8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

February 21, 2007

Date of Report (date of earliest event reported)

SALESFORCE.COM, INC.

(Exact name of Registrant as specified in charter)

Delaware	001-32224	94-3320693
(State or other jurisdiction of incorporation)	(Commission File Number)	(I. R. S. Employer Identification No.)

The Landmark @ One Market, Suite 300

San Francisco CA 94105

(Address of principal executive offices)

Registrant’s telephone number, including area code: (415) 901-7000

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02 – Results of Operations and Financial Condition

On February 21, 2007, the Company issued a press release announcing its results for the quarter ended January 31, 2007. A copy of the press release is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated by reference herein.

The information in this current report on Form 8-K and the exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release dated February 21, 2007

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 21, 2007	salesforce.com, inc.
	/s/ David Schellhase
	David Schellhase, Senior Vice President and General Counsel

Exhibit Index

Exhibit Number	Exhibit Title
99.1	Press Release dated February 21, 2007

EX-99.1

Exhibit 99.1

David Havlek

salesforce.com

Investor Relations

415-536-2171

dhavlek@salesforce.com

Jane Hynes

salesforce.com

Public Relations

415-901-5079

jhynes@salesforce.com

Salesforce.com Announces Record Fiscal Fourth Quarter Results

• Net Paying Subscribers Rise a Record 90,000 to 646,000

• Record Revenue of $144M, up 58% year-over-year

• Net Customers Rise a Record 2,700 to 29,800

• Largest customer grows to 25,000 subscribers

• Operating Cash Flow of $38M

• Total Cash and Marketable Securities increase $41M to $413M, up $116M year over year

• Break-even GAAP EPS, at the high end of company guidance

SAN FRANCISCO, Calif. – February 21, 2007 – Salesforce.com (NYSE: CRM), the market and technology leader in on-demand business services, today announced results for its fiscal fourth quarter and full fiscal year ended January 31, 2007.

“The fourth quarter was remarkable for its strength across all business segments, products, and geographies, best demonstrated by our adding 90,000 net new subscribers, and 2,700 net new customers,” said Marc Benioff, Chairman and CEO of salesforce.com. “The fourth quarter also included our largest enterprise implementation, 25,000 subscribers—the largest on-demand CRM customer ever—demonstrating the enterprise-class scalability of our solution that is unrivaled in the industry today. In fact, we added more than a thousand net new subscribers a day during the quarter for a new grand total of approximately 646,000.”

Salesforce.com delivered the following results for the fourth quarter and full fiscal year 2007:

Revenue: Total Q4 revenue was $144.2 million, an increase of 58% on a year-over-year basis and an increase of 11% on a quarter-over-quarter basis. Subscription and support revenues were $132.1 million, an increase of 60% on a year-over-year basis and an increase of 12% on a quarter-over-quarter basis. Professional services and other revenues were $12.2 million, an increase of 41% on a year-over-year basis and an increase of 5% on a quarter-over-quarter basis.

For the full year, the company reported revenue of approximately $497.1 million, an increase of 60% from the prior year. Subscription and support revenues were $451.6 million for the year, an increase of 61%, while professional services revenue rose 56% to finish at $45.4 million.

Earnings per Share: Q4 GAAP earnings per share were break-even, including approximately $11.2 million in stock based compensation and approximately $0.5 million in amortization of purchased intangibles related to a previously announced acquisition. For the basis of Q4 GAAP EPS calculations, there was an average of 121 million diluted shares outstanding during the quarter.

For the full year, GAAP earnings per share were breakeven, including approximately $39 million in stock based compensation and approximately $1.7 million in amortization of purchased intangibles related to a previously announced acquisition. For the basis of full year GAAP EPS calculations, there was an average of 120 million diluted shares outstanding during the quarter.

Customers and Paying Subscribers: Net paying customers rose approximately 2,700 during the quarter to approximately 29,800, an increase of 45% from Q4 of the prior year, and an increase of 10% from the prior quarter. Net paying subscribers rose approximately 90,000 during Q4 to exit the quarter at approximately 646,000 total subscribers.

Cash: Cash from operations for the fiscal fourth quarter was approximately $38 million, and roughly $111 million for the full fiscal year. Total cash, cash equivalents and marketable securities finished the quarter at approximately $413 million.

