Recession, What Recession? San Francisco’s Very Own SalesForce.Com Continues to Kick Ass, Take Names

See?

Salesforce.com Announces Fiscal Second Quarter Results

First Enterprise Cloud Computing Company to Exceed $2.1 Billion Annual Revenue Run Rate

– Record Quarterly Revenue of $546 Million, up 38% Year-Over-Year

– Raises FY12 Revenue Guidance to $2.22 Billion – $2.23 Billion

– Deferred Revenue of $935 Million, up 37% Year-Over-Year

– Operating Cash Flow of $83 Million, up 9% Year-Over-Year

– Company Record 6,300 Net New Customer Additions

– Total Customers Rise to 104,000, up 21,600 or 26% Year-Over-Year

SalesForce saved our bacon, you know, after our somewhat misguided BioTech Uber Alles approach to Mission Bay bit the dust.

Plus, CEO and Fouder Marc Benioff just kicked in nine(!) figures to build a new UCSF Childrens Hospital.

See? What it will look like:

See you at DreamForce 2011!

And at that big concert too, the one with Alanis and will.i.am and Jay Leno and MC Hammer and

All the deets:

SAN FRANCISCO, Aug. 18, 2011 – Salesforce.com (NYSE: CRM), the enterprise cloud computing (http://www.salesforce.com/cloudcomputing/) company, today announced results for its fiscal second quarter ended July 31, 2011.

“We’re expecting over 40,000 people to register for Dreamforce which takes place in San Francisco later this month. It’s the cloud event of the year where attendees can learn how to supercharge their relationships with employees and customers using social, mobile and open cloud technologies,” said Marc Benioff, Chairman and CEO, salesforce.com. “We hope to see you there.”

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

Revenue: Total Q2 revenue was $546 million, an increase of 38% on a year-over-year basis. Subscription and support revenues were $509 million, an increase of 38% on a year-over-year basis. Professional services and other revenues were $37 million, an increase of 44% on a year-over-year basis.

Earnings per Share: Q2 GAAP net loss per share was ($0.03), and non-GAAP diluted earnings per share increased 3% year-over-year to $0.30. These GAAP and non-GAAP results include a one-time charge of $0.04 per diluted share associated with the legal settlement disclosed in the Form 8-K filed on June 15, 2011. The company’s non-GAAP results exclude the effects of approximately $55 million in stock-based compensation expense, approximately $19 million in amortization of purchased intangibles, and approximately $3 million in net non-cash interest expense related to the company’s convertible senior notes. Non-GAAP EPS calculations are based on 143 million diluted shares outstanding during the quarter, including approximately 4 million shares associated with the convertible senior notes and warrants. GAAP EPS calculations are based on a basic share count of approximately 135 million shares.

Customers: Net paying customers rose approximately 6,300 during the quarter to finish at approximately 104,000. This was a quarterly record for the company. Since July 31, 2010, the company added 21,600 net paying customers, an increase of 26% on a year-over-year basis. As discussed on May 19, 2011, the company will no longer provide the customer metric on a quarterly basis, but expects to provide periodic updates on achievement of customer milestones in the future.

Cash: Cash generated from operations for the fiscal second quarter was $83 million, an increase of 9% on a year-over-year basis. Total cash, cash equivalents and marketable securities finished the quarter at approximately $1.3 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of July 31, 2011 was $935 million, an increase of 37% on a year-over-year basis.

As of August 18, 2011, salesforce.com is initiating guidance for its third quarter of fiscal year 2012. In addition, the company is raising its prior full fiscal year 2012 revenue guidance and updating its projected full fiscal year 2012 GAAP and non-GAAP EPS guidance previously provided on May 19, 2011.

On it goes

Q3 FY12 Guidance: Revenue for the company’s third fiscal quarter is projected to be in the range of approximately $568 million to approximately $570 million.

For the third fiscal quarter, the company expects to report a GAAP net loss per share of approximately ($0.06) to ($0.05), while diluted non-GAAP EPS is expected to be approximately $0.30 to $0.31. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $60 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $18 million, and net non-cash interest expense related to the company’s convertible senior notes, expected to be approximately $3 million. EPS estimates assume a GAAP tax rate of 54%, and a non-GAAP tax rate of 33%. For the purpose of the EPS calculation, the company assumed an average basic share count of approximately 137 million shares, and an average diluted share count of approximately 146 million shares.

