SAN FRANCISCO, May 28, 2020 /PRNewswire/ -- Salesforce
(NYSE: CRM), the global leader in CRM, today announced results for
its fiscal first quarter ended April 30,
2020.
"Our results, amidst this global crisis, demonstrated our
ability to execute at speed, innovate at scale and the strength of
our business model," said Marc
Benioff, Chair & CEO, Salesforce. "We made long-term
investments in keeping our employees safe, supporting our
customers, delivering crucial innovation like Work.com, and helping
our communities with PPE, grants, and technology. The pandemic
showed us that digital is an imperative for every company, and
we're confident Salesforce will continue to accelerate as we bring
our customers into the new normal."
In response to COVID-19, Salesforce took the following actions
in its fiscal first quarter to invest in its customers, employees
and community during this unprecedented time, and to prepare for
the future:
- Launched Salesforce Care, a set of free rapid response
solutions to help companies stay connected to their employees,
customers and partners during the COVID-19 crisis
- Created the Tableau Data Hub, a free resource to help companies
and governments around the world see and understand data about the
pandemic
- Developed an online leadership program called Leading Through
Change. The program highlights the work Salesforce customers have
been doing during the crisis and has over 75 million views to
date
- Provided customers most affected by the COVID-19 pandemic
temporary financial flexibility
- Gave certainty to its sales team with a one-time guaranteed
commission for the first quarter
- Directed its global workforce to work from home and cancelled
all business travel by employees for the foreseeable future
- Committed to no significant layoffs for the first 90 days of
the crisis
- Launched B-Well Together for employees, a series focused on
aligning the mind and body with leading well-being experts. Based
on global demand, the company opened it to the public
- Shifted customer, industry, and employee events to virtual-only
experiences for the remainder of 2020
- Donated more than $7.5M in grants
to organizations on the front lines of the crisis in the
San Francisco Bay Area,
New York, Israel, Italy, Spain,
France and Germany
- Sourced more than 50 million units of PPE, such as masks,
gowns, suits, and face shields for hospitals in the US, U.K.,
India and France
Salesforce continues to invest in its stakeholders. In the
second fiscal quarter, the company introduced Work.com, new
technology solutions and resources to help business and community
leaders around the world reopen safely, re-skill employees and
respond efficiently on the heels of the COVID-19 pandemic. Work.com
has generated enormous interest from businesses and governments and
deepened partnerships with the world's top system integrators and
technology partners. For example, Workday recently announced that
it will integrate its employee data directly into Work.com to make
it easier for employers to centralize critical data and get their
businesses up and running again.
Salesforce delivered the following results for its fiscal first
quarter:
Revenue:
Total first quarter revenue was $4.87
billion, an increase of 30% year-over-year, and 31% in
constant currency. Subscription and support revenues for the
quarter were $4.58 billion, an
increase of 31% year-over-year. Professional services and other
revenues for the quarter were $290
million, an increase of 20% year-over-year.
Earnings per Share:
First quarter GAAP earnings per share was $0.11, and non-GAAP diluted earnings per share
was $0.70. Mark-to-market accounting
of the company's strategic investments, required by ASU 2016-01,
benefited GAAP earnings per share by $0.16 based on a U.S. tax rate of 25% and
non-GAAP diluted earnings per share by $0.16 based on a non-GAAP tax rate of 22%.
Cash: Cash generated from
operations for the first quarter was $1.86
billion, a decrease of 5% year-over-year. Total cash, cash
equivalents and marketable securities ended the first quarter at
$9.80 billion.
Remaining Performance
Obligation: Remaining performance obligation ended the first
quarter at approximately $29.3
billion, an increase of 18% year-over-year. Current
remaining performance obligation ended the first quarter at
approximately $14.5 billion, an
increase of 23% year-over-year, 24% in constant currency.
As of May 28, 2020, the company is
initiating its revenue guidance, GAAP earnings per share guidance,
non-GAAP earnings per share guidance, and current remaining
performance obligation growth guidance for the its second quarter
of fiscal year 2021. As a result of the first quarter financial
impacts of COVID-19 discussed above, and the company's current
assumptions related to the extent to which the pandemic will affect
the business going forward, the company is lowering its revenue
guidance, GAAP earnings per share guidance, non-GAAP earnings per
share guidance, and operating cash flow guidance previously
provided on February 25, 2020 for its
full fiscal year 2021. Management will provide further
commentary around these guidance assumptions on its earnings call,
which is expected to occur on May 28,
2020 at 2:00 PM Pacific
Time.
