenues by geography:

Americas

70%

69%

70%

68%

Europe

18

17

17

18

Asia Pacific

12

14

13

14

100%

100%

100%

100%

Three Months Ended 

Three Months Ended 

Three Months Ended 

January 31, 2013

October 31, 2012

January 31, 2012

compared to Three Months

compared to Three Months

compared to Three Months

Ended January 31, 2012

Ended October 31, 2011

Ended January 31, 2011

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

Americas

34%

38%

41%

Europe

39%

41%

32%

Asia Pacific

22%

30%

28%

Total growth

33%

37%

38%

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 Share Count Information

(in thousands)

Three Months Ended January 31, 

Fiscal Year Ended January 31, 

2013

2012

2013

2012

Weighted-average shares outstanding for basic earnings per share

144,970

136,720

141,224

135,302

Effect of dilutive securities (1):

Convertible senior notes

3,179

1,700

2,840

2,263

Warrants associated with the convertible senior note hedges

1,757

0

1,283

553

Employee stock awards

3,300

3,407

3,723

4,177

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

153,206

141,827

149,070

142,295

(1)

The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and twelve months ended January 31, 2013 and 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, 

2013

2012

2013

2012

 Operating cash flow 

 GAAP net cash provided by operating activities 

$    281,573

$    240,347

$    736,897

$    591,507

 Less: 

 Capital expenditures 

(50,522)

(44,602)

(175,601)

(151,645)

 Free cash flow 

$    231,051

$    195,745

$    561,296

$    439,862

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 land activity, building improvements and strategic investments. 

Comprehensive Income (Loss)

(in thousands)

Three Months Ended January 31, 

Fiscal Year Ended January 31, 

2013

2012

2013

2012

 Net loss 

$     (20,844)

$       (4,078)

$   (270,445)

$     (11,572)

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

 Foreign currency translation and other gains (losses) 

(5,298)

9,065

4,783

9,512

 Unrealized gains (losses) on investments 

(1,740)

(1,042)

(329)

(5,658)

 Other comprehensive income (loss), before tax 

(7,038)

8,023

4,454

3,854

 Tax effect 

526

683

0

2,110

 Other comprehensive income (loss),  net of tax 

(6,512)

8,706

4,454

5,964

 Comprehensive income (loss) 

$     (27,356)

$         4,628

$   (265,991)

$       (5,608)

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,

2013

2012

2013

2012

Gross profit

GAAP gross profit

$651,319

$495,568

$2,366,616

$1,777,653

Plus:

Amortization of purchased intangibles (a)

18,886

17,132

77,249

60,069

Stock-based expenses (b) 

9,304

5,283

33,757

17,451

Non-GAAP gross profit

$679,509

$517,983

$2,477,622

$1,855,173

Operating expenses

GAAP operating expenses

$672,126

$501,945

$2,477,326

$1,812,738

Less:

Amortization of purchased intangibles (a)

(2,093)

(2,751)

(10,922)

(7,250)

Stock-based expenses (b) 

(98,251)

(64,817)

(345,593)

(211,807)

Non-GAAP operating expenses

$571,782

$434,377

$2,120,811

$1,593,681

Income from operations

GAAP loss from operations

$ (20,807)

$   (6,377)

$  (110,710)

$    (35,085)

Plus:

Amortization of purchased intangibles (a)

20,979

19,883

88,171

67,319

Stock-based expenses (b) 

107,555

70,100

379,350

229,258

Non-GAAP income from operations

$107,727

$  83,606

$   356,811

$   261,492

Non-operating income (loss) (c)

GAAP non-operating income (loss)

$   (5,236)

$   (1,158)

$    (17,084)

$      1,768

Plus: Amortization of debt discount, net

6,389

4,144

23,837

12,335

Non-GAAP non-operating income (loss)

$    1,153

$    2,986

$      6,753

$     14,103

Net income

GAAP net loss 

$ (20,844)

$   (4,078)

$  (270,445)

$    (11,572)

Plus:

Amortization of purchased intangibles

20,979

19,883

88,171

67,319

Stock-based expenses 

107,555

70,100

379,350

229,258

Amortization of debt discount, net

6,389

4,144

23,837

12,335

One-time tax items (e)

0

0

149,147

0

Less:

Income tax effect of Non-GAAP adjustments 

(36,347)

(28,419)

(127,518)

(103,730)

Non-GAAP net income 

$  77,732

$  61,630

$   242,542

$   193,610

Diluted earnings per share

GAAP diluted loss per share (d)

$    (0.14)

$    (0.03)

$       (1.92)

$       (0.09)

Plus:

Amortization of purchased intangibles

0.14

0.14

0.59

0.47

Stock-based expenses

0.70

0.49

2.54

1.62

Amortization of debt discount, net

0.04

0.03

0.16

0.09

One-time tax items

0.00

0.00

1.00

0.00

Less:

.

Income tax effect of Non-GAAP adjustments

(0.23)

(0.20)

(0.74)

(0.73)

Non-GAAP diluted earnings per share 

$     0.51

$     0.43

$        1.63

$        1.36

Shares used in computing diluted net income per share

153,206

141,827

149,070

142,295

a)

Amortization of purchased intangibles were as follows:

Three Months Ended January 31,

Fiscal Year Ended January 31,

2013

2012

2013

2012