Salesforce (NYSE: CRM), the global leader in CRM, today
announced results for its fourth quarter and full fiscal year ended
January 31, 2023.
- Fourth Quarter Revenue of $8.38 Billion, up 14%
Year-Over-Year ("Y/Y"), up 17% Constant Currency ("CC")
- FY23 Revenue of $31.4 Billion, up 18% Y/Y, up 22%
CC
- FY23 GAAP Operating Margin of 3.3% and Non-GAAP Operating
Margin of 22.5%
- FY23 Operating Cash Flow of $7.1B, up 19% Y/Y
- Current Remaining Performance Obligation of $24.6 Billion,
up 12% Y/Y, 13% CC
- Fourth Quarter GAAP Diluted Loss per Share of $(0.10) and
Non-GAAP Diluted Earnings per Share ("EPS") of $1.68
- Returned $2.3 Billion in Fourth Quarter and $4.0 Billion in
FY23 to Shareholders in the Form of Share Repurchases
- Full Year FY24 Revenue Guidance of $34.5 Billion to $34.7
Billion, up ~10% Y/Y
- Full Year FY24 GAAP Operating Margin Guidance of ~10.8% and
Non-GAAP Operating Margin Guidance of ~27.0%
- Full Year FY24 Operating Cash Flow Guidance of ~15 - 16%
growth Y/Y
- Announces Share Repurchase Program increased to $20
billion
“For the full year we delivered $31.4 billion in revenue, up 18%
year-over-year, or 22% in constant currency, one of the best
performances of any enterprise software company our size,” said
Marc Benioff, Chair and CEO of Salesforce. “We closed FY23 with
operating cash flow reaching $7.1 billion, up 19% year-over-year,
the highest cash flow in our company’s history, and one of the
highest cash flows of any enterprise software company our
size.”
“Our relentless focus on execution and proactive management of
the current environment allowed us to close out a strong quarter
and set us up for a transformational fiscal year 24,” said Amy
Weaver, President and CFO, Salesforce. “It’s a New Day at
Salesforce and as we look ahead, I am excited for the opportunity
in front of us as we continue to drive profitable growth.”
Salesforce delivered the following results for its fiscal fourth
quarter and full fiscal year:
Revenue: Total fourth quarter revenue
was $8.38 billion, an increase of 14% Y/Y, and 17% CC. Subscription
and support revenues were $7.79 billion, an increase of 14% Y/Y.
Professional services and other revenues were $0.60 billion, an
increase of 19% Y/Y.
Total fiscal 2023 revenue was $31.35 billion,
an increase of 18% Y/Y, and 22% CC. Subscription and support
revenues were $29.02 billion, an increase of 18% Y/Y. Professional
services and other revenues were $2.33 billion, an increase of 27%
Y/Y.
Operating Margin: Fourth quarter GAAP
operating margin was 4.3%. Fourth quarter non-GAAP operating margin
was 29.2%. Restructuring impacted fourth quarter GAAP and non-GAAP
operating margin by (990) bps and +140 bps, respectively.
Fiscal 2023 GAAP operating margin was 3.3%.
Fiscal 2023 non-GAAP operating margin was 22.5%. Restructuring
impacted fiscal 2023 GAAP and non-GAAP operating margin by (260)
bps and +40 bps, respectively.
Earnings per Share: Fourth quarter
GAAP diluted loss per share was $(0.10), and non-GAAP diluted EPS
was $1.68. Mark-to-market accounting of the Company’s strategic
investments negatively impacted GAAP diluted loss per share by
$(0.24) based on a U.S. tax rate of 25% and non-GAAP diluted EPS by
$(0.25) based on a non-GAAP tax rate of 22%. Restructuring impacted
fourth quarter GAAP diluted loss per share and non-GAAP diluted EPS
by (84) cents and +9 cents, respectively.
Fiscal 2023 GAAP diluted EPS was $0.21, and
non-GAAP diluted EPS was $5.24. Mark-to-market accounting of the
company’s strategic investments negatively impacted GAAP diluted
EPS by $(0.18) based on a U.S. tax rate of 25% and non-GAAP diluted
EPS by $(0.19) based on a non-GAAP tax rate of 22%. Restructuring
impacted fiscal 2023 GAAP and non-GAAP diluted EPS by (83) cents
and +9 cents, respectively.
Cash Flow: Cash generated from
operations for the fourth quarter was $2.79 billion, an increase of
41% Y/Y. Free cash flow was $2.57 billion, an increase of 42% Y/Y.
