Salesforce (NYSE: CRM), the #1 AI CRM, today announced results
for its first quarter fiscal 2025 ended April 30, 2024.
First Quarter Highlights
- First Quarter Revenue of $9.13 Billion, up 11%
Year-Over-Year ("Y/Y"), up 11% in Constant Currency ("CC"),
inclusive of Subscription & Support Revenue of $8.59 Billion,
up 12% Y/Y
- First Quarter GAAP Operating Margin of 18.7% and non-GAAP
Operating Margin of 32.1%
- Current Remaining Performance Obligation of $26.4 Billion,
up 10% Y/Y, up 10% in CC
- First Quarter Operating Cash Flow of $6.25 Billion, up 39%
Y/Y, and Free Cash Flow of $6.08 Billion, up 43% Y/Y
- Returned $2.2 Billion in the Form of Share Repurchases and
$0.4 Billion in Dividend Payments to Stockholders
FY25 Guidance Highlights
- Initiates Second Quarter FY25 Revenue Guidance of $9.20
Billion to $9.25 Billion, up 7% - 8% Y/Y
- Maintains Full Year FY25 Revenue Guidance of $37.7 Billion
to $38.0 Billion, up 8% - 9% Y/Y and Lowers Full Year FY25
Subscription & Support Revenue Growth Guidance to Slightly
Below 10% Y/Y & Approximately 10% in CC
- Lowers Full Year FY25 GAAP Operating Margin Guidance to
19.9% and Maintains non-GAAP Operating Margin Guidance of
32.5%
- Maintains Full Year FY25 Operating Cash Flow Growth Guidance
of 21% to 24% Y/Y
“Our profitable growth trajectory continues to drive strong cash
flow generation. Q1 operating cash flow was $6.25 billion, up 39%
year-over-year. Q1 free cash flow was $6.1 billion, up 43%
year-over-year,” said Marc Benioff, Chair and CEO, Salesforce. “We
are at the beginning of a massive opportunity for our customers to
connect with their customers in a whole new way with AI. As the
world’s #1 AI CRM, we’re incredibly well positioned to help
companies realize the promise of AI over the next decade.”
“We delivered another quarter of disciplined profitable growth,
with GAAP operating margin of 18.7%, up 1,370 basis points
year-over-year, and Non-GAAP operating margin of 32.1%, up 450
basis points year-over year,” said Amy Weaver, President and CFO of
Salesforce. “We’ve also made significant progress on our capital
return program, returning more than $14 billion to shareholders
since inception, including the payout of our first ever quarterly
dividend in Q1.”
Guidance
Our guidance includes GAAP and non-GAAP financial measures.
Q2 FY25
Guidance
Full Year FY25
Guidance
Total Revenue
$9.20 - $9.25 Billion
$37.7 - $38.0 Billion
Y/Y Growth
7 - 8%
8 - 9%
FX Impact(1)
($50M) Y/Y FX
($100M) Y/Y FX
Subscription & Support Revenue Growth
(Y/Y)(2)
N/A
Slightly below 10%, Approx 10%
CC
GAAP Operating Margin
N/A
19.9%
Non-GAAP Operating Margin(3)
N/A
32.5%
GAAP Diluted Earnings per Share(3)
$1.31 - $1.33
$6.04 - $6.12
Non-GAAP Diluted Earnings per Share(3)
$2.34 - $2.36
$9.86 - $9.94
Operating Cash Flow Growth (Y/Y)
N/A
21% - 24%
Current Remaining Performance Obligation
Growth (Y/Y)
9%
N/A
FX Impact(4)
($200M) Y/Y FX
N/A
(1)
Revenue FX impact is calculated by taking
the current period rates compared to the prior period average
rates.
(2)
Subscription & Support revenue
excludes professional services revenue.
(3)
Non-GAAP operating margin and non-GAAP
Diluted 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 Q2 -
Q4 FY25 repurchase activity under our share repurchase program.
(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 FY25
Guidance
GAAP operating margin(1)
19.9%
Plus
Amortization of purchased
intangibles(2)
4.3%
Stock-based compensation expense(2)(3)
8.2%
Restructuring(2)(3)
0.1%
Non-GAAP operating margin(1)
32.5%
(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 FY25.