Full Year FY12 Guidance: Revenue for the company’s full fiscal year 2012 is projected to be in the range of approximately $2.22 billion to approximately $2.23 billion.

For the full fiscal year 2012, the company expects to report a GAAP net loss per share of approximately ($0.11) to ($0.09), while diluted non-GAAP EPS is expected to be approximately $1.30 to $1.32. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $241 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $64 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $11 million. EPS estimates assume a GAAP tax rate of 72%, and a non-GAAP tax rate of 32%. For the purpose of the EPS calculation, assume an average basic share count of approximately 136 million shares, and an average diluted share count of approximately 145 million shares.

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

Fiscal 2012
———–
Q3 FY2012
— ——

($0.06) – ($0.11) -
GAAP EPS* ($0.05) ($0.09)
Plus
Amortization of purchased intangibles $0.12 $0.44
Stock-based expense $0.41 $1.67
Amortization of debt discount, net $0.02 $0.07
Less
Income tax effect of certain Non-GAAP items ($0.19) ($0.77)
—— ——
Non-GAAP diluted EPS $0.30-$0.31 $1.30-$1.32

Shares used in computing basic net income per
share (millions) 137 136
Shares used in computing diluted net income per
share (millions) 146 145

* For Q3 & FY12 GAAP EPS loss, basic number of
shares used for calculation

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its second quarter fiscal year 2012 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 webcast 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 64853124. A replay will be available at 800-642-1687 or +1 706-645-9291, passcode 88793161, until midnight (Eastern Time) September 16, 2011.

About Salesforce.com

With more than 100,000 customers, Salesforce.com is the enterprise cloud computing company that is leading the shift to the social enterprise. Social enterprises leverage social, mobile and open cloud technologies to put customers at the heart of their business. Based on salesforce.com’s real-time, multitenant architecture, the company’s platform and application services include:

– Salesforce Chatter, a secure, private social network for your business
– Salesforce Sales Cloud, for sales force automation and contact
management
– Salesforce Service Cloud, for customer service and support solutions
– Salesforce Radian6, for social media monitoring and engagement
– Salesforce Jigsaw, for B2B sales and marketing account and contact data
– AppExchange, the leading marketplace for enterprise cloud computing
applications
– Force.com, for custom application development
– Heroku, for building social and mobile apps in Ruby

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 amortization of debt discount on the company’s convertible senior notes, as well as the tax consequences associated with these items. The purpose of the non-GAAP tax rate is to quantify the excluded tax consequences of the excluded expense items. These non-GAAP estimates are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. The method used to produce non-GAAP financial measures is not computed according to GAAP and may differ from the methods used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.

The primary purpose of these non-GAAP measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash items on the company’s operating performance. Non-cash stock-based compensation, amortization of acquisition-related intangible assets, and the amortization of debt discount on the company’s convertible senior notes are being excluded from the company’s FY12 financial results because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but were made for the company’s long-term benefit over multiple periods. While strategic decisions, such as those to issue stock-based compensation, acquire a company, or issue convertible senior notes, are made to further the company’s long-term strategic objectives and impact the company’s income statement under GAAP measures, these items affect multiple periods and management is not able to change or affect these items in any particular period. As such, supplementing GAAP disclosure with non-GAAP disclosure using the non-GAAP measures provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period, and management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the company’s performance.

In addition, the majority of the company’s industry peers report non-GAAP operating results that exclude certain non-cash or non-recurring items. Management believes that the provision of supplemental non-GAAP information will enable a more complete comparison of the company’s relative performance.

Specifically, management is excluding the following items from its non-GAAP EPS for Q2 and its non-GAAP estimates for Q3 and FY12:

– Stock-Based Expenses: The company’s compensation strategy is to use
stock-based compensation to attract and retain key 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, customer lists and customer relationships, as items arising
from pre-acquisition activities determined at the time of an
acquisition. While it is continually viewed for impairment,
amortization of the cost 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 coupon interest rate is
0.75%. The difference between the imputed interest expense and the
coupon interest expense, net of the interest amount capitalized, is
excluded from management’s assessment of the company’s operating
performance because management believes that this non-cash expense is
not indicative of ongoing operating performance. Management believes
that the exclusion of the non-cash interest expense provides investors
an enhanced view of the company’s operational performance.
– Income Tax Effects: The company’s estimated non-GAAP effective tax rate
is lower than the estimated GAAP effective tax rate due to the exclusion
of the expense items described above.

