Salesforce.com Announces Fiscal 2013 Third Quarter Results

          Salesforce.com Announces Fiscal 2013 Third Quarter Results

- Quarterly Revenue of $788 Million, up 35% Year-Over-Year

- Deferred Revenue of $1.29 Billion, up 41% Year-Over-Year

- Unbilled Deferred Revenue Increases to Approximately $3 Billion

- Raises FY13 Revenue Guidance to $3.041 - $3.046 Billion

- Initiates FY14 Revenue Guidance of $3.80 - $3.85 Billion

PR Newswire

SAN FRANCISCO, Nov. 20, 2012

SAN FRANCISCO, Nov. 20, 2012 /PRNewswire/ --Salesforce.com (NYSE: CRM), the
enterprise cloud computing (http://www.salesforce.com/cloudcomputing/)
company, today announced results for its fiscal third quarter ended October
31, 2012.

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

"Salesforce.com is the first enterprise cloud computing company to exceed a $3
billion annual revenue run rate, with outstanding third quarter revenue growth
at 35% in dollars and 37% in constant currency," said Marc Benioff, Chairman
and CEO, salesforce.com. "Given the strong customer response to our next
generation social and mobile cloud technologies, I'm delighted to announce
that we expect to surpass a $4 billion annual revenue run rate during our
fiscal year 2014."

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

Revenue: Total Q3 revenue was $788 million, an increase of 35% on a
year-over-year basis. Subscription and support revenues were $741 million, an
increase of 35% on a year-over-year basis. Professional services and other
revenues were $48 million, an increase of 36% on a year-over-year basis.

Earnings per Share: Q3 GAAP net loss per share was ($1.55), and non-GAAP
diluted earnings per share was $0.33.

The company recorded a one-time, non-cash charge to income tax expense in the
third quarter of fiscal 2013 in the amount of $149 million to establish a
valuation allowance against a significant portion of its deferred tax assets.
This accounting treatment reflects the company's assessment of whether the
deferred tax assets will be realizable in the near-future, but has no effect
on the company's ability to utilize deferred tax assets, such as loss
carryforwards and tax credits, to reduce future cash tax payments. The
Company will continue to assess and record any necessary quarterly changes to
the valuation allowance and the corresponding income tax expense or benefit.

The company's non-GAAP results exclude the effects of the $149 million charge
related to the establishment of the tax valuation allowance, $26 million
related to the quarterly change in the tax valuation allowance, $105 million
in stock-based compensation expense, $26 million in amortization of purchased
intangibles, and $6 million in net non-cash interest expense related to the
company's convertible senior notes. GAAP EPS calculations are based on a
basic share count of approximately 142 million shares. Non-GAAP EPS
calculations are based on approximately 150 million diluted shares outstanding
during the quarter, including approximately four million shares associated
with the company's convertible senior notes.

Cash: Cash generated from operations for the fiscal third quarter was $106
million, a decrease of 18% on a year-over-year basis. Total cash, cash
equivalents and marketable securities finished the quarter at $1.4 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of October 31,
2012 was $1.29 billion, an increase of 41% on a year-over-year basis. Current
deferred revenue increased by 35% year-over-year to $1.23 billion, benefited
in part by longer invoice durations. Non-current deferred revenue increased
by 414% year-over-year to $66 million. Unbilled deferred revenue, representing
business that is contracted but unbilled and off balance sheet, ended the
third quarter at approximately $3 billion, up from approximately $2.8 billion
at the end of the fiscal second quarter.

As of November 20, 2012, salesforce.com is initiating revenue, GAAP EPS and
non-GAAP EPS guidance for its fiscal fourth quarter of fiscal year 2013. In
addition, for the full fiscal year 2013, the company is raising its revenue
and non-GAAP EPS guidance and lowering its GAAP EPS guidance previously
provided on August 23, 2012. The company is also initiating revenue guidance
for fiscal year 2014.

Q4 FY13 Guidance: Revenue for the company's fourth fiscal quarter is
projected to be in the range of $825 million to $830 million, an increase of
31% year-over-year.

GAAP net loss per share is expected to be in the range of ($0.25) to ($0.23),
while diluted non-GAAP EPS is expected to be in the range of $0.38 to $0.40.
The non-GAAP estimate excludes the effects of stock-based compensation
expense, expected to be approximately $107 million, amortization of purchased
intangibles related to acquisitions, expected to be approximately $21 million,
and net non-cash interest expense related to the convertible senior notes,
expected to be approximately $6 million. EPS estimates assume a GAAP tax rate
of approximately negative 7%, and a non-GAAP tax rate of approximately 40%,
which reflect the estimated quarterly change in the tax valuation allowance.
The GAAP EPS calculation assumes an average basic share count of
approximately 145 million shares, and the non-GAAP EPS calculation assumes an
average fully diluted share count of approximately 155 million shares.

