10-KPeriod: FY2010

Salesforce, Inc. Annual Report, Year Ended Jan 31, 2010

Filed March 11, 2010For Securities:CRM

Summary

Salesforce.com, Inc. filed its annual report on Form 10-K for the fiscal year ended January 31, 2010. The company, a leader in enterprise cloud computing and CRM services, reported strong revenue growth of 21% year-over-year, reaching $1.3 billion. Subscription and support revenue constituted the vast majority of this, indicating the success of its Software-as-a-Service (SaaS) model. The company demonstrated solid operational performance, with income from operations growing significantly. Significant investments in marketing and sales, along with research and development, highlight Salesforce's commitment to continued growth and market leadership. Financially, Salesforce ended the fiscal year with a strong cash position of $1.7 billion, reflecting healthy cash flow from operations. The company also managed its expenses effectively, with marketing and sales expenses, while substantial, representing a slightly lower percentage of revenue compared to the previous year. The report also details the issuance of $575 million in convertible senior notes, signaling a move to strengthen its capital structure for future growth. Overall, the filing paints a picture of a rapidly growing company solidifying its position in the emerging cloud computing market.

Financial Highlights

54 data points
Beta

Revenue

$1.31B

80.2% Gross Margin

Net Income

$80.72M

6.2% Net Margin

EPS (Diluted)

$0.16

Total Assets

$2.46B

Cash & Equivalents

$1.01B

Free Cash Flow

$221.41M

Financial Statements
Beta
Revenue$1.31B
Cost of Revenue$257.93M
Gross Profit$1.05B
R&D Expenses$131.90M
Operating Expenses$932.39M
Operating Income$115.27M
Interest Expense$2.00M
Net Income$80.72M
EPS (Basic)$0.16
EPS (Diluted)$0.16
Shares Outstanding (Basic)497.85M
Shares Outstanding (Diluted)512.46M

Key Highlights

  • 1Total revenues grew by 21% to $1.3 billion for the fiscal year ended January 31, 2010.
  • 2Subscription and support revenue accounted for 93% of total revenues, demonstrating the strength of the subscription-based cloud model.
  • 3Income from operations increased to $115.3 million, up from $63.7 million in the prior fiscal year.
  • 4The company ended the fiscal year with a robust cash and marketable securities balance of $1.7 billion.
  • 5Salesforce.com raised $575 million through the issuance of 0.75% convertible senior notes, enhancing its capital structure.
  • 6Marketing and sales expenses, a significant investment area, represented 46% of total revenues, down from 50% in the prior year.
  • 7The company experienced strong international revenue growth, with Europe and Asia Pacific contributing 29% of total revenues.

Frequently Asked Questions

The primary revenue driver for Salesforce during fiscal year 2010 was its subscription and support services, which accounted for approximately 93% of its total revenues. This indicates the success and dominance of its cloud-based subscription model.

Salesforce experienced significant revenue growth while managing its expenses effectively. Marketing and sales expenses, though substantial at 46% of revenue, decreased as a percentage of total revenue compared to the prior year (50%), reflecting improved operational efficiency as the company scaled. Research and development and general and administrative expenses also grew in absolute terms, supporting the company's expansion and product development.

A key financial activity was the issuance of $575 million in 0.75% convertible senior notes in January 2010. This move was aimed at strengthening the company's capital structure. Additionally, Salesforce entered into convertible note hedge transactions and sold warrants to mitigate potential dilution from the convertible notes.

Salesforce maintained a strong liquidity position, ending the fiscal year with $1.7 billion in cash, cash equivalents, and marketable securities. This, combined with positive cash flow from operations, indicated a healthy financial standing to support its growth initiatives.