Exhibit 99.1
| FOR IMMEDIATE RELEASE | Contacts: | |
| Joelle Fitzgerald | ||
| salesforce.com | ||
| Investor Relations | ||
| 415-536-6250 | ||
| jfitzgerald@salesforce.com | ||
| Jane Hynes | ||
| salesforce.com | ||
| Public Relations | ||
| 415-901-5079 | ||
| jhynes@salesforce.com | ||
Salesforce.com Delivers Strong Fiscal Second Quarter Results, Raises Guidance
Revenue Increases 88% to $40.6 Million; Net Income Increases to $1.2 Million
1,300 Customers and 21,000 Paying Subscribers Added in the Quarter
SAN FRANCISCO, Calif. – August 19, 2004 –Salesforce.com (NYSE: CRM), the market and technology leader in on demand customer relationship management, today announced results for its second fiscal quarter, ended July 31, 2004.
“We are delighted to have delivered strong results during a difficult period for the software industry,” said Marc Benioff, chairman and CEO of salesforce.com. “Our numbers speak for the growing acceptance of the on demand computing model.”
Salesforce.com delivered the following results for the second quarter of fiscal year 2005:
| • | Revenue: Total revenue was $40.6 million, an increase of 88 percent compared to $21.6 million for the same period last year. Subscription and support revenue was $36.0 million, an increase of 84 percent compared to $19.6 million for the same period last year. Professional services and other revenues were $4.6 million, an increase of 125 percent compared to $2.0 million for the same period last year. |
| • | Net income: Net income was $1.2 million, an increase of 859 percent compared to $122,000 for the same period last year. Earnings per diluted share were $0.01 compared to break even for the same period last year. |
| • | Cash: Cash from operations for the fiscal second quarter was $14.9 million compared to $4.0 million for the same period last year, an increase of 275 percent year over year. This cash increase is in addition to the $113.8 million received as proceeds from the company’s IPO. |
| • | Deferred revenue: Deferred revenue for the fiscal second quarter was $61.6 million compared to $29.4 million as of the end of the second quarter of fiscal year 2004, an increase of 109 percent year over year. This compares to deferred revenue of $52.3 million as of the end of the previous quarter, or 18 percent growth sequentially. |
| • | Customers and paying subscribers: During the second quarter, the company added over 1,300 customers and approximately 21,000 paying subscribers. As of the end of the second quarter, the company had approximately 11,100 customers and approximately 168,000 paying subscribers. |
Salesforce.com is raising its guidance for the fiscal year 2005, ending January 31, 2005, based on information as of August 19, 2004:
| • | Fiscal year 2005 revenue is expected to be in the range of $165.0 million to $170.0 million. |
| • | Fiscal year 2005 earnings per diluted share are expected to be in the range of $0.02 to $0.04 based on an estimated average of 110 million diluted shares and an effective tax rate of 13 percent. |
Salesforce.com also expects revenue for its third quarter of fiscal year 2005 to be in the range of $43.0 million to $45.0 million.
Quarterly Conference Call
Salesforce.com will host a conference call to discuss second quarter results at 2:00 p.m. Pacific Daylight Time today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company’s Investor Relations Web site at http://www.salesforce.com/investor. In addition, an archive of the webcast can be accessed through the same link until midnight on August 30, 2004. Participants who choose to call in to the conference call can do so by dialing (800) 310-6649 or (719) 457-2693. A replay will be available until midnight on August 23, 2004 and can be accessed by dialing (888) 203-1112 or (719) 457-0820, access code 365871.
About salesforce.com
Salesforce.com is the market and technology leader in on demand customer relationship management (CRM). Through its award-winning salesforce.com family of products, the company provides a comprehensive suite of CRM services to help enterprises of all size, industries and geographies meet the complex challenge of managing customer information. Salesforce.com also offers sforce, the salesforce.com client/service platform, to allow customers and independent software vendors to customize and integrate salesforce.com, as well as build their own on demand enterprise applications. As of July 31, 2004, salesforce.com manages customer information for approximately 11,100 customers and approximately 168,000 paying subscribers including Advanced Micro Devices (AMD), America Online (AOL), Automatic Data Processing (ADP), Avis/Budget Rent A Car (Cendant Rental Car Group), Dow Jones Newswires, Polycom and SunTrust Banks. Salesforce.com is headquartered in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol “CRM”. For more information please visit http://www.salesforce.com or call 1-800-NO-SOFTWARE.
