Delaware | 001-32224 | 94-3320693 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
(d) | Exhibits |
99.1 | Press Release dated February 28, 2018 |
Exhibit Number | Exhibit Title | |
99.1 |
Dated: | February 28, 2018 | salesforce.com, inc. | |
/s/ Mark J. Hawkins | |||
Mark J. Hawkins President and Chief Financial Officer (Principal Financial Officer) |
• | Fourth Quarter Revenue of $2.85 Billion, up 24% Year-Over-Year, 21% in Constant Currency |
• | Full Year Revenue of $10.48 Billion, up 25% Year-Over-Year, 24% in Constant Currency |
• | Deferred Revenue of $7.09 Billion, up 28% Year-Over-Year, 25% in Constant Currency |
• | Unbilled Deferred Revenue of Approximately $13.3 Billion, up 48% Year-Over-Year |
• | Fourth Quarter Operating Cash Flow of $1.05 Billion, up 49% Year-Over-Year |
• | Full Year Operating Cash Flow of $2.74 Billion, up 27% Year-Over-Year |
Fiscal 2019 | |||||||
Q1 | FY2019 | ||||||
GAAP diluted EPS range* | $0.09 - $0.10 | $0.61 - $0.63 | |||||
Plus | |||||||
Amortization of purchased intangibles | $ | 0.09 | $ | 0.35 | |||
Stock-based expense | $ | 0.34 | $ | 1.47 | |||
Amortization of debt discount, net | $ | 0.01 | $ | 0.01 | |||
Less | |||||||
Income tax effects and adjustments** | $ | (0.10 | ) | $ | (0.42 | ) | |
Non-GAAP diluted EPS*** | $0.43 - $0.44 | $2.02 - $2.04 | |||||
Shares used in computing basic net income per share (millions) | 730 | 742 | |||||
Shares used in computing diluted net income per share (millions) | 757 | 763 |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Subscription and support | $ | 2,655,000 | $ | 2,110,651 | $ | 9,710,538 | $ | 7,756,205 | |||||||
Professional services and other | 196,003 | 183,337 | 769,474 | 635,779 | |||||||||||
Total revenues | 2,851,003 | 2,293,988 | 10,480,012 | 8,391,984 | |||||||||||
Cost of revenues (1)(2): | |||||||||||||||
Subscription and support | 548,475 | 463,271 | 2,033,457 | 1,617,315 | |||||||||||
Professional services and other | 189,317 | 162,686 | 740,065 | 616,724 | |||||||||||
Total cost of revenues | 737,792 | 625,957 | 2,773,522 | 2,234,039 | |||||||||||
Gross profit | 2,113,211 | 1,668,031 | 7,706,490 | 6,157,945 | |||||||||||
Operating expenses (1)(2): | |||||||||||||||
Research and development | 396,547 | 344,192 | 1,553,073 | 1,208,127 | |||||||||||
Marketing and sales | 1,364,305 | 1,089,243 | 4,829,291 | 3,918,027 | |||||||||||
General and administrative | 274,490 | 257,941 | 1,088,358 | 967,563 | |||||||||||
Total operating expenses | 2,035,342 | 1,691,376 | 7,470,722 | 6,093,717 | |||||||||||
Income (loss) from operations | 77,869 | (23,345 | ) | 235,768 | 64,228 | ||||||||||
Investment income | 11,779 | 3,627 | 35,848 | 27,374 | |||||||||||
Interest expense | (21,561 | ) | (24,323 | ) | (86,943 | ) | (88,988 | ) | |||||||
Other income (1) | 20,130 | 20,572 | 17,435 | 9,072 | |||||||||||
Gains from acquisitions of strategic investments | 0 | 0 | 0 | 13,697 | |||||||||||
Income (loss) before benefit from (provision for) income taxes | 88,217 | (23,469 | ) | 202,108 | 25,383 | ||||||||||
Benefit from (provision for) income taxes | (20,662 | ) | (27,971 | ) | (74,630 | ) | 154,249 | ||||||||
Net income (loss) | $ | 67,555 | $ | (51,440 | ) | $ | 127,478 | $ | 179,632 | ||||||
Basic net income (loss) per share | $ | 0.09 | $ | (0.07 | ) | $ | 0.18 | $ | 0.26 | ||||||
Diluted net income (loss) per share | $ | 0.09 | $ | (0.07 | ) | $ | 0.17 | $ | 0.26 | ||||||
