Salesforce Announces Record Fourth Quarter and Full Year Fiscal 2018 Results
SAN FRANCISCO, Feb. 28, 2018 /PRNewswire/ -- Salesforce (NYSE: CRM), the global leader in CRM, today announced results for its fiscal fourth quarter and full fiscal year ended January 31, 2018.
"We had an outstanding quarter of growth that propelled Salesforce over the $10 billion revenue milestone for the year," said Marc Benioff, chairman and CEO, Salesforce. "No other enterprise software company has achieved this scale faster than Salesforce. Our relentless focus on customer success continues to strengthen our position as the global leader in CRM."
Salesforce delivered the following results for its fiscal fourth quarter and full fiscal year 2018:
Revenue: Total fourth quarter revenue was $2.85 billion, an increase of 24% year-over-year, and 21% in constant currency. Subscription and support revenues were $2.66 billion, an increase of 26% year-over-year. Professional services and other revenues were $196 million, an increase of 7% year-over-year.
Full fiscal year 2018 revenue was $10.48 billion, an increase of 25% year-over-year, and 24% in constant currency. Subscription and support revenues were $9.71 billion, an increase of 25% year-over-year. Professional services and other revenues were $769 million, an increase of 21% year-over-year.
Earnings per Share: Fourth quarter GAAP diluted earnings per share was $0.09, and non-GAAP diluted earnings per share was $0.35. Earnings per share benefitted by $0.02 related to net realized gains from strategic investments in the fourth quarter. For the full fiscal year 2018, GAAP diluted earnings per share was $0.17, and non-GAAP diluted earnings per share was $1.35.
Cash: Cash generated from operations for the fourth quarter was $1.05 billion, an increase of 49% year-over-year. Cash generated from operations for the full fiscal year 2018 was $2.74 billion, an increase of 27% year-over-year. Total cash, cash equivalents and marketable securities finished the fourth quarter at $4.52 billion.
Deferred Revenue: Deferred revenue on the balance sheet as of January 31, 2018 was $7.09 billion, an increase of 28% year-over-year, and 25% in constant currency. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the fourth quarter at approximately $13.3 billion, up 48% year-over-year.
As of February 28, 2018, the company is initiating revenue, earnings per share, and deferred revenue guidance for its first quarter of fiscal year 2019. In addition, the company is raising its full fiscal year 2019 revenue guidance previously provided on November 21, 2017. The company is also initiating earnings per share guidance and operating cash flow guidance for its full fiscal year 2019. The guidance below does not reflect the impact of new accounting standards ASC 606, ASC 340-40 and ASU 2016-01[1] and is based on estimated GAAP tax rates that reflect the company's currently available information, including its anticipated impact of the new Tax Act and interpretations thereof, as well as other factors and assumptions.
Q1 FY19 Guidance: Revenue is projected to be $2.925 billion to $2.935 billion, an increase of 23% year-over-year.
GAAP diluted earnings per share is projected to be $0.09 to $0.10, while non-GAAP diluted earnings per share is projected to be $0.43 to $0.44.
On balance sheet deferred revenue growth is projected to be 23% to 24% year-over-year.
Full Year FY19 Guidance: Revenue is projected to be $12.6 billion to $12.65 billion, an increase of 20% to 21% year-over-year.
GAAP diluted earnings per share is projected to be $0.61 to $0.63, while non-GAAP diluted earnings per share is projected to be $2.02 to $2.04.
Operating cash flow growth is projected to be 20% to 21% year-over-year.
The following is a per share reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share guidance for the next quarter and the full year:
Fiscal 2019
-----------
Q1 FY2019
--- ------
GAAP diluted EPS range* $0.09 - $0.10 $0.61 - $0.63
Plus
Amortization of
purchased intangibles $0.09 $0.35
Stock-based expense $0.34 $1.47
Amortization of debt
discount, net $0.01 $0.01
Less
Income tax effects and
adjustments** $(0.10) $(0.42)
------ ------
Non-GAAP diluted EPS*** $0.43 - $0.44 $2.02 - $2.04
Shares used in
computing basic net
income per share
(millions) 730 742
Shares used in
computing diluted net
income per share
(millions) 757 763
* The Company's GAAP tax
provision is expected to be
20.0% for the three months
ended April 30th, 2018 and
18.5% for the twelve months
ended January 31st, 2019. The
Company's GAAP diluted EPS
excludes the effect of ASU
2016-01.