Full Year FY13 Guidance: Revenue for the company's full fiscal year 2013 is
projected to be in the range of $3.041 billion to $3.046 billion, an increase
of 34% year-over-year.

For the company's full fiscal year 2013, GAAP net loss per share is expected
to be in the range of ($2.02) to ($2.00) while diluted non-GAAP EPS is
expected to be in the range of $1.50 to $1.52. The lowering of the GAAP net
loss per share range is a result of the non-cash tax expenses in Q3, as
discussed above. The non-GAAP estimate excludes the effects of the fiscal
third quarter charge to establish a tax valuation allowance of approximately
$149 million, stock-based compensation expense, expected to be approximately
$379 million, amortization of purchased intangibles related to acquisitions,
expected to be approximately $88 million, and net non-cash interest expense
related to the convertible senior notes, expected to be approximately $24
million. EPS estimates assume a GAAP tax rate of approximately negative 114%,
and a non-GAAP tax rate of approximately 37%, which reflect the estimated
annual change in the tax valuation allowance. Due to the valuation allowance,
however, the GAAP tax rate is volatile and difficult to forecast. The GAAP
EPS calculation assumes an average basic share count of approximately 141
million shares, and the non-GAAP EPS calculation assumes an average fully
diluted share count of approximately 149 million shares.

Full Year FY14 Guidance: Revenue for the company's full fiscal year 2014 is
projected to be in the range of approximately $3.80 billion to approximately
$3.85 billion. The company will provide its expectations for FY14 GAAP and
non-GAAP EPS when it announces its fourth quarter fiscal year 2013 results in
February 2013.

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

                                     Fiscal 2013
                                     Q4                   FY2013
GAAP EPS Range*                      ($0.25) - ($0.23)  ($2.02) - ($2.00)
Plus
Amortization of purchased            $        0.14 $        0.59
intangibles
Stock-based expense                  $        0.69 $        2.54
Amortization of debt discount, net   $        0.04 $        0.16
Less
One time tax charge                  $           $        1.00
                                     -
Quarterly change in valuation        $        0.06 $        0.23
allowance
Income tax effect of certain         $              $      
Non-GAAP items                       (0.30)              (1.00)
Non-GAAP diluted EPS                 $0.38 - $0.40      $1.50 - $1.52
Shares used in computing basic net   145                  141
income per share (millions)
Shares used in computing diluted net 155                  149
income per share (millions)
* For Q4 & FY13 GAAP EPS loss, basic number of shares used for calculation

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its third quarter fiscal
year 2013 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 audiocast
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 51384041. A replay will be available at 800-585-8367 or +1 855-859-2056,
passcode 51384041, until midnight (Eastern Time) December 20, 2012.

About salesforce.com

Founded in 1999, salesforce.com is the enterprise cloud computing leader.
Using salesforce.com's social and mobile cloud technologies, companies can
connect with customers, partners and employees in entirely new ways. Based on
salesforce.com's real-time, multitenant architecture, the company's platform
and apps give customers the tools to create a social front office and
revolutionize the way they sell, service, market, collaborate, work and
innovate.

  oGrow your business with the world's #1 sales app, Salesforce Sales Cloud
  oDeliver amazing customer service with the award-winning Salesforce Service
    Cloud
  oListen, engage, advertise, and measure social media marketing with the
    Salesforce Marketing Cloud
  oAchieve breakthrough collaboration and productivity with Salesforce
    Chatter
  oAlign, motivate and drive performance with Salesforce Work.com
  oBuild social and mobile cloud apps on the Salesforce Platform and extend
    success with the world's leading enterprise app marketplace, the
    AppExchange

