Salesforce released its earnings report for fiscal Q4 and full-year 2011, beating most estimates.

Quarterly revenue was $632 Million, up 38% YoY. Full-year revenue was $2.27 Billion, up 37% YoY.

“Salesforce.com’s 38% revenue growth in the fourth quarter was a spectacular finish to our fiscal year, a year in which we delivered 37% revenue growth and added nearly 2,500 employees, including nearly 2,000 in the U.S.,” said CEO Marc Benioff. “Given the strong customer response to the social enterprise, we’re excited to raise our guidance today, which puts us on pace to exceed the $3 billion revenue run rate during FY13.”

Here’s the release in its entirety:

SAN FRANCISCO, Feb. 23, 2012 /PRNewswire/ — Salesforce.com (NYSE: CRM), the enterprise cloud computing (http://www.salesforce.com/cloudcomputing/) company, today announced results for its fiscal fourth quarter and full fiscal year ended January 31, 2012.

(Logo:  http://photos.prnewswire.com/prnh/20050216/SFW105LOGO)

“Salesforce.com’s 38% revenue growth in the fourth quarter was a spectacular finish to our fiscal year, a year in which we delivered 37% revenue growth and added nearly 2,500 employees, including nearly 2,000 in the U.S.,” said Marc Benioff, Chairman and CEO, salesforce.com. “Given the strong customer response to the social enterprise, we’re excited to raise our guidance today, which puts us on pace to exceed the $3 billion revenue run rate during FY13.”

Salesforce.com delivered the following results for its fiscal fourth quarter:

Revenue: Total Q4 revenue was $632 million, an increase of 38% on a year-over-year basis. Subscription and support revenues were $594 million, an increase of 39% on a year-over-year basis. Professional services and other revenues were $38 million, an increase of 33% on a year-over-year basis.

For the full fiscal year 2012, the company reported revenue of $2.27 billion, an increase of 37% from the prior year. Subscription and support revenues were $2.13 billion, an increase of 37% on a year-over-year basis. Professional services and other revenues were $140 million, an increase of 32% on a year-over-year basis.

Earnings per Share: Q4 GAAP net loss per share was ($0.03), and non-GAAP diluted earnings per share was $0.43. The company’s non-GAAP results exclude the effects of approximately $70 million in stock-based compensation expense, approximately $20 million in amortization of purchased intangibles, and approximately $4 million in net non-cash interest expense related to the company’s convertible senior notes. Non-GAAP EPS calculations are based on approximately 142 million diluted shares outstanding during the quarter, including approximately 1.7 million shares associated with the company’s convertible senior notes. GAAP EPS calculations are based on a basic share count of approximately 137 million shares.

For the full fiscal year 2012, GAAP net loss per share was ($0.09), and non-GAAP diluted earnings per share was $1.36. The company’s non-GAAP results exclude the effects of approximately $229 million in stock-based compensation, approximately$67 million in amortization of purchased intangibles, and approximately $12 million in net non-cash interest expense related to the convertible senior notes. Non-GAAP EPS calculations are based on approximately 142 million diluted shares outstanding during the year, including approximately 2.8 million shares associated with the company’s convertible senior notes. GAAP EPS calculations are based on a basic share count of approximately 135 million shares.

Cash: Cash generated from operations for the fiscal fourth quarter was $240 million, an increase of 45% on a year-over-year basis. For the full fiscal year 2012, operating cash flow totaled $592 million, up 29% year-over-year. Total cash, cash equivalents and marketable securities finished the quarter at approximately $1.4 billion.

Deferred Revenue: Deferred revenue on the balance sheet as of January 31, 2012 was approximately $1.38 billion, an increase of 48% on a year-over-year basis. Current deferred revenue increased by 41% to approximately $1.29 billion, benefited in part by longer invoice durations.  Long term deferred revenue increased by 309% to approximately $89 million. Unbilled deferred revenue, representing business that is contracted but unbilled and off balance sheet, ended the fiscal year at approximately $2.2 billion, up from approximately $1.5 billion at the end of fiscal 2011.

As of February 23, 2012, salesforce.com is initiating revenue and EPS guidance for its first quarter of fiscal year 2013, and initiating EPS guidance for its full fiscal year 2013. In addition, the company is raising its full fiscal year 2013 revenue guidance previously provided on November 17, 2011.

