Market Overview

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, Feb. 28, 2013 /PRNewswire/ -- 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.

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

"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.

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,


Oct 31,


Jul 31,


Apr 30,


Jan 31,


Oct 31,



2013


2012


2012


2012


2012


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 


Three Months Ended 


Three Months Ended 



January 31, 2013


October 31, 2012


January 31, 2012



compared to Three Months


compared to Three Months


compared to Three Months



Ended January 31, 2012


Ended October 31, 2011


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

 

 

SOURCE salesforce.com

 

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