Sign In  |  Register  |  About Los Altos  |  Contact Us

Los Altos, CA
September 01, 2020 1:26pm
7-Day Forecast | Traffic
  • Search Hotels in Los Altos

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Salesforce Announces Strong Third Quarter Fiscal 2024 Results

Salesforce (NYSE: CRM), the #1 AI CRM, today announced results for its third quarter fiscal 2024 ended October 31, 2023.

  • Third Quarter Revenue of $8.72 Billion, up 11% Year-Over-Year ("Y/Y"), up 10% in Constant Currency ("CC")
  • Third Quarter GAAP Operating Margin of 17.2% and non-GAAP Operating Margin of 31.2%
  • Current Remaining Performance Obligation of $23.9 Billion, up 14% Y/Y, 13% CC
  • Third Quarter GAAP Diluted Earnings per Share ("EPS") of $1.25 and non-GAAP Diluted EPS of $2.11
  • Returned $1.9 Billion to Stockholders in the Third Quarter in the Form of Share Repurchases
  • Initiates Fourth Quarter FY24 Revenue Guidance of $9.18 Billion to $9.23 Billion, up 10% Y/Y
  • Narrows Full Year FY24 Revenue Guidance to $34.75 Billion to $34.8 Billion, up 11% Y/Y
  • Raises Full Year FY24 GAAP Operating Margin Guidance to 14.5% and non-GAAP Operating Margin Guidance to 30.5%
  • Raises Full Year FY24 Operating Cash Flow Growth Guidance to 30% to 33% Y/Y

“We had another strong quarter of executing on our profitable growth plan we set in motion last year, delivering $8.7 billion in revenue and again raising our operating margin guidance for this fiscal year,” said Marc Benioff, Chair and CEO, Salesforce. “We're now the third largest enterprise software company by revenue, the number one AI CRM and the number one enterprise apps company. Most importantly, we're bringing CRM, data, AI and trust together in a single, integrated platform, leading our customers into a new era of incredible productivity and growth.”

“Over the last year we have transformed the company, enabling us to deliver another quarter of strong profitable growth with GAAP operating margin of 17.2% and non-GAAP operating margin of 31.2%,” said Amy Weaver, President and CFO of Salesforce. “We remain focused on driving shareholder value as we deliver innovation to our customers as the #1 AI CRM.”

Salesforce delivered the following results for its fiscal third quarter:

Revenue: Total third quarter revenue was $8.72 billion, an increase of 11% Y/Y and 10% CC. Subscription and support revenues were $8.14 billion, an increase of 13% Y/Y. Professional services and other revenues were $0.58 billion, a decrease of (4)% Y/Y.

Operating Margin: Third quarter GAAP operating margin was 17.2%. Third quarter non-GAAP operating margin was 31.2%. Restructuring negatively impacted third quarter GAAP operating margin by (60) bps.

Earnings per Share: Third quarter GAAP diluted EPS was $1.25, and non-GAAP diluted EPS was $2.11. Losses on the Company’s strategic investments negatively impacted GAAP diluted EPS by $(0.06) based on a U.S. tax rate of 25% and non-GAAP diluted EPS by $(0.06) based on a non-GAAP tax rate of 23.5%. Restructuring negatively impacted third quarter GAAP diluted EPS by $(0.06).

Cash Flow: Cash generated from operations for the third quarter was $1.53 billion, an increase of 389% Y/Y. Free cash flow was $1.37 billion, an increase of 1088% Y/Y. Restructuring negatively impacted third quarter operating cash flow growth by (3,600) bps.

Remaining Performance Obligation: Remaining performance obligation ended the third quarter at $48.3 billion, an increase of 21% Y/Y. Current remaining performance obligation ended at $23.9 billion, an increase of 14% Y/Y, and 13% CC.

Forward Looking Guidance

As of November 29, 2023, the Company is initiating its fourth quarter GAAP and non-GAAP diluted EPS guidance, current remaining performance obligation growth guidance, and revenue guidance. The Company is updating its full year FY24 revenue guidance and raising its GAAP and non-GAAP diluted EPS guidance, GAAP and non-GAAP operating margin guidance, and operating cash flow growth guidance.

Our guidance assumes no change to the value of the Company's strategic investment portfolio as it is not possible to forecast future gains and losses. In addition, the guidance below is based on estimated GAAP tax rates that reflect the Company’s currently available information, and excludes forecasted discrete tax items such as excess tax benefits from stock-based compensation. The GAAP tax rates may fluctuate due to discrete tax items and related effects in conjunction with certain provisions in the Tax Cuts and Jobs Act, future acquisitions or other transactions.

 

Q4 FY24

Guidance

 

Full Year FY24

Guidance

Revenue

$9.18 - $9.23 Billion

 

$34.75 - $34.8 Billion

Y/Y Growth

10%

 

11%

FX Impact(1)

No impact

 

($50M) Y/Y FX

GAAP Operating Margin

N/A

 

14.5%

Non-GAAP Operating Margin(2)

N/A

 

30.5%

GAAP Diluted Earnings per Share(2)

$1.26 - $1.27

 

$3.99 - $4.00

Non-GAAP Diluted Earnings per Share(2)

$2.25 - $2.26

 

$8.18 - $8.19

Operating Cash Flow Growth (Y/Y)(3)

N/A

 

30% - 33%

Current Remaining Performance Obligation Growth (Y/Y)

10%

 

N/A

FX Impact(4)

(~1 pt)

 

N/A

(1) Revenue FX impact is calculated by taking the current period rates compared to the prior period average rates.

