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Salesforce.com (CRM), the enterprise cloud computing (http://www.salesforce.com/cloudcomputing/) company, today announced results for its fiscal second quarter ended July 31, 2012.
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"Our second quarter revenue growth was outstanding at 34% in dollars and 37% in constant currency," said Marc Benioff, Chairman and CEO, salesforce.com. "Salesforce.com’s social enterprise strategy is enabling companies to connect with customers, partners, and employees in completely new ways - and it’s creating new opportunities for their growth and ours."
Salesforce.com delivered the following results for its fiscal second quarter:
Revenue: Total Q2 revenue was $732 million, an increase of 34% on a year-over-year basis. Subscription and support revenues were $687 million, an increase of 35% on a year-over-year basis. Professional services and other revenues were $44 million, an increase of 20% on a year-over-year basis.
Earnings per Share: Q2 GAAP net loss per share was ($0.07), and non-GAAP diluted earnings per share was $0.42. The company’s non-GAAP results exclude the effects of $85 million in stock-based compensation expense, $20 million in amortization of purchased intangibles, and $6 million in net non-cash interest expense related to the company’s convertible senior notes. Non-GAAP EPS calculations are based on approximately 146 million diluted shares outstanding during the quarter, including approximately 3 million shares associated with the company’s convertible senior notes. GAAP EPS calculations are based on a basic share count of approximately 139 million shares.
Cash: Cash generated from operations for the fiscal second quarter was $136 million, an increase of 64% on a year-over-year basis. Total cash, cash equivalents and marketable securities finished the quarter at $1.8 billion.
Deferred Revenue: Deferred revenue on the balance sheet as of July 31, 2012 was $1.34 billion, an increase of 43% on a year-over-year basis. Current deferred revenue increased by 38% year-over-year to $1.27 billion, benefited in part by longer invoice durations. Non-current deferred revenue increased by 293% year-over-year to $69 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the second quarter at approximately $2.8 billion, up from approximately $2.7 billion at the end of the fiscal first quarter.
As of August 23, 2012, salesforce.com is initiating revenue, GAAP EPS and non-GAAP EPS guidance for its fiscal third quarter of fiscal year 2013. In addition, for the full fiscal year 2013, the company is raising its revenue and non-GAAP EPS guidance previously provided on June 4, 2012, and initiating GAAP EPS guidance.
Q3 FY13 Guidance: Revenue for the company’s third fiscal quarter is projected to be in the range of $773 million to $777 million, an increase of 32% to 33% year-over-year.
GAAP net loss per share is expected to be in the range of ($0.27) to ($0.26), while diluted non-GAAP EPS is expected to be in the range of $0.31 to $0.32. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $99 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $27 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $6 million. EPS estimates assume a GAAP tax rate of approximately 37%, and a non-GAAP tax rate of approximately 35%. The GAAP EPS calculation assumes an average basic share count of approximately 142 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 151 million shares.
Full Year FY13 Guidance: Revenue for the company’s full fiscal year 2013 is projected to be in the range of $3.025 billion to $3.035 billion, an increase of 33% to 34% year-over-year.
For the company’s full fiscal year 2013, GAAP net loss per share is expected to be in the range of ($0.75) to ($0.72) while diluted non-GAAP EPS is expected to be in the range of $1.48 to $1.51. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $382 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $95 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $24 million. EPS estimates assume a GAAP tax rate of approximately 30%, and a non-GAAP tax rate of approximately 37%. The GAAP EPS calculation assumes an average basic share count of approximately 141 million shares, and the non-GAAP EPS calculation assumes an average fully diluted share count of approximately 150 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 2013
Q3 FY2013
GAAP EPS Range* ($0.27) - ($0.26) ($0.75) - ($0.72)
Plus
Amortization of purchased intangibles $ 0.18 $ 0.64
Stock-based expense $ 0.66 $ 2.54
Amortization of debt discount, net $ 0.04 $ 0.16
Less
Income tax effect of certain Non-GAAP items $ (0.30) $ (1.11)
Non-GAAP diluted EPS $0.31 - $0.32 $1.48 - $1.51
Shares used in computing basic net income per share (millions) 142 141
Shares used in computing diluted net income per share (millions) 151 150
* For Q3 & FY13 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 2013 results at 2:00 p.m. Pacific Time today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company’s Investor Relations Web site at http://www.salesforce.com/investor. In addition, an archive of the audiocast can be accessed through the same link. Participants who choose to call in to the conference call can do so by dialing domestically 866-901-SFDC or 866-901-7332 and internationally at +1 706-902-1764, passcode salesforce.com or 17262326. A replay will be available at 800-585-8367 or +1 855-859-2056, passcode 17262326, until midnight (Eastern Time) September 23, 2012.
