http://www.morningstar.com/earnings/32567803-salesforcecom-inc-crm-q3-2012.aspx

Salesforce.com Inc CRM
Q3 2012 Earnings Call Transcript

Transcript Call Date 11/17/2011

With that, let me turn the call over to Marc.

Marc Benioff - Chairman and CEO: Thanks, David. I am absolutely delighted to share these amazing third quarter results and I’ll begin by briefly reviewing some of our financial highlights from the quarter. First, revenue of $584 million rose by amazingly 36%. Our annual revenue run rate is now more than $2.3 billion, and it makes us the first enterprise cloud company to reach this milestone.

Non-GAAP EPS of $0.34 was absolutely above our guided range and we delivered that while hosting a world-class Dreamforce here in San Francisco. Now, it is the largest enterprise software event in the world with more than 46,000 registered attendees.

Deferred revenues increased by 32% and it finished the quarter at $918 million, and third quarter operating cash flow rose by 74% year-over-year to $129 million in the quarter. We exited the quarter with approximately $1.3 billion in cash and equivalents on our balance sheet.

Now, in fiscal year 2012, we became the first enterprise cloud company to surpass a $2 billion annual revenue run rate, and today I am delighted to announce that we expect to reach a $3 billion annual revenue run rate during our next fiscal year. That is just spectacular growth.

Our financial success in the third quarter was powered by a tremendous response from customers to our new social enterprise strategy. We are now engaging customers at a higher, more strategic level than ever before and we’ve seen more large deals this quarter as a result of that strategy than we have seen in other quarters this year.

A Dreamforce we showed how some of the world’s best companies such as Burberry, Toyota, Verizon, are all transforming into social enterprises. In fact, I’m delighted to share with you that one of our largest transactions in the quarter was Verizon who signed up for 80,000 subscribers or Chatter, 7,000 subscribers to the Sales Cloud and Data.com.

Now, Verizon’s vision for the social enterprise is to build an employee social network connecting retail stores and office based employees feeling a new level of global collaboration and by mobilizing their workforce on iPads, Verizon plans to delight customers in entirely new way. Today, we’re seeing customers by a broader selection of our services as evidence by growth of all of our product lines.

For the Sales Cloud, we singed Maersk, one of the world’s largest shipping companies in the world based in Europe and they swapped out Oracle and selected salesforce for their entire global sales team. We also won deals against Oracle with Fair, Eli Lilly, Telstra, Fuji Xerox, Japan Post, Unisys, PTC Parametric and Diebold Securities, all strong wins against Oracle, but in Q3, we also won against Microsoft, closing major deals with Pfizer, AXA, SentryLink, American Teleconference Services, Gates Corp, Banca Civica, Orion, Vivint, M&G and Tripwire. Other new or add-on transaction for the Sales Cloud from the third quarter included Adobe, Avaya, Sompo and Kaspersky Labs. As exciting as our Sales Cloud momentum is, perhaps nowhere is the social enterprise message as critical as it is in customer service. In fact, five of our top ten transactions of the quarter included the Service Cloud.

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