** The Company's Non-GAAP tax
provision uses a long-term
projected tax rate of 21.5%,
which reflects currently
available information and
could be subject to change.
*** The Company's Non-GAAP
diluted EPS excludes the
effect of ASU 2016-01.
For additional information regarding non-GAAP financial measures see the reconciliation of results and related explanations below.
Quarterly Conference Call
Salesforce will host a conference call at 2:00 p.m. (PT) / 5:00 p.m. (ET) today to discuss its financial results with the investment community. A live web broadcast of the event will be available on the Salesforce Investor Relations website at www.salesforce.com/investor. A live dial-in is available domestically at 866-901-SFDC or 866-901-7332 and internationally at 706-902-1764, passcode 9190744. A replay will be available at (800) 585-8367 or (855) 859-2056 until midnight (ET) Mar. 30, 2018.
About Salesforce
Salesforce, the global leader in CRM, empowers companies to connect with their customers in a whole new way. Salesforce 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 about Salesforce, visit: www.salesforce.com.
"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about our financial results, which may include expected GAAP and non-GAAP financial and other operating and non-operating results, including revenue, net income, diluted earnings per share, operating cash flow growth, operating margin improvement, deferred revenue growth, expected revenue growth, expected tax rates, stock-based compensation expenses, amortization of purchased intangibles, amortization of debt discount and shares outstanding. 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 the effect of general economic and market conditions; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our business strategy and our plan to build our business, including our strategy to be the leading provider of enterprise cloud computing applications and platforms; the pace of change and innovation in enterprise cloud computing services; the competitive nature of the market in which we participate; our international expansion strategy; our service performance and security, including the resources and costs required to prevent, detect and remediate potential security breaches; the expenses associated with new data centers and third-party infrastructure providers; additional data center capacity; real estate and office facilities space; our operating results and cash flows; new services and product features; our strategy of acquiring or making investments in complementary businesses, joint ventures, services, technologies and intellectual property rights; the performance and fair value of our investments in complementary businesses through our strategic investment portfolio; our ability to realize the benefits from strategic partnerships and investments; our ability to successfully integrate acquired businesses and technologies; our ability to continue to grow and maintain deferred revenue and unbilled deferred revenue; our ability to protect our intellectual property rights; our ability to develop our brands; our reliance on third-party hardware, software and platform providers; our dependency on the development and maintenance of the infrastructure of the Internet; the effect of evolving domestic and foreign government regulations, including those related to the provision of services on the Internet, those related to accessing the Internet, and those addressing data privacy and import and export controls; the valuation of our deferred tax assets; the potential availability of additional tax assets in the future; the impact of new accounting pronouncements and tax laws, including the U.S. Tax Cuts and Jobs Act, and interpretations thereof; uncertainties affecting our ability to estimate our non-GAAP tax rate; the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; factors related to our outstanding convertible notes, revolving credit facility, term loan and loan associated with 50 Fremont; compliance with our debt covenants and capital lease obligations; current and potential litigation involving us; and the impact of climate change.
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. 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.
© 2018 salesforce.com, inc. All rights reserved. Salesforce and other marks are trademarks of salesforce.com, inc. Other brands featured herein may be trademarks of their respective owners.
Non-GAAP Financial Measures: This press release includes information about non-GAAP diluted earnings per share, non-GAAP tax rates, non-GAAP free cash flow, and constant currency revenue and constant currency deferred revenue growth rates (collectively the "non-GAAP financial measures"). These non-GAAP financial measures are measurements of financial performance that are not prepared in accordance with U.S. generally accepted accounting principles and computational methods may differ from those 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. Management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the company's performance.
The primary purpose of using non-GAAP measures is to provide supplemental information that may prove useful to investors and to enable investors to evaluate the company's results in the same way management does. Management believes that supplementing GAAP disclosure with non-GAAP disclosure provides investors with a more complete view of the company's operational performance and allows for meaningful period-to-period comparisons and analysis of trends in the company's business. Further, to the extent that other companies use similar methods in calculating non-GAAP measures, the provision of supplemental non-GAAP information can allow for a comparison of the company's relative performance against other companies that also report non-GAAP operating results.
Non-GAAP diluted earnings per share excludes, to the extent applicable, the impact of the following items: stock-based compensation, amortization of acquisition-related intangibles, amortization of acquired leases, the net amortization of debt discount on the company's convertible senior notes, gains/losses on conversions of the company's convertible senior notes, gains/losses on sales of land and building improvements, gains/losses on company-initiated acquisitions of entities in which the company held an equity investment, and termination of office leases, as well as income tax adjustments. These items are excluded because the decisions that give rise to them are not made to increase revenue in a particular period, but instead for the company's long-term benefit over multiple periods.