About salesforce.com: Founded in 1999, salesforce.com is the enterprise cloud computing company that is leading customers in their transformation to become social enterprises. Social enterprises are able to connect with customers, partners and employees in entirely new ways. Based on salesforce.com’s real-time, multitenant architecture, the company’s platform and application services give customers the tools to create a true social front office and revolutionize the way they sell, service, market, collaborate, work, and innovate.
Grow your business with the world’s #1 sales app, Salesforce Sales Cloud
Deliver amazing customer service with the award-winning Salesforce Service Cloud
Listen, engage, advertise, and measure social media marketing with the Salesforce Marketing Cloud
Build social and mobile cloud apps on the Salesforce Platform and extend social enterprise success with the world’s leading enterprise app marketplace, the AppExchange
Achieve breakthrough collaboration and productivity with Salesforce Chatter
Align, motivate and drive performance with Salesforce Rypple
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 the tax consequences associated with these items. The purpose of the non-GAAP tax rate is to quantify the excluded tax consequences of the excluded expense items. These non-GAAP estimates are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. The method used to produce non-GAAP financial measures is not computed according to GAAP and may differ from the methods used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.
The primary purpose of these non-GAAP measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash items on the company’s operating performance. Non-cash stock-based compensation, amortization of acquisition-related intangible assets, and the net amortization of debt discount on the company’s convertible senior notes are being excluded from the company’s FY13 financial results because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but were made for the company’s long-term benefit over multiple periods. While strategic decisions, such as those to issue stock-based compensation, acquire a company, or issue convertible senior notes, are made to further the company’s long-term strategic objectives and impact the company’s 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. As significant unusual or discrete events occur, 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 Q2 and its non-GAAP estimates for Q3 and FY13:
Stock-Based Expenses: The company’s compensation strategy includes the use of stock-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
Amortization of Purchased Intangibles: The company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While it is continually viewed for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
Amortization of Debt Discount: Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, for GAAP purposes we are required to recognize imputed interest expense on the company’s $575 million of convertible subordinated notes that were issued in a private placement in January 2010. The imputed interest rate is approximately 5.9%, while the actual coupon interest rate of the notes is 0.75%. The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management’s assessment of the company’s operating performance because management believes that this non-cash expense is not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the company’s operational performance.
Income Tax Effects: The company’s estimated non-GAAP effective tax rate excludes the tax effect of the expense items described above.
"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about expected GAAP revenue and GAAP and non-GAAP EPS for the third fiscal quarter of 2013 and the full fiscal year, the company’s expected revenue run rate and revenues in fiscal 2013, the company’s expected tax rates, stock-based compensation expenses, amortization of purchased intangibles and debt discount, and shares outstanding. 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 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 expenses associated with the company’s real estate and office facilities space; and general developments in the economy, financial markets, and credit markets.
Further information on these and other factors that could affect the company’s financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time, including the company’s Form 10-Q that will be filed for the second quarter ended July 31, 2012 and our Form 10-K filed for the fiscal year ended January 31, 2012. These documents are available on the SEC Filings section of the Investor Information section of the company’s website at www.salesforce.com/investor.
Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
Copyright ? 2012 salesforce.com, inc. All rights reserved. Salesforce, Chatter, Sales Cloud, Service Cloud, Marketing Cloud, Rypple, AppExchange, Salesforce Platform, and others are trademarks of salesforce.com, inc. Other names used herein may be trademarks of their respective owners.
