Blaise Zerega says send in the clouds. If you're looking for proof that  cloud computing -- software as a service -- is for real, wait no longer than the earnings call from Salesforce.com due to start at 5 pm ET.  Listen online, as CEO Marc Benioff crows triumphant. Some of the highlights:
 
     - Record Revenue of $263 Million, up 49% Year-Over-Year
 
     - Operating Cash Flow of $53 Million, up 53% Year-Over-Year
 
     - GAAP EPS of $0.08, up 167% Year-Over-Year
 
     - Record 4,100 New Customer Additions; Total Customers Now 47,700
 
     - Total Cash and Marketable Securities Increases $326 Million
       Year-Over-Year to $823 Million
 
     - Company Announces Strategic Acquisition of InStranet, Inc. to
       Accelerate Growth in Salesforce CRM Customer Service and Support
 
     - Company Raises FY09 Revenue Guidance to $1.070 - $1.075 Billion


  Release follows below:
    SAN FRANCISCO, Aug. 20 /PRNewswire-FirstCall/ -- Salesforce.com
(NYSE: CRM), the market and technology leader in Software as a Service (SaaS) and Platform as a Service (PaaS), today announced results for its fiscal second quarter ended July 31, 2008.
    (Logo:  http://www.newscom.com/cgi-bin/prnh/20050216/SFW105LOGO)
    "By becoming the first ever Software as a Service company to achieve an annualized revenue run rate of one billion dollars, our second quarter performance is a milestone for salesforce.com, and for the cloud computing industry, " said Marc Benioff, Chairman and CEO.  "Our largest customers are increasingly becoming the best examples of what is possible using the power of our growing portfolio of Software as a Service applications and our emerging Platform as a Service."  
    Salesforce.com delivered the following results for its second quarter fiscal year 2009:
 
    Revenue: Total Q2 revenue was $263.1 million, an increase of 49% on a year-over-year basis and an increase of 6% on a quarter-over-quarter basis.   Subscription and support revenues were $239.7 million, an increase of 50% on a year-over-year basis and an increase of 6% on a quarter-over-quarter basis.  Professional services and other revenues were $23.4 million, an increase of 41% on a year-over-year basis and an increase of 5% on a quarter-over-quarter basis. 

    Earnings per Share:  Q2 GAAP diluted earnings per share were approximately $0.08, including approximately $19 million in stock based compensation and approximately $1.3 million in amortization of purchased intangibles related to previously announced acquisitions.  For the basis of Q2 GAAP EPS calculations, there was an average of approximately 126 million diluted shares outstanding during the quarter.
    Cash: Cash from operations for the fiscal second quarter was approximately $53 million, up 53% year-over-year, and seasonally down 37% from Q1.   Total cash, cash equivalents and marketable securities finished the quarter at approximately $823 million, an increase of approximately $73 million from Q1 and up approximately $326 million from July 31, 2007.
    Deferred Revenue: Deferred revenue was approximately $480 million as of July 31, 2008, an increase of 49% on a year-over-year basis and up 2% on a quarter-over-quarter basis.
    Customers Additions: During the quarter net paying customers rose approximately 4,100, a company record, to approximately 47,700.  Compared with the year ago quarter, net paying customers have grown by approximately 12,400.  
 
    InStranet Acquisition:  Earlier today, salesforce.com announced the acquisition of InStranet, the leading provider of knowledge management technology for business to consumer call centers.  The addition of this innovative technology will increase the momentum of Salesforce CRM Customer Service and Support in a growing market, which is currently estimated at $3.4 billion by Gartner (Gartner, Market Trends: CRM Software, Worldwide, 2007-2012, March 31, 2008). Salesforce.com's acquisition of InStranet closed on August 4, 2008, for approximately $31.5 million, which includes the assumption of $4.2 million in cash on InStranet's balance sheet.
 
    Guidance:  As of August 20, 2008, salesforce.com is initiating guidance for its third quarter, fiscal year 2009.  In addition, the company is updating its revenue and earnings per share guidance for its full fiscal year 2009.
 