Our guidance assumes no change to the value of the company's
strategic investment portfolio resulting from ASU 2016-01 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
future acquisitions or other transactions.
|
Q2 FY21
Guidance
|
|
Full Year FY21
Guidance
|
Revenue
|
$4.89 - $4.90
billion
|
|
~$20.0
billion
|
Y/Y Growth
|
22% - 23%
|
|
~17%
|
GAAP earnings per
share
|
($0.02) -
($0.01)
|
|
($0.06) -
($0.04)
|
Non-GAAP earnings per
share
|
$0.66 -
$0.67
|
|
$2.93 -
$2.95
|
Operating Cash Flow
Growth (Y/Y)
|
N/A
|
|
~10% - 11%
|
Current Remaining
Performance Obligation Growth (Y/Y)
|
~16% - 17%
|
|
N/A
|
|
The following is a
per share reconciliation of GAAP diluted loss per share to non-GAAP
diluted earnings per share guidance for the next quarter and the
full year:
|
|
|
Fiscal
2021
|
|
Q2
|
|
FY21
|
GAAP loss per share
range(1)(2)
|
($0.02) -
($0.01)
|
|
($0.06) -
($0.04)
|
Plus
|
|
|
|
Amortization of
purchased intangibles
|
$
|
0.31
|
|
|
$
|
1.21
|
|
Stock-based
expense
|
$
|
0.62
|
|
|
$
|
2.36
|
|
Income tax effects
and adjustments(3)
|
$
|
(0.25)
|
|
|
$
|
(0.58)
|
|
Non-GAAP diluted
earnings per share(2)
|
$0.66 -
$0.67
|
|
$2.93 -
$2.95
|
|
|
|
|
Shares used in
computing basic GAAP net loss per share (millions)
|
903
|
|
|
906
|
|
Shares used in
computing diluted Non-GAAP net income per share
(millions)
|
924
|
|
|
927
|
|
(1) The Company's GAAP tax provision is expected to
be approximately 81% for the three months ended July 31, 2020, and approximately 104% for the
year ended January 31, 2021. 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 basic and
diluted earnings per share assumes no change to the value of our
strategic investment portfolio resulting from ASU 2016-01 as it is
not possible to forecast future gains and losses. While
historically the company's strategic investment portfolio has had a
positive impact on the company's financial results, that may not be
true for future periods, particularly in periods of significant
market fluctuations that affect the publicly traded companies
within the company's strategic investment portfolio. The impact of
future gains or losses from the company's strategic investment
portfolio could be material.
(3) 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.
For additional information regarding non-GAAP financial measures
see the reconciliation of results and related explanations
below.
Quarterly Conference Call
Salesforce will 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 of the event will be available on
the Salesforce Investor Relations website at
www.salesforce.com/investor. A live dial-in is available
domestically at (833) 579-0905 and internationally at (778)
560-2800, Conference ID 6520138. A replay will be available
at (800) 585-8367 or (416) 621-4642 until midnight (ET)
June 11, 2020.
About Salesforce
Salesforce is the global leader in
Customer Relationship Management (CRM), bringing companies closer
to their customers in the digital age. Founded in 1999, Salesforce
enables companies of every size and industry to take advantage of
powerful technologies—cloud, mobile, social, internet of things,
artificial intelligence, voice and blockchain—to create a
360-degree 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 may include 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 improvement, expected revenue growth,
expected current remaining performance obligation growth, expected
tax rates, stock-based compensation expenses, amortization of
purchased intangibles, shares outstanding, market growth,
environmental, social and governance goals, expected capital
allocation, including mergers and acquisitions, capital
expenditures and other investments, expectations regarding closing
contemplated acquisitions and contributions from acquired
companies. 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 effect of the impact of
the COVID-19 pandemic, related public health measures and resulting
economic downturn and market volatility; our ability to maintain
service performance and security levels 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 and costs related to 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 Tableau, 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 beyond the CRM market;
the success of our strategy of acquiring or making investments in
complementary businesses, joint ventures, services, technologies
and intellectual property rights; our ability to realize the
benefits from strategic partnerships, joint ventures and
investments; our ability to successfully integrate acquired
businesses and technologies; our ability to compete in the market
in which we participate; the success of our business strategy and
our plan to build our business, including our strategy to be the
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 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
develop 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 and market conditions; the impact of
geopolitical events; uncertainties regarding the impact of
expensing stock options and other equity awards; the sufficiency of
our capital resources; risks related to our 2023 and 2028 senior
notes, revolving credit facility and loan associated with 50
Fremont; our ability to comply with our debt covenants and lease
obligations; and the impact of climate change, natural disasters
and actual or threatened public health emergencies, including the
ongoing COVID-19 pandemic.
