01—Abstract
Summary
Summary of the 10-Q filed May 22, 2015. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 millionb. The company's operating cash flow also saw a healthy increase, reflecting strong collections from its fourth quarter billings.
02—Key points
Key Highlights
- Total revenues grew 23% to $1.51 billion, exceeding the prior year's $1.23 billion.
- Subscription and support revenues, the primary revenue driver, increased by 22% to $1.41 billion.
- The 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.
- Operating cash flow increased substantially to $730.9 million from $473.1 million year-over-year.
- Marketing and sales expenses decreased as a percentage of revenue to 49% from 52%, indicating improved operating leverage.
- The 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2016, Salesforce, Inc. kept $0.00.
- Revenue$1.51B100.0%
- Cost of revenue−$381.8M25.3%
- Gross profit$1.13B74.7%
- Operating costs−$1.10B72.7%
- Operating income$31.1M2.1%
- Interest, other & tax−$27.0M1.8%
- Net income$4.1M0.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2016filed May 22, 2015Financial Statements
Q1 FY2016 against Q1 FY2015
| Line item | Q1 FY2016Q1 FY2015 | Change |
|---|---|---|
| Revenue | $1.51B$1.23B | +23.2% |
| Gross Profit | $1.13B$934.47M | +20.9% |
| R&D Expenses | $222.13M$188.36M | +17.9% |
| Operating Expenses | $1.10B$989.81M | +11.0% |
| Operating Income | $31.11M-$55.34M | +156.2% |
| Interest Expense | $16.68M$20.36M | −18.1% |
| Net Income | $4.09M-$96.91M | +104.2% |
| EPS (Basic) | $0.01$-0.16 | +106.3% |
| EPS (Diluted) | $0.01$-0.16 | +106.3% |
| Shares Outstanding (Basic) | 653.81M612.51M | +6.7% |
| Shares Outstanding (Diluted) | 664.31M612.51M | +8.5% |
05—Questions
Frequently Asked Questions
What is the company's revenue performance for the quarter?
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.
How did the company perform in terms of profitability?
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.
What is the company's cash flow situation?
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.
What were the key expenses impacting the company's profitability?
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.
06—Continue