“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about expected GAAP revenue and GAAP and non-GAAP EPS for the third fiscal quarter of 2012 and the full fiscal year, the company’s expected tax rates, stock-based compensation expenses, amortization expenses, and shares outstanding. The achievement or success of the matters covered by such forward-looking statements involve 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; rate of growth and anticipated revenue run rate; errors, interruptions or delays in the company’s service or the company’s Web hosting; breaches of the company’s security measures; the financial impact of any previous and future acquisitions; the nature of the company’s business model; the company’s ability to continue to release, and gain customer acceptance of, new and improved versions of the company’s service; successful customer deployment and utilization of the company’s existing and future services; changes in the company’s sales cycle; competition; various financial aspects of the company’s subscription model; unexpected increases in attrition or decreases in new business; the emerging markets in which we operate; unique aspects of entering or expanding in international markets, the company’s ability to hire, retain and motivate employees and manage the company’s growth; changes in the company’s customer base; technological developments; regulatory developments; litigation related to intellectual property and other matters, and any related claims, negotiations and settlements; unanticipated changes in the company’s effective tax rate; fluctuations in the number of shares we have outstanding and the price of such shares; foreign currency exchange rates; collection of receivables; interest rates; the company’s plans to build our new global headquarters in San Francisco, California and the associated costs; 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 fiscal quarter ended July 31 2011, and our Form 10-K filed for the fiscal year ended January 31, 2011. 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.

©2011 salesforce.com, inc. All rights reserved. Salesforce.com, Salesforce, Chatter, Sales Cloud, Service Cloud, Radian6, Jigsaw, AppExchange, Force.com, Heroku, and all associated logos are trademarks of salesforce.com, inc. in the United States and other countries. Other names used herein may be trademarks of their respective owners.

salesforce.com, inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

Three Months Ended
July 31,
——————
2011 2010
—- —-

Revenues:
Subscription and support $509,279 $368,951
Professional services and other 36,723 25,421
—— ——
Total revenues 546,002 394,372

Cost of revenues (1):
Subscription and support 89,144 48,981
Professional services and other 31,766 28,809
—— ——
Total cost of revenues 120,910 77,790

Gross profit 425,092 316,582

Operating expenses (1):
Research and development 73,393 42,930
Marketing and sales 283,001 182,401
General and administrative 84,446 61,569
—— ——
Total operating expenses 440,840 286,900

Income (loss) from operations (15,748) 29,682

Investment income 5,112 8,735
Interest expense (3,846) (7,185)
Other expense (3,231) (1,765)
—— ——

Income (loss) before benefit
(provision) for income taxes
and noncontrolling interest (17,713) 29,467

Benefit (provision) for income
taxes 13,445 (12,884)
—— ——-

Consolidated net income (loss) (4,268) 16,583

Less: Net loss attributable to
noncontrolling interest 0 (1,839)
— ——

Net income (loss) attributable
to salesforce.com ($4,268) $14,744
======= =======

Basic net income (loss) per
share attributable to
salesforce.com common
shareholders ($0.03) $0.11

Diluted net income (loss) per
share attributable to
salesforce.com common
shareholders ($0.03) $0.11

Shares used in computing basic
net income per share 135,093 129,462

Shares used in computing diluted
net income per share 135,093 134,176

(1) Amounts include stock-based
expenses, as follows:
Cost of revenues $4,379 $3,186
Research and development 11,188 4,041
Marketing and sales 27,114 12,317
General and administrative 11,913 7,071

Six Months Ended
July 31,
—————-
2011 2010
—- —-

Revenues:
Subscription and support $982,783 $719,663
Professional services and other 67,583 51,522
—— ——
Total revenues 1,050,366 771,185

Cost of revenues (1):
Subscription and support 164,387 93,038
Professional services and other 59,589 56,333
—— ——
Total cost of revenues 223,976 149,371

Gross profit 826,390 621,814

Operating expenses (1):
Research and development 138,685 83,052
Marketing and sales 537,472 358,268
General and administrative 168,784 117,762
——- ——-
Total operating expenses 844,941 559,082

Income (loss) from operations (18,551) 62,732

Investment income 13,167 16,610
Interest expense (7,517) (14,245)
Other expense (4,031) (3,738)
—— ——

Income (loss) before benefit
(provision) for income taxes
and noncontrolling interest (16,932) 61,359

