01—Abstract
Summary
Summary of the 10-Q filed November 20, 2015. Cited figures are marked; the original filing is the authoritative source.
Salesforce.com, Inc. reported a net loss of $25.2 milliona for the third quarter of fiscal year 2016, compared to a net loss of $38.9 million in the prior year's third quarter.
Total revenues increased by 24% to $1.71 billionb, driven primarily by a 24% rise in subscription and support revenues. The company continues to invest heavily in marketing and sales, which represented 48% of total revenues, and research and development, indicating a strong focus on growth. Despite the net loss, operating income turned positive, reaching $43.4 million, a significant improvement from the prior year's operating loss of $22.0 million.
This performance was bolstered by a gain on the sale of land and building improvements. The company also reported substantial increases in cash and cash equivalents, driven by strong operating cash flow, which grew to $117.9 millionc for the quarter. The company's balance sheet shows growth in key assets like cash and marketable securities, although accounts receivable decreased.
Liabilities saw a reduction in total liabilities due to lower deferred revenue and the absence of borrowings on the revolving credit facility, which was fully paid down. Strategic investments increased significantly, indicating a focus on expanding its ecosystem. Overall, Salesforce demonstrated robust revenue growth and improved operational profitability, though the net loss persists due to ongoing investments and non-cash expenses.
02—Key points
Key Highlights
- Total revenue increased by 24% year-over-year to $1.71 billion.
- Subscription and support revenue, the primary revenue driver, grew 24% to $1.60 billion.
- Operating income turned positive at $43.4 million, a significant improvement from a $22.0 million loss in the prior year's quarter.
- Net loss decreased to $25.2 million from $38.9 million in the prior year's quarter.
- Cash and cash equivalents and marketable securities increased to $2.3 billion.
- Operating cash flow for the nine months ended October 31, 2015, was $1.15 billion, up from $841.5 million in the prior year.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2016, Salesforce, Inc. lost $0.01.
- Revenue$1.71B100.0%
- Cost of revenue−$423.7M24.7%
- Gross profit$1.29B75.3%
- Operating costs−$1.24B72.7%
- Operating income$43.4M2.5%
- Interest, other & tax−$68.6M4.0%
- Net income−$25.2M1.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2016filed November 20, 2015Financial Statements
Q3 FY2016 against Q3 FY2015
| Line item | Q3 FY2016Q3 FY2015 | Change |
|---|---|---|
| Revenue | $1.71B$1.38B | +23.7% |
| Gross Profit | $1.29B$1.05B | +22.6% |
| R&D Expenses | $239.21M$195.46M | +22.4% |
| Operating Expenses | $1.24B$1.07B | +16.1% |
| Operating Income | $43.43M-$22.04M | +297.1% |
| Interest Expense | $18.25M$17.68M | +3.2% |
| Net Income | -$25.16M-$38.92M | +35.4% |
| EPS (Basic) | $-0.04$-0.06 | +33.3% |
| EPS (Diluted) | $-0.04$-0.06 | +33.3% |
| Shares Outstanding (Basic) | 664.13M629.55M | +5.5% |
| Shares Outstanding (Diluted) | 664.13M629.55M | +5.5% |
05—Questions
Frequently Asked Questions
What is Salesforce's revenue growth for the quarter?
Salesforce reported a 24% increase in total revenues for the third quarter of fiscal year 2016, reaching $1.71 billion, driven by a 24% rise in subscription and support revenues.
Is the company profitable on a GAAP basis?
No, Salesforce reported a net loss of $25.2 million for the third quarter of fiscal year 2016. However, operating income was positive at $43.4 million, an improvement from the prior year's operating loss.
How is the company managing its cash and debt?
The company has a strong liquidity position with $2.3 billion in cash, cash equivalents, and marketable securities. They have paid down their revolving credit facility, and while they have convertible senior notes and a loan on 50 Fremont, the overall cash flow from operations is positive and robust.
What are the key drivers of Salesforce's expenses?
Salesforce continues to invest heavily in marketing and sales (48% of revenue) and research and development (14% of revenue) to drive growth. These, along with stock-based compensation and amortization of intangibles, are the primary expense categories.
06—Continue