Shares used in computing basic net income (loss) per share | 724,127 | 700,994 | 714,919 | 687,797 | |||||||||||
Shares used in computing diluted net income (loss) per share | 749,464 | 700,994 | 734,598 | 700,217 |
(1) | Amounts include amortization of purchased intangibles from business combinations, as follows: |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenues | $ | 38,866 | $ | 43,214 | $ | 165,545 | $ | 127,676 | |||||||
Marketing and sales | 30,066 | 31,000 | 121,340 | 97,601 | |||||||||||
Other non-operating expense | 315 | 564 | 1,433 | 2,491 |
(2) | Amounts include stock-based expense, as follows: |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenues | $ | 32,748 | $ | 30,545 | $ | 129,954 | $ | 107,457 | |||||||
Research and development | 62,653 | 63,323 | 259,838 | 187,487 | |||||||||||
Marketing and sales | 112,015 | 113,422 | 468,553 | 388,937 | |||||||||||
General and administrative | 30,266 | 37,097 | 138,668 | 136,486 |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Revenues: | |||||||||||
Subscription and support | 93 | % | 92 | % | 93 | % | 92 | % | |||
Professional services and other | 7 | 8 | 7 | 8 | |||||||
Total revenues | 100 | 100 | 100 | 100 | |||||||
Cost of revenues (1)(2): | |||||||||||
Subscription and support | 19 | 20 | 19 | 19 | |||||||
Professional services and other | 7 | 7 | 7 | 8 | |||||||
Total cost of revenues | 26 | 27 | 26 | 27 | |||||||
Gross profit | 74 | 73 | 74 | 73 | |||||||
Operating expenses (1)(2): | |||||||||||
Research and development | 14 | 15 | 15 | 14 | |||||||
Marketing and sales | 48 | 48 | 46 | 47 | |||||||
General and administrative | 9 | 11 | 10 | 11 | |||||||
Total operating expenses | 71 | 74 | 71 | 72 | |||||||
Income (loss) from operations | 3 | (1 | ) | 3 | 1 | ||||||
Investment income | 0 | 0 | 0 | 0 | |||||||
Interest expense | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||
Other income (1) | 1 | 1 | 0 | 0 | |||||||
Gains from acquisitions of strategic investments | 0 | 0 | 0 | 0 | |||||||
Income (loss) before benefit from (provision for) income taxes | 3 | (1 | ) | 2 | 0 | ||||||
Benefit from (provision for) income taxes | (1 | ) | (1 | ) | (1 | ) | 2 | ||||
Net income (loss) | 2 | % | (2 | )% | 1 | % | 2 | % |
(1) | Amortization of purchased intangibles from business combinations as a percentage of total revenues, as follows: |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Cost of revenues | 1 | % | 2 | % | 2 | % | 2 | % | |||
Marketing and sales | 1 | 1 | 1 | 1 | |||||||
Other non-operating expense | 0 | 0 | 0 | 0 |
(2) | Stock-based expense as a percentage of total revenues, as follows: |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Cost of revenues | 1 | % | 1 | % | 1 | % | 1 | % | |||
Research and development | 2 | 3 | 2 | 2 | |||||||
Marketing and sales | 4 | 5 | 4 | 5 | |||||||
General and administrative | 1 | 2 | 1 | 2 |
January 31, 2018 | January 31, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,543,484 | $ | 1,606,549 | |||
Marketable securities | 1,978,221 | 602,338 | |||||
Accounts receivable, net | 3,917,401 | 3,196,643 | |||||
Deferred commissions | 460,887 | 311,770 | |||||
Prepaid expenses and other current assets | 390,378 | 279,527 | |||||
Total current assets | 9,290,371 | 5,996,827 | |||||
Property and equipment, net | 1,946,527 | 1,787,534 | |||||
Deferred commissions, noncurrent | 413,375 | 227,849 | |||||
Capitalized software, net | 146,065 | 141,671 | |||||
Strategic investments | 677,283 | 566,953 | |||||
Goodwill | 7,314,096 | 7,263,846 | |||||