    Q3 FY09:  Revenue for the company's third fiscal quarter is projected to be in the range of approximately $273 million to approximately $274 million. Excluding the effect of the InStranet acquisition, the company's EPS outlook is $0.08 to $0.09.  Including the effect of the InStranet acquisition, estimated at $0.02 for the third quarter, the company is issuing guidance that its GAAP fully diluted EPS will be in the range of $0.06 to $0.07.  The GAAP EPS estimate also includes the effects of stock based compensation and the amortization of purchased intangibles.  For the third fiscal quarter, stock based compensation expense is expected to be approximately $20 million, and the expense associated with amortization of purchased intangibles, including that associated with the acquisition of InStranet, is expected to be approximately $2.0 million.  For purposes of the Q3 GAAP fully diluted EPS calculation, the company is expecting an average diluted shares count of approximately 127 million shares, and a GAAP tax rate of 48%.
    Fiscal FY09: The company is raising its full year revenue guidance it provided on May 21, 2008, with revenue now expected to be in the range of approximately $1.070 billion to approximately $1.075 billion.  Excluding the effect of the InStranet acquisition the company's EPS outlook has improved to $0.34 to $0.35, from its prior guidance of $0.33 to $0.34.  Including the effect of the InStranet acquisition, estimated at $0.05 for the full year, the company is updating its fiscal FY09 GAAP fully diluted EPS guidance to be in the range of $0.29 to $0.30.  The GAAP EPS estimate includes the effects of stock based compensation and the amortization of purchased intangibles.  For the full fiscal year 2009, stock based compensation expense is expected to be approximately $83 million, and the expense associated with the amortization of purchased intangibles, including that associated with InStranet, is currently expected to be approximately $6.6 million.  For purposes of the fiscal year 2009 GAAP fully diluted EPS calculation, the company is expecting an average diluted share count of approximately 126 million shares, and a GAAP tax rate of 48%.
 
    Quarterly Conference Call
    Salesforce.com will host a conference call to discuss its second quarter fiscal 2009 results today at 2:00 p.m. PacificTime. 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 706-902-1764.  A replay will be available at (800)
642-1687 or (706) 645-9291, passcode 59172236, until midnight Eastern Time September 5, 2008.
 
    About salesforce.com
    Salesforce.com is the market and technology leader in Software as a Service (SaaS) and Platform as a Service (PaaS). The company's portfolio of SaaS applications, including its award-winning CRM, available at http://www.salesforce.com/products/, has revolutionized the ways that customers manage and share business information over the Internet.  The company's Force.com PaaS enables customers, developers and partners to build powerful on-demand applications that deliver the benefits of multi-tenancy across the enterprise. Applications built on the Force.com platform, available at http://www.force.com/, can be easily shared, exchanged and installed with a few simple clicks via salesforce.com's AppExchange marketplace available at http://www.salesforce.com/appexchange/.
    As of July 31, 2008, salesforce.com manages customer information for approximately 47,700 customers including ABN AMRO, Dow Jones Newswires, Japan Post, Kaiser Permanente, KONE, Sprint Nextel, and SunTrust Banks.  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 in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol "CRM". For more information please visit http://www.salesforce.com, or call
1-800-NO-SOFTWARE.
 
    "Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:  This press release contains forward-looking statements about expected revenue and GAAP earnings per share for the third fiscal quarter of 2009 and the full fiscal year 2009, and our expected tax rate, stock based compensation expense, amortization rate, and shares outstanding, the achievement of which involve risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our 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 our financial and operating results, rate of growth and anticipated revenue run rate; errors, interruptions or delays in our service or our Web hosting; breaches of our security measures; the financial impact the acquisition of InStranet and any future acquisitions; the nature of our business model; our ability to continue to release, and gain customer acceptance of, new and improved versions of our service; successful customer deployment and utilization of our existing and future services; competition; various financial aspects of our subscription model; the emerging market in which we operate; our ability to hire, retain and motivate our employees and manage our growth; changes in our customer base; technological developments; regulatory developments; unanticipated changes in our effective tax rate; and fluctuations in the number of shares we have outstanding, the price of such shares, foreign currency exchange rates and interest rates.
    Further information on these and other factors that could affect our 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 our Form 10-Q that will be filed for the quarter ended July 31, 2008 and our Form 10-K for the fiscal year ended January 31, 2008.  These documents are or will be  available on the SEC Filings section of the Investor Information section of our website at http://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 (c) 2008 salesforce.com, inc. All rights reserved. Salesforce and the "no software" logo are registered trademarks of salesforce.com, inc., and salesforce.com owns other registered and unregistered trademarks. 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   Six Months Ended 
                                            July 31,            July 31,
                                         2008      2007      2008      2007
   
    Revenues:
       Subscription and support        $239,720  $159,998  $465,061  $307,688
       Professional services and other   23,357    16,581    45,638    31,303
          Total revenues                263,077   176,579   510,699   338,991
   
    Cost of revenues (1):
       Subscription and support          30,668    22,375    59,378    42,559
       Professional services and other   23,423    19,037    46,011    38,020
          Total cost of revenues         54,091    41,412   105,389    80,579
   
