salesforce.com, inc (CRM)

Q2 2013 Earnings Call

August 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

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

Adam H. Holt - Morgan Stanley, Research Division

Brad A. Zelnick - Macquarie Research

Walter H. Pritchard - Citigroup Inc, Research Division

Heather Bellini - Goldman Sachs Group Inc., Research Division

Brent Thill - UBS Investment Bank, Research Division

Jason Maynard - Wells Fargo Securities, LLC, Research Division

Kash G. Rangan - BofA Merrill Lynch, Research Division

Brendan Barnicle - Pacific Crest Securities, Inc., Research Division

Karl Keirstead - BMO Capital Markets U.S.

Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division

Thomas Ernst - Deutsche Bank AG, Research Division

Robert P. Breza - RBC Capital Markets, LLC, Research Division

Tom Roderick - Stifel, Nicolaus & Co., Inc., Research Division

Raimo Lenschow - Barclays Capital, Research Division

Presentation

Operator

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Good afternoon. My name is Jamaria, and I will be your conference operator today. At this time, I would like to welcome everyone to the salesforce.com Q2 2013 Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Mr. David Havlek, Head of Investor Relations. Sir, you may begin.

David Havlek

Thanks, Jamaria, and good afternoon to everyone joining us today to discuss salesforce.com's second quarter fiscal year 2013 results. The details of our results can be found in a press release issued about an hour ago or in our Form 8-K filed with the SEC.

In addition, I'm thrilled to announce today that we'll be tweeting the highlights of our call on Twitter for the first time ever. This is an exciting addition to our call and in making our broadcast even more accessible. To join us on Twitter, you can follow us at the handle @salesforce_ir.

Here to discuss our second quarter performance today are Marc Benioff, Chairman and CEO, who's in a very good mood today; as well as Graham Smith, our Chief Financial Officer. Marc and Graham will be making a few comments, and then we'll open things up to your questions. [Operator Instructions] During our discussion today, either in our prepared remarks or in our response 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 the additional details may be onetime in nature and may or may not be provided in the future.

In addition, please also note that our commentary today will primarily be in non-GAAP terms. Reconciliations between GAAP and non-GAAP metrics for both our reported results and our forward guidance can be found in our earnings press release.

It's also possible that we may reference certain unreleased services or features not yet currently available on our discussion today. Because we cannot guarantee that future timing or availability of these services or features, we recommend customers listening today to make their purchase decisions based on services and features that are currently available.

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 2013 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 of these risks, uncertainties and assumptions, of course, as well as other information on potential risk factors that could affect our financial results are included in our forms filed with the SEC, including our most recent report on Form 10-Q, particularly under the heading Risk Factors.

To access the press release or historical results or 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 at salesforce.com/investors.

All right, let's go ahead and get this thing started. Let me turn the call over to Marc.

Marc Benioff

Hey, thanks, David, for the world's largest IR introduction. We're having an outstanding year of growth, and I'm absolutely delighted to share our second quarter results with all of you today. Revenue for the second quarter rose 34% from a year ago to $732 million, and constant currency revenue grew even faster at 37%. Just one year after surpassing a $2 billion annual revenue run rate, we now expect to break through that $3 billion annual revenue run rate threshold next quarter. Pretty awesome. It was only a couple of years ago that I remember was on the phone with all of you talking about a $1 billion revenue run rate, and now we're at $3 billion.

Operating cash flow exceeded $130 million, an increase of more than 60% year-over-year. Operating cash flow is one of the very best measurements of success at salesforce.com, and I'm delighted to see this great result. Deferred revenue was more than $1.3 billion, which is up more than 40% year-over-year, and the dollar value of booked business on and off the balance sheet now tops $4.1 billion, up more than 50% year-over-year.

Given our strong financial results and pipeline of new business, we're thrilled to announce that we're once again raising our full fiscal year 2013 revenue guidance. The high end of our guidance puts us on pace to deliver a full year revenue growth rate of 34%. Awesome. Since we first gave guidance in November last year, we have now raised our forecast for the year by more than $100 million. This is evidence of continued growth and execution at salesforce.com and the industry's move to social enterprise.

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