Q1 FY13 Guidance: Revenue for the company’s first fiscal quarter is projected to be in the range of $673 million to $678 million, an increase of 33% to 34%, year-over-year.

GAAP net loss per share is expected to be in the range of ($0.19) to ($0.18), while diluted non-GAAP EPS is expected to be in the range of $0.33 to $0.34. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $79 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $21 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $5 million. EPS estimates assume a GAAP tax rate of approximately 3%, and a non-GAAP tax rate of approximately 38%. For the purpose of the non-GAAP EPS calculation, assume an average fully diluted share count of approximately 145 million shares, and for the GAAP EPS calculation, assume an average basic share count of approximately 138 million shares.

Full Year FY13 Guidance: The company is raising its projected full fiscal year 2013 revenue from guidance previously provided on November 17, 2011. Revenue for the company’s full fiscal year 2013 is projected to be in the range of $2.92 billion to $2.95 billion, an increase of 29% to 30%, year-over-year.

For the company’s full fiscal year 2013, GAAP net loss per share is expected to be in the range of ($0.55) to ($0.51) while diluted non-GAAP EPS is expected to be in the range of $1.58 to $1.62. The non-GAAP estimate excludes the effects of stock-based compensation expense, expected to be approximately $368 million, amortization of purchased intangibles related to acquisitions, expected to be approximately $80 million, and net non-cash interest expense related to the convertible senior notes, expected to be approximately $24 million. EPS estimates assume a GAAP tax rate of approximately 8%, and a non-GAAP tax rate of approximately 38%. For the purpose of the non-GAAP EPS calculation, assume an average fully diluted share count of approximately 149 million shares, and for the GAAP EPS calculation, assume an average basic share count of approximately 142 million shares.

The following is a per share reconciliation of GAAP EPS to non-GAAP diluted EPS guidance for the first quarter and full fiscal year:

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its fourth quarter fiscal year 2012 results at 2:00 p.m. Pacific Time today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company’s Investor Relations Web site at http://www.salesforce.com/investor. In addition, an archive of the webcast can be accessed through the same link. Participants who choose to call in to the conference call can do so by dialing domestically 866-901-SFDC or 866-901-7332 and internationally at +1 706-902-1764, passcode salesforce.com or 48589774. A replay will be available at 800-642-1687 or +1 706-645-9291, passcode 48589774, until midnight (Eastern Time) March 23, 2012.

About Salesforce.com

With 100,000+ customers, salesforce.com is the enterprise cloud computing company that is leading the shift to the social enterprise. Social enterprises leverage social, mobile and open cloud technologies to put customers at the heart of their business. Based on salesforce.com‘s real-time, multitenant architecture, the company’s platform and application services include:

• Salesforce Chatter, a private social network for your business
• Salesforce Sales Cloud, for sales force automation and contact management
• Salesforce Service Cloud, for customer service and support solutions
• Salesforce Radian6, for social media monitoring and engagement
• Salesforce Data.com, the most complete source of accurate business data
• AppExchange, the leading marketplace for enterprise cloud computing applications
• Force.com, for custom application development
• Heroku, for building social and mobile apps
• Database.com, the world’s first enterprise cloud database

Any unreleased services or features referenced in this or other press releases or public statements are not currently available and may not be delivered on time or at all. Customers who purchase salesforce.com applications should make their purchase decisions based upon features that are currently available. Salesforce.com has headquarters in San Francisco, with offices inEurope and Asia, and trades on the New York Stock Exchange under the ticker symbol “CRM.” For more information please visithttp://salesforce.com, or call 1-800-NO-SOFTWARE.

Non-GAAP Financial Measures: This press release includes information about non-GAAP EPS and non-GAAP tax rates (collectively the “non-GAAP financial measures”). Non-GAAP EPS estimates exclude the impact of the following non-cash items: stock-based compensation, amortization of acquisition-related intangibles, and the net amortization of debt discount on the company’s convertible senior notes, as well as the tax consequences associated with these items. The purpose of the non-GAAP tax rate is to quantify the excluded tax consequences of the excluded expense items. These non-GAAP estimates are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. The method used to produce non-GAAP financial measures is not computed according to GAAP and may differ from the methods used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.