Benefit (provision) for income
taxes 13,194 (24,900)
—— ——-

Consolidated net income (loss) (3,738) 36,459

Less: Net loss attributable to
noncontrolling interest 0 (3,970)
— ——

Net income (loss) attributable
to salesforce.com ($3,738) $32,489
======= =======

Basic net income (loss) per
share attributable to
salesforce.com common
shareholders ($0.03) $0.25

Diluted net income (loss) per
share attributable to
salesforce.com common
shareholders ($0.03) $0.24

Shares used in computing basic
net income per share 134,273 128,747

Shares used in computing diluted
net income per share 134,273 133,437

(1) Amounts include stock-based
expenses, as follows:
Cost of revenues $8,030 $6,260
Research and development 19,027 8,143
Marketing and sales 50,901 24,527
General and administrative 24,194 14,153

salesforce.com, inc.
Condensed Consolidated Statements of Operations

As a percentage of total revenues:
(Unaudited)

Three Months Ended Six Months Ended
July 31, July 31,
—————— —————-
2011 2010 2011 2010
—- —- —- —-
Revenues:
Subscription and support 93% 94% 94% 93%
Professional services and
other 7 6 6 7
— — — —
Total revenues 100 100 100 100

Cost of revenues (1):
Subscription and support 16 13 15 12
Professional services and
other 6 7 6 7
— — — —
Total cost of revenues 22 20 21 19

Gross profit 78 80 79 81

Operating expenses (1):
Research and development 13 11 13 11
Marketing and sales 52 46 52 47
General and
administrative 16 16 16 15
— — — —
Total operating expenses 81 73 81 73

Income (loss) from
operations (3) 7 (2) 8

Investment income 1 2 1 2
Interest expense (1) (2) 0 (2)
Other expense 0 0 0 0
— — — —

Income (loss) before
benefit (provision) for
income taxes and
noncontrolling interest (3) 7 (1) 8

Benefit (provision) for
income taxes 2 (3) 1 (3)
— — — —

Consolidated net income
(loss) (1) 4 0 5

Less: Net loss
attributable to
noncontrolling interest 0 0 0 (1)
— — — —

Net income (loss)
attributable to
salesforce.com (1%) 4% 0% 4%
—- === === ===

(1) Stock-based expenses
as a percentage of total
revenues, as follows:
Cost of revenues 1% 1% 1% 1%
Research and development 2 1 2 1
Marketing and sales 5 3 5 3
General and administrative 2 2 2 2

salesforce.com, inc.
Condensed Consolidated Balance Sheets
(in thousands)

January
July 31, 31,
2011 2011
—- —-
(unaudited)

Assets
Current assets:
Cash and cash equivalents $449,794 $424,292
Short-term marketable securities 127,582 72,678
Accounts receivable, net 342,397 426,943
Deferred commissions 66,092 67,774
Deferred income taxes 33,915 27,516
Prepaid expenses and other current assets
(see additional metrics) 95,042 55,721
—— ——

Total current assets 1,114,822 1,074,924

Marketable securities, noncurrent 709,282 910,587
Property and equipment, net (see additional
metrics) 470,070 387,174
Deferred commissions, noncurrent 47,574 48,842
Deferred income taxes, noncurrent 64,219 41,199
Capitalized software, net (see additional
metrics) 198,291 127,987
Goodwill 671,570 396,081
Other assets, net (see additional metrics) 145,500 104,371
——- ——-

Total assets $3,421,328 $3,091,165
========== ==========

Liabilities, temporary equity and
stockholders’ equity
Current liabilities:
Accounts payable $22,321 $18,106
Accrued expenses and other liabilities (see
additional metrics) 389,853 345,121
Deferred revenue 917,755 913,239
Convertible senior notes, net 484,128 0
——- —

Total current liabilities 1,814,057 1,276,466

Convertible senior notes, net 0 472,538
Income taxes payable, noncurrent 34,777 18,481
Long-term lease liabilities and other 46,088 25,487
Deferred revenue, noncurrent 17,511 21,702
—— ——
Total liabilities 1,912,433 1,814,674

Temporary equity 90,772 0

Stockholders’ equity:
Common stock 135 133
Additional paid-in capital 1,243,472 1,098,604
Accumulated other comprehensive income 7,219 6,719
Retained earnings 167,297 171,035
——- ——-