(2) Non-GAAP operating margin and non-GAAP EPS are non-GAAP financial measures. See below for an explanation of non-GAAP financial measures. The Company's shares used in computing GAAP Diluted EPS guidance and non-GAAP Diluted EPS guidance excludes any impact to share count from potential Q4 FY24 repurchase activity under our share repurchase program.

(3) Operating Cash Flow Growth guidance includes an estimated 14% - 16% headwind from charges associated with our restructuring plan announced on January 4, 2023 (the "Restructuring Plan").

(4) Current Remaining Performance Obligation FX impact is calculated by taking the current period rates compared to the prior period ending rates.

The following is a reconciliation of GAAP operating margin guidance to non-GAAP operating margin guidance for the full year:

 

 

Full Year FY24

Guidance

GAAP operating margin(1)

 

~14.5%

Plus

 

 

Amortization of purchased intangibles(2)

 

5.4%

Stock-based compensation expense(2)(3)

 

8.0%

Restructuring(2)(3)

 

2.6%

Non-GAAP operating margin(1)

 

~30.5%

(1) GAAP operating margin is the proportion of GAAP income from operations as a percentage of GAAP revenue. Non-GAAP operating margin is the proportion of non-GAAP income from operations as a percentage of GAAP revenue.

(2) The percentages shown above have been calculated based on the midpoint of the low and high ends of the revenue guidance for full year FY24.

(3) The percentages shown in the restructuring line have been calculated based on charges associated with the Restructuring Plan. Stock-based compensation expense included in the full year FY24 guidance GAAP to non-GAAP reconciliation table excludes stock-based compensation expense related to the Restructuring Plan, which is included in the restructuring line.

The following is a per share reconciliation of GAAP diluted EPS to non-GAAP diluted EPS guidance for the next quarter and the full year:

 

Fiscal 2024

 

Q4

 

 

FY24

 

GAAP diluted earnings per share range(1)(2)

$1.26 - $1.27

 

 

$3.99 - $4.00

 

Plus

 

 

 

 

 

Amortization of purchased intangibles

$

0.47

 

 

$

1.90

 

Stock-based compensation expense

$

0.69

 

 

$

2.82

 

Restructuring(3)

$

0.09

 

 

$

0.91

 

Less

 

 

 

 

 

Income tax effects and adjustments(4)

$

(0.26

)

 

$

(1.44

)

Non-GAAP diluted earnings per share(2)

$2.25 - $2.26

 

 

$8.18 - $8.19

 

Shares used in computing basic net income per share (millions)(5)

 

973

 

 

 

975

 

Shares used in computing diluted net income per share (millions)(5)

 

984

 

 

 

985

 

(1) The Company's GAAP tax provision is expected to be approximately 26% for the three months ended January 31, 2024, and approximately 21% for the year ended January 31, 2024. The GAAP tax rates may fluctuate due to discrete tax items and related effects in conjunction with certain provisions in the Tax Cuts and Jobs Act, future acquisitions or other transactions.

(2) The Company's projected GAAP and non-GAAP diluted EPS assumes no change to the value of our strategic investment portfolio as it is not possible to forecast future gains and losses. The impact of future gains or losses from the Company’s strategic investment portfolio could be material.

(3) The estimated impact to GAAP diluted EPS is in connection with the Restructuring Plan.

(4) The Company’s non-GAAP tax provision uses a long-term projected tax rate of 23.5%, which reflects currently available information and could be subject to change.

(5) The Company's shares used in computing GAAP EPS guidance and non-GAAP EPS guidance excludes any impact to share count from Q4 FY24 repurchase activity under our share repurchase program.

 

For additional information regarding non-GAAP financial measures see the reconciliation of results and related explanations below.

Management will provide further commentary around these guidance assumptions on its earnings call.

Product Releases and Enhancements

Three times a year Salesforce delivers new product releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments made over multiple years, designed to help customers drive cost savings, boost efficiency, and build trust.

To view our major product releases and other highlights as part of the Winter 2024 Product Release, visit: www.salesforce.com/products/innovation/winter-24-release.

Quarterly Conference Call

Salesforce plans to host a conference call at 2:00 p.m. (PT) / 5:00 p.m. (ET) to discuss its financial results with the investment community. A live webcast and replay details of the event will be available on the Salesforce Investor Relations website at www.salesforce.com/investor.

About Salesforce

Salesforce empowers companies of every size and industry to connect with their customers through the power of AI + data + CRM. For more information about Salesforce (NYSE: CRM), visit: www.salesforce.com.

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about the Company's financial and operating results and guidance, which include, but are not limited to, expected GAAP and non-GAAP financial and other operating and non-operating results, including revenue, net income, earnings per share, operating cash flow growth, operating margin, expected revenue growth, expected foreign currency exchange rate impact, expected current remaining performance obligation growth, expected tax rates or provisions, stock-based compensation expenses, amortization of purchased intangibles, shares outstanding, market growth, strategic investments, expected restructuring expense or charges, and expected timing of product releases and enhancements. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company’s results or outcomes could differ materially from those expressed or implied by the forward-looking statements it makes.

