| Document and Entity Information | ||
| 3 Months Ended
Apr. 30, 2010 | Apr. 30, 2010
| |
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | 2010-04-30 | |
| Document Fiscal Year Focus | 2,011 | |
| Document Fiscal Period Focus | Q1 | |
| Trading Symbol | CRM | |
| Entity Registrant Name | SALESFORCE COM INC | |
| Entity Central Index Key | 0001108524 | |
| Current Fiscal Year End Date | --01-31 | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 128,700,000 |
| Condensed Consolidated Balance Sheets (USD $) | ||
| In Thousands | Apr. 30, 2010
| Jan. 31, 2010
|
| Current assets: | ||
| Cash and cash equivalents | $690,794 | $1,011,306 |
| Short-term marketable securities | 260,958 | 230,659 |
| Accounts receivable, net | 183,612 | 320,956 |
| Deferred commissions | 46,215 | 47,388 |
| Deferred income taxes | 36,315 | 40,116 |
| Prepaid expenses and other current assets | 45,858 | 55,734 |
| Total current assets | 1,263,752 | 1,706,159 |
| Marketable securities, noncurrent | 949,796 | 485,083 |
| Fixed assets, net | 86,710 | 89,711 |
| Deferred commissions, noncurrent | 29,132 | 28,140 |
| Deferred income taxes, noncurrent | 34,181 | 27,579 |
| Capitalized software, net | 35,050 | 34,809 |
| Goodwill | 47,749 | 48,955 |
| Other assets, net | 41,727 | 39,765 |
| Total assets | 2,488,097 | 2,460,201 |
| Current liabilities: | ||
| Accounts payable | 13,133 | 14,791 |
| Accrued expenses and other current liabilities | 171,612 | 194,738 |
| Income taxes payable | 5,901 | 8,424 |
| Deferred revenue | 647,454 | 690,177 |
| Total current liabilities | 838,100 | 908,130 |
| 0.75% Convertible senior notes due 2015, net | 455,649 | 450,198 |
| Income taxes payable, noncurrent | 17,101 | 17,551 |
| Long-term lease liabilities and other | 11,805 | 13,485 |
| Deferred revenue, noncurrent | 17,075 | 14,171 |
| Total liabilities | 1,339,730 | 1,403,535 |
| salesforce.com stockholders' equity: | ||
| Common stock | 129 | 127 |
| Additional paid-in capital | 1,010,005 | 938,544 |
| Accumulated other comprehensive gain (loss) | 70 | (1,430) |
| Retained earnings | 124,306 | 106,561 |
| Total stockholders' equity controlling interest | 1,134,510 | 1,043,802 |
| Total stockholders' equity noncontrolling interest | 13,857 | 12,864 |
| Total stockholders' equity | 1,148,367 | 1,056,666 |
| Total liabilities and stockholders' equity | $2,488,097 | $2,460,201 |
| Condensed Consolidated Statements of Operations (USD $) | |||||||||||||||||||
| In Thousands, except Per Share data | 3 Months Ended
Apr. 30, 2010 | 3 Months Ended
Apr. 30, 2009 | |||||||||||||||||
| Revenues: | |||||||||||||||||||
| Subscription and support | $350,712 | $281,768 | |||||||||||||||||
| Professional services and other | 26,101 | 23,156 | |||||||||||||||||
| Total revenues | 376,813 | 304,924 | |||||||||||||||||
| Cost of revenues (1): | |||||||||||||||||||
| Subscription and support | 44,057 | 37,028 | |||||||||||||||||
| Professional services and other | 27,524 | 24,772 | |||||||||||||||||
| Total cost of revenues | 71,581 | [1] | 61,800 | [1] | |||||||||||||||
| Gross profit | 305,232 | 243,124 | |||||||||||||||||
| Operating expenses (1): | |||||||||||||||||||
| Research and development | 40,122 | 31,584 | |||||||||||||||||
| Marketing and sales | 175,867 | 138,267 | |||||||||||||||||
| General and administrative | 56,193 | 43,150 | |||||||||||||||||
| Total operating expenses | 272,182 | [1] | 213,001 | [1] | |||||||||||||||
| Income from operations | 33,050 | 30,123 | |||||||||||||||||
| Investment income | 7,875 | 4,530 | |||||||||||||||||
| Interest expense | (7,060) | (208) | |||||||||||||||||
| Other income (expense) | (1,973) | 371 | |||||||||||||||||
| Income before provision for income taxes and noncontrolling interest | 31,892 | 34,816 | |||||||||||||||||
| Provision for income taxes | (12,016) | (15,823) | |||||||||||||||||
| Consolidated net income | 19,876 | 18,993 | |||||||||||||||||
| Less: Net income attributable to noncontrolling interest | (2,131) | (557) | |||||||||||||||||
| Net income attributable to salesforce.com | $17,745 | $18,436 | |||||||||||||||||
| Basic net income per share attributable to salesforce.com common shareholders | 0.14 | 0.15 | |||||||||||||||||
