F3Q09 Earnings Call
November 20, 2008 5:00 pm ET
David Havlek - Investor Relations
Marc Benioff - Chairman of the Board, Chief Executive Officer
Graham V. Smith - Chief Financial Officer, Executive Vice President
Kash Rangan - Merrill Lynch
Laura Lederman - William Blair & Company, LLC
Brent Thill - Citigroup
Tom Roderick - Thomas Weisel Partners
Tom Ernst - Deutsche Bank Securities
Michael Huang - ThinkPanmure
Philip Rueppel - Wachovia Capital Markets, LLC
Rich Baldry - Canaccord Adams
Brendan Barnicle - Pacific Crest Securities
Karl Keirstad - Kaufman Brothers
Keith Weiss - J. P. Morgan
Bradley Whitt - American Technology Research
Nathan Schneiderman - Roth Capital Partners LLC
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I would now like to turn the conference over to David Havlek, Vice President of Investor Relations. Sir, you may begin.
Thanks, Gerald, and good afternoon, everyone.
Earlier today, Salesforce.com released the results for its third quarter fiscal year 2009. The full disclosure of these results can be found in our Q3 results press release as well as in our Form 8K filed with the SEC. Additional financial information, including historical financial details beyond what is provided in the press release, can also be found on our company website.
Joining me today, as always, to discuss our third quarter is Chairman and Chief Executive Officer Marc Benioff as well as Chief Financial Officer Graham Smith. Marc and Graham will offer some brief prepared remarks and then we'll open things up to your questions. Because of the typically high volume of question requests and because we want to address as many of you as possible, we ask that you limit your questions to a single question today.
Before we begin, let me inform you that the primary purpose of today's call is to provide you with information regarding our third quarter fiscal year 2009 performance. Some of our discussion and responses to your questions may contain forward-looking statements.
These statements are subject to risks, uncertainties and assumptions. Should any of these risks or uncertainties materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements. All of these risks, uncertainties and assumptions, as well as other information on potential risk factors that could affect our financial results, are included in our reports filed with the SEC, including on our most recent Form 10-K, particularly under the heading Risk Factors.
I also want to remind you that today's call is being live webcast. A dial-in replay will be available shortly following the conclusion of the call until December 5, and a webcast replay will be available on our Investor website for approximately 90 days.
To access the press release, the additional financial detail, the webcast replay or any of our SEC disclosures, I encourage you to visit our Investor Relations website at Salesforce.com/Investor. If you need further assistance, please contact me directly or send a message to Investor@Salesforce.com.
Lastly before I turn things over to Marc, please be reminded that any unreleased services or features referenced in today's discussion or other public statements are not currently available and may not be delivered on time or at all. Customers who purchase our services should make the purchase decision based upon features that are currently available.
With that, let me turn the call over to Marc to tell you about our Q3 performance.
On today's call I'd like to accomplish two goals - review our solid financial results for the third quarter and discuss how we are managing Salesforce.com in the current economy.
We believe that as customers are asked to do more with less in this uncertain environment, cloud computing will be an increasingly compelling alternative to traditional enterprise server software. In the next few minutes, we'll detail our near, medium and long-term strategies, but first let's go over our third quarter financial results, which speak to the core strength of Salesforce.com.
Third quarter revenue rose by 43% from a year ago to $276 million. At this level, our annual revenue run rate now exceeds $1.1 billion, a first ever milestone for any enterprise cloud computing company. And, in the first nine months of this fiscal year, our revenue of $787 million already exceeds the $749 million in revenue we did all of last year. Salesforce.com is the fastest-growing enterprise software company of its size in the world today. That's pretty incredible in today's environment.
Our strong revenue performance, combined with solid expense management, helped drive GAAP earnings per share of $0.08 up 60% from $0.05 per share a year ago, and we achieved these results while absorbing roughly $0.02 of dilution related to our previously announced acquisition of Paris-based InStranet. Operating cash flow was $17 million in the third quarter and now totals roughly $154 million through three quarters, which translates into roughly $1.23 per share of operating cash. And Graham will provide more details on the financials in a moment.
Let me now discuss what we're seeing in the current environment and why we believe Salesforce.com can continue to take market share.
As we look at our own fundamentals, we believe that we have the right model for times like these. The key elements of this model include:
A core value proposition that emphasizes low upfront cost, low risk, and fast results;