Specifically, management is excluding the following items from its non-GAAP earnings per share, as applicable, for the periods presented in the Q4 FY18 financial statements and for its non-GAAP estimates for Q1 and FY19:
-- Stock-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.
-- Amortization of Purchased Intangibles and Acquired Leases: The company
views amortization of acquisition- and building-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, and acquired lease intangibles, 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.
-- 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 $1.15 billion of convertible senior notes due in April
2018 that were issued in a private placement in March 2013. The imputed
interest rate was approximately 2.5% for the convertible notes due 2018,
while the actual coupon interest rate of the notes is 0.25%. 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.
-- Gains on Acquisitions of Strategic Investments: The company views gains
on sales of its strategic investments resulting from acquisitions
initiated by the company in which an equity interest was previously held
as discrete events and not indicative of operational performance during
any particular period.
-- Income Tax Effects and Adjustments: The company utilizes a fixed
long-term projected non-GAAP tax rate in order to provide better
consistency across the interim reporting periods by eliminating the
effects of items such as changes in the tax valuation allowance and tax
effects of acquisitions-related costs, since each of these can vary in
size and frequency. When projecting this long-term rate, the company
evaluated a three-year financial projection that excludes the direct
impact of the following non-cash items: stock-based expenses,
amortization of purchased intangibles and acquired leases, amortization
of debt discount, and gains on acquisitions of strategic investments.
The projected rate also assumes no new acquisitions in the three-year
period, and considers other factors including the company's expected tax
structure, its tax positions in various jurisdictions and key
legislation in major jurisdictions where the company operates. For
fiscal 2018, after evaluating the impact of the 2017 U.S. Tax Cuts and
Jobs Act ("Tax Act") for the period from enactment of the Tax Act on
December 22, 2017 to fiscal year end, the company concluded that its
previously disclosed non-GAAP tax rate of 34.5 percent remained
appropriate. For fiscal 2019, the company has determined that its
projected non-GAAP tax rate will be 21.5 percent, which reflects
currently available information, including the anticipated impact of the
Tax Act and interpretations thereof, as well as other factors and
assumptions. The non-GAAP tax rate could be subject to change for a
variety of reasons, including the company's ongoing analysis of the Tax
Act over the measurement period, the rapidly evolving global tax
environment, significant changes in the company's geographic earnings
mix including due to acquisition activity, or other changes to the
company's strategy or business operations. The company will re-evaluate
its long-term rate as appropriate.
The company defines the non-GAAP measure free cash flow as GAAP net cash provided by operating activities, less capital expenditures. For this purpose, capital expenditures does not include our strategic investments, nor does it include any costs or activities related to our purchase of 50 Fremont land and building, and building - leased facilities.
1 Accounting Standards Codification ("ASC") 606 "Revenue from Contracts
with Customers,"
ASC 340-40 "Other Assets and Deferred Costs - Contracts with Customers"
and Accounting Standards Update 2016-01 "Financial Instruments" (ASU
2016-01), which will be effective as of the beginning of Fiscal 2019.
salesforce.com, inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Revenues:
Subscription and support $2,655,000 $2,110,651 $9,710,538 $7,756,205
Professional services and
other 196,003 183,337 769,474 635,779
------- ------- ------- -------
Total revenues 2,851,003 2,293,988 10,480,012 8,391,984
Cost of revenues (1)(2):
Subscription and support 548,475 463,271 2,033,457 1,617,315
Professional services and
other 189,317 162,686 740,065 616,724
------- ------- ------- -------
Total cost of revenues 737,792 625,957 2,773,522 2,234,039
Gross profit 2,113,211 1,668,031 7,706,490 6,157,945
Operating expenses (1)(2):
Research and development 396,547 344,192 1,553,073 1,208,127
Marketing and sales 1,364,305 1,089,243 4,829,291 3,918,027
General and administrative 274,490 257,941 1,088,358 967,563
Total operating expenses 2,035,342 1,691,376 7,470,722 6,093,717
Income (loss) from operations 77,869 (23,345) 235,768 64,228
Investment income 11,779 3,627 35,848 27,374
Interest expense (21,561) (24,323) (86,943) (88,988)
Other income (1) 20,130 20,572 17,435 9,072
Gains from acquisitions of
strategic investments 0 0 0 13,697
--- --- --- ------
Income (loss) before benefit
from (provision for) income
taxes 88,217 (23,469) 202,108 25,383
Benefit from (provision for)
income taxes (20,662) (27,971) (74,630) 154,249
------- ------- ------- -------
Net income (loss) $67,555 $(51,440) $127,478 $179,632
======= ======== ======== ========
Basic net income (loss) per
share $0.09 $(0.07) $0.18 $0.26
Diluted net income (loss) per
share $0.09 $(0.07) $0.17 $0.26
Shares used in computing
basic net income (loss) per
share 724,127 700,994 714,919 687,797
Shares used in computing
diluted net income (loss)
per share 749,464 700,994 734,598 700,217
_______________
(1) Amounts include amortization of
purchased intangibles from
business combinations, as follows:
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Cost of revenues $38,866 $43,214 $165,545 $127,676
Marketing and sales 30,066 31,000 121,340 97,601
Other non-operating
expense 315 564 1,433 2,491
(2) Amounts include stock-
based expense, as
follows:
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Cost of revenues $32,748 $30,545 $129,954 $107,457
Research and development 62,653 63,323 259,838 187,487
Marketing and sales 112,015 113,422 468,553 388,937
General and administrative 30,266 37,097 138,668 136,486
salesforce.com, inc.
