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Salesforce.com Announces Fiscal First Quarter Results
May 19, 2011 (04:05 PM EDT)


First Enterprise Cloud Computing Company to Exceed $2.0 Billion Annual Revenue Run Rate

- Record Quarterly Revenue of $504 Million, up 34% Year-Over-Year

- Deferred Revenue of $915 Million, up 38% Year-Over-Year

- Operating Cash Flow of $140 Million, down 3% Year-Over-Year

- 5,400 Net New Customers in the Quarter

- Total Customers at 97,700 up 26% Year-Over-Year

- Raises FY12 Revenue Guidance to $2.15 - $2.17 Billion

SAN FRANCISCO, May 19, 2011 /PRNewswire/ -- Salesforce.com (NYSE: CRM), the enterprise cloud computing company, today announced results for its fiscal first quarter ended April 30, 2011.

(Logo:  http://photos.prnewswire.com/prnh/20050216/SFW105LOGO)

"Salesforce.com has become the first enterprise cloud computing company to reach a $2.0 billion annual revenue run rate," said Marc Benioff, Chairman and CEO. "We are delighted to see our revenue growth rate continue to accelerate."

Salesforce.com delivered the following results for its fiscal first quarter:

Revenue: Total Q1 revenue was $504 million, an increase of 34% on a year-over-year basis.  Subscription and support revenues were $474 million, an increase of 35% on a year-over-year basis.  Professional services and other revenues were $31 million, an increase of 18% on a year-over-year basis.  

Earnings per Share:  Q1 GAAP diluted earnings per share were breakeven, and non-GAAP diluted earnings per share decreased 7% year-over-year to $0.28. The company's non-GAAP results exclude the effects of approximately $48 million in stock-based compensation expense, approximately $10 million in amortization of purchased intangibles, and approximately $3 million in non-cash interest expense related to the company's convertible senior notes.  All EPS calculations are based on 141 million diluted shares outstanding during the quarter. The company's Q1 diluted shares outstanding include approximately 3 million shares associated with the convertible senior notes and warrants.

Customers: Net paying customers rose approximately 5,400 during the quarter to finish at approximately 97,700.  Since April 30, 2010, the company added 20,400 net paying customers, an increase of 26% on a year-over-year basis.

Cash: Cash generated from operations for the fiscal first quarter was $140 million, a decrease of 3% on a year-over-year basis. Total cash, cash equivalents and marketable securities finished the year at approximately $1.5 billion, a decrease of approximately $379 million from the prior year.

Deferred Revenue: Deferred revenue on the balance sheet as of April 30, 2011 was $915 million, an increase of 38% on a year-over-year basis.

As of May 19, 2011, salesforce.com is initiating guidance for its second quarter of fiscal year 2012. In addition, the company is raising its prior full fiscal year 2012 revenue and non-GAAP EPS guidance provided on March 30, 2011, and updating its projected full fiscal year 2012 GAAP EPS guidance previously provided on February 24, 2011.

Q2 FY12 Guidance:  Revenue for the company's second fiscal quarter is projected to be in the range of approximately $526 million to approximately $528 million.

For the second fiscal quarter, the company expects to report a GAAP net loss per share of approximately ($0.01) to breakeven, while diluted non-GAAP EPS is expected to be approximately $0.29 to $0.30. All EPS estimates include a one-time tax benefit of $0.02, associated with the acquisition of Radian6. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $54 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $17 million, and non-cash interest expense related to the company's convertible senior notes, expected to be approximately $3 million. EPS estimates assume a GAAP tax rate of 113%, and a non-GAAP tax rate of 30%. For the purpose of the EPS calculation, assume an average basic share count of approximately 136 million shares, and an average diluted share count of approximately 144 million shares. Salesforce.com completed its previously announced acquisition of Radian6 on May 2, 2011, and these estimates include the forecasted operating results for Radian6 from that date forward. Radian6 estimates incorporate a preliminary purchase price allocation, and are therefore subject to change.

Full Year FY12 Guidance:  Revenue for the company's full fiscal year 2012 is projected to be in the range of approximately $2.15 billion to approximately $2.17 billion.