    Gross profit                        208,986   135,167   405,310   258,412
   
    Operating expenses (1):
       Research and development          24,033    15,096    43,800    29,217
       Marketing and sales              130,774    90,216   253,478   174,141
       General and administrative        38,081    26,508    76,513    51,593
          Total operating expenses      192,888   131,820   373,791   254,951
   
    Income from operations               16,098     3,347    31,519     3,461
   
    Interest, net                         6,708     5,615    13,430    10,622
    Other income (expense)                 (840)      280    (1,603)      449
   
    Income before provision for income
     taxes and minority interest         21,966     9,242    43,346    14,532
   
    Provision for income taxes          (10,558)   (4,653)  (20,869)   (8,495)
   
    Income before minority interest      11,408     4,589    22,477     6,037
   
    Minority interest in consolidated
     joint venture                       (1,412)     (854)   (2,926)   (1,572)
   
    Net income                           $9,996    $3,735   $19,551    $4,465
   
    Basic net income per share            $0.08     $0.03     $0.16     $0.04
   
    Diluted net income per share          $0.08     $0.03     $0.16     $0.04
   
    Shares used in computing basic net
     income per share                   120,863   116,294   120,321   115,637
   
    Shares used in computing diluted 
     net income per share               125,626   121,333   125,091   120,993
   
   
    (1) Amounts include stock-based  
     expenses, as follows:
          Cost of revenues               $2,657    $1,965    $5,332    $3,739
          Research and development        2,259     1,510     4,358     2,787
          Marketing and sales             8,749     6,265    16,870    11,884
          General and administrative      5,219     3,691    10,389     7,033
   
               Total stock-based     
                expenses                $18,884   $13,431   $36,949   $25,443
 
 
 
    salesforce.com, inc.
    Condensed Consolidated Statements of Operations
   
                                           Three Months Ended Six Months Ended
                                                 July 31,          July 31,
                                               2008     2007     2008     2007
    Revenues:
        Subscription and support               91%      91%      91%      91%
        Professional services and other          9        9        9        9
            Total revenues                     100      100      100      100
   
    Cost of revenues:
        Subscription and support                12       12       12       13
        Professional services and other          9       11        9       11
            Total cost of revenues              21       23       21       24
   
    Gross profit                                79       77       79       76
   
    Operating expenses:
        Research and development                 9        9        8        9
        Marketing and sales                     50       51       50       51
        General and administrative              14       15       15       15
            Total operating expenses            73       75       73       75
   
    Income from operations                       6        2        6        1
   
    Interest, net                                2        3        2        3
    Other income (expense)                       0        0        0        0
   
    Income before provision for income   
     taxes and minority interest                 8        5        8        4
   
    Provision for income taxes                  (3)      (2)      (3)      (2)
   
    Income before minority interest              5        3        5        2
   
    Minority interest in consolidated    
     joint venture                              (1)      (1)      (1)      (1)
   
    Net income                                  4%       2%       4%       1%
   
   
    Stock-based expenses as a percentage 
     of total revenues, as follows:
            Cost of revenues                    1%       1%       1%       1%
            Research and development             1        1        1        1
            Marketing and sales                  3        4        3        4
            General and administrative           2        2        2        2
   
                 Total stock-based       
                  expenses                      7%       8%       7%       8%
 
 
 
    salesforce.com, inc.
    Condensed Consolidated Balance Sheets
    (in thousands)
                                               July 31,         January 31,
                                                2008               2008
                                              unaudited
   
    Assets
    Current assets:
       Cash and cash equivalents                $427,043          $279,095
       Short-term marketable securities          151,298           171,748
       Accounts receivable, net                  146,982           220,061
       Deferred commissions                       35,751            35,679
       Deferred income taxes                       7,906             7,173
       Prepaid expenses and other     
        current assets                            33,148            27,055
   
    Total current assets                         802,128           740,811
   
    Marketable securities, noncurrent            245,076           218,957
    Fixed assets, net                             56,643            41,380
    Deferred commissions, noncurrent              14,615            16,435
    Deferred income taxes, noncurrent             34,989            26,512
    Capitalized software, net                     24,218            23,061
    Goodwill                                       8,556             8,556
    Other assets, net                             17,318            13,881
   
    Total assets                              $1,203,543        $1,089,593
   
    Liabilities and stockholders'     
     equity
    Current liabilities:
       Accounts payable                          $14,428            $7,478
       Accrued expenses and other     
        current liabilities                      117,180           125,996
       Income taxes payable                        1,269             3,622
       Deferred revenue                          466,948           468,821
   