Total stockholders’ equity 1,418,123 1,276,491
——— ———

Total liabilities, temporary equity and
stockholders’ equity $3,421,328 $3,091,165

salesforce.com, inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

Three Months Ended
July 31,
——————
2011 2010
—- —-
Operating activities:
Consolidated net income
(loss) $(4,268) $16,583
Adjustments to reconcile net income
(loss) to net
cash provided by operating
activities:
Depreciation and amortization 40,239 17,793
Amortization of debt discount and
transaction costs 2,077 5,533
Amortization of deferred
commissions 24,916 18,106
Expenses related to stock-based
awards 54,594 26,615
Excess tax benefits from employee
stock plans (2,086) (22,902)
Changes in assets and
liabilities:
Accounts receivable, net (66,076) (41,413)
Deferred commissions (26,137) (20,248)
Prepaid expenses and other current
assets (9,611) 181
Other assets (1,913) (2,703)
Accounts payable 4,121 5,583
Accrued expenses and other current
liabilities 47,624 57,378
Deferred revenue 19,453 15,590

Net cash provided by operating
activities 82,933 76,096
—— ——

Investing activities:
Business combinations, net of
cash acquired (285,335) (151,503)
Land activity and building
improvements (5,422) 0
Strategic investments (7,782) (2,000)
Changes in marketable
securities 21,662 (234,030)
Capital expenditures (45,051) (27,831)

Net cash used in investing
activities (321,928) (415,364)
——– ——–

Financing activities:
Purchase of subsidiary stock 0 0
Proceeds from the exercise of stock
options 42,282 34,127
Excess tax benefits from employee
stock plans 2,086 22,902
Contingent consideration payment
related to prior business
combinations (13,400) 0
Principal payments on capital lease
obligations (10,549) (2,123)

Net cash provided by financing
activities 20,419 54,906
—— ——

Effect of exchange rate changes 3,758 3,493
—– —–

Net increase (decrease) in cash
and
cash equivalents (214,818) (280,869)

Cash and cash equivalents,
beginning of period 664,612 690,794
——- ——-

Cash and cash equivalents, end of
period $449,794 $409,925
======== ========

Six Months Ended
July 31,
—————-
2011 2010
—- —-
Operating activities:
Consolidated net income
(loss) $(3,738) $36,459
Adjustments to reconcile net income
(loss) to net
cash provided by operating
activities:
Depreciation and amortization 69,832 32,298
Amortization of debt discount and
transaction costs 4,332 10,984
Amortization of deferred
commissions 49,591 37,595
Expenses related to stock-based
awards 102,152 53,083
Excess tax benefits from employee
stock plans (4,120) (32,190)
Changes in assets and
liabilities:
Accounts receivable, net 90,051 97,538
Deferred commissions (46,641) (39,556)
Prepaid expenses and other current
assets (18,994) 10,120
Other assets (4,626) (4,142)
Accounts payable 2,984 3,925
Accrued expenses and other current
liabilities (18,017) 37,394
Deferred revenue (355) (24,229)

Net cash provided by operating
activities 222,451 219,279
——- ——-

Investing activities:
Business combinations, net of
cash acquired (298,670) (151,503)
Land activity and building
improvements (6,436) 0
Strategic investments (13,215) (2,500)
Changes in marketable
securities 148,120 (729,973)
Capital expenditures (72,365) (39,521)

Net cash used in investing
activities (242,566) (923,497)
——– ——–

Financing activities:
Purchase of subsidiary stock 0 (1,273)
Proceeds from the exercise of stock
options 74,568 71,643
Excess tax benefits from employee
stock plans 4,120 32,190
Contingent consideration payment
related to prior business
combinations (16,200) 0
Principal payments on capital lease
obligations (14,111) (4,041)

Net cash provided by financing
activities 48,377 98,519
—— ——

Effect of exchange rate changes (2,760) 4,318
—— —–

Net increase (decrease) in cash
and
cash equivalents 25,502 (601,381)

Cash and cash equivalents,
beginning of period 424,292 1,011,306
——- ———

Cash and cash equivalents, end of
period $449,794 $409,925
======== ========

salesforce.com, inc.
Additional Metrics
(Unaudited)

Jul 31, Apr 30,
2011 2011
—- —-

Full Time Equivalent Headcount 6,352 5,513

Financial data (in thousands):
Cash, cash equivalents and
marketable
securities $1,286,658 $1,522,285
Deferred revenue, current and
noncurrent $935,266 $915,133

Selected Balance Sheet Accounts
(in thousands):
Jul 31, Jan 31,
2011 2011
—- —-
Prepaid Expenses and Other
Current Assets
Deferred professional services
costs $15,138 $17,908
Prepaid income taxes 14,780 720
Prepaid expenses and other
current assets 65,124 37,093
$95,042 $55,721
======= =======

