01—Abstract
Summary
Summary of the 10-K filed March 6, 2015. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc.'s 2015 10-K filing highlights a period of significant growth and strategic expansion.
The company continues to solidify its position as a leader in enterprise cloud computing and Customer Relationship Management (CRM) solutions. Total revenues grew by 32% year-over-year, reaching $5.4 billiona, primarily driven by its subscription and support services, which now constitute 93% of total revenue. The company continues to invest heavily in research and development and marketing and sales, which, while contributing to a reported net loss of $262.7 million, are crucial for expanding its service offerings and market reach.
Salesforce has strategically expanded its core cloud offerings to include Sales Cloud, Service Cloud, Marketing Cloud, Community Cloud, Analytics Cloud, and the Salesforce1 Platform, underscoring its commitment to providing a comprehensive customer success platform. The company's growth strategy emphasizes strengthening existing solutions, expanding into new high-growth categories, fostering strategic relationships with existing customers, and aggressively pursuing new customer acquisition globally. Investments in infrastructure, including data center capacity and personnel, are ongoing to support this expansion.
Salesforce's subscription-based model, with a typical contract term of 12-36 months, demonstrates strong customer retention, with an attrition rate between 9-10%b for fiscal year 2015. Despite the reported GAAP net loss, the company's non-GAAP operating profit showed a substantial increase, indicating underlying operational strength. The company also made significant strategic acquisitions, including ExactTarget and RelateIQ, to enhance its product portfolio and market position.
02—Key points
Key Highlights
- Total revenues increased by 32% to $5.4 billion in fiscal year 2015, demonstrating robust top-line growth.
- Subscription and support revenues represent 93% of total revenues, underscoring the strength of Salesforce's recurring revenue model.
- The company reported a net loss of $262.7 million on a GAAP basis, largely due to significant investments in sales, marketing, and research and development, as well as stock-based compensation and acquisitions.
- Salesforce continues to expand its cloud service offerings, now encompassing Sales Cloud, Service Cloud, Marketing Cloud, Community Cloud, Analytics Cloud, and the Salesforce1 Platform.
- Marketing and sales expenses remained the largest cost category, representing 51% of total revenues, reflecting ongoing investment in customer acquisition and brand building.
- The company experienced a strong increase in cash provided by operating activities, reaching $1.2 billion, an improvement from the prior year.
- Significant acquisitions, including ExactTarget and RelateIQ, were completed to enhance product capabilities and market reach.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2015, Salesforce, Inc. lost $0.05.
- Revenue$5.37B100.0%
- Cost of revenue−$1.29B24.0%
- Gross profit$4.08B76.0%
- Operating costs−$4.23B78.7%
- Operating income−$145.6M2.7%
- Interest, other & tax−$117.1M2.2%
- Net income−$262.7M4.9%
04—Financials
Financial Highlights
Figures from 10-KFY2015filed March 6, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $5.37B$4.07B | +32.0% |
| Gross Profit | $4.08B$3.10B | +31.6% |
| R&D Expenses | $792.92M$623.80M | +27.1% |
| Operating Expenses | $4.23B$3.39B | +24.8% |
| Operating Income | -$145.63M-$286.07M | +49.1% |
| Interest Expense | $73.24M$77.21M | −5.1% |
| Net Income | -$262.69M-$232.18M | −13.1% |
| EPS (Basic) | $-0.42$-0.39 | −7.7% |
| EPS (Diluted) | $-0.42$-0.39 | −7.7% |
| Shares Outstanding (Basic) | 624.15M597.61M | +4.4% |
| Shares Outstanding (Diluted) | 624.15M597.61M | +4.4% |
05—Questions
Frequently Asked Questions
What is Salesforce's primary business model and revenue source?
Salesforce's primary business model is Software-as-a-Service (SaaS) delivered via the cloud, focused on Customer Relationship Management (CRM) and other enterprise cloud computing solutions. Its main revenue source is subscription fees from customers for access to these services, along with related professional services for implementation and support. Subscription and support revenues accounted for 93% of total revenues in fiscal year 2015.
How is Salesforce managing its significant operating expenses, particularly Marketing and Sales?
Salesforce views its significant investments in marketing and sales (51% of revenue in FY2015) as critical for its growth strategy. These expenses are aimed at acquiring new customers, increasing penetration within existing customer bases, and building brand awareness. The company expects these costs to remain substantial to support its aggressive growth plans and market expansion.
What is the significance of the company's net loss on a GAAP basis?
The reported GAAP net loss of $262.7 million for fiscal year 2015 is primarily attributed to substantial investments in research and development, sales and marketing, stock-based compensation expenses, and costs associated with acquisitions. Management considers these investments essential for long-term growth and market leadership. The company also highlights strong growth in non-GAAP operating profit, suggesting that the underlying business operations are performing well despite the GAAP net loss.
How does Salesforce approach acquisitions as part of its strategy?
Acquisitions are a key component of Salesforce's strategy to expand its service offerings, market presence, and technological capabilities. The company completed significant acquisitions of ExactTarget and RelateIQ in the preceding fiscal year to bolster its marketing and data science offerings, respectively. These acquisitions are integrated into its core platform to enhance its comprehensive customer success platform.
06—Continue