salesforce.com, inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended July 31, Six Months Ended July 31,
2012 2011 2012 2011
Revenues:
Subscription and support $ 687,493 $ 509,279 $ 1,342,713 $ 982,783
Professional services and other 44,156 36,723 84,403 67,583
Total revenues 731,649 546,002 1,427,116 1,050,366
Cost of revenues (1)(2):
Subscription and support 118,519 89,144 227,263 164,387
Professional services and other 43,899 31,766 86,706 59,589
Total cost of revenues 162,418 120,910 313,969 223,976
Gross profit 569,231 425,092 1,113,147 826,390
Operating expenses (1)(2):
Research and development 99,442 73,393 194,218 138,685
Marketing and sales 380,160 283,001 749,949 537,472
General and administrative 103,095 84,446 204,695 168,784
Total operating expenses 582,697 440,840 1,148,862 844,941
Loss from operations (13,466) (15,748) (35,715) (18,551)
Investment income 7,173 5,112 11,634 13,167
Interest expense (8,033) (3,846) (14,403) (7,517)
Other income (expense) 294 (3,231) (416) (4,031)
Loss before benefit from income taxes (14,032) (17,713) (38,900) (16,932)
Benefit from income taxes 4,203 13,445 9,596 13,194
Net loss $ (9,829) $ (4,268) $ (29,304) $ (3,738)
Basic net loss per share $ (0.07) $ (0.03) $ (0.21) $ (0.03)
Diluted net loss per share $ (0.07) $ (0.03) $ (0.21) $ (0.03)
Shares used in computing basic net loss per share 139,425 135,093 138,789 134,273
Shares used in computing diluted net loss per share 139,425 135,093 138,789 134,273
(1) Amounts include amortization of purchased intangibles from business combinations, as follows:
Cost of revenues $ 17,668 $ 16,373 $ 35,116 $ 25,468
Marketing and sales 2,407 2,306 5,834 3,546
(2) Amounts include stock-based expenses, as follows:
Cost of revenues $ 7,864 $ 4,379 $ 15,117 $ 8,030
Research and development 16,089 11,188 31,756 19,027
Marketing and sales 44,781 27,114 86,768 50,901
General and administrative 16,683 11,913 33,042 24,194
salesforce.com, inc.
Condensed Consolidated Statements of Operations
As a percentage of total revenues:
(Unaudited)
Three Months Ended July 31, Six Months Ended
July 31,
2012 2011 2012 2011
Revenues:
Subscription and support 94% 93% 94% 94%
Professional services and other 6 7 6 6
Total revenues 100 100 100 100
Cost of revenues (1)(2):
Subscription and support 16 16 16 15
Professional services and other 6 6 6 6
Total cost of revenues 22 22 22 21
Gross profit 78 78 78 79
Operating expenses (1)(2):
Research and development 14 13 14 13
Marketing and sales 52 52 53 52
General and administrative 14 16 14 16
Total operating expenses 80 81 81 81
Loss from operations (2) (3) (3) (2)
Investment income 1 1 1 1
Interest expense (1) (1) (1) 0
Other income (expense) 0 0 0 0
Loss before benefit from income taxes (2) (3) (3) (1)
Benefit from income taxes 1 2 1 1
Net loss (1%) (1%) (2%) 0%
(1) Amortization of purchased intangibles from business combinations as a percentage of total revenues, as follows:
Cost of revenues 2% 3% 2% 2%
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 2 2 2 2
Marketing and sales 6 5 6 5
General and administrative 2 2 2 2
salesforce.com, inc.
Condensed Consolidated Balance Sheets
(in thousands)
July 31, January 31,
2012 2012
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,000,730 $ 607,284
Short-term marketable securities 106,933 170,582
Accounts receivable, net 446,917 683,745
Deferred commissions 94,921 98,471
Deferred income taxes 56,723 31,821
Prepaid expenses and other current assets (see additional metrics) 146,901 80,319
Total current assets 1,853,125 1,672,222
Marketable securities, noncurrent 696,602 669,308
Property and equipment, net (see additional metrics) 556,776 527,946
Deferred commissions, noncurrent 77,010 78,149
Deferred income taxes, noncurrent 108,031 87,587
Capitalized software, net (see additional metrics) 173,456 188,412
