01—Abstract
Summary
Summary of the 10-Q filed August 25, 2009. Cited figures are marked; the original filing is the authoritative source.
Salesforce.com, Inc. (CRM) reported solid revenue growth in its second quarter of fiscal year 2010, with total revenues increasing by 20% year-over-year to $316.1 milliona.
This growth was primarily driven by subscription and support services, which saw a 22%b increase. Despite a challenging economic environment impacting IT spending, the company demonstrated resilience, expanding its customer base and maintaining strong renewal rates. Gross profit margin improved slightly, and operating income saw a significant increase of 83%, reflecting effective cost management and operating leverage.
The company maintained a strong liquidity position with $1.0 billionc in cash, cash equivalents, and marketable securities as of July 31, 2009. While the company acknowledged the macroeconomic headwinds, including longer sales cycles and smaller initial customer deployment sizes, it reiterated its commitment to strategic investments in research and development, international expansion, and platform development. Salesforce.com continues to focus on strengthening its core CRM offerings and expanding its cloud computing platform, positioning itself for continued growth as the economy recovers.
02—Key points
Key Highlights
- Total revenues increased by 20% to $316.1 million for the three months ended July 31, 2009.
- Subscription and support revenues grew by 22% to $293.4 million, representing 93% of total revenues.
- Operating income increased by 83% to $29.5 million, demonstrating improved profitability.
- Gross profit margin remained strong at 80%.
- The company maintained a robust liquidity position with $1.0 billion in cash, cash equivalents, and marketable securities.
- Marketing and sales expenses decreased as a percentage of revenue to 46% from 50% in the prior year's comparable period, indicating improved efficiency.
- Despite economic challenges, the company increased investment in Research and Development by 30% year-over-year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2010, Salesforce, Inc. kept $0.07.
- Revenue$316.1M100.0%
- Cost of revenue−$62.5M19.8%
- Gross profit$253.6M80.2%
- Operating costs−$224.1M70.9%
- Operating income$29.5M9.3%
- Interest, other & tax−$8.3M2.6%
- Net income$21.2M6.7%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2010filed August 25, 2009Financial Statements
Q2 FY2010 against Q2 FY2009
| Line item | Q2 FY2010Q2 FY2009 | Change |
|---|---|---|
| Revenue | $316.06M$263.08M | +20.1% |
| Cost of Revenue | $62.50M$54.09M | +15.5% |
| Gross Profit | $253.56M$208.99M | +21.3% |
| R&D Expenses | $31.10M$24.03M | +29.4% |
| Operating Expenses | $224.08M$192.89M | +16.2% |
| Operating Income | $29.49M$16.10M | +83.2% |
| Interest Expense | $293K-$6.71M | +104.4% |
| Net Income | $21.20M$10.00M | +112.1% |
| EPS (Basic) | $0.04$0.02 | +112.5% |
| EPS (Diluted) | $0.04$0.02 | +112.5% |
| Shares Outstanding (Basic) | 495.38M483.45M | +2.5% |
| Shares Outstanding (Diluted) | 506.26M502.50M | +0.7% |
05—Questions
Frequently Asked Questions
What is the company's revenue growth performance in this quarter?
Salesforce.com reported a 20% increase in total revenues to $316.1 million for the three months ended July 31, 2009, compared to $263.1 million in the same period last year. Subscription and support revenues, the primary driver of growth, increased by 22%.
How is the company managing expenses in the current economic climate?
The company is demonstrating effective expense management. Marketing and sales expenses, as a percentage of total revenues, decreased to 46% from 50% in the prior year's comparable quarter. While absolute operating expenses increased due to investments in R&D and headcount growth, operating income grew significantly by 83%, indicating improved operating leverage.
What is the company's financial position and liquidity?
Salesforce.com maintains a strong financial position with $1.0 billion in cash, cash equivalents, and marketable securities as of July 31, 2009. This healthy liquidity provides the company with financial flexibility to navigate economic uncertainties and pursue strategic investments.
What are the key challenges or headwinds the company is facing?
The company acknowledges the impact of the weakened global economy on IT spending, leading to longer sales cycles, smaller initial customer deployment sizes, and a slower rate of customer upgrades. There's also a slight decrease in subscription renewal rates, particularly among small and medium-sized businesses.
06—Continue