Deferred Revenue: Deferred revenue on the balance sheet as of January 31, 2007 was $284 million, an increase of 68% on a year-over-year basis and 29% on a quarter-over-quarter basis.

Based on information as of February 21, 2007, salesforce.com is initiating guidance for its first quarter, fiscal year 2008. For its full fiscal year 2008, the company is affirming its revenue guidance and initiating EPS guidance.

Q1 FY08: Revenue for the company’s first fiscal quarter is projected to be in the range of approximately $155 million to approximately $157 million. GAAP diluted EPS is expected to be in the range of approximately <$0.01> to $0.01. GAAP EPS estimates include the effects of stock based compensation and the amortization of purchased intangibles. For the first fiscal quarter FY08, stock based compensation expense is expected to be approximately $11 to $13 million, and the expense associated with the amortization of purchased intangibles is now expected to be approximately $0.5 million. For the basis of Q1 GAAP EPS calculation, the company is expecting an average diluted shares count of 124 million shares, and a GAAP tax rate of 70%.

Full Year FY08: The company today is affirming the increased full year revenue outlook it provided on December 12, 2007, with revenue expected to be approximately $710 million to approximately $720 million. The company is also initiating its earnings outlook for the full year, expecting GAAP diluted EPS to be in the range of approximately $0.07 to $0.09. GAAP EPS estimates include the effects of stock based compensation and the amortization of purchased intangibles. For the full fiscal year ‘08, stock based compensation expense is expected to be approximately $60 to $70 million, and the expense associated with the amortization of purchased intangibles is currently expected to be approximately $2.2 million. For the basis of full fiscal year 2008 GAAP EPS calculation, the company is expecting an average diluted shares count of 126 million shares, and a GAAP tax rate of 60%.

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its fourth quarter fiscal 2007 results at 2:00 p.m. Pacific Standard 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 into the conference call can do so by dialing domestically 866-901-SFDC or 866-901-7332 and internationally 706-758-3772. A replay will be available at (800) 642-1687 or (706) 645-9291, passcode 8722215, until midnight (EST) March 8, 2007.

About salesforce.com

Salesforce.com is the market and technology leader in on-demand business services. The company’s Salesforce suite of on-demand applications enables customers to manage and share all of their sales, support, marketing and partner information on-demand. AppExchange, salesforce.com’s on-demand

platform, allows customers and partners to build powerful new applications quickly and easily, customize and integrate the Salesforce suite to meet their unique business needs, and distribute and sell on-demand apps at www.appexchange.com. Customers can also take advantage of Successforce, salesforce.com’s world-class training, support, consulting and best practices offerings.

As of January 31, 2007, salesforce.com manages customer information for approximately 29,800 customers and approximately 646,000 paying subscribers including Advanced Micro Devices (AMD), America Online (AOL), Avis/Budget Rent A Car (Cendant Rental Car Group), Dow Jones Newswires, Nokia, Polycom and SunTrust. 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 first fiscal quarter of 2008 and the full fiscal year 2008, our expected tax rate and anticipated shares outstanding, the achievement of which involve risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions proves 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 operating results, rate of growth and anticipated revenue run rate, errors, interruptions or delays in our service or our Web hosting, our new business model, our history of operating losses, the possibility that we will not remain profitable, breach of our security measures, the emerging market in which we operate, our relatively limited operating history, our ability to hire, retain and motivate our employees and manage our growth, competition, our ability to continue to release and gain customer acceptance of new and improved versions of our service, customer and partner acceptance of the AppExchange, successful customer deployment and utilization of our services, unanticipated changes in our effective tax rate, fluctuations in the number of shares 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 Form 10-Q for the quarter ended October 31, 2006, and our Form 10-K for the fiscal year ended January 31, 2006. These documents are available on the SEC Filings section of the Investor Information section of our 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.