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 Investor
Information section of the company's website at
www.salesforce.com/investor.
Salesforce.com, inc. assumes no obligation and does not intend
to update these forward-looking statements, except as required by
law.
© 2020 salesforce.com, inc. All rights
reserved. Salesforce and other marks are trademarks
of salesforce.com, inc. Other brands featured herein may
be trademarks of their respective owners.
salesforce.com,
inc.
|
Consolidated
Statements of Operations
|
(in millions,
except per share data)
|
(Unaudited)
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
Subscription and
support
|
$
|
4,575
|
|
|
$
|
3,496
|
|
Professional services
and other
|
290
|
|
|
241
|
|
Total
revenues
|
4,865
|
|
|
3,737
|
|
Cost of revenues
(1)(2):
|
|
|
|
Subscription and
support
|
966
|
|
|
678
|
|
Professional services
and other
|
288
|
|
|
236
|
|
Total cost of
revenues
|
1,254
|
|
|
914
|
|
Gross
profit
|
3,611
|
|
|
2,823
|
|
Operating expenses
(1)(2):
|
|
|
|
Research and
development
|
859
|
|
|
554
|
|
Marketing and
sales
|
2,390
|
|
|
1,697
|
|
General and
administrative
|
502
|
|
|
362
|
|
Total operating
expenses
|
3,751
|
|
|
2,613
|
|
Income (loss) from
operations
|
(140)
|
|
|
210
|
|
Gains on strategic
investments, net
|
192
|
|
|
281
|
|
Other
expense
|
(5)
|
|
|
(9)
|
|
Income before benefit
from (provision for) income taxes
|
47
|
|
|
482
|
|
Benefit from
(provision for) income taxes
|
52
|
|
|
(90)
|
|
Net income
|
$
|
99
|
|
|
$
|
392
|
|
Basic net income per
share
|
$
|
0.11
|
|
|
$
|
0.51
|
|
Diluted net income
per share
|
$
|
0.11
|
|
|
$
|
0.49
|
|
Shares used in
computing basic net income per share
|
896
|
|
|
771
|
|
Shares used in
computing diluted net income per share
|
913
|
|
|
793
|
|
|
(1) Amounts include
amortization of intangible assets acquired through business
combinations, as follows:
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Cost of
revenues
|
$
|
159
|
|
|
$
|
61
|
|
Marketing and
sales
|
112
|
|
|
68
|
|
|
(2) Amounts
include stock-based expense, as follows:
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Cost of
revenues
|
$
|
52
|
|
|
$
|
43
|
|
Research and
development
|
166
|
|
|
81
|
|
Marketing and
sales
|
223
|
|
|
177
|
|
General and
administrative
|
63
|
|
|
42
|
|
salesforce.com,
inc.