Intangible assets acquired through business combinations, net | 826,445 | 1,113,374 | |||||
Other assets, net | 395,640 | 486,869 | |||||
Total assets | $ | 21,009,802 | $ | 17,584,923 | |||
Liabilities, temporary equity and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable, accrued expenses and other liabilities | $ | 2,010,096 | $ | 1,752,664 | |||
Deferred revenue | 7,094,705 | 5,542,802 | |||||
Current portion of debt | 1,024,717 | 0 | |||||
Total current liabilities | 10,129,518 | 7,295,466 | |||||
Noncurrent debt | 694,781 | 2,008,391 | |||||
Other noncurrent liabilities | 793,140 | 780,939 | |||||
Total liabilities | 11,617,439 | 10,084,796 | |||||
Temporary equity: | |||||||
Convertible 0.25% senior notes due April 2018 | 3,867 | 0 | |||||
Stockholders’ equity: | |||||||
Common stock | 730 | 708 | |||||
Additional paid-in capital | 9,752,340 | 8,040,170 | |||||
Accumulated other comprehensive loss | (27,142 | ) | (75,841 | ) | |||
Accumulated deficit | (337,432 | ) | (464,910 | ) | |||
Total stockholders’ equity | 9,388,496 | 7,500,127 | |||||
Total liabilities, temporary equity and stockholders’ equity | $ | 21,009,802 | $ | 17,584,923 |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating activities: | |||||||||||||||
Net income (loss) | $ | 67,555 | $ | (51,440 | ) | $ | 127,478 | $ | 179,632 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 187,689 | 180,766 | 752,600 | 632,245 | |||||||||||
Amortization of debt discount and issuance costs | 8,002 | 9,207 | 31,267 | 30,541 | |||||||||||
Gains from acquisitions of strategic investments | 0 | 0 | 0 | (13,697 | ) | ||||||||||
Amortization of deferred commissions | 132,975 | 101,014 | 464,662 | 371,541 | |||||||||||
Expenses related to employee stock plans | 237,682 | 244,387 | 997,013 | 820,367 | |||||||||||
Changes in assets and liabilities, net of business combinations: | |||||||||||||||
Accounts receivable, net | (2,397,485 | ) | (1,905,275 | ) | (720,019 | ) | (628,477 | ) | |||||||
Deferred commissions | (426,591 | ) | (235,065 | ) | (799,305 | ) | (462,030 | ) | |||||||
Prepaid expenses and other current assets and other assets | 190,924 | (3,127 | ) | 24,140 | (28,850 | ) | |||||||||
Accounts payable, accrued expenses and other liabilities | 347,945 | 325,011 | 308,225 | 49,953 | |||||||||||
Deferred revenue | 2,702,624 | 2,040,668 | 1,551,904 | 1,210,973 | |||||||||||
Net cash provided by operating activities | 1,051,320 | 706,146 | 2,737,965 | 2,162,198 | |||||||||||
Investing activities: | |||||||||||||||
Business combinations, net of cash acquired | (5,610 | ) | (360,629 | ) | (25,391 | ) | (3,192,739 | ) | |||||||
Purchases of strategic investments | (103,350 | ) | (44,495 | ) | (216,438 | ) | (110,329 | ) | |||||||
Sales of strategic investments | 74,834 | 53,836 | 130,732 | 80,342 | |||||||||||
Purchases of marketable securities | (569,397 | ) | (83,550 | ) | (2,003,115 | ) | (1,070,412 | ) | |||||||
Sales of marketable securities | 121,366 | 78,252 | 558,614 | 2,005,301 | |||||||||||
Maturities of marketable securities | 36,034 | 2,713 | 79,123 | 67,454 | |||||||||||
Capital expenditures | (137,759 | ) | (143,974 | ) | (534,027 | ) | (463,958 | ) | |||||||
Net cash used in investing activities | (583,882 | ) | (497,847 | ) | (2,010,502 | ) | (2,684,341 | ) | |||||||
Financing activities: | |||||||||||||||
Proceeds from term loan, net | 0 | 0 | 0 | 495,550 | |||||||||||
Proceeds from employee stock plans | 165,514 | 85,616 | 650,300 | 401,481 | |||||||||||
