Salesforce.com Inc (CRM)

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Salesforce.com (CRM)

Q4 2012 Earnings Call

February 23, 2012 5:00 pm ET

Executives

David Havlek -

Marc Benioff - Co-Founder, Chairman and Chief Executive Officer

Graham V. Smith - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Brent Thill - UBS Investment Bank, Research Division

Jason Maynard - Wells Fargo Securities, LLC, Research Division

Heather Bellini - Goldman Sachs Group Inc., Research Division

Mark R. Murphy - Piper Jaffray Companies, Research Division

Adam H. Holt - Morgan Stanley, Research Division

Brad A. Zelnick - Macquarie Research

Kash G. Rangan - BofA Merrill Lynch, Research Division

Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division

Thomas Ernst - Deutsche Bank AG, Research Division

Laura Lederman - William Blair & Company L.L.C., Research Division

Richard G. Sherlund - Nomura Securities Co. Ltd., Research Division

Presentation

Operator

Good afternoon. My name is David, and I will be your conference operator today. At this time, I would like to welcome everyone to the Salesforce.com Q4 and Full Year Fiscal 2012 Results Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. David Havlek, Head of Investor Relations. Sir, you may begin your conference.

David Havlek

Thanks, David, and welcome, everyone, to today's call. Earlier this afternoon, Salesforce.com issued a press release detailing its fourth quarter fiscal year 2012 results. In addition to the press release, the company results can also be found in the Form 8-K filed with the SEC.

Joining me today to discuss our outstanding fourth quarter are Marc Benioff, Chairman and CEO; and Graham Smith, our CFO. [Operator Instructions] Our commentary will primarily be in non-GAAP terms today. Reconciliations between GAAP and non-GAAP metrics for both our reported results and our forward guidance can be found in our earnings press release.

At times in our prepared comments or responses to your questions, we may offer incremental metrics to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that this additional detail maybe one-time in nature, and we may or may not provide an update in the future.

With that, let me make this call official with a brief safe harbor. The primary purpose of today's call is to provide you with information regarding our fiscal fourth quarter 2012 performance. 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 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 report on Form 10-Q, particularly under the heading Risk Factors. To access our Q4 press release, including the GAAP to non-GAAP reconciliations, our historical results, any of our SEC filings, the webcast replay of today's call or simply to learn more about Salesforce, I encourage you to visit our Investor Relations website.

Finally, before I turn the call over to Mark, please be advised that during today's discussion, we may reference certain unreleased services or features not yet currently available, because we can't guarantee the future timing or availability of these services or features to recommend customers make their purchase decisions based on services and features that are currently available.

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

Marc Benioff

Thanks, David. Our fourth quarter was a really gorgeous finish to an amazing year of growth for Salesforce.com, and the first quarter is already off to a spectacular start. I'm going to get to that in just one moment.

Revenue for the fourth quarter rose 38% from a year ago to $632 million. For the full year, we delivered approximately $2.27 billion in revenue, with an annual revenue run rate that now exceeds $2.5 billion, and our full year revenue grew 37% from fiscal year '11. Look, David, no other enterprise software company of our size is growing faster.

Deferred revenue increased by 48% year-over-year, propelling deferred revenue past the $1 billion milestone for the first time ever, and we now have more than $3.5 billion of booked business on and off the balance sheet. We also set a company record for cash flow in the quarter exceeding $200 million operating cash, that's an increase of 45% year-over-year. For the full year, operating cash flow rose 29% to nearly $600 million.

And finally, we added approximately 2,500 employees around the world in fiscal year '12, including nearly 2,000 of them right here in the United States of America.

Now during the quarter, we closed more than 4x the number of 7 bigger transactions than Q4 of last year, including the largest transaction in our history, which was quickly usurped by another transaction that I'll soon mention. In all, we signed more than 100 7-figure transactions and 9 8-figure transactions in the quarter. And as I've been foreshadowing, I'm thrilled to announce that since closing the fourth quarter, we've already topped ourselves by signing our first ever 9-figure transaction in the opening days of Q1.

Now, I want to be really clear with everyone before I continue. This 9-figure transaction is not reflected in any of these numbers that we're talking about today and is not currently reflected in our income sheet, our balance sheet that were -- income statement or balance sheet that we're publishing today, and we're going to be discussing the details of this 9-figure transaction on our first quarter call. I just want to let everyone know how excited we are about the transaction and it's with an insurance -- a very large insurance company, and we couldn't be more excited about this.

Read the rest of this transcript for free on seekingalpha.com