For the full fiscal year 2012, the company expects to report a GAAP net loss per share of approximately ($0.03) to ($0.01), while diluted non-GAAP EPS is expected to be approximately $1.30 to $1.32. All EPS estimates include a one-time tax benefit of $0.04, associated with the acquisition of Radian6. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $238 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $60 million, and non-cash interest expense related to the convertible senior notes, expected to be approximately $11 million. EPS estimates assume a GAAP tax rate of 113%, and a non-GAAP tax rate of 33%. For the purpose of the EPS calculation, assume an average basic share count of approximately 136 million shares, and an average diluted share count of approximately 145 million shares. Salesforce.com completed its previously announced acquisition of Radian6 on May 2, 2011, and these estimates include the forecasted operating results for Radian6 from that date forward. Radian6 estimates incorporate a preliminary purchase price allocation, and are therefore subject to change.

The following is a per share reconciliation of GAAP diluted EPS to non-GAAP diluted EPS Guidance for the second quarter and full fiscal year:


Fiscal 2012


Q2

FY2012




GAAP EPS range

($0.01) - $0.00

($0.03) - ($0.01)

Plus



Amortization of purchased intangibles

$0.12

$0.42

Stock-based expense

$0.37

$1.65

Amortization of debt discount

$0.02

$0.08

Less



Income tax effect of certain Non-GAAP items

($0.21)

($0.82)

Non-GAAP diluted EPS

$0.29 - $0.30

$1.30 - $1.32




Shares used in computing basic net income per share (millions)

136

136

Shares used in computing diluted net income per share (millions)

144

145




For this per share reconciliation, diluted shares were used for the above calculations



Quarterly Conference Call

Salesforce.com will host a conference call to discuss its first quarter fiscal year 2012 results at 2:00 p.m. Pacific 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.  Participants who choose to call in to the conference call can do so by dialing domestically 866-901-SFDC or 866-901-7332 and internationally at +1 706-902-1764, passcode salesforce.com or 64853124.  A replay will be available at 800-642-1687 or +1 706-645-9291, passcode 64853124, until midnight (Eastern Time) June 16, 2011.

About Salesforce.com

Salesforce.com is the enterprise cloud computing company that has transformed the way companies collaborate and communicate. Salesforce.com is leading the effort to bring Cloud 2, the next paradigm for computing, to the enterprise by offering its customers the social collaboration, mobility and openness that are the hallmark of this new world. The company's platform and application services include:


Salesforce.com offers the fastest path to customer success with cloud computing. As of April 30, 2011, salesforce.com manages customer information for approximately 97,700 customers including Allianz Commercial, Dell, Japan Post, Kaiser Permanente, KONE, 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://salesforce.com, or call 1-800-NO-SOFTWARE.

Non-GAAP Financial Measures:  This press release includes information about non-GAAP EPS and non-GAAP tax rates (collectively the "non-GAAP financial measures").  Non-GAAP EPS estimates exclude the impact of the following non-cash items:  stock-based compensation, amortization of acquisition-related intangibles, and the amortization of debt discount on the company's convertible senior notes, as well as the tax consequences associated with these items.  The purpose of the non-GAAP tax rate is to quantify the excluded tax consequences of the excluded expense items.  These non-GAAP estimates are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles.  The method used to produce non-GAAP financial measures is not computed according to GAAP and may differ from the methods used by other companies.  Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP.

The primary purpose of these non-GAAP measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash items on the company's operating performance.  Non-cash stock-based compensation, amortization of acquisition-related intangible assets, and the amortization of debt discount on the company's convertible senior notes are being excluded from the company's FY12 financial results because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but were made for the company's long-term benefit over multiple periods.  While strategic decisions, such as those to issue stock-based compensation, acquire a company, or issue convertible senior notes, are made to further the company's long-term strategic objectives and impact the company's income statement under GAAP measures, these items affect multiple periods and management is not able to change or affect these items in any particular period.  As such, supplementing GAAP disclosure with non-GAAP disclosure using the non-GAAP measures provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period, and management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the company's performance.

In addition, the majority of the company's industry peers report non-GAAP operating results that exclude certain non-cash or non-recurring items.  Management believes that the provision of supplemental non-GAAP information will enable a more complete comparison of the company's relative performance.  