Principal payments on capital lease obligations | (23,006 | ) | (24,397 | ) | (105,896 | ) | (98,157 | ) | |||||||
Proceeds from revolving credit facility | 0 | 748,824 | 0 | 748,824 | |||||||||||
Payments on revolving credit facility | 0 | (550,000 | ) | (200,000 | ) | (550,000 | ) | ||||||||
Payments on convertible senior notes | (123,179 | ) | 0 | (123,179 | ) | 0 | |||||||||
Net cash provided by financing activities | 19,329 | 260,043 | 221,225 | 997,698 | |||||||||||
Effect of exchange rate changes | (15,120 | ) | (7,529 | ) | (11,753 | ) | (27,369 | ) | |||||||
Net increase in cash and cash equivalents | 471,647 | 460,813 | 936,935 | 448,186 | |||||||||||
Cash and cash equivalents, beginning of period | 2,071,837 | 1,145,736 | 1,606,549 | 1,158,363 | |||||||||||
Cash and cash equivalents, end of period | $ | 2,543,484 | $ | 1,606,549 | $ | 2,543,484 | $ | 1,606,549 |
Jan 31, 2018 | Oct 31, 2017 | Jul 31, 2017 | Apr 30, 2017 | Jan 31, 2017 | Oct 31, 2016 | ||||||||||||||||||
Full Time Equivalent Headcount | 29,401 | 28,527 | 27,155 | 26,213 | 25,178 | 23,939 | |||||||||||||||||
Financial data (in thousands): | |||||||||||||||||||||||
Cash, cash equivalents and marketable securities | $ | 4,521,705 | $ | 3,628,665 | $ | 3,501,245 | $ | 3,219,550 | $ | 2,208,887 | $ | 1,751,130 | |||||||||||
Strategic investments | $ | 677,283 | $ | 670,406 | $ | 657,687 | $ | 639,191 | $ | 566,953 | $ | 555,968 | |||||||||||
Deferred revenue | $ | 7,094,705 | $ | 4,392,082 | $ | 4,818,634 | $ | 5,042,652 | $ | 5,542,802 | $ | 3,495,133 | |||||||||||
Unbilled deferred revenue, a non-GAAP measure (1) | $ | 13,300,000 | $ | 11,500,000 | $ | 10,400,000 | $ | 9,600,000 | $ | 9,000,000 | $ | 8,600,000 | |||||||||||
Principal due on our outstanding debt obligations (2) | $ | 1,726,821 | $ | 1,850,000 | $ | 1,850,000 | $ | 1,850,000 | $ | 2,050,000 | $ | 1,850,000 |
January 31, 2018 | October 31, 2017 | January 31, 2017 | |||||||||
Prepaid Expenses and Other Current Assets | |||||||||||
Prepaid income taxes | $ | 33,523 | $ | 43,301 | $ | 26,932 | |||||
Other taxes receivable | 32,692 | 33,099 | 34,177 | ||||||||
Prepaid expenses and other current assets | 324,163 | 393,546 | 218,418 | ||||||||
$ | 390,378 | $ | 469,946 | $ | 279,527 | ||||||
Property and Equipment, net | |||||||||||
Land | $ | 183,888 | $ | 183,888 | $ | 183,888 | |||||
Buildings and building improvements | 626,062 | 626,168 | 621,377 | ||||||||
Computers, equipment and software | 1,628,827 | 1,600,783 | 1,440,986 | ||||||||
Furniture and fixtures | 139,299 | 132,374 | 112,564 | ||||||||
Leasehold improvements | 824,470 | 776,396 | 627,069 | ||||||||
3,402,546 | 3,319,609 | 2,985,884 | |||||||||
Less accumulated depreciation and amortization | (1,456,019 | ) | (1,454,718 | ) | (1,198,350 | ) | |||||
$ | 1,946,527 | $ | 1,864,891 | $ | 1,787,534 | ||||||
Intangible Assets Acquired Through Business Combinations, net | |||||||||||
Acquired developed technology | $ | 349,563 | $ | 388,346 | $ | 514,232 | |||||
Customer relationships | 471,936 | 501,500 | 589,579 | ||||||||
Other | 4,946 | 5,922 | 9,563 | ||||||||
$ | 826,445 | $ | 895,768 | $ | 1,113,374 | ||||||
Other Assets, net | |||||||||||
Deferred income taxes, noncurrent, net | $ | 36,523 | $ | 31,596 | $ | 28,939 | |||||
Long-term deposits | 23,518 | 23,979 | 23,597 | ||||||||
Domain names and patents, net | 22,779 | 26,811 | 39,213 | ||||||||
Customer contract assets | 170,921 | 201,357 | 281,733 | ||||||||