The risks and uncertainties referred to above include -- but are not limited to -- risks associated with: our ability to maintain security levels and service performance that meet the expectations of our customers, and the resources and costs required to avoid unanticipated downtime and prevent, detect and remediate performance degradation and security breaches; the expenses associated with our data centers and third-party infrastructure providers; our ability to secure additional data center capacity; our reliance on third-party hardware, software and platform providers; uncertainties regarding AI technologies and its integration into our product offerings; the effect of evolving domestic and foreign government regulations, including those related to the provision of services on the Internet, those related to accessing the Internet, and those addressing data privacy, cybersecurity, cross-border data transfers and import and export controls; current and potential litigation involving us or our industry, including litigation involving acquired entities, and the resolution or settlement thereof; regulatory developments and regulatory investigations involving us or affecting our industry; our ability to successfully introduce new services and product features, including any efforts to expand our services; the success of our strategy of acquiring or making investments in complementary businesses, joint ventures, services, technologies and intellectual property rights; our ability to complete, on a timely basis or at all, announced transactions; our ability to realize the benefits from acquisitions, strategic partnerships, joint ventures and investments, and successfully integrate acquired businesses and technologies; our ability to compete in the markets in which we participate; the success of our business strategy and our plan to build our business, including our strategy to be a leading provider of enterprise cloud computing applications and platforms; our ability to execute our business plans; our ability to continue to grow unearned revenue and remaining performance obligation; the pace of change and innovation in enterprise cloud computing services; the seasonal nature of our sales cycles; our ability to limit customer attrition and costs related to those efforts; the success of our international expansion strategy; the demands on our personnel and infrastructure resulting from significant growth in our customer base and operations, including as a result of acquisitions; our ability to preserve our workplace culture, including as a result of our decisions regarding our current and future office environments or remote work policies; our dependency on the development and maintenance of the infrastructure of the Internet; our real estate and office facilities strategy and related costs and uncertainties; fluctuations in, and our ability to predict, our operating results and cash flows; the variability in our results arising from the accounting for term license revenue products; the performance and fair value of our investments in complementary businesses through our strategic investment portfolio; the impact of future gains or losses from our strategic investment portfolio, including gains or losses from overall market conditions that may affect the publicly traded companies within our strategic investment portfolio; our ability to protect our intellectual property rights; our ability to maintain and enhance our brands; the impact of foreign currency exchange rate and interest rate fluctuations on our results; the valuation of our deferred tax assets and the release of related valuation allowances; the potential availability of additional tax assets in the future; the impact of new accounting pronouncements and tax laws; uncertainties affecting our ability to estimate our tax rate; uncertainties regarding our tax obligations in connection with potential jurisdictional transfers of intellectual property, including the tax rate, the timing of transfers and the value of such transferred intellectual property; uncertainties regarding the effect of general economic, business and market conditions, including inflationary pressures, general economic downturn or recession, market volatility, increasing interest rates, changes in monetary policy and the prospect of a shutdown of the U.S. federal government; the potential impact of financial institution instability; the impact of geopolitical events, including the war in Ukraine and the Israel-Hamas war; uncertainties regarding the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; our ability to execute our share repurchase program; our ability to comply with our debt covenants and lease obligations; the impact of climate change, natural disasters and actual or threatened public health emergencies; expected benefits of and timing of completion of the restructuring plan and the expected costs and charges of the restructuring plan, including, among other things, the risk that the restructuring costs and charges may be greater than we anticipate, our restructuring efforts may adversely affect our internal programs and ability to recruit and retain skilled and motivated personnel, our restructuring efforts may be distracting to employees and management, our restructuring efforts may negatively impact our business operations and reputation with or ability to serve customers, and our restructuring efforts may not generate their intended benefits to the extent or as quickly as anticipated; and our ability to achieve our aspirations, goals and projections related to our environmental, social and governance (“ESG”) initiatives, including our ability to comply with evolving legal standards and federal and state regulations concerning ESG matters.

Further information on these and other factors that could affect the Company’s actual results or outcomes is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings it makes with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Financials section of the Company’s website at http://investor.salesforce.com/financials/.

Salesforce, Inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

© 2023 Salesforce, Inc. All rights reserved. Salesforce and other marks are trademarks of Salesforce, Inc. Other brands featured herein may be trademarks of their respective owners.

 

Salesforce, Inc.

Condensed Consolidated Statements of Operations

(in millions, except per share data)

(Unaudited)

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

Subscription and support

$

8,141

 

 

$

7,233

 

 

$

23,789

 

 

$

21,232

 

Professional services and other

 

579

 

 

 

604

 

 

 

1,781

 

 

 

1,736

 

Total revenues

 

8,720

 

 

 

7,837

 

 

 

25,570

 

 

 

22,968

 

Cost of revenues (1)(2):

 

 

 

 

 

 

 

Subscription and support

 

1,571

 

 

 

1,451

 

 

 

4,596

 

 

 

4,381

 

Professional services and other

 

584

 

 

 

637

 

 

 

1,797

 

 

 

1,879

 

Total cost of revenues

 

2,155

 

 

 

2,088

 

 

 

6,393

 

 

 

6,260

 

Gross profit

 

6,565

 

 

 

5,749

 

 

 

19,177

 

 

 

16,708

 

Operating expenses (1)(2):

 

 

 

 

 

 

 

Research and development

 

1,204

 

 

 

1,280

 

 

 

3,631

 

 

 

3,927

 

Marketing and sales

 

3,173

 

 

 

3,345

 

 

 

9,440

 

 

 

10,141

 

General and administrative

 

632

 

 

 

664

 

 

 

1,902

 

 

 

1,967

 

Restructuring (3)

 

55

 

 

 

0

 

 

 

815

 

 

 

0

 