|
Consolidated
Statements of Operations
|
(As a percentage
of total revenues)
|
(Unaudited)
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
Subscription and
support
|
94
|
%
|
|
94
|
%
|
Professional services
and other
|
6
|
|
|
6
|
|
Total
revenues
|
100
|
|
|
100
|
|
Cost of revenues
(1)(2):
|
|
|
|
Subscription and
support
|
20
|
|
|
18
|
|
Professional services
and other
|
6
|
|
|
6
|
|
Total cost of
revenues
|
26
|
|
|
24
|
|
Gross
profit
|
74
|
|
|
76
|
|
Operating expenses
(1)(2):
|
|
|
|
Research and
development
|
18
|
|
|
15
|
|
Marketing and
sales
|
49
|
|
|
45
|
|
General and
administrative
|
10
|
|
|
10
|
|
Total operating
expenses
|
77
|
|
|
70
|
|
Income (loss) from
operations
|
(3)
|
|
|
6
|
|
Gains on strategic
investments, net
|
4
|
|
|
7
|
|
Other
expense
|
0
|
|
|
0
|
|
Income before benefit
from (provision for) income taxes
|
1
|
|
|
13
|
|
Benefit from
(provision for) income taxes
|
1
|
|
|
(3)
|
|
Net income
|
2
|
%
|
|
10
|
%
|
|
(1) Amounts
include amortization of intangible assets acquired through business
combinations as a percentage of total revenues, as
follows:
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Cost of
revenues
|
3
|
%
|
|
2
|
%
|
Marketing and
sales
|
2
|
|
|
2
|
|
|
|
(2) Amounts
include stock-based expense as a percentage of total revenues, as
follows:
|
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Cost of
revenues
|
1
|
%
|
|
1
|
%
|
Research and
development
|
3
|
|
|
2
|
|
Marketing and
sales
|
5
|
|
|
5
|
|
General and
administrative
|
1
|
|
|
1
|
|
salesforce.com,
inc.
|
Consolidated
Balance Sheets
|
(in
millions)
|
(Unaudited)
|
|
|
April 30,
2020
|
|
January 31,
2020
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
5,772
|
|
|
$
|
4,145
|
|
Marketable
securities
|
4,030
|
|
|
3,802
|
|
Accounts receivable,
net
|
3,076
|
|
|
6,174
|
|
Costs capitalized to
obtain revenue contracts, net
|
881
|
|
|
926
|
|
Prepaid expenses and
other current assets
|
954
|
|
|
916
|
|
Total current
assets
|
14,713
|
|
|
15,963
|
|
Property and
equipment, net
|
2,518
|
|
|
2,375
|
|
Operating lease
right-of-use assets, net
|
2,983
|
|
|
3,040
|
|
Noncurrent costs
capitalized to obtain revenue contracts, net
|
1,171
|
|
|
1,348
|
|
Strategic
investments
|
1,902
|
|
|
1,963
|
|
Goodwill
|
25,266
|
|
|
25,134
|
|
Intangible assets
acquired through business combinations, net
|
4,488
|
|
|
4,724
|
|
Capitalized software
and other assets, net
|
582
|
|
|
579
|
|
Total
assets
|
$
|
53,623
|
|
|
$
|
55,126
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable,
accrued expenses and other liabilities
|
$
|
2,989
|
|
|
$
|
3,433
|
|
Operating lease
liabilities, current
|
742
|
|
|
750
|
|
Unearned
revenue
|
9,112
|
|
|
10,662
|
|
Total current
liabilities
|
12,843
|
|
|
14,845
|
|
Noncurrent
debt
|
2,673
|
|
|
2,673
|
|
Noncurrent operating
lease liabilities
|
2,422
|
|
|
2,445
|
|
Other noncurrent
liabilities
|
1,120
|
|
|
1,278
|
|
Total
liabilities
|
19,058
|
|
|
21,241
|
|
Stockholders'
equity:
|
|
|
|
Common
stock
|
1
|
|
|
1
|
|
Additional paid-in
capital
|
32,739
|
|
|
32,116
|
|
Accumulated other
comprehensive loss
|
(135)
|
|
|
(93)
|
|
Retained
earnings
|
1,960
|
|
|
1,861
|
|
Total stockholders'
equity
|
34,565
|
|
|
33,885
|
|
Total liabilities and
stockholders' equity
|
$
|
53,623
|
|
|
$
|
55,126
|
|
salesforce.com,
inc.