Consolidated Statements of Operations
(As a percentage of total revenues)
(Unaudited)
Three Months Ended Fiscal Year Ended
January 31, January 31,
2018 2017 2018 2017
---- ---- ---- ----
Revenues:
Subscription
and
support 93% 92% 93% 92%
Professional
services
and other 7 8 7 8
--- --- --- ---
Total
revenues 100 100 100 100
Cost of revenues
(1)(2):
Subscription
and
support 19 20 19 19
Professional
services
and other 7 7 7 8
--- --- --- ---
Total cost
of
revenues 26 27 26 27
Gross
profit 74 73 74 73
Operating expenses
(1)(2):
Research
and
development 14 15 15 14
Marketing
and sales 48 48 46 47
General
and
administrative 9 11 10 11
--- --- --- ---
Total
operating
expenses 71 74 71 72
Income
(loss)
from
operations 3 (1) 3 1
Investment
income 0 0 0 0
Interest
expense (1) (1) (1) (1)
Other
income
(1) 1 1 0 0
Gains from
acquisitions
of
strategic
investments 0 0 0 0
Income
(loss)
before
benefit
from
(provision
for)
income
taxes 3 (1) 2 0
Benefit
from
(provision
for)
income
taxes (1) (1) (1) 2
--- --- --- ---
Net income
(loss) 2% (2)% 1% 2%
=== === === ===
_______________
(1) Amortization of purchased
intangibles from business
combinations as a percentage of
total revenues, as follows:
Three Months Ended Fiscal Year Ended
January 31, January 31,
2018 2017 2018 2017
---- ---- ---- ----
Cost of revenues 1% 2% 2% 2%
Marketing and sales 1 1 1 1
Other non-operating
expense 0 0 0 0
(2) Stock-based expense as a
percentage of total
revenues, as follows:
Three Months Ended Fiscal Year Ended
January 31, January 31,
2018 2017 2018 2017
---- ---- ---- ----
Cost of revenues 1% 1% 1% 1%
Research and development 2 3 2 2
Marketing and sales 4 5 4 5
General and administrative 1 2 1 2
salesforce.com, inc.