Restructuring impacted fourth quarter operating cash flow growth by
(370) bps.
Cash generated from operations for fiscal
2023 was $7.1 billion, an increase of 19% Y/Y. Free cash flow was
$6.3 billion, an increase of 19% Y/Y. Restructuring impacted fiscal
2023 operating cash flow growth by (120) bps.
Remaining Performance Obligation:
Remaining performance obligation ended the fourth quarter at $48.6
billion, an increase of 11% Y/Y. Current remaining performance
obligation ended at $24.6 billion, an increase of 12% Y/Y, 13%
CC.
Forward-Looking Guidance
As of March 1, 2023, the Company is initiating its first quarter
GAAP and non-GAAP EPS guidance, current remaining performance
obligation growth guidance, and revenue guidance. The Company is
initiating its full year FY24 revenue guidance, GAAP and non-GAAP
EPS guidance, GAAP and non-GAAP operating margin guidance, and
operating cash flow 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 the tax effects of stock-based compensation. The GAAP tax
rates may fluctuate due to future acquisitions or other
transactions.
Q1 FY24
Guidance
Full Year FY24
Guidance
Revenue
$8.16 - $8.18 Billion
$34.5 - $34.7 Billion
Y/Y Growth
~10%
~10%
FX Impact(1)
~($150M) Y/Y FX
no impact
GAAP Operating Margin
N/A
~10.8%
Non-GAAP Operating Margin(2)
N/A
~27.0%
GAAP Earnings per Share(2)
$0.24 - $0.25
$2.59 - $2.61
Non-GAAP Earnings per Share(2)
$1.60 - $1.61
$7.12 - $7.14
Operating Cash Flow Growth (Y/Y)(3)
N/A
15% - 16%
Current Remaining Performance Obligation
Growth (Y/Y)
~11%
N/A
FX Impact(4)
no impact
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
earnings per share are non-GAAP financial measures. Refer to the
Appendix for an explanation of non-GAAP financial measures. The
Company's shares used in computing GAAP earnings per share guidance
and Non-GAAP earnings per share guidance excludes any impact to
share count from FY24 repurchase activity under our Share
Repurchase Program.
(3) Operating Cash Flow Growth guidance
includes an estimated 14% headwind associated with charges from
restructuring.
(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)
~10.8%
Plus
Amortization of purchased
intangibles(2)
5.4%
Stock-based compensation expense(2)
8.3%
Restructuring(2)(3)
2.5%
Non-GAAP operating margin(1)
~27.0%
(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 above have been
calculated based on the midpoint of the low and high ends of the
estimated charges in connection with our restructuring plan
announced on January 4, 2023 (the "Plan").
The following is a per share reconciliation of GAAP diluted
earnings per share to non-GAAP diluted earnings per share guidance
for the next quarter and the full year:
Fiscal 2024
Q1
FY24
GAAP diluted earnings per share
range(1)(2)
$0.24 - $0.25
$2.59 - $2.61
Plus
Amortization of purchased intangibles
$
0.48
$
1.88
Stock-based compensation expense
$
0.72
$
2.88
Restructuring(3)
$
0.56
$
0.85
Less
Income tax effects and adjustments(4)
$
(0.40
)
$
(1.08
)
Non-GAAP diluted earnings per share(2)
$1.60 - $1.61
$7.12 - $7.14
Shares used in computing basic net income
per share (millions)(5)
984
992
Shares used in computing diluted net
income per share (millions)(5)
988
995
(1) The Company's GAAP tax provision is
expected to be approximately 30% for the three months ended April
30, 2023, and approximately 30% 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 earnings per share 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
earnings per share has been calculated based on the midpoint of the
low and high ends of the estimated charges in connection with our
restructuring Plan announced on January 4, 2023 (the "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 earnings per share guidance and Non-GAAP earnings per share
guidance excludes any impact to share count from 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.
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, the global CRM leader, empowers companies of every
size and industry to digitally transform and create a 360° view of
their customers. 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,
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, and expected restructuring expense or charges. 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 could
differ materially from the results 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 the impact of, and actions
we may take in response to, the COVID-19 pandemic, related public
health measures and resulting economic downturn and market
volatility; our ability to maintain security levels and service
performance meeting 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; 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,
cross-border data transfers and import and export controls; current
and potential litigation involving us or our industry, including
litigation involving acquired entities such as Slack Technologies,
Inc., 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
work-from-home 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 the transfer 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 and changes
in monetary policy; the impact of geopolitical events, including
the recent conflict in Europe; 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 the
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, the risk that
our restructuring efforts may adversely affect our internal
programs and our ability to recruit and retain skilled and
motivated personnel, and may be distracting to employees and
management, the risk that our restructuring efforts may negatively
impact our business operations and reputation with or ability to
serve customers, and the risk that 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
initiatives.
