Salesforce.com Announces Record Fiscal First Quarter Results

First on-demand business service provider to exceed $100-million in revenue in a single quarter

  • Record Revenue of $104.7M, up 63% year-over-year
  • Company Raises Full Year Fiscal 2007 Guidance
  • Paying Subscribers rise 45,000 to 444,000, up 66% year-over-year
  • Customers rise 2,200 to 22,700, up 46% year-over-year
  • Fully Diluted Non-GAAP EPS of $0.04
  • GAAP EPS approximately break-even
  • AppExchange exceeds 200 On-Demand Applications
  • Largest Enterprise Implementation Now at 7,500 Subscribers

SAN FRANCISCO, Calif. — May 17, 2006 — Salesforce.com (NYSE: CRM), the market and technology leader in on-demand business services, today announced results for its fiscal first quarter ended April 30, 2006.

"I am excited to announce that salesforce.com is the first on demand business services provider to exceed one hundred million dollars in a single quarter," said Marc Benioff, chairman and CEO of salesforce.com. "Over 22,000 customers and 444,000 subscribers have chosen our salesforce.com and AppExchange on demand business services instead of traditional enterprise software to create this important industry milestone. Our largest implementation is now 7,500 subscribers, demonstrating the unique ability of the on demand model to scale from the largest enterprises in the world to the smallest."

Salesforce.com delivered the following results for the first quarter of fiscal year 2007:

    Customers and Paying Subscribers: Net paying subscribers rose approximately 45,000 during Q1 to exit the quarter at approximately 444,000 total subscribers. This ending total represents an increase of 66% from Q1 of the prior year, and an increase of 11% from the prior quarter. Customers rose approximately 2,200 during the quarter and totaled approximately 22,700, an increase of 46% from Q1 of the prior year, and an increase of 11% from the prior quarter.

    Revenue: Total revenue was $104.7 million, an increase of 63% on a year-over-year basis and an increase of 15% on a quarter-to-quarter basis. Subscription and support revenues were $94.5 million, an increase of 62% on a year-over-year basis and an increase of 15% on a quarter-to-quarter basis. Professional services and other revenues were $10.2 million, an increase of 70% on a year-over-year basis and an increase of 18% on a quarter-to-quarter basis.

    Earnings per Share: GAAP earnings per share were approximately break-even. Non-GAAP earnings per diluted share, excluding the effects of stock based compensation and amortization of purchased intangibles related to acquisitions, were $0.04. For the basis of non-GAAP EPS calculations, a diluted share count of 120 million shares was used.

    Cash: Cash from operations for the fiscal first quarter was $12.4 million.

    Deferred Revenue: Deferred revenue on the balance sheet as of April 30, 2006 was $182 million, an increase of 74% on a year-over-year basis and 8% on a quarter-to-quarter basis.
Based on information as of May 17, 2006, Salesforce.com is initiating guidance for its second quarter fiscal 2007 ending July 31, 2006, and updating guidance for its full fiscal year 2007 ending January 31, 2007.
    Q2 FY07: Revenue for the company's second fiscal quarter is expected to be in the range of approximately $112 million to approximately $114 million. Non-GAAP earnings per diluted share, excluding the effects of stock based compensation and amortization of purchased intangibles associated with acquisitions, are expected to be in the range of approximately $0.03 to approximately $0.04. This further assumes an estimated average of 121 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 45%. The company expects to report a GAAP loss of approximately $0.02 to $0.04 per share for the second quarter.

    Full Year FY07: The company today is raising its revenue outlook for its fiscal year 2007, and now expects full year revenue of approximately $478 million to approximately $483 million. Non-GAAP earnings per diluted share, excluding the effects of stock based compensation and amortization of purchased intangibles associated with acquisitions, are expected to be in the range of approximately $0.17 to $0.19. This estimate is in-line with the company's prior outlook. This outlook further assumes an estimated average of 122 million diluted shares outstanding and an estimated non-GAAP effective tax rate of 45%. The company expects to report a GAAP loss of approximately $0.05 to $0.08 per share for its full fiscal year 2007.

      Quarterly Conference Call
      Salesforce.com will host a conference call to discuss its first quarter and fiscal 2007 results at 2:00 p.m. Pacific Daylight 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 into the conference call can do so by dialing 866-901-SFDC or 866-901-7332. International participants may dial 706-758-3772. A replay will be available until midnight Eastern Daylight Time on June 2, 2006 and can be accessed by dialing, (800) 642-1687 or (706) 645-9291, passcode 8249998.

      safe harbor



      "Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about expected revenue and GAAP and Non-GAAP earnings per share for the second fiscal quarter of 2007 and the full fiscal year 2007, the achievement of which involve risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions proves incorrect, our 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 our operating results and rate of growth, errors, interruptions or delays in our service or our Web hosting, our new business model, our history of operating losses, the possibility that we will not remain profitable, breach of our security measures, the emerging market in which we operate, our relatively limited operating history, our ability to hire, retain and motivate our employees and manage our growth, competition, our ability to continue to release and gain customer acceptance of new and improved versions of our service, our belief that Sendia Corporation's wireless solution will provide value to our customers, customer and partner acceptance of the AppExchange, successful customer deployment and utilization of our services, unanticipated changes in our effective tax rate, fluctuations in the number of shares outstanding, the price of such shares, foreign currency exchange rates and interest rates.

      Further information on these and other factors that could affect our 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 our Form 10-K for the fiscal year ended January 31, 2006. These documents are available on the SEC Filings section of the Investor Information section of our 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.

      safe harbor



      "Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about expected revenue and GAAP and Non-GAAP earnings per share for the second fiscal quarter of 2007 and the full fiscal year 2007, the achievement of which involve risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions proves incorrect, our 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 our operating results and rate of growth, errors, interruptions or delays in our service or our Web hosting, our new business model, our history of operating losses, the possibility that we will not remain profitable, breach of our security measures, the emerging market in which we operate, our relatively limited operating history, our ability to hire, retain and motivate our employees and manage our growth, competition, our ability to continue to release and gain customer acceptance of new and improved versions of our service, our belief that Sendia Corporation's wireless solution will provide value to our customers, customer and partner acceptance of the AppExchange, successful customer deployment and utilization of our services, unanticipated changes in our effective tax rate, fluctuations in the number of shares outstanding, the price of such shares, foreign currency exchange rates and interest rates.

      Further information on these and other factors that could affect our 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 our Form 10-K for the fiscal year ended January 31, 2006. These documents are available on the SEC Filings section of the Investor Information section of our 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.