Property and Equipment, net
Land $248,263 $248,263
Building improvements 24,269 10,115
Computers, equipment and
software 195,991 115,736
Furniture and fixtures 23,687 20,462
Leasehold improvements 113,148 100,380
——- ——-
605,358 494,956
Less accumulated depreciation
and
amortization (135,288) (107,782)
——– ——–
$470,070 $387,174
======== ========

Capitalized Software, net
Capitalized internal-use
software development
costs, net of accumulated
amortization $32,983 $29,154
Acquired developed technology,
net of
accumulated amortization 165,308 98,833
——- ——
$198,291 $127,987
======== ========

Other Assets, net
Deferred professional services
costs,
noncurrent portion $8,022 $10,201
Long-term deposits 13,715 12,114
Purchased intangible assets, net
accumulated
amortization 47,114 31,660
Acquired intellectual property,
net of
accumulated amortization 13,559 5,874
Strategic investments 40,283 27,065
Other 22,807 17,457
$145,500 $104,371
======== ========

Accrued Expenses and Other
Current Liabilities
Accrued compensation $130,693 $148,275
Accrued other liabilities 126,076 112,840
Accrued income and other taxes
payable 82,832 49,135
Accrued professional costs 23,796 12,548
Accrued rent 26,456 22,323
$389,853 $345,121
======== ========

Jan 31, Oct 31,
2011 2010
—- —-

Full Time Equivalent Headcount 5,306 4,758

Financial data (in thousands):
Cash, cash equivalents and
marketable
securities $1,407,557 $1,802,440
Deferred revenue, current and
noncurrent $934,941 $694,557

Selected Balance Sheet Accounts
(in thousands):

Prepaid Expenses and Other
Current Assets
Deferred professional services
costs
Prepaid income taxes
Prepaid expenses and other
current assets

Property and Equipment, net
Land
Building improvements
Computers, equipment and
software
Furniture and fixtures
Leasehold improvements

Less accumulated depreciation
and
amortization

Capitalized Software, net
Capitalized internal-use
software development
costs, net of accumulated
amortization
Acquired developed technology,
net of
accumulated amortization

Other Assets, net
Deferred professional services
costs,
noncurrent portion
Long-term deposits
Purchased intangible assets, net
accumulated
amortization
Acquired intellectual property,
net of
accumulated amortization
Strategic investments
Other

Accrued Expenses and Other
Current Liabilities
Accrued compensation
Accrued other liabilities
Accrued income and other taxes
payable
Accrued professional costs
Accrued rent

Jul 31, Apr 30,
2010 2010
—- —-

Full Time Equivalent Headcount 4,447 4,106

Financial data (in thousands):
Cash, cash equivalents and
marketable
securities $1,858,928 $1,901,548
Deferred revenue, current and
noncurrent $683,019 $664,529

Selected Balance Sheet Accounts
(in thousands):

Prepaid Expenses and Other
Current Assets
Deferred professional services
costs
Prepaid income taxes
Prepaid expenses and other
current assets

Property and Equipment, net
Land
Building improvements
Computers, equipment and
software
Furniture and fixtures
Leasehold improvements

Less accumulated depreciation
and
amortization

Capitalized Software, net
Capitalized internal-use
software development
costs, net of accumulated
amortization
Acquired developed technology,
net of
accumulated amortization

Other Assets, net
Deferred professional services
costs,
noncurrent portion
Long-term deposits
Purchased intangible assets, net
accumulated
amortization
Acquired intellectual property,
net of
accumulated amortization
Strategic investments
Other

Accrued Expenses and Other
Current Liabilities
Accrued compensation
Accrued other liabilities
Accrued income and other taxes
payable
Accrued professional costs
Accrued rent

Three Months Ended July Six Months Ended July
31, 31,
———————— ———————-
2011 2010 2011 2010
—- —- —- —-
Revenues by
geography (in
thousands):
Americas $366,916 $274,669 $706,934 $533,953
Europe 102,056 65,545 196,451 132,387
Asia Pacific 77,030 54,158 146,981 104,845
—— —— ——- ——-

$546,002 $394,372 $1,050,366 $771,185
======== ======== ========== ========

As a percentage
of total
revenues:

Revenues by
geography:
Americas 67% 70% 67% 69%
Europe 19 17 19 17
Asia Pacific 14 13 14 14
— — — —

