Salesforce.com Announces Record Fiscal Third Quarter Results

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First Software-as-a-Service Company to Exceed $500 Million Annual Revenue Run-Rate

– Record Revenue of $130M, up 57% year-over-year

– Net Paying Subscribers Rise a Record 61,000 to 556,000

– Net Customers Rise a Record 2,300 to 27,100

– Operating Cash Flow of $30.6M

– Largest Customer Doubles Deployment to 15,000 Subscribers

– Company Raises Full Year Fiscal 2007 Guidance

– Break-even GAAP EPS

– GAAP EPS was reduced by Approximately $0.06 of Stock-Based Compensation
and Amortization of Purchased Intangibles

SAN FRANCISCO, Nov. 15 /PRNewswire-FirstCall/ — Salesforce.com

(NYSE: CRM), the market and technology leader in on-demand business services, today announced results for its fiscal third quarter ended October 31, 2006.

“We had a spectacular quarter,” said Marc Benioff, chairman and CEO, salesforce.com. “We have doubled our largest customer to 15,000 subscribers demonstrating the scalability of the on-demand model to the world’s largest companies.”

(Logo: http://www.newscom.com/cgi-bin/prnh/20050216/SFW105LOGO )

Salesforce.com delivered the following results for the third quarter of fiscal year 2007:

Revenue: Total revenue was $130 million, an increase of 57% on a
year-over-year basis and an increase of 10% on a quarter-over-quarter
basis. Subscription and support revenues were $118 million, an increase
of 59% on a year-over-year basis and an increase of 11% on a
quarter-over-quarter basis. Professional services and other revenues were
$12 million, an increase of 40% on a year-over-year basis and an increase
of 1% on a quarter-over-quarter basis.

Earnings per Share: GAAP earnings per share were break-even. This result
included approximately $10.2 million in stock-based compensation and
approximately $0.6 million in amortization of purchased intangibles
related to an acquisition. Together, these items reduced reported GAAP
EPS by approximately $0.06 per share. For the basis of GAAP EPS
calculations, there was an average of 120 million diluted shares
outstanding during the quarter.

Customers and Paying Subscribers: Customers rose approximately 2,300, a
new record, during the quarter and totaled approximately 27,100, an
increase of 45% from Q3 of the prior year, and an increase of 9% from the
prior quarter. Net paying subscribers rose approximately 61,000 during Q3
to exit the quarter at approximately 556,000 total subscribers. This
brings total net paying subscriber additions to 163,000 for the first nine
months of fiscal 2007.

Cash: Cash from operations for the fiscal third quarter was approximately
$30.6 million, an increase of 25% year-over-year. Total cash, cash
equivalents and marketable securities finished the quarter at $371
million, up 45% on a year-over-year basis.

Deferred Revenue: Deferred revenue on the balance sheet as of October 31,
2006 was $219 million, an increase of 73% on a year-over-year basis and 8%
on a quarter-over-quarter basis.

Based on information as of November 15, 2006, salesforce.com is initiating guidance for its fourth quarter and raising guidance for its full fiscal year 2007 ending January 31, 2007. Salesforce.com is also initiating full year fiscal 2008 guidance.

Q4 FY07: Revenue for the company’s fourth fiscal quarter is projected to
be in the range of approximately $140 million to approximately $142
million. GAAP diluted EPS is expected to be in the range of approximately
negative ($0.02) to break-even. GAAP EPS estimates include the effects
of stock-based compensation and the amortization of purchased intangibles.
For the fourth fiscal quarter FY07, stock-based compensation expense is
expected to be approximately $10 to $12 million, and the expense
associated with the amortization of purchased intangibles is now expected
to be approximately $0.6 million. Together, these items are expected to
reduce GAAP earnings per share by approximately $0.06 to $.07 per share.

Full Year FY07: The company today is raising its revenue outlook for its
fiscal year 2007, and now expects full year revenue of approximately $493
million to approximately $495 million. The company is also raising its
earnings outlook for the full year, and now expects GAAP diluted EPS to be
in the range of approximately negative ($0.02) to breakeven. GAAP EPS
estimates include the effects of stock-based compensation and the
amortization of purchased intangibles. For the full fiscal year ’07,
stock-based compensation expense is expected to be approximately $38 to
$40 million, and the expense associated with the amortization of purchased
intangibles is now expected to be approximately $1.8 million. Together,
these items are expected to reduce GAAP earnings per share by
approximately $0.22 to $0.23 per share.

Full Year FY08: The company today is initiating revenue guidance for its
fiscal year 2008, and now expects full year revenue of approximately $700
million to approximately $710 million. The company plans to provide its
expectations for FY08 GAAP EPS on its fourth quarter, FY07 results
conference call planned for mid-February, 2007. GAAP EPS for FY08 is
expected to be impacted by the effects of stock-based compensation and the
amortization of purchased intangibles. For the full fiscal year,
stock-based compensation expense is expected to be approximately $60 to
$70 million with an expected reduction in reported GAAP EPS of $0.32 to
$0.37. The expense associated with the amortization of purchased
intangibles is now expected to be approximately $2 million, reducing
reported GAAP EPS by approximately $0.01 for the full fiscal year ’08.

Quarterly Conference Call

Salesforce.com will host a conference call to discuss its third 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 1115764, until midnight (EST) December 1, 2006.

About salesforce.com

Salesforce.com is the market and technology leader in on-demand business services. The company’s Salesforce suite of on-demand CRM applications allows customers to manage and share all of their sales, support, marketing and partner information on-demand. Apex, the world’s first on-demand platform, enables customers, developers and partners to build powerful new on-demand applications that extend beyond CRM to deliver the benefits of multi-tenancy and The Business Web across the enterprise. All Apex components and applications can be easily shared, exchanged and installed via salesforce.com’s AppExchange directory, available at http://www.salesforce.com/appexchange . Customers can also take advantage of Successforce, salesforce.com’s world-class training, support, consulting and best practices offerings.

As of October 31, 2006, salesforce.com manages customer information for approximately 27,100 customers and approximately 556,000 paying subscribers including Advanced Micro Devices (AMD), America Online (AOL), Avis Budget Group, Inc, Dow Jones Newswires, Nokia, Polycom 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 fourth fiscal quarter of 2007, the full fiscal year 2007, the full fiscal year 2008, related items, and our revenue run rate and future revenue goals, and acceptance of the Apex platform, 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 Apex platform and 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 July 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.

NOTE: Salesforce.com is a registered trademark of, AppExchange and Successforce are trademarks of, salesforce.com, Inc., San Francisco, California. Other names used may be trademarks of their respective owners.

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