Specifically, management is excluding the following items from its non-GAAP EPS for Q1 and its non-GAAP estimates for Q2 and FY12:

  • Stock-Based Expenses:  The company's compensation strategy is to use stock-based compensation to attract and retain key employees and executives.  It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period.  Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.  
  • Amortization of Purchased Intangibles:  The company views amortization of acquisition-related intangible assets, such as the amortization of an acquired company's research and development efforts, customer lists and customer relationships, as items arising from pre-acquisition activities.  These are costs that are determined at the time of an acquisition.  While it is continually viewed for impairment, amortization of the cost is a static expense, one that is not typically affected by operations during any particular period.
  • Amortization of Debt Discount:  Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate.  Accordingly, for GAAP purposes we are required to recognize imputed interest expense on the company's $575 million of convertible subordinated notes that were issued in a private placement in January 2010.  The imputed interest rate is approximately 5.9%, while the coupon interest rate is 0.75%.  The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management's assessment of the company's operating performance because management believes that this non-cash expense is not indicative of ongoing operating performance.  Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the company's operational performance.
  • Income Tax Effects:  The company's estimated non-GAAP effective tax rate is lower than the estimated GAAP effective tax rate due to the exclusion of the expense items described above.  

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:  This press release contains forward-looking statements about expected GAAP revenue and GAAP and non-GAAP EPS for the second fiscal quarter of 2012 and the full fiscal year, the company's expected tax rates, stock-based compensation expenses, amortization expenses, and shares outstanding.  The achievement or success of the matters covered by such forward-looking statements involve risks, uncertainties and assumptions.  If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company's 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 the company's financial and operating results; rate of growth and anticipated revenue run rate; errors, interruptions or delays in the company's service or the company's Web hosting; breaches of the company's security measures; the financial impact of any previous and future acquisitions; the nature of the company's business model; the company's ability to continue to release, and gain customer acceptance of, new and improved versions of the company's service; successful customer deployment and utilization of the company's existing and future services; changes in the company's sales cycle; competition; various financial aspects of the company's subscription model; unexpected increases in attrition or decreases in new business; the emerging markets in which we operate; unique aspects of entering or expanding in international markets, the company's ability to hire, retain and motivate  employees and manage the company's growth; changes in the company's customer base; technological developments; regulatory developments; litigation related to intellectual property and other matters, and any related claims, negotiations and settlements; unanticipated changes in the company's effective tax rate; fluctuations in the number of shares we have outstanding and the price of such shares; foreign currency exchange rates; interest rates; the company's plans to build our new global headquarters in San Francisco, California and the associated costs; and general developments in the economy, financial markets, and credit markets.

Further information on these and other factors that could affect the company's financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time, including the company's Form 10-Q that will be filed for the fiscal quarter ended April 30, 2011, and our Form 10-K filed for the fiscal year ended January 31, 2011.  These documents are available on the SEC Filings section of the Investor Information section of the company's 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.

Copyright (c) 2011 salesforce.com, inc.  All rights reserved.  Salesforce and the "no software" logo are registered trademarks of salesforce.com, inc., and salesforce.com owns other registered and unregistered trademarks.  Other names used herein 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 April 30,





2011


2010








Revenues:






Subscription and support

$473,504


$350,712


Professional services and other

30,860


26,101



Total revenues

504,364


376,813








Cost of revenues (1):





Subscription and support

75,243


44,057


Professional services and other

27,823


27,524



Total cost of revenues

103,066


71,581








Gross profit


401,298


305,232








Operating expenses (1):





Research and development

65,292


40,122


Marketing and sales

254,471


175,867


General and administrative

84,338


56,193



Total operating expenses

404,101


272,182








Income (loss) from operations

(2,803)


33,050








Investment income


8,055


7,875

Interest expense


(3,671)


(7,060)

Other expense


(800)


(1,973)








Income before provision for income taxes and noncontrolling interest

781


31,892








Provision for income taxes

(251)


(12,016)








Consolidated net income

530


19,876








Less: Net loss attributable to noncontrolling interest

0


(2,131)








Net income attributable to salesforce.com

$530


$17,745








Basic net income per share attributable to salesforce.com common shareholders

$0.00


$0.14








Diluted net income per share attributable to salesforce.com common shareholders

$0.00


$0.13








Shares used in computing basic net income per share

133,454


128,032








Shares used in computing diluted net income per share

141,062


132,251















(1) Amounts include stock-based expenses, as follows:






Cost of revenues

$    3,651


$    3,074



Research and development

7,839


4,102



Marketing and sales

23,787


12,210



General and administrative

12,281


7,082



salesforce.com, inc.