Other | 141,899 | 141,145 | 113,387 | ||||||||
$ | 395,640 | $ | 424,888 | $ | 486,869 | ||||||
Accounts Payable, Accrued Expenses and Other Liabilities | |||||||||||
Accounts payable | $ | 76,465 | $ | 120,019 | $ | 115,257 | |||||
Accrued compensation | 960,453 | 622,419 | 730,390 | ||||||||
Non-cash equity liability | 0 | 49,435 | 68,355 | ||||||||
Accrued income and other taxes payable | 305,861 | 193,693 | 239,699 | ||||||||
Capital lease obligation, current | 102,539 | 114,147 | 102,106 | ||||||||
Other current liabilities | 564,778 | 586,695 | 496,857 | ||||||||
$ | 2,010,096 | $ | 1,686,408 | $ | 1,752,664 | ||||||
Other Noncurrent Liabilities | |||||||||||
Deferred income taxes and income taxes payable | $ | 115,717 | $ | 117,193 | $ | 99,378 | |||||
Financing obligation - leased facility | 198,226 | 198,903 | 200,711 | ||||||||
Long-term lease liabilities and other | 479,197 | 420,774 | 480,850 | ||||||||
$ | 793,140 | $ | 736,870 | $ | 780,939 |
Subscription and support revenue by cloud service offering (in millions): | Three Months Ended January 31, | Fiscal Year Ended January 31, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales Cloud | $ | 931.8 | $ | 804.9 | $ | 3,554.3 | $ | 3,060.6 | |||||||
Service Cloud | 789.3 | 615.3 | 2,877.1 | 2,320.7 | |||||||||||
Salesforce Platform and Other | 536.3 | 391.7 | 1,929.2 | 1,441.6 | |||||||||||
Marketing and Commerce Cloud | 397.6 | 298.8 | 1,349.9 | 933.3 | |||||||||||
$ | 2,655.0 | $ | 2,110.7 | $ | 9,710.5 | $ | 7,756.2 |
Total revenues by geography (in thousands): | Three Months Ended January 31, | Fiscal Year Ended January 31, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Americas | $ | 2,042,184 | $ | 1,718,197 | $ | 7,579,116 | $ | 6,224,971 | |||||||
Europe | 535,806 | 360,876 | 1,903,524 | 1,373,547 | |||||||||||
Asia Pacific | 273,013 | 214,915 | 997,372 | 793,466 | |||||||||||
$ | 2,851,003 | $ | 2,293,988 | $ | 10,480,012 | $ | 8,391,984 | ||||||||
Total revenues by geography as a percentage of total revenues: | Three Months Ended January 31, | Fiscal Year Ended January 31, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Americas | 72 | % | 75 | % | 72 | % | 74 | % | |||||||
Europe | 19 | 16 | 18 | 16 | |||||||||||
Asia Pacific | 9 | 9 | 10 | 10 | |||||||||||
100 | % | 100 | % | 100 | % | 100 | % |
Revenue constant currency growth rates (as compared to the comparable prior periods) | Three Months Ended January 31, 2018 compared to Three Months Ended January 31, 2017 | Three Months Ended October 31, 2017 compared to Three Months Ended October 31, 2016 | Three Months Ended January 31, 2017 compared to Three Months Ended January 31, 2016 | ||
Americas | 19% | 21% | 29% | ||
Europe | 31% | 33% | 26% | ||
Asia Pacific | 26% | 27% | 30% | ||
Total growth | 21% | 23% | 28% |
Deferred revenue constant currency growth rates (as compared to the comparable prior periods) | January 31, 2018 compared to January 31, 2017 | October 31, 2017 compared to October 31, 2016 | January 31, 2017 compared to January 31, 2016 | ||
Total growth | 25% | 24% | 29% |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Weighted-average shares outstanding for basic earnings per share | 724,127 | 700,994 | 714,919 | 687,797 | |||||||
Effect of dilutive securities: | |||||||||||
Convertible senior notes | 5,798 | 1,642 | 4,672 | 1,906 | |||||||
Employee stock awards | 16,945 | 8,567 | 14,163 | 10,514 | |||||||
Warrants | 2,594 | 0 | 844 | 0 | |||||||
