Salesforce.com Announces Fiscal 2013 Second Quarter Results

- Quarterly Revenue of $732 Million, up 34% Year-Over-Year

- Quarterly Operating Cash Flow of $136 Million, up 64% Year-Over-Year

- Deferred Revenue of $1.34 Billion, up 43% Year-Over-Year

- Unbilled Deferred Revenue Increases to Approximately $2.8 Billion

- Raises FY13 Revenue Guidance to $3.025 - $3.035 Billion

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

SAN FRANCISCO, Aug. 23, 2012 /PRNewswire/ -- Salesforce.com (NYSE: CRM), the enterprise cloud computing (http://www.salesforce.com/cloudcomputing/) company, today announced results for its fiscal second quarter ended July 31, 2012.

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

"Our second quarter revenue growth was outstanding at 34% in dollars and 37% in constant currency," said Marc Benioff, Chairman and CEO, salesforce.com.  "Salesforce.com's social enterprise strategy is enabling companies to connect with customers, partners, and employees in completely new ways – and it's creating new opportunities for their growth and ours." 

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

Revenue:  Total Q2 revenue was $732 million, an increase of 34% on a year-over-year basis.  Subscription and support revenues were $687 million, an increase of 35% on a year-over-year basis.  Professional services and other revenues were $44 million, an increase of 20% on a year-over-year basis. 

Earnings per Share:  Q2 GAAP net loss per share was ($0.07), and non-GAAP diluted earnings per share was $0.42.  The company's non-GAAP results exclude the effects of $85 million in stock-based compensation expense, $20 million in amortization of purchased intangibles, and $6 million in net non-cash interest expense related to the company's convertible senior notes.  Non-GAAP EPS calculations are based on approximately 146 million diluted shares outstanding during the quarter, including approximately 3 million shares associated with the company's convertible senior notes.  GAAP EPS calculations are based on a basic share count of approximately 139 million shares. 

Cash:  Cash generated from operations for the fiscal second quarter was $136 million, an increase of 64% on a year-over-year basis.  Total cash, cash equivalents and marketable securities finished the quarter at $1.8 billion.

Deferred Revenue:  Deferred revenue on the balance sheet as of July 31, 2012 was $1.34 billion, an increase of 43% on a year-over-year basis. Current deferred revenue increased by 38% year-over-year to $1.27 billion, benefited in part by longer invoice durations.  Non-current deferred revenue increased by 293% year-over-year to $69 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the second quarter at approximately $2.8 billion, up from approximately $2.7 billion at the end of the fiscal first quarter. 

As of August 23, 2012, salesforce.com is initiating revenue, GAAP EPS and non-GAAP EPS guidance for its fiscal third quarter of fiscal year 2013. In addition, for the full fiscal year 2013, the company is raising its revenue and non-GAAP EPS guidance previously provided on June 4, 2012, and initiating GAAP EPS guidance.

Q3 FY13 Guidance:  Revenue for the company's third fiscal quarter is projected to be in the range of $773 million to $777 million, an increase of 32% to 33% year-over-year.

GAAP net loss per share is expected to be in the range of ($0.27) to ($0.26), while diluted non-GAAP EPS is expected to be in the range of $0.31 to $0.32.  The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $99 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $27 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $6 million.  EPS estimates assume a GAAP tax rate of approximately 37%, and a non-GAAP tax rate of approximately 35%.  The GAAP EPS calculation assumes an average basic share count of approximately 142 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 151 million shares.

Full Year FY13 Guidance:  Revenue for the company's full fiscal year 2013 is projected to be in the range of $3.025 billion to $3.035 billion, an increase of 33% to 34% year-over-year.

For the company's full fiscal year 2013, GAAP net loss per share is expected to be in the range of ($0.75) to ($0.72) while diluted non-GAAP EPS is expected to be in the range of $1.48 to $1.51.  The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $382 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $95 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 30%, and a non-GAAP tax rate of approximately 37%.  The GAAP EPS calculation assumes an average basic share count of approximately 141 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 150 million shares.