100% 100% 100% 100%
=== === === ===

Supplemental Revenue Analysis

Three Months Ended Three Months Ended
July 31, 2011 April 30, 2011
compared to Three compared to Three
Months Months
Ended July 31, 2010 Ended April 30, 2010
——————- ——————–
Revenue constant
currency growth rates
(as compared to the
comparable prior
periods)

Americas 34% 31%
Europe 36% 36%
Asia Pacific 33% 29%
Total growth 34% 32%

Three Months Ended
July 31, 2010
compared to Three
Months
Ended July 31, 2009
——————-
Revenue constant currency growth rates (as
compared to the comparable prior periods)

Americas 22%
Europe 30%
Asia Pacific 53%
Total growth 26%

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 Sharecount Information
(in thousands)

Three Months
Ended Six Months Ended
July 31, July 31,
——– ——–
2011 2010 2011 2010
—- —- —- —-

Weighted-average shares
outstanding for basic
earnings per share 135,093 129,462 134,273 128,747
Effect of dilutive
securities:
Convertible senior notes 2,753 349 2,581 349
Warrants associated with
the convertible senior
note hedges 1,160 0 919 0
Employee stock awards 4,450 4,365 4,563 4,341
Adjusted weighted-average
shares outstanding and
assumed conversions for
diluted earnings per share 143,456 134,176 142,336 133,437
======= ======= ======= =======

Supplemental Cash Flow Information

Free cash flow analysis, a non-GAAP measure
(in thousands)

Six Months Ended July
Three Months Ended July 31, 31,
————————— ———————-
2011 2010 2011 2010
—- —- —- —-
Operating cash
flow-
GAAP net cash
provided by
operating
activities $82,933 $76,096 $222,451 $219,279
Less:
Capital
expenditures (45,051) (27,831) (72,365) (39,521)
Free cash flow $37,882 $48,265 $150,086 $179,758
======= ======= ======== ========

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 new global
headquarters and strategic investments.

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 Six Months Ended
July 31, July 31,

2011 2010 2011 2010
—- —- —- —-
Gross profit
————
GAAP gross profit $425,092 $316,582 $826,390 $621,814
Plus:
Amortization of
purchased
intangibles (b) 16,373 3,891 25,468 5,570
Stock-based expenses
(c) 4,379 3,186 8,030 6,260

Non-GAAP gross
profit $445,844 $323,659 $859,888 $633,644
————– ——– ——– ——– ——–

Operating expenses
——————
GAAP operating
expenses $440,840 $286,900 $844,941 $559,082
Less:
Amortization of
purchased
intangibles (b) (2,306) (1,225) (3,546) (2,050)
Stock-based expenses
(c) (50,215) (23,429) (94,122) (46,823)

Non-GAAP operating
expenses $388,319 $262,246 $747,273 $510,209
—————— ——– ——– ——– ——–

Income from
operations
———–
GAAP income (loss)
from operations $(15,748) $29,682 $(18,551) $62,732
Plus:
Amortization of
purchased
intangibles (b) 18,679 5,116 29,014 7,620
Stock-based expenses
(c) 54,594 26,615 102,152 53,083

Non-GAAP income from
operations $57,525 $61,413 $112,615 $123,435
——————– ——- ——- ——– ——–

Non-operating income
(a)
——————–
GAAP non-operating
income (loss) $(1,965) $(215) $1,619 $(1,373)
Plus: Amortization
of debt discount,
net 2,712 5,533 5,470 10,984

Non-GAAP non-
operating income $747 $5,318 $7,089 $9,611
—————– —- —— —— ——

Net income
attributable to
salesforce.com
—————-
GAAP net income
(loss) attributable
to salesforce.com $(4,268) $14,744 $(3,738) $32,489
Plus:
Amortization of
purchased
intangibles 18,679 5,116 29,014 7,620
Stock-based expenses 54,594 26,615 102,152 53,083
Amortization of debt
discount, net 2,712 5,533 5,470 10,984
Less:
Income tax effect of
Non-GAAP items (28,635) (13,274) (49,926) (25,493)
Non-GAAP net income
attributable to
salesforce.com $43,082 $38,734 $82,972 $78,683
——————- ——- ——- ——- ——-