The primary purpose of these non-GAAP measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash items on the company’s operating performance. Non-cash stock-based compensation, amortization of acquisition-related intangible assets, and the net amortization of debt discount on the company’s convertible senior notes are being excluded from the company’s FY12 financial results because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but were made for the company’s long-term benefit over multiple periods. While strategic decisions, such as those to issue stock-based compensation, acquire a company, or issue convertible senior notes, are made to further the company’s long-term strategic objectives and impact the company’s income statement under GAAP measures, these items affect multiple periods and management is not able to change or affect these items in any particular period. As such, supplementing GAAP disclosure with non-GAAP disclosure using the non-GAAP measures provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period, and management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the company’s performance.

In addition, the majority of the company’s industry peers report non-GAAP operating results that exclude certain non-cash or non-recurring items. Management believes that the provision of supplemental non-GAAP information will enable a more complete comparison of the company’s relative performance.

Specifically, management is excluding the following items from its non-GAAP EPS for Q4 and FY12 and its non-GAAP estimates for Q1 and FY13:

• Stock-Based Expenses: The company’s compensation strategy includes the use of stock-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
• Amortization of Purchased Intangibles: The company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While it is continually viewed for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
• Amortization of Debt Discount: Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, for GAAP purposes we are required to recognize imputed interest expense on the company’s $575 million of convertible subordinated notes that were issued in a private placement in January 2010. The imputed interest rate is approximately 5.9%, while the coupon interest rate is 0.75%. The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management’s assessment of the company’s operating performance because management believes that this non-cash expense is not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the company’s operational performance.
• Income Tax Effects: The company’s estimated non-GAAP effective tax rate is lower than the estimated GAAP effective tax rate due to the exclusion of the expense items described above.

“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about expected GAAP revenue and GAAP and non-GAAP EPS for the first fiscal quarter of 2013 and the full fiscal year, the company’s expected revenue run rate and revenues in fiscal 2013, the company’s expected tax rates, stock-based compensation expenses, amortization of purchased intangibles and debt discount, and shares outstanding. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements we make.

The risks and uncertainties referred to above include – but are not limited to – risks associated with possible fluctuations in the company’s financial and operating results; the company’s rate of growth and anticipated revenue run rate, including the company’s ability to convert deferred revenue and unbilled deferred revenue into revenue and, as appropriate, cash flow, and the continued growth and ability to maintain deferred revenue and unbilled deferred revenue; errors, interruptions or delays in the company’s service or the company’s Web hosting; breaches of the company’s security measures; the financial impact of any previous and future acquisitions; the nature of the company’s business model; the company’s ability to continue to release, and gain customer acceptance of, new and improved versions of the company’s service; successful customer deployment and utilization of the company’s existing and future services; changes in the company’s sales cycle; competition; various financial aspects of the company’s subscription model; unexpected increases in attrition or decreases in new business; the emerging markets in which we operate; unique aspects of entering or expanding in international markets, the company’s ability to hire, retain and motivate  employees and manage the company’s growth; changes in the company’s customer base; technological developments; regulatory developments; litigation related to intellectual property and other matters, and any related claims, negotiations and settlements; unanticipated changes in the company’s effective tax rate; fluctuations in the number of shares we have outstanding and the price of such shares; foreign currency exchange rates; collection of receivables; interest rates; the company’s plans to build and expand its campus in San Francisco, California and the associated costs; and general developments in the economy, financial markets, and credit markets.

Further information on these and other factors that could affect the company’s financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time, including the company’s Form 10-K that will be filed for the fiscal year ended January 31, 2012. These documents are available on the SEC Filings section of the Investor Information section of the company’s website at www.salesforce.com/investor.

Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Copyright © 2012 salesforce.com, inc. All rights reserved. Salesforce.com, Salesforce, Chatter, Sales Cloud, Service Cloud, Radian6, Jigsaw, AppExchange, Force.com, Heroku, and all associated logos are trademarks of salesforce.com, inc. in the United States and other countries. Salesforce.com offers its Siteforce products and services in Germany under the Force.com Sites trademark. Other names used herein may be trademarks of their respective owners.

salesforce.com, inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
			Three Months Ended January 31,				Fiscal Year Ended January 31,
			2012		2011		2012		2011
Revenues:
	Subscription and support		$ 594,269		$ 428,534		$ 2,126,234		$ 1,551,145
	Professional services and other		37,644		28,333		140,305		105,994
		Total revenues	631,913		456,867		2,266,539		1,657,139
Cost of revenues (1)(2):
	Subscription and support		100,065		61,116		360,758		208,243
	Professional services and other		36,280		31,195		128,128		115,570
		Total cost of revenues	136,345		92,311		488,886		323,813
Gross profit			495,568		364,556		1,777,653		1,333,326
Operating expenses (1)(2):
	Research and development		80,613		57,530		295,347		187,887
	Marketing and sales		327,567		233,217		1,169,610		792,029
	General and administrative		93,765		74,200		347,781		255,913
		Total operating expenses	501,945		364,947		1,812,738		1,235,829
Income (loss) from operations			(6,377)		(391)		(35,085)		97,497
Investment income			4,965		9,426		23,268		37,735
Interest expense			(5,669)		(3,290)		(17,045)		(24,909)
Other expense			(454)		(1,366)		(4,455)		(6,025)
Income (loss) before benefit (provision) for income taxes and noncontrolling interest			(7,535)		4,379		(33,317)		104,298
Benefit (provision) for income taxes			3,457		6,491		21,745		(34,601)
Consolidated net income (loss)			(4,078)		10,870		(11,572)		69,697
Less: Net loss attributable to noncontrolling interest			0		43		0		(5,223)
Net income (loss) attributable to salesforce.com			$   (4,078)		$   10,913		$    (11,572)		$      64,474
Basic net income (loss) per share attributable to salesforce.com common shareholders			$     (0.03)		$       0.08		$        (0.09)		$          0.50
Diluted net income (loss) per share attributable to salesforce.com common shareholders			$     (0.03)		$       0.08		$        (0.09)		$          0.47
Shares used in computing basic net income (loss) per share			136,720		132,344		135,302		130,222
Shares used in computing diluted net income (loss) per share			136,720		140,199		135,302		136,598
(1) Amounts include amortization of purchased intangibles from business combinations, as follows:
		Cost of revenues	$   17,132		$     5,721		$      60,069		$      15,459
		Marketing and sales	2,751		1,146		7,250		4,209
(2) Amounts include stock-based expenses, as follows:
		Cost of revenues	$     5,283		$     3,541		$      17,451		$      12,158
		Research and development	14,670		6,778		45,894		18,897
		Marketing and sales	35,706		19,955		115,730		56,451
		General and administrative	14,441		11,440		50,183		32,923

salesforce.com, inc.
Condensed Consolidated Statements of Operations
As a percentage of total revenues:
(Unaudited)
						Three Months Ended January 31,				Fiscal Year Ended January 31,
						2012		2011		2012		2011
Revenues:
	Subscription and support					94%		94%		94%		94%
	Professional services and other					6		6		6		6
		Total revenues				100		100		100		100
Cost of revenues (1)(2):
	Subscription and support					16		13		16		13
	Professional services and other					6		7		6		7
		Total cost of revenues				22		20		22		20
Gross profit						78		80		78		80
Operating expenses (1)(2):
	Research and development					12		13		13		11
	Marketing and sales					52		51		52		48
	General and administrative					15		16		15		15
		Total operating expenses				79		80		80		74
Income (loss) from operations						(1)		0		(2)		6
Investment income						1		2		1		2
Interest expense						(1)		(1)		(1)		(2)
Other expense						0		0		0		0
Income (loss) before benefit (provision) for income taxes and noncontrolling interest						(1)		1		(2)		6
Benefit (provision) for income taxes						0		1		1		(2)
Consolidated net income (loss)						(1)		2		(1)		4
Less: Net loss attributable to noncontrolling interest						0		0		0		0
Net income (loss) attributable to salesforce.com						(1%)		2%		(1%)		4%
(1) Amortization of purchased intangibles from business combinations as a percentage of total revenues, as follows:
		Cost of revenues				3%		1%		3%		1%
		Marketing and sales				0		0		0		0
(2) Stock-based expenses as a percentage of total revenues, as follows:
		Cost of revenues				1%		1%		1%		1%
		Research and development				2		1		2		1
		Marketing and sales				6		4		5		3
		General and administrative				2		3		2		2

