Salesforce (NYSE: CRM), the #1 AI CRM, today announced results
for its fiscal fourth quarter and full fiscal year 2024 ended
January 31, 2024.
- Fourth Quarter Revenue of $9.29 Billion, up 11%
Year-Over-Year ("Y/Y"), up 10% in Constant Currency ("CC")
- Current Remaining Performance Obligation of $27.6 Billion,
up 12% Y/Y, up 13% CC
- FY24 Revenue of $34.9 Billion, up 11% Y/Y, up 11%
CC
- FY24 GAAP Operating Margin of 14.4% and non-GAAP Operating
Margin of 30.5%
- FY24 Operating Cash Flow of $10.2 Billion, up 44%
Y/Y
- Initiates a Quarterly Dividend of $0.40 per Share of
Outstanding Common Stock
- Announced Share Repurchase Program Authorization Increased
by $10 Billion
- Returned $1.7 Billion in the Form of Share Repurchases to
Stockholders in Q4 and $11.7 Billion Since Inception of our Share
Repurchase Program
- Initiates Full Year FY25 Revenue Guidance of $37.7 Billion
to $38.0 Billion, up 8% - 9% Y/Y
- Initiates Full Year FY25 Subscription & Support Revenue
Growth Guidance of Approximately 10% Y/Y, Slightly Above 10% Y/Y
CC
- Initiates Full Year FY25 GAAP Operating Margin Guidance of
20.4% and non-GAAP Operating Margin Guidance of 32.5%
- Initiates Full Year FY25 Operating Cash Flow Growth Guidance
of 21% to 24% Y/Y
“It's been a phenomenal year of transformation for Salesforce
with strong performance across all our key metrics, including
record cash flow and margin growth. Our total remaining performance
obligation ended the fourth quarter at $56.9 billion, an increase
of 17% year-over-year. We’re also thrilled to initiate our
first-ever Salesforce dividend and increase our share buyback plan
by $10 billion,” said Marc Benioff, Chair & CEO, Salesforce.
“With our trusted, unified Einstein 1 Platform, we’re incredibly
well positioned to build on our success and capitalize on the
massive surge in tech spending expected over the coming years,
delivering an unprecedented level of intelligence to our customers
as AI transforms every company and industry.”
“We had a strong close to our fiscal year and demonstrated
significant progress on the profitable growth strategy we announced
last year, delivering full year GAAP operating margin of 14.4% and
Non-GAAP operating margin of 30.5%,” said Amy Weaver, President and
CFO of Salesforce. “We have had an extraordinary year of
transformation and, looking ahead, we remain committed to driving
shareholder value.”
Salesforce delivered the following results for its fiscal fourth
quarter and full fiscal year:
Revenue: Total fourth quarter revenue
was $9.29 billion, an increase of 11% Y/Y and 10% CC. Subscription
and support revenues were $8.75 billion, an increase of 12% Y/Y.
Professional services and other revenues were $0.54 billion, a
decrease of (9)% Y/Y.
Fiscal 2024 revenue was $34.86 billion, an
increase of 11% Y/Y and 11% CC. Subscription and support revenues
were $32.54 billion, an increase of 12% Y/Y. Professional services
and other revenues were $2.32 billion, flat Y/Y.
Operating Margin: Fourth quarter GAAP
operating margin was 17.5%. Fourth quarter non-GAAP operating
margin was 31.4%. Restructuring negatively impacted fourth quarter
GAAP operating margin by (190) bps.
Fiscal 2024 GAAP operating margin was 14.4%.
Fiscal 2024 non-GAAP operating margin was 30.5%. Restructuring
negatively impacted fiscal 2024 GAAP operating margin by (280)
bps.
Earnings per Share: Fourth quarter
GAAP diluted EPS was $1.47 and non-GAAP diluted EPS was $2.29.