Further information on these and other factors that could affect
the Company’s financial results 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.
Consolidated Statements of
Operations
(in millions, except per share
data)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Revenues:
Subscription and support
$
7,789
$
6,828
$
29,021
$
24,657
Professional services and other
595
498
2,331
1,835
Total revenues
8,384
7,326
31,352
26,492
Cost of revenues (1)(2):
Subscription and support
1,440
1,456
5,821
5,059
Professional services and other
660
558
2,539
1,967
Total cost of revenues
2,100
2,014
8,360
7,026
Gross profit
6,284
5,312
22,992
19,466
Operating expenses (1)(2):
Research and development
1,128
1,291
5,055
4,465
Marketing and sales
3,385
3,464
13,526
11,855
General and administrative
586
733
2,553
2,598
Restructuring (3)
828
0
828
0
Total operating expenses
5,927
5,488
21,962
18,918
Income (loss) from operations
357
(176
)
1,030
548
Gains (losses) on strategic investments,
net
(314
)
34
(239
)
1,211
Other expense
(10
)
(55
)
(131
)
(227
)
Income (loss) before benefit from
(provision for) income taxes
33
(197
)
660
1,532
Benefit from (provision for) income
taxes
(131
)
169
(452
)
(88
)
Net income (loss)
$
(98
)
$
(28
)
$
208
$
1,444
Basic net income (loss) per share
$
(0.10
)
$
(0.03
)
$
0.21
$
1.51
Diluted net income (loss) per share
$
(0.10
)
$
(0.03
)
$
0.21
$
1.48
Shares used in computing basic net income
(loss) per share
984
986
992
955
Shares used in computing diluted net
income (loss) per share
984
986
997
974
(1) Amounts include amortization of
intangible assets acquired through business combinations, as
follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Cost of revenues
$
250
$
273
$
1,035
$
897
Marketing and sales
223
236
916
727
(2) Amounts include stock-based
compensation expense, as follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Cost of revenues
$
127
$
106
$
499
$
386
Research and development
273
272
1,136
918
Marketing and sales
309
287
1,256
1,104
General and administrative
80
98
368
371
Restructuring
20
0
20
0
(3) In January 2023, the Company announced
a restructuring plan (the “Plan”) intended to reduce operating
costs, improve operating margins, and continue advancing its
ongoing commitment to profitable growth. The Plan includes a
reduction of the Company's workforce and select real estate exits
and office space reductions within certain markets.
Salesforce, Inc.
Consolidated Statements of
Operations
(As a percentage of total
revenues)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Revenues:
Subscription and support
93
%
93
%
93
%
93
%
Professional services and other
7
7
7
7
Total revenues
100
100
100
100
Cost of revenues (1)(2):
Subscription and support
17
20
19
19
Professional services and other
8
7
8
8
Total cost of revenues
25
27
27
27
Gross profit
75
73
73
73
Operating expenses (1)(2):
Research and development
14
18
16
17
Marketing and sales
40
47
43
44
General and administrative
7
10
8
10
Restructuring
10
0
3
0
Total operating expenses
71
75
70
71
Income (loss) from operations
4
(2
)
3
2
Gains (losses) on strategic investments,
net
(4
)
0
(1
)
5
Other expense
0
(1
)
0
(1
)
Income (loss) before benefit from
(provision for) income taxes
0
(3
)
2
6
Benefit from (provision for) income
taxes
(1
)
3
(1
)
(1
)
Net income (loss)
(1
)%
0
%
1
%
5
%
(1) Amounts include amortization of
intangible assets acquired through business combinations as a
percentage of total revenues, as follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Cost of revenues
3
%
4
%
3
%
3
%
Marketing and sales
3
3
3
3
(2) Amounts include stock-based
compensation expense as a percentage of total revenues, as
follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Cost of revenues
2
%
1
%
2
%
1
%
Research and development
3
4
3
4
Marketing and sales
4
4
4
4
General and administrative
1
1
1
1
Restructuring
0
0
0
0
Salesforce, Inc.