Total operating expenses

 

5,064

 

 

 

5,289

 

 

 

15,788

 

 

 

16,035

 

Income from operations

 

1,501

 

 

 

460

 

 

 

3,389

 

 

 

673

 

Gains (losses) on strategic investments, net

 

(72

)

 

 

23

 

 

 

(242

)

 

 

75

 

Other income (expense)

 

58

 

 

 

(8

)

 

 

158

 

 

 

(121

)

Income before provision for income taxes

 

1,487

 

 

 

475

 

 

 

3,305

 

 

 

627

 

Provision for income taxes

 

(263

)

 

 

(265

)

 

 

(615

)

 

 

(321

)

Net income

$

1,224

 

 

$

210

 

 

$

2,690

 

 

$

306

 

Basic net income per share

$

1.26

 

 

$

0.21

 

 

$

2.76

 

 

$

0.31

 

Diluted net income per share

$

1.25

 

 

$

0.21

 

 

$

2.73

 

 

$

0.31

 

Shares used in computing basic net income per share

 

972

 

 

 

997

 

 

 

976

 

 

 

995

 

Shares used in computing diluted net income per share

 

981

 

 

 

1,000

 

 

 

985

 

 

 

1,001

 

 

(1) Amounts include amortization of intangible assets acquired through business combinations, as follows:

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cost of revenues

$

245

 

 

$

250

 

 

$

743

 

 

$

785

 

Marketing and sales

 

223

 

 

 

224

 

 

 

668

 

 

 

693

 

 

(2) Amounts include stock-based compensation expense, as follows:

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cost of revenues

$

109

 

 

$

130

 

 

$

324

 

 

$

372

 

Research and development

 

238

 

 

 

287

 

 

 

735

 

 

 

863

 

Marketing and sales

 

275

 

 

 

330

 

 

 

815

 

 

 

947

 

General and administrative

 

71

 

 

 

96

 

 

 

223

 

 

 

288

 

Restructuring

 

0

 

 

 

0

 

 

 

16

 

 

 

0

 

(3) In January 2023, the Company announced a restructuring plan (the "Restructuring Plan”) intended to reduce operating costs, improve operating margins, and continue advancing the Company's ongoing commitment to profitable growth. The Restructuring Plan includes a reduction of the Company's workforce and select real estate exits and office space reductions within certain markets.

Salesforce, Inc.

Condensed Consolidated Statements of Operations

(As a percentage of total revenues)

(Unaudited)

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Revenues:

 

 

 

 

 

 

 

Subscription and support

93

%

 

92

%

 

93

%

 

92

%

Professional services and other

7

 

 

8

 

 

7

 

 

8

 

Total revenues

100

 

 

100

 

 

100

 

 

100

 

Cost of revenues (1)(2):

 

 

 

 

 

 

 

Subscription and support

18

 

 

19

 

 

18

 

 

19

 

Professional services and other

7

 

 

8

 

 

7

 

 

8

 

Total cost of revenues

25

 

 

27

 

 

25

 

 

27

 

Gross profit

75

 

 

73

 

 

75

 

 

73

 

Operating expenses (1)(2):

 

 

 

 

 

 

 

Research and development

14

 

 

16

 

 

14

 

 

17

 

Marketing and sales

36

 

 

43

 

 

37

 

 

44

 

General and administrative

7

 

 

8

 

 

8

 

 

9

 

Restructuring

1

 

 

0

 

 

3

 

 

0

 

Total operating expenses

58

 

 

67

 

 

62

 

 

70

 

Income from operations

17

 

 

6

 

 

13

 

 

3

 

Gains (losses) on strategic investments, net

(1

)

 

0

 

 

(1

)

 

0

 

Other income (expense)

1

 

 

0

 

 

1

 

 

0

 

Income before provision for income taxes

17

 

 

6

 

 

13

 

 

3

 

Provision for income taxes

(3

)

 

(3

)

 

(2

)

 

(2

)

Net income

14

%

 

3

%

 

11

%

 

1

%

 

(1) Amounts include amortization of intangible assets acquired through business combinations as a percentage of total revenues, as follows:

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Cost of revenues

3

%

 

3

%

 

3

%

 

3

%

Marketing and sales

2

 

 

3

 

 

3

 

 

3

 

 
(2) Amounts include stock-based compensation expense as a percentage of total revenues, as follows:

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Cost of revenues

1

%

 

2

%

 

1

%

 

2

%

Research and development

3

 

 

4

 

 

3

 

 

4

 

Marketing and sales

3

 

 

4

 

 

3

 

 

4

 

General and administrative

1

 

 

1

 

 

1

 

 

1

 

Restructuring

0

 

 

0

 

 

0

 

 

0

 

 

Salesforce, Inc.

