Saturday, August 6, 2011

SalesForce.com Announces Earnings on Thursday, August 18 (Financial Charts) *Financial Performance Review* CRM

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SalesForce.com (CRM) will report FY Q2, QE July 2011, financial results on Thursday, August 18



1 - All financial data below is GAAP, unless otherwise noted, which results in a lower financial performance.
2 - SalesForce.com also reports Non-GAAP, which results in a higher earnings per share.
3 - Non-GAAP does not include stock-based compensation expense, amortization of purchased intangibles, and non-cash interest expense related to convertible senior notes. 


SalesForce.com (CRM) Financial Performance Review

SalesForce.com will report QE July 2011 financial results on Thursday, August 18, after market closeThe conference call will be at 2:00 p.m. PT.

SalesForce.com financial performance charts for prior quarters have been posted on the SalesForce.com Financial Performance page along with additional quarterly commentary and will be updated for this next quarterly report. The charts are also lower in this post.

The SalesForce.com financial performance charts are:
SalesFoce.com Performance by the Quarters
Earnings per Share (Diluted)
Cash Flow per Share from Operations (Diluted)
Total Revenues, Operating Income, Net Income
Gross Margin, Operating Margin, Net Margin
Return on Assets
Total Revenues and Earnings per Share Growth Rates
Operating Expense Ratio


SalesForce.com (CRM) Future and Past Financial Performance

Earnings per Share
Yahoo Finance analysts' estimates QE July 2011: Non-GAAP $0.30 average, $0.26 low, $0.31 high, 35 analysts
Prior Quarter QE April 2011: GAAP  $0.00, Non-GAAP $0.28
Prior Year QE July 2010: GAAP  $0.11, Non-GAAP $0.29
SalesForce.com Outlook GAAP -$0.01 to $0.00, Non-GAAP $0.29 to $0.30
The analysts' average Non-GAAP Earnings Per Share estimate for QE July 2011 of $0.30 is reasonable. SalesForce.com has already announced the Non-GAAP earnings per share is estimated at $0.29 to $0.30, which is an increase from prior quarter QE April 2011 of $0.28 and prior year QE July 2010 of $0.29.

Total Revenues
Yahoo Finance analysts' estimates QE July 2011: $528.63M average, $525.87M low, $536.30M high, 35 analysts
Prior Quarter QE April 2011: $504.36M
Prior Year QE July 2010: $394.37M
SalesForce.com Outlook $526M to $528M
The analysts' average GAAP and Non-GAAP Total Revenues of $528.63M is just higher than the SalesForce.com outlook. SalesForce.com has already announced the GAAP and Non-GAAP total revenues are estimated at $526M to $528M, which is an increase QoQ and YoY.

Prior QE April 2011 Financial Results
When SalesForce.com reports QE July 2011, the 3 months ended July, financial results on August 18, SalesForce.com is expected to beat, match, or miss various QE April 2011 results. These financial results are charted on the SalesForce.com Financial Performance page and lower in this post. SalesForce.com for QE April 2011, the 3 months ended April, financial results were:
GAAP
Total Revenues $504.36M
Operating Income -$2.80M
Net Income $530M
Earnings per Share $0.00
Gross Profit Margin 79.57%
Operating Income Margin -0.56%
Net Income Margin 0.11%

Summary
SalesForce.com will probably report another GAAP Operating Loss and near $0.00 GAAP Earnings per Share. SalesForce.com has already announced through their outlook that QE July 2011 will be an increase over QE April 2011 on both GAAP and Non-GAAP total revenues and Non-GAAP earnings per share. For QE July 2011, SalesForce.com should beat QE April 2011 on GAAP Total Revenues per their own outlook. SalesForce.com will miss QE April 2011 on GAAP Operating Income, Net Income, and Earnings per Share per their own outlook. SalesForce.com will miss QoQ on GAAP Gross Margin, Operating Income Margin, and Net Income Margin. Any lower on these margins will create significant uncertainty about SalesForce.com as these margins are already trending lower than the historical range. The detailed quarter by quarter charts are on the SalesForce.com Financial Performance page.


SalesForce.com (CRM) Financial Performance by the Quarters (Charts)


SalesForce.com (CRM) Earnings Per Share Below is a chart of quarterly earnings per share. Earnings per share have ranged between $0.00 and $0.17 for the past 17 quarters and remained below $0.20 for all the quarters reviewed. Latest QE April 2011 EPS of $0.00 is at the lowest to-date and a multi-year.



SalesForce.com (CRM) Cash Flow per Share (Chart) Below is a chart of cash flow from operations per share. Cash flow per share has been volatile ranging from $0.14 to $1.18. Latest QE April 2011 cash flow per share of $0.99 is just below the prior quarter peak and the bright spot of the most recent quarter.


SalesForce.com (CRM) Total Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly total revenues, operating income, and net income. Total revenues have consistently grown, are at a new high of $504.4M for the latest QE April 2011, and guidance indicates higher in the future. Operating income has not kept pace with total revenues and 2 consecutive GAAP operating losses have been reported, of -$2.8M for QE April 2011 and -$391K for QE January 2011. These operating losses were after the October 2010 record operating income of $35.2M. Net income dropped in QE April 2011 to a meager $530K, a multi-year low. This is after a disappointing $10.9M in QE January 2011, which was the lowest since the QE January 2008. The QE January 2010 net income of $22.415 is the all-time high.


SalesForce.com (CRM) Gross Margin, Operating Margin, and Net Margin (Chart) Below is a chart of quarterly gross margin, operating margin, and net margin. Gross margin has been stable and remained in the 79%-81% range for the past 13 quarters. Operating margin has fluctuated, been negative for 2 consecutive quarters, and is below the peaks of 9%+ in 2009. Net margin is very low at a dismal +0.11% for the QE April 2011 and is well below the peaks of 2009.


SalesForce.com (CRM) Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. SalesForce.com has a historically low ROA for a technology company and doesn't appear to have an effective deployment of assets. The ROA peaked in QE October 2009 at 5.13% and has declined each quarter since to 1.78% in QE April 2011. The $1.52B+ in cash, cash equivalents, and marketable securities, which are 48.7% of the total assets of $3.13B is pulling down the ROA. If this excess liquidity is not going to be used for an acquisition or expansion, the company should retire debt or pay a dividend. Return on assets peaked in the QE October 2009 at 5.13% and have decreased for 6 consecutive quarters to an extremely low 1.78%.


SalesForce.com (CRM) Growth Rates (Chart) Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for revenues and earnings per share. Total revenues QoQ have increased in every quarter on the chart, ranging from +3.65% to +14.16%. Earnings per share QoQ has fluctuated and decreased for 2 consecutive quarters.


SalesForce.com (CRM) Operating Expense Ratio Below is a chart of quarterly operating expense ratio, which is operating expenses divided by total revenues. The current Operating Expense Ratio of 80.12% is probably a record high - and too high. This indicates a decreased efficiency plus a lower proportion of revenues is reaching the bottom line, net income, and ultimately earnings per share.




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