01—Abstract
Summary
Summary of the 10-K filed February 29, 2008. Cited figures are marked; the original filing is the authoritative source.
Salesforce.com, Inc.'s 2008 10-K filing reveals a company experiencing significant growth and solidifying its position as a leader in the software-as-a-service (SaaS) CRM market.
The company reported substantial revenue growth of 51% year-over-year, reaching $748.7 milliona, driven by an increase in paying subscriptions to approximately 1.1 million. This growth underscores the market's increasing adoption of the on-demand model, which Salesforce pioneered. Despite significant investments in sales, marketing, and infrastructure to support this expansion, Salesforce demonstrated improved profitability, shifting from an operating loss in the prior year to an operating income of $20.3 million.
The company's strategic focus on expanding its platform capabilities with Force.com and its AppExchange ecosystem appears to be paying off, enhancing the value proposition for customers and fostering a developer community. Salesforce's robust cash flow from operations and strong cash position provide a solid foundation for continued investment and growth.
02—Key points
Key Highlights
- Revenue increased by 51% to $748.7 million for the fiscal year ended January 31, 2008, up from $497.1 million in the prior year.
- The number of paying subscriptions grew significantly to approximately 1.1 million as of January 31, 2008, from approximately 646,000 as of January 31, 2007.
- The company achieved operating income of $20.3 million in fiscal 2008, a substantial improvement from an operating loss of $3.6 million in fiscal 2007.
- Cash flow from operating activities increased significantly to $204.3 million in fiscal 2008, up from $111.2 million in fiscal 2007.
- Salesforce is actively expanding its global presence, with international revenues (Europe and Asia Pacific) growing by 74% and now representing 25% of total revenues.
- The Force.com platform and AppExchange continue to be key strategic initiatives, enabling third-party development and expanding the ecosystem around Salesforce's CRM offerings.
- Stock-based expenses, following the adoption of SFAS 123R, remain a significant expense, totaling $55.2 million in fiscal 2008.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Salesforce, Inc. kept $0.02.
- Revenue$748.7M100.0%
- Cost of revenue−$171.6M22.9%
- Gross profit$577.1M77.1%
- Operating costs−$556.8M74.4%
- Operating income$20.3M2.7%
- Interest, other & tax−$2.0M0.3%
- Net income$18.4M2.5%
Where FY2008 revenue went
$748.7M- Other operating costs: $493.0M, 66% of revenue
- Cost of revenue: $171.6M, 23% of revenue
- Net income: $18.4M, 2.5% of revenue
- R&D: $63.8M, 8.5% of revenue
Kept 2.5% as net incomeNet income $18.4M · 2.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 29, 2008Financial Statements
| Revenue | $748.70M |
| Cost of Revenue | $171.59M |
| Gross Profit | $577.11M |
| R&D Expenses | $63.81M |
| Operating Expenses | $556.80M |
| Operating Income | $20.31M |
| Interest Expense | $46K |
| Net Income | $18.36M |
| EPS (Basic) | $0.04 |
| EPS (Diluted) | $0.04 |
| Shares Outstanding (Basic) | 467.36M |
| Shares Outstanding (Diluted) | 489.69M |
05—Questions
Frequently Asked Questions
What is Salesforce's primary business model and how does it generate revenue?
Salesforce's primary business model is software-as-a-service (SaaS), offering a comprehensive Customer Relationship Management (CRM) solution on demand. Revenue is primarily generated through subscription fees from customers accessing these on-demand applications and from additional support services. Professional services and training also contribute to revenue.
How did Salesforce perform financially in fiscal year 2008 compared to the previous year?
Salesforce demonstrated strong financial performance in fiscal year 2008. Total revenues grew by 51% to $748.7 million. The company also improved its profitability, moving from an operating loss of $3.6 million in fiscal 2007 to an operating income of $20.3 million in fiscal 2008. This growth was supported by a significant increase in paying subscriptions and robust cash flow from operations.
What are the key strategic priorities for Salesforce as outlined in this filing?
Key strategic priorities include continuing to lead the transformation to SaaS and Platform-as-a-Service (PaaS), strengthening its core CRM applications and expanding into new application areas, aggressively pursuing new customers and international markets, deepening relationships with existing customers, and encouraging the development of third-party applications on its Force.com platform through initiatives like the AppExchange.
What are the main risks identified by Salesforce in its business operations?
Salesforce identified several key risks, including potential defects or disruptions in its service, reliance on third-party hosting facilities, security breaches, intense competition, the immaturity and volatility of the SaaS market, challenges in expanding beyond CRM, and the potential impact of evolving regulations. The company also notes risks related to its stock price volatility and the concentration of ownership among insiders.
06—Continue