(3)
The percentages shown in the restructuring
line have been calculated based on charges associated with the
Company's restructuring activities. Stock-based compensation
expense included in the full year FY25 guidance GAAP to non-GAAP
reconciliation table excludes stock-based compensation expense
related to the Company's restructuring activities, 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 2025
Q2
FY25
GAAP diluted earnings per share
range(1)(2)
$1.31 - $1.33
$6.04 - $6.12
Plus
Amortization of purchased intangibles
$ 0.46
$ 1.63
Stock-based compensation expense
$ 0.79
$ 3.12
Restructuring(3)
$ 0.02
$ 0.06
Less
Income tax effects and adjustments(4)
$ (0.24)
$ (0.99)
Non-GAAP diluted earnings per share(2)
$2.34 - $2.36
$9.86 - $9.94
Shares used in computing basic net income
per share (millions)(5)
974
977
Shares used in computing diluted net
income per share (millions)(5)
988
992
(1)
The Company's GAAP tax provision is
expected to be approximately 24.5% for the three months ended July
31, 2024, and approximately 23.0% for the year ended January 31,
2025. 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 Company's restructuring activities.
(4)
The Company’s non-GAAP tax provision uses
a long-term projected tax rate of 22.0%, 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 potential Q2 - Q4
FY25 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 Summer 2024 Product Release, visit:
www.salesforce.com/products/summer-24-release.
Environmental, Social, and Governance (ESG) Strategy
To learn more about our latest initiatives and priorities, visit
our recently published Stakeholder Impact Report:
https://salesforce.com/stakeholder-impact-report.
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 is the #1 AI CRM, empowering companies to connect
with their customers in a whole new way through the power of CRM +
AI + Data + Trust on one unified platform: Einstein 1. For more
information visit: www.salesforce.com (NYSE: CRM).
"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 and adversely from those expressed or implied in our
forward-looking statements. Readers are cautioned not to place
undue reliance on such forward-looking statements.
The risks and uncertainties referred to above include -- but are
not limited to -- risks associated with:
- our ability to maintain sufficient security levels and service
performance, avoid downtime and prevent, detect and remediate
performance degradation and security breaches;
- our ability to secure sufficient data center capacity;
- our reliance on third-party infrastructure providers, including
hardware, software and platform providers and the organizations
responsible for the development and maintenance of the
infrastructure of the Internet;
- uncertainties regarding AI technologies and their integration
into our product offerings;
- our ability to achieve our aspirations, goals and projections
related to our environmental, social and governance (“ESG”)
initiatives;
- the effect of evolving government regulations, including those
related to our industry and providing services on or accessing the
Internet, and those addressing ESG matters, data privacy,
cybersecurity, cross-border data transfers, government contracting
and procurement, and import and export controls;
- current and potential litigation and regulatory investigations
involving us or our industry;
- our ability to successfully expand or introduce new services
and product features;
- our ability to successfully complete, integrate and realize the
benefits from acquisitions or other strategic transactions;
- uncertainties regarding the pace of change and innovation and
our ability to compete in the markets in which we participate;
- our ability to successfully execute our business strategy and
our business plans, including efforts to expand internationally and
related risks;
- our ability to predict and meet expectations regarding our
operating results and cash flows, including revenue and remaining
performance obligation, including as a result of the seasonal
nature of our sales cycle and the variability in our results
arising from the accounting for term license revenue products and
some complex transactions;
- our ability to predict and limit customer attrition and costs
related to those efforts;
- the demands on our personnel and infrastructure resulting from
significant growth in our customer base and operations, including
as a result of acquisitions;
- our real estate and office facilities strategy and related
costs and uncertainties;
- the performance of our strategic investment portfolio,
including fluctuations in the fair value of our investments;
- our ability to protect our intellectual property rights;
- our ability to maintain and enhance our brands;
- uncertainties regarding the valuation and potential
availability of certain tax assets;
- the impact of new accounting pronouncements and tax laws;
- uncertainties affecting our ability to estimate our tax rate,
including our tax obligations in connection with potential
jurisdictional transfer of intellectual property;
- uncertainties regarding the effect of geopolitical events,
inflationary pressures, market and macroeconomic volatility,
financial institution instability, changes in monetary policy,
foreign currency exchange rate and interest rate fluctuations, a
potential shutdown of the U.S. federal government and climate
change, natural disasters and actual or threatened public health
emergencies on our workforce, business, and operating results;
- uncertainties regarding the impact of expensing stock options
and other equity awards;
- the sufficiency of our capital resources, including our ability
to execute our share repurchase program and declare future cash
dividends;
- our ability to comply with our debt covenants and lease
obligations; and
- uncertainties regarding impacts to our workforce and workplace
culture, such as those arising from our current and future office
environments or remote work policies or our ability to realize the
expected benefits of the restructuring plan.