Condensed Consolidated Balance Sheets

(in millions)

 

 

October 31, 2023

 

January 31, 2023

Assets

(unaudited)

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

6,453

 

 

$

7,016

 

Marketable securities

 

5,410

 

 

 

5,492

 

Accounts receivable, net

 

4,850

 

 

 

10,755

 

Costs capitalized to obtain revenue contracts, net

 

1,757

 

 

 

1,776

 

Prepaid expenses and other current assets

 

1,732

 

 

 

1,356

 

Total current assets

 

20,202

 

 

 

26,395

 

Property and equipment, net

 

3,807

 

 

 

3,702

 

Operating lease right-of-use assets, net

 

2,518

 

 

 

2,890

 

Noncurrent costs capitalized to obtain revenue contracts, net

 

2,194

 

 

 

2,697

 

Strategic investments

 

4,774

 

 

 

4,672

 

Goodwill

 

48,614

 

 

 

48,568

 

Intangible assets acquired through business combinations, net

 

5,737

 

 

 

7,125

 

Deferred tax assets and other assets, net

 

3,176

 

 

 

2,800

 

Total assets

$

91,022

 

 

$

98,849

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable, accrued expenses and other liabilities

$

5,308

 

 

$

6,743

 

Operating lease liabilities, current

 

523

 

 

 

590

 

Unearned revenue

 

12,564

 

 

 

17,376

 

Debt, current

 

999

 

 

 

1,182

 

Total current liabilities

 

19,394

 

 

 

25,891

 

Noncurrent debt

 

8,426

 

 

 

9,419

 

Noncurrent operating lease liabilities

 

2,764

 

 

 

2,897

 

Other noncurrent liabilities

 

2,348

 

 

 

2,283

 

Total liabilities

 

32,932

 

 

 

40,490

 

Stockholders’ equity:

 

 

 

Common stock

 

1

 

 

 

1

 

Treasury stock, at cost

 

(10,004

)

 

 

(4,000

)

Additional paid-in capital

 

58,149

 

 

 

55,047

 

Accumulated other comprehensive loss

 

(331

)

 

 

(274

)

Retained earnings

 

10,275

 

 

 

7,585

 

Total stockholders’ equity

 

58,090

 

 

 

58,359

 

Total liabilities and stockholders’ equity

$

91,022

 

 

$

98,849

 

 

Salesforce, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(Unaudited)

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Operating activities:

 

 

 

 

 

 

 

Net income

$

1,224

 

 

$

210

 

 

$

2,690

 

 

$

306

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization (1)

 

862

 

 

 

941

 

 

 

3,006

 

 

 

2,754

 

Amortization of costs capitalized to obtain revenue contracts, net

 

482

 

 

 

423

 

 

 

1,428

 

 

 

1,225

 

Stock-based compensation expense

 

693

 

 

 

843

 

 

 

2,113

 

 

 

2,470

 

(Gains) losses on strategic investments, net

 

72

 

 

 

(23

)

 

 

242

 

 

 

(75

)

Changes in assets and liabilities, net of business combinations:

 

 

 

 

 

 

 

Accounts receivable, net

 

550

 

 

 

471

 

 

 

5,905

 

 

 

5,486

 

Costs capitalized to obtain revenue contracts, net

 

(300

)

 

 

(375

)

 

 

(906

)

 

 

(1,279

)

Prepaid expenses and other current assets and other assets

 

(407

)

 

 

(63

)

 

 

(750

)

 

 

(359

)

Accounts payable and accrued expenses and other liabilities

 

172

 

 

 

(309

)

 

 

(1,607

)

 

 

(1,205

)

Operating lease liabilities

 

(139

)

 

 

(173

)

 

 

(474

)

 

 

(561

)

Unearned revenue

 

(1,677

)

 

 

(1,632

)

 

 

(4,816

)

 

 

(4,439

)

Net cash provided by operating activities

 

1,532

 

 

 

313

 

 

 

6,831

 

 

 

4,323

 

Investing activities:

 

 

 

 

 

 

 

Business combinations, net of cash acquired

 

(82

)

 

 

0

 

 

 

(82

)

 

 

(439

)

Purchases of strategic investments

 

(103

)

 

 

(44

)

 

 

(390

)

 

 

(475

)

Sales of strategic investments

 

80

 

 

 

98

 

 

 

102

 

 

 

181

 

Purchases of marketable securities

 

(661

)

 

 

(408

)

 

 

(2,827

)

 

 

(4,132

)

Sales of marketable securities

 

315

 

 

 

500

 

 

 

1,117

 

 

 

1,392

 

Maturities of marketable securities

 

563

 

 

 

585

 

 

 

1,810

 

 

 

1,752

 

Capital expenditures

 

(166

)

 

 

(198

)

 

 

(589

)

 

 

(580

)

Net cash provided by (used in) investing activities

 

(54

)

 

 

533

 

 

 

(859

)

 

 

(2,301

)

Financing activities:

 

 

 

 

 

 

 

Repurchases of common stock

 

(1,925

)

 

 

(1,677

)

 

 

(5,928

)

 

 

(1,677

)

Proceeds from employee stock plans

 

274

 

 

 

233

 

 

 

1,085

 

 

 

688

 

Principal payments on financing obligations

 

(114

)

 

 

(233

)

 

 

(506

)

 

 

(349

)

Repayments of debt

 

0

 

 

 

(1

)

 

 

(1,182

)

 

 

(3

)

Net cash used in financing activities

 

(1,765

)

 

 

(1,678

)

 

 

(6,531

)

 

 

(1,341

)

Effect of exchange rate changes

 

(32

)

 

 

(23

)

 

 

(4

)

 

 

(69

)

Net increase (decrease) in cash and cash equivalents

 

(319

)

 

 

(855

)

 

 

(563

)

 

 

612

 

Cash and cash equivalents, beginning of period

 

6,772

 

 

 

6,931

 

 

 

7,016

 

 

 

5,464

 

Cash and cash equivalents, end of period

$

6,453

 

 

$

6,076

 

 

$

6,453

 

 

$

6,076

 

(1) Includes amortization of intangible assets acquired through business combinations, depreciation of fixed assets and amortization and impairment of right-of-use assets.