Consolidated Balance Sheets
(in millions)
January 31, 2023
January 31, 2022
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
7,016
$
5,464
Marketable securities
5,492
5,073
Accounts receivable, net
10,755
9,739
Costs capitalized to obtain revenue
contracts, net
1,776
1,454
Prepaid expenses and other current
assets
1,356
1,120
Total current assets
26,395
22,850
Property and equipment, net
3,702
2,815
Operating lease right-of-use assets,
net
2,890
2,880
Noncurrent costs capitalized to obtain
revenue contracts, net
2,697
2,342
Strategic investments
4,672
4,784
Goodwill
48,568
47,937
Intangible assets acquired through
business combinations, net
7,125
8,978
Deferred tax assets and other assets,
net
2,800
2,623
Total assets
$
98,849
$
95,209
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable, accrued expenses and
other liabilities
$
6,743
$
5,470
Operating lease liabilities, current
590
686
Unearned revenue
17,376
15,628
Debt, current
1,182
4
Total current liabilities
25,891
21,788
Noncurrent debt
9,419
10,592
Noncurrent operating lease liabilities
2,897
2,703
Other noncurrent liabilities
2,283
1,995
Total liabilities
40,490
37,078
Stockholders’ equity:
Common stock
1
1
Treasury stock, at cost
(4,000
)
0
Additional paid-in capital
55,047
50,919
Accumulated other comprehensive loss
(274
)
(166
)
Retained earnings
7,585
7,377
Total stockholders’ equity
58,359
58,131
Total liabilities and stockholders’
equity
$
98,849
$
95,209
Salesforce, Inc.
Consolidated Statements of Cash
Flows
(in millions)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Operating activities:
Net income (loss)
$
(98
)
$
(28
)
$
208
$
1,444
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization (1)
1,032
931
3,786
3,298
Amortization of costs capitalized to
obtain revenue contracts, net
443
356
1,668
1,348
Stock-based compensation expense
809
763
3,279
2,779
(Gains) losses on strategic investments,
net
314
(34
)
239
(1,211
)
Changes in assets and liabilities, net of
business combinations:
Accounts receivable, net
(6,481
)
(5,719
)
(995
)
(1,824
)
Costs capitalized to obtain revenue
contracts, net
(1,066
)
(1,060
)
(2,345
)
(2,283
)
Prepaid expenses and other current assets
and other assets
57
115
(302
)
114
Accounts payable and accrued expenses and
other liabilities
1,733
1,343
528
507
Operating lease liabilities
(138
)
(194
)
(699
)
(801
)
Unearned revenue
6,183
5,509
1,744
2,629
Net cash provided by operating
activities
2,788
1,982
7,111
6,000
Investing activities:
Business combinations, net of cash
acquired
0
(60
)
(439
)
(14,876
)
Purchases of strategic investments
(75
)
(785
)
(550
)
(1,718
)
Sales of strategic investments
174
37
355
2,201
Purchases of marketable securities
(645
)
(1,165
)
(4,777
)
(5,674
)
Sales of marketable securities
379
414
1,771
4,179
Maturities of marketable securities
697
267
2,449
2,069
Capital expenditures
(218
)
(167
)
(798
)
(717
)
Net cash provided by (used in) investing
activities
312
(1,459
)
(1,989
)
(14,536
)
Financing activities:
Proceeds from issuance of debt, net of
issuance costs
0
0
0
7,906
Repayments of Slack Convertible Notes, net
of capped call proceeds
0
(17
)
0
(1,197
)
Repurchases of common stock
(2,323
)
0
(4,000
)
0
Proceeds from employee stock plans
173
259
861
1,289
Principal payments on financing
obligations
(70
)
(38
)
(419
)
(156
)
Repayments of debt
(1
)
(1
)
(4
)
(4
)
Net cash provided by (used in) financing
activities
(2,221
)
203
(3,562
)
7,838
Effect of exchange rate changes
61
(15
)
(8
)
(33
)
Net increase (decrease) in cash and
cash equivalents
940
711
1,552
(731
)
Cash and cash equivalents, beginning of
period
6,076
4,753
5,464
6,195
Cash and cash equivalents, end of
period
$
7,016
$
5,464
$
7,016
$
5,464
(1) Includes depreciation of fixed assets,
amortization of intangible assets acquired through business
combinations and amortization of right of use assets.
Salesforce, Inc.