Losses on the Company’s strategic investments negatively impacted
GAAP diluted EPS by $(0.03) based on a U.S. tax rate of 24.5% and
non-GAAP diluted EPS by $(0.03) based on a non-GAAP tax rate of
23.5%. Restructuring negatively impacted fourth quarter GAAP
diluted EPS by $(0.18).
Fiscal 2024 GAAP diluted EPS was $4.20 and
non-GAAP diluted EPS was $8.22. Losses on the Company’s strategic
investments negatively impacted GAAP diluted EPS by $(0.21) based
on a U.S. tax rate of 24.5% and non-GAAP diluted EPS by ($0.22)
based on a non-GAAP tax rate of 23.5%. Restructuring negatively
impacted fiscal 2024 GAAP diluted EPS by $(1.00).
Cash Flow: Cash generated from
operations for the fourth quarter was $3.40 billion, an increase of
22% Y/Y. Free cash flow was $3.26 billion, an increase of 27% Y/Y.
Restructuring negatively impacted fourth quarter operating cash
flow growth by (200) bps.
Cash generated from operations for the fiscal
2024 was $10.23 billion, an increase of 44% Y/Y. Free cash flow was
$9.50 billion, an increase of 50% Y/Y. Restructuring negatively
impacted fiscal 2024 operating cash flow growth by (1,500) bps.
Remaining Performance Obligation:
Remaining performance obligation ended the fourth quarter at $56.9
billion, an increase of 17% Y/Y. Current remaining performance
obligation ended at $27.6 billion, an increase of 12% Y/Y, and 13%
CC.
Salesforce Initiates Quarterly Dividend
Salesforce’s Board of Directors declared a cash dividend of
$0.40 per share of our outstanding common stock, payable on April
11, 2024 to stockholders of record as of the close of business on
March 14, 2024. We intend to pay a cash dividend on a quarterly
basis going forward, subject to market conditions and approval by
our Board of Directors.
Forward Looking Guidance
As of February 28, 2024, the Company is initiating its first
quarter GAAP and non-GAAP diluted EPS guidance, current remaining
performance obligation growth guidance, and revenue guidance. The
Company is initiating its full year FY25 revenue guidance, GAAP and
non-GAAP diluted EPS guidance, GAAP and non-GAAP operating margin
guidance, subscription and support revenue growth 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.
Q1 FY25
Guidance
Full Year FY25
Guidance
Total Revenue
$9.12 - $9.17 Billion
$37.7 - $38.0 Billion
Y/Y Growth
11%
9%
FX Impact(1)
($50M) Y/Y FX
($100M) Y/Y FX
Subscription & Support Revenue Y/Y
Growth(4)
N/A
Approx 10%, Slightly Above 10% in
CC
GAAP Operating Margin
N/A
~20.4%
Non-GAAP Operating Margin(2)
N/A
~32.5%
GAAP Diluted Earnings per Share(2)
$1.42 - $1.44
$6.07 - $6.15
Non-GAAP Diluted Earnings per Share(2)
$2.37 - $2.39
$9.68 - $9.76
Operating Cash Flow Growth (Y/Y)
N/A
21% - 24%
Current Remaining Performance Obligation
Growth (Y/Y)
11%
N/A
FX Impact(3)
($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) 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 Q1 -
Q4 FY25 repurchase activity under our share repurchase program.
(3) Current Remaining Performance
Obligation FX impact is calculated by taking the current period
rates compared to the prior period ending rates.
(4) Subscription & Support revenue
excludes professional services revenue.
