Reiterates FY23 Revenue Guidance of $31.7
Billion to $31.8 Billion
- Third Quarter Revenue of $6.86 Billion, up 27%
Year-Over-Year, 26% in Constant Currency
- Current Remaining Performance Obligation of Approximately
$18.8 Billion, up 23% Year-Over-Year, 23% in Constant
Currency
- Third Quarter GAAP Operating Margin of 0.6% and Non-GAAP
Operating Margin of 19.8%
- Initiates Fourth Quarter FY22 Revenue Guidance of $7.224
Billion to $7.234 Billion, up Approximately 24%
Year-Over-Year
- Raises FY22 Revenue Guidance to $26.39 Billion to $26.40
Billion, up Approximately 24% Year-Over-Year
- Raises FY22 GAAP Operating Margin Guidance to Approximately
1.8% and Non-GAAP Operating Margin Guidance to Approximately
18.6%
- Raises FY22 Operating Cash Flow Growth Guidance to
Approximately 18% to 19% Growth Year-Over-Year
- Initiates First Quarter FY23 Revenue Guidance of $7.215
Billion to $7.250 Billion, up Approximately 21% to 22%
Year-Over-Year
- Reiterates FY23 GAAP Operating Margin Guidance of
Approximately 3.0% to 3.5% and Non-GAAP Operating Margin of
Approximately 20%
Salesforce (NYSE: CRM), the global leader in CRM, today
announced results for its third quarter of fiscal 2022 ended
October 31, 2021.
“We delivered another phenomenal quarter, fueling strong revenue
growth, margin and cash flow,” said Marc Benioff, Chair and CEO of
Salesforce. “Salesforce is more relevant and strategic than ever as
every company accelerates their digital transformation journey.
Just as we’ve helped our customers navigate the pandemic, we’re now
guiding them toward greater growth, customer success, health and
safety, and trust. With the tremendous strength of our Customer 360
platform and Slack, we’re on track to reach $50 billion revenue in
FY26.”
“Our disciplined approach continues to deliver record levels of
operating margin this year,” said Amy Weaver, President and CFO.
“During the third quarter, we again executed against the strong
demand environment in front of us. Slack saw another strong
quarter, and we are pleased with Slack’s representation in our
largest deals. In this new world, Slack and our Customer 360 have
never been more relevant.”
Salesforce delivered the following results for its fiscal third
quarter:
Revenue: Total third quarter revenue
was $6.86 billion, an increase of 27% year-over-year, and 26% in
constant currency. Subscription and support revenues for the
quarter were $6.38 billion, an increase of 25% year-over-year.
Professional services and other revenues for the quarter were $0.48
billion, an increase of 45% year-over-year.
Operating Margin: Third quarter GAAP
operating margin was 0.6%. Third quarter non-GAAP operating margin
was 19.8%.
Earnings per Share: Third quarter GAAP
diluted earnings per share was $0.47, and non-GAAP diluted earnings
per share was $1.27. Mark-to-market accounting of the company’s
strategic investments benefited GAAP diluted earnings per share by
$0.27 based on a U.S. tax rate of 25% and non-GAAP diluted earnings
per share by $0.28 based on a non-GAAP tax rate of 21.5%.
Cash: Cash generated from operations
for the third quarter was $0.40 billion, an increase of 19%
year-over-year. Total cash, cash equivalents and marketable
securities ended the third quarter at $9.39 billion.
Remaining Performance Obligation:
Remaining performance obligation ended the third quarter at
approximately $36.3 billion, an increase of 20% year-over-year.
Current remaining performance obligation ended the third quarter at
approximately $18.8 billion, an increase of 23% year-over-year, 23%
in constant currency.
As of November 30, 2021, 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 its fourth quarter of fiscal year 2022. As of November
30, 2021, the company is raising its revenue guidance previously
updated on September 23, 2021 for its full fiscal year 2022. As of
November 30, 2021, the company is raising its operating cash flow
guidance, GAAP earnings per share guidance, non-GAAP earnings per
share guidance, GAAP operating margin guidance and non-GAAP
operating margin guidance previously updated on August 25, 2021 for
its full fiscal year 2022. As of November 30, 2021, the company is
initiating its revenue guidance for its first quarter of fiscal
year 2023. As of November 30, 2021, the company is reiterating its
revenue guidance, GAAP operating margin guidance and non-GAAP
operating margin guidance for its full fiscal year 2023 previously
provided on September 23, 2021.