|
Consolidated
Statements of Cash Flows
|
(in
millions)
|
(Unaudited)
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Operating
activities:
|
|
|
|
Net income
|
$
|
99
|
|
|
$
|
392
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
658
|
|
|
437
|
|
Amortization of costs
capitalized to obtain revenue contracts, net
|
247
|
|
|
209
|
|
Expenses related to
employee stock plans
|
504
|
|
|
343
|
|
Gains on strategic
investments, net
|
(192)
|
|
|
(281)
|
|
Changes in assets and
liabilities, net of business combinations:
|
|
|
|
Accounts receivable,
net
|
3,094
|
|
|
2,774
|
|
Costs capitalized to
obtain revenue contracts, net
|
(25)
|
|
|
(124)
|
|
Prepaid expenses and
other current assets and other assets
|
(11)
|
|
|
(97)
|
|
Accounts
payable
|
147
|
|
|
15
|
|
Accrued expenses and
other liabilities
|
(904)
|
|
|
(560)
|
|
Operating lease
liabilities
|
(203)
|
|
|
(164)
|
|
Unearned
revenue
|
(1,555)
|
|
|
(979)
|
|
Net cash provided by
operating activities
|
1,859
|
|
|
1,965
|
|
Investing
activities:
|
|
|
|
Business
combinations, net of cash acquired
|
(103)
|
|
|
(10)
|
|
Purchases of
strategic investments
|
(342)
|
|
|
(159)
|
|
Sales of strategic
investments
|
601
|
|
|
194
|
|
Purchases of
marketable securities
|
(834)
|
|
|
(734)
|
|
Sales of marketable
securities
|
337
|
|
|
86
|
|
Maturities of
marketable securities
|
227
|
|
|
56
|
|
Capital
expenditures
|
(323)
|
|
|
(159)
|
|
Net cash used in
investing activities
|
(437)
|
|
|
(726)
|
|
Financing
activities:
|
|
|
|
Proceeds from
employee stock plans
|
258
|
|
|
219
|
|
Principal payments on
financing obligations
|
(48)
|
|
|
(11)
|
|
Repayments of
debt
|
(1)
|
|
|
(1)
|
|
Net cash provided by
financing activities
|
209
|
|
|
207
|
|
Effect of exchange
rate changes
|
(4)
|
|
|
(5)
|
|
Net increase in
cash and cash equivalents
|
1,627
|
|
|
1,441
|
|
Cash and cash
equivalents, beginning of period
|
4,145
|
|
|
2,669
|
|
Cash and cash
equivalents, end of period
|
$
|
5,772
|
|
|
$
|
4,110
|
|
salesforce.com,
inc.
|
Additional
Metrics
|
(Unaudited)
|
|
|
April 30,
2020
|
|
January 31,
2020
|
|
October 31,
2019
|
|
July
31, 2019
|
|
April
30, 2019
|
|
January
31, 2019
|
Full time
equivalent headcount (1)
|
51,613
|
|
|
49,703
|
|
|
47,677
|
|
|
40,571
|
|
|
37,485
|
|
|
35,995
|
|
Financial data (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents
and marketable securities
|
$
|
9,802
|
|
|
$
|
7,947
|
|
|
$
|
6,529
|
|
|
$
|
6,042
|
|
|
$
|
6,379
|
|
|
$
|
4,342
|
|
Strategic
investments
|
1,902
|
|
|
1,963
|
|
|
1,760
|
|
|
1,614
|
|
|
1,548
|
|
|
1,302
|
|
Operating lease
liabilities (2)
|
3,164
|
|
|
3,195
|
|
|
3,270
|
|
|
3,047
|
|
|
3,058
|
|
|
NA
|
|
Principal due on the
Company's outstanding debt obligations (3)
|
2,693
|
|
|
2,694
|
|
|
2,845
|
|
|
2,996
|
|
|
3,197
|
|
|
3,198
|
|
Net cash provided by
operating activities
|
1,859
|
|
|
1,632
|
|
|
298
|
|
|
436
|
|
|
1,965
|
|
|
1,331
|
|
Capital
expenditures
|
323
|
|
|
136
|
|
|
170
|
|
|
178
|
|
|
159
|
|
|
167
|
|
|
|
(1)
|
Full time equivalent
headcount includes 5,231 from third quarter fiscal 2020
acquisitions.
|
(2)
|
Effective February 1,
2019, the Company adopted Topic 842 using the modified
retrospective method. Accordingly, the results for prior periods
were not adjusted to conform to the current period measurement or
recognition of results.
|
(3)
|
The Company repaid
$200 million, $150 million and $150 million of the 2021 Term Loan
in June 2019, October 2019 and November 2019,
respectively.
|
Supplemental Revenue Analysis
Remaining Performance Obligation
Transaction price allocated to the remaining performance
obligations 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. Transaction
price allocated to the remaining performance obligation is
influenced by several factors, including seasonality, the timing of
renewals, average contract terms and foreign currency exchange
rates. Unbilled portions of the remaining transaction price
denominated in foreign currencies are revalued each period based on
the period end exchange rates.
