Salesforce (CRM) 8-K Salesforce.com Announces Record Fiscal Second Quarter 2008 Results

Exhibit 99.1

David Havlek

salesforce.com

Investor Relations

415-536-2171

dhavlek@salesforce.com

Jane Hynes

salesforce.com

Public Relations

415-901-5079

jhynes@salesforce.com

Salesforce.com Announces Record Fiscal Second Quarter 2008 Results

Exceeds Q2 Revenue and EPS Guidance and Raises Full Year Outlook

Surpasses 800,000 subscribers and $700 Million Annual Revenue Run Rate

• Record Revenue of $177M, up 49% Year-Over-Year

• GAAP Net Income Surges to $3.7M, up 412% Sequentially

• GAAP EPS of $0.03, Above High End of Company Guidance

• Net Paying New Customers Rise a Record 3,000 to 35,300

• Two Largest Deployments Now Exceed 30,000 Subscribers Each

• Record Q2 Operating Cash Flow of $35M, Up 15% Year-over-Year

SAN FRANCISCO, Calif. – August 15, 2007 –Salesforce.com (NYSE: CRM), the market and technology leader in on-demand business services, today announced results for its second fiscal quarter ended July 31, 2007.

“Our business continues to show incredible momentum: a year ago, our largest customer had roughly 7,500 subscribers. Today, our installed base includes 2 customers with more than 30,000 subscribers; 4 customers with 20,000 or more subscribers; 5 customers with over 10,000 and a remarkable 68 customers with more than 1,000 subscribers—a greater than 40% increase in the number of customers with 1000 or more subscribers versus 6 months ago,” said Marc Benioff, chairman and CEO, salesforce.com. “Now with an annual revenue run rate of more than $700 million, our company is well-positioned to take on-demand even further into the enterprise.”

Salesforce.com delivered the following results for the second fiscal quarter 2008:

Revenue: Total Q2 revenue was $176.6 million, an increase of 49% on a year-over-year basis and an increase of 9% on a quarter-over-quarter basis. Subscription and support revenues were $160.0 million, an increase of 50% on a year-over-year basis and an increase of 8% on a quarter-over-quarter basis. Professional services and other revenues were $16.6 million, an increase of 45% on a year-over-year basis and an increase of 13% on a quarter-over-quarter basis.

Earnings per Share: Q2 diluted GAAP earnings per share were $0.03. This result includes approximately $13 million in stock based compensation and approximately $1.5 million in amortization of purchased intangibles related to previously announced acquisitions, as well as a 50% tax rate. Q2 diluted GAAP EPS calculations are based on an average of 121 million diluted shares outstanding during the quarter.

Customers: The company achieved a new record in Q2 by adding approximately 3,000 net paying customers in a quarter for the first time in its history. These additions pushed total net paying customers in the second quarter to 35,300, an increase of approximately 10,500 or 42% from Q2 of the prior year, and an increase of approximately 9% from the prior quarter. Net paying subscribers rose to more than 800,000 subscribers as of quarter end, an increase of more than 60% year over year.

Cash: Cash from operations for the fiscal second quarter was approximately $35 million, an increase of 15% year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at approximately $497 million, an increase of approximately 49% or $163 million year-over-year.

Deferred Revenue: Deferred revenue on the balance sheet as of the end of the fiscal second quarter was roughly $322 million, an increase of 59% on a year-over-year basis and 9% on a quarter-over-quarter basis.

Based on information as of August 15, 2007, salesforce.com is initiating guidance for its third quarter, fiscal year 2008, and raising its guidance for the full fiscal year 2008.

Q3 FY08: Revenue for the company’s third fiscal quarter is projected to be in the range of approximately $187 million to $189 million. GAAP diluted EPS is expected to be in the range of approximately $0.01 to $0.02. GAAP EPS estimates include the effects of stock based compensation and the amortization of purchased intangibles. For the third fiscal quarter FY08, stock based compensation expense is expected to be approximately $14 million to $16 million, and the expense associated with the amortization of purchased intangibles is now expected to be approximately $1.5 million. For the purposes of Q3 GAAP EPS calculation, the company is expecting an average diluted shares count of 123 million shares, and a GAAP tax rate of 58%.