Consolidated Balance Sheets
(in thousands)
(Unaudited)
January 31, January 31,
2018 2017
---- ----
Assets
Current assets:
Cash and cash equivalents $2,543,484 $1,606,549
Marketable securities 1,978,221 602,338
Accounts receivable, net 3,917,401 3,196,643
Deferred commissions 460,887 311,770
Prepaid expenses and other current
assets 390,378 279,527
Total current assets 9,290,371 5,996,827
Property and equipment, net 1,946,527 1,787,534
Deferred commissions, noncurrent 413,375 227,849
Capitalized software, net 146,065 141,671
Strategic investments 677,283 566,953
Goodwill 7,314,096 7,263,846
Intangible assets acquired through
business combinations, net 826,445 1,113,374
Other assets, net 395,640 486,869
Total assets $21,009,802 $17,584,923
=========== ===========
Liabilities, temporary equity and stockholders' equity
Current liabilities:
Accounts payable, accrued expenses and
other liabilities $2,010,096 $1,752,664
Deferred revenue 7,094,705 5,542,802
Current portion of debt 1,024,717 0
--------- ---
Total current liabilities 10,129,518 7,295,466
Noncurrent debt 694,781 2,008,391
Other noncurrent liabilities 793,140 780,939
------- -------
Total liabilities 11,617,439 10,084,796
---------- ----------
Temporary equity:
Convertible 0.25% senior notes due April
2018 3,867 0
----- ---
Stockholders' equity:
Common stock 730 708
Additional paid-in capital 9,752,340 8,040,170
Accumulated other comprehensive loss (27,142) (75,841)
Accumulated deficit (337,432) (464,910)
-------- --------
Total stockholders' equity 9,388,496 7,500,127
--------- ---------
Total liabilities, temporary equity and
stockholders' equity $21,009,802 $17,584,923
=========== ===========
salesforce.com, inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Operating activities:
Net income (loss) $67,555 $(51,440) $127,478 $179,632
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 187,689 180,766 752,600 632,245
Amortization of debt discount and
issuance costs 8,002 9,207 31,267 30,541
Gains from acquisitions of strategic
investments 0 0 0 (13,697)
Amortization of deferred commissions 132,975 101,014 464,662 371,541
Expenses related to employee stock
plans 237,682 244,387 997,013 820,367
Changes in assets and liabilities, net of business
combinations:
Accounts receivable, net (2,397,485) (1,905,275) (720,019) (628,477)
Deferred commissions (426,591) (235,065) (799,305) (462,030)
Prepaid expenses and other current
assets and other assets 190,924 (3,127) 24,140 (28,850)
Accounts payable, accrued expenses
and other liabilities 347,945 325,011 308,225 49,953
Deferred revenue 2,702,624 2,040,668 1,551,904 1,210,973
--------- --------- --------- ---------
Net cash provided by operating
activities 1,051,320 706,146 2,737,965 2,162,198
--------- ------- --------- ---------
Investing activities:
Business combinations, net of cash
acquired (5,610) (360,629) (25,391) (3,192,739)
Purchases of strategic investments (103,350) (44,495) (216,438) (110,329)
Sales of strategic investments 74,834 53,836 130,732 80,342
Purchases of marketable securities (569,397) (83,550) (2,003,115) (1,070,412)
Sales of marketable securities 121,366 78,252 558,614 2,005,301
Maturities of marketable securities 36,034 2,713 79,123 67,454
Capital expenditures (137,759) (143,974) (534,027) (463,958)
-------- -------- -------- --------
Net cash used in investing
activities (583,882) (497,847) (2,010,502) (2,684,341)
-------- -------- ---------- ----------
Financing activities:
Proceeds from term loan, net 0 0 0 495,550
Proceeds from employee stock plans 165,514 85,616 650,300 401,481
Principal payments on capital lease
obligations (23,006) (24,397) (105,896) (98,157)
Proceeds from revolving credit
facility 0 748,824 0 748,824
Payments on revolving credit
facility 0 (550,000) (200,000) (550,000)
Payments on convertible senior notes (123,179) 0 (123,179) 0
-------- --- -------- ---
Net cash provided by financing
activities 19,329 260,043 221,225 997,698
Effect of exchange rate changes (15,120) (7,529) (11,753) (27,369)
------- ------ ------- -------
Net increase in cash and cash
equivalents 471,647 460,813 936,935 448,186
Cash and cash equivalents, beginning
of period 2,071,837 1,145,736 1,606,549 1,158,363
--------- --------- --------- ---------
Cash and cash equivalents, end of
period $2,543,484 $1,606,549 $2,543,484 $1,606,549
========== ========== ========== ==========
salesforce.com, inc.
Additional Metrics
(Unaudited)
Jan 31, Oct 31, Jul 31, Apr 30, Jan 31, Oct 31,
2017 2017 2017 2017 2016
2018
----
Full Time Equivalent Headcount 29,401 28,527 27,155 26,213 25,178 23,939
Financial data (in thousands):
Cash, cash equivalents and marketable securities $4,521,705 $3,628,665 $3,501,245 $3,219,550 $2,208,887 $1,751,130
Strategic investments $677,283 $670,406 $657,687 $639,191 $566,953 $555,968
Deferred revenue $7,094,705 $4,392,082 $4,818,634 $5,042,652 $5,542,802 $3,495,133
Unbilled deferred revenue, a non-GAAP measure (1) $13,300,000 $11,500,000 $10,400,000 $9,600,000 $9,000,000 $8,600,000
Principal due on our outstanding debt obligations (2) $1,726,821 $1,850,000 $1,850,000 $1,850,000 $2,050,000 $1,850,000
(1) 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. The
amount of unbilled deferred
revenue may change from quarter to
quarter for several reasons,
including the specific timing,
duration and size of customer
subscription agreements and the
timing of customer renewals.