The portion of the remaining performance obligation that is
unbilled is not recorded on the balance sheet. Remaining
performance obligation consisted of the following (in
billions):
|
Current
|
|
Noncurrent
|
|
Total
|
As of April 30, 2020
(1)
|
$
|
14.5
|
|
|
$
|
14.8
|
|
|
$
|
29.3
|
|
As of January 31,
2020 (2)
|
15.0
|
|
|
15.8
|
|
|
30.8
|
|
As of April 30,
2019
|
11.8
|
|
|
13.1
|
|
|
24.9
|
|
|
|
(1)
|
Includes
approximately $450 million and $700 million of remaining
performance obligation related to the Salesforce.org business
combination in June 2019 and the Tableau acquisition in August
2019, respectively.
|
(2)
|
Includes
approximately $450 million and $650 million of remaining
performance obligation related to the Salesforce.org business
combination in June 2019 and the Tableau acquisition in August
2019, respectively.
|
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,
|
|
2020
|
|
2019
|
Unearned revenue,
beginning of period
|
$
|
10,662
|
|
|
$
|
8,564
|
|
Billings and other
(1)
|
3,305
|
|
|
2,714
|
|
Contribution from
contract asset
|
5
|
|
|
44
|
|
Revenue recognized
ratably over time
|
(4,453)
|
|
|
(3,488)
|
|
Revenue recognized
over time as delivered
|
(191)
|
|
|
(172)
|
|
Revenue recognized at
a point in time
|
(221)
|
|
|
(77)
|
|
Unearned revenue from
business combinations
|
5
|
|
|
0
|
|
Unearned revenue, end
of period
|
$
|
9,112
|
|
|
$
|
7,585
|
|
|
|
(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,
|
|
2020
|
|
2019
|
Sales
Cloud
|
$
|
1,245
|
|
|
$
|
1,073
|
|
Service
Cloud
|
1,252
|
|
|
1,020
|
|
Salesforce Platform
and Other (1)
|
1,364
|
|
|
842
|
|
Marketing and
Commerce Cloud
|
714
|
|
|
561
|
|
|
$
|
4,575
|
|
|
$
|
3,496
|
|
|
(1) Includes
approximately $273 million of revenue for the three months ended
April 30, 2020 contributed from the August 2019 acquisition of
Tableau.
|
Total Revenue by Geographic Locations
Revenues by geographical region consisted of the following (in
millions):
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Americas
|
$
|
3,370
|
|
|
$
|
2,617
|
|
Europe
|
1,034
|
|
|
755
|
|
Asia
Pacific
|
461
|
|
|
365
|
|
|
$
|
4,865
|
|
|
$
|
3,737
|
|
|
|
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Americas
|
69
|
%
|
|
70
|
%
|
Europe
|
21
|
|
|
20
|
|
Asia
Pacific
|
10
|
|
|
10
|
|
|
100
|
%
|
|
100
|
%
|
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.
Revenue constant currency growth rates were as follows:
|
Three Months
Ended
April 30, 2020
compared to Three Months
Ended April 30, 2019
|
|
Three Months
Ended
January 31, 2020
compared to Three Months
Ended January 31, 2019
|
|
Three Months
Ended
April 30, 2019
compared to Three Months
Ended April 30, 2018
|
Americas
|
29%
|
|
32%
|
|
25%
|
Europe
|
41%
|
|
47%
|
|
32%
|
Asia
Pacific
|
28%
|
|
28%
|
|
27%
|
Total
growth
|
31%
|
|
34%
|
|
26%
|
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:
|
April 30,
2020
compared to
April 30, 2019
|
|
January 31,
2020
compared to
January 31, 2019
|
|
April 30,
2019
compared to
April 30, 2018
|
Total
growth
|
24%
|
|
27%
|
|
24%
|
Supplemental Cash
Flow Information
|
Free cash flow
analysis, a non-GAAP measure
|
(in
millions)
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
GAAP net cash
provided by operating activities
|
$
|
1,859
|
|
|
$
|
1,965
|
|
Capital expenditures
(1)
|
(323)
|
|
|
(159)
|
|
Free cash
flow
|
$
|
1,536
|
|
|
$
|
1,806
|
|
|
|
(1)
|
Capital expenditures
for the three months ended April 30, 2020 includes the Company's
purchase of the property located at 450 Mission St. in San
Francisco ("450 Mission") for approximately $150
million.
