Summary
Salesforce, Inc. (CRM) reported its first quarter fiscal year 2010 results for the period ending April 30, 2009. The company demonstrated continued revenue growth, with total revenues reaching $304.9 million, a 23% increase year-over-year, primarily driven by subscription and support services which accounted for 92% of total revenue. Despite macroeconomic headwinds impacting IT spending, Salesforce maintained strong gross margins at 80% and saw significant operating income growth to $30.1 million from $15.4 million in the prior year period. The company also generated substantial operating cash flow of $98.0 million. However, investors should note the increase in research and development expenses (up 50% year-over-year) and marketing and sales expenses (up 13% year-over-year) as the company continues to invest in its platform and growth, alongside a noted slowdown in the pace of new business acquisition due to longer sales cycles and smaller initial customer deployments. The balance sheet reflects a healthy liquidity position with $983.8 million in cash, cash equivalents, and marketable securities. Deferred revenue also saw a healthy increase to $549.4 million. Management indicated plans to continue investing in data center capacity, R&D, and sales and marketing, while also implementing cost controls to manage the impact of the weakened global economy. The company anticipates slower revenue growth in fiscal year 2010 compared to fiscal year 2009, attributing this to a general slowdown in IT spending and longer sales cycles impacting new business acquisition.
Financial Highlights
28 data points| Revenue | $304.92M |
| Cost of Revenue | $61.80M |
| Gross Profit | $243.12M |
| R&D Expenses | $31.58M |
| Operating Expenses | $213.00M |
| Operating Income | $30.12M |
| Interest Expense | $208K |
| Net Income | $18.44M |
| EPS (Basic) | $0.04 |
| EPS (Diluted) | $0.04 |
| Shares Outstanding (Basic) | 492.82M |
| Shares Outstanding (Diluted) | 501.40M |
Key Highlights
- 1Total revenues grew 23% year-over-year to $304.9 million, driven by a 25% increase in subscription and support revenue.
- 2Gross profit margin remained strong at 80% ($243.1 million).
- 3Operating income more than doubled to $30.1 million, up from $15.4 million in the prior year period.
- 4Operating cash flow was robust at $98.0 million.
- 5Cash, cash equivalents, and marketable securities totaled $983.8 million as of April 30, 2009, indicating strong liquidity.
- 6Deferred revenue increased to $549.4 million, reflecting strong future revenue potential.
- 7The company acknowledges a slowdown in new business due to longer sales cycles and smaller initial deployments, leading to an expectation of slower revenue growth in FY2010.