01—Abstract
Summary
Summary of the 10-Q filed November 26, 2014. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc. (CRM) reported its financial results for the third quarter of fiscal year 2015, ending October 31, 2014.
The company demonstrated strong revenue growth, with total revenues increasing by 29% year-over-year to $1.38 billiona. This growth was primarily driven by subscription and support revenues, which rose 28% to $1.29 billion, indicating continued customer adoption and expansion of its cloud-based CRM services. The company also saw significant growth in professional services revenue.
Despite a continued operating loss, the reported figures suggest healthy underlying business momentum and market acceptance of Salesforce's offerings. Key financial highlights include improved operating leverage, with the operating loss narrowing significantly from $97.9 million in the prior year period to $22.0 millionb. This improvement was driven by revenue growth outpacing the growth in operating expenses, particularly in marketing and sales, and a reduction in the percentage of revenue attributed to research and development and general and administrative expenses.
The company also benefited from gains on property sales, contributing to a reduction in the net loss. Salesforce continues to invest in growth, with a strong cash position and a newly established revolving credit facility, positioning it to pursue future opportunities.
02—Key points
Key Highlights
- Total revenues increased 29% year-over-year to $1.38 billion.
- Subscription and support revenues grew 28% to $1.29 billion, driven by new business and customer upgrades.
- Operating loss narrowed significantly to $22.0 million from $97.9 million in the prior year period.
- Marketing and sales expenses as a percentage of revenue decreased to 52% from 54% in the prior year period.
- The company reported gains on the sale of land and building improvements totaling $15.6 million.
- Cash, cash equivalents, and marketable securities totaled $1.8 billion, providing strong liquidity.
- A new $650 million revolving credit facility was established, with $300 million drawn to repay existing term loans.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2015, Salesforce, Inc. lost $0.03.
- Revenue$1.38B100.0%
- Cost of revenue−$333.2M24.1%
- Gross profit$1.05B75.9%
- Operating costs−$1.07B77.5%
- Operating income−$22.0M1.6%
- Interest, other & tax−$16.9M1.2%
- Net income−$38.9M2.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed November 26, 2014Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $1.38B$1.08B | +28.6% |
| Cost of Revenue | $333.21M$268.19M | +24.2% |
| Gross Profit | $1.05B$807.85M | +30.0% |
| R&D Expenses | $195.46M$170.69M | +14.5% |
| Operating Expenses | $1.07B$905.78M | +18.4% |
| Operating Income | -$22.04M-$97.93M | +77.5% |
| Interest Expense | $17.68M$22.93M | −22.9% |
| Net Income | -$38.92M-$124.43M | +68.7% |
| EPS (Basic) | $-0.06$-0.21 | +71.4% |
| EPS (Diluted) | $-0.06$-0.21 | +71.4% |
| Shares Outstanding (Basic) | 629.55M600.47M | +4.8% |
| Shares Outstanding (Diluted) | 629.55M600.47M | +4.8% |
05—Questions
Frequently Asked Questions
What was Salesforce's revenue performance for the quarter?
Salesforce reported a 29% increase in total revenues, reaching $1.38 billion for the three months ended October 31, 2014, compared to $1.08 billion in the same period last year. Subscription and support revenues, the primary revenue driver, increased by 28% to $1.29 billion.
How did the company's profitability change?
The operating loss for the quarter decreased substantially to $22.0 million from $97.9 million in the prior year's comparable period. This improvement was due to revenue growth outpacing the rise in operating expenses, and the company benefiting from gains on property sales.
What is the company's liquidity and financing position?
Salesforce maintains a strong liquidity position with $1.8 billion in cash, cash equivalents, and marketable securities as of October 31, 2014. Additionally, the company entered into a new $650 million revolving credit facility, enhancing its financial flexibility.
How is Salesforce investing for future growth?
The company continues to invest in growth through increased headcount in sales and R&D, expansion of data center capacity, and marketing activities. The acquisition of ExactTarget in July 2013 also contributed to revenue growth and is being integrated into the business.
06—Continue