Condensed Consolidated Statements of Operations







As a percentage of total revenues:

(Unaudited)








Three Months Ended April 30,




2011


2010

Revenues:





Subscription and support

94%


93%


Professional services and other

6


7



Total revenues

100


100







Cost of revenues:





Subscription and support

15


12


Professional services and other

5


7



Total cost of revenues

20


19







Gross profit

80


81







Operating expenses:





Research and development

13


10


Marketing and sales

51


47


General and administrative

17


15



Total operating expenses

81


72







Income (loss) from operations

(1)


9







Investment income

2


2

Interest expense

(1)


(2)

Other expense

0


(1)







Income before provision for income taxes and noncontrolling interest

0


8







Provision for income taxes

0


(3)







Consolidated net income

0


5







Less: Net loss attributable to noncontrolling interest

0


0







Net income attributable to salesforce.com

0%


5%



















Stock-based expenses as a percentage of total revenues, as follows:






Cost of revenues

1%


1%



Research and development

2


1



Marketing and sales

5


3



General and administrative

2


2



salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)








April 30,


January 31,



2011


2011



(unaudited)








Assets




Current assets:





Cash and cash equivalents

$664,612


$424,292


Short-term marketable securities

99,224


72,678


Accounts receivable, net

270,816


426,943


Deferred commissions

65,800


67,774


Deferred income taxes

23,791


27,516


Prepaid expenses and other current assets

63,886


55,721






Total current assets

1,188,129


1,074,924






Marketable securities, noncurrent

758,449


910,587

Property and equipment, net (see additional metrics)

446,268


387,174

Deferred commissions, noncurrent

46,645


48,842

Deferred income taxes, noncurrent

47,432


41,199

Capitalized software, net (see additional metrics)

124,661


127,987

Goodwill

406,889


396,081

Other assets, net (see additional metrics)

109,595


104,371






Total assets

$3,128,068


$3,091,165






Liabilities, temporary equity and stockholders' equity




Current liabilities:





Accounts payable

$16,969


$18,106


Accrued expenses and other liabilities (see additional metrics)

295,970


345,121


Deferred revenue

893,904


913,239


Convertible senior notes, net

478,369


0






Total current liabilities

1,685,212


1,276,466






Convertible senior notes, net

0


472,538

Income taxes payable, noncurrent

20,292


18,481

Long-term lease liabilities and other

49,062


25,487

Deferred revenue, noncurrent

21,229


21,702

Total liabilities

1,775,795


1,814,674






Temporary equity

96,631


0






Stockholders' equity:





Common stock

134


133


Additional paid-in capital

1,083,867


1,098,604


Accumulated other comprehensive gain

76


6,719


Retained earnings

171,565


171,035






Total stockholders' equity

1,255,642


1,276,491






Total liabilities, temporary equity and stockholders' equity

$3,128,068


$3,091,165



salesforce.com, inc.  

Condensed Consolidated Statements of Cash Flows

(in thousands)



(Unaudited)











Three Months Ended April 30,




2011


2010

Operating activities:




Consolidated net income

$        530


$   19,876

Adjustments to reconcile net income to net




cash provided by operating activities:





Depreciation and amortization

29,593


14,505


Amortization of debt discount and transaction costs

2,255


5,451


Amortization of deferred commissions

24,675


19,489


Expenses related to stock-based awards

47,558


26,468


Excess tax benefits from employee stock plans

(2,034)


(9,288)


Changes in assets and liabilities:






Accounts receivable, net

156,127


138,951



Deferred commissions

(20,504)


(19,308)



Prepaid expenses and other current assets

(9,383)


9,939



Other assets

(2,713)


(1,439)



Accounts payable

(1,137)


(1,658)



Accrued expenses and other current liabilities

(65,641)


(19,984)



Deferred revenue

(19,808)


(39,819)















Net cash provided by operating activities

139,518


143,183







Investing activities:




Business combinations, net of cash acquired

(13,335)


0

Land activity and building improvements

(1,014)


0

Strategic investments

(5,433)


(500)

Changes in marketable securities

126,458


(495,943)

Capital expenditures

(27,314)


(11,690)















Net cash provided by (used in) investing activities

79,362


(508,133)







Financing activities:




Purchase of subsidiary stock

0


(1,273)

Proceeds from the exercise of stock options

32,286


37,516

Excess tax benefits from employee stock plans

2,034


9,288

Contingent consideration payment related to prior business combination

(2,800)


0

Principal payments on capital lease obligations

(3,562)


(1,918)















Net cash provided by financing activities

27,958


43,613







Effect of exchange rate changes

(6,518)


825







Net increase (decrease) in cash and




cash equivalents


240,320


(320,512)







Cash and cash equivalents, beginning of period

424,292


1,011,306







Cash and cash equivalents, end of period

$ 664,612


$ 690,794



salesforce.com, inc.

