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F4Q09 Earnings Call

February 25, 2009 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


Brent Thill - Citigroup

[Greg Donovan] - Deutsche Bank Securities

Laura Lederman - William Blair & Company, LLC

Kash Rangan - Merrill Lynch

Heather Bellini - UBS

Mark Murphy - Piper Jaffray

Adam Holt - Morgan Stanley

Rich Baldry - Canaccord Adams

Philip Rueppel - Wachovia Capital Markets, LLC

Brendan Barnicle - Pacific Crest Securities



Good afternoon. My name is [Barbara] and I'll be your conference operator today. At this time I'd like to welcome everyone to the fourth quarter fiscal 2009 financial results conference call. (Operator Instructions)

I'd now like to turn the call over to David Havlek, Vice President of Investor Relations. Mr. Havlek, you may begin your conference.

David Havlek

Thanks, Barbara, and good afternoon. I'd like to welcome everyone to's fourth quarter fiscal year 2009 earnings conference call.

Joining me today as always to discuss our results are Chairman and Chief Executive Marc Benioff and Graham Smith, our Chief Financial Officer. Marc and Graham will offer some brief prepared remarks and then we'll open things up to your questions.

A full disclosure of our fourth quarter results can be found in a press release issued about an hour ago as well as in our Form 8-K filed with the SEC. Additional financial information, including historical financial detail beyond what is provided in the press release can also be found on our company website.

I'd like to remind you that all of our financial commentary today will be in GAAP terms unless otherwise stated. In addition, at times in our prepared comments or in response to your questions we may offer certain metrics about our business that help provide greater understanding. Please be advised that we may or may not update these metrics in future calls.

In addition, it's important to note that company subscriber updates include only those subscribers that have been provisioned. We may have in the past or we may today announce certain customer wins that have not yet been fully provisioned and thus these wins not be fully reflected in any subscriber update.

And now a quick safe harbor before we begin:

The primary purpose of today's call is to provide you with information regarding our fourth quarter fiscal year 2009 performance; however, some of our discussion or 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 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 our most recent Form 10-K, particularly under the heading Risk Factors.

I also remind you that today's call is being webcast. A dial-in replay will be available shortly after the call until March 13th, and we'll have that on our website for approximately 90 days. To access the press release, the additional financial detail, the webcast or any of our SEC disclosures, I encourage you to visit our website at

Lastly, before I turn the call over to Marc, please be reminded that any unreleased services or features referenced in today's discussion or in 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 on features that are currently available.

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

Marc Benioff

Thanks, David.

We're pleased to report record financial results for our fiscal fourth quarter. With the completion of this fiscal year, we've achieved a major milestone for our company and our industry. We have become the first enterprise cloud computing to report more than $1 billion in revenue in a singe fiscal year. That's a remarkable achievement in any environment, let alone the one that we're currently facing.

Fourth quarter revenue of $290 million was up 34% from a year ago. For the full year, revenue rose to $1.077 billion, an increase of $328 million from fiscal year '08 and more than double what we did just two years ago. Our FY '09 growth makes us the fastest growing software company of our size in the world today.

We exited the year with an annualized run rate of nearly $1.2 billion. While growth and share continue to be our priority, we've also done a very good job of growing our profitability by becoming more operationally efficient. Fourth quarter GAAP EPS rose by 83% from a year ago to $0.11 per share. For the full year, GAAP EPS of $0.35 rose by more than 130%. Graham will have more to say in a moment about how we're adjusting to the current economic environment.

Fourth quarter operating cash flow was approximately $76 million. For the full year we delivered more than $1.80 per share in operating cash and more than $1.30 per share in free cash. Also, we exited the year with more than $880 million in cash and marketable securities on our balance sheet and no debt, an amount that now translates into more than $7 per share cash.

Deferred revenue showed a strong seasonal improvement in the fourth quarter, rising by roughly $124 million from the third quarter to finish at $594 million. This represents growth of 24% from a year ago.

As you might expect, the Salesforce CRM and community is growing as well. As of the end of the fourth quarter, our global community of net paying subscribers stood at more than 1.5 million, up more than 35% from a year ago. Equally important, we added roughly 3,600 net customers during the fourth quarter to bring our total net paying customer count to more than 55,400. That's an increase of roughly 14,000 customers for the year, more customers than we added in our first six years of business.

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