Goodwill 840,531 785,381
Other assets, net (see additional metrics) 148,039 155,149
Total assets $ 4,453,570 $ 4,164,154
Liabilities, temporary equity and stockholders’ equity
Current liabilities:
Accounts payable $ 69,339 $ 33,258
Accrued expenses and other liabilities (see additional metrics) 482,888 502,442
Deferred revenue 1,268,407 1,291,622
Convertible senior notes, net 508,533 496,149
Total current liabilities 2,329,167 2,323,471
Income taxes payable, noncurrent 47,165 37,258
Long-term lease liabilities and other 49,790 48,651
Deferred revenue, noncurrent 68,777 88,673
Total liabilities 2,494,899 2,498,053
Temporary equity 66,357 78,741
Stockholders’ equity:
Common stock 139 137
Additional paid-in capital 1,742,286 1,415,077
Accumulated other comprehensive income 19,730 12,683
Retained earnings 130,159 159,463
Total stockholders’ equity 1,892,314 1,587,360
Total liabilities, temporary equity and stockholders’ equity $ 4,453,570 $ 4,164,154
salesforce.com, inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended July 31, Six Months Ended July 31,
2012 2011 2012 2011
Operating activities:
Net loss $ (9,829) $ (4,268) $ (29,304) $ (3,738)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 49,999 40,239 99,440 69,832
Amortization of debt discount and transaction costs 6,371 2,077 11,040 4,332
Amortization of deferred commissions 35,783 24,916 72,029 49,591
Expenses related to stock-based plans 85,417 54,594 166,683 102,152
Excess tax benefits from employee stock plans (14,702) (2,086) (25,745) (4,120)
Changes in assets and liabilities:
Accounts receivable, net (75,522) (66,076) 237,138 90,051
Deferred commissions (35,222) (26,137) (67,340) (46,641)
Prepaid expenses and other current assets (35,747) (9,611) (56,096) (18,994)
Other assets (891) (1,913) 864 (4,626)
Accounts payable 49,586 4,121 36,081 2,984
Accrued expenses and other current liabilities 78,485 47,624 (52,270) (18,017)
Deferred revenue 2,469 19,453 (43,111) (355)
Net cash provided by operating activities 136,197 82,933 349,409 222,451
Investing activities:
Business combinations, net of cash acquired (10,078) (285,335) (58,991) (298,670)
Land activity and building improvements - (5,422) (4,106) (6,436)
Strategic investments (1,129) (7,782) (3,794) (13,215)
Changes in marketable securities 412,797 21,662 38,215 148,120
Capital expenditures (29,304) (45,051) (74,025) (72,365)
Net cash provided by (used in) investing activities 372,286 (321,928) (102,701) (242,566)
Financing activities:
Proceeds from equity plans 33,824 42,282 127,391 74,568
Excess tax benefits from employee stock plans 14,702 2,086 25,745 4,120
Contingent consideration payment related to prior business combinations - (13,400) - (16,200)
Principal payments on capital lease obligations (7,479) (10,549) (15,053) (14,111)
Net cash provided by financing activities 41,047 20,419 138,083 48,377
Effect of exchange rate changes 10,415 3,758 8,655 (2,760)
Net increase (decrease) in cash and cash equivalents 559,945 (214,818) 393,446 25,502
Cash and cash equivalents, beginning of period 440,785 664,612 607,284 424,292
Cash and cash equivalents, end of period $ 1,000,730 $ 449,794 $ 1,000,730 $ 449,794
salesforce.com, inc.
Additional Metrics
(Unaudited)
Jul 31, Apr 30, Jan 31, Oct 31, Jul 31, Apr 30,
2012 2012 2012 2011 2011 2011
Full Time Equivalent Headcount 8,765 8,335 7,785 6,953 6,352 5,513
Financial data (in thousands):
Cash, cash equivalents and marketable securities $ 1,804,265 $ 1,657,089 $ 1,447,174 $ 1,296,693 $ 1,286,658 $ 1,522,285
Deferred revenue, current and noncurrent $ 1,337,184 $ 1,334,716 $ 1,380,295 $ 917,821 $ 935,266 $ 915,133
Selected Balance Sheet Accounts (in thousands):
Jul 31, Jan 31,
2012 2012
Prepaid Expenses and Other Current Assets
Deferred professional services costs $ 7,825 $ 10,399
Prepaid income taxes 24,007 12,785