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, the net amortization of debt discount on the company's
convertible senior notes, certain one-time, non-cash tax charges, quarterly
changes to the valuation allowance, 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 net amortization of debt discount on the company's convertible
senior notes are being excluded from the company's FY13 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 statement of operations 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, such
as certain one-time charges. As significant unusual or discrete events occur,
such as the valuation allowance against the company's deferred tax assets, the
results may be excluded in the period in which the events occur. 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 Q3 and its non-GAAP estimates for Q4 and FY13:

  oStock-Based Expenses: The company's compensation strategy includes the
    use of stock-based compensation to attract and retain 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.
  oAmortization of Purchased Intangibles: The company views amortization of
    acquisition-related intangible assets, such as the amortization of the
    cost associated with an acquired company's research and development
    efforts, trade names, customer lists and customer relationships, as items
    arising from pre-acquisition activities determined at the time of an
    acquisition. While these intangible assets are continually evaluated for
    impairment, amortization of the cost of purchased intangibles is a static
    expense, one that is not typically affected by operations during any
    particular period.
  oAmortization 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 actual coupon interest rate of the notes 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.
  oOne-time Tax Charge: As a result of the company assessing the
    realizability of its deferred tax assets, the company recorded a one-time,
    non-cash charge to income tax expense to establish a valuation allowance
    against a significant portion of those assets. The company applied
    significant judgment as part of this analysis including considering the
    company's past operating results, cumulative losses and forecasts of
    future taxable income. As part of establishing a valuation allowance with
    respect to the company's deferred tax assets, the company will assess and
    record any necessary quarterly changes to the valuation allowance and the
    corresponding income tax expense or benefit. Management believes that the
    exclusion of this non-cash charge is appropriate to provide investors with
    a better view of the company's operational performance.
  oQuarterly Change in Valuation Allowance: As part of establishing a
    valuation allowance, the company records a quarterly charge related to the
    change in the valuation allowance. Management believes that the exclusion
    of any quarterly charge related to the change in the valuation allowance
    is appropriate to provide investors with a better view of the company's
    operational performance.
  oIncome Tax Effects: The company's estimated non-GAAP effective tax rate
    adjusts for the tax effect 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 fourth fiscal quarter of 2013
and the full fiscal year, the company's expected revenue run rate and revenues
in fiscal 2014, the company's expected tax rates, stock-based compensation
expenses, amortization of purchased intangibles and debt discount, shares
outstanding, and deferred tax asset valuation allowances. The achievement or
success of the matters covered by such forward-looking statements involves
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; the company's rate of growth and anticipated revenue run
rate, including the company's ability to convert deferred revenue and unbilled
deferred revenue into revenue and, as appropriate, cash flow, and the
continued growth and ability to maintain deferred revenue and unbilled
deferred revenue; 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 the company operates; 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; collection of
receivables; interest rates; factors affecting our deferred tax assets and
ability to value and utilize them, including the timing of when we once again
achieve profitability on a pre-tax basis; the expenses associated with the
company's real estate and office facilities space; 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 third
quarter ended October 31, 2012 and our Form 10-K filed for the fiscal year
ended January 31, 2012. 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 © 2012 salesforce.com, inc. All rights reserved. Salesforce,
Chatter, Sales Cloud, Service Cloud, Marketing Cloud, Work.com, AppExchange,
Salesforce Platform, and others are trademarks of salesforce.com, inc. 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       Nine Months Ended October
                            October 31,              31,
                            2012         2011        2012         2011
Revenues:
    Subscription and        $         $       $           $   
    support                 740,600     549,182    2,083,313    1,531,965
    Professional services   47,798       35,078      132,201      102,661
    and other
      Total revenues        788,398      584,260     2,215,514    1,634,626
Cost of revenues (1)(2):
    Subscription and        134,183      96,306      361,446      260,693
    support
    Professional services   52,065       32,259      138,771      91,848
    and other
      Total cost of         186,248      128,565     500,217      352,541
      revenues
Gross profit                602,150      455,695     1,715,297    1,282,085
Operating expenses (1)(2):
    Research and            114,074      76,049      308,292      214,734
    development
    Marketing and sales     428,507      304,571     1,178,456    842,043
    General and             113,757      85,232      318,452      254,016
    administrative
      Total operating       656,338      465,852     1,805,200    1,310,793
      expenses
Loss from operations        (54,188)     (10,157)    (89,903)     (28,708)
Investment income           3,887        5,136       15,521       18,303
Interest expense            (8,190)      (3,859)     (22,593)     (11,376)
Other income (expense)      (4,360)      30          (4,776)      (4,001)
Loss before benefit from
(provision for) income      (62,851)     (8,850)     (101,751)    (25,782)
taxes
Benefit from (provision     (157,446)    5,094       (147,850)    18,288
for) income taxes (3)
                            $         $       $           $     
Net loss                   (220,297)              (249,601)     (7,494)
                                         (3,756)
                            $       $       $       $     
Basic net loss per share    (1.55)             (1.78)          (0.06)
                                         (0.03)
Diluted net loss per        $       $       $       $     
share                       (1.55)             (1.78)          (0.06)
                                         (0.03)
Shares used in computing    142,203      135,847     139,959      134,824
basic net loss per share
Shares used in computing    142,203      135,847     139,959      134,824
diluted net loss per share
(1) Amounts include amortization of purchased intangibles from
business combinations, as follows:
      Cost of revenues      $       $       $         $     
                            23,247        17,469   58,363       42,937
      Marketing and sales   2,995        953         8,829        4,499
(2) Amounts include stock-based expenses, as
follows:
                            $       $       $         $     
      Cost of revenues       9,336               24,453       12,168
                                         4,138
      Research and          21,984       12,197      53,740       31,224
      development
      Marketing and sales   55,304       29,123      142,072      80,024
      General and           18,488       11,548      51,530       35,742
      administrative
(3) Amount includes one-time tax items, as follow:
      Benefit from          $         $       $           $     
      (provision for)       (149,147)           (149,147)        
      income taxes                         0                   0



