10-KPeriod: FY2013

Salesforce, Inc. Annual Report, Year Ended Jan 31, 2013

Filed March 8, 2013For Securities:CRM

Summary

Salesforce, Inc. (CRM) reported strong revenue growth of 35% for the fiscal year ended January 31, 2013, reaching $3.1 billion, primarily driven by its subscription and support services. The company continues to invest heavily in sales and marketing (53% of revenue) and research and development (14% of revenue) to fuel its expansion. While the company experienced an operating loss of $110.7 million for the fiscal year, this was largely due to significant stock-based compensation expenses ($379.4 million) and amortization of acquired intangibles ($88.2 million), as well as a one-time tax charge of $149.1 million to establish a valuation allowance for deferred tax assets. The company ended the fiscal year with a solid cash position of $1.8 billion. Salesforce's strategy focuses on strengthening its core offerings, innovating in high-growth markets, improving renewal rates, deepening customer relationships, aggressively pursuing new customers globally, and encouraging third-party app development on its platform. The company also completed several strategic acquisitions during the year, including Buddy Media, Inc., to expand its service capabilities. Investors should note the company's significant investment in growth, the resulting net loss (exacerbated by non-cash charges and a one-time tax item), and the ongoing reliance on stock-based compensation. The company's core business model, centered on subscription-based cloud computing, continues to demonstrate robust top-line growth, positioning it for future expansion despite current profitability challenges.

Financial Statements
Beta
Revenue$3.05B
Cost of Revenue$683.58M
Gross Profit$2.37B
R&D Expenses$429.48M
Operating Expenses$2.48B
Operating Income-$110.71M
Interest Expense$30.95M
Net Income-$270.44M
EPS (Basic)$-0.48
EPS (Diluted)$-0.48
Shares Outstanding (Basic)564.90M
Shares Outstanding (Diluted)564.90M

Key Highlights

  • 1Total revenues increased by 35% to $3.1 billion for the fiscal year ended January 31, 2013.
  • 2Subscription and support revenues represented 94% of total revenues, indicating strong recurring revenue.
  • 3Marketing and sales expenses accounted for 53% of total revenues, reflecting significant investment in customer acquisition and brand building.
  • 4The company reported a net loss of $270.4 million, influenced by $379.4 million in stock-based expenses and a $149.1 million tax charge for a valuation allowance.
  • 5Cash, cash equivalents, and marketable securities totaled $1.8 billion, providing a strong liquidity position.
  • 6Salesforce completed strategic acquisitions of Buddy Media, Inc., Rypple, Inc., and GoInstant, Inc. to enhance its product offerings and market reach.
  • 7The company's strategy emphasizes continued investment in innovation, customer acquisition, and global expansion.

Frequently Asked Questions

Salesforce's primary revenue driver is its subscription and support services for its enterprise cloud computing solutions. These services accounted for approximately 94% of the company's total revenues for the fiscal year ended January 31, 2013.

Salesforce reported a net loss primarily due to substantial investments in growth, including significant stock-based compensation expenses ($379.4 million) and amortization of purchased intangibles ($88.2 million). Additionally, a one-time, non-cash charge of $149.1 million was recorded in the third quarter of fiscal 2013 to establish a valuation allowance for deferred tax assets, further impacting profitability. The company prioritizes reinvesting revenue into its business for long-term expansion.

Salesforce's strategy focuses on strengthening its core CRM solutions, innovating in high-growth markets like marketing and collaboration, improving customer renewal rates, deepening relationships with existing customers, aggressively pursuing new customers globally, and fostering the development of third-party applications on its platform. The company also continues to evaluate strategic acquisitions.

Salesforce maintained a strong liquidity position with $1.8 billion in cash, cash equivalents, and marketable securities as of January 31, 2013. The company generates significant cash from operations, which it plans to use for continued investment in infrastructure, personnel, sales and marketing activities, research and development, and potential acquisitions to support its growth objectives.