01—Abstract
Summary
Summary of the 10-Q filed November 25, 2013. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc.'s (CRM) 10-Q filing for the period ending October 30, 2013, reveals robust revenue growth, primarily driven by its subscription and support services, which increased by 36%a year-over-year for the quarter.
This growth is attributed to acquiring new customers, upgrades from existing ones, and reduced attrition rates. Despite strong top-line performance, the company reported a net loss of $124.4 millionb for the quarter, widening from a loss of $220.3 million in the prior year's comparable period. This increased loss is largely due to significant operating expenses, including substantial investments in marketing and sales, research and development, and general administrative costs, exacerbated by the impact of stock-based compensation and amortization of acquired intangible assets.
The company completed a major acquisition of ExactTarget for approximately $2.6 billionc, which significantly impacted its balance sheet with increased goodwill and intangible assets, as well as its cash flows due to the financing of this acquisition through debt. Despite the reported net loss, the company's cash flow from operations remained positive, demonstrating its ability to generate cash from its core business activities.
02—Key points
Key Highlights
- Total revenues increased by 36% to $1.076 billion for the three months ended October 31, 2013, compared to $788.4 million in the prior year period.
- Subscription and support revenues grew by 36% to $1.004 billion, indicating strong demand for the core CRM services.
- The company reported a net loss of $124.4 million for the quarter, compared to a net loss of $220.3 million in the prior year's comparable period. The net loss per share was $(0.21) compared to $(0.39) in the prior year.
- Operating expenses increased significantly, with Marketing and Sales expenses at $581.2 million and Research and Development at $170.7 million, reflecting ongoing investments in growth and integration of ExactTarget.
- The company completed the acquisition of ExactTarget for approximately $2.6 billion, which contributed significantly to goodwill ($1.84 billion) and intangible assets ($706 million).
- Cash and cash equivalents decreased to $651.8 million from $747.2 million at the beginning of the fiscal year, partly due to investing activities, including acquisitions.
- Net cash provided by operating activities was $137.9 million for the quarter, up from $105.9 million in the prior year period.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2014, Salesforce, Inc. lost $0.12.
- Revenue$1.08B100.0%
- Cost of revenue−$268.2M24.9%
- Gross profit$807.8M75.1%
- Operating costs−$905.8M84.2%
- Operating income−$97.9M9.1%
- Interest, other & tax−$26.5M2.5%
- Net income−$124.4M11.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2014filed November 25, 2013Financial Statements
Q3 FY2014 against Q3 FY2013
| Line item | Q3 FY2014Q3 FY2013 | Change |
|---|---|---|
| Revenue | $1.08B$788.40M | +36.5% |
| Cost of Revenue | $268.19M$186.25M | +44.0% |
| Gross Profit | $807.85M$602.15M | +34.2% |
| R&D Expenses | $170.69M$114.07M | +49.6% |
| Operating Expenses | $905.78M$656.34M | +38.0% |
| Operating Income | -$97.93M-$54.19M | −80.7% |
| Interest Expense | $22.93M$8.19M | +180.0% |
| Net Income | -$124.43M-$220.30M | +43.5% |
| EPS (Basic) | $-0.21$-0.39 | +46.2% |
| EPS (Diluted) | $-0.21$-0.39 | +46.2% |
| Shares Outstanding (Basic) | 600.47M568.81M | +5.6% |
| Shares Outstanding (Diluted) | 600.47M568.81M | +5.6% |
05—Questions
Frequently Asked Questions
What is the company's revenue performance for the quarter?
Salesforce reported total revenues of $1.076 billion for the three months ended October 31, 2013, a 36% increase compared to $788.4 million in the same period last year. This growth was primarily driven by subscription and support revenues, which rose 36% to $1.004 billion.
What is the company's profitability for the quarter?
The company reported a net loss of $124.4 million for the three months ended October 31, 2013, or $(0.21) per share. This is an improvement from the net loss of $220.3 million, or $(0.39) per share, reported in the comparable period last year.
What were the major expenses impacting profitability?
Significant operating expenses, including marketing and sales ($581.2 million) and research and development ($170.7 million), contributed to the net loss. These expenses are driven by investments in growth, talent, and the integration of acquired businesses, alongside substantial stock-based compensation and amortization of intangible assets.
What is the impact of the ExactTarget acquisition?
Salesforce acquired ExactTarget for approximately $2.6 billion. This acquisition significantly increased the company's goodwill and intangible assets on the balance sheet and was financed through debt, impacting cash flows and interest expenses. The results of ExactTarget are included in the financial statements from the acquisition date.
How is the company managing its liquidity?
As of October 31, 2013, Salesforce had $1.085 billion in cash, cash equivalents, and marketable securities. The company generated $137.9 million in cash from operating activities during the quarter, indicating positive cash flow from operations despite the reported net loss.
06—Continue