Salesforce.com (CRM) reported second quarter EPS of 17 cents and revenue of $316.1 million, which exceeded the Zacks Consensus Estimate EPS of 15 cents and revenue of $313.0 million.

Revenue for the quarter was $316.1 million, an increase of 20.0% from $263.0 million reported in the year-ago quarter and an increase of 3.7% from $304.9 million reported in the first quarter of fiscal 2010. This exceeded the company’s guidance range of $312.0 million to $313.0 million. The increase in revenue can be attributed to better execution and a weakening of the U.S. dollar.

Subscription & support revenue of $293.4 million increased 22.0% from the year-ago quarter and 4.1% from the previous quarter. Professional services & other revenue of $22.6 million decreased 3.0% from the year-ago quarter and decreased 2.6% from the previous quarter.

Net paying customers increased by 3,900 during the quarter, bringing the total to 63,200. This was an increase of 15,500 year over year. New business in the second quarter was in line with the company’s expectations.

Global headcount at the end of the second quarter was 3,650, and the company added 46 new customers across key areas. Geographically, the Americas contributed 71.4% of total second quarter 2010 revenue, growing 20.0% year-over-year. Europe contributed 17.7%, growing 13.0% year-over-year. Asia-Pacific contributed 10.7%, growing 35.0% year-over-year.

Gross margin has marginally increased to 80.0% in the quarter versus 79.3% in the year-ago quarter and 79.7% in the previous quarter. This increase in gross margin can be attributed to a mix shift towards subscription and support revenue.? Operating margin was 9.3% in the quarter, versus 6.1% in the year-ago quarter and 9.9% in the previous quarter.

GAAP EPS includes approximately $20.9 million in stock based compensation expense and approximately $2.2 million in amortization of purchased intangibles related to previously announced acquisitions. On an adjusted basis, the EPS was 35 cents.

Salesforce.com generated $45.9 million in cash from operating activities in the second quarter of 2010 versus $98.0 million in the previous quarter. Free cash flow was approximately $27.0 million.

The company ended the quarter with $1030.4 million in cash and cash equivalents and marketable securities (both current and non-current) versus $983.8 million in the previous quarter. Salesforce.com has no long-term debt. Deferred revenue for the quarter was $549.0 million, remaining flat on a sequential basis. DSOs in the quarter were 49 days, an increase of 3 days from the previous quarter.

Management provided guidance for the third quarter. Accordingly, revenue for the third quarter is projected in the range of $323.0 million to $324.0 million, with the GAAP diluted EPS in the 15 cents to 16 cents range. The company has provided its full-year 2010 guidance, and expects revenue to increase from its previous outlook. Revenue is now expected to be approximately $1.27 billion to $1.28 billion compared to its previous outlook of $1.25 billion to $1.27 billion.

The company now expects GAAP diluted EPS to be in the range of approximately 60-61 cents, compared to its previous outlook of 59-60 cents.