salesforce.com, inc.
Condensed Consolidated Balance Sheets
(in thousands)
						January 31,			January 31,
						2012			2011
						(unaudited)
Assets
Current assets:
	Cash and cash equivalents					$    607,284			$    424,292
	Short-term marketable securities					170,582			72,678
	Accounts receivable, net					683,745			426,943
	Deferred commissions					98,471			67,774
	Deferred income taxes					31,821			27,516
	Prepaid expenses and other current assets (see additional metrics)					80,319			55,721
Total current assets						1,672,222			1,074,924
Marketable securities, noncurrent						669,308			910,587
Property and equipment, net (see additional metrics)						527,946			387,174
Deferred commissions, noncurrent						78,149			48,842
Deferred income taxes, noncurrent						87,587			41,199
Capitalized software, net (see additional metrics)						188,412			127,987
Goodwill						785,381			396,081
Other assets, net (see additional metrics)						155,149			104,371
Total assets						$ 4,164,154			$ 3,091,165
Liabilities, temporary equity and stockholders’ equity
Current liabilities:
	Accounts payable					$      33,258			$      18,106
	Accrued expenses and other liabilities (see additional metrics)					502,442			345,121
	Deferred revenue					1,291,622			913,239
	Convertible senior notes, net					496,149			0
Total current liabilities						2,323,471			1,276,466
Convertible senior notes, net						0			472,538
Income taxes payable, noncurrent						37,258			18,481
Long-term lease liabilities and other						48,651			25,487
Deferred revenue, noncurrent						88,673			21,702
Total liabilities						2,498,053			1,814,674
Temporary equity						78,741			0
Stockholders’ equity:
	Common stock					137			133
	Additional paid-in capital					1,415,077			1,098,604
	Accumulated other comprehensive income					12,683			6,719
	Retained earnings					159,463			171,035
Total stockholders’ equity						1,587,360			1,276,491
Total liabilities, temporary equity and stockholders’ equity						$ 4,164,154			$ 3,091,165

salesforce.com, inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
							Three Months Ended January 31,				Fiscal Year Ended January 31,
							2012		2011		2012		2011
Operating activities:
Consolidated net income (loss)							$   (4,078)		$   10,870		$ (11,572)		$    69,697
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
	Depreciation and amortization						45,901		23,738		157,286		75,746
	Amortization of debt discount and transaction costs						3,877		1,982		10,347		19,621
	Amortization of deferred commissions						30,742		22,605		107,195		80,159
	Expenses related to stock-based awards						70,100		41,714		229,258		120,429
	Excess tax benefits from employee stock plans						4,994		10,777		(6,018)		(35,991)
	Changes in assets and liabilities:
		Accounts receivable, net					(365,099)		(169,833)		(244,947)		(102,507)
		Deferred commissions					(86,947)		(56,004)		(167,199)		(121,247)
		Prepaid expenses and other current assets					(777)		8,464		(10,736)		2,001
		Other assets					2,816		(365)		2,883		(9,770)
		Accounts payable					3,716		(5,254)		12,644		1,246
		Accrued expenses and other current liabilities					72,628		36,684		67,692		132,004
		Deferred revenue					462,474		240,384		444,674		227,693
		Net cash provided by operating activities					240,347		165,762		591,507		459,081
Investing activities:
Business combinations, net of cash acquired							(57,914)		(247,994)		(422,699)		(403,331)
Land activity and building improvements							(6,565)		(269,944)		(19,655)		(277,944)
Strategic investments							(2,647)		(13,605)		(37,370)		(20,105)
Changes in marketable securities							(45,608)		179,346		141,679		(270,287)
Capital expenditures							(44,602)		(30,576)		(151,645)		(90,887)
		Net cash used in investing activities					(157,336)		(382,773)		(489,690)		(1,062,554)
Financing activities:
Purchase of subsidiary stock							0		(19,721)		0		(171,964)
Proceeds from equity plans							26,203		44,406		116,565		160,402
Excess tax benefits from employee stock plans							(4,994)		(10,777)		6,018		35,991
Contingent consideration payment related to prior business combinations							0		0		(16,200)		0
Principal payments on capital lease obligations							(8,737)		(3,198)		(30,533)		(10,355)
		Net cash provided by financing activities					12,472		10,710		75,850		14,074
Effect of exchange rate changes							8,814		290		5,325		2,385
Net increase (decrease) in cash and
cash equivalents							104,297		(206,011)		182,992		(587,014)
Cash and cash equivalents, beginning of period							502,987		630,303		424,292		1,011,306
Cash and cash equivalents, end of period							$ 607,284		$ 424,292		$ 607,284		$  424,292