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

Fiscal 2013

Q3

FY2013

GAAP EPS Range*

 ($0.27) - ($0.26) 

 ($0.75) - ($0.72) 

Plus

Amortization of purchased intangibles

$               0.18

$               0.64

Stock-based expense

$               0.66

$               2.54

Amortization of debt discount, net

$               0.04

$               0.16

Less

Income tax effect of certain Non-GAAP items

$              (0.30)

$              (1.11)

Non-GAAP diluted EPS

 $0.31 - $0.32 

 $1.48 - $1.51 

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

142

141

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

151

150

* For Q3 & FY13 GAAP EPS loss, basic number of shares used for calculation

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its second quarter 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 salesforce.com or 17262326.  A replay will be available at 800-585-8367 or +1 855-859-2056, passcode 17262326, until midnight (Eastern Time) September 23, 2012.

About salesforce.com: Founded in 1999, salesforce.com is the enterprise cloud computing company that is leading customers in their transformation to become social enterprises. Social enterprises are able to connect with customers, partners and employees in entirely new ways. Based on salesforce.com's real-time, multitenant architecture, the company's platform and application services give customers the tools to create a true social front office and revolutionize the way they sell, service, market, collaborate, work, 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 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 FY13 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.  As significant unusual or discrete events occur, 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 Q2 and its non-GAAP estimates for Q3 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 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.
  • Income Tax Effects:  The company's estimated non-GAAP effective tax rate excludes the tax effect 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 third 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 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-Q that will be filed for the second quarter ended July 31, 2012 and our Form 10-K 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, Chatter, Sales Cloud, Service Cloud, Marketing Cloud, Rypple, AppExchange, Salesforce Platform, and others are trademarks of salesforce.com, inc.  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 July 31,

Six Months Ended July 31,

2012

2011

2012

2011

Revenues:

Subscription and support

$ 687,493

$ 509,279

$ 1,342,713

$ 982,783

Professional services and other

44,156

36,723

84,403

67,583

Total revenues

731,649

546,002

1,427,116

1,050,366

Cost of revenues (1)(2):

Subscription and support

118,519

89,144

227,263

164,387

Professional services and other

43,899

31,766

86,706

59,589

Total cost of revenues

162,418

120,910

313,969

223,976

Gross profit

569,231

425,092

1,113,147

826,390

Operating expenses (1)(2):

Research and development

99,442

73,393

194,218

138,685

Marketing and sales

380,160

283,001

749,949

537,472

General and administrative

103,095

84,446

204,695

168,784

Total operating expenses

582,697

440,840

1,148,862

844,941

Loss from operations

(13,466)

(15,748)

(35,715)

(18,551)

Investment income

7,173

5,112

11,634

13,167

Interest expense

(8,033)

(3,846)

(14,403)

(7,517)

Other income (expense)

294

(3,231)

(416)

(4,031)

Loss before benefit from income taxes 

(14,032)

(17,713)

(38,900)

(16,932)

Benefit from income taxes

4,203

13,445

9,596

13,194

Net loss 

$    (9,829)

$    (4,268)

$     (29,304)

$    (3,738)

Basic net loss per share 

$      (0.07)

$      (0.03)

$          (0.21)

$      (0.03)

Diluted net loss per share

$      (0.07)

$      (0.03)

$          (0.21)

$      (0.03)

Shares used in computing basic net loss per share

139,425

135,093

138,789

134,273

Shares used in computing diluted net loss per share

139,425

135,093

138,789

134,273

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

Cost of revenues

$   17,668

$   16,373

$       35,116

$   25,468

Marketing and sales

2,407

2,306

5,834

3,546

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

Cost of revenues

$      7,864

$      4,379

$       15,117

$      8,030

Research and development

16,089

11,188

31,756

19,027

Marketing and sales

44,781

27,114

86,768

50,901

General and administrative

16,683

11,913

33,042

24,194

 

 

salesforce.com, inc.