(2) Our outstanding debt
obligations include our 0.25%
Convertible Senior Notes, the loan
assumed on 50 Fremont, and the
Term Loan. The principal due on
our 0.25% Convertible Senior Notes
of approximately $1.0 billion as
of January 31, 2018 is payable in
April 2018.
Selected Balance Sheet Accounts (in thousands):
January 31, October 31, January 31,
2018 2017 2017
---- ---- ----
Prepaid Expenses and Other
Current Assets
Prepaid income taxes $33,523 $43,301 $26,932
Other taxes receivable 32,692 33,099 34,177
Prepaid expenses and other
current assets 324,163 393,546 218,418
------- ------- -------
$390,378 $469,946 $279,527
======== ======== ========
Property and Equipment, net
Land $183,888 $183,888 $183,888
Buildings and building
improvements 626,062 626,168 621,377
Computers, equipment and
software 1,628,827 1,600,783 1,440,986
Furniture and fixtures 139,299 132,374 112,564
Leasehold improvements 824,470 776,396 627,069
------- -------
3,402,546 3,319,609 2,985,884
Less accumulated
depreciation and
amortization (1,456,019) (1,454,718) (1,198,350)
---------- ---------- ----------
$1,946,527 $1,864,891 $1,787,534
========== ========== ==========
Intangible Assets Acquired
Through Business
Combinations, net
Acquired developed
technology $349,563 $388,346 $514,232
Customer relationships 471,936 501,500 589,579
Other 4,946 5,922 9,563
$826,445 $895,768 $1,113,374
======== ======== ==========
Other Assets, net
Deferred income taxes,
noncurrent, net $36,523 $31,596 $28,939
Long-term deposits 23,518 23,979 23,597
Domain names and patents,
net 22,779 26,811 39,213
Customer contract assets 170,921 201,357 281,733
Other 141,899 141,145 113,387
$395,640 $424,888 $486,869
======== ======== ========
Accounts Payable, Accrued
Expenses and Other
Liabilities
Accounts payable $76,465 $120,019 $115,257
Accrued compensation 960,453 622,419 730,390
Non-cash equity liability 0 49,435 68,355
Accrued income and other
taxes payable 305,861 193,693 239,699
Capital lease obligation,
current 102,539 114,147 102,106
Other current liabilities 564,778 586,695 496,857
$2,010,096 $1,686,408 $1,752,664
========== ========== ==========
Other Noncurrent Liabilities
Deferred income taxes and
income taxes payable $115,717 $117,193 $99,378
Financing obligation -
leased facility 198,226 198,903 200,711
Long-term lease liabilities
and other 479,197 420,774 480,850
------- ------- -------
$793,140 $736,870 $780,939
======== ======== ========
Supplemental Revenue Analysis
Subscription and
support revenue by
cloud service
offering (in
millions): Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Sales Cloud $931.8 $804.9 $3,554.3 $3,060.6
Service Cloud 789.3 615.3 2,877.1 2,320.7
Salesforce Platform
and Other 536.3 391.7 1,929.2 1,441.6
Marketing and
Commerce Cloud 397.6 298.8 1,349.9 933.3
$2,655.0 $2,110.7 $9,710.5 $7,756.2
======== ======== ======== ========
Total revenues by
geography (in
thousands): Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Americas $2,042,184 $1,718,197 $7,579,116 $6,224,971
Europe 535,806 360,876 1,903,524 1,373,547
Asia Pacific 273,013 214,915 997,372 793,466
------- ------- ------- -------
$2,851,003 $2,293,988 $10,480,012 $8,391,984
========== ========== =========== ==========
Total revenues by
geography as a
percentage of
total revenues: Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Americas 72% 75% 72% 74%
Europe 19 16 18 16
Asia Pacific 9 9 10 10
--- --- --- ---
100% 100% 100% 100%
=== === === ===
Revenue constant
currency growth
rates (as
compared to the
comparable prior
periods) Three Months Ended Three Months Ended Three Months Ended
January 31, 2018 October 31, 2017 January 31, 2017
compared to Three Months compared to Three Months compared to Three Months
Ended January 31, 2017 Ended October 31, 2016 Ended January 31, 2016
---------------------- ---------------------- ----------------------
Americas 19% 21% 29%
Europe 31% 33% 26%
Asia Pacific 26% 27% 30%
Total growth 21% 23% 28%
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 weighted
average exchange rate for the
quarter being compared to for
growth rate calculations
presented, rather than the
actual exchange rates in
effect during that period.