Additional Metrics


(Unaudited)



























Apr 30,


Jan 31,


Oct 31,


Jul 31,


Apr 30,


Jan 31,



2011


2011


2010


2010


2010


2010














Full Time Equivalent Headcount

5,513


5,306


4,758


4,447


4,106


3,969



























Financial data (in thousands):













Cash, cash equivalents and marketable













  securities

$1,522,285


$1,407,557


$1,802,440


$1,858,928


$1,901,548


$1,727,048


Deferred revenue, current and noncurrent

$915,133


$934,941


$694,557


$683,019


$664,529


$704,348



























Selected Balance Sheet Accounts (in thousands):














Apr 30,


Jan 31,











2011


2011










Capitalized Software, net













    Capitalized internal-use software development costs, net of accumulated amortization

$31,037


$29,154










    Acquired developed technology, net of accumulated amortization

93,624


98,833











$124,661


$127,987























Other Assets, net













    Deferred professional services costs, noncurrent portion

$9,860


$10,201










    Long-term deposits

12,617


12,114










    Purchased intangible assets, net accumulated amortization

30,620


31,660










    Acquired intellectual property, net of accumulated amortization

5,594


5,874










    Strategic investments

31,593


27,065










    Other

19,311


17,457











$109,595


$104,371























Property and Equipment, net













    Land

$248,263


$248,263










    Building improvements

15,640


10,115










    Computers, equipment and software

171,703


115,736










    Furniture and fixtures

22,518


20,462










    Leasehold improvements

106,528


100,380











564,652


494,956










    Less accumulated depreciation and amortization

(118,384)


(107,782)











$446,268


$387,174























Accrued Expenses and Other Current Liabilities













    Accrued compensation

$98,237


$148,275










    Accrued other liabilities

122,213


112,840










    Accrued income and other taxes payable

34,673


49,135










    Accrued professional costs

15,464


12,548










    Accrued rent

25,383


22,323











$295,970


$345,121

































Three Months Ended April 30,









2011


2010









Revenues by geography (in thousands):













Americas

$                                   340,018


$                                   259,284










Europe

94,395


66,842










Asia Pacific

69,951


50,687
























$                                   504,364


$                                   376,813






















As a percentage of total revenues:

























Revenues by geography:













Americas

67%


69%










Europe

19


18










Asia Pacific

14


13
























100%


100%





























































Supplemental Revenue Analysis (1)














Three Months Ended


Three Months Ended


Three Months Ended









April 30, 2011


January 31, 2011


April 30, 2010









compared to Three Months


compared to Three Months


compared to Three Months









Ended April 30, 2010


Ended January 31, 2010


Ended April 30, 2009







Revenue constant currency growth rates (as compared to the












    comparable prior periods)


























Americas

31%


26%


18%








Europe

36%


41%


24%








Asia Pacific

29%


35%


50%








Total growth

32%


30%


22%




















(1)  We present constant currency information to provide a framework for assessing how our underlying business performed excluding the  

effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in

currencies other than United States dollars are converted into United States dollars at the exchange rates in effect at the end of each

quarter for  growth rate calculations presented, rather than the actual exchange rates in effect during that period.



























Supplemental Diluted Sharecount Information












(in thousands)

Three Months Ended April 30,











2011


2010























Weighted-average shares outstanding for basic earnings per share

133,454


128,032










Effect of dilutive securities:













Convertible senior notes

2,409


0










Warrants associated with the convertible senior note hedges

678


0










Employee stock awards

4,521


4,219










Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share

141,062


132,251





























































Supplemental Cash Flow Information (2)

























Free cash flow analysis, a non-GAAP measure







(in thousands)






































Three Months Ended April 30,









2011


2010










Operating cash flow-













GAAP net cash provided by operating activities

$                                   139,518


$                                   143,183










Less:













Capital expenditures

(27,314)


(11,690)










Free cash flow

$                                   112,204


$                                   131,493






















(2)  Our free cash flow analysis includes GAAP net cash provided by operating activities less capital expenditures. The capital expenditures

balance does not include any costs related to the purchase and activities related to the building of our new global headquarters.



salesforce.com, inc.

