Salesforce.com Announces Record Fiscal Third Quarter 2008 Results
SAN FRANCISCO, Calif. - November 15, 2007
Record Revenue and Operating Cash; Company Raises Outlook
- Record Revenue of $193M, up 48% Year-Over-Year
- Record Operating Cash Flow of $52M, up 70% Year-Over-Year
- Cash & Marketable Securities Reach $571M, up $200M Year-Over-Year
- GAAP Net Income Rises to $6.5M, up 74% Sequentially
- GAAP EPS of $0.05 Exceeds Company Guidance
- Net Paying New Customers Rise 2,800 to 38,100
- Raising Full Year FY08 Revenue and EPS Outlook
(NYSE: CRM), the market and technology leader in on-demand business services, today announced
results for its third fiscal quarter ended October 31, 2007.
"Revenue for our third fiscal quarter grew an amazing 48% from the year ago quarter to
roughly $193 million. That's more revenue in 9-months this fiscal year, than we achieved all of
last year," said Marc Benioff, CEO and Chairman. "At this rate, we expect to push well past the
$800 million revenue run rate in Q4, and we are now on track to become the first ever on-demand
company to exceed $1 billion in annual revenue in our fiscal '09. Our on-demand industry leadership
has never been more clear."
Salesforce.com delivered the following results for the third
fiscal quarter 2008:
Total Q3 revenue was $192.8 million, an increase
of 48% on a year-over-year basis and an increase of 9% on a quarter-over-quarter basis.
Subscription and support revenues were $176.4 million, an increase of 49% on a year-over-year basis
and an increase of 10% on a quarter-over-quarter basis. Professional services and other revenues
were $16.4 million, an increase of 41% on a year-over-year basis and a decrease of 1% on a
Earnings per Share: Q3 diluted GAAP earnings per share were
$0.05. The Q3 GAAP EPS result was benefited by a gain of approximately $0.01 per share associated
with the sale of a minority investment. Third quarter results also include approximately $14.2
million in stock based compensation and approximately $1.4 million in amortization of purchased
intangibles related to previously announced acquisitions, as well as a 46% tax rate. Q3 diluted
GAAP EPS calculations are based on an average of 122 million diluted shares outstanding during the
Customers: The company added approximately 2,800 net paying
customers during the 3rd quarter. These additions pushed total net paying customers in the third
quarter to 38,100, an increase of approximately 11,000 or 41% from Q3 of the prior year, and an
approximately 8% from the prior quarter.
Cash: Cash from operations for the fiscal third quarter was
the most in the company's history at approximately $52 million, an increase of approximately 70%
year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at
approximately $571 million, an increase of approximately 54% or $200 million year-over-year.
Deferred Revenue: Deferred revenue on the balance sheet as
of the end of the fiscal third quarter was roughly $341 million, an increase of 55% on a
year-over-year basis and 6% on a quarterover-quarter basis.
Based on information as of November 15, 2007, salesforce.com is initiating guidance for its
fourth quarter and raising guidance for its full fiscal year 2008 ending January 31, 2008.
Salesforce.com is also initiating full year fiscal 2009 guidance.
Q4 FY08: Revenue for the company's fourth fiscal quarter is
projected to be in the range of approximately $206 million to $208 million. GAAP diluted EPS is
expected to be in the range of approximately $0.03 to $0.04. GAAP EPS estimates include the effects
of stock based
Quarterly Conference Call
compensation and the amortization of purchased intangibles. For the fourth fiscal quarter
FY08, stock based compensation expense is expected to be approximately $16 million to $18 million,
and the expense associated with the amortization of purchased intangibles is now expected to be
approximately $1.5 million. For the purposes of Q4 GAAP EPS calculation, the company is expecting
an average diluted shares count of 125 million shares, and a GAAP tax rate of 46%.
Full Year FY08: The company is raising its full fiscal year
2008 revenue and EPS outlook. Revenue is now expected to be approximately $737 million to
approximately $739 million. The company now expects GAAP diluted EPS to be in the range of
approximately $0.12 to $0.13. This GAAP EPS estimate includes the effects of stock based
compensation, amortization of purchased intangibles, and the third quarter gain on the sale of a
minority investment. For the full fiscal year 2008, stock based compensation expense is expected to
be approximately $56 million to $58 million, and the expense associated with the amortization of
purchased intangibles is currently expected to be approximately $5.5 million. For the purposes of
the full fiscal year 2008 GAAP EPS calculation, the company is expecting an average diluted shares
count of 123 million shares, and a GAAP tax rate of 50%.
Full Year FY09: The company today is initiating revenue
guidance for its fiscal year 2009, and now expects full year revenue of approximately $1.0 billion
to approximately $1.02 billion. The company plans to provide its expectations for FY09 GAAP EPS at
the time it announces its fourth quarter FY08 results planned for February, 2008.
Salesforce.com will host a conference call to discuss its third quarter fiscal 2008 results
at 2:00 p.m. (PST) 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 domestically 866-901-SFDC or 866-901-7332 and internationally 706-902-1764. A replay will
be available at (800) 642-1687 or (706) 645-9291, passcode 22940333, until midnight (EST) November
"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:
This press release contains forward-looking statements including but not limited to statements
regarding our expected future revenue, GAAP diluted earnings per share, expected tax rate,
anticipated shares outstanding, future growth and margin expectations, further adoption of our
on-demand business services by enterprises, and the potential market for our existing service
offerings. All of our forward looking statements 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 cash flows, rate of growth and
anticipated revenue run rate, 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, 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
contained in our SEC filings, including our most recent reports on Form 10-K and 10-Q, particularly
under the heading "Risk Factors." These documents are available in the SEC Filings portion of the
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statements, except as required by law.
Salesforce.com is the world’s largest provider of customer relationship management (CRM) software. For more information about salesforce.com (NYSE: CRM), visit: www.salesforce.com/ap/.
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