Condensed Consolidated Statements of Operations

As a percentage of total revenues:

(Unaudited)

Three Months Ended July 31,

Six Months Ended July 31,

2012

2011

2012

2011

Revenues:

Subscription and support

94%

93%

94%

94%

Professional services and other

6

7

6

6

Total revenues

100

100

100

100

Cost of revenues (1)(2):

Subscription and support

16

16

16

15

Professional services and other

6

6

6

6

Total cost of revenues

22

22

22

21

Gross profit

78

78

78

79

Operating expenses (1)(2):

Research and development

14

13

14

13

Marketing and sales

52

52

53

52

General and administrative

14

16

14

16

Total operating expenses

80

81

81

81

Loss from operations

(2)

(3)

(3)

(2)

Investment income

1

1

1

1

Interest expense

(1)

(1)

(1)

0

Other income (expense)

0

0

0

0

Loss before benefit from income taxes

(2)

(3)

(3)

(1)

Benefit from income taxes

1

2

1

1

Net loss 

(1%)

(1%)

(2%)

0%

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

Cost of revenues

2%

3%

2%

2%

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

2

2

2

Marketing and sales

6

5

6

5

General and administrative

2

2

2

2

 

 

 

salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)

July 31,

January 31,

2012

2012

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$  1,000,730

$     607,284

Short-term marketable securities

106,933

170,582

Accounts receivable, net

446,917

683,745

Deferred commissions

94,921

98,471

Deferred income taxes

56,723

31,821

Prepaid expenses and other current assets (see additional metrics)

146,901

80,319

Total current assets

1,853,125

1,672,222

Marketable securities, noncurrent

696,602

669,308

Property and equipment, net (see additional metrics)

556,776

527,946

Deferred commissions, noncurrent

77,010

78,149

Deferred income taxes, noncurrent

108,031

87,587

Capitalized software, net (see additional metrics)

173,456

188,412

Goodwill

840,531

785,381

Other assets, net (see additional metrics)

148,039

155,149

Total assets

$  4,453,570

$  4,164,154

Liabilities, temporary equity and stockholders' equity

Current liabilities:

Accounts payable

$       69,339

$        33,258

Accrued expenses and other liabilities (see additional metrics)

482,888

502,442

Deferred revenue

1,268,407

1,291,622

Convertible senior notes, net

508,533

496,149

Total current liabilities

2,329,167

2,323,471

Income taxes payable, noncurrent

47,165

37,258

Long-term lease liabilities and other

49,790

48,651

Deferred revenue, noncurrent

68,777

88,673

Total liabilities

2,494,899

2,498,053

Temporary equity

66,357

78,741

Stockholders' equity:

Common stock

139

137

Additional paid-in capital

1,742,286

1,415,077

Accumulated other comprehensive income 

19,730

12,683

Retained earnings 

130,159

159,463

Total stockholders' equity

1,892,314

1,587,360

Total liabilities, temporary equity and stockholders' equity

$  4,453,570

$  4,164,154

 

 

salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Three Months Ended July 31,

Six Months Ended July 31,

2012

2011

2012

2011

Operating activities:

Net loss

$       (9,829)

$    (4,268)

$     (29,304)

$    (3,738)

Adjustments to reconcile net loss to net

cash provided by operating activities:

Depreciation and amortization

49,999

40,239

99,440

69,832

Amortization of debt discount and transaction costs

6,371

2,077

11,040

4,332

Amortization of deferred commissions

35,783

24,916

72,029

49,591

Expenses related to stock-based plans

85,417

54,594

166,683

102,152

Excess tax benefits from employee stock plans 

(14,702)

(2,086)

(25,745)

(4,120)

Changes in assets and liabilities:

Accounts receivable, net

(75,522)

(66,076)

237,138

90,051

Deferred commissions

(35,222)

(26,137)

(67,340)

(46,641)

