F3Q10 Earnings Call
November 17, 2009 5:00 pm ET
David Havlek - Investor Relations
Marc Benioff - Chief Executive Officer
Graham V. Smith - Chief Financial Officer
Mark Murphy - Piper Jaffray
Sarah Friar - Goldman Sachs
Analyst for Heather Bellini – ISI Group
Adam Holt – Morgan Stanley
Laura Lederman - William Blair & Company
Kash Rangan - Merrill Lynch
Analyst for Michael Nemeroff - Wedbush
Brent Thill - UBS
Robert Breza - RBC Capital Markets
Previous Statements by CRM
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Thank you. I would like to personally welcome everyone to Salesforce.com’s third quarter financial results call. After a few opening comments to make today’s call official, I will turn things over to our Chairman and Chief Executive Officer, Marc Benioff, to review the highlights of the quarter. Graham Smith, our Chief Financial Officer, will then provide some detail on the financial performance of the quarter before we open things up to your questions.
Tomorrow is the kick off of Dream Force, our biggest user conference of the year. We will try to keep our call a bit more brief than past calls. In that context if we are unable to get to your question today please be advised that both Marc Benioff and Graham Smith will be hosting an in-person Q&A session at 1:00 PT tomorrow. If you are unable to attend that session in person it will be webcast.
With that let me quickly remind you that a full disclosure of our third 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 also be made available on our website. Today's call is being live Web cast. A dial-in replay will be available shortly following the conclusion of the call until December 8, 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 Salesforce.com, I encourage you to visit our Investor Relations Web site at Salesforce.com/Investor.
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 additional metrics to provide a greater understanding about our business or our quarterly results. Please be advised that we may or may not update these metrics on future calls.
The primary purpose of today’s call is to provide to you the information regarding our fiscal third quarter. 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 advised 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.
With that let me turn the call over to Marc.
Thank you David and welcome everyone to our call. We are very excited to share our results on the first fiscal third quarter and let me just begin with some of these exciting financial highlights. Revenue grew 20% from a year ago to approximately $331 million and this result was well above our outlook entering the quarter primarily as a result of improvement in new business demand and lower attrition.
At this level our annual revenue run rate is now more than $1.3 billion and we continue to be the fastest growing software company of our size in the world today. GAAP EPS of $0.16 as double the $0.08 we reported a year ago. Operating cash flow of $36 million was over 100%, actually it was 107% from a year ago and we now have nearly $1.1 billion in cash and marketable securities on our balance sheet.
By virtually every financial metric Q3 was an amazing quarter. Graham will have more to say about all of the financial details in just a moment.
Now while our financial results were outstanding, perhaps the most exciting part of our quarter was the improvement we saw in some of the key growth drivers of our business. On our second quarter call in August we discussed seeing signs of stabilization in our business, if you remember the call. However, based on our third quarter performance we now believe we are seeing some very early signs of improvement in some very key areas. That is really causing us to enter a growth stance in our company.
First, on a year-over-year basis new business performance was up in the third quarter and was our best growth quarter of the year. As a result we now expect new business for the full year to be flat to slightly up. Now, this is a big change from the first and second quarter when we thought new business for the full year would be flat to slightly down.