Salesforce.com Announces Fiscal 2013 Third Quarter Results

- Quarterly Revenue of $788 Million, up 35% Year-Over-Year

- Deferred Revenue of $1.29 Billion, up 41% Year-Over-Year

- Unbilled Deferred Revenue Increases to Approximately $3 Billion

- Raises FY13 Revenue Guidance to $3.041 - $3.046 Billion

- Initiates FY14 Revenue Guidance of $3.80 - $3.85 Billion

20 Nov, 2012, 16:05 ET from salesforce.com

SAN FRANCISCO, Nov. 20, 2012 /PRNewswire/ -- Salesforce.com (NYSE: CRM), the enterprise cloud computing (http://www.salesforce.com/cloudcomputing/) company, today announced results for its fiscal third quarter ended October 31, 2012.

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

"Salesforce.com is the first enterprise cloud computing company to exceed a $3 billion annual revenue run rate, with outstanding third quarter revenue growth at 35% in dollars and 37% in constant currency," said Marc Benioff, Chairman and CEO, salesforce.com. "Given the strong customer response to our next generation social and mobile cloud technologies, I'm delighted to announce that we expect to surpass a $4 billion annual revenue run rate during our fiscal year 2014."

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

Revenue:  Total Q3 revenue was $788 million, an increase of 35% on a year-over-year basis.  Subscription and support revenues were $741 million, an increase of 35% on a year-over-year basis.  Professional services and other revenues were $48 million, an increase of 36% on a year-over-year basis. 

Earnings per Share:  Q3 GAAP net loss per share was ($1.55), and non-GAAP diluted earnings per share was $0.33.

The company recorded a one-time, non-cash charge to income tax expense in the third quarter of fiscal 2013 in the amount of $149 million to establish a valuation allowance against a significant portion of its deferred tax assets. This accounting treatment reflects the company's assessment of whether the deferred tax assets will be realizable in the near-future, but has no effect on the company's ability to utilize deferred tax assets, such as loss carryforwards and tax credits, to reduce future cash tax payments.  The Company will continue to assess and record any necessary quarterly changes to the valuation allowance and the corresponding income tax expense or benefit.

The company's non-GAAP results exclude the effects of the $149 million charge related to the establishment of the tax valuation allowance, $26 million related to the quarterly change in the tax valuation allowance, $105 million in stock-based compensation expense, $26 million in amortization of purchased intangibles, and $6 million in net non-cash interest expense related to the company's convertible senior notes.  GAAP EPS calculations are based on a basic share count of approximately 142 million shares. Non-GAAP EPS calculations are based on approximately 150 million diluted shares outstanding during the quarter, including approximately four million shares associated with the company's convertible senior notes.    

Cash:  Cash generated from operations for the fiscal third quarter was $106 million, a decrease of 18% on a year-over-year basis.  Total cash, cash equivalents and marketable securities finished the quarter at $1.4 billion.

Deferred Revenue:  Deferred revenue on the balance sheet as of October 31, 2012 was $1.29 billion, an increase of 41% on a year-over-year basis. Current deferred revenue increased by 35% year-over-year to $1.23 billion, benefited in part by longer invoice durations.  Non-current deferred revenue increased by 414% year-over-year to $66 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the third quarter at approximately $3 billion, up from approximately $2.8 billion at the end of the fiscal second quarter. 

As of November 20, 2012, salesforce.com is initiating revenue, GAAP EPS and non-GAAP EPS guidance for its fiscal fourth quarter of fiscal year 2013. In addition, for the full fiscal year 2013, the company is raising its revenue and non-GAAP EPS guidance and lowering its GAAP EPS guidance previously provided on August 23, 2012. The company is also initiating revenue guidance for fiscal year 2014.

Q4 FY13 Guidance:  Revenue for the company's fourth fiscal quarter is projected to be in the range of $825 million to $830 million, an increase of 31% year-over-year.

GAAP net loss per share is expected to be in the range of ($0.25) to ($0.23), while diluted non-GAAP EPS is expected to be in the range of $0.38 to $0.40.  The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $107 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 $6 million.  EPS estimates assume a GAAP tax rate of approximately negative 7%, and a non-GAAP tax rate of approximately 40%, which reflect the estimated quarterly change in the tax valuation allowance.  The GAAP EPS calculation assumes an average basic share count of approximately 145 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 155 million shares.