Prepaid expenses and other current assets 115,069 57,135
$ 146,901 $ 80,319
Property and Equipment, net
Land $ 248,263 $ 248,263
Building improvements 49,572 43,868
Computers, equipment and software 280,868 232,460
Furniture and fixtures 29,402 25,250
Leasehold improvements 148,470 137,587
756,575 687,428
Less accumulated depreciation and amortization (199,799) (159,482)
$ 556,776 $ 527,946
Capitalized Software, net
Capitalized internal-use software development costs, net of accumulated amortization $ 53,999 $ 41,442
Acquired developed technology, net of accumulated amortization 119,457 146,970
$ 173,456 $ 188,412
Other Assets, net
Deferred professional services costs, noncurrent portion $ 2,101 $ 3,935
Long-term deposits 13,293 13,941
Purchased intangible assets, net of accumulated amortization 41,311 46,110
Acquired intellectual property, net of accumulated amortization 15,841 15,020
Strategic investments 51,276 53,949
Other 24,217 22,194
$ 148,039 $ 155,149
Accrued Expenses and Other Current Liabilities
Accrued compensation $ 192,776 $ 228,466
Accrued other liabilities 150,149 121,957
Accrued income and other taxes payable 68,519 100,471
Accrued professional costs 24,026 21,993
Accrued rent 47,418 29,555
$ 482,888 $ 502,442
Selected Off-Balance Sheet Accounts
Unbilled Deferred Revenue, a non-GAAP measure
Unbilled deferred revenue was approximately $2.8 billion as of July 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 July 31, Six Months Ended July 31,
2012 2011 2012 2011
Revenues by geography (in thousands):
Americas $ 507,974 $ 366,916 $ 992,927 $ 706,934
Europe 124,609 102,056 242,903 196,451
Asia Pacific 99,066 77,030 191,286 146,981
$ 731,649 $ 546,002 $ 1,427,116 $ 1,050,366
As a percentage of total revenues:
Revenues by geography:
Americas 69% 67% 70% 67%
Europe 17 19 17 19
Asia Pacific 14 14 13 14
100% 100% 100% 100%
Three Months Ended Three Months Ended Three Months Ended
July 31, 2012 April 30, 2012 July 31, 2011
compared to Three Months compared to Three Months compared to Three Months
Ended July 31, 2011 Ended April 30, 2011 Ended July 31, 2010
Revenue constant currency growth rates (as compared to the comparable prior periods)
Americas 38% 43% 34%
Europe 40% 33% 36%
Asia Pacific 28% 30% 33%
Total growth 37% 39% 34%
We present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect at the end of each quarter for growth rate calculations presented, rather than the actual exchange rates in effect during that period.
Supplemental Diluted Share Count Information
(in thousands)
Three Months Ended July 31, Six Months Ended July 31,
2012 2011 2012 2011
Weighted-average shares outstanding for basic earnings per share 139,425 135,093 138,789 134,273
Effect of dilutive securities (1):
Convertible senior notes 2,542 2,753 2,665 2,581
Warrants associated with the convertible senior note hedges 866 1,160 1,037 919
Employee stock awards 3,361 4,450 3,711 4,563
Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share 146,194 143,456 146,202 142,336
(1) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and six months ended July 31, 2012 and 2011 because the effect would have been anti-dilutive.
Supplemental Cash Flow Information
Free cash flow analysis, a non-GAAP measure
(in thousands)
Three Months Ended July 31, Six Months Ended July 31,
2012 2011 2012 2011
Operating cash flow
GAAP net cash provided by operating activities $ 136,197 $ 82,933 $ 349,409 $ 222,451
Less:
Capital expenditures (29,304) (45,051) (74,025) (72,365)
Free cash flow $ 106,893 $ 37,882 $ 275,384 $ 150,086
Our free cash flow analysis includes GAAP net cash provided by operating activities less capital expenditures. The capital expenditures balance does not include any costs related to the purchase and activities related to the building of our campus and strategic investments.