Full Year FY08: The company is raising its full fiscal year 2008 revenue and EPS outlook provided on May 16, 2007. Revenue is now expected to be approximately $727 million to approximately $732 million. The company now expects GAAP diluted EPS to be in the range of approximately $0.08 to $0.10. GAAP EPS estimates include the effects of stock based compensation and the amortization of purchased intangibles. For the full fiscal year 2008, stock based compensation expense is expected to be approximately $55 million to $60 million, and the expense associated with the amortization of purchased intangibles is currently expected to be approximately $5.0 million. For the purposes of the full fiscal year 2008 GAAP EPS calculation, the company is expecting an average diluted shares count of 123 million shares, and a GAAP tax rate of 58%.

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its second quarter fiscal 2008 results at 2:00 p.m. (PDT) 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. Participants who choose to call into the conference call can do so by dialing domestically 866-901-SFDC or 866-901-7332 and internationally 706-902-1764. A replay will be available at (800) 642-1687 or (706) 645-9291, passcode 12424692, until midnight (EDT) August 24, 2007.

About salesforce.com

Salesforce.com is the market and technology leader in on-demand business services. The company’s Salesforce suite of on-demand CRM applications allows customers to manage and share all of their sales, support, marketing and partner information on-demand. The Salesforce Platform, the world’s first on-demand platform, enables customers, developers and partners to build powerful new on-demand applications that extend beyond CRM to deliver the benefits of multi-tenancy and The

Business Web across the enterprise. The Salesforce Platform allows applications to be easily shared, exchanged and installed with a few simple clicks via salesforce.com’s AppExchange directory, available athttp://www.salesforce.com/appexchange. Customers can also take advantage ofSuccessforce, salesforce.com’s world-class training, support, consulting and best practices offerings.

As of July 31, 2007, salesforce.com manages customer information for approximately 35,300 customers including ABN AMRO, Dow Jones Newswires, Japan Post, Kaiser Permanente, KONE, Sprint Nextel and SunTrust Banks. Any unreleased services or features referenced in this or other press releases or public statements are not currently available and may not be delivered on time or at all. Customers who purchase salesforce.com applications should make their purchase decisions based upon features that are currently available. Salesforce.com has headquarters 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.

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“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements including but not limited to statements regarding our expected future revenue, GAAP diluted earnings per share, expected tax rate, anticipated shares outstanding, further adoption of our on-demand business services by enterprises, and the potential market for our existing service offerings. All of our forward looking statements involve risks, uncertainties and assumptions. If any such risks or 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 possible fluctuations in our operating results and cash flows, rate of growth and anticipated revenue run rate, errors, interruptions or delays in our service or our Web hosting, our new business model, our history of operating losses, the possibility that we will not remain profitable, breach of our security measures, the emerging market in which we operate, our relatively limited operating history, our ability to hire, retain and motivate our employees and manage our growth, competition, our ability to continue to release and gain customer acceptance of new and improved versions of our service, customer and partner acceptance of the AppExchange, successful customer deployment and utilization of our services, unanticipated changes in our effective tax rate, fluctuations in the number of shares outstanding, the price of such shares, foreign currency exchange rates and interest rates.

Further information on these and other factors that could affect our financial results is contained in our SEC filings, including our most recent reports on Form 10-K and 10-Q, particularly under the heading “Risk Factors.” These documents are available in the SEC Filings portion of the Investor Information section of our website atwww.salesforce.com/investor.

Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

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Salesforce.com is a registered trademark of salesforce.com, and AppExchange, The Business Web, IdeaExchange and Successforce are trademarks of salesforce.com, Inc., San Francisco, California. Other names used may be trademarks of their respective owners.