Diluted earnings per
share
——————–
GAAP diluted earnings
(loss) per share (d) $(0.03) $0.11 $(0.03) $0.24
Plus:
Amortization of
purchased
intangibles 0.13 0.04 0.20 0.06
Stock-based expenses 0.38 0.20 0.72 0.40
Amortization of debt
discount, net 0.02 0.04 0.04 0.08
Less:
Income tax effect of
Non-GAAP items (0.20) (0.10) (0.35) (0.19)
Non-GAAP diluted
earnings per share
attributable to
salesforce.com $0.30 $0.29 $0.58 $0.59
——————- —– —– —– —–

Shares used in
computing diluted
net income per share 143,456 134,176 142,336 133,437

a) Non-operating income consists of investment income, interest
expense and other expense

b) Amortization of purchased intangibles were as follows:

Three Months Ended Six Months Ended
July 31, July 31,
—————— —————-
2011 2010 2011 2010
—- —- —- —-

Cost of revenues $16,373 $3,891 $25,468 $5,570
Marketing and sales 2,306 1,225 3,546 2,050
—– —– —– —–
$18,679 $5,116 $29,014 $7,620

c) Stock-based expenses were as follows:

Three Months Ended Six Months Ended
July 31, July 31,
—————— —————-
2011 2010 2011 2010
—- —- —- —-

Cost of revenues $4,379 $3,186 $8,030 $6,260
Research and development 11,188 4,041 19,027 8,143
Marketing and sales 27,114 12,317 50,901 24,527
General and administrative 11,913 7,071 24,194 14,153
$54,594 $26,615 $102,152 $53,083

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.

salesforce.com, inc.
COMPUTATION OF BASIC AND DILUTED GAAP AND NON-GAAP NET INCOME (LOSS)
PER SHARE
The following reflects the calculation of Basic and Diluted Net
Income (loss) Per Share
(in thousands, except per share data)
(Unaudited)

Three Months Six Months
Ended Ended
July 31, July 31,
——– ——–
2011 2010 2011 2010
—- —- —- —-

GAAP Basic Net Income (loss) Per
Share

Net income (loss) attributable to
salesforce.com $(4,268) $14,744 $(3,738) $32,489

Basic net income (loss) per share
attributable to salesforce.com
common stockholders ($0.03) $0.11 ($0.03) $0.25

Shares used in computing basic net
income per share attributable to
salesforce.com common
stockholders 135,093 129,462 134,273 128,747

Three Months Six Months
Ended Ended
July 31, July 31,
——– ——–
2011 2010 2011 2010
—- —- —- —-

Non-GAAP Basic Net Income Per
Share

Non-GAAP net income attributable
to salesforce.com $43,082 $38,734 $82,972 $78,683

Basic Non-GAAP net income per
share attributable to
salesforce.com common
stockholders $0.32 $0.30 $0.62 $0.61

Shares used in computing basic net
income per share attributable to
salesforce.com common
stockholders 135,093 129,462 134,273 128,747

Three Months Six Months
Ended Ended
July 31, July 31,
——– ——–
2011 2010 2011 2010
—- —- —- —-

GAAP Diluted Net Income (loss) Per
Share

Net income (loss) attributable to
salesforce.com $(4,268) $14,744 $(3,738) $32,489

Diluted net income (loss) per
share attributable to
salesforce.com common
stockholders ($0.03) $0.11 ($0.03) $0.24

Shares used in computing diluted
net income per share attributable
to salesforce.com common
stockholders 135,093 134,176 134,273 133,437

Three Months Six Months
Ended Ended
July 31, July 31,
——– ——–
2011 2010 2011 2010
—- —- —- —-

Non-GAAP Diluted Net Income Per
Share

Non-GAAP net income attributable
to salesforce.com $43,082 $38,734 $82,972 $78,683

Diluted Non-GAAP net income per
share attributable to
salesforce.com common
stockholders $0.30 $0.29 $0.58 $0.59

Shares used in computing diluted
net income per share attributable
to salesforce.com common
stockholders 143,456 134,176 142,336 133,437

SOURCE salesforce.com

Tags: , , , , , , , , , , , , , , , , , , , , ,

One Response to “Recession, What Recession? San Francisco’s Very Own SalesForce.Com Continues to Kick Ass, Take Names”

  1. Sameer Bhansaki says:

    My employer uses Salesforce and continues to buy more and more products from them. It’s faster, cheaper, and more reliable than hiring some IT douchebags to build it all internally (which, of course, our IT people wanted to do until we bitch-slapped them).

    If anything, Salesforce’s sales should be up during a double-dip recession!

Leave a Reply