| Diluted net income per share attributable to salesforce.com common shareholders | 0.13 | 0.15 | |||||||||||||||||
| Shares used in computing basic net income per share | 128,032 | 123,206 | |||||||||||||||||
| Shares used in computing diluted net income per share | 132,251 | 125,349 | |||||||||||||||||
| [1]Amounts include stock-based expenses, as follows: Cost of revenues $ 3,074, $ 3,156 - Research and development $ 4,102, $ 3,084 - Marketing and sales $ 12,210, $ 9,942 - General and administrative $ 7,082, $ 5,481 | |||||||||||||||||||
| Condensed Consolidated Statements of Operations (Parenthetical) (USD $) | ||
| In Thousands | 3 Months Ended
Apr. 30, 2010 | 3 Months Ended
Apr. 30, 2009 |
| Stock-based expenses, Cost of revenues | $3,074 | $3,156 |
| Stock-based expenses, Research and development | 4,102 | 3,084 |
| Stock-based expenses, Marketing and sales | 12,210 | 9,942 |
| Stock-based expenses, General and administrative | $7,082 | $5,481 |
| Condensed Consolidated Statements of Cash Flows (USD $) | ||
| In Thousands | 3 Months Ended
Apr. 30, 2010 | 3 Months Ended
Apr. 30, 2009 |
| Operating activities | ||
| Consolidated net income | $19,876 | $18,993 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 14,505 | 12,145 |
| Amortization of debt discount | 5,451 | |
| Amortization of deferred commissions | 19,489 | 14,946 |
| Expense related to stock-based awards | 26,468 | 21,663 |
| Excess tax benefits from employee stock plans | (9,288) | (9,448) |
| Changes in assets and liabilities: | ||
| Accounts receivable, net | 138,951 | 120,686 |
| Deferred commissions | (19,308) | (10,869) |
| Prepaid expenses and other current assets | 9,939 | (3,127) |
| Other assets | (1,439) | (2,801) |
| Accounts payable | (1,658) | (622) |
| Accrued expenses and other current liabilities | (23,584) | (31,450) |
| Income taxes | 3,600 | 12,513 |
| Deferred revenue | (39,819) | (44,653) |
| Net cash provided by operating activities | 143,183 | 97,976 |
| Investing activities | ||
| Purchase of subsidiary stock | (1,273) | |
| Purchase of marketable securities | (816,358) | (459,251) |
| Sales of marketable securities | 204,153 | 187,791 |
| Maturities of marketable securities | 116,262 | 28,822 |
| Capital expenditures | (12,190) | (13,428) |
| Net cash used in investing activities | (509,406) | (256,066) |
| Financing activities | ||
| Proceeds from the exercise of stock options | 37,516 | 9,168 |
| Excess tax benefits from employee stock plans | 9,288 | 9,448 |
| Principal payments on capital lease obligations | (1,918) | (1,248) |
| Net cash provided by financing activities | 44,886 | 17,368 |
| Effect of exchange rate changes | 825 | (1,407) |
| Net decrease in cash and cash equivalents | (320,512) | (142,129) |
| Cash and cash equivalents, beginning of period | 1,011,306 | 483,834 |
| Cash and cash equivalents, end of period | 690,794 | 341,705 |
| Cash paid (received) during the period for: | ||
| Interest | 215 | 208 |
| Income taxes, net of tax refunds | (5,513) | 4,283 |
| Non-cash financing and investing activities: | ||
| Fixed assets acquired under capital leases | $431 | $6,196 |
| Summary of Business and Significant Accounting Policies | |
| 3 Months Ended
Apr. 30, 2010 | |
| Summary of Business and Significant Accounting Policies | 1. Summary of Business and Significant Accounting Policies Description of Business Salesforce.com, inc. (the "Company") is a leading provider of enterprise cloud computing applications. The Company provides a comprehensive customer and collaboration relationship management ("CRM") service to businesses of all sizes and industries worldwide and provides a technology platform for customers and developers to build and run applications. The Company offers its services on a subscription basis. Fiscal Year The Company's fiscal year ends on January 31. References to fiscal 2011, for example, refer to the fiscal year ending January 31, 2011. Basis of Presentation The accompanying condensed consolidated balance sheet as of April 30, 2010 and the condensed consolidated statements of operations and the condensed consolidated statements of cash flows for the three months ended April 30, 2010 and 2009, respectively, are unaudited. The condensed consolidated balance sheet data as of January 31, 2010 was derived from the audited consolidated financial statements which are included in the Company's Form 10-K for the fiscal year ended January 31, 2010, which was filed with the Securities and Exchange Commission (the "SEC") on March 11, 2010. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company's fiscal 2010 Form 10-K. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company's management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in the Form 10-K, and include all adjustments necessary for the fair presentation of the Company's statement of financial position as of April 30, 2010, and its results of operations and its cash flows for the three months ended April 30, 2010 and 2009. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2010 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2011. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the Company's consolidated financial statements and notes thereto. Significant estimates and assumptions made by management include the determination of the provision for income taxes, whether an other-than-temporary decline has occurred in the fair value of certain investments in marketable securities, and the fair value of stock awards issued. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of the Company |
| Balance Sheet Accounts | |
| 3 Months Ended
Apr. 30, 2010 | |
| Balance Sheet Accounts | 2. Balance Sheet Accounts Marketable Securities At April 30, 2010, marketable securities consisted of the following (in thousands): AmortizedCost UnrealizedGains UnrealizedLosses Fair Value Corporate notes and obligations $ 748,365 $ 6,697 $ (503 ) $ 754,559 U.S. agency obligations 169,967 401 (63 ) 170,305 Mortgage backed securities 128,491 821 (202 ) 129,110 Collateralized mortgage obligations 101,277 1,088 (99 ) 102,266 U.S. treasury securities 51,406 (95 ) 51,311 Foreign government bonds 3,231 (28 ) 3,203 $ 1,202,737 $ 9,007 $ (990 ) $ 1,210,754 At January 31, 2010, marketable securities consisted of the following (in thousands): AmortizedCost UnrealizedGains UnrealizedLosses Fair Value Corporate notes and obligations $ 329,750 $ 7,889 $ (65 ) $ 337,574 U.S. treasury securities 136,606 170 (116 ) 136,660 Mortgage backed securities 40,187 719 (41 ) 40,865 Collateralized mortgage obligations 36,785 436 (33 ) 37,188 U.S. agency obligations 162,896 571 (12 ) 163,455 $ 706,224 $ 9,785 $ (267 ) $ 715,742 April30,2010 January31,2010 Recorded as follows (in thousands): Short-term (due in one year or less) $ 260,958 $ 230,659 Long-term (due between one and 3 years) 949,796 485,083 $ 1,210,754 $ 715,742 At April 30, 2010, the following marketable securities were in an unrealized loss position (in thousands): Less than 12Months 12MonthsorGreater Total FairValue UnrealizedLosses FairValue UnrealizedLosses FairValue UnrealizedLosses Corporate notes and obligations $ 181,257 $ (503 ) $ $ $ 181,257 $ (503 ) U.S. agency obligations 57,185 (63 ) 57,185 (63 ) Mortgage backed securities 60,397 (202 ) 39 60,436 (202 ) Collateralized mortgage obligations 26,800 (99 ) 26,800 (99 ) U.S. treasury securities 32,124 (1 ) 9,197 (94 ) 41,321 (95 ) Foreign government bonds 3,203 (28 ) 3,203 (28 ) $ 360,966 $ (896 ) $ 9,236 $ (94 ) $ 370,202 $ (990 ) The unrealized loss for each of these fixed rate marketable securities ranged from less than $1,000 to $94,000. The Company does not believe any of the unrealized losses represent an other-than-temporary impairment based on its evaluation of available evidence as of April 30, 2010. The Company expects to receive the full principal and interest on all of these marketable securities. |
| Stockholders' Equity | |
| 3 Months Ended
Apr. 30, 2010 | |