Additional Metrics
(Unaudited)
January 31,
2023
October 31,
2022
July 31,
2022
April 30,
2022
January 31,
2022
Full time equivalent headcount
79,390
79,824
78,634
77,810
73,541
Financial data (in millions):
Cash, cash equivalents and marketable
securities
$
12,508
$
11,918
$
13,533
$
13,503
$
10,537
Strategic investments
4,672
5,124
5,124
4,936
4,784
Principal due on the Company's outstanding
debt obligations
10,682
10,683
10,684
10,685
10,686
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 January 31, 2023
$
24.6
$
24.0
$
48.6
As of October 31, 2022
20.9
19.1
40.0
As of July 31, 2022
21.5
20.1
41.6
As of April 30, 2022
21.5
20.5
42.0
As of January 31, 2022
22.0
21.7
43.7
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 January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Unearned revenue, beginning of period
$
11,193
$
10,116
$
15,628
$
12,607
Billings and other (1)
14,680
12,992
33,034
29,011
Contribution from contract asset
(113
)
(157
)
62
110
Revenue recognized over time
(7,730
)
(6,771
)
(29,595
)
(24,841
)
Revenue recognized at a point in time
(654
)
(555
)
(1,757
)
(1,651
)
Unearned revenue from business
combinations
0
3
4
392
Unearned revenue, end of period
$
17,376
$
15,628
$
17,376
$
15,628
(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 January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Sales
$
1,787
$
1,586
$
6,831
$
5,989
Service
1,924
1,710
7,369
6,474
Platform and Other (1)
1,557
1,350
5,967
4,509
Marketing and Commerce
1,177
1,046
4,516
3,902
Data
1,344
1,136
4,338
3,783
$
7,789
$
6,828
$
29,021
$
24,657
(1) Platform and Other includes
approximately $410 million and $1.5 billion of Slack subscription
and support revenues for the three and twelve months ended January
31, 2023.
Total Revenue by Geographic Locations
Revenues by geographical region consisted of the following (in
millions):
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Americas
$
5,657
$
4,939
$
21,250
$
17,983
Europe
1,935
1,717
7,163
6,016
Asia Pacific
792
670
2,939
2,493
$
8,384
$
7,326
$
31,352
$
26,492
Constant Currency Growth Rates
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 this information, 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 for growth rate calculations presented, rather than the
actual exchange rates in effect during that period.
Subscription and support revenues constant currency growth rates
by the Company's service offerings were as follows:
Three Months Ended
January 31, 2023
compared to Three
Months
Ended January 31, 2022
Three Months Ended
October 31, 2022
compared to Three
Months
Ended October 31, 2021
Sales
16%
17%
Service
15%
16%
Platform and Other
18%
22%
Marketing and Commerce
16%
18%
Data
20%
16%
Revenue constant currency growth rates by geographical region
were as follows:
Three Months Ended
January 31, 2023
compared to Three
Months
Ended January 31, 2022
Three Months Ended
October 31, 2022
compared to Three
Months
Ended October 31, 2021
Three Months Ended
January 31, 2022
compared to Three
Months
Ended January 31, 2021
Americas
14%
16%
23%
Europe
20%
23%
40%
Asia Pacific
30%
30%
28%
Total growth
17%
19%
27%
The Company presents constant currency information for current
remaining performance obligation to provide a framework for
assessing how the Company's underlying business performed excluding
the effects of foreign currency rate fluctuations. To present the
information, the Company converted the current remaining
performance obligation balances in local currencies in previous
comparable periods using the United States dollar currency exchange
rate as of the most recent balance sheet date.
Current remaining performance obligation constant currency
growth rates were as follows:
January 31, 2023
compared to
January 31, 2022
October 31, 2022
compared to
October 31, 2021
January 31, 2022
compared to
January 31, 2021
Total growth
13%
15%
24%
Salesforce, Inc.
GAAP Results Reconciled to non-GAAP
Results
The following table reflects selected GAAP
results reconciled to non-GAAP results.
