10-QPeriod: Q3 FY2015

Salesforce, Inc. Quarterly Report for Q3 Ended Oct 31, 2014

Filed November 26, 2014For Securities:CRM

Summary

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 billion. 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 million. 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.

Financial Highlights

49 data points
Beta

Revenue

$1.38B

75.9% Gross Margin

Net Income

-$38.92M

-2.8% Net Margin

EPS (Diluted)

$-0.06

Total Assets

$9.41B

Cash & Equivalents

$846.33M

Free Cash Flow

$49.09M

Financial Statements
Beta
Revenue$1.38B
Cost of Revenue$333.21M
Gross Profit$1.05B
R&D Expenses$195.46M
Operating Expenses$1.07B
Operating Income-$22.04M
Interest Expense$17.68M
Net Income-$38.92M
EPS (Basic)$-0.06
EPS (Diluted)$-0.06
Shares Outstanding (Basic)629.55M
Shares Outstanding (Diluted)629.55M

Key Highlights

  • 1Total revenues increased 29% year-over-year to $1.38 billion.
  • 2Subscription and support revenues grew 28% to $1.29 billion, driven by new business and customer upgrades.
  • 3Operating loss narrowed significantly to $22.0 million from $97.9 million in the prior year period.
  • 4Marketing and sales expenses as a percentage of revenue decreased to 52% from 54% in the prior year period.
  • 5The company reported gains on the sale of land and building improvements totaling $15.6 million.
  • 6Cash, cash equivalents, and marketable securities totaled $1.8 billion, providing strong liquidity.
  • 7A new $650 million revolving credit facility was established, with $300 million drawn to repay existing term loans.

Frequently Asked Questions

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.

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.

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.

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.