01—Abstract
Summary
Summary of the 10-Q filed November 25, 2009. Cited figures are marked; the original filing is the authoritative source.
Salesforce.com, Inc. (CRM) reported its third-quarter fiscal year 2010 results, ending October 31, 2009.
The company demonstrated solid revenue growth, with total revenues increasing by 20% year-over-year to $330.5 milliona. Subscription and support revenues, the core of their business, grew by 21% to $306.9 million, indicating continued demand for their cloud-based CRM services despite the challenging economic environment. Profitability also saw significant improvement, with operating income rising to $30.1 million, a substantial increase from $16.1 million in the prior year period.
This improved operating leverage, with operating expenses growing at a slower pace than revenue, demonstrates effective cost management. Net income attributable to salesforce.com also more than doubled to $20.7 millionb, leading to diluted earnings per share of $0.16, up from $0.08 in the prior year quarter. The company's balance sheet remains strong, with $1.1 billion in cash, cash equivalents, and marketable securities, providing ample liquidity.
02—Key points
Key Highlights
- Total revenues grew 20% to $330.5 million, driven by a 21% increase in subscription and support revenue.
- Operating income more than doubled to $30.1 million, indicating improved operational efficiency.
- Net income attributable to salesforce.com increased to $20.7 million, more than doubling from $10.1 million in the prior year.
- Diluted earnings per share rose to $0.16 from $0.08 in the comparable prior year period.
- The company ended the quarter with a strong liquidity position, holding $1.1 billion in cash, cash equivalents, and marketable securities.
- Marketing and sales expenses as a percentage of revenue decreased to 46% from 49% in the prior year, reflecting better cost control relative to revenue growth.
- International revenues (Europe and Asia Pacific) grew by 28%, outpacing overall revenue growth and indicating successful global expansion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2010, Salesforce, Inc. kept $0.06.
- Revenue$330.5M100.0%
- Cost of revenue−$65.6M19.8%
- Gross profit$265.0M80.2%
- Operating costs−$234.8M71.0%
- Operating income$30.1M9.1%
- Interest, other & tax−$9.4M2.9%
- Net income$20.7M6.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2010filed November 25, 2009Financial Statements
Q3 FY2010 against Q3 FY2009
| Line item | Q3 FY2010Q3 FY2009 | Change |
|---|---|---|
| Revenue | $330.55M$276.49M | +19.6% |
| Cost of Revenue | $65.57M$56.35M | +16.4% |
| Gross Profit | $264.98M$220.14M | +20.4% |
| R&D Expenses | $32.76M$26.27M | +24.7% |
| Operating Expenses | $234.84M$204.01M | +15.1% |
| Operating Income | $30.14M$16.13M | +86.8% |
| Interest Expense | $292K-$3.84M | +107.6% |
| Net Income | $20.69M$10.12M | +104.4% |
| EPS (Basic) | $0.04$0.02 | +112.5% |
| EPS (Diluted) | $0.04$0.02 | +100.0% |
| Shares Outstanding (Basic) | 498.24M486.54M | +2.4% |
| Shares Outstanding (Diluted) | 514.38M500.53M | +2.8% |
05—Questions
Frequently Asked Questions
How did Salesforce's revenue perform in this quarter compared to the same quarter last year?
Total revenues increased by 20% to $330.5 million for the three months ended October 31, 2009, compared to $276.5 million for the same period in 2008. Subscription and support revenue, the company's primary revenue stream, grew by 21%.
What is the company's profitability and earnings per share trend?
Profitability improved significantly. Operating income more than doubled to $30.1 million from $16.1 million year-over-year. Net income attributable to salesforce.com also more than doubled to $20.7 million, resulting in diluted earnings per share of $0.16, up from $0.08 in the prior year's comparable quarter.
What is Salesforce's current financial health and liquidity position?
The company maintains a strong financial position with $1.1 billion in cash, cash equivalents, and marketable securities as of October 31, 2009, providing ample liquidity and financial flexibility.
How are the company's operating expenses trending, particularly marketing and sales?
While operating expenses increased in absolute terms, they grew at a slower pace than revenue. Notably, marketing and sales expenses decreased as a percentage of total revenues to 46% from 49% in the prior year, indicating improved operational efficiency and cost management relative to revenue growth.
06—Continue