Prepaid expenses and other current assets

(35,747)

(9,611)

(56,096)

(18,994)

Other assets

(891)

(1,913)

864

(4,626)

Accounts payable

49,586

4,121

36,081

2,984

Accrued expenses and other current liabilities

78,485

47,624

(52,270)

(18,017)

Deferred revenue

2,469

19,453

(43,111)

(355)

Net cash provided by operating activities

136,197

82,933

349,409

222,451

Investing activities:

Business combinations, net of cash acquired

(10,078)

(285,335)

(58,991)

(298,670)

Land activity and building improvements

-

(5,422)

(4,106)

(6,436)

Strategic investments

(1,129)

(7,782)

(3,794)

(13,215)

Changes in marketable securities

412,797

21,662

38,215

148,120

Capital expenditures

(29,304)

(45,051)

(74,025)

(72,365)

Net cash provided by (used in) investing activities

372,286

(321,928)

(102,701)

(242,566)

Financing activities:

Proceeds from equity plans

33,824

42,282

127,391

74,568

Excess tax benefits from employee stock plans

14,702

2,086

25,745

4,120

Contingent consideration payment related to prior business combinations

-

(13,400)

-

(16,200)

Principal payments on capital lease obligations

(7,479)

(10,549)

(15,053)

(14,111)

Net cash provided by financing activities

41,047

20,419

138,083

48,377

Effect of exchange rate changes 

10,415

3,758

8,655

(2,760)

Net increase (decrease) in cash and cash equivalents

559,945

(214,818)

393,446

25,502

Cash and cash equivalents, beginning of period

440,785

664,612

607,284

424,292

Cash and cash equivalents, end of period

$ 1,000,730

$ 449,794

$ 1,000,730

$ 449,794

 

salesforce.com, inc.

Additional Metrics

(Unaudited)

Jul 31,

Apr 30,

Jan 31,

Oct 31,

Jul 31,

Apr 30,

2012

2012

2012

2011

2011

2011

Full Time Equivalent Headcount

8,765

8,335

7,785

6,953

6,352

5,513

Financial data (in thousands):

Cash, cash equivalents and marketable securities 

$ 1,804,265

$ 1,657,089

$ 1,447,174

$ 1,296,693

$ 1,286,658

$ 1,522,285

Deferred revenue, current and noncurrent

$ 1,337,184

$ 1,334,716

$ 1,380,295

$    917,821

$    935,266

$    915,133

Selected Balance Sheet Accounts (in thousands):

Jul 31,

Jan 31,

2012

2012

Prepaid Expenses and Other Current Assets

     Deferred professional services costs

$         7,825

$       10,399

     Prepaid income taxes

24,007

12,785

     Prepaid expenses and other current assets

115,069

57,135

$    146,901

$       80,319

Property and Equipment, net

     Land

$    248,263

$    248,263

     Building improvements

49,572

43,868

     Computers, equipment and software

280,868

232,460

     Furniture and fixtures

29,402

25,250

     Leasehold improvements

148,470

137,587

756,575

687,428

     Less accumulated depreciation and amortization

(199,799)

(159,482)

$    556,776

$    527,946

Capitalized Software, net

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

$       53,999

$       41,442

     Acquired developed technology, net of accumulated amortization

119,457

146,970

$    173,456

$    188,412

Other Assets, net

     Deferred professional services costs, noncurrent portion

$         2,101

$         3,935

     Long-term deposits

13,293

13,941

     Purchased intangible assets, net of accumulated amortization

41,311

46,110

     Acquired intellectual property, net of accumulated amortization

15,841

15,020

     Strategic investments

51,276

53,949

     Other

24,217

22,194

$    148,039

$    155,149

Accrued Expenses and Other Current Liabilities

     Accrued compensation

$    192,776

$    228,466

     Accrued other liabilities

150,149

121,957

     Accrued income and other taxes payable

68,519

100,471

     Accrued professional costs

24,026

21,993

     Accrued rent

47,418

29,555

$    482,888

$    502,442

Selected Off-Balance Sheet Accounts

Unbilled Deferred Revenue, a non-GAAP measure

Unbilled deferred revenue was approximately $2.8 billion as of July 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 July 31, 

