10-QPeriod: Q1 FY2016

Salesforce, Inc. Quarterly Report for Q1 Ended Apr 30, 2015

Filed May 22, 2015For Securities:CRM

Summary

Salesforce, Inc. (CRM) reported its first quarter fiscal year 2016 results for the period ending April 29, 2015. The company demonstrated strong revenue growth, with total revenues increasing by 23% year-over-year to $1.51 billion, primarily driven by a 22% increase in subscription and support revenues. Despite the revenue growth, the company reported a net income of $4.1 million, a significant improvement from a net loss of $96.9 million in the prior year's comparable quarter. This turnaround was partly due to a substantial $36.6 million non-cash gain recognized from the termination of an operating lease related to the acquisition of the 50 Fremont building. However, excluding one-time items and stock-based compensation, non-GAAP net income showed a robust increase of 56% to $108.3 million. The company's operating cash flow also saw a healthy increase, reflecting strong collections from its fourth quarter billings.

Financial Highlights

47 data points
Beta

Revenue

$1.51B

74.7% Gross Margin

Net Income

$4.09M

0.3% Net Margin

EPS (Diluted)

$0.01

Total Assets

$10.37B

Cash & Equivalents

$941.96M

Free Cash Flow

$663.99M

Financial Statements
Beta
Revenue$1.51B
Gross Profit$1.13B
R&D Expenses$222.13M
Operating Expenses$1.10B
Operating Income$31.11M
Interest Expense$16.68M
Net Income$4.09M
EPS (Basic)$0.01
EPS (Diluted)$0.01
Shares Outstanding (Basic)653.81M
Shares Outstanding (Diluted)664.31M

Key Highlights

  • 1Total revenues grew 23% to $1.51 billion, exceeding the prior year's $1.23 billion.
  • 2Subscription and support revenues, the primary revenue driver, increased by 22% to $1.41 billion.
  • 3The company returned to profitability with a net income of $4.1 million, a significant improvement from a net loss of $96.9 million in the same quarter last year.
  • 4Operating cash flow increased substantially to $730.9 million from $473.1 million year-over-year.
  • 5Marketing and sales expenses decreased as a percentage of revenue to 49% from 52%, indicating improved operating leverage.
  • 6The company completed the acquisition of the 50 Fremont building in San Francisco for $637.6 million, which included a one-time non-cash gain from lease termination.

Frequently Asked Questions

Salesforce reported total revenues of $1.51 billion for the quarter ended April 29, 2015, representing a 23% increase compared to $1.23 billion in the same period last year. This growth was primarily driven by subscription and support revenues, which increased 22% year-over-year to $1.41 billion.

The company reported a net income of $4.1 million ($0.01 per diluted share) for the quarter, a significant improvement from a net loss of $96.9 million ($-0.16 per diluted share) in the comparable quarter of the prior year. This improvement was aided by a $36.6 million non-cash gain from the termination of an operating lease related to the 50 Fremont acquisition. On a non-GAAP basis, which excludes certain items like stock-based compensation and amortization of intangibles, net income increased by 56% to $108.3 million.

Net cash provided by operating activities was $730.9 million for the three months ended April 29, 2015, up from $473.1 million in the prior year period. This increase reflects strong collections from the fourth quarter's billings and improved profitability. Net cash used in investing activities was $536.1 million, largely due to the acquisition of the 50 Fremont building and strategic investments.

Marketing and sales expenses remain the largest cost category, totaling $736.9 million, though it decreased as a percentage of revenue to 49% from 52% in the prior year. Research and development expenses were $222.1 million, and general and administrative expenses were $175.8 million. Stock-based compensation was a significant expense, amounting to $142.6 million for the quarter.