Adjusted weighted-average shares outstanding and assumed conversions for GAAP and Non-GAAP diluted earnings per share | 749,464 | 711,203 | 734,598 | 700,217 |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating cash flow | |||||||||||||||
GAAP net cash provided by operating activities | $ | 1,051,320 | $ | 706,146 | $ | 2,737,965 | $ | 2,162,198 | |||||||
Less: | |||||||||||||||
Capital expenditures | (137,759 | ) | (143,974 | ) | (534,027 | ) | (463,958 | ) | |||||||
Free cash flow | $ | 913,561 | $ | 562,172 | $ | 2,203,938 | $ | 1,698,240 |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income (loss) | $ | 67,555 | $ | (51,440 | ) | $ | 127,478 | $ | 179,632 | ||||||
Other comprehensive income (loss), before tax and net of reclassification adjustments: | |||||||||||||||
Foreign currency translation and other gains (losses) | 23,882 | (14,547 | ) | 52,072 | (43,070 | ) | |||||||||
Unrealized gains (losses) on marketable securities and strategic investments | (55,702 | ) | (6,461 | ) | (4,497 | ) | 14,500 | ||||||||
Other comprehensive income (loss), before tax | (31,820 | ) | (21,008 | ) | 47,575 | (28,570 | ) | ||||||||
Tax effect | 1,124 | 8,110 | 1,124 | 2,646 | |||||||||||
Other comprehensive income (loss), net of tax | (30,696 | ) | (12,898 | ) | 48,699 | (25,924 | ) | ||||||||
Comprehensive income (loss) | $ | 36,859 | $ | (64,338 | ) | $ | 176,177 | $ | 153,708 |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Non-GAAP gross profit | |||||||||||||||
GAAP gross profit | $ | 2,113,211 | $ | 1,668,031 | $ | 7,706,490 | $ | 6,157,945 | |||||||
Plus: | |||||||||||||||
Amortization of purchased intangibles (a) | 38,866 | 43,214 | 165,545 | 127,676 | |||||||||||
Stock-based expense (b) | 32,748 | 30,545 | 129,954 | 107,457 | |||||||||||
Non-GAAP gross profit | $ | 2,184,825 | $ | 1,741,790 | $ | 8,001,989 | $ | 6,393,078 | |||||||
Non-GAAP operating expenses | |||||||||||||||
GAAP operating expenses | $ | 2,035,342 | $ | 1,691,376 | $ | 7,470,722 | $ | 6,093,717 | |||||||
Less: | |||||||||||||||
Amortization of purchased intangibles (a) | (30,066 | ) | (31,000 | ) | (121,340 | ) | (97,601 | ) | |||||||
Stock-based expense (b) | (204,934 | ) | (213,842 | ) | (867,059 | ) | (712,910 | ) | |||||||
Non-GAAP operating expenses | $ | 1,800,342 | $ | 1,446,534 | $ | 6,482,323 | $ | 5,283,206 | |||||||
Non-GAAP income from operations | |||||||||||||||
GAAP income (loss) from operations | $ | 77,869 | $ | (23,345 | ) | $ | 235,768 | $ | 64,228 | ||||||
Plus: | |||||||||||||||
Amortization of purchased intangibles (a) | 68,932 | 74,214 | 286,885 | 225,277 | |||||||||||
Stock-based expense (b) | 237,682 | 244,387 | 997,013 | 820,367 | |||||||||||
Non-GAAP income from operations | $ | 384,483 | $ | 295,256 | $ | 1,519,666 | $ | 1,109,872 | |||||||
Non-GAAP non-operating income (loss) (c) | |||||||||||||||
GAAP non-operating income (loss) | $ | 10,348 | $ | (124 | ) | $ | (33,660 | ) | $ | (38,845 | ) | ||||
Plus: | |||||||||||||||
Amortization of debt discount, net | 6,674 | 6,344 | 25,943 | 25,137 | |||||||||||
Amortization of acquired lease intangible | 315 | 564 | 1,433 | 2,491 | |||||||||||
Less: | |||||||||||||||
Gains from acquisitions of strategic investments | 0 | 0 | 0 | (13,697 | ) | ||||||||||
Non-GAAP non-operating income (loss) | $ | 17,337 | $ | 6,784 | $ | (6,284 | ) | $ | (24,914 | ) | |||||
Non-GAAP net income | |||||||||||||||
GAAP net income (loss) | $ | 67,555 | $ | (51,440 | ) | $ | 127,478 | $ | 179,632 | ||||||