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
revise or update publicly any forward-looking statements for any
reason, except as required by law.
© 2024 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 April
30,
2024
2023
Revenues:
Subscription and support
$
8,585
$
7,642
Professional services and other
548
605
Total revenues
9,133
8,247
Cost of revenues (1)(2):
Subscription and support
1,560
1,510
Professional services and other
602
615
Total cost of revenues
2,162
2,125
Gross profit
6,971
6,122
Operating expenses (1)(2):
Research and development
1,368
1,207
Sales and marketing
3,239
3,154
General and administrative
647
638
Restructuring
8
711
Total operating expenses
5,262
5,710
Income from operations
1,709
412
Gains (losses) on strategic investments,
net (3)
37
(141
)
Other income
121
55
Income before provision for income
taxes
1,867
326
Provision for income taxes
(334
)
(127
)
Net income
$
1,533
$
199
Basic net income per share
$
1.58
$
0.20
Diluted net income per share (3)
$
1.56
$
0.20
Shares used in computing basic net income
per share
970
980
Shares used in computing diluted net
income per share
985
988
(1) Amounts include amortization of
intangible assets acquired through business combinations, as
follows:
Three Months Ended April
30,
2024
2023
Cost of revenues
$
238
$
248
Sales and marketing
223
223
(2) Amounts include stock-based
compensation expense, as follows:
Three Months Ended April
30,
2024
2023
Cost of revenues
$
119
$
103
Research and development
260
241
Sales and marketing
290
263
General and administrative
81
73
Restructuring
0
16
(3) During the three months ended April
30, 2024 and 2023, gains (losses) on strategic investments impacted
GAAP diluted EPS by $0.03 and $(0.11) based on a U.S. tax rate of
24.5% and non-GAAP diluted EPS by $0.03 and $(0.11) based on a
non-GAAP tax rate of 22.0% and 23.5%, respectively.
Salesforce, Inc.
Condensed Consolidated Statements of
Operations
(As a percentage of total
revenues)
(Unaudited)
Three Months Ended April
30,
2024
2023
Revenues:
Subscription and support
94
%
93
%
Professional services and other
6
7
Total revenues
100
100
Cost of revenues (1)(2):
Subscription and support
17
18
Professional services and other
7
8
Total cost of revenues
24
26
Gross profit
76
74
Operating expenses (1)(2):
Research and development
15
15
Sales and marketing
35
38
General and administrative
7
8
Restructuring
0
8
Total operating expenses
57
69
Income from operations
19
5
Gains (losses) on strategic investments,
net
0
(2
)
Other income
1
1
Income before provision for income
taxes
20
4
Provision for income taxes
(3
)
(2
)
Net income
17
%
2
%
(1) Amounts include amortization of
intangible assets acquired through business combinations as a
percentage of total revenues, as follows:
Three Months Ended April
30,
2024
2023
Cost of revenues
3
%
3
%
Sales and marketing
2
3
(2) Amounts include stock-based
compensation expense as a percentage of total revenues, as
follows:
Three Months Ended April
30,
2024
2023
Cost of revenues
1
%
1
%
Research and development
3
3
Sales and marketing
3
3
General and administrative
1
1
Restructuring
0
0
Salesforce, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
April 30, 2024
January 31, 2024
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
9,958
$
8,472
Marketable securities
7,712
5,722
Accounts receivable, net
4,273
11,414
Costs capitalized to obtain revenue
contracts, net
1,865
1,905
Prepaid expenses and other current
assets
1,796
1,561
Total current assets
25,604
29,074
Property and equipment, net
3,506
3,689
Operating lease right-of-use assets,
net
2,255
2,366
Noncurrent costs capitalized to obtain
revenue contracts, net
2,286
2,515
Strategic investments
4,978
4,848
Goodwill
48,940
48,620
Intangible assets acquired through
business combinations, net
4,869
5,278
Deferred tax assets and other assets,
net
3,742
3,433
Total assets
$
96,180
$
99,823
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable, accrued expenses and
other liabilities
$
5,520
$
6,111
Operating lease liabilities, current
568
518
Unearned revenue
16,061
19,003
Debt, current
1,000
999
Total current liabilities
23,149
26,631
Noncurrent debt
8,429
8,427
Noncurrent operating lease liabilities
2,519
2,644
Other noncurrent liabilities
2,400
2,475
Total liabilities
36,497
40,177
Stockholders’ equity:
Common stock
1
1
Treasury stock, at cost
(13,860
)
(11,692
)
Additional paid-in capital
60,946
59,841
Accumulated other comprehensive loss
(270
)
(225
)
Retained earnings
12,866
11,721
Total stockholders’ equity
59,683
59,646
Total liabilities and stockholders’
equity
$
96,180
$
99,823
Salesforce, Inc.