| Stockholders' Equity | 3. Stockholders' Equity Stock Options Issued to Employees The 1999 Stock Option Plan (the "1999 Plan") provides for the issuance of incentive and non-statutory options to employees and nonemployees of the Company. In fiscal 2010, the 1999 Plan expired. Therefore, all remaining shares available expired. The expiration of the 1999 Plan did not affect awards outstanding under the 1999 Plan, which continue to be governed by the terms and conditions of the 1999 Plan. The Company also maintains the 2004 Equity Incentive Plan, 2004 Employee Stock Purchase Plan and the 2004 Outside Directors Stock Plan. These plans, other than the 1999 Plan and the 2004 Outside Directors Stock Plan, provide for annual automatic increases on February 1 to the shares reserved for issuance based on the lesser of (i) a specific percentage of the total number of shares outstanding at year end; (ii) a fixed number of shares; or (iii) a lesser number of shares set by the Company's Board of Directors, all as specified in the respective plans. On February 1, 2010, 3.5 million additional shares were reserved under the 2004 Equity Incentive Plan pursuant to the automatic increase. The 2004 Employee Stock Purchase Plan will not be implemented unless and until the Company's Board of Directors authorizes the commencement of one or more offerings under the plan. No offering periods have been authorized to date. In April 2006, the Company's Board of Directors approved the 2006 Inducement Equity Incentive Plan (the "Inducement Plan") that allows for stock option and other equity incentive grants to employees in connection with merger or acquisition activity. In fiscal 2010, the Board of Directors amended the Inducement Plan to increase the share reserve by 300,000 shares to 700,000 shares in total. As of April 30, 2010, there were 436,560 shares of common stock available for grant under the Inducement Plan. Prior to February 1, 2006, options issued under the Company's stock option plans were generally for periods not to exceed 10 years. Stock activity is as follows: SharesAvailablefor Grant Options Outstanding OutstandingStockOptions Weighted-AverageExercisePrice AggregateIntrinsicValue(inthousands) Balance as of January31, 2010 4,607,929 14,036,371 $ 40.36 Increase in shares authorized: 2004 Equity Incentive Plan 3,500,000 Options granted under all plans (333,000 ) 333,000 $ 72.37 Restricted stock unit activity (14,452 ) Stock grants to board members for board services and advisory board members (12,550 ) Exercised (1,290,032 ) $ 29.08 1999 Plan shares cancelled (42,150 ) Cancelled 234,170 (234,170 ) $ 42.10 Balance as of April30, 2010 7,939,947 12,845,169 $ 42.29 $ 556,329 Vested or expected to vest 12,364,425 $ 41.92 $ 540,094 Exercisable as of April 30, 2010 5,306,195 $ 30.91 $ 290,174 The total intrinsic value of |
| Commitments | |
| 3 Months Ended
Apr. 30, 2010 | |
| Commitments | 4. Commitments Letters of Credit As of April 30, 2010, the Company had a total of $11.2 million in letters of credit outstanding for office space in San Francisco, California, New York City, Singapore, Sweden, United Kingdom, Australia and Switzerland. These letters of credit renew annually and mature at various dates through June 2019. Leases The Company leases office space and equipment under noncancelable operating and capital leases with various expiration dates. As of April 30, 2010, the future minimum lease payments under noncancelable operating and capital leases are as follows (in thousands): CapitalLeases OperatingLeases Fiscal Period: Remaining nine months in fiscal 2011 $ 5,959 $ 72,805 Fiscal 2012 7,748 80,949 Fiscal 2013 1,222 70,496 Fiscal 2014 49,697 Fiscal 2015 29,450 Thereafter 121,045 Total minimum lease payments 14,929 $ 424,442 Less: amount representing interest (763 ) Present value of capital lease obligations $ 14,166 The Company's agreements for the facilities and certain services provide the Company with the option to renew. The Company's future contractual obligations would change if it were to exercise these options. |
| Legal Proceedings | |
| 3 Months Ended
Apr. 30, 2010 | |