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,
	2007			2006			2007			2006
Revenues:
Subscription and support	$	159,998		$	106,663		$	307,688		$	201,156
Professional services and other		16,581			11,474			31,303			21,667
Total revenues		176,579			118,137			338,991			222,823
Cost of revenues (1):
Subscription and support		22,375			15,775			42,559			28,550
Professional services and other		19,037			13,356			38,020			25,141
Total cost of revenues		41,412			29,131			80,579			53,691
Gross profit		135,167			89,006			258,412			169,132
Operating expenses (1):
Research and development		15,096			11,008			29,217			19,833
Marketing and sales		90,216			59,811			174,141			111,827
General and administrative		26,508			19,466			51,593			38,871
Total operating expenses		131,820			90,285			254,951			170,531
Income (loss) from operations		3,347			(1,279	)		3,461			(1,399	)
Interest, net		5,615			3,170			10,622			6,149
Other income (expense)		280			137			449			(462	)
Income before provision for income taxes and minority interest		9,242			2,028			14,532			4,288
Provision for income taxes		(4,653	)		(1,713	)		(8,495	)		(3,718	)
Income before minority interest		4,589			315			6,037			570
Minority interest in consolidated joint venture		(854	)		(460	)		(1,572	)		(944	)
Net income (loss)	$	3,735		$	(145	)	$	4,465		$	(374	)
Basic net income (loss) per share	$	0.03		$	0.00		$	0.04		$	0.00
Diluted net income (loss) per share	$	0.03		$	0.00		$	0.04		$	0.00
Shares used in computing basic net income (loss) per share		116,294			111,838			115,637			111,397
Shares used in computing diluted net income (loss) per share		121,333			111,838			120,993			111,397
(1)    Amounts include stock-based expenses, as follows:
Cost of revenues	$	1,965		$	1,442		$	3,739		$	2,596
Research and development		1,510			1,286			2,787			2,006
Marketing and sales		6,265			4,718			11,884			8,200
General and administrative		3,691			2,747			7,033			4,997
Total stock-based expenses	$	13,431		$	10,193		$	25,443		$	17,799

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,
	2007		2006		2007		2006
Revenues:
Subscription and support	91	%	90	%	91	%	90	%
Professional services and other	9		10		9		10
Total revenues	100		100		100		100
Cost of revenues:
Subscription and support	12		13		13		13
Professional services and other	11		12		11		11
Total cost of revenues	23		25		24		24
Gross profit	77		75		76		76
Operating expenses:
Research and development	9		9		9		9
Marketing and sales	51		51		51		50
General and administrative	15		16		15		18
Total operating expenses	75		76		75		77
Income (loss) from operations	2		(1	)	1		(1	)
Interest, net	3		3		3		3
Other income (expense)	0		0		0		0
Income before provision for income taxes and minority interest	5		2		4		2
Provision for income taxes	(2	)	(2	)	(2	)	(2	)
Income before minority interest	3		0		2		0
Minority interest in consolidated joint venture	(1	)	0		(1	)	0
Net income (loss)	2	%	0	%	1	%	0	%
Stock-based expenses as a percentage of total revenues, as follows:
Cost of revenues	1	%	1	%	1	%	1	%
Research and development	1		1		1		1
Marketing and sales	4		4		4		4
General and administrative	2		3		2		2
Total stock-based expenses	8	%	9	%	8	%	8	%

salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)