Six Months Ended July 31, 

2012

2011

2012

2011

Revenues by geography (in thousands):

Americas

$    507,974

$    366,916

$    992,927

$    706,934

Europe

124,609

102,056

242,903

196,451

Asia Pacific

99,066

77,030

191,286

146,981

$    731,649

$    546,002

$ 1,427,116

$ 1,050,366

As a percentage of total revenues:

Revenues by geography:

Americas

69%

67%

70%

67%

Europe

17

19

17

19

Asia Pacific

14

14

13

14

100%

100%

100%

100%

Three Months Ended 

Three Months Ended 

Three Months Ended 

July 31, 2012

April 30, 2012

July 31, 2011

compared to Three Months

compared to Three Months

compared to Three Months

Ended July 31, 2011

Ended April 30, 2011

Ended July 31, 2010

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

Americas

38%

43%

34%

Europe

40%

33%

36%

Asia Pacific

28%

30%

33%

Total growth

37%

39%

34%

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 July 31, 

Six Months Ended July 31, 

2012

2011

2012

2011

Weighted-average shares outstanding for basic earnings per share

139,425

135,093

138,789

134,273

Effect of dilutive securities (1):

Convertible senior notes

2,542

2,753

2,665

2,581

Warrants associated with the convertible senior note hedges

866

1,160

1,037

919

Employee stock awards

3,361

4,450

3,711

4,563

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

146,194

143,456

146,202

142,336

(1)

The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and six months ended July 31, 2012 and 2011 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 July 31, 

Six Months Ended July 31, 

2012

2011

2012

2011

 Operating cash flow 

 GAAP net cash provided by operating activities 

$    136,197

$       82,933

$    349,409

$    222,451

 Less: 

 Capital expenditures 

(29,304)

(45,051)

(74,025)

(72,365)

 Free cash flow 

$    106,893

$       37,882

$    275,384

$    150,086

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. 

Comprehensive Income (Loss) (in thousands)

Three Months Ended July 31, 

Six Months Ended July 31, 

2012

2011

2012

2011

 Net loss 

$       (9,829)

$       (4,268)

$     (29,304)

$       (3,738)

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

 Foreign currency translation and other gains (losses) 

10,135

5,858

6,947

(1,219)

 Unrealized gains (losses) on investments 

(961)

2,052

159

2,745

 Other comprehensive income, before tax 

9,174

7,910

7,106

1,526

 Tax effect 

359

(767)

(59)

(1,026)

 Other comprehensive income,  net of tax 

9,533

7,143

7,047

500

 Comprehensive income (loss) 

$           (296)

$         2,875

$     (22,257)

$       (3,238)

 

 

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 July 31,

Six Months Ended July 31,

2012

2011

2012

2011

Gross profit

GAAP gross profit

$569,231

$425,092

$1,113,147

$826,390

Plus:

Amortization of purchased intangibles (a)

17,668

16,373

35,116

25,468

Stock-based expenses (b) 

7,864

4,379

15,117

8,030

Non-GAAP gross profit

$594,763

$445,844

$1,163,380

$859,888

Operating expenses

GAAP operating expenses

$582,697

$440,840

$1,148,862

$844,941

Less:

Amortization of purchased intangibles (a)

(2,407)

(2,306)

(5,834)

(3,546)

Stock-based expenses (b) 

(77,553)

(50,215)

(151,566)

(94,122)

Non-GAAP operating expenses

$502,737

$388,319

$   991,462

$747,273

Income from operations

GAAP loss from operations

$ (13,466)

$ (15,748)

$    (35,715)

$ (18,551)

Plus:

Amortization of purchased intangibles (a)

20,075

18,679

40,950

29,014