Condensed Consolidated Statements of
Cash Flows
(in millions)
(Unaudited)
Three Months Ended April
30,
2024
2023
Operating activities:
Net income
$
1,533
$
199
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization (1)
879
1,254
Amortization of costs capitalized to
obtain revenue contracts, net
517
470
Stock-based compensation expense
750
696
(Gains) losses on strategic investments,
net
(37
)
141
Changes in assets and liabilities, net of
business combinations:
Accounts receivable, net
7,162
6,123
Costs capitalized to obtain revenue
contracts, net
(248
)
(275
)
Prepaid expenses and other current assets
and other assets
(514
)
(291
)
Accounts payable and accrued expenses and
other liabilities
(755
)
(1,403
)
Operating lease liabilities
(85
)
(168
)
Unearned revenue
(2,955
)
(2,255
)
Net cash provided by operating
activities
6,247
4,491
Investing activities:
Business combinations, net of cash
acquired
(338
)
0
Purchases of strategic investments
(203
)
(105
)
Sales of strategic investments
53
9
Purchases of marketable securities
(3,252
)
(368
)
Sales of marketable securities
616
269
Maturities of marketable securities
636
785
Capital expenditures
(163
)
(243
)
Net cash provided by (used in) investing
activities
(2,651
)
347
Financing activities:
Repurchases of common stock
(2,133
)
(2,054
)
Proceeds from employee stock plans
533
449
Principal payments on financing
obligations
(120
)
(110
)
Repayments of debt
0
(1,001
)
Payments of dividends
(388
)
0
Net cash used in financing activities
(2,108
)
(2,716
)
Effect of exchange rate changes
(2
)
17
Net increase in cash and cash
equivalents
1,486
2,139
Cash and cash equivalents, beginning of
period
8,472
7,016
Cash and cash equivalents, end of
period
$
9,958
$
9,155
(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)
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 condensed consolidated balance sheets.
RPO consisted of the following (in
billions):
Current
Noncurrent
Total
As of April 30, 2024
$
26.4
$
27.5
$
53.9
As of January 31, 2024
27.6
29.3
56.9
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
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 April
30,
2024
2023
Unearned revenue, beginning of period
$
19,003
$
17,376
Billings and other (1)
6,108
5,937
Contribution from contract asset
70
55
Revenue recognized over time
(8,571
)
(7,837
)
Revenue recognized at a point in time
(562
)
(410
)
Unearned revenue from business
combinations
13
0
Unearned revenue, end of period
$
16,061
$
15,121
(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 April
30,
2024
2023
Sales
$
1,998
$
1,810
Service
2,182
1,964
Platform and Other
1,718
1,567
Marketing and Commerce
1,282
1,170
Integration and Analytics (1)
1,405
1,131
$
8,585
$
7,642
(1) In the fourth quarter of fiscal 2024,
the Company renamed the service offering previously referred to as
Data to Integration and Analytics, which includes Mulesoft and
Tableau.
Total Revenue by Geographic Locations
Revenues by geographical region consisted of
the following (in millions):
Three Months Ended April
30,
2024
2023
Americas
$
6,062
$
5,482
Europe
2,145
1,951
Asia Pacific
926
814
$
9,133
$
8,247
Constant Currency Growth Rates
Subscription and support revenues constant
currency growth rates by the Company's service offerings were as
follows:
Three Months Ended
April 30, 2024 Compared to Three Months Ended
April 30, 2023
Three Months Ended
January 31, 2024 Compared to Three Months Ended
January 31, 2023
Three Months Ended
April 30, 2023 Compared to Three Months Ended
April 30, 2022
Sales
11%
10%
13%
Service
11%
12%
13%
Platform and Other
10%
10%
12%
Marketing and Commerce
10%
7%
10%
Integration and Analytics (1)
25%
21%
20%
(1) In the fourth quarter of fiscal 2024,
the Company renamed the service offering previously referred to as
Data to Integration and Analytics, which includes Mulesoft and
Tableau.