Management will provide further commentary around these guidance
assumptions on its earnings call, which is expected to occur on
November 30, 2021 at 2:00 PM Pacific Time.
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 future acquisitions or other
transactions.
Q4 FY22
Guidance
Full Year FY22
Guidance
Q1 FY23
Guidance
Full Year FY23
Guidance
Revenue(1)
$7.224 - $7.234 Billion
$26.39 - $26.40 Billion
$7.215 - $7.250 Billion
$31.7 - $31.8 Billion
Y/Y Growth
~24%
~24% to ~24%
~21% - 22%
~20%
GAAP operating margin
N/A
~1.8%
N/A
~3.0 - 3.5%
Non-GAAP operating margin
N/A
~18.6%
N/A
~20.0%
GAAP earnings (loss) per share
($0.24) - ($0.23)
$1.28 - $1.29
N/A
N/A
Non-GAAP earnings per share
$0.72 - $0.73
$4.68 - $4.69
N/A
N/A
Operating Cash Flow Growth (Y/Y)
N/A
~18% - 19%
N/A
N/A
Current Remaining Performance Obligation
Growth (Y/Y)
~19%
N/A
N/A
N/A
(1) Full Year FY22 revenue guidance
includes contributions from Slack Technologies, Inc. of
approximately $565 million, net of purchase accounting.
The following is a reconciliation of GAAP operating margin
guidance to non-GAAP operating margin guidance for the full
year:
Full Year FY22
Guidance
Full Year FY23
Guidance
GAAP operating margin(1)
1.8%
~3.0% - 3.5%
Plus
Amortization of purchased
intangibles(2)
6.2%
5.8%
Stock-based expense(2)
10.6%
11.1% - 10.6%
Non-GAAP operating margin(1)
18.6%
~20%
(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 years FY22 and FY23.
The following is a per share reconciliation of GAAP diluted
earnings (loss) per share to non-GAAP diluted earnings per share
guidance for the next quarter and the full year:
Fiscal 2022
Q4
FY22
GAAP earnings (loss) per share
range(1)(2)
($0.24) - ($0.23
)
$1.28 - $1.29
Plus
Amortization of purchased intangibles
$
0.50
$
1.66
Stock-based expense
$
0.77
$
2.86
Less
Income tax effects and adjustments(3)
$
(0.31
)
$
(1.12
)
Non-GAAP diluted earnings per share(2)
$0.72 - $0.73
$4.68 - $4.69
Shares used in computing basic GAAP net
income per share (millions)
987
955
Shares used in computing diluted Non-GAAP
net income per share (millions)
1,013
976
(1)The Company's GAAP tax provision is
expected to be approximately 34% for the three months ended January
31, 2022, and approximately 11% for the year ended January 31,
2022. The GAAP tax rates may fluctuate due to discrete tax items
and related effects in conjunction with certain provisions in the
Tax Cuts and Jobs Act, future acquisitions or other
transactions.
(2) The Company's projected GAAP and
Non-GAAP diluted earnings (loss) 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 21.5%, 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 plans to host a conference call at 2:00 p.m. (PT) /
5:00 p.m. (ET) to discuss its financial results with the investment
community. A live webcast and replay details of the event will be
available on the Salesforce Investor Relations website at
www.salesforce.com/investor.
About Salesforce
Salesforce, the global CRM leader, empowers companies of every
size and industry to digitally transform and create a 360° view of
their customers. For more information about Salesforce (NYSE: CRM),
visit: www.salesforce.com.