Plus: | |||||||||||||||
Amortization of purchased intangibles (a) | 68,932 | 74,214 | 286,885 | 225,277 | |||||||||||
Amortization of acquired lease intangible | 315 | 564 | 1,433 | 2,491 | |||||||||||
Stock-based expense (b) | 237,682 | 244,387 | 997,013 | 820,367 | |||||||||||
Amortization of debt discount, net | 6,674 | 6,344 | 25,943 | 25,137 | |||||||||||
Less: | |||||||||||||||
Gains from acquisitions of strategic investments | 0 | 0 | 0 | (13,697 | ) | ||||||||||
Income tax effects and adjustments | (117,894 | ) | (77,743 | ) | (447,415 | ) | (533,984 | ) | |||||||
Non-GAAP net income | $ | 263,264 | $ | 196,326 | $ | 991,337 | $ | 705,223 |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Non-GAAP diluted earnings per share | |||||||||||||||
GAAP diluted net income (loss) per share | $ | 0.09 | $ | (0.07 | ) | $ | 0.17 | $ | 0.26 | ||||||
Plus: | |||||||||||||||
Amortization of purchased intangibles | 0.09 | 0.10 | 0.39 | 0.32 | |||||||||||
Amortization of acquired lease intangible | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||
Stock-based expense | 0.32 | 0.34 | 1.36 | 1.17 | |||||||||||
Amortization of debt discount, net | 0.01 | 0.01 | 0.04 | 0.04 | |||||||||||
Less: | |||||||||||||||
Gains from acquisitions of strategic investments | 0.00 | 0.00 | 0.00 | (0.02 | ) | ||||||||||
Income tax effects and adjustments | (0.16 | ) | (0.10 | ) | (0.61 | ) | (0.76 | ) | |||||||
Non-GAAP diluted earnings per share | $ | 0.35 | $ | 0.28 | $ | 1.35 | $ | 1.01 | |||||||
Shares used in computing Non-GAAP diluted net income per share | 749,464 | 711,203 | 734,598 | 700,217 |
a) | Amortization of purchased intangibles were as follows: |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenues | $ | 38,866 | $ | 43,214 | $ | 165,545 | $ | 127,676 | |||||||
Marketing and sales | 30,066 | 31,000 | 121,340 | 97,601 | |||||||||||
$ | 68,932 | $ | 74,214 | $ | 286,885 | $ | 225,277 |
b) | Stock-based expense was as follows: |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenues | $ | 32,748 | $ | 30,545 | $ | 129,954 | $ | 107,457 | |||||||
Research and development | 62,653 | 63,323 | 259,838 | 187,487 | |||||||||||
Marketing and sales | 112,015 | 113,422 | 468,553 | 388,937 | |||||||||||
General and administrative | 30,266 | 37,097 | 138,668 | 136,486 | |||||||||||
$ | 237,682 | $ | 244,387 | $ | 997,013 | $ | 820,367 |
c) | GAAP non-operating income (loss) consists of investment income, interest expense, other income (expense) and gains from acquisitions of strategic investments. |
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
GAAP Basic Net Income (Loss) Per Share | |||||||||||||||
Net income (loss) | $ | 67,555 | $ | (51,440 | ) | $ | 127,478 | $ | 179,632 | ||||||
Basic net income (loss) per share | $ | 0.09 | $ | (0.07 | ) | $ | 0.18 | $ | 0.26 | ||||||
Shares used in computing basic net income (loss) per share | 724,127 | 700,994 | 714,919 | 687,797 | |||||||||||
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Non-GAAP Basic Net Income Per Share | |||||||||||||||
Non-GAAP net income | $ | 263,264 | $ | 196,326 | $ | 991,337 | $ | 705,223 | |||||||
Basic Non-GAAP net income per share | $ | 0.36 | $ | 0.28 | $ | 1.39 | $ | 1.03 | |||||||
Shares used in computing basic Non-GAAP net income per share | 724,127 | 700,994 | 714,919 | 687,797 | |||||||||||
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
GAAP Diluted Net Income (Loss) Per Share | |||||||||||||||
Net income (loss) | $ | 67,555 | $ | (51,440 | ) | $ | 127,478 | $ | 179,632 | ||||||
