EX-99.1 2 d467616dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

David Havlek

salesforce.com

Investor Relations

415-536-2171

dhavlek@salesforce.com

Jane Hynes

salesforce.com

Public Relations

415-901-5079

jhynes@salesforce.com

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

SAN FRANCISCO, Calif. – February 28, 2013 – 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.

“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.

 

   

Grow your business with the #1 sales app, Salesforce Sales Cloud

 

   

Deliver amazing customer service with the #1 service app, Salesforce Service Cloud

 

   

Listen, engage, advertise and measure social marketing with the #1 social marketing app, Salesforce Marketing Cloud

 

   

Build and deliver social and mobile apps with the Salesforce Platform, and extend success with the world’s leading enterprise app marketplace, the AppExchange

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,
2013
     Oct 31,
2012
     Jul 31,
2012
     Apr 30,
2012
     Jan 31,
2012
     Oct 31,
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
January 31, 2013
compared to Three Months
Ended January 31, 2012
    Three Months Ended
October 31, 2012
compared to Three Months
Ended October 31, 2011
    Three Months Ended
January 31, 2012
compared to Three Months
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  

Cost of revenues

   $ 18,886       $ 17,132       $ 77,249       $ 60,069   

Marketing and sales

     2,093         2,751         10,922         7,250   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 20,979       $ 19,883       $ 88,171       $ 67,319   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

b) Stock-based expenses were as follows:

 

     Three Months Ended January 31,      Fiscal Year Ended January 31,  
     2013      2012      2013      2012  

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   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 107,555       $ 70,100       $ 379,350       $ 229,258   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

c) Non-operating income (loss) consists of investment income, interest expense and other income (expense).
d) Reported GAAP loss per share was calculated using the basic share count. Non-GAAP diluted earnings per share was calculated using the diluted share count.
e) One-time, non-cash charge to income tax expense to establish a valuation allowance against a significant portion of deferred tax assets which was recorded in the fiscal third quarter 2013.


salesforce.com, inc.

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

(in thousands, except per share data)

(Unaudited)

 

     Three Months Ended
January 31,
    Fiscal Year Ended
January 31,
 
     2013     2012     2013     2012  

GAAP Basic Net Loss Per Share

        

Net loss

   $ (20,844   $ (4,078   $ (270,445   $ (11,572

Basic 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   
     Three Months Ended
January 31,
    Fiscal Year Ended
January 31,
 
     2013     2012     2013     2012  

Non-GAAP Basic Net Income Per Share

        

Non-GAAP net income

   $ 77,732      $ 61,630      $ 242,542      $ 193,610   

Basic Non-GAAP net income per share

   $ 0.54      $ 0.45      $ 1.72      $ 1.43   

Shares used in computing basic net income per share

     144,970        136,720        141,224        135,302   
     Three Months Ended
January 31,
    Fiscal Year Ended
January 31,
 
     2013     2012     2013     2012  

GAAP Diluted Net Loss Per Share

        

Net loss

   $ (20,844   $ (4,078   $ (270,445   $ (11,572

Diluted net loss per share

   $ (0.14   $ (0.03   $ (1.92   $ (0.09

Shares used in computing diluted net loss per share

     144,970        136,720        141,224        135,302   
     Three Months Ended
January 31,
    Fiscal Year Ended
January 31,
 
     2013     2012     2013     2012  

Non-GAAP Diluted Net Income Per Share

        

Non-GAAP net income

   $ 77,732      $ 61,630      $ 242,542      $ 193,610   

Diluted Non-GAAP net income 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