Summary
Salesforce.com, Inc. (CRM) reported its second-quarter results for the period ending July 31, 2011, showcasing robust revenue growth, up 38% year-over-year to $546 million. This strong performance was primarily driven by a 38% increase in subscription and support revenues, indicating continued demand for its core CRM services. The company also saw significant growth in its international markets, with revenues from Europe and Asia Pacific up 50% year-over-year. Despite this top-line growth, the company incurred a net loss of $4.3 million for the quarter, a shift from the net income of $14.7 million in the prior year, largely due to increased operating expenses, particularly in marketing and sales, which rose 52% of revenue. This investment in growth, including expanded R&D and sales headcount, reflects Salesforce's strategy to capture market share and expand its social enterprise offerings through continued product development and strategic acquisitions, such as Radian6, which was acquired in May 2011. For the first six months of the fiscal year, total revenues grew 36% to $1.05 billion. The company maintained a healthy cash position with $449.8 million in cash and cash equivalents and $1.29 billion in cash, cash equivalents, and marketable securities as of July 31, 2011. The company continues to invest heavily in growth, with marketing and sales expenses representing 52% of revenues for the six-month period. Management anticipates continued significant investment in fiscal 2012, which is expected to lead to lower diluted earnings per share compared to fiscal 2011, signaling a focus on long-term market expansion over immediate profitability.
Financial Highlights
51 data points| Revenue | $546.00M |
| Cost of Revenue | $120.91M |
| Gross Profit | $425.09M |
| R&D Expenses | $73.39M |
| Operating Expenses | $440.84M |
| Operating Income | -$15.75M |
| Interest Expense | $3.85M |
| Net Income | -$4.27M |
| EPS (Basic) | $-0.01 |
| EPS (Diluted) | $-0.01 |
| Shares Outstanding (Basic) | 540.37M |
| Shares Outstanding (Diluted) | 540.37M |
Key Highlights
- 1Total revenues increased by 38% to $546.0 million for the three months ended July 31, 2011, compared to $394.4 million in the prior year period.
- 2Subscription and support revenues, the primary revenue driver, grew by 38% to $509.3 million.
- 3International revenues (Europe and Asia Pacific) showed strong growth, increasing by 50% year-over-year to $179.1 million.
- 4Operating expenses increased significantly, leading to a net loss of $4.3 million for the quarter, compared to a net income of $14.7 million in the prior year.
- 5Marketing and sales expenses represented a substantial 52% of total revenues for the quarter and six-month period, reflecting investment in growth.
- 6The company acquired Radian6 in May 2011 for approximately $336.6 million to expand its social media capabilities.
- 7Cash, cash equivalents, and marketable securities stood at $1.29 billion as of July 31, 2011, indicating a solid liquidity position.