Salesforce, Inc.

Additional Metrics

(Unaudited)

 

 

October 31,

2023

 

July 31,

2023

 

April 30,

2023

 

January 31,

2023

 

October 31,

2022

Full time equivalent headcount

70,843

 

70,456

 

72,970

 

79,390

 

79,824

 

Supplemental Revenue Analysis

Remaining Performance Obligation

Remaining performance obligation ("RPO") represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. RPO is influenced by several factors, including seasonality, the timing of renewals, the timing of software license deliveries, average contract terms and foreign currency exchange rates. Remaining performance obligation is also impacted by acquisitions. Unbilled portions of RPO denominated in foreign currencies are revalued each period based on the period end exchange rates. The portion of RPO that is unbilled is not recorded on the consolidated balance sheets.

RPO consisted of the following (in billions):

 

Current

 

Noncurrent

 

Total

As of October 31, 2023

$

23.9

 

$

24.4

 

$

48.3

As of July 31, 2023

 

24.1

 

 

22.5

 

 

46.6

As of April 30, 2023

 

24.1

 

 

22.6

 

 

46.7

As of January 31, 2023

 

24.6

 

 

24.0

 

 

48.6

As of October 31, 2022

 

20.9

 

 

19.1

 

 

40.0

Unearned Revenue

Unearned revenue represents amounts that have been invoiced in advance of revenue recognition and is recognized as revenue when transfer of control to customers has occurred or services have been provided. The change in unearned revenue was as follows (in millions):

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Unearned revenue, beginning of period

$

14,237

 

 

$

12,825

 

 

$

17,376

 

 

$

15,628

 

Billings and other (1)

 

6,876

 

 

 

6,142

 

 

 

20,536

 

 

 

18,354

 

Contribution from contract asset

 

167

 

 

 

63

 

 

 

218

 

 

 

175

 

Revenue recognized over time

 

(8,249

)

 

 

(7,473

)

 

 

(24,264

)

 

 

(21,865

)

Revenue recognized at a point in time

 

(471

)

 

 

(364

)

 

 

(1,306

)

 

 

(1,103

)

Unearned revenue from business combinations

 

4

 

 

 

0

 

 

 

4

 

 

 

4

 

Unearned revenue, end of period

$

12,564

 

 

$

11,193

 

 

$

12,564

 

 

$

11,193

 

(1) Other includes, for example, the impact of foreign currency translation.

Disaggregation of Revenue

Subscription and Support Revenue by the Company's service offerings

Subscription and support revenues consisted of the following (in millions):

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Sales

$

1,906

 

$

1,717

 

$

5,611

 

$

5,044

Service

 

2,074

 

 

1,856

 

 

6,087

 

 

5,445

Platform and Other

 

1,686

 

 

1,513

 

 

4,891

 

 

4,410

Marketing and Commerce

 

1,230

 

 

1,129

 

 

3,638

 

 

3,339

Data (1)

 

1,245

 

 

1,018

 

 

3,562

 

 

2,994

 

$

8,141

 

$

7,233

 

$

23,789

 

$

21,232

(1) Data is comprised of revenue from Analytics, which includes Tableau, and Integration, which includes Mulesoft.

Total Revenue by Geographic Locations

Revenues by geographical region consisted of the following (in millions):

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Americas

$

5,862

 

$

5,361

 

$

17,113

 

$

15,593

Europe

 

1,998

 

 

1,745

 

 

5,923

 

 

5,228

Asia Pacific

 

860

 

 

731

 

 

2,534

 

 

2,147

 

$

8,720

 

$

7,837

 

$

25,570

 

$

22,968

Constant Currency Growth Rates

Subscription and support revenues constant currency growth rates by the Company's service offerings were as follows:

 

Three Months Ended

October 31, 2023

Compared to Three Months

Ended October 31, 2022

 

Three Months Ended

July 31, 2023

Compared to Three Months

Ended July 31, 2022

 

Three Months Ended

October 31, 2022

Compared to Three Months

Ended October 31, 2021

Sales

10%

 

12%

 

17%

Service

11%

 

12%

 

16%

Platform and Other

11%

 

11%

 

22%

Marketing and Commerce

8%

 

10%

 

18%

Data (1)

22%

 

16%

 

16%

(1) Data is comprised of revenue from Analytics, which includes Tableau, and Integration, which includes Mulesoft.

Revenue constant currency growth rates by geographical region were as follows:

 

Three Months Ended

October 31, 2023

Compared to Three Months

Ended October 31, 2022

 

Three Months Ended

July 31, 2023

Compared to Three Months

Ended July 31, 2022

 

Three Months Ended

October 31, 2022

Compared to Three Months

Ended October 31, 2021

Americas

9%

 

10%

 

16%

Europe

10%

 

11%

 

23%

Asia Pacific

21%

 

24%

 

30%

Total growth

10%

 

11%

 

19%

Current remaining performance obligation constant currency growth rates were as follows:

 

October 31, 2023

Compared to

October 31, 2022

 

July 31, 2023

Compared to

July 31, 2022

 

October 31, 2022

Compared to

October 31, 2021

Total growth

13%

 

11%

 

15%

 

Salesforce, Inc.

GAAP Results Reconciled to non-GAAP Results

The following tables reflect selected GAAP results reconciled to non-GAAP results.