Diluted net income (loss) per share | $ | 0.09 | $ | (0.07 | ) | $ | 0.17 | $ | 0.26 | ||||||
Shares used in computing diluted net income (loss) per share | 749,464 | 700,994 | 734,598 | 700,217 | |||||||||||
Three Months Ended January 31, | Fiscal Year Ended January 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Non-GAAP Diluted Net Income Per Share | |||||||||||||||
Non-GAAP net income | $ | 263,264 | $ | 196,326 | $ | 991,337 | $ | 705,223 | |||||||
Diluted Non-GAAP net income per share | $ | 0.35 | $ | 0.28 | $ | 1.35 | $ | 1.01 | |||||||
Shares used in computing diluted Non-GAAP net income per share | 749,464 | 711,203 | 734,598 | 700,217 |
• | 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 and Acquired Leases: The company views amortization of acquisition- and building-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, and acquired lease intangibles, 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 $1.15 billion of convertible senior notes due in April 2018 that were issued in a private placement in March 2013. The imputed interest rate was approximately 2.5% for the convertible notes due 2018, while the actual coupon interest rate of the notes is 0.25%. 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. |
• | Gains on Acquisitions of Strategic Investments: The company views gains on sales of its strategic investments resulting from acquisitions initiated by the company in which an equity interest was previously held as discrete events and not indicative of operational performance during any particular period. |
• | Income Tax Effects and Adjustments: The company utilizes a fixed long-term projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of items such as changes in the tax valuation allowance and tax effects of acquisitions-related costs, since each of these can vary in size and frequency. When projecting this long-term rate, the company evaluated a three-year financial projection that excludes the direct impact of the following non-cash items: stock-based expenses, amortization of purchased intangibles and acquired leases, amortization of debt discount, and gains on acquisitions of strategic investments. The projected rate also assumes no new acquisitions in the three-year period, and considers other factors including the company’s expected tax structure, its tax positions in various jurisdictions and key legislation in major jurisdictions where the company operates. For fiscal 2018, after evaluating the impact of the 2017 U.S. Tax Cuts and Jobs Act (“Tax Act”) for the period from enactment of the Tax Act on December 22, 2017 to fiscal year end, the company concluded that its previously disclosed non-GAAP tax rate of 34.5 percent remained appropriate. For fiscal 2019, the company has determined that its projected non-GAAP tax rate will be 21.5 percent, which reflects currently available information, including the anticipated impact of the Tax Act and interpretations thereof, as well as other factors and assumptions. The non-GAAP tax rate could be subject to change for a variety of reasons, including the company’s ongoing analysis of the Tax Act over the measurement period, the rapidly evolving global tax environment, significant changes in the company’s geographic earnings mix including due to acquisition activity, or other changes to the company’s strategy or business operations. The company will re-evaluate its long-term rate as appropriate. |