Full Year FY13 Guidance:  Revenue for the company's full fiscal year 2013 is projected to be in the range of $3.041 billion to $3.046 billion, an increase of 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 ($2.02) to ($2.00) while diluted non-GAAP EPS is expected to be in the range of $1.50 to $1.52.  The lowering of the GAAP net loss per share range is a result of the non-cash tax expenses in Q3, as discussed above.  The non-GAAP estimate excludes the effects of the fiscal third quarter charge to establish a tax valuation allowance of approximately $149 million, stock-based compensation expense, expected to be approximately $379 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $88 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 negative 114%, and a non-GAAP tax rate of approximately 37%, which reflect the estimated annual change in the tax valuation allowance. Due to the valuation allowance, however, the GAAP tax rate is volatile and difficult to forecast.  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 149 million shares.

Full Year FY14 Guidance: Revenue for the company's full fiscal year 2014 is projected to be in the range of approximately $3.80 billion to approximately $3.85 billion.  The company will provide its expectations for FY14 GAAP and non-GAAP EPS when it announces its fourth quarter fiscal year 2013 results in February 2013.

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

Fiscal 2013

Q4

FY2013

GAAP EPS Range*

 ($0.25) - ($0.23) 

 ($2.02) - ($2.00) 

Plus

Amortization of purchased intangibles

$               0.14

$               0.59

Stock-based expense

$               0.69

$               2.54

Amortization of debt discount, net

$               0.04

$               0.16

Less

One time tax charge

$                    -

$               1.00

Quarterly change in valuation allowance

$               0.06

$               0.23

Income tax effect of certain Non-GAAP items

$              (0.30)

$              (1.00)

Non-GAAP diluted EPS

 $0.38 - $0.40 

 $1.50 - $1.52 

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

145

141

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

155

149

* For Q4 & FY13 GAAP EPS loss, basic number of shares used for calculation

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its third 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 51384041.  A replay will be available at 800-585-8367 or +1 855-859-2056, passcode 51384041, until midnight (Eastern Time) December 20, 2012.

About salesforce.com

Founded in 1999, salesforce.com is the enterprise cloud computing leader. Using salesforce.com's social and mobile cloud technologies, companies can connect with customers, partners and employees in entirely new ways. Based on salesforce.com's real-time, multitenant architecture, the company's platform and apps give customers the tools to create a 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, the net amortization of debt discount on the company's convertible senior notes, certain one-time, non-cash tax charges, quarterly changes to the valuation allowance, 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 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 Q3 and its non-GAAP estimates for Q4 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 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 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.
  • One-time Tax Charge: As a result of the company assessing the realizability of its deferred tax assets, 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.
  • Quarterly Change in Valuation Allowance: As part of establishing a valuation allowance, the company records a quarterly charge related to the change in the valuation allowance.  Management believes that the exclusion of any quarterly charge related to the change in the valuation allowance is appropriate to provide investors with a better view of the company's operational performance.
  • Income Tax Effects:  The company's estimated non-GAAP effective tax rate adjusts for 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 fourth fiscal quarter of 2013 and the full fiscal year, the company's expected revenue run rate and revenues in fiscal 2014, the company's expected tax rates, stock-based compensation expenses, amortization of purchased intangibles and debt discount, 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 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 third quarter ended October 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, Work.com, 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 October 31,

Nine Months Ended October 31,

2012

2011

2012

2011

Revenues:

Subscription and support

$        740,600

$          549,182

$   2,083,313

$        1,531,965

Professional services and other

47,798

35,078

132,201

102,661

Total revenues

788,398

584,260

2,215,514

1,634,626

Cost of revenues (1)(2):

Subscription and support

134,183

96,306

361,446

260,693

Professional services and other

52,065

32,259

138,771

91,848

Total cost of revenues

186,248

128,565

500,217

352,541

Gross profit

602,150

455,695

1,715,297

1,282,085

Operating expenses (1)(2):