Revenue constant currency growth rates by geographical region
were as follows:
Three Months Ended
April 30, 2024 Compared to Three Months Ended
April 30, 2023
Three Months Ended
January 31, 2024 Compared to Three Months Ended
January 31, 2023
Three Months Ended
April 30, 2023 Compared to Three Months Ended
April 30, 2022
Americas
11%
9%
10%
Europe
9%
11%
17%
Asia Pacific
21%
19%
24%
Total growth
11%
10%
13%
Current remaining performance obligation
constant currency growth rates were as follows:
April 30, 2024 Compared
to April 30, 2023
January 31, 2024
Compared to January 31, 2023
April 30, 2023 Compared
to April 30, 2022
Total growth
10%
13%
12%
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 April
30,
2024
2023
Non-GAAP income
from operations
GAAP income from operations
$
1,709
$
412
Plus:
Amortization of purchased intangibles
(1)
461
471
Stock-based compensation expense
(2)(3)
750
680
Restructuring
8
711
Non-GAAP income from operations
$
2,928
$
2,274
Non-GAAP
operating margin as a percentage of revenues
Total revenues
$
9,133
$
8,247
GAAP operating margin (4)
18.7
%
5.0
%
Non-GAAP operating margin (4)
32.1
%
27.6
%
Non-GAAP net
income
GAAP net income
$
1,533
$
199
Plus:
Amortization of purchased intangibles
(1)
461
471
Stock-based compensation expense
(2)(3)
750
680
Restructuring
8
711
Income tax effects and adjustments
(345
)
(387
)
Non-GAAP net income
$
2,407
$
1,674
Three Months Ended April
30,
2024
2023
Non-GAAP diluted
net income per share
GAAP diluted net income per share
$
1.56
$
0.20
Plus:
Amortization of purchased intangibles
(1)
0.47
0.48
Stock-based compensation expense
(2)(3)
0.76
0.69
Restructuring
0.01
0.72
Income tax effects and adjustments
(0.36
)
(0.40
)
Non-GAAP diluted net income per share
$
2.44
$
1.69
Shares used in computing Non-GAAP diluted
net income per share
985
988
(1) Amortization of purchased intangibles
was as follows:
Three Months Ended April
30,
2024
2023
Cost of revenues
$
238
$
248
Sales and marketing
223
223
$
461
$
471
(2) Stock-based compensation expense,
excluding stock-based compensation expense related to
restructuring, was as follows:
Three Months Ended April
30,
2024
2023
Cost of revenues
$
119
$
103
Research and development
260
241
Sales and marketing
290
263
General and administrative
81
73
$
750
$
680
(3) Stock-based compensation expense
included in the GAAP to non-GAAP reconciliation tables above
excludes stock-based compensation expense related to restructuring
activities for the three months ended April 30, 2024 and 2023 of $0
and $16 million, respectively, which are 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
associated with the Company's restructuring activities.
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 April
30,
2024
2023
GAAP Basic Net Income Per Share
Net income
$
1,533
$
199
Basic net income per share
$
1.58
$
0.20
Shares used in computing basic net income
per share
970
980
Three Months Ended April
30,
2024
2023
Non-GAAP Basic Net Income Per
Share
Non-GAAP net income
$
2,407
$
1,674
Non-GAAP basic net income per share
$
2.48
$
1.71
Shares used in computing Non-GAAP basic
net income per share
970
980
Three Months Ended April
30,
2024
2023
GAAP Diluted Net Income Per
Share
Net income
$
1,533
$
199
Diluted net income per share (3)
$
1.56
$
0.20
Shares used in computing diluted net
income per share
985
988
Three Months Ended April
30,
2024
2023
Non-GAAP Diluted Net Income Per
Share
Non-GAAP net income
$
2,407
$
1,674
Non-GAAP diluted net income per share
$
2.44
$
1.69
Shares used in computing Non-GAAP diluted
net income per share
985
988
Supplemental Cash Flow
Information
Computation of Free Cash Flow, a
Non-GAAP Measure
(in millions)
(Unaudited)
Three Months Ended April
30,
2024
2023
GAAP net cash provided by operating
activities
$
6,247
$
4,491
Capital expenditures
(163
)
(243
)
Free cash flow
$
6,084
$
4,248
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, constant currency subscription and support revenue growth
rate 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 associated with the
Company's restructuring activities. 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 Company's restructuring
activities 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 (Losses) 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 (Losses) 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 compensation 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 2024,
the Company used a projected non-GAAP tax rate of 23.5%. For fiscal
2025, the Company uses a projected non-GAAP tax rate of 22.0%,
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240529359249/en/
Mike Spencer Salesforce Investor Relations
investor@salesforce.com
Carolyn Guss Salesforce Public Relations 415-536-4966
pr@salesforce.com
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