Summary
Salesforce.com, Inc. (CRM) reported its first-quarter fiscal year 2007 results for the period ending April 30, 2006. The company experienced significant year-over-year revenue growth of 63%, reaching $104.7 million, driven primarily by a 63% increase in subscription and support revenues. This growth was fueled by a substantial rise in paying subscribers, which increased to approximately 444,000. Despite strong revenue performance, the company reported an operating loss of $0.12 million for the quarter, compared to an operating income of $4.3 million in the prior year. This shift is largely attributable to increased operating expenses, particularly in marketing and sales, research and development, and general and administrative functions, as Salesforce continues to invest in expanding its infrastructure and personnel to support its rapid growth. Additionally, the adoption of SFAS 123R, requiring the expensing of stock-based compensation, significantly impacted reported expenses, contributing $7.6 million in pre-tax stock-based expenses during the quarter, which notably reduced net income to a loss of $0.23 million from a profit of $4.38 million in the prior year's comparable period. The company also announced the acquisition of Sendia Corporation for $15.5 million, aimed at enhancing its on-demand wireless application capabilities. Salesforce maintained a strong liquidity position with $298.3 million in cash, cash equivalents, and marketable securities. Management expressed confidence that existing liquidity and cash from operations would be sufficient to meet working capital needs for the next 12 months, though future growth may necessitate additional financing. Investors should note the significant impact of SFAS 123R adoption on profitability and the ongoing substantial investments in growth initiatives, which are expected to continue affecting short-term earnings.
Key Highlights
- 1Revenue increased by 63% year-over-year to $104.7 million.
- 2Number of paying subscriptions grew to approximately 444,000, up from 267,000 in the prior year's quarter.
- 3Reported an operating loss of $0.12 million, a decrease from an operating income of $4.3 million in the prior year.
- 4Net loss of $0.23 million, compared to a net income of $4.38 million in the same quarter last year.
- 5Adopted SFAS 123R, resulting in $7.6 million in pre-tax stock-based expenses for the quarter.
- 6Acquired Sendia Corporation for $15.5 million to expand wireless capabilities.
- 7Ended the quarter with $298.3 million in cash, cash equivalents, and marketable securities.