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)
~20.4%
Plus
Amortization of purchased
intangibles(2)
4.4%
Stock-based compensation expense(2)(3)
7.7%
Restructuring(2)(3)
—%
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
Q1
FY25
GAAP diluted earnings per share
range(1)(2)
$1.42 - $1.44
$6.07 - $6.15
Plus
Amortization of purchased intangibles
$
0.47
$
1.64
Stock-based compensation expense
$
0.73
$
2.92
Restructuring(3)
$
—
$
0.02
Less
Income tax effects and adjustments(4)
$
(0.25
)
$
(0.97
)
Non-GAAP diluted earnings per share(2)
$2.37 - $2.39
$9.68 - $9.76
Shares used in computing basic net income
per share (millions)(5)
976
986
Shares used in computing diluted net
income per share (millions)(5)
994
1,002
(1) The Company's GAAP tax provision is
expected to be approximately 22.5% for the three months ended April
30, 2024, and approximately 22.5% 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 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 Spring 2024 Product Release, visit:
www.salesforce.com/products/spring-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 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 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 fluctuations in the 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 declare future cash
dividends; 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
revise or update publicly these 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.
Consolidated Statements of
Operations
(in millions, except per share
data)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Revenues:
Subscription and support
$
8,748
$
7,789
$
32,537
$
29,021
Professional services and other
539
595
2,320
2,331
Total revenues
9,287
8,384
34,857
31,352
Cost of revenues (1)(2):
Subscription and support
1,581
1,440
6,177
5,821
Professional services and other
567
660
2,364
2,539
Total cost of revenues
2,148
2,100
8,541
8,360
Gross profit
7,139
6,284
26,316
22,992
Operating expenses (1)(2):
Research and development
1,275
1,128
4,906
5,055
Marketing and sales
3,437
3,385
12,877
13,526
General and administrative
632
586
2,534
2,553
Restructuring (3)
173
828
988
828
Total operating expenses
5,517
5,927
21,305
21,962
Income from operations
1,622
357
5,011
1,030
Losses on strategic investments, net
(35
)
(314
)
(277
)
(239
)
Other income (expense)
58
(10
)
216
(131
)
Income before provision for income
taxes
1,645
33
4,950
660
Provision for income taxes
(199
)
(131
)
(814
)
(452
)
Net income (loss)
$
1,446
$
(98
)
$
4,136
$
208
Basic net income (loss) per share
$
1.49
$
(0.10
)
$
4.25
$
0.21
Diluted net income (loss) per share
$
1.47
$
(0.10
)
$
4.20
$
0.21
Shares used in computing basic net income
(loss) per share
970
984
974
992
Shares used in computing diluted net
income (loss) per share
983
984
984
997
(1) Amounts include amortization of
intangible assets acquired through business combinations, as
follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Cost of revenues
$
235
$
250
$
978
$
1,035
Marketing and sales
223
223
891
916
(2) Amounts include stock-based
compensation expense, as follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Cost of revenues
$
107
$
127
$
431
$
499
Research and development
237
273
972
1,136
Marketing and sales
247
309
1,062
1,256
General and administrative
76
80
299
368
Restructuring
7
20
23
20
(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. In the fourth quarter of fiscal 2024, the Company
initiated, and has substantially completed, an initiative to drive
further operational efficiencies through a focused workforce
reduction.
Salesforce, Inc.