    Total current liabilities                    599,825           605,917
   
    Income taxes payable, noncurrent              10,289             8,465
    Long-term lease abandonment       
     liability and other                           2,986             2,136
    Deferred revenue, noncurrent                  12,598            12,073
    Minority interest                             11,869             8,943
   
    Total liabilities                            637,567           637,534
   
    Stockholders' equity:
       Common stock                                  121               119
       Additional paid-in capital                568,078           471,802
       Accumulated other comprehensive
        loss                                      (4,188)           (2,276)
       Retained earnings (deficit)                 1,965           (17,586)
   
    Total stockholders' equity                   565,976           452,059
   
    Total liabilities and stockholders'
     equity                                   $1,203,543        $1,089,593
 
 
 
    salesforce.com, inc.
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
          (Unaudited)
                                        Three Months Ended   Six Months Ended 
                                             July 31,            July 31,
                                          2008      2007      2008      2007
    Operating activities:
    Net income                           $9,996    $3,735   $19,551    $4,465
    Adjustments to reconcile net     
     income to net
    cash provided by operating       
     activities:
       Minority interest                  1,412       854     2,926     1,572
       Depreciation and amortization      8,870     6,045    17,028    10,893
       Amortization of deferred      
        commissions                      13,907     9,644    28,630    18,683
       Expenses related to stock-based
        awards                           18,884    13,431    36,949    25,443
       Excess tax benefits from       
        employee stock plans            (11,843)   (8,920)  (24,541)  (15,206)
       Changes in assets and         
        liabilities                      11,849     9,865    56,364    25,634
   
          Net cash provided by       
           operating activities          53,075    34,654   136,907    71,484
   
    Investing activities:
    Changes in marketable securities    (25,118)  (13,735)   (8,578)  (47,947)
    Capital expenditures                (13,036)  (10,104)  (37,213)  (26,061)
    
   
          Net cash provided by  
           investing activities         (38,154)  (23,839)  (45,791)  (74,008)
   
    Financing activities:
    Proceeds from the exercise of    
     stock options and warrants          22,525    15,404    34,010    23,704
    Excess tax benefits from employee
     stock plans                         11,843     8,920    24,541    15,206
    Principal payments on capital    
     lease obligations                                 (6)       (5)     (163)
   
   
          Net cash provided by       
           financing activities          34,368    24,318    58,546    38,747
   
    Effect of exchange rate changes        (794)      324    (1,714)      118
   
    Net increase in cash and
    cash equivalents                     48,495    35,457   147,948    36,341
   
    Cash and cash equivalents,       
     beginning of period                378,548    87,492   279,095    86,608
   
    Cash and cash equivalents, end of
     period                            $427,043  $122,949  $427,043  $122,949
 
 
 
    salesforce.com, inc.
    Additional Metrics
        (Unaudited)
                        Jul 31,   Apr 30,  Jan 31,   Oct 31,  Jul 31,  Apr 30,
                         2008      2008      2008     2007      2007    2007
   
    Full Time
     Equivalent     
     Headcount              3,046    2,864    2,606    2,461    2,302    2,243
   
   
    Financial data
     (in thousands):
       Cash, cash
        equivalents
        and marketable
        securities       $823,417 $750,633 $669,800 $571,003 $497,191 $448,071
        Deferred
         revenue,    
         current
         and non-current $479,546 $470,297 $480,894 $340,808 $321,852 $295,672
 
 
 
                                 Three Months Ended       Six Months Ended 
                                       July 31,                July 31,
                                   2008        2007        2008        2007
    Revenues by geography (in
     thousands):
        Americas                 $188,563    $133,343    $366,934    $257,795
        Europe                     49,356      29,160      94,520      54,734
        Asia Pacific               25,158      14,076      49,245      26,462
   
                                 $263,077    $176,579    $510,699    $338,991
   
    As a percentage of total 
     revenues:
   
    Revenues by geography:
        Americas                       72%         76%         72%         76%
        Europe                         19          16          19          16
        Asia Pacific                    9           8           9           8
   
                                      100%        100%        100%        100%
 
SOURCE  salesforce.com
    -0-                             08/20/2008
    /CONTACT:  David Havlek, Investor Relations, +1-415-536-2171, dhavlek@salesforce.com, or Jane Hynes, Public Relations, +1-415-901-5079, jhynes@salesforce.com, both of salesforce.com/
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    /Web site:  http://www.salesforce.com /
    (CRM