|
Supplemental Strategic Investment Information
Gains
on strategic investments, net
All fair value adjustments of the Company's publicly traded and
privately held equity investments are recorded through the
statements of operations. Therefore, the Company anticipates
additional volatility to the Company's statements of operations in
future periods, due to changes in market prices of the Company's
investments in publicly held equity investments and the valuation
and timing of observable price changes and impairments of the
Company's investments in privately held securities. These changes
could be material based on market conditions and events. The
results for the current fiscal period are not indicative of the
results to be expected for any subsequent quarter or fiscal
year.
Gains and losses recognized on strategic investments were as
follows (in millions):
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Unrealized gains
recognized on publicly traded equity securities, net
|
$
|
0
|
|
|
$
|
150
|
|
Unrealized gains
(losses) recognized on privately held equity securities,
net
|
(38)
|
|
|
122
|
|
Realized gains on
sales of equity securities, net
|
239
|
|
|
19
|
|
Losses on debt
securities, net
|
(9)
|
|
|
(10)
|
|
Gains on strategic
investments, net
|
$
|
192
|
|
|
$
|
281
|
|
The Company recorded approximately $77
million of impairments on its privately held equity and debt
securities during the three months ended April 30, 2020, which is reflected in the table
above.
Supplemental Debt Information
The carrying values of the Company's borrowings were as follows
(in millions):
Instrument
|
|
Date of
issuance
|
|
Maturity
date
|
|
April 30,
2020
|
|
January 31,
2020
|
2023 Senior
Notes
|
|
April 2018
|
|
April 2023
|
|
$
|
995
|
|
|
$
|
995
|
|
2028 Senior
Notes
|
|
April 2018
|
|
April 2028
|
|
1,490
|
|
|
1,489
|
|
Loan assumed on 50
Fremont
|
|
February
2015
|
|
June 2023
|
|
192
|
|
|
193
|
|
Total carrying value
of debt
|
|
|
|
|
|
2,677
|
|
|
2,677
|
|
Less current portion
of debt
|
|
|
|
|
|
(4)
|
|
|
(4)
|
|
Total noncurrent
debt
|
|
|
|
|
|
$
|
2,673
|
|
|
$
|
2,673
|
|
salesforce.com,
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
April 30,
|
|
2020
|
|
2019
|
Non-GAAP gross
profit
|
|
|
|
GAAP gross
profit
|
$
|
3,611
|
|
|
$
|
2,823
|
|
Plus:
|
|
|
|
Amortization of
purchased intangibles (1)
|
159
|
|
|
61
|
|
Stock-based expense
(2)
|
52
|
|
|
43
|
|
Non-GAAP gross
profit
|
$
|
3,822
|
|
|
$
|
2,927
|
|
Non-GAAP operating
expenses
|
|
|
|
GAAP operating
expenses
|
$
|
3,751
|
|
|
$
|
2,613
|
|
Less:
|
|
|
|
Amortization of
purchased intangibles (1)
|
112
|
|
|
68
|
|
Stock-based expense
(2)
|
452
|
|
|
300
|
|
Non-GAAP operating
expenses
|
$
|
3,187
|
|
|
$
|
2,245
|
|
Non-GAAP income
from operations
|
|
|
|
GAAP income (loss)
from operations
|
$
|
(140)
|
|
|
$
|
210
|
|
Plus:
|
|
|
|
Amortization of
purchased intangibles (1)
|
271
|
|
|
129
|
|
Stock-based expense
(2)
|
504
|
|
|
343
|
|
Non-GAAP income from
operations
|
$
|
635
|
|
|
$
|
682
|
|
Non-GAAP net
income
|
|
|
|
GAAP net
income
|
$
|
99
|
|
|
$
|
392
|
|
Plus:
|
|
|
|
Amortization of
purchased intangibles (1)
|
271
|
|
|
129
|
|
Stock-based expense
(2)
|
504
|
|
|
343
|
|
Income tax effects
and adjustments
|
(233)
|
|
|
(125)
|
|
Non-GAAP net
income
|
$
|
641
|
|
|
$
|
739
|
|
|
|
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Non-GAAP diluted
net income per share
|
|
|
|
GAAP diluted net
income per share
|
$
|
0.11
|
|
|
$
|
0.49
|
|
Plus:
|
|
|
|
Amortization of
purchased intangibles
|
0.30
|
|
|
0.16
|
|
Stock-based
expense
|
0.55
|
|
|
0.43
|
|
Income tax effects
and adjustments
|
(0.26)
|
|
|
(0.15)
|
|