Consolidated Statements of
Operations
(As a percentage of total
revenues)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Revenues:
Subscription and support
94
%
93
%
93
%
93
%
Professional services and other
6
7
7
7
Total revenues
100
100
100
100
Cost of revenues (1)(2):
Subscription and support
17
17
18
19
Professional services and other
6
8
7
8
Total cost of revenues
23
25
25
27
Gross profit
77
75
75
73
Operating expenses (1)(2):
Research and development
13
14
14
16
Marketing and sales
37
40
37
43
General and administrative
7
7
7
8
Restructuring
2
10
3
3
Total operating expenses
59
71
61
70
Income from operations
18
4
14
3
Losses on strategic investments, net
(1
)
(4
)
(1
)
(1
)
Other income (expense)
1
0
1
0
Income before provision for income
taxes
18
0
14
2
Provision for income taxes
(2
)
(1
)
(2
)
(1
)
Net income (loss)
16
%
(1
)%
12
%
1
%
(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,
2024
2023
2024
2023
Cost of revenues
3
%
3
%
3
%
3
%
Marketing and sales
2
3
2
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,
2024
2023
2024
2023
Cost of revenues
1
%
2
%
1
%
2
%
Research and development
3
3
3
3
Marketing and sales
3
4
3
4
General and administrative
0
1
1
1
Restructuring
0
0
0
0
Salesforce, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
January 31, 2024
January 31, 2023
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
8,472
$
7,016
Marketable securities
5,722
5,492
Accounts receivable, net
11,414
10,755
Costs capitalized to obtain revenue
contracts, net
1,905
1,776
Prepaid expenses and other current
assets
1,561
1,356
Total current assets
29,074
26,395
Property and equipment, net
3,689
3,702
Operating lease right-of-use assets,
net
2,366
2,890
Noncurrent costs capitalized to obtain
revenue contracts, net
2,515
2,697
Strategic investments
4,848
4,672
Goodwill
48,620
48,568
Intangible assets acquired through
business combinations, net
5,278
7,125
Deferred tax assets and other assets,
net
3,433
2,800
Total assets
$
99,823
$
98,849
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable, accrued expenses and
other liabilities
$
6,111
$
6,743
Operating lease liabilities, current
518
590
Unearned revenue
19,003
17,376
Debt, current
999
1,182
Total current liabilities
26,631
25,891
Noncurrent debt
8,427
9,419
Noncurrent operating lease liabilities
2,644
2,897
Other noncurrent liabilities
2,475
2,283
Total liabilities
40,177
40,490
Stockholders’ equity:
Common stock
1
1
Treasury stock, at cost
(11,692
)
(4,000
)
Additional paid-in capital
59,841
55,047
Accumulated other comprehensive loss
(225
)
(274
)
Retained earnings
11,721
7,585
Total stockholders’ equity
59,646
58,359
Total liabilities and stockholders’
equity
$
99,823
$
98,849
Salesforce, Inc.
Consolidated Statements of Cash
Flows
(in millions)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Operating activities:
Net income (loss)
$
1,446
$
(98
)
$
4,136
$
208
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization (1)
953
1,032
3,959
3,786
Amortization of costs capitalized to
obtain revenue contracts, net
497
443
1,925
1,668
Stock-based compensation expense
674
809
2,787
3,279
Losses on strategic investments, net
35
314
277
239
Changes in assets and liabilities, net of
business combinations:
Accounts receivable, net
(6,564
)
(6,481
)
(659
)
(995
)
Costs capitalized to obtain revenue
contracts, net
(966
)
(1,066
)
(1,872
)
(2,345
)
Prepaid expenses and other current assets
and other assets
(93
)
57
(843
)
(302
)
Accounts payable and accrued expenses and
other liabilities
1,129
1,733
(478
)
528
Operating lease liabilities
(147
)
(138
)
(621
)
(699
)
Unearned revenue
6,439
6,183
1,623
1,744
Net cash provided by operating
activities
3,403
2,788
10,234
7,111
Investing activities:
Business combinations, net of cash
acquired
0
0
(82
)
(439
)
Purchases of strategic investments
(106
)
(75
)
(496
)
(550
)
Sales of strategic investments
6
174
108
355
Purchases of marketable securities