salesforce.com, inc.
Condensed Consolidated Statements of Operations
As a percentage of total revenues:
(Unaudited)
                                                  Three Months   Nine Months
                                                  Ended October  Ended October
                                                  31,            31,
                                                  2012     2011  2012     2011
Revenues:
       Subscription and support                   94%      94%   94%      94%
       Professional services and other            6        6     6        6
            Total revenues                        100      100   100      100
Cost of revenues (1)(2):
       Subscription and support                   17       16    17       16
       Professional services and other            7        6     6        6
            Total cost of revenues                24       22    23       22
Gross profit                                      76       78    77       78
Operating expenses (1)(2):
       Research and development                   15       13    14       13
       Marketing and sales                        54       52    53       52
       General and administrative                 14       15    14       15
            Total operating expenses              83       80    81       80
Loss from operations                              (7)      (2)   (4)      (2)
Investment income                                 0        1     1        1
Interest expense                                  (1)      (1)   (1)      (1)
Other income (expense)                            0        0     0        0
Loss before benefit from (provision for) income   (8)      (2)   (4)      (2)
taxes
Benefit from (provision for) income taxes (3)     (20)     1     (7)      1
Net loss                                         (28)%    (1)%  (11)%    (1)%
(1) Amortization of purchased intangibles from
business combinations as a percentage of total
revenues, as follows:
            Cost of revenues                      3%       3%    3%       3%
            Marketing and sales                   0        0     0        0
(2) Stock-based expenses as a percentage of total
revenues, as follows:
            Cost of revenues                      1%       1%    1%       1%
            Research and development              3        2     2        2
            Marketing and sales                   7        5     6        5
            General and administrative            2        2     2        2
(3) One-time tax items as a percentage of total
revenues, as follows:
            Benefit from (provision for) income   (19)%    0%    (7)%     0%
            taxes



salesforce.com, inc.
Condensed Consolidated Balance Sheets
(in thousands)
                                               October 31,         January 31,
                                               2012                2012
                                               (unaudited)
Assets
Current assets:
          Cash and cash equivalents            $            $    
                                               521,720             607,284
          Short-term marketable securities     83,844              170,582
          Accounts receivable, net             418,590             683,745
          Deferred commissions                 100,808             98,471
          Deferred income taxes, net           14,723              31,821
          Prepaid expenses and other current   117,600             80,319
          assets (see additional metrics)
Total current assets                           1,257,285           1,672,222
Marketable securities, noncurrent              810,486             669,308
Property and equipment, net (see additional    583,839             527,946
metrics)
Deferred commissions, noncurrent               80,304              78,149
Deferred income taxes, noncurrent, net         6,285               87,587
Capitalized software, net (see additional      225,137             188,412
metrics)
Goodwill                                       1,525,154           785,381
Other assets, net (see additional metrics)     153,800             155,149
Total assets                                   $              $   
                                               4,642,290          4,164,154
Liabilities, temporary equity and
stockholders' equity
Current liabilities:
          Accounts payable                     $           $     
                                               57,940             33,258
          Accrued expenses and other
          liabilities (see additional          524,267             502,442
          metrics)
          Deferred revenue                     1,226,118           1,291,622
          Convertible senior notes, net        514,891             496,149
Total current liabilities                      2,323,216           2,323,471
Income taxes payable, noncurrent               46,246              37,258
Long-term lease liabilities and other          63,629              48,651
Deferred revenue, noncurrent                   65,585              88,673
Total liabilities                              2,498,676           2,498,053
Temporary equity                               59,999              78,741
Stockholders' equity:
          Common stock                         142                 137
          Additional paid-in capital           2,149,962           1,415,077
          Accumulated other comprehensive      23,649              12,683
          income
          Retained earnings (deficit)          (90,138)            159,463
Total stockholders' equity                     2,083,615           1,587,360
Total liabilities, temporary equity and        $              $   
stockholders' equity                           4,642,290          4,164,154