Non-GAAP diluted net
income per share
|
$
|
0.70
|
|
|
$
|
0.93
|
|
Shares used in
computing Non-GAAP diluted net income per share
|
913
|
|
|
793
|
|
|
|
1) Amortization
of purchased intangibles was as follows:
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Cost of
revenues
|
$
|
159
|
|
|
$
|
61
|
|
Marketing and
sales
|
112
|
|
|
68
|
|
|
$
|
271
|
|
|
$
|
129
|
|
|
|
2) Stock-based
expense was as follows:
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Cost of
revenues
|
$
|
52
|
|
|
$
|
43
|
|
Research and
development
|
166
|
|
|
81
|
|
Marketing and
sales
|
223
|
|
|
177
|
|
General and
administrative
|
63
|
|
|
42
|
|
|
$
|
504
|
|
|
$
|
343
|
|
salesforce.com,
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,
|
|
2020
|
|
2019
|
GAAP Basic Net
Income Per Share
|
|
|
|
Net income
|
$
|
99
|
|
|
$
|
392
|
|
Basic net income per
share
|
$
|
0.11
|
|
|
$
|
0.51
|
|
Shares used in
computing basic net income per share
|
896
|
|
|
771
|
|
|
|
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Non-GAAP Basic Net
Income Per Share
|
|
|
|
Non-GAAP net
income
|
$
|
641
|
|
|
$
|
739
|
|
Non-GAAP basic net
income per share
|
$
|
0.72
|
|
|
$
|
0.96
|
|
Shares used in
computing Non-GAAP basic net income per share
|
896
|
|
|
771
|
|
|
|
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
GAAP Diluted Net
Income Per Share
|
|
|
|
Net income
|
$
|
99
|
|
|
$
|
392
|
|
Diluted net income
per share
|
$
|
0.11
|
|
|
$
|
0.49
|
|
Shares used in
computing diluted net income per share
|
913
|
|
|
793
|
|
|
|
|
|
|
Three Months Ended
April 30,
|
|
2020
|
|
2019
|
Non-GAAP Diluted
Net Income Per Share
|
|
|
|
Non-GAAP net
income
|
$
|
641
|
|
|
$
|
739
|
|
Non-GAAP diluted net
income per share
|
$
|
0.70
|
|
|
$
|
0.93
|
|
Shares used in
computing Non-GAAP diluted net income per share
|
913
|
|
|
793
|
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Non-GAAP Financial Measures: This press release
includes information about non-GAAP diluted earnings per share,
non-GAAP tax rates, free cash flow and 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 diluted earnings per share excludes, to the extent
applicable, the impact of the following items: stock-based
compensation, amortization of acquisition-related intangibles, 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.
Specifically, management is excluding the following items from
its non-GAAP earnings per share, as applicable, for the periods
presented in the Q1 FY21 financial statements and for its non-GAAP
estimates for Q2 and FY21:
- Stock-Based Expenses: The company's compensation strategy
includes the use of stock-based compensation 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 we exclude 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.
- Gains on Strategic Investments, net: Upon the adoption of
Accounting Standards Update 2016-01 on February 1, 2018, the company is required to
record 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.
- 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 assumes no new
acquisitions in the three-year period, and considers other 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 2020, the company used a
projected non-GAAP tax rate of 22.5%. For fiscal 2021, 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 the rate as appropriate.
The company defines the non-GAAP measure free cash flow as GAAP
net cash provided by operating activities, less capital
expenditures. For this purpose, capital expenditures includes the
cash consideration related to the purchase of 450 Mission, but does
not include our strategic investments.
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SOURCE Salesforce