(934
)
(645
)
(3,761
)
(4,777
)
Sales of marketable securities
394
379
1,511
1,771
Maturities of marketable securities
319
697
2,129
2,449
Capital expenditures
(147
)
(218
)
(736
)
(798
)
Net cash provided by (used in) investing
activities
(468
)
312
(1,327
)
(1,989
)
Financing activities:
Repurchases of common stock
(1,692
)
(2,323
)
(7,620
)
(4,000
)
Proceeds from employee stock plans
869
173
1,954
861
Principal payments on financing
obligations
(123
)
(70
)
(629
)
(419
)
Repayments of debt
0
(1
)
(1,182
)
(4
)
Net cash used in financing activities
(946
)
(2,221
)
(7,477
)
(3,562
)
Effect of exchange rate changes
30
61
26
(8
)
Net increase in cash and cash
equivalents
2,019
940
1,456
1,552
Cash and cash equivalents, beginning of
period
6,453
6,076
7,016
5,464
Cash and cash equivalents, end of
period
$
8,472
$
7,016
$
8,472
$
7,016
(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)
January 31, 2024
October 31, 2023
July 31, 2023
April 30, 2023
January 31, 2023
Full time equivalent headcount
72,682
70,843
70,456
72,970
79,390
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, 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
As of January 31, 2023
24.6
24.0
48.6
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,
2024
2023
2024
2023
Unearned revenue, beginning of period
$
12,564
$
11,193
$
17,376
$
15,628
Billings and other (1)
15,834
14,680
36,370
33,034
Contribution from contract asset
(108
)
(113
)
110
62
Revenue recognized over time
(8,463
)
(7,730
)
(32,727
)
(29,595
)
Revenue recognized at a point in time
(824
)
(654
)
(2,130
)
(1,757
)
Unearned revenue from business
combinations
0
0
4
4
Unearned revenue, end of period
$
19,003
$
17,376
$
19,003
$
17,376
(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,
2024
2023
2024
2023
Sales
$
1,969
$
1,787
$
7,580
$
6,831
Service
2,158
1,924
8,245
7,369
Platform and Other
1,720
1,557
6,611
5,967
Marketing and Commerce
1,274
1,177
4,912
4,516
Integration and Analytics (1)
1,627
1,344
5,189
4,338
$
8,748
$
7,789
$
32,537
$
29,021
(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 January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Americas
$
6,176
$
5,657
$
23,289
$
21,250
Europe
2,205
1,935
8,128
7,163
Asia Pacific
906
792
3,440
2,939
$
9,287
$
8,384
$
34,857
$
31,352
Constant Currency Growth Rates
Subscription and support revenues constant currency growth rates
by the Company's service offerings were as follows:
Three Months Ended
January 31, 2024
Compared to Three
Months
Ended January 31, 2023
Three Months Ended
October 31, 2023
Compared to Three
Months
Ended October 31, 2022
Three Months Ended
January 31, 2023
Compared to Three
Months
Ended January 31, 2022
Sales
10%
10%
16%
Service
12%
11%
15%
Platform and Other
10%
11%
18%
Marketing and Commerce
7%
8%
16%
Integration and Analytics (1)
21%
22%
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
January 31, 2024
Compared to Three
Months
Ended January 31, 2023
Three Months Ended
October 31, 2023
Compared to Three
Months
Ended October 31, 2022
Three Months Ended
January 31, 2023
Compared to Three
Months
Ended January 31, 2022
Americas
9%
9%
14%
Europe
11%
10%
20%
Asia Pacific
19%
21%
30%
Total growth
10%
10%
17%
Current remaining performance obligation constant currency
growth rates were as follows:
January 31, 2024
Compared to
January 31, 2023
October 31, 2023
Compared to
October 31, 2022
January 31, 2023
Compared to
January 31, 2022
Total growth
13%
13%
13%
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 January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Non-GAAP income
from operations
GAAP income from operations
$
1,622
$
357
$
5,011
$
1,030
Plus:
Amortization of purchased intangibles
(1)
458
473
1,869
1,951
Stock-based compensation expense
(2)(3)
667
789
2,764
3,259
Restructuring
173
828
988
828
Non-GAAP income from operations
$
2,920
$
2,447
$
10,632
$
7,068
Non-GAAP
operating margin as a percentage of revenues
Total revenues