(in millions, except per share data)

(Unaudited)

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Non-GAAP income from operations

 

 

 

 

 

 

 

GAAP income from operations

$

1,501

 

 

$

460

 

 

$

3,389

 

 

$

673

 

Plus:

 

 

 

 

 

 

 

Amortization of purchased intangibles (1)

 

468

 

 

 

474

 

 

 

1,411

 

 

 

1,478

 

Stock-based compensation expense (2)(3)

 

693

 

 

 

843

 

 

 

2,097

 

 

 

2,470

 

Restructuring

 

55

 

 

 

0

 

 

 

815

 

 

 

0

 

Non-GAAP income from operations

$

2,717

 

 

$

1,777

 

 

$

7,712

 

 

$

4,621

 

Non-GAAP operating margin as a percentage of revenues

 

 

 

 

 

 

 

Total revenues

$

8,720

 

 

$

7,837

 

 

$

25,570

 

 

$

22,968

 

GAAP operating margin (4)

 

17.2

%

 

 

5.9

%

 

 

13.3

%

 

 

2.9

%

Non-GAAP operating margin (4)

 

31.2

%

 

 

22.7

%

 

 

30.2

%

 

 

20.1

%

Non-GAAP net income

 

 

 

 

 

 

 

GAAP net income

$

1,224

 

 

$

210

 

 

$

2,690

 

 

$

306

 

Plus:

 

 

 

 

 

 

 

Amortization of purchased intangibles (1)

 

468

 

 

 

474

 

 

 

1,411

 

 

 

1,478

 

Stock-based compensation expense (2)(3)

 

693

 

 

 

843

 

 

 

2,097

 

 

 

2,470

 

Restructuring

 

55

 

 

 

0

 

 

 

815

 

 

 

0

 

Income tax effects and adjustments

 

(372

)

 

 

(129

)

 

 

(1,177

)

 

 

(686

)

Non-GAAP net income

$

2,068

 

 

$

1,398

 

 

$

5,836

 

 

$

3,568

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Non-GAAP diluted net income per share

 

 

 

 

 

 

 

GAAP diluted net income per share

$

1.25

 

 

$

0.21

 

 

$

2.73

 

 

$

0.31

 

Plus:

 

 

 

 

 

 

 

Amortization of purchased intangibles

 

0.48

 

 

 

0.47

 

 

 

1.43

 

 

 

1.48

 

Stock-based compensation expense

 

0.71

 

 

 

0.84

 

 

 

2.13

 

 

 

2.47

 

Restructuring

 

0.06

 

 

 

0.00

 

 

 

0.83

 

 

 

0.00

 

Income tax effects and adjustments

 

(0.39

)

 

 

(0.12

)

 

 

(1.19

)

 

 

(0.70

)

Non-GAAP diluted net income per share

$

2.11

 

 

$

1.40

 

 

$

5.93

 

 

$

3.56

 

Shares used in computing Non-GAAP diluted net income per share

 

981

 

 

 

1,000

 

 

 

985

 

 

 

1,001

 

(1) Amortization of purchased intangibles was as follows:

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Cost of revenues

$

245

 

$

250

 

$

743

 

$

785

Marketing and sales

 

223

 

 

224

 

 

668

 

 

693

 

$

468

 

$

474

 

$

1,411

 

$

1,478

(2) Stock-based compensation expense, excluding stock-based compensation expense related to restructuring, was as follows:

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Cost of revenues

$

109

 

$

130

 

$

324

 

$

372

Research and development

 

238

 

 

287

 

 

735

 

 

863

Marketing and sales

 

275

 

 

330

 

 

815

 

 

947

General and administrative

 

71

 

 

96

 

 

223

 

 

288

 

$

693

 

$

843

 

$

2,097

 

$

2,470

(3) Stock-based compensation expense included in the GAAP to non-GAAP reconciliation tables above for the nine months ended October 31, 2023 excludes stock-based compensation expense related to the Restructuring Plan of $16 million, which is included in the Restructuring line.

 

(4) GAAP operating margin is the proportion of GAAP income from operations as a percentage of GAAP revenue. Non-GAAP operating margin is the proportion of non-GAAP income from operations as a percentage of GAAP revenue. Non-GAAP income from operations excludes the impact of the amortization of purchased intangibles, stock-based compensation expense and charges related to the Restructuring Plan.

Salesforce, Inc.

Computation of Basic and Diluted GAAP and non-GAAP Net Income Per Share

(in millions, except per share data)

(Unaudited)

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

GAAP Basic Net Income Per Share

 

 

 

 

 

 

 

Net income

$

1,224

 

$

210

 

$

2,690

 

$

306

Basic net income per share

$

1.26

 

$

0.21

 

$

2.76

 

$

0.31

Shares used in computing basic net income per share

 

972

 

 

997

 

 

976

 

 

995

 

 

 

 

 

 

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Non-GAAP Basic Net Income Per Share

 

 

 

 

 

 

 

Non-GAAP net income

$

2,068

 

$

1,398

 

$

5,836

 

$

3,568

Non-GAAP basic net income per share

$

2.13

 

$

1.40

 

$

5.98

 

$

3.59

Shares used in computing Non-GAAP basic net income per share

 

972

 

 

997

 

 

976

 

 

995

 

 

 

 

 

 

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

GAAP Diluted Net Income Per Share

 

 

 

 

 

 

 

Net income

$

1,224

 

$

210

 

$

2,690

 

$

306

Diluted net income per share

$

1.25

 

$

0.21

 

$

2.73

 

$

0.31

Shares used in computing diluted net income per share

 

981

 

 

1,000

 

 

985

 

 

1,001

 

 

 

 