# # #
Salesforce.com is a registered trademark of salesforce.com, inc., San Francisco, California. Other names used may be trademarks of their respective owners.
“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about expected revenue and earnings that involve risks, uncertainties and assumptions. If any such uncertainties materialize or if any of the assumptions proves incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.
The risks and uncertainties referred to above include - but are not limited to - risks associated with our new business model, our history of operating losses, possible fluctuations in our operating results and rate of growth, interruptions or delays in our Web hosting, breach of our security measures, the immature market in which we operate, our relatively limited operating history, our ability to expand, retain and motivate our employees and manage our growth, competition, new releases of our service and successful customer deployment and utilization and selling to larger enterprise customers. Further information on these and other factors that could affect our financial results is included in our registration statement on Form S-1 filed with the SEC on June 22, 2004 and in other filings with the Securities and Exchange Commission. These documents are available on the SEC Filings section of the Investor Information section of our website at www.salesforce.com/investor.
Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
salesforce.com, inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
| 2004 | 2003 | 2004 | 2003 | ||||||||||||
Revenues: | |||||||||||||||
Subscription and support | $ | 36,017 | $ | 19,592 | $ | 67,133 | $ | 36,514 | |||||||
Professional services and other | 4,564 | 2,031 | 8,287 | 4,022 | |||||||||||
Total revenues | 40,581 | 21,623 | 75,420 | 40,536 | |||||||||||
Cost of revenues (1): | |||||||||||||||
Subscription and support | 2,699 | 1,819 | 4,981 | 3,416 | |||||||||||
Professional services and other | 5,483 | 2,009 | 9,564 | 3,767 | |||||||||||
Total cost of revenues | 8,182 | 3,828 | 14,545 | 7,183 | |||||||||||
Gross profit | 32,399 | 17,795 | 60,875 | 33,353 | |||||||||||
Operating expenses (1): | |||||||||||||||
Research and development | 2,074 | 1,685 | 4,201 | 2,925 | |||||||||||
Marketing and sales | 22,525 | 12,205 | 42,940 | 22,861 | |||||||||||
General and administrative | 6,635 | 3,771 | 12,208 | 7,416 | |||||||||||
Total operating expenses | 31,234 | 17,661 | 59,349 | 33,202 | |||||||||||
Income from operations | 1,165 | 134 | 1,526 | 151 | |||||||||||
Interest, net | 348 | 85 | 491 | 154 | |||||||||||
Other income | 5 | (70 | ) | 25 | 245 | ||||||||||
Income before provision for income taxes and minority interest | 1,518 | 149 | 2,042 | 550 | |||||||||||
Provision for income taxes | 202 | 22 | 272 | 71 | |||||||||||
Income before minority interest | 1,316 | 127 | 1,770 | 479 | |||||||||||
Minority interest in consolidated joint venture | (146 | ) | (5 | ) | (163 | ) | 11 | ||||||||
Net income | $ | 1,170 | $ | 122 | $ | 1,607 | $ | 490 | |||||||
Basic net income per share | $ | 0.02 | $ | — | $ | 0.03 | $ | 0.02 | |||||||
Diluted net income per share | $ | 0.01 | $ | — | $ | 0.02 | $ | 0.01 | |||||||
Shares used in computing basic net income per share | 64,524 | 29,236 | 48,106 | 28,948 | |||||||||||
Shares used in computing diluted net income per share | 107,749 | 91,973 | 104,079 | 91,785 | |||||||||||
(1) Amounts include stock-based expenses, as follows: | |||||||||||||||
Cost of revenues | $ | 187 | $ | 153 | $ | 357 | $ | 313 | |||||||
Research and development | 80 | 124 | 169 | 244 | |||||||||||
Marketing and sales | 408 | 521 | 822 | 1,035 | |||||||||||
General and administrative | 425 | 246 | 629 | 536 | |||||||||||
Total stock-based expenses | $ | 1,100 | $ | 1,044 | $ | 1,977 | $ | 2,128 | |||||||
salesforce.com, inc.