salesforce.com, inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
                               Three Months Ended        Nine Months Ended
                               October 31,               October 31,
                               2012        2011          2012        2011
Operating activities:
                               $         $        $        $    
Net loss                       (220,297)   (3,756)    (249,601)   
                                                                     (7,494)
Adjustments to reconcile
net loss to net
cash provided by operating
activities:
       Depreciation and        59,960      41,553        159,400     111,385
       amortization
       Amortization of debt
       discount and            6,471       2,138         17,511      6,470
       transaction costs
       Amortization of         39,070      26,862        111,099     76,453
       deferred commissions
       Expenses related to     105,112     57,006        271,795     159,158
       employee stock plans
       Excess tax benefits
       from employee stock     (3,160)     (6,892)       (28,905)    (11,012)
       plans
       Tax valuation           149,147     0             149,147     0
       allowance
       Changes in assets and
       liabilities:
             Accounts          33,664      30,101        270,802     120,152
             receivable, net
             Deferred          (48,251)    (33,611)      (115,591)   (80,252)
             commissions
             Prepaid expenses
             and other         39,390      9,035         (16,706)    (9,959)
             current assets
             Other assets      6,775       4,693         7,639       67
             Accounts          (14,356)    5,944         21,725      8,928
             payable
             Accrued expenses
             and other         1,152       13,081        (51,118)    (4,936)
             current
             liabilities
             Deferred          (48,762)    (17,445)      (91,873)    (17,800)
             revenue
             Net cash
             provided by       105,915     128,709       455,324     351,160
             operating
             activities
Investing activities:
Business combinations, net     (515,760)   (66,115)      (574,751)   (364,785)
of cash acquired
Land activity and building     0           (6,654)       (4,106)     (13,090)
improvements
Strategic investments          (1,657)     (21,508)      (5,451)     (34,723)
Changes in marketable          (89,428)    39,167        (51,213)    187,287
securities
Capital expenditures           (51,054)    (34,678)      (125,079)   (107,043)
             Net cash used in
             investing         (657,899)   (89,788)      (760,600)   (332,354)
             activities
Financing activities:
Proceeds from equity plans     76,483      15,794        203,874     90,362
Excess tax benefits from       3,160       6,892         28,905      11,012
employee stock plans
Contingent consideration
payment related to prior       0           0             0           (16,200)
business combinations
Principal payments on          (7,664)     (7,685)       (22,717)    (21,796)
capital lease obligations
             Net cash
             provided by       71,979      15,001        210,062     63,378
             financing
             activities
Effect of exchange rate        995         (729)         9,650       (3,489)
changes
Net increase (decrease) in
cash and
cash equivalents               (479,010)   53,193        (85,564)    78,695
Cash and cash equivalents,     1,000,730   449,794       607,284     424,292
beginning of period
Cash and cash equivalents,     $        $        $       $    
end of period                  521,720     502,987       521,720    502,987



salesforce.com, inc.
Additional Metrics
(Unaudited)
                  Oct 31,      Jul 31,      Apr 30,     Jan 31,    Oct 31,     Jul 31,
                  2012         2012         2012        2012       2011        2011
Full Time
Equivalent        9,319        8,765        8,335       7,785      6,953       6,352
Headcount
Financial data
(in thousands):
 Cash, cash                    $                    $    
 equivalents and  $                    $                    $           $    
 marketable       1,416,050   1,804,265   1,657,089   1,447,174  1,296,693  1,286,658
 securities
 Deferred                      $                    $                  $    
 revenue,         $                    $                    $         
 current and      1,291,703   1,337,184   1,334,716   1,380,295  917,821    935,266
 noncurrent
Selected Balance
Sheet Accounts
(in thousands):
                  Oct 31,      Jul 31,      Jan 31,
                  2012         2012         2012
 Prepaid
 Expenses and
 Other Current
 Assets
  Deferred    $        $        $   
 professional                      10,399
 services costs   4,974       7,825
  Prepaid     17,526       24,007       12,785
 income taxes
  Prepaid
 expenses and     95,100       115,069      57,135
 other current
 assets
                  $        $        $   
                                       80,319
                  117,600      146,901
 Property and
 Equipment, net
                  $        $        $ 
  Land                             248,263
                  248,263      248,263
  Building    49,572       49,572       43,868
 improvements
 Computers,
 equipment and    305,216      280,868      232,460
 software
  Furniture   34,093       29,402       25,250
 and fixtures
  Leasehold   172,569      148,470      137,587
 improvements
                  809,713      756,575      687,428
  Less
 accumulated
 depreciation     (225,874)    (199,799)    (159,482)
 and
 amortization
                  $        $        $ 
                                       527,946
                  583,839      556,776
 Capitalized
 Software, net
 
