F2Q2011 Earnings Call Transcript
August 19, 2010 5:00 pm ET
David Havlek – VP, IR
Marc Benioff – Chairman & CEO
Graham Smith – EVP & CFO
Kash Rangan – Merrill Lynch
Laura Lederman – William Blair
Heather Bellini – ISI Group
Brent Thill – UBS
Sarah Friar – Goldman Sachs
Mark Murphy – Piper Jaffray
Joel Fishbein – Lazard
Adam Holt – Morgan Stanley
Jason Maynard – Wells Fargo Securities
Brendan Barnicle – Pacific
Brad Zelnick – Macquarie
Steve Ashley – Robert W. Baird
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Good afternoon. My name is Philip and I will be your conference operator today. At this time, I would like to welcome everyone to the
Q2 2011 fiscal results conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you.
I will now like to turn the call over to David Havlek, Vice President of Investor Relations. Sir, you may begin.
Thanks, Philip. Good afternoon and welcome everyone to
’s fiscal year ‘11 second quarter earnings conference call. Joining me from our San Francisco headquarters today to discuss our outstanding second quarter results are Marc Benioff, Chairman and CEO and Graham Smith, Chief Financial Officer.
Following our prepared remarks today, we’ll open things up to your questions. With a sell-side coverage listed now number is nearly 40, I ask that you respectfully limit yourself to a single question today, so that we can get to as many of you as possible.
Complete disclosure of our second quarter results can be found in the press release issued about an hour ago, as well as in our Form 8-K filed with the SEC.
Additional information including historical financial detail beyond what is provided in the press release will also be made available on our Web site. In addition, a webcast of today’s call is available on our Web site for 90 days and a dial-in replay would be available through September 10.
Our commentary today will include both GAAP and non-GAAP measures. Reconciliations between GAAP and non-GAAP metrics for both our reported results and our forward guidance can be found in our earnings press release available on our Web site.
At times in our prepared comments or in response to your questions, we may offer certain additional metrics to provide a greater understanding of our business or our quarterly results. Please be advised that we may or may not update these additional metrics on future calls.
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 second quarter 2011 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 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 reported on Form 10-Q, particularly under the heading, Risk Factors.
To access our Q2 press release, including the GAAP to non-GAAP reconciliations, the report detailing our historical financials, the webcast replay or any of our SEC disclosures or simply to learn more about
, I encourage you to visit our Investor Relations Web site at,
Finally, please also be advised that unreleased services or features referenced in today’s discussion or in other public statements are not currently available and thus may not be delivered on time or at all. Customers who purchase our services should make the purchase decisions based on services and features that are currently available.
With that said, let me turn the call over to Marc to discuss our second quarter results.
Thanks, David. I am delighted today to share results of our second quarter. In an improving demand environment, together with the continued shift to enterprise cloud computing allowed us to post another great financial quarter.
Second quarter revenue of $394 million rose 25% year-over-year. Even with an annual revenue run rate approaching $1.6 billion, our revenue growth is accelerating. At 25%, second quarter revenue rose at its fastest rate in six quarters and it represents the third quarter in a row in which growth rate has now increased.
Non-GAAP EPS of $0.29 was well above our outlook entering the quarter. GAAP EPS was $0.11.
We also delivered roughly $76 million in operating cash flow, an increase of more than 66% from a year ago. Over the past 12 months, our business has generated more than $340 million of operating cash and we exited the quarter with roughly $1.9 billion of cash, cash equivalents and marketable securities.
Finally, I am pleased today to announce that we are raising the high end of our full year fiscal year ‘11 revenue guidance to $1.6 billion. This is a huge new milestone for
While our second quarter financial performance speaks for itself, the big news this quarter was the release of Chatter in June.
Just as Amazon did a decade ago, Facebook and Twitter are now showing us the future of the Internet, this time in the area of collaboration. According to Nielsen, use of social networking apps was up 43% as a percentage of time spent on the web between June 2009 and June 2010.
Leveraging the social features popularized by the consumer web like profiles, status updates, real time feeds and mobile apps, Salesforce Chatter helps companies increase employee productivity by empowering employees with the new level of collaboration.
Customer response to Salesforce Chatter has been nothing short of amazing. Within a week of the release, more than 10,000 customers had turned on Salesforce Chatter. Today, less than two months later that number has now grown to nearly 20,000 customers or roughly one quarter of our total customer base. We believe this is the most successful new software released ever.