Condensed Consolidated Statements of Operations
As a percentage of total revenues:
(Unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||
Revenues: | ||||||||||||
Subscription and support | 89 | % | 91 | % | 89 | % | 90 | % | ||||
Professional services and other | 11 | 9 | 11 | 10 | ||||||||
Total revenues | 100 | 100 | 100 | 100 | ||||||||
Cost of revenues: | ||||||||||||
Subscription and support | 6 | 8 | 6 | 9 | ||||||||
Professional services and other | 14 | 10 | 13 | 9 | ||||||||
Total cost of revenues | 20 | 18 | 19 | 18 | ||||||||
Gross profit | 80 | 82 | 81 | 82 | ||||||||
Operating expenses: | ||||||||||||
Research and development | 5 | 8 | 6 | 8 | ||||||||
Marketing and sales | 56 | 56 | 57 | 56 | ||||||||
General and administrative | 16 | 17 | 16 | 18 | ||||||||
Total operating expenses | 77 | 81 | 79 | 82 | ||||||||
Income from operations | 3 | 1 | 2 | 0 | ||||||||
Interest, net | 1 | 0 | 1 | 0 | ||||||||
Other income | 0 | 0 | 0 | 1 | ||||||||
Income before provision for income taxes and minority interest | 4 | 1 | 3 | 1 | ||||||||
Provision for income taxes | (1 | ) | 0 | (1 | ) | 0 | ||||||
Income before minority interest | 3 | 1 | 2 | 1 | ||||||||
Minority interest in consolidated joint venture | 0 | 0 | 0 | 0 | ||||||||
Net income | 3 | % | 1 | % | 2 | % | 1 | % | ||||
Stock-based expenses as a percentage of total revenues, as follows: | ||||||||||||
Cost of revenues | 1 | % | 1 | % | 1 | % | 1 | % | ||||
Research and development | 0 | 1 | 0 | 0 | ||||||||
Marketing and sales | 1 | 2 | 1 | 3 | ||||||||
General and administrative | 1 | 1 | 1 | 1 | ||||||||
Total stock-based expenses | 3 | % | 5 | % | 3 | % | 5 | % | ||||
salesforce.com, inc.
Condensed Consolidated Balance Sheets
(in thousands)
July 31, 2004 | January 31, 2004 | |||||||
| (unaudited) | (audited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 61,093 | $ | 10,463 | ||||
Short-term marketable securities | 55,057 | 25,349 | ||||||
Accounts receivable | 29,944 | 26,536 | ||||||
Deferred commissions | 7,374 | 8,266 | ||||||
Prepaid expenses and other current assets | 3,500 | 3,532 | ||||||
Total current assets | 156,968 | 74,146 | ||||||
Marketable securities, noncurrent | 56,477 | — | ||||||
Restricted cash | 3,158 | 3,912 | ||||||
Fixed assets, net | 5,986 | 5,069 | ||||||
Deferred commissions, noncurrent | 2,127 | 2,890 | ||||||
Other assets | 1,797 | 1,494 | ||||||
Total assets | $ | 226,513 | $ | 87,511 | ||||
Liabilities, convertible preferred stock, and stockholders’ equity (deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,947 | $ | 2,035 | ||||
Accrued expenses and other current liabilities | 25,078 | 17,682 | ||||||
Income taxes payable | 540 | 534 | ||||||
Deferred revenue | 61,557 | 49,677 | ||||||
Current portion of capital lease obligations | 558 | 78 | ||||||
Total current liabilities | 89,680 | 70,006 | ||||||
Capital lease obligations, net of current portion | 1,004 | — | ||||||
Long-term lease abandonment liability and other | 1,689 | 1,830 | ||||||
Minority interest | 953 | 775 | ||||||
Total liabilities | 93,326 | 72,611 | ||||||
Convertible preferred stock | — | 61,137 | ||||||
Stockholders’ equity (deficit): | ||||||||
Common stock | 103 | 32 | ||||||
Additional paid-in capital | 213,321 | 35,580 | ||||||
Deferred stock-based compensation | (8,087 | ) | (8,251 | ) | ||||
Notes receivables from stockholders | (1,723 | ) | (1,674 | ) | ||||
Accumulated other comprehensive (loss) income | (100 | ) | 10 | |||||
Accumulated deficit | (70,327 | ) | (71,934 | ) | ||||
Total stockholders’ equity (deficit) | 133,187 | (46,237 | ) | |||||
Total liabilities, convertible preferred stock and stockholders’ equity (deficit) | $ | 226,513 | $ | 87,511 | ||||
salesforce.com, inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Operating activities: | ||||||||||||||||
Net income | $ | 1,170 | $ | 122 | $ | 1,607 | $ | 490 | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||||
Minority interest | 146 | 5 | 163 | (11 | ) | |||||||||||
