Summary
Salesforce.com, Inc. (CRM) reported its first-quarter fiscal year 2012 results for the period ending April 30, 2011. The company demonstrated robust top-line growth, with total revenues increasing by 34% year-over-year to $504.4 million, driven primarily by a 35% surge in subscription and support revenues. This growth reflects strong customer acquisition and retention. Despite the revenue growth, the company reported a net loss from operations of $2.8 million, a shift from a profitable quarter in the prior year. This was largely due to a significant increase in operating expenses, particularly in marketing and sales (up 44% year-over-year) and research and development (up 63% year-over-year), as Salesforce continues to invest heavily in growth initiatives and infrastructure, including recent acquisitions. The company's balance sheet remains strong, with cash, cash equivalents, and marketable securities totaling $1.5 billion. However, the company also highlighted the activation of its convertible senior notes' conversion feature, which reclassifies a portion of these notes as a current liability and has a dilutive effect on earnings per share. Management expressed confidence in the company's liquidity and ability to fund its operations and growth plans, while acknowledging the expectation of lower diluted earnings per share in fiscal year 2012 due to continued investment. Investors should note the company's ongoing aggressive investment in sales and marketing to drive customer acquisition and expansion, which is pressuring short-term profitability. The substantial increase in R&D also signals a commitment to product innovation and platform development. The acquisition of Radian6 shortly after the quarter's end further underscores Salesforce's strategy of expanding its cloud offerings through strategic M&A.
Financial Highlights
51 data points| Revenue | $504.36M |
| Cost of Revenue | $103.07M |
| Gross Profit | $401.30M |
| R&D Expenses | $65.29M |
| Operating Expenses | $404.10M |
| Operating Income | -$2.80M |
| Interest Expense | $3.67M |
| Net Income | $530K |
| Shares Outstanding (Basic) | 533.82M |
| Shares Outstanding (Diluted) | 564.25M |
Key Highlights
- 1Total revenues grew 34% to $504.4 million for the first quarter of FY2012, compared to $376.8 million in the prior year's first quarter.
- 2Subscription and support revenues, the core of the business, increased 35% to $473.5 million, representing 94% of total revenues.
- 3Operating expenses saw significant increases, with Marketing and Sales up 44% and Research and Development up 63% year-over-year, reflecting substantial investments in growth.
- 4The company reported a net loss from operations of $2.8 million for the quarter, a decline from operating income of $33.1 million in the prior year's quarter.
- 5Cash, cash equivalents, and marketable securities remained strong at $1.5 billion, indicating solid liquidity.
- 6Convertible senior notes became convertible at the holder's option, leading to their classification as a current liability and a dilutive effect on EPS.
- 7International revenues (Europe and Asia Pacific) grew by 40%, now representing 33% of total revenues, indicating expanding global reach.