Salesforce.com is a registered trademark of, and AppExchange and Successforce are trademarks of, salesforce.com, inc., San Francisco, California. Other names used 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 Jan 31,						Year Ended January 31,
	2007			2006			2007			2006
Revenues:
Subscription and support	$	132,071		$	82,425		$	451,660		$	280,639
Professional services and other		12,151			8,639			45,438			29,218
Total revenues		144,222			91,064			497,098			309,857
Cost of revenues (1):
Subscription and support		16,279			11,039			61,457			34,457
Professional services and other		17,560			10,301			57,433			34,669
Total cost of revenues		33,839			21,340			118,890			69,126
Gross profit		110,383			69,724			378,208			240,731
Operating expenses (1):
Research and development		13,331			6,956			44,614			23,330
Marketing and sales		74,582			42,503			252,935			149,598
General and administrative		24,546			15,013			84,257			47,986
Lease recovery		0			0			0			(285	)
Total operating expenses		112,459			64,472			381,806			220,629
Income (loss) from operations		(2,076	)		5,252			(3,598	)		20,102
Interest, net		4,503			2,499			14,784			7,657
Other income (expense)		1,463			(197	)		1,310			439
Income before (provision) benefit for income taxes and minority interest		3,890			7,554			12,496			28,198
(Provision) benefit for income taxes		(2,659	)		(1,330	)		(9,795	)		1,310
Income before minority interest		1,231			6,224			2,701			29,508
Minority interest in consolidated joint venture		(715	)		(267	)		(2,220	)		(1,034	)
Net income	$	516		$	5,957		$	481		$	28,474
Basic net income per share	$	0.00		$	0.05		$	0.00		$	0.27
Diluted net income per share	$	0.00		$	0.05		$	0.00		$	0.24
Shares used in computing basic net income per share		113,905			109,455			112,386			107,274
Shares used in computing diluted net income per share		121,259			120,983			120,154			118,737
(1)    Amounts include stock-based expenses, as follows:
Cost of revenues	$	1,622		$	130		$	5,522		$	575
Research and development		1,322			76			4,523			332
Marketing and sales		5,366			297			18,392			1,325
General and administrative		2,856			326			10,768			1,216
Total stock-based expenses	$	11,166		$	829		$	39,205		$	3,448

salesforce.com, inc.

Condensed Consolidated Statements of Operations

As a percentage of total revenues:

(Unaudited)

	Three Months Ended Jan 31,				Year Ended January 31,
	2007		2006		2007		2006
Revenues:
Subscription and support	92	%	91	%	91	%	91	%
Professional services and other	8		9		9		9
Total revenues	100		100		100		100
Cost of revenues:
Subscription and support	11		12		12		11
Professional services and other	12		11		12		11
Total cost of revenues	23		23		24		22
Gross profit	77		77		76		78
Operating expenses:
Research and development	9		8		9		8
Marketing and sales	52		47		51		48
General and administrative	17		16		17		16
Lease recovery	0		0		0		0
Total operating expenses	78		71		77		72
Income (loss) from operations	(1	)	6		(1	)	6
Interest, net	3		2		4		3
Other income (expense)	1		0		0		0
Income before (provision) benefit for income taxes and minority interest	3		8		3		9
(Provision) benefit for income taxes	(2	)	(1	)	(2	)	1
Income before minority interest	1		7		1		10
Minority interest in consolidated joint venture	(1	)	0		(1	)	(1	)
Net income	0	%	7	%	0	%	9	%
Stock-based expenses as a percentage of total revenues, as follows:
Cost of revenues	1	%	0	%	1	%	0	%
Research and development	1		0		1		0
Marketing and sales	4		0		4		1
General and administrative	2		1		2		0
Total stock-based expenses	8	%	1	%	8	%	1	%

salesforce.com, inc.

Condensed Consolidated Balance Sheets

(in thousands)

	January 31, 2007			January 31, 2006
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	86,608		$	99,842
Short-term marketable securities		165,816			107,723
Accounts receivable, net		128,693			76,128
Deferred commissions		22,072			13,186
Deferred income taxes		228			0
Prepaid expenses and other current assets		15,679			6,338
Total current assets		419,096			303,217
Marketable securities, noncurrent		160,088			89,227
Fixed assets, net		30,155			24,216
Deferred commissions, noncurrent		9,478			3,889
Deferred income taxes, noncurrent		20,625			10,416
Goodwill		6,705			0
Other assets		18,685			3,784
Total assets	$	664,832		$	434,749
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	8,870		$	10,212
Accrued expenses and other current liabilities		77,151			48,782
Income taxes payable		6,739			2,650
Deferred income taxes		0			3,191
Deferred revenue		284,063			169,175
Current portion of capital lease obligations		176			615
Total current liabilities		376,999			234,625
Capital lease obligations, net of current portion		6			184
Long-term lease abandonment liability and other		1,402			1,155
Minority interest		4,634			2,414
Total liabilities		383,041			238,378
Stockholders’ equity:
Common stock		115			111
Additional paid-in capital		319,496			237,010
Deferred stock-based compensation		0			(2,531	)
Accumulated other comprehensive loss		(2,187	)		(2,105	)
Accumulated deficit		(35,633	)		(36,114	)
Total stockholders’ equity		281,791			196,371
Total liabilities and stockholders’ equity	$	664,832		$	434,749