GAAP RESULTS RECONCILED TO NON-GAAP RESULTS

The following table reflects selected salesforce.com GAAP results reconciled to non-GAAP results

(in thousands, except per share data)


(Unaudited)











Three Months Ended
April 30,








2011


2010


Gross profit





GAAP gross profit

$ 401,298


$ 305,232


Plus:





Amortization of purchased intangibles (b)

9,095


1,678


Stock-based expenses (c)

3,651


3,074







Non-GAAP gross profit

$ 414,044


$ 309,984







Operating expenses





GAAP operating expenses

$ 404,101


$ 272,182


Less:





Amortization of purchased intangibles (b)

(1,240)


(826)


Stock-based expenses (c)

(43,907)


(23,394)







Non-GAAP operating expenses

$ 358,954


$ 247,962







Income from operations





GAAP income (loss) from operations

$   (2,803)


$   33,050


Plus:





Amortization of purchased intangibles (b)

10,335


2,504


Stock-based expenses (c)

47,558


26,468







Non-GAAP income from operations

$   55,090


$   62,022







Non-operating income (a)





GAAP non-operating income (loss)

$     3,584


$   (1,158)


Plus:  Amortization of debt discount, net

2,758


5,451







Non-GAAP non-operating income

$     6,342


$     4,293







Net income attributable to salesforce.com





GAAP net income attributable to salesforce.com

$        530


$   17,745


Plus:





Amortization of purchased intangibles

10,335


2,504


Stock-based expenses

47,558


26,468


Amortization of debt discount, net

2,758


5,451


Less:





Income tax effect of Non-GAAP items

(21,291)


(12,219)


Non-GAAP net income attributable to salesforce.com

$   39,890


$   39,949







Diluted earnings per share





GAAP diluted earnings per share

$       0.00


$       0.13


Plus:





Amortization of purchased intangibles

0.07


0.02


Stock-based expenses

0.34


0.20


Amortization of debt discount, net

0.02


0.04


Less:





Income tax effect of  Non-GAAP items

(0.15)


(0.09)


Non-GAAP diluted earnings per share attributable to salesforce.com

$       0.28


$       0.30







Shares used in computing diluted net income per share

141,062


132,251













a)

Non-operating income consists of investment income, interest expense and other expense











b)

Amortization of purchased intangibles were as follows:






Three Months Ended April 30,



2011


2010







Cost of revenues

$     9,095


$     1,678


Marketing and sales

1,240


826



$   10,335


$     2,504











c)

Stock-based expenses were as follows:






Three Months Ended April 30,



2011


2010







Cost of revenues

$     3,651


$     3,074


Research and development

7,839


4,102


Marketing and sales

23,787


12,210


General and administrative

12,281


7,082



$   47,558


$   26,468



salesforce.com, inc.

COMPUTATION OF BASIC AND DILUTED GAAP AND NON-GAAP NET INCOME PER SHARE

The following reflects the calculation of Basic and Diluted Net Income Per Share

(in thousands, except per share data)


(Unaudited)





Three Months Ended
April 30,



2011

2010






GAAP Basic Net Income Per Share








Net income attributable to salesforce.com

$      530

$ 17,745






Basic net income per share attributable to salesforce.com common stockholders

$0.00

$0.14






Shares used in computing basic net income per share attributable to salesforce.com common stockholders

133,454

128,032















Three Months Ended
April 30,



2011

2010






Non-GAAP Basic Net Income Per Share








Non-GAAP net income attributable to salesforce.com

$ 39,890

$ 39,949






Basic Non-GAAP net income per share attributable to salesforce.com common stockholders

$0.30

$0.31






Shares used in computing basic net income per share attributable to salesforce.com common stockholders

133,454

128,032















Three Months Ended
April 30,



2011

2010






GAAP Diluted Net Income Per Share








Net income attributable to salesforce.com

$      530

$ 17,745






Diluted net income per share attributable to salesforce.com common stockholders

$0.00

$0.13






Shares used in computing diluted net income per share attributable to salesforce.com common stockholders

141,062

132,251















Three Months Ended
April 30,



2011

2010






Non-GAAP Diluted Net Income Per Share








Non-GAAP net  income attributable to salesforce.com

$ 39,890

$ 39,949






Diluted  Non-GAAP net income per share attributable to salesforce.com common stockholders

$0.28

$0.30






Shares used in computing diluted net income per share attributable to salesforce.com common stockholders

141,062

132,251



SOURCE salesforce.com