Research and development

114,074

76,049

308,292

214,734

Marketing and sales

428,507

304,571

1,178,456

842,043

General and administrative

113,757

85,232

318,452

254,016

Total operating expenses

656,338

465,852

1,805,200

1,310,793

Loss from operations

(54,188)

(10,157)

(89,903)

(28,708)

Investment income

3,887

5,136

15,521

18,303

Interest expense

(8,190)

(3,859)

(22,593)

(11,376)

Other income (expense)

(4,360)

30

(4,776)

(4,001)

Loss before benefit from (provision for) income taxes

(62,851)

(8,850)

(101,751)

(25,782)

Benefit from (provision for) income taxes (3)

(157,446)

5,094

(147,850)

18,288

Net loss 

$       (220,297)

$             (3,756)

$    (249,601)

$               (7,494)

Basic net loss per share 

$              (1.55)

$               (0.03)

$           (1.78)

$                 (0.06)

Diluted net loss per share 

$              (1.55)

$               (0.03)

$           (1.78)

$                 (0.06)

Shares used in computing basic net loss per share

142,203

135,847

139,959

134,824

Shares used in computing diluted net loss per share

142,203

135,847

139,959

134,824

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

Cost of revenues

$           23,247

$            17,469

$        58,363

$              42,937

Marketing and sales

2,995

953

8,829

4,499

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

Cost of revenues

$             9,336

$               4,138

$        24,453

$              12,168

Research and development

21,984

12,197

53,740

31,224

Marketing and sales

55,304

29,123

142,072

80,024

General and administrative

18,488

11,548

51,530

35,742

(3) Amount includes one-time tax items, as follow:

Benefit from (provision for) income taxes

$       (149,147)

$                        0

$    (149,147)

$                        0

 

salesforce.com, inc.

Condensed Consolidated Statements of Operations

As a percentage of total revenues:

(Unaudited)

Three Months Ended October 31,

Nine Months Ended October 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

17

16

17

16

Professional services and other

7

6

6

6

Total cost of revenues

24

22

23

22

Gross profit

76

78

77

78

Operating expenses (1)(2):

Research and development

15

13

14

13

Marketing and sales

54

52

53

52

General and administrative

14

15

14

15

Total operating expenses

83

80

81

80

Loss from operations

(7)

(2)

(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

(8)

(2)

(4)

(2)

Benefit from (provision for) income taxes (3)

(20)

1

(7)

1

Net loss 

(28)%

(1)%

(11)%

(1)%

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

Cost of revenues

3%

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

2

2

Marketing and sales

7

5

6

5

General and administrative

2

2

2

2

(3) One-time tax items as a percentage of total revenues, as follows:

Benefit from (provision for) income taxes

(19)%

0%

(7)%

0%

 

salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)

October 31,

January 31,

2012

2012

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$               521,720

$          607,284

Short-term marketable securities

83,844

170,582

Accounts receivable, net

418,590

683,745

Deferred commissions

100,808

98,471

Deferred income taxes, net

14,723

31,821

Prepaid expenses and other current assets (see additional metrics)

117,600

80,319

Total current assets

1,257,285

1,672,222

Marketable securities, noncurrent

810,486

669,308

Property and equipment, net (see additional metrics)

583,839

527,946

Deferred commissions, noncurrent

80,304

78,149

Deferred income taxes, noncurrent, net

6,285

87,587

Capitalized software, net (see additional metrics)

225,137

188,412

Goodwill

1,525,154

785,381

Other assets, net (see additional metrics)

153,800

155,149

Total assets

$            4,642,290

$       4,164,154

Liabilities, temporary equity and stockholders' equity

Current liabilities:

Accounts payable

$                  57,940

$            33,258

Accrued expenses and other liabilities (see additional metrics)

524,267

502,442

Deferred revenue

1,226,118

1,291,622

Convertible senior notes, net

514,891

496,149

Total current liabilities

2,323,216

2,323,471

Income taxes payable, noncurrent

46,246

37,258

Long-term lease liabilities and other

63,629

48,651

Deferred revenue, noncurrent

65,585

88,673

Total liabilities

2,498,676

2,498,053

Temporary equity

59,999

78,741

Stockholders' equity:

Common stock

142

137

Additional paid-in capital

2,149,962

1,415,077

Accumulated other comprehensive income 

23,649

12,683

Retained earnings (deficit)

(90,138)

159,463

Total stockholders' equity

2,083,615

1,587,360

Total liabilities, temporary equity and stockholders' equity

$            4,642,290

$       4,164,154

 

salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Three Months Ended October 31,

Nine Months Ended October 31,

2012

2011

2012

2011

Operating activities:

Net loss

$      (220,297)

$              (3,756)

$        (249,601)

$             (7,494)

Adjustments to reconcile net loss to net

cash provided by operating activities:

Depreciation and amortization

59,960

41,553

159,400

111,385

Amortization of debt discount and transaction costs

6,471

2,138

17,511

6,470

Amortization of deferred commissions

39,070

26,862

111,099

76,453

Expenses related to employee stock plans

105,112

57,006

271,795

159,158

Excess tax benefits from employee stock plans 

(3,160)

(6,892)

(28,905)

(11,012)

Tax valuation allowance

149,147

0

149,147

0

Changes in assets and liabilities:

Accounts receivable, net

33,664

30,101

270,802

120,152

Deferred commissions

(48,251)

(33,611)

(115,591)

(80,252)

Prepaid expenses and other current assets

39,390

9,035

(16,706)

(9,959)

Other assets

6,775

4,693

7,639

67

Accounts payable

(14,356)

5,944

21,725

8,928

Accrued expenses and other current liabilities

1,152

13,081

(51,118)

(4,936)

Deferred revenue

(48,762)

(17,445)

(91,873)

(17,800)

Net cash provided by operating activities

105,915

128,709

455,324

351,160

Investing activities:

Business combinations, net of cash acquired

(515,760)

(66,115)

(574,751)

(364,785)

Land activity and building improvements

0

(6,654)

(4,106)

(13,090)

Strategic investments

(1,657)

(21,508)

(5,451)

(34,723)

Changes in marketable securities

(89,428)

39,167

(51,213)

187,287

Capital expenditures

(51,054)

(34,678)

(125,079)

(107,043)

Net cash used in investing activities

(657,899)

(89,788)

(760,600)

(332,354)

Financing activities:

Proceeds from equity plans

76,483

15,794

203,874

90,362

Excess tax benefits from employee stock plans

3,160

6,892

28,905

11,012

Contingent consideration payment related to prior business combinations

0

0

0

(16,200)

Principal payments on capital lease obligations

(7,664)

(7,685)

(22,717)

(21,796)

Net cash provided by financing activities

71,979

15,001

210,062

63,378

Effect of exchange rate changes 

995

(729)

9,650

(3,489)

Net increase (decrease) in cash and 

cash equivalents

(479,010)

53,193

(85,564)

78,695

Cash and cash equivalents, beginning of period

1,000,730

449,794

607,284

424,292

Cash and cash equivalents, end of period

$       521,720

$           502,987

$          521,720

$          502,987

 

salesforce.com, inc.

Additional Metrics

(Unaudited)

Oct 31,

Jul 31,

Apr 30,

Jan 31,

Oct 31,

Jul 31,

2012

2012

2012

2012

2011

2011

Full Time Equivalent Headcount

9,319

8,765

8,335

7,785

6,953

6,352

Financial data (in thousands):

Cash, cash equivalents and marketable securities 

$          1,416,050

$            1,804,265

$ 1,657,089

$             1,447,174

$  1,296,693

$         1,286,658

Deferred revenue, current and noncurrent

$          1,291,703

$            1,337,184

$ 1,334,716

$             1,380,295

$      917,821

$            935,266

Selected Balance Sheet Accounts (in thousands):

Oct 31,

Jul 31,

Jan 31,

2012

2012

2012

Prepaid Expenses and Other Current Assets

     Deferred professional services costs

$                  4,974

$                    7,825

$       10,399

     Prepaid income taxes

17,526

24,007

12,785

     Prepaid expenses and other current assets

95,100

115,069

57,135

$             117,600

$                146,901

$       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

305,216

280,868

232,460

     Furniture and fixtures

34,093

29,402

25,250

     Leasehold improvements

172,569

148,470

137,587

809,713

756,575

687,428

     Less accumulated depreciation and amortization

(225,874)