 Capitalized
 internal-use     $        $    
 software                            $   
 development      57,866       53,999      41,442
 costs, net of
 accumulated
 amortization
  Acquired
 developed
 technology, net  167,271      119,457      146,970
 of accumulated
 amortization
                  $        $        $ 
                                       188,412
                  225,137      173,456
 Other Assets,
 net
  Deferred
 professional     $        $        $    
 services costs,                   3,935
 noncurrent       1,573       2,101
 portion
  Long-term   14,425       13,293       13,941
 deposits
  Purchased
 intangible
 assets, net of   51,447       41,311       46,110
 accumulated
 amortization
  Acquired
 intellectual
 property, net    14,851       15,841       15,020
 of accumulated
 amortization
  Strategic   50,251       51,276       53,949
 investments
  Other       21,253       24,217       22,194
                  $        $        $ 
                                       155,149
                  153,800      148,039
 Accrued
 Expenses and
 Other Current
 Liabilities
  Accrued     $        $        $ 
 compensation                          228,466
                  230,662      192,776
  Accrued
 other            142,647      150,149      121,957
 liabilities
  Accrued
 income and       75,468       68,519       100,471
 other taxes
 payable
  Accrued
 professional     13,044       24,026       21,993
 costs
  Accrued     62,446       47,418       29,555
 rent
                  $        $        $ 
                                       502,442
                  524,267      482,888
Selected
Off-Balance
Sheet Accounts
 Unbilled
 Deferred
 Revenue, a
 non-GAAP
 measure
 Unbilled deferred revenue was approximately $3.0 billion as of October 31, 2012 and
 $2.2 billion as of January 31, 2012. Unbilled deferred revenue represents future
 billings under our non-cancelable subscription agreements that have not been invoiced
 and, accordingly, are not recorded in deferred revenue.
Supplemental
Revenue Analysis
                  Three Months Ended        Nine Months Ended
                  October 31,              October 31,
                  2012         2011         2012        2011
Revenues by
geography (in
thousands):
                  $        $        $           $    
 Americas                              1,540,326    
                  547,399      397,118                 1,104,052
 Europe           133,791      103,864      376,694     300,315
 Asia Pacific     107,208      83,278       298,494     230,259
                  $        $        $           $    
                                       2,215,514    
                  788,398      584,260                 1,634,626
As a percentage
of total
revenues:
Revenues by
geography:
 Americas         69         % 68         % 70        % 68        %
 Europe           17           18           17          18
 Asia Pacific     14           14           13          14
                  100        % 100        % 100       % 100       %



                                                                      Three
                                                                      Months
                           Three Months Ended                        Ended
                                                Three Months Ended
                           October 31, 2012                           October
                                                July 31, 2012         31, 2011
                           compared to Three
                           Months               compared to Three     compared
                                                Months                to Three
                           Ended October 31,                          Months
                           2011                 Ended July 31, 2011
                                                                      Ended
                                                                      October
                                                                      31, 2010
Revenue constant currency growth rates