Deferred
revenue
constant
currency
growth
rates (as
compared
to the
comparable
prior
periods) January 31, 2018 October 31, 2017 January 31, 2017
compared to compared to compared to
January 31, 2017 October 31, 2016 January 31, 2016
---------------- ---------------- ----------------
Total
growth 25% 24% 29%
We present constant currency
information for deferred
revenue to provide a framework
for assessing how our
underlying business performed
excluding the effects of
foreign currency rate
fluctuations. To present the
information above, we convert
the deferred revenue balances
in local currencies in previous
comparable periods using the
United States dollar currency
exchange rate as on the most
recent balance sheet date.
Supplemental GAAP and Non-GAAP Diluted Share Count Information
(share data in thousands)
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Weighted-average
shares outstanding
for basic earnings
per share 724,127 700,994 714,919 687,797
Effect of dilutive securities:
Convertible senior
notes 5,798 1,642 4,672 1,906
Employee stock awards 16,945 8,567 14,163 10,514
Warrants 2,594 0 844 0
----- --- --- ---
Adjusted weighted-
average shares
outstanding and
assumed conversions
for GAAP and Non-
GAAP diluted earnings
per share 749,464 711,203 734,598 700,217
======= ======= ======= =======
Supplemental Cash Flow Information
Free cash flow analysis, a non-GAAP measure
(in thousands)
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Operating cash flow
GAAP net cash
provided by
operating
activities $1,051,320 $706,146 $2,737,965 $2,162,198
Less:
Capital
expenditures (137,759) (143,974) (534,027) (463,958)
-------- -------- -------- --------
Free cash flow $913,561 $562,172 $2,203,938 $1,698,240
======== ======== ========== ==========
Comprehensive Income (Loss)
(in thousands)
(Unaudited)
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Net income (loss) $67,555 $(51,440) $127,478 $179,632
Other comprehensive income (loss),
before tax and net of reclassification
adjustments:
Foreign currency
translation and other
gains (losses) 23,882 (14,547) 52,072 (43,070)
Unrealized gains
(losses) on marketable
securities and
strategic investments (55,702) (6,461) (4,497) 14,500
------- ------ ------ ------
Other comprehensive
income (loss), before
tax (31,820) (21,008) 47,575 (28,570)
Tax effect 1,124 8,110 1,124 2,646
----- ----- ----- -----
Other comprehensive
income (loss), net of
tax (30,696) (12,898) 48,699 (25,924)
------- ------- ------ -------
Comprehensive income
(loss) $36,859 $(64,338) $176,177 $153,708
======= ======== ======== ========
salesforce.com, inc.
GAAP Results Reconciled to non-GAAP Results
The following table reflects selected GAAP results reconciled to non-GAAP results.
(in thousands, except per share data)
(Unaudited)
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Non-GAAP gross profit
---------------------
GAAP gross profit $2,113,211 $1,668,031 $7,706,490 $6,157,945
Plus:
Amortization of
purchased
intangibles (a) 38,866 43,214 165,545 127,676
Stock-based
expense (b) 32,748 30,545 129,954 107,457
------ ------ ------- -------
Non-GAAP gross
profit $2,184,825 $1,741,790 $8,001,989 $6,393,078
---------- ---------- ---------- ----------
Non-GAAP operating expenses
---------------------------
GAAP operating
expenses $2,035,342 $1,691,376 $7,470,722 $6,093,717
Less:
Amortization of
purchased
intangibles (a) (30,066) (31,000) (121,340) (97,601)
Stock-based
expense (b) (204,934) (213,842) (867,059) (712,910)
Non-GAAP
operating
expenses $1,800,342 $1,446,534 $6,482,323 $5,283,206
---------- ---------- ---------- ----------
Non-GAAP income from operations
-------------------------------
GAAP income
(loss) from
operations $77,869 $(23,345) $235,768 $64,228
Plus:
Amortization of
purchased
intangibles (a) 68,932 74,214 286,885 225,277
Stock-based
expense (b) 237,682 244,387 997,013 820,367
Non-GAAP income
from operations $384,483 $295,256 $1,519,666 $1,109,872
-------- -------- ---------- ----------
Non-GAAP non-operating income
(loss) (c)