Comprehensive Income (Loss)
(in thousands)
Three Months Ended July 31, Six Months Ended July 31,
2012 2011 2012 2011
Net loss $ (9,829) $ (4,268) $ (29,304) $ (3,738)
Other comprehensive income, before tax and net of reclassification adjustments:
Foreign currency translation and other gains (losses) 10,135 5,858 6,947 (1,219)
Unrealized gains (losses) on investments (961) 2,052 159 2,745
Other comprehensive income, before tax 9,174 7,910 7,106 1,526
Tax effect 359 (767) (59) (1,026)
Other comprehensive income, net of tax 9,533 7,143 7,047 500
Comprehensive income (loss) $ (296) $ 2,875 $ (22,257) $ (3,238)
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,
2012 2011 2012 2011
Gross profit
GAAP gross profit $569,231 $425,092 $1,113,147 $826,390
Plus:
Amortization of purchased intangibles (a) 17,668 16,373 35,116 25,468
Stock-based expenses (b) 7,864 4,379 15,117 8,030
Non-GAAP gross profit $594,763 $445,844 $1,163,380 $859,888
Operating expenses
GAAP operating expenses $582,697 $440,840 $1,148,862 $844,941
Less:
Amortization of purchased intangibles (a) (2,407) (2,306) (5,834) (3,546)
Stock-based expenses (b) (77,553) (50,215) (151,566) (94,122)
Non-GAAP operating expenses $502,737 $388,319 $ 991,462 $747,273
Income from operations
GAAP loss from operations $ (13,466) $ (15,748) $ (35,715) $ (18,551)
Plus:
Amortization of purchased intangibles (a) 20,075 18,679 40,950 29,014
Stock-based expenses (b) 85,417 54,594 166,683 102,152
Non-GAAP income from operations $ 92,026 $ 57,525 $ 171,918 $112,615
Non-operating income (c)
GAAP non-operating income (loss) $ (566) $ (1,965) $ (3,185) $ 1,619
Plus: Amortization of debt discount, net 6,207 2,712 11,090 5,470
Non-GAAP non-operating income $ 5,641 $ 747 $ 7,905 $ 7,089
Net income
GAAP net loss $ (9,829) $ (4,268) $ (29,304) $ (3,738)
Plus:
Amortization of purchased intangibles 20,075 18,679 40,950 29,014
Stock-based expenses 85,417 54,594 166,683 102,152
Amortization of debt discount, net 6,207 2,712 11,090 5,470
Less:
Income tax effect of Non-GAAP items (41,154) (28,635) (74,249) (49,926)
Non-GAAP net income $ 60,716 $ 43,082 $ 115,170 $ 82,972
Diluted earnings per share
GAAP diluted loss per share (d) $ (0.07) $ (0.03) $ (0.21) $ (0.03)
Plus:
Amortization of purchased intangibles 0.14 0.13 0.28 0.20
Stock-based expenses 0.58 0.38 1.14 0.72
Amortization of debt discount, net 0.04 0.02 0.08 0.04
Less:
Income tax effect of Non-GAAP items (0.27) (0.20) (0.50) (0.35)
Non-GAAP diluted earnings per share $ 0.42 $ 0.30 $ 0.79 $ 0.58
Shares used in computing diluted net income per share 146,194 143,456 146,202 142,336
a) Amortization of purchased intangibles were as follows:
Three Months Ended July 31, Six Months Ended July 31,
2012 2011 2012 2011
Cost of revenues $ 17,668 $ 16,373 $ 35,116 $ 25,468
Marketing and sales 2,407 2,306 5,834 3,546
$ 20,075 $ 18,679 $ 40,950 $ 29,014
b) Stock-based expenses were as follows:
Three Months Ended July 31, Six Months Ended July 31,
2012 2011 2012 2011
Cost of revenues $ 7,864 $ 4,379 $ 15,117 $ 8,030
Research and development 16,089 11,188 31,756 19,027
Marketing and sales 44,781 27,114 86,768 50,901
General and administrative 16,683 11,913 33,042 24,194
$ 85,417 $ 54,594 $ 166,683 $102,152
c) Non-operating income 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.
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 Six Months Ended
July 31, July 31,
2012 2011 2012 2011
GAAP Basic Net Loss Per Share
Net loss $ (9,829) $ (4,268) $ (29,304) $ (3,738)
Basic net loss per share $ (0.07) $ (0.03) $ (0.21) $ (0.03)
Shares used in computing basic net loss per share 139,425 135,093 138,789 134,273
Three Months Ended Six Months Ended
July 31, July 31,
2012 2011 2012 2011
Non-GAAP Basic Net Income Per Share
Non-GAAP net income $60,716 $43,082 $115,170 $82,972
Basic Non-GAAP net income per share $ 0.44 $ 0.32 $ 0.83 $ 0.62
Shares used in computing basic net income per share 139,425 135,093 138,789 134,273
Three Months Ended Six Months Ended
July 31, July 31,
2012 2011 2012 2011
GAAP Diluted Net Loss Per Share
Net loss $ (9,829) $ (4,268) $ (29,304) $ (3,738)
Diluted net loss per share $ (0.07) $ (0.03) $ (0.21) $ (0.03)
Shares used in computing diluted net loss per share 139,425 135,093 138,789 134,273
Three Months Ended Six Months Ended
July 31, July 31,
2012 2011 2012 2011
Non-GAAP Diluted Net Income Per Share
Non-GAAP net income $60,716 $43,082 $115,170 $82,972
Diluted Non-GAAP net income per share $ 0.42 $ 0.30 $ 0.79 $ 0.58
Shares used in computing diluted net income per share 146,194 143,456 146,202 142,336
SOURCE salesforce.com
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