(as compared to the comparable prior periods)
     Americas              38%                  38%                   36%
     Europe                41%                  40%                   29%
     Asia Pacific          30%                  28%                   31%
     Total growth          37%                  37%                   34%
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 Share Count
Information
(in thousands)
                           Three Months Ended   Nine Months Ended
                           October 31,         October 31,
                           2012       2011      2012       2011
     Weighted-average
     shares outstanding    142,203    135,847   139,959    134,824
     for basic earnings
     per share
     Effect of dilutive
     securities (1):
     Convertible senior    2,853      2,190     2,727      2,451
     notes
     Warrants associated
     with the              1,300      372       1,124      737
     convertible senior
     note hedges
     Employee stock        3,670      3,762     3,794      4,330
     awards
     Adjusted
     weighted-average
     shares outstanding
     and assumed           150,026    142,171   147,604    142,342
     conversions for
     diluted earnings
     per share
     The effects of these dilutive securities were not included in the GAAP
(1)  calculation of diluted net loss per share for the three and nine months
     ended October 31, 2012 and 2011 because the effect would have been
     anti-dilutive.
Supplemental Cash Flow Information
Free cash flow analysis, a non-GAAP measure
(in thousands)
                           Three Months Ended   Nine Months Ended
                           October 31,         October 31,
                           2012       2011      2012       2011
     Operating cash
     flow
     GAAP net cash        $      $                 $    
     provided by                          $           
     operating             105,915    128,709  455,324   351,160
     activities
     Less:
     Capital              (51,054)   (34,678)  (125,079)  (107,043)
     expenditures
                           $      $                 $    
     Free cash flow                     $           
                           54,861             330,245   244,117
                                      94,031
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 campus and strategic investments.
Comprehensive Loss
(in thousands)             Three Months Ended   Nine Months Ended
                           October 31,         October 31,
                           2012       2011      2012       2011
                           $      $                 $    
     Net loss                            $             
                           (220,297)          (249,601)  (7,494)
                                      (3,756)
     Other
     comprehensive
     income, before tax
     and net of
     reclassification
     adjustments:
     Foreign currency
     translation and       3,134      1,666     10,081     447
     other gains
     Unrealized gains
     (losses) on           1,252      (7,361)   1,411      (4,616)
     investments
     Other
     comprehensive         4,386      (5,695)   11,492     (4,169)
     income (loss),
     before tax
     Tax effect          (467)      2,453     (526)      1,427
     Other
     comprehensive         3,919      (3,242)   10,966     (2,742)
     income (loss), net
     of tax
                           $      $                 $    
     Comprehensive                        (238,635)     
     loss                 (216,378)                     (10,236)
                                      (6,998)



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       Nine Months Ended

                            October 31,              October 31,
                            2012         2011        2012          2011
    Gross profit
    GAAP gross profit       $       $       $          $   
                            602,150       455,695   1,715,297    1,282,085
    Plus:
    Amortization of
    purchased intangibles   23,247       17,469      58,363        42,937
    (a)
    Stock-based expenses    9,336        4,138       24,453        12,168
    (b)
    Non-GAAP gross profit   $       $       $          $   
                            634,733       477,302   1,798,113    1,337,190
    Operating expenses
    GAAP operating          $       $       $          $   
    expenses                656,338       465,852   1,805,200    1,310,793
    Less:
    Amortization of
    purchased intangibles   (2,995)      (953)       (8,829)       (4,499)
    (a)
    Stock-based expenses    (95,776)     (52,868)    (247,342)     (146,990)
    (b)
    Non-GAAP operating      $       $       $          $   
    expenses                557,567       412,031   1,549,029    1,159,304
    Income from
    operations
    GAAP loss from          $       $       $        $     
    operations              (54,188)      (10,157)  (89,903)      (28,708)
    Plus:
    Amortization of
    purchased intangibles   26,242       18,422      67,192        47,436
    (a)
    Stock-based expenses    105,112      57,006      271,795       159,158
    (b)
    Non-GAAP income from    $       $       $        $     
    operations              77,166       65,271   249,084       177,886
    Non-operating income
    (loss) (c)
    GAAP non-operating      $       $       $        $     
    income (loss)            (8,663)      1,307  (11,848)       2,926
    Plus: Amortization of   6,358        2,721       17,448        8,191
    debt discount, net
    Non-GAAP                $       $       $        $     
    non-operating income     (2,305)      4,028   5,600      11,117
    (loss)
    Net income
                            $        $       $         $     
    GAAP net loss          (220,297)             (249,601)     (7,494)
                                         (3,756)
    Plus:
    Amortization of         26,242       18,422      67,192        47,436
    purchased intangibles
    Stock-based expenses   105,112      57,006      271,795       159,158
    Amortization of debt    6,358        2,721       17,448        8,191
    discount, net
    One-time tax items      149,147      0           149,147       0
    Quarterly change in     25,947       0           25,947        0
    valuation allowance
    Less:
    Income tax effect of
    Non-GAAP adjustments    (42,868)     (25,383)    (117,117)     (75,311)
    and other tax items
    Non-GAAP net income    $       $       $        $     
                            49,641       49,010   164,811       131,980
    Diluted earnings per
    share
    GAAP diluted loss per   $       $       $        $     
    share (d)                 (1.55)              (1.78)      (0.06)
                                         (0.03)
    Plus:
    Amortization of         0.17         0.13        0.46          0.33
    purchased intangibles
    Stock-based expenses    0.70         0.40        1.84          1.13
    Amortization of debt    0.04         0.02        0.12          0.06
    discount, net
    One-time tax items      0.99         0.00        1.01          0.00
    Quarterly change in     0.17         0.00        0.18          0.00
    valuation allowance
    Less:                                .
    Income tax effect of
    Non-GAAP adjustments    (0.19)       (0.18)      (0.71)        (0.53)
    and other tax items
    Non-GAAP diluted        $       $       $        $     
    earnings per share       0.33               1.12       0.93
                                         0.34
    Shares used in
    computing diluted net   150,026      142,171     147,604       142,342
    income per share
    Amortization of
a)  purchased intangibles
    were as follows:
                            Three Months Ended       Nine Months Ended October
                            October 31,              31,
                            2012         2011        2012          2011
    Cost of revenues        $       $       $        $     
                            23,247       17,469   58,363       42,937
    Marketing and sales     2,995        953         8,829         4,499
                            $       $       $        $     
                            26,242       18,422   67,192       47,436
b)  Stock-based expenses
    were as follows:
                            Three Months Ended       Nine Months Ended October
                            October 31,              31,
                            2012         2011        2012          2011
    Cost of revenues        $       $       $        $     
                             9,336       4,138  24,453       12,168
    Research and            21,984       12,197      53,740        31,224
    development
    Marketing and sales     55,304       29,123      142,072       80,024
    General and             18,488       11,548      51,530        35,742
    administrative
                            $       $       $        $     
                            105,112       57,006   271,795       159,158
c) Non-operating income (loss) consists of investment income, interest
    expense and other income (expense).
d) Reported GAAP loss per share was calculated using the basic share count.
    Non-GAAP diluted earnings per share was calculated using the diluted
    share count.