Depreciation and amortization | 679 | 707 | 1,427 | 1,325 | ||||||||||||
Amortization of deferred commissions | 3,875 | 1,799 | 7,468 | 3,251 | ||||||||||||
Expenses related to stock-based awards | 1,100 | 1,044 | 1,977 | 2,128 | ||||||||||||
Changes in assets and liabilities | 7,965 | 309 | 8,952 | 1,564 | ||||||||||||
Net cash provided by operating activities | 14,935 | 3,986 | 21,594 | 8,747 | ||||||||||||
Investing activities: | ||||||||||||||||
Restricted cash | 760 | (8 | ) | 754 | (27 | ) | ||||||||||
Changes in marketable securities | (73,361 | ) | (2,256 | ) | (86,185 | ) | (10,350 | ) | ||||||||
Capital expenditures | (484 | ) | (488 | ) | (762 | ) | (819 | ) | ||||||||
Net cash used in investing activities | (73,085 | ) | (2,752 | ) | (86,193 | ) | (11,196 | ) | ||||||||
Financing activities: | ||||||||||||||||
Proceeds from the issuance of common stock, net of issuance costs | 113,768 | — | 113,768 | — | ||||||||||||
Proceeds from the exercise of stock options | 92 | 114 | 1,734 | 175 | ||||||||||||
Principal payments on capital lease obligations | (157 | ) | (159 | ) | (215 | ) | (310 | ) | ||||||||
Repurchase of unvested shares | (7 | ) | (11 | ) | (43 | ) | (16 | ) | ||||||||
Proceeds from subsidiary stock offerings | 40 | — | 40 | — | ||||||||||||
Net cash provided by (used in) financing activities | 113,736 | (56 | ) | 115,284 | (151 | ) | ||||||||||
Effect of exchange rate changes | (53 | ) | 11 | (55 | ) | 21 | ||||||||||
Net increase (decrease) in cash and cash equivalents | 55,533 | 1,189 | 50,630 | (2,579 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 5,560 | 4,941 | 10,463 | 8,709 | ||||||||||||
Cash and cash equivalents, end of period | $ | 61,093 | $ | 6,130 | $ | 61,093 | $ | 6,130 | ||||||||
salesforce.com, inc.
Additional Metrics
July 31, 2004 | April 30, 2004 | January 31, 2004 | July 31, 2003 | ||||||||||
Customer and subscriber data: | |||||||||||||
Approximate number of customers | 11,100 | 9,800 | 8,700 | 7,000 | |||||||||
Approximate number of paying subscriptions (1) | 168,000 | 147,000 | 127,000 | 96,000 | |||||||||
Full Time Equivalent Headcount | 594 | 518 | 444 | 357 | |||||||||
Financial data: | |||||||||||||
Cash, cash equivalents and marketable securities | $ | 172,627 | (2) | $ | 43,733 | $ | 35,812 | $ | 23,780 | ||||
Deferred revenue | $ | 61,557 | $ | 52,340 | $ | 49,677 | $ | 29,449 | |||||
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
Revenues by geography: | ||||||||||||||||
Americas | $ | 32,506 | $ | 17,909 | $ | 60,842 | $ | 33,955 | ||||||||
Europe | 5,828 | 2,692 | 10,460 | 4,730 | ||||||||||||
Asia Pacific | 2,247 | 1,022 | 4,118 | 1,851 | ||||||||||||
| $ | 40,581 | $ | 21,623 | $ | 75,420 | $ | 40,536 | |||||||||
As a percentage of total revenues: | ||||||||||||||||
Revenues by geography: | ||||||||||||||||
Americas | 80 | % | 83 | % | 81 | % | 84 | % | ||||||||
Europe | 14 | 12 | 14 | 12 | ||||||||||||
Asia Pacific | 6 | 5 | 5 | 4 | ||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
| (1) | Paying subscriptions are defined as unique user accounts, purchased by customers for use by their employees and other customer-authorized users that have not been suspended for non-payment and for which we are recognizing subscription revenue. |
The July 31, 2004 paying subscriber metrics do not include the 20,000 subscriptions to a national professional organization since these subscriptions were priced at a nominal fee per subscription per month and provide limited rights to access and use certain features in the Company’s on-demand application service. The Company believes that excluding the 20,000 subscriptions provides a more accurate representation of its numbers.
Also, the July 31, 2004 number excludes approximately 2,000 paying subscribers who are using the Company’s service, but for which the Company has delayed revenue recognition until specific new technology is completed.
| (2) | Includes net proceeds of $113.8 million from the Company’s sale of common stock during its initial public offering in June 2004. |