$
9,287
$
8,384
$
34,857
$
31,352
GAAP operating margin (4)
17.5
%
4.3
%
14.4
%
3.3
%
Non-GAAP operating margin (4)
31.4
%
29.2
%
30.5
%
22.5
%
Non-GAAP net
income
GAAP net income (loss)
$
1,446
$
(98
)
$
4,136
$
208
Plus:
Amortization of purchased intangibles
(1)
458
473
1,869
1,951
Stock-based compensation expense
(2)(3)
667
789
2,764
3,259
Restructuring
173
828
988
828
Income tax effects and adjustments
(493
)
(336
)
(1,670
)
(1,022
)
Non-GAAP net income
$
2,251
$
1,656
$
8,087
$
5,224
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Non-GAAP diluted
net income per share
GAAP diluted net income (loss) per
share
$
1.47
$
(0.10
)
$
4.20
$
0.21
Plus:
Amortization of purchased intangibles
(1)
0.47
0.48
1.90
1.96
Stock-based compensation expense
(2)(3)
0.68
0.80
2.81
3.27
Restructuring
0.18
0.84
1.00
0.83
Income tax effects and adjustments
(0.51
)
(0.34
)
(1.69
)
(1.03
)
Non-GAAP diluted net income per share
$
2.29
$
1.68
$
8.22
$
5.24
Shares used in computing Non-GAAP diluted
net income per share
983
987
984
997
(1) Amortization of purchased intangibles
was as follows:
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Cost of revenues
$
235
$
250
$
978
$
1,035
Marketing and sales
223
223
891
916
$
458
$
473
$
1,869
$
1,951
(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,
2024
2023
2024
2023
Cost of revenues
$
107
$
127
$
431
$
499
Research and development
237
273
972
1,136
Marketing and sales
247
309
1,062
1,256
General and administrative
76
80
299
368
$
667
$
789
$
2,764
$
3,259
(3) Stock-based compensation expense
included in the GAAP to non-GAAP reconciliation tables above
excludes stock-based compensation expense related to restructuring
initiatives for the three months ended January 31, 2024 and 2023 of
$7 million and $20 million, respectively, and for the fiscal year
ended January 31, 2024 and 2023 of $23 million and $20 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
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,
2024
2023
2024
2023
GAAP Basic Net Income (Loss) Per
Share
Net income (loss)
$
1,446
$
(98
)
$
4,136
$
208
Basic net income (loss) per share
$
1.49
$
(0.10
)
$
4.25
$
0.21
Shares used in computing basic net income
(loss) per share
970
984
974
992
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Non-GAAP Basic Net Income Per
Share
Non-GAAP net income
$
2,251
$
1,656
$
8,087
$
5,224
Non-GAAP basic net income per share
$
2.32
$
1.68
$
8.30
$
5.27
Shares used in computing Non-GAAP basic
net income per share
970
984
974
992
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
GAAP Diluted Net Income (Loss) Per
Share
Net income (loss)
$
1,446
$
(98
)
$
4,136
$
208
Diluted net income (loss) per share
$
1.47
$
(0.10
)
$
4.20
$
0.21
Shares used in computing diluted net
income (loss) per share
983
984
984
997
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
Non-GAAP Diluted Net Income Per
Share
Non-GAAP net income
$
2,251
$
1,656
$
8,087
$
5,224
Non-GAAP diluted net income per share
$
2.29
$
1.68
$
8.22
$
5.24
Shares used in computing Non-GAAP diluted
net income per share
983
987
984
997
Supplemental Cash Flow
Information
Computation of Free Cash Flow, a
Non-GAAP Measure
(in millions)
(Unaudited)
Three Months Ended January
31,
Fiscal Year Ended January
31,
2024
2023
2024
2023
GAAP net cash provided by operating
activities
$
3,403
$
2,788
$
10,234
$
7,111
Capital expenditures
(147
)
(218
)
(736
)
(798
)
Free cash flow
$
3,256
$
2,570
$
9,498
$
6,313
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 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 (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 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 and 2023, the Company
used a projected non-GAAP tax rate of 23.5% and 22.0%,
respectively. 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/20240228722646/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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