 

 

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

2023

 

2022

 

2023

 

2022

Non-GAAP Diluted Net Income Per Share

 

 

 

 

 

 

 

Non-GAAP net income

$

2,068

 

$

1,398

 

$

5,836

 

$

3,568

Non-GAAP diluted net income per share

$

2.11

 

$

1.40

 

$

5.92

 

$

3.56

Shares used in computing Non-GAAP diluted net income per share

 

981

 

 

1,000

 

 

985

 

 

1,001

 

Supplemental Cash Flow Information

Computation of Free Cash Flow, a Non-GAAP Measure

(in millions)

(Unaudited)

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP net cash provided by operating activities

$

1,532

 

 

$

313

 

 

$

6,831

 

 

$

4,323

 

Capital expenditures

 

(166

)

 

 

(198

)

 

 

(589

)

 

 

(580

)

Free cash flow

$

1,366

 

 

$

115

 

 

$

6,242

 

 

$

3,743

 

 

Non-GAAP Financial Measures: This press release includes information about non-GAAP operating margin, non-GAAP earnings per share, non-GAAP tax rates, free cash flow, constant currency revenue and constant currency current remaining performance obligation growth rates (collectively the “non-GAAP financial measures”). These non-GAAP financial measures are measurements of financial performance that are not prepared in accordance with U.S. generally accepted accounting principles and computational methods may differ from those used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. Management uses both GAAP and non-GAAP measures when planning, monitoring and evaluating the Company’s performance.

The primary purpose of using non-GAAP measures is to provide supplemental information that may prove useful to investors and to enable investors to evaluate the Company’s results in the same way management does. Management believes that supplementing GAAP disclosure with non-GAAP disclosure provides investors with a more complete view of the Company’s operational performance and allows for meaningful period-to-period comparisons and analysis of trends in the Company’s business. Further to the extent that other companies use similar methods in calculating non-GAAP measures, the provision of supplemental non-GAAP information can allow for a comparison of the Company’s relative performance against other companies that also report non-GAAP operating results.

Non-GAAP Operating Margin is the proportion of non-GAAP income from operations as a percentage of GAAP revenue. Non-GAAP income from operations excludes the impact of the following items: stock-based compensation expense, amortization of acquisition-related intangibles, and charges related to the Restructuring Plan. Non-GAAP operating margin for Q1 FY25 reflects our operating priorities, not specific guidance. A reconciliation of non-GAAP operating margin for Q1 FY25 is not available without unreasonable efforts and has been omitted in accordance with SEC rules. Non-GAAP earnings per share excludes, to the extent applicable, the impact of the following items: stock-based compensation expense, amortization of purchased intangibles, charges related to the Restructuring Plan, and income tax adjustments. These items are excluded because the decisions that give rise to them are not made to increase revenue in a particular period, but instead for the Company’s long-term benefit over multiple periods.

As described above, the Company excludes or adjusts for the following in its non-GAAP results and guidance:

  • Stock-Based Compensation Expense: The Company’s compensation strategy includes the use of stock-based compensation expense to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
  • Amortization of Purchased Intangibles: The Company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, customer lists and customer relationships, and in some cases, acquired lease intangibles, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, which is not typically affected by operations during any particular period. Although the Company excludes the amortization of purchased intangibles from these non-GAAP measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.
  • Restructuring: Restructuring charges are costs associated with a formal restructuring plan and may include employee notice period costs and severance payments, lease or contract termination costs, asset impairments, accelerated depreciation and amortization, and other related expenses. The Company excludes these restructuring charges because they are distinct from ongoing operational costs and it does not believe they are reflective of current and expected future business performance and operating results.
  • Gains on Strategic Investments, net: The Company records all fair value adjustments to its equity securities held within the strategic investment portfolio through the statement of operations. As it is not possible to forecast future gains and losses, the Company assumes no change to the value of its strategic investment portfolio in its GAAP and non-GAAP estimates for future periods, including its guidance. Gains on Strategic Investments, net, are included in its GAAP financial statements.
  • Income Tax Effects and Adjustments: The Company utilizes a fixed long-term projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of items such as changes in the tax valuation allowance and tax effects of acquisition-related costs, since each of these can vary in size and frequency. When projecting this long-term rate, the Company evaluated a three-year financial projection that excludes the direct impact of the following non-cash items: stock-based expenses and the amortization of purchased intangibles. The projected rate also considers factors including the Company’s expected tax structure, its tax positions in various jurisdictions and key legislation in major jurisdictions where the Company operates. For fiscal 2023, the Company used a projected non-GAAP tax rate 22.0%. For fiscal 2024, the Company uses a projected non-GAAP tax rate of 23.5%, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the Company’s geographic earnings mix due to acquisition activity, or other changes to the Company’s strategy or business operations. The Company will re-evaluate its long-term rate as appropriate.

The Company presents constant currency information to provide a framework for assessing how the Company's underlying business performed excluding the effect of foreign currency rate fluctuations. To present constant currency revenue growth rates, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the weighted average exchange rate for the quarter being compared to rather than the actual exchange rates in effect during that period. To present current remaining performance obligation growth rates on a constant currency basis, current remaining performance obligation balances in local currencies in previous comparable periods are converted using the United States dollar currency exchange rate as of the most recent balance sheet date.

The Company defines the non-GAAP measure free cash flow as GAAP net cash provided by operating activities, less capital expenditures.

Contacts

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 LosAltos.com & California Media Partners, LLC. All rights reserved.