salesforce.com, inc.
Additional Metrics
(Unaudited)
				Jan 31,		Oct 31,		Jul 31,		Apr 30,		Jan 31,		Oct 31,
				2012		2011		2011		2011		2011		2010
Full Time Equivalent Headcount				7,785		6,953		6,352		5,513		5,306		4,758
Financial data (in thousands):
	Cash, cash equivalents and marketable securities			$ 1,447,174		$ 1,296,693		$ 1,286,658		$ 1,522,285		$ 1,407,557		$ 1,802,440
	Deferred revenue, current and noncurrent			$ 1,380,295		$    917,821		$    935,266		$    915,133		$    934,941		$    694,557
Selected Balance Sheet Accounts (in thousands):
				Jan 31,		Oct 31,		Jan 31,
				2012		2011		2011
	Prepaid Expenses and Other Current Assets
	Deferred professional services costs			$      10,399		$      13,563		$      17,908
	Prepaid income taxes			12,785		13,137		720
	Prepaid expenses and other current assets			57,135		52,728		37,093
				$      80,319		$      79,428		$      55,721
	Property and Equipment, net
	Land			$    248,263		$    248,263		$    248,263
	Building improvements			43,868		34,974		10,115
	Computers, equipment and software			232,460		223,288		115,736
	Furniture and fixtures			25,250		24,622		20,462
	Leasehold improvements			137,587		125,838		100,380
				687,428		656,985		494,956
	Less accumulated depreciation and amortization			(159,482)		(152,158)		(107,782)
				$    527,946		$    504,827		$    387,174
	Capitalized Software, net
	Capitalized internal-use software development costs, net of accumulated amortization			$      41,442		$      35,475		$      29,154
	Acquired developed technology, net of accumulated amortization			146,970		163,938		98,833
				$    188,412		$    199,413		$    127,987
	Other Assets, net
	Deferred professional services costs, noncurrent portion			$        3,935		$        5,707		$      10,201
	Long-term deposits			13,941		13,887		12,114
	Purchased intangible assets, net of accumulated amortization			46,110		45,410		31,660
	Acquired intellectual property, net of accumulated amortization			15,020		13,895		5,874
	Strategic investments			53,949		55,035		27,065
	Other			22,194		22,484		17,457
				$    155,149		$    156,418		$    104,371
	Accrued Expenses and Other Current Liabilities
	Accrued compensation			$    228,466		$    145,116		$    148,275
	Accrued other liabilities			121,957		134,741		112,840
	Accrued income and other taxes payable			100,471		78,819		49,135
	Accrued professional costs			21,993		22,836		12,548
	Accrued rent			29,555		27,638		22,323
				$    502,442		$    409,150		$    345,121
Selected Off-Balance Sheet Accounts
	Unbilled Deferred Revenue, a non-GAAP measure
		Unbilled deferred revenue was approximately $2.2 billion as of January 31, 2012 and $1.5 billion as of January 31, 2011. Unbilled deferred revenue represents future billings under our non-cancelable subscription agreements that have not been invoiced and, accordingly, are not recorded in deferred revenue.
Supplemental Revenue Analysis
				Three Months Ended January 31,				Fiscal Year Ended January 31,
				2012		2011		2012		2011
Revenues by geography (in thousands):
	Americas			$    436,237		$    308,526		$ 1,540,289		$ 1,135,019
	Europe			108,141		82,933		408,456		291,784
	Asia Pacific			87,535		65,408		317,794		230,336
				$    631,913		$    456,867		$ 2,266,539		$ 1,657,139
As a percentage of total revenues:
Revenues by geography:
	Americas			69	%	68	%	68	%	68	%
	Europe			17		18		18		18
	Asia Pacific			14		14		14		14
				100	%	100	%	100	%	100	%
				Three Months Ended				Three Months Ended				Three Months Ended
				January 31, 2012				October 31, 2011				January 31, 2011
				compared to Three Months				compared to Three Months				compared to Three Months
				Ended January 31, 2011				Ended October 31, 2010				Ended January 31, 2010
Revenue constant currency growth rates (as compared to the comparable prior periods)
	Americas			41%				36%				26%
	Europe			32%				29%				41%
	Asia Pacific			28%				31%				35%
	Total growth			38%				34%				30%
We present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect at the end of each quarter for growth rate calculations presented, rather than the actual exchange rates in effect during that period.
Supplemental Diluted Sharecount Information
(in thousands)
				Three Months Ended January 31,				Fiscal Year Ended January 31,
				2012		2011		2012		2011
	Weighted-average shares outstanding for basic earnings per share			136,720		132,344		135,302		130,222
	Effect of dilutive securities (1):
	Convertible senior notes			1,700		2,421		2,263		1,561
	Warrants associated with the convertible senior note hedges			0		696		553		0
	Employee stock awards			3,407		4,738		4,177		4,815
	Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share			141,827		140,199		142,295		136,598
(1)	The effects of these dilutive securities were not included in the GAAP calculation of diluted earnings/loss per share for the three and twelve months ended January 31, 2012 because the effect would have been anti-dilutive.
Supplemental Cash Flow Information
Free cash flow analysis, a non-GAAP measure
(in thousands)
				Three Months Ended January 31,				Fiscal Year Ended January 31,
				2012		2011		2012		2011
	Operating cash flow-
	GAAP net cash provided by operating activities			$    240,347		$    165,762		$    591,507		$    459,081
	Less:
	Capital expenditures			(44,602)		(30,576)		(151,645)		(90,887)
	Free cash flow			$    195,745		$    135,186		$    439,862		$    368,194
Our free cash flow analysis includes GAAP net cash provided by operating activities less capital expenditures. The capital expenditures balance does not include any costs related to the purchase and activities related to the building of our campus and strategic investments.