-----------------------------
GAAP non-
operating income
(loss) $10,348 $(124) $(33,660) $(38,845)
Plus:
Amortization of
debt discount,
net 6,674 6,344 25,943 25,137
Amortization of
acquired lease
intangible 315 564 1,433 2,491
Less:
Gains from
acquisitions of
strategic
investments 0 0 0 (13,697)
--- --- --- -------
Non-GAAP non-
operating income
(loss) $17,337 $6,784 $(6,284) $(24,914)
------- ------ ------- --------
Non-GAAP net income
-------------------
GAAP net income
(loss) $67,555 $(51,440) $127,478 $179,632
Plus:
Amortization of
purchased
intangibles (a) 68,932 74,214 286,885 225,277
Amortization of
acquired lease
intangible 315 564 1,433 2,491
Stock-based
expense (b) 237,682 244,387 997,013 820,367
Amortization of
debt discount,
net 6,674 6,344 25,943 25,137
Less:
Gains from
acquisitions of
strategic
investments 0 0 0 (13,697)
Income tax
effects and
adjustments (117,894) (77,743) (447,415) (533,984)
-------- ------- -------- --------
Non-GAAP net
income $263,264 $196,326 $991,337 $705,223
======== ======== ======== ========
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Non-GAAP diluted
earnings per
share
----------------
GAAP diluted net
income (loss)
per share $0.09 $(0.07) $0.17 $0.26
Plus:
Amortization of
purchased
intangibles 0.09 0.10 0.39 0.32
Amortization of
acquired lease
intangible 0.00 0.00 0.00 0.00
Stock-based
expense 0.32 0.34 1.36 1.17
Amortization of
debt discount,
net 0.01 0.01 0.04 0.04
Less:
Gains from
acquisitions of
strategic
investments 0.00 0.00 0.00 (0.02)
Income tax
effects and
adjustments (0.16) (0.10) (0.61) (0.76)
----- ----- -----
Non-GAAP diluted
earnings per
share $0.35 $0.28 $1.35 $1.01
===== ===== ===== =====
Shares used in
computing Non-
GAAP diluted net
income per share 749,464 711,203 734,598 700,217
a) Amortization of purchased
intangibles were as follows:
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Cost of revenues $38,866 $43,214 $165,545 $127,676
Marketing and sales 30,066 31,000 121,340 97,601
------ ------ ------- ------
$68,932 $74,214 $286,885 $225,277
======= ======= ======== ========
b) Stock-based expense was
as follows:
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Cost of revenues $32,748 $30,545 $129,954 $107,457
Research and development 62,653 63,323 259,838 187,487
Marketing and sales 112,015 113,422 468,553 388,937
General and administrative 30,266 37,097 138,668 136,486
------ ------ ------- -------
$237,682 $244,387 $997,013 $820,367
======== ======== ======== ========
c) GAAP non-operating income
(loss) consists of investment
income, interest expense, other
income (expense) and gains from
acquisitions of strategic
investments.
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 January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
GAAP Basic Net Income (Loss)
Per Share
Net income
(loss) $67,555 $(51,440) $127,478 $179,632
Basic net
income
(loss) per
share $0.09 $(0.07) $0.18 $0.26
Shares used
in
computing
basic net
income
(loss) per
share 724,127 700,994 714,919 687,797
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Non-GAAP Basic Net Income Per
Share
Non-GAAP
net income $263,264 $196,326 $991,337 $705,223
Basic Non-
GAAP net
income per
share $0.36 $0.28 $1.39 $1.03
Shares used
in
computing
basic Non-
GAAP net
income per
share 724,127 700,994 714,919 687,797
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
GAAP Diluted Net Income (Loss)
Per Share
Net income
(loss) $67,555 $(51,440) $127,478 $179,632
Diluted net
income
(loss) per
share $0.09 $(0.07) $0.17 $0.26
Shares used
in
computing
diluted net
income
(loss) per
share 749,464 700,994 734,598 700,217
Three Months Ended January 31, Fiscal Year Ended January 31,
2018 2017 2018 2017
---- ---- ---- ----
Non-GAAP Diluted Net Income
Per Share
Non-GAAP
net income $263,264 $196,326 $991,337 $705,223
Diluted Non-
GAAP net
income per
share $0.35 $0.28 $1.35 $1.01
Shares used
in
computing
diluted
Non-GAAP
net income
per share 749,464 711,203 734,598 700,217
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SOURCE Salesforce
