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Q1 2012 Earnings Call

May 19, 2011 5:00 pm ET


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

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

David Havlek -


Brendan Barnicle - Pacific Crest Securities, Inc.

Stan Zlotsky - Deutsche Bank AG

Laura Lederman - William Blair & Company L.L.C.

Brent Thill - UBS Investment Bank

Ross MacMillan - Jefferies & Company, Inc.

Brad Zelnick - Macquarie Research

Unknown Analyst -

Robert Breza - RBC Capital Markets, LLC

Mark Murphy - Piper Jaffray Companies

Kash Rangan - BofA Merrill Lynch



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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 Q1 Fiscal Results Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. David Havlek, Vice President of Investor Relations. Sir, you may begin your conference.

David Havlek

Thanks, David. I'd like to welcome everyone to's first quarter fiscal year 2012 results call. Joining me to discuss our results today as always are: Marc Benioff, Chairman and CEO; and Graham Smith, our CFO. Following our prepared remarks, we'll open things up for your questions. As always I ask as a courtesy to your peers, please limit yourself to one question today.

A complete disclosure of our first 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 detailed historical financial statements and facts, is available on our website.

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 press release.

At times in our prepared comments today or in responses to your questions, we may offer incremental metrics to provide a greater understanding of our business or our quarterly results. Please be advised that some of these disclosures are one time in nature and we may or cannot update those metrics in the future.

Also of importance, beginning in the third quarter, we will no longer be reporting our customer count metric on a quarterly basis. We said we plan to update that metrics when we receive notable milestones. We're making this change because recent acquisitions, primarily Heroku and Manymoon, have added a large number of users. Linking those users to specific customer organizations can be extremely challenging and in some cases impossible. As result, we believe our traditional customer metric will become less meaningful overtime. We plan to report the customer metric using our traditional measure one last time in Q2.

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 first quarter 2012 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, 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-K, particularly under the heading Risk Factors.

To access our first quarter press release, including the GAAP to non-GAAP affiliations or rhetorical results, any of our SEC disclosures or simply to learn more about, I encourage you to visit our Investor Relations website.

In addition, a webcast of today's call will be available for 90 days, and a dial-in replay will be available through June 16.

Finally, before I turn the call over to Marc, please be advised that we may reference certain unreleased services or features that are not currently available in today's discussion. We can't guarantee that future timing of or availability of these services or features and, as such, customers who purchase our services should make their purchase decisions based on services and features that are currently available.

With that, let me turn the call over to Marc to discuss our excellent first quarter results. Marc?

Marc Benioff

Thanks, David. Our first quarter was indeed a fantastic kickoff to fiscal year 2012, continuing the momentum we experienced in fiscal year 2011. And I'm thrilled to report that just one quarter into our fiscal year, we have crossed the threshold of the $2 billion annual revenue run rate. As you can see from the revenue, we are absolutely delighted now to be at a new level of performance of our company, and our revenue growth rate is accelerating.

Let me begin by briefly reviewing some of our financial highlights of the quarter. Revenue of $504 million was 34% from the year-ago quarter. Deferred revenue also accelerated to $915 million, a 38% year-over-year increase. Incredible. And we also delivered $140 million of operating cash flow. And over the past 12 months, we've generated roughly $460 million in operating cash, an increase of more than 40% from a year-ago period.

Finally, David, we are pleased to be able to raise revenue guidance to $2.15 billion to $2.17 billion, a significant increase once again to our revenue guidance for fiscal year 2012, and our second increase this year, the first one after we acquired Radian6.

Now I'd like to say a few words about Japan and the Japan disaster before we begin. First of all, let me personally and on behalf of and our employees and our shareholders, send our condolences to the victims of the Japan disaster. Our sadness is overwhelming, and we are deeply with you, and we send our wishes for a quick recovery.

Now like many companies, of course, our business is also affected by the earthquake in Japan. However, the diligence of our Japan team ended the quarter closer to their original plan than we could really have ever expected.

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