salesforce.com, inc.
GAAP RESULTS RECONCILED TO NON-GAAP RESULTS
The following table reflects selected salesforce.com GAAP results reconciled to non-GAAP results
(in thousands, except per share data)
(Unaudited)
			Three Months Ended  January 31,				Fiscal Year Ended  January 31,
			2012		2011		2012		2011
	Gross profit
	GAAP gross profit		$                  495,568		$                  364,556		$               1,777,653		$               1,333,326
	Plus:
	Amortization of purchased intangibles (b)		17,132		5,721		60,069		15,459
	Stock-based expenses (c)		5,283		3,541		17,451		12,158
	Non-GAAP gross profit		$                  517,983		$                  373,818		$               1,855,173		$               1,360,943
	Operating expenses
	GAAP operating expenses		$                  501,945		$                  364,947		$               1,812,738		$               1,235,829
	Less:
	Amortization of purchased intangibles (b)		(2,751)		(1,146)		(7,250)		(4,209)
	Stock-based expenses (c)		(64,817)		(38,173)		(211,807)		(108,271)
	Non-GAAP operating expenses		$                  434,377		$                  325,628		$               1,593,681		$               1,123,349
	Income from operations
	GAAP income (loss) from operations		$                    (6,377)		$                       (391)		$                  (35,085)		$                    97,497
	Plus:
	Amortization of purchased intangibles (b)		19,883		6,867		67,319		19,668
	Stock-based expenses (c)		70,100		41,714		229,258		120,429
	Non-GAAP income from operations		$                    83,606		$                    48,190		$                  261,492		$                  237,594
	Non-operating income (a)
	GAAP non-operating income (loss)		$                    (1,158)		$                      4,770		$                      1,768		$                      6,801
	Plus:  Amortization of debt discount, net		4,144		2,430		12,335		19,079
	Non-GAAP non-operating income		$                      2,986		$                      7,200		$                    14,103		$                    25,880
	Net income attributable to salesforce.com
	GAAP net income (loss) attributable to salesforce.com		$                    (4,078)		$                    10,913		$                  (11,572)		$                    64,474
	Plus:
	Amortization of purchased intangibles		19,883		6,867		67,319		19,668
	Stock-based expenses		70,100		41,714		229,258		120,429
	Amortization of debt discount, net		4,144		2,430		12,335		19,079
	Less:
	Income tax effect of Non-GAAP items		(28,419)		(18,854)		(103,730)		(57,544)
	Non-GAAP net income attributable to salesforce.com		$                    61,630		$                    43,070		$                  193,610		$                  166,106
	Diluted earnings per share
	GAAP diluted earnings (loss) per share (d)		$                      (0.03)		$                        0.08		$                      (0.09)		$                        0.47
	Plus:
	Amortization of purchased intangibles		0.14		0.05		0.47		0.14
	Stock-based expenses		0.49		0.30		1.62		0.88
	Amortization of debt discount, net		0.03		0.01		0.09		0.14
	Less:
	Income tax effect of  Non-GAAP items		(0.20)		(0.13)		(0.73)		(0.41)
	Non-GAAP diluted earnings per share attributable to salesforce.com		$                        0.43		$                        0.31		$                        1.36		$                        1.22
	Shares used in computing diluted net income per share		141,827		140,199		142,295		136,598
a)	Non-operating income consists of investment income, interest expense and other income (expense)
b)	Amortization of purchased intangibles were as follows:
			Three Months Ended January 31,				Fiscal Year Ended January 31,
			2012		2011		2012		2011
	Cost of revenues		$                    17,132		$                      5,721		$                    60,069		$                    15,459
	Marketing and sales		2,751		1,146		7,250		4,209
			$                    19,883		$                      6,867		$                    67,319		$                    19,668
c)	Stock-based expenses were as follows:
			Three Months Ended January 31,				Fiscal Year Ended January 31,
			2012		2011		2012		2011
	Cost of revenues		$                      5,283		$                      3,541		$                    17,451		$                    12,158
	Research and development		14,670		6,778		45,894		18,897
	Marketing and sales		35,706		19,955		115,730		56,451
	General and administrative		14,441		11,440		50,183		32,923
			$                    70,100		$                    41,714		$                  229,258		$                  120,429
d)	Reported GAAP loss per share was calculated using the basic share count.
	Non-GAAP diluted earnings per share was calculated using the diluted share count.