(in millions, except per share data)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Non-GAAP income
from operations
GAAP income (loss) from operations
$
357
$
(176
)
$
1,030
$
548
Plus:
Amortization of purchased intangibles
(1)
473
509
1,951
1,624
Stock-based compensation expense
(2)(3)
789
763
3,259
2,779
Restructuring
828
0
828
0
Non-GAAP income from operations
$
2,447
$
1,096
$
7,068
$
4,951
Non-GAAP
operating margin as a percentage of revenues
Total revenues
$
8,384
$
7,326
$
31,352
$
26,492
GAAP operating margin (4)
4.3
%
(2.4
)%
3.3
%
2.1
%
Non-GAAP operating margin (4)
29.2
%
15.0
%
22.5
%
18.7
%
Non-GAAP net
income
GAAP net income (loss)
$
(98
)
$
(28
)
$
208
$
1,444
Plus:
Amortization of purchased intangibles
(1)
473
509
1,951
1,624
Stock-based compensation expense
(2)(3)
789
763
3,259
2,779
Restructuring
828
0
828
0
Income tax effects and adjustments
(336
)
(401
)
(1,022
)
(1,188
)
Non-GAAP net income
$
1,656
$
843
$
5,224
$
4,659
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Non-GAAP diluted
net income per share
GAAP diluted net income (loss) per
share
$
(0.10
)
$
(0.03
)
$
0.21
$
1.48
Plus:
Amortization of purchased intangibles
0.48
0.51
1.96
1.67
Stock-based compensation expense (2)
(3)
0.80
0.76
3.27
2.85
Restructuring
0.84
0.00
0.83
0.00
Income tax effects and adjustments
(0.34
)
(0.40
)
(1.03
)
(1.22
)
Non-GAAP diluted net income per share
$
1.68
$
0.84
$
5.24
$
4.78
Shares used in computing Non-GAAP diluted
net income per share
987
1,003
997
974
Reported GAAP diluted net loss per share
for the three months ended January 31, 2023 and January 31, 2022
were calculated using basic share count. Non-GAAP diluted net
income per share for the three months ended January 31, 2023 and
January 31, 2022 were calculated using diluted share count which
includes approximately 3 million and 17 million shares of dilutive
securities related to employee stock awards, respectively.
(1) Amortization of purchased intangibles
was as follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Cost of revenues
$
250
$
273
$
1,035
$
897
Marketing and sales
223
236
916
727
$
473
$
509
$
1,951
$
1,624
(2) Stock-based compensation expense,
excluding stock-based compensation expense related to
restructuring, was as follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Cost of revenues
$
127
$
106
$
499
$
386
Research and development
273
272
1,136
918
Marketing and sales
309
287
1,256
1,104
General and administrative
80
98
368
371
$
789
$
763
$
3,259
$
2,779
(3) Stock-based compensation expense
included in the GAAP to non-GAAP reconciliation tables above for
the three and twelve months ended January 31, 2023 exclude
stock-based compensation expense related to the Company's
restructuring plan of $20 million, which is included in the
Restructuring line.
(4) GAAP operating margin is the
proportion of GAAP income (loss) 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 (Loss) Per Share
(in millions, except per share data)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
GAAP Basic Net Income (Loss) Per
Share
Net income (loss)
$
(98
)
$
(28
)
$
208
$
1,444
Basic net income (loss) per share
$
(0.10
)
$
(0.03
)
$
0.21
$
1.51
Shares used in computing basic net income
(loss) per share
984
986
992
955
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Non-GAAP Basic Net Income Per
Share
Non-GAAP net income
$
1,656
$
843
$
5,224
$
4,659
Non-GAAP basic net income per share
$
1.68
$
0.85
$
5.27
$
4.88
Shares used in computing Non-GAAP basic
net income per share
984
986
992
955
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
GAAP Diluted Net Income (Loss) Per
Share
Net income (loss)
$
(98
)
$
(28
)
$
208
$
1,444
Diluted net income (loss) per share
$
(0.10
)
$
(0.03
)
$
0.21
$
1.48
Shares used in computing diluted net
income (loss) per share
984
986
997
974
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
Non-GAAP Diluted Net Income Per
Share
Non-GAAP net income
$
1,656
$
843
$
5,224
$
4,659
Non-GAAP diluted net income per share
$
1.68
$
0.84
$
5.24
$
4.78
Shares used in computing Non-GAAP diluted
net income per share
987
1,003
997
974
Supplemental Cash Flow
Information
Computation of free cash flow, a
non-GAAP measure
(in millions)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2023
2022
2023
2022
GAAP net cash provided by operating
activities
$
2,788
$
1,982
$
7,111
$
6,000
Capital expenditures
(218
)
(167
)
(798
)
(717
)
Free cash flow
$
2,570
$
1,815
$
6,313
$
5,283
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 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 and 2022, the Company
used a projected non-GAAP tax rate of 22.0% and 21.5%,
respectively. 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 defines the non-GAAP measure free cash flow as GAAP
net cash provided by operating activities, less capital
expenditures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230301005760/en/
Mike Spencer Salesforce Investor Relations 415-536-6250
investor@salesforce.com
Carolyn Guss Salesforce Public Relations 415-536-4966
pr@salesforce.com
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