Salesforce, Inc. Quarterly Report for Q2 Ended Jul 31, 2009

Summary

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 million. This growth was primarily driven by subscription and support services, which saw a 22% 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 billion 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.

Key Highlights

• 1Total revenues increased by 20% to $316.1 million for the three months ended July 31, 2009.
• 2Subscription and support revenues grew by 22% to $293.4 million, representing 93% of total revenues.
• 3Operating income increased by 83% to $29.5 million, demonstrating improved profitability.
• 4Gross profit margin remained strong at 80%.
• 5The company maintained a robust liquidity position with $1.0 billion in cash, cash equivalents, and marketable securities.
• 6Marketing and sales expenses decreased as a percentage of revenue to 46% from 50% in the prior year's comparable period, indicating improved efficiency.
• 7Despite economic challenges, the company increased investment in Research and Development by 30% year-over-year.

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