salesforce.com, inc.
COMPUTATION OF BASIC AND DILUTED GAAP AND NON-GAAP NET INCOME (LOSS) PER SHARE
(in thousands, except per share data)
(Unaudited)
		Three Months Ended January 31,				Fiscal Year Ended January 31,
		2012		2011		2012		2011
	GAAP Basic Net Income (loss) Per Share
	Net income (loss) attributable to salesforce.com	$ (4,078)		$ 10,913		$ (11,572)		$   64,474
	Basic net income (loss) per share attributable to salesforce.com common stockholders	(0.03)		0.08		(0.09)		0.50
	Shares used in computing basic net income (loss) per share attributable to salesforce.com common stockholders	136,720		132,344		135,302		130,222
		Three Months Ended January 31,				Fiscal Year Ended January 31,
		2012		2011		2012		2011
	Non-GAAP Basic Net Income Per Share
	Non-GAAP net income attributable to salesforce.com	$ 61,630		$ 43,070		$ 193,610		$ 166,106
	Basic Non-GAAP net income per share attributable to salesforce.com common stockholders	0.45		0.33		1.43		1.28
	Shares used in computing basic net income per share attributable to salesforce.com common stockholders	136,720		132,344		135,302		130,222
		Three Months Ended January 31,				Fiscal Year Ended January 31,
		2012		2011		2012		2011
	GAAP Diluted Net Income (loss) Per Share
	Net income (loss) attributable to salesforce.com	$ (4,078)		$ 10,913		$ (11,572)		$   64,474
	Diluted net income (loss) per share attributable to salesforce.com common stockholders	(0.03)		0.08		(0.09)		0.47
	Shares used in computing diluted net income (loss) per share attributable to salesforce.com common stockholders	136,720		140,199		135,302		136,598
		Three Months Ended January 31,				Fiscal Year Ended January 31,
		2012		2011		2012		2011
	Non-GAAP Diluted Net Income Per Share
	Non-GAAP net income attributable to salesforce.com	$ 61,630		$ 43,070		$ 193,610		$ 166,106
	Diluted Non-GAAP net income per share attributable to salesforce.com common stockholders	0.43		0.31		1.36		1.22
	Shares used in computing diluted net income per share attributable to salesforce.com common stockholders	141,827		140,199		142,295		136,598