Salesforce.com today announced results for its fiscal third quarter ended October 31, 2012.
"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.
