Salesforce, Inc. Quarterly Report for Q3 Ended Oct 31, 2009

Summary

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 million. 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 million, 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.

Key Highlights

• 1Total revenues grew 20% to $330.5 million, driven by a 21% increase in subscription and support revenue.
• 2Operating income more than doubled to $30.1 million, indicating improved operational efficiency.
• 3Net income attributable to salesforce.com increased to $20.7 million, more than doubling from $10.1 million in the prior year.
• 4Diluted earnings per share rose to $0.16 from $0.08 in the comparable prior year period.
• 5The company ended the quarter with a strong liquidity position, holding $1.1 billion in cash, cash equivalents, and marketable securities.
• 6Marketing 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.
• 7International revenues (Europe and Asia Pacific) grew by 28%, outpacing overall revenue growth and indicating successful global expansion.

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