| Legal Proceedings | 5. Legal Proceedings The Company is involved in various legal proceedings and receive claims from time to time, arising from the normal course of business activities. During fiscal 2009, the Company received a communication from Microsoft Corporation alleging that we infringed some of its patents. The Company, from time to time has been in discussions with Microsoft since receipt of that communication. On May 18, 2010, Microsoft filed a complaint against the Company in the United States District Court for the Western District of Washington alleging infringement of nine patents which Microsoft claims are related to certain aspects of the Company's products and services. The complaint seeks, among other things, damages, attorneys' fees and costs, and injunctive relief. The Company continues to analyze the potential merits of these claims, the potential defenses to such claims and potential counter claims. The Company intends to defend its interests in this matter vigorously. Currently, the Company does not believe that the resolution of this lawsuit will have a material adverse effect on its financial condition, but it could be material to the net income or cash flows (or both) of a particular quarter. The Company has been, and may in the future be, sued by third parties for alleged infringement of their proprietary rights, including patent infringement lawsuits unrelated to the Microsoft lawsuit discussed above. The Company evaluates these lawsuits with respect to their potential merits, the Company's potential defenses and counter claims, and the expected effect on the Company. The Company's technologies may be subject to injunction if they are held to infringe the rights of a third party. The outcome of any litigation, regardless of its merits, is inherently uncertain. Any intellectual property claims and lawsuits, including the Microsoft lawsuit, could be time-consuming and expensive to resolve, divert management attention from executing the Company's business plan and require the Company to change the Company's technology, change the Company's business practices and/or pay monetary damages or enter into short- or long-term royalty or licensing agreements. Many of our subscription agreements require the Company to indemnify its customers for third-party intellectual property infringement claims, which could increase the cost to the Company of an adverse ruling on such a claim. Any adverse determination related to intellectual property claims or litigation could prevent the Company from offering its service to others, could be material to its net income or cash flows (or both) of a particular quarter or could otherwise adversely affect the Company's operating results. |
| Related-Party Transactions | |
| 3 Months Ended
Apr. 30, 2010 | |
| Related-Party Transactions | 6. Related-Party Transactions In January 1999, the salesforce.com/foundation, also referred to as the Foundation, a non-profit public charity, was chartered to build philanthropic programs that are focused on youth and technology. The Company's chairman is the chairman of the Foundation. The Company's chairman, one of the Company's employees and one of the Company's board members hold three of the Foundation's seven board seats. The Company is not the primary beneficiary of the Foundation's activities, and accordingly, the Company does not consolidate the Foundation's statement of activities with its financial results. Since the Foundation's inception, the Company has provided at no charge certain resources to Foundation employees such as office space. The value of these items totals approximately $35,000 per quarter during for the three months ended April 30, 2010. In addition to the resource sharing with the Foundation, the Company issued the Foundation warrants in August 2002 to purchase 500,000 shares of common stock which were all exercised in prior years. As of April30, 2010, the Foundation held 135,500 shares of salesforce.com common stock. Additionally, the Company has donated subscriptions to the Company's service to other qualified non-profit organizations and permitted the Foundation to sell such subscriptions to qualified non-profit organizations. The fair value of these donated subscriptions were approximately $4.0 million per month during the three months ended April30 2010. The Company currently plans to continue providing free subscriptions to qualified non-profit organizations through its relationship with the Foundation. |
