01—Abstract
Summary
Summary of the 10-Q filed August 22, 2008. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc. (CRM) reported strong year-over-year growth in its third-quarter fiscal 2009 filing.
Total revenues increased by 49% to $263.1 milliona for the three months ended July 31, 2008, compared to the same period in the prior year. This growth was primarily driven by a 50% surge in subscription and support revenues, indicating continued demand for its core CRM services. The company also demonstrated improved profitability, with operating income increasing significantly to $16.1 million from $3.3 million in the prior year's quarter, reflecting improved operational efficiency despite substantial investments in growth.
The balance sheet remains robust, with cash, cash equivalents, and marketable securities growing to $823.4 millionb. The acquisition of InStranet for $31.5 million in cash shortly after the quarter's end highlights Salesforce's strategic intent to expand its product offerings and market reach.
Investors should note the continued significant investment in marketing and sales (50%c of revenue) as a key driver of future growth, as well as the ongoing impact of stock-based compensation expense. The company's international expansion is also a notable trend, with revenues from Europe and Asia Pacific showing strong growth and contributing a larger percentage of total revenue.
02—Key points
Key Highlights
- Total revenues for the three months ended July 31, 2008, surged by 49% year-over-year to $263.1 million.
- Subscription and support revenue, the company's primary revenue stream, grew by 50% year-over-year, demonstrating strong demand for its core CRM services.
- Operating income showed significant improvement, rising to $16.1 million from $3.3 million in the prior year's quarter, indicating better operational leverage.
- The company's cash, cash equivalents, and marketable securities increased to $823.4 million as of July 31, 2008, up from $497.2 million at the same time last year, reflecting strong cash generation.
- Salesforce completed the acquisition of InStranet for approximately $31.5 million in cash in August 2008, signaling strategic expansion beyond core CRM.
- International revenue growth was strong, with Europe and Asia Pacific contributing 28% of total revenues, up from 24% in the prior year's quarter, highlighting successful global expansion efforts.
- Marketing and sales expenses remained substantial at 50% of total revenues, underscoring the company's continued investment in customer acquisition and market penetration.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2009, Salesforce, Inc. kept $0.04.
- Revenue$263.1M100.0%
- Cost of revenue−$54.1M20.6%
- Gross profit$209.0M79.4%
- Operating costs−$192.9M73.3%
- Operating income$16.1M6.1%
- Interest, other & tax−$6.1M2.3%
- Net income$10.0M3.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2009filed August 22, 2008Financial Statements
| Revenue | $263.08M |
| Cost of Revenue | $54.09M |
| Gross Profit | $208.99M |
| R&D Expenses | $24.03M |
| Operating Expenses | $192.89M |
| Operating Income | $16.10M |
| Interest Expense | -$6.71M |
| Net Income | $10.00M |
| EPS (Basic) | $0.02 |
| EPS (Diluted) | $0.02 |
| Shares Outstanding (Basic) | 483.45M |
| Shares Outstanding (Diluted) | 502.50M |
05—Questions
Frequently Asked Questions
What was Salesforce's revenue growth in the reported quarter?
For the three months ended July 31, 2008, Salesforce reported total revenues of $263.1 million, representing a significant increase of 49% compared to the same period in the prior year. This growth was primarily driven by a 50% increase in subscription and support revenues.
How did Salesforce's profitability change year-over-year?
Profitability improved considerably. Operating income for the three months ended July 31, 2008, was $16.1 million, a substantial increase from $3.3 million in the same period of the prior year. This improvement occurred despite continued significant investments in marketing and sales and includes $18.9 million in stock-based expenses.
What is the company's cash position and liquidity?
As of July 31, 2008, Salesforce maintained a strong liquidity position with cash, cash equivalents, and marketable securities totaling $823.4 million, an increase from $497.2 million as of July 31, 2007. Net cash provided by operating activities was $53.1 million for the quarter, further strengthening its financial flexibility.
What strategic acquisitions did Salesforce make around this reporting period?
Salesforce acquired InStranet, Inc., a knowledge management application provider, for approximately $31.5 million in cash on August 4, 2008. This acquisition occurred shortly after the end of the reporting period and indicates a strategy to expand its product portfolio.
06—Continue