salesforce.com, inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three Months Ended Jan 31,						Year Ended January 31,
	2007			2006			2007			2006
Operating activities:
Net income	$	516		$	5,957		$	481		$	28,474
Adjustments to reconcile net income to net cash provided by operating activities:
Reversal of deferred tax valuation reserve		0			0			0			(6,769	)
Minority interest		715			267			2,220			1,034
Depreciation and amortization		3,129			1,948			10,667			6,027
Amortization of deferred commissions		6,776			4,249			23,381			14,606
Amortization of purchased intangibles		608			0			1,837			0
Lease recovery		0			0			0			(285	)
Expenses related to stock-based awards		11,166			829			39,205			3,448
Tax benefits from employee stock plans		(5,768	)		950			(16,574	)		3,662
Changes in assets and liabilities		21,017			25,140			50,007			45,696
Net cash provided by operating activities		38,159			39,340			111,224			95,893
Investing activities:
Business combination		0			0			(15,502	)		0
Purchase of subsidiary stock		(2,777	)		0			(2,777	)		0
Restricted cash		0			0			0			3,191
Changes in marketable securities		(25,042	)		(27,279	)		(128,194	)		(27,562	)
Capital expenditures		(7,625	)		(5,614	)		(22,123	)		(23,434	)
Net cash used in investing activities		(35,444	)		(32,893	)		(168,596	)		(47,805	)
Financing activities:
Proceeds from the exercise of stock options and warrants		8,042			6,084			29,082			15,735
Tax benefits from employee stock plans		5,768			0			16,574			0
Collection of notes receivables		0			0			0			727
Principal payments on capital lease obligations		(158	)		(151	)		(617	)		(614	)
Repurchase of unvested shares		(2	)		0			(12	)		(28	)
Net cash provided by financing activities		13,650			5,933			45,027			15,820
Effect of exchange rate changes		(81	)		107			(889	)		203
Net increase (decrease) in cash and cash equivalents		16,284			12,487			(13,234	)		64,111
Cash and cash equivalents, beginning of period		70,324			87,355			99,842			35,731
Cash and cash equivalents, end of period	$	86,608		$	99,842		$	86,608		$	99,842

salesforce.com, inc.

Additional Metrics

(Unaudited)

	Jan 31, 2007		Oct 31, 2006		July 31, 2006		April 30, 2006		January 31, 2006		October 31, 2005
Customer and subscriber data:
Approximate number of customers		29,800		27,100		24,800		22,700		20,500		18,700
Approximate number of paying subscriptions (1)		646,000		556,000		495,000		438,000		393,000		347,000
Full Time Equivalent Headcount		2,070		1,807		1,625		1,480		1,304		1,116
Financial data (in thousands):
Cash, cash equivalents and marketable securities	$	412,512	$	371,278	$	334,107	$	298,313	$	296,792	$	256,853
Deferred revenue	$	284,063	$	219,431	$	202,836	$	182,036	$	169,175	$	127,110

	Three Months Ended Jan 31,						Year Ended Jan 31,
	2007			2006			2007			2006
Revenues by geography (in thousands):
Americas	$	110,752		$	72,387		$	387,570		$	247,009
Europe		22,631			12,800			75,026			43,577
Asia Pacific		10,839			5,877			34,502			19,271
	$	144,222		$	91,064		$	497,098		$	309,857
As a percentage of total revenues:
Revenues by geography:
Americas		77	%		80	%		78	%		80	%
Europe		16			14			15			14
Asia Pacific		7			6			7			6
		100	%		100	%		100	%		100	%

(1) Paying subscriptions are defined as unique user accounts, purchased by customers for use by their employees and other customer-authorized users that have not been suspended for non-payment and for which we are recognizing subscription revenue.