salesforce.com, inc.
COMPUTATION OF BASIC AND DILUTED GAAP AND NON-GAAP NET INCOME (LOSS) PER SHARE
(in thousands, except per share data)
(Unaudited)
                    Three Months Ended              Nine Months Ended

                    October 31,                     October 31,
                    2012             2011           2012           2011
  GAAP Basic Net
  Loss Per Share
                    $          $        $        $     
  Net loss         (220,297)       (3,756)         (249,601)     
                                                                   (7,494)
  Basic net loss    $         $        $        $     
  per share          (1.55)        (0.03)                     
                                                    (1.78)        (0.06)
  Shares used in
  computing basic   142,203          135,847        139,959        134,824
  net loss per
  share
                    Three Months Ended              Nine Months Ended

                    October 31,                     October 31,
                    2012             2011           2012           2011
  Non-GAAP Basic
  Net Income Per
  Share
  Non-GAAP net      $         $        $        $     
  income           49,641          49,010           164,811     
                                                                   131,980
  Basic Non-GAAP    $         $        $        $     
  net income per      0.35          0.36                      
  share                                            1.18           0.98
  Shares used in
  computing basic   142,203          135,847        139,959        134,824
  net income per
  share
                    Three Months Ended              Nine Months Ended

                    October 31,                     October 31,
                    2012             2011           2012           2011
  GAAP Diluted Net
  Loss Per Share
                    $          $        $        $     
  Net loss         (220,297)       (3,756)         (249,601)     
                                                                   (7,494)
  Diluted net loss  $         $        $        $     
  per share          (1.55)        (0.03)                     
                                                    (1.78)        (0.06)
  Shares used in
  computing diluted 142,203          135,847        139,959        134,824
  net loss per
  share
                    Three Months Ended              Nine Months Ended

                    October 31,                     October 31,
                    2012             2011           2012           2011
  Non-GAAP Diluted
  Net Income Per
  Share
  Non-GAAP net      $         $        $        $     
  income           49,641          49,010           164,811     
                                                                   131,980
  Diluted Non-GAAP  $         $        $        $     
  net income per      0.33          0.34                      
  share                                            1.12           0.93
  Shares used in
  computing diluted 150,026          142,171        147,604        142,342
  net income per
  share

SOURCE salesforce.com

Website: http://www.salesforce.com
Contact: David Havlek, salesforce.com, Investor Relations, +1-415-536-2171,
dhavlek@salesforce.com, or Jane Hynes, salesforce.com, Public Relations,
+1-415-901-5079, jhynes@salesforce.com
 
Press spacebar to pause and continue. Press esc to stop.