Salesforce.com F4Q09 (Qtr End 1/31/09) Earnings Call Transcript

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2009-02-26 03:09:25.0

Tags: Salesforce.com Inc., Operating Margin, Call Transcript, Earnings, Operational Accounting, Personal Finance, Finance, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions)

David Havlek

Just quickly while we're queuing your calls I'd like to remind everyone of a couple upcoming events. First, Marc will be presenting tomorrow - in fact, keynoting - at the Pacific Crest SAS Conference that's at noon Pacific Time here in San Francisco. Marc will also be presenting next Monday, the 2nd, at 11:00 a.m. Pacific Time at the Morgan Stanley Technology Conference, again here in San Francisco.

Finally, as Marc indicated, we're [inaudible] now to half day analyst day in conjunction with our next Cloudforce event in New York City on March 23rd. Following our customer event in the Morning, Marc, Graham and several other senior executives will be there to offer more details on our long-term business plan. Look for your invitation in the coming days or you can register on our website or, as always, you can contact Investor Relations.

With that, let's go ahead and take our first question.

Operator

Your first question comes from Brent Thill - Citigroup.

Brent Thill - Citigroup

Graham, if you could just comment on the mechanics on the operating cash flow being flat for the year, what's driving that? And if you could also just discuss your rationale behind the margin expansion. You mentioned over 300 basis points in the current year and it looks like you're looking for a little bit less in the next year, albeit still good growth. If you could just walk through both those, that'd be great.

Graham V. Smith

Well, sure. Obviously, the two are related. I think in terms of the operating margin expansion I think we saw good performance this year. As you know, we've slightly lowered the guidance range so there's increasing uncertainty out there and I think we have to reflect that in our revenue guidance and that obviously then impacts our operating margin, which is why I guided slightly lower than we did last year.

And that therefore sort of feeds into the operating cash equation. Clearly, we do I think a good job trying to manage cash. You see that DSOs have come down significantly in the fourth quarter, so we definitely are very focused on cash. But I think combining the small decrease in the margin expansion and also the cash taxes I talked about earlier, where we could see as much as a $25 million swing going through operating cash flow just makes me think right now I want to set that guidance at roughly flat.

 

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