	July 31, 2007			January 31, 2007
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	122,949		$	86,608
Short-term marketable securities		184,881			165,816
Accounts receivable, net		114,046			128,693
Deferred commissions		25,150			22,072
Deferred income taxes		2,106			228
Prepaid expenses and other current assets		28,039			15,679
Total current assets		477,171			419,096
Marketable securities, noncurrent		189,361			160,088
Fixed assets, net		36,690			30,155
Deferred commissions, noncurrent		8,675			9,478
Deferred income taxes, noncurrent		22,620			20,625
Capitalized software		23,956			10,983
Goodwill		6,705			6,705
Other assets		10,601			7,702
Total assets	$	775,779		$	664,832
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	7,215		$	8,870
Accrued expenses and other current liabilities		81,358			77,327
Income taxes payable		1,689			6,739
Deferred revenue		321,852			284,063
Total current liabilities		412,114			376,999
Income taxes payable, noncurrent		5,007			0
Long-term lease abandonment liability and other		1,371			1,408
Minority interest		6,231			4,634
Total liabilities		424,723			383,041
Stockholders’ equity:
Common stock		117			115
Additional paid-in capital		384,510			319,496
Accumulated other comprehensive loss		(2,094	)		(2,187	)
Accumulated deficit		(31,477	)		(35,633	)
Total stockholders’ equity		351,056			281,791
Total liabilities and stockholders’ equity	$	775,779		$	664,832

salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three Months Ended July 31,						Six Months Ended July 31,
	2007			2006			2007			2006
Operating activities:
Net income (loss)	$	3,735		$	(145	)	$	4,465		$	(374	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Minority interest		854			460			1,572			944
Depreciation and amortization		6,045			3,103			10,893			5,428
Amortization of deferred commissions		9,644			5,651			18,683			10,778
Expenses related to stock-based awards		13,431			10,193			25,443			17,799
Excess tax benefits from employee stock plans		(8,920	)		(3,328	)		(15,206	)		(5,928	)
Changes in assets and liabilities		9,865			14,088			25,634			13,791
Net cash provided by operating activities		34,654			30,022			71,484			42,438
Investing activities:
Business combination		0			0			0			(15,502	)
Purchase of subsidiary stock		0			0			0			0
Changes in marketable securities		(13,735	)		(14,151	)		(47,947	)		13,057
Capital expenditures		(10,104	)		(2,818	)		(26,061	)		(5,413	)
Net cash used in investing activities		(23,839	)		(16,969	)		(74,008	)		(7,858	)
Financing activities:
Proceeds from the exercise of stock options and warrants		15,404			5,388			23,704			10,891
Excess tax benefits from employee stock plans		8,920			3,328			15,206			5,928
Principal payments on capital lease obligations		(6	)		(153	)		(163	)		(304	)
Repurchase of unvested shares		0			(10	)		0			(10	)
Net cash provided by financing activities		24,318			8,553			38,747			16,505
Effect of exchange rate changes		324			(187	)		118			(935	)
Net increase in cash and cash equivalents		35,457			21,419			36,341			50,150
Cash and cash equivalents, beginning of period		87,492			128,573			86,608			99,842
Cash and cash equivalents, end of period	$	122,949		$	149,992		$	122,949		$	149,992

salesforce.com, inc.

Additional Metrics

(Unaudited)

	July 31, 2007		April 30, 2007		Jan 31, 2007		Oct 31, 2006		July 31, 2006		April 30, 2006
Full Time Equivalent Headcount		2,302		2,243		2,070		1,807		1,625		1,480
Financial data (in thousands):
Cash, cash equivalents and marketable securities	$	497,191	$	448,071	$	412,512	$	371,278	$	334,107	$	298,313
Deferred revenue	$	321,852	$	295,672	$	284,063	$	219,431	$	202,836	$	182,036

	Three Months Ended July 31,						Six Months Ended July 31,
	2007			2006			2007			2006
Revenues by geography (in thousands):
Americas	$	133,343		$	92,553		$	257,795		$	175,578
Europe		29,160			17,624			54,734			32,574
Asia Pacific		14,076			7,960			26,462			14,671
	$	176,579		$	118,137		$	338,991		$	222,823
As a percentage of total revenues:
Revenues by geography:
Americas		76	%		78	%		76	%		79	%
Europe		16			15			16			15
Asia Pacific		8			7			8			6
		100	%		100	%		100	%		100	%