(199,799)

(159,482)

$             583,839

$                556,776

$    527,946

Capitalized Software, net

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

$               57,866

$                  53,999

$       41,442

     Acquired developed technology, net of accumulated amortization

167,271

119,457

146,970

$             225,137

$                173,456

$    188,412

Other Assets, net

     Deferred professional services costs, noncurrent portion

$                  1,573

$                    2,101

$         3,935

     Long-term deposits

14,425

13,293

13,941

     Purchased intangible assets, net of accumulated amortization

51,447

41,311

46,110

     Acquired intellectual property, net of accumulated amortization

14,851

15,841

15,020

     Strategic investments

50,251

51,276

53,949

     Other

21,253

24,217

22,194

$             153,800

$                148,039

$    155,149

Accrued Expenses and Other Current Liabilities

     Accrued compensation

$             230,662

$                192,776

$    228,466

     Accrued other liabilities

142,647

150,149

121,957

     Accrued income and other taxes payable

75,468

68,519

100,471

     Accrued professional costs

13,044

24,026

21,993

     Accrued rent

62,446

47,418

29,555

$             524,267

$                482,888

$    502,442

Selected Off-Balance Sheet Accounts

Unbilled Deferred Revenue, a non-GAAP measure

Unbilled deferred revenue was approximately $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 October 31, 

Nine Months Ended October 31, 

2012

2011

2012

2011

Revenues by geography (in thousands):

Americas

$             547,399

$                397,118

$ 1,540,326

$             1,104,052

Europe

133,791

103,864

376,694

300,315

Asia Pacific

107,208

83,278

298,494

230,259

$             788,398

$                584,260

$ 2,215,514

$             1,634,626

As a percentage of total revenues:

Revenues by geography:

Americas

69

%

68

%

70

%

68

%

Europe

17

18

17

18

Asia Pacific

14

14

13

14

100

%

100

%

100

%

100

%

 

Three Months Ended 

October 31, 2012

compared to Three Months

Ended October 31, 2011

Three Months Ended 

July 31, 2012

compared to Three Months

Ended July 31, 2011

Three Months Ended

October 31, 2011

compared to Three Months

Ended October 31, 2010

Revenue constant currency growth rates

(as compared to the comparable prior periods)

Americas

38%

38%

36%

Europe

41%

40%

29%

Asia Pacific

30%

28%

31%

Total growth

37%

37%

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 October 31, 

Nine Months Ended October 31, 

2012

2011

2012

2011

Weighted-average shares outstanding for basic earnings per share

142,203

135,847

139,959

134,824

Effect of dilutive securities (1):

Convertible senior notes

2,853

2,190

2,727

2,451

Warrants associated with the convertible senior note hedges

1,300

372

1,124

737

Employee stock awards

3,670

3,762

3,794

4,330

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

150,026

142,171

147,604

142,342

(1)

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

Nine Months Ended October 31, 

2012

2011

2012

2011

 Operating cash flow 

 GAAP net cash provided by operating activities 

$             105,915

$                128,709

$    455,324

$                351,160

 Less: 

 Capital expenditures 

(51,054)

(34,678)

(125,079)

(107,043)

 Free cash flow 

$              54,861

$                  94,031

$    330,245

$                244,117

 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 Loss

(in thousands)

Three Months Ended October 31, 

Nine Months Ended October 31, 

2012

2011

2012

2011

 Net loss 

$           (220,297)

$                   (3,756)

$   (249,601)

$                   (7,494)

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

 Foreign currency translation and other gains 

3,134

1,666

10,081

447

 Unrealized gains (losses) on investments 

1,252

(7,361)

1,411

(4,616)

 Other comprehensive income (loss), before tax 

4,386

(5,695)

11,492

(4,169)

 Tax effect 

(467)

2,453

(526)

1,427

 Other comprehensive income (loss),  net of tax 

3,919