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F2Q10 Earnings Call

August 20, 2009 5:00 pm ET


David Havlek - Investor Relations

Marc Benioff - Chief Executive Officer

Graham V. Smith - Chief Financial Officer


Tom Ernst - Deutsche Bank Securities

Kash Rangan - Merrill Lynch

Brendan Barnicle - Pacific Crest Securities

Laura Lederman - William Blair & Company

Keith Weiss for Adam Holt - Morgan Stanley

Karl Keirstead - Kaufman Bros.

Sarah Friar - Goldman Sachs

Philip Rueppel - Wells Fargo Securities

Mark Murphy - Piper Jaffray

Robert Breza - RBC Capital Markets

Philip Winslow - Credit Suisse



At this time I would like to welcome everyone to the Q2 fiscal year 2010 financial results conference call. (Operator Instructions)

I will now turn the call over to David Havlek, Vice President of Investor Relations.

David Havlek

Welcome everyone to today's call. Joining me today from San Francisco headquarters to discuss our second quarter fiscal year 2010 results are Chairman and Chief Executive, Marc Benioff, and Graham Smith, our Chief Financial Officer.

A full disclosure of our second 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 will be made available following today's call as well.

Today's call is being live Web cast. A dial-in replay will be available shortly following the conclusion of the call until September 10, 2009, and a Web cast replay will be made available for approximately 90 days. To access the press release, the additional financial detail, the Web cast replay, or any of our SEC disclosures, or simply to learn more about, I encourage you to visit our Investor Relations Web site at

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 or our quarterly results. Please be advised that we may or may not update these metrics on future calls.

Let me make this call official with a quick brief Safe Harbor. The primary purpose of today's call is to provide you with information regarding our second quarter fiscal year 2010 performance. However, some of our discussion or responses to your questions may contain certain 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 factors that could affect our financial results are included in our reports filed with the SEC, including our most recent Form 10-Q, particularly under the heading Risk Factors.

Please also 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 decisions based on features that are currently available.

Following some of our brief comments today from Marc and Graham we will open to accept your questions. Because we have plenty of analysts in our call queue and as a courtesy to others, I ask that you please limit yourself to one question. Thanks in advance for your cooperation and with that, let me turn things over to Marc.

Marc Benioff

I am pleased to report's second quarter financial results.

Revenue was approximately $316.0 million, an increase of 20% from a year ago. remains the very fastest-growing software company of its size in the world today.

GAAP earnings per share was $0.17, an increase of more than 110% from a year ago. That's more earnings than we achieved in all of fiscal 2008 and our first half earnings per share of $0.32 is nearly equal to what we achieved all of last year.

Operating cash flow was $46.0 million for the quarter, translating into roughly $0.36 per share of cash generation.

And I am very excited to say we have achieved another milestone this quarter by exceeding the $1.0 billion mark for cash and marketable securities. That translates into more than $8.00 per share of cash and equivalents.

Powering all of this financial success was another very solid quarter of customer success.

During the second quarter we added approximately 3,900 net new paying customers, matching the pace we saw in the first quarter. Over the past 12 months we've added nearly 16,000 net new customers, to bring our total global community of customers to more than 63,000. This represents a year-over-year increase of 32% and positions us well for future growth.

Let's take a look at some of our major wins this quarter. Highlighting our second quarter were three marquee transactions. First, I am thrilled to announce that another leading insurance broker and risk management company, Marsh, has selected for sales and marketing automation in a win against Oracle and Microsoft. Marsh is driving higher employee productivity and greater customer satisfaction by fully integrating their CRM and third-party news feeds and account contact information. With an initial deployment of roughly 2,500 subscribers, Marsh plans to grow their deployment to over 10,000.

Insurance has become the second pillar of our success in financial services. Marsh joins a long list of insurance brokers and providers using, including Aeon, A. J. Gallagher, Allianz, AIG, Lincoln, Liberty Mutual, Chubb, and as we announced last quarter, Japan's leader, Sampo.

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