"Safe harbor" statement under the Private Securities Litigation
Reform Act of 1995: This press release contains forward-looking
statements about the company's financial and operating results,
which 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,
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, and
expected 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 impact of, and actions
we may take in response to, the COVID-19 pandemic, related public
health measures and resulting economic downturn and market
volatility; our ability to maintain security levels and service
performance meeting the expectations of our customers, and the
resources and costs required to avoid unanticipated downtime and
prevent, detect and remediate performance degradation and security
breaches; the expenses associated with our data centers and
third-party infrastructure providers; our ability to secure
additional data center capacity; our reliance on third-party
hardware, software and platform providers; the effect of evolving
domestic and foreign government regulations, including those
related to the provision of services on the Internet, those related
to accessing the Internet, and those addressing data privacy,
cross-border data transfers and import and export controls; current
and potential litigation involving us or our industry, including
litigation involving acquired entities such as Tableau Software,
Inc. and Slack Technologies, Inc., and the resolution or settlement
thereof; regulatory developments and regulatory investigations
involving us or affecting our industry; our ability to successfully
introduce new services and product features, including any efforts
to expand our services; the success of our strategy of acquiring or
making investments in complementary businesses, joint ventures,
services, technologies and intellectual property rights; our
ability to complete, on a timely basis or at all, announced
transactions; our ability to realize the benefits from
acquisitions, strategic partnerships, joint ventures and
investments, including our July 2021 acquisition of Slack
Technologies, Inc., and successfully integrate acquired businesses
and technologies; our ability to compete in the markets in which we
participate; the success of our business strategy and our plan to
build our business, including our strategy to be a leading provider
of enterprise cloud computing applications and platforms; our
ability to execute our business plans; our ability to continue to
grow unearned revenue and remaining performance obligation; the
pace of change and innovation in enterprise cloud computing
services; the seasonal nature of our sales cycles; our ability to
limit customer attrition and costs related to those efforts; the
success of our international expansion strategy; the demands on our
personnel and infrastructure resulting from significant growth in
our customer base and operations, including as a result of
acquisitions; our ability to preserve our workplace culture,
including as a result of our decisions regarding our current and
future office environments or work-from-home policies; our
dependency on the development and maintenance of the infrastructure
of the Internet; our real estate and office facilities strategy and
related costs and uncertainties; fluctuations in, and our ability
to predict, our operating results and cash flows; the variability
in our results arising from the accounting for term license revenue
products; the performance and fair value of our investments in
complementary businesses through our strategic investment
portfolio; the impact of future gains or losses from our strategic
investment portfolio, including gains or losses from overall market
conditions that may affect the publicly traded companies within our
strategic investment portfolio; our ability to protect our
intellectual property rights; our ability to 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; 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
Financials 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.
© 2021 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 October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Revenues:
Subscription and support
$
6,379
$
5,085
$
17,829
$
14,500
Professional services and other
484
334
1,337
935
Total revenues
6,863
5,419
19,166
15,435
Cost of revenues (1)(2):
Subscription and support
1,335
1,060
3,603
3,039
Professional services and other
509
334
1,409
920
Total cost of revenues
1,844
1,394
5,012
3,959
Gross profit
5,019
4,025
14,154
11,476
Operating expenses (1)(2):
Research and development
1,203
902
3,174
2,659
Marketing and sales
3,111
2,377
8,391
7,042
General and administrative
667
522
1,865
1,513
Total operating expenses
4,981
3,801
13,430
11,214
Income from operations
38
224
724
262
Gains on strategic investments, net
363
1,036
1,177
1,910
Other expense
(102
)
(10
)
(172
)
(36
)
Income before benefit from (provision for)
income taxes
299
1,250
1,729
2,136
Benefit from (provision for) income taxes
(3)
169
(169
)
(257
)
1,669
Net income
$
468
$
1,081
$
1,472
$
3,805
Basic net income per share
$
0.48
$
1.19
$
1.56
$
4.20
Diluted net income per share
$
0.47
$
1.15
$
1.53
$
4.11
Shares used in computing basic net income
per share
980
911
945
905
Shares used in computing diluted net
income per share
1,001
939
964
926
(1) Amounts include amortization of
intangible assets acquired through business combinations, as
follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Cost of revenues
$
272
$
169
$
624
$
494
Marketing and sales
236
114
491
344
(2) Amounts include stock-based expense,
as follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Cost of revenues
$
103
$
65
$
280
$
180
Research and development
276
181
646
531
Marketing and sales
316
242
817
718
General and administrative
117
78
273
219
(3) During the second quarter of fiscal
2021, the Company recorded approximately $2.0 billion of a one-time
benefit from a discrete tax item related to the recognition of
deferred tax assets resulting from an intra-entity transfer of
intangible property.
salesforce.com, inc.
Consolidated Statements of
Operations
(As a percentage of total
revenues)
(Unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Revenues:
Subscription and support
93
%
94
%
93
%
94
%
Professional services and other
7
6
7
6
Total revenues
100
100
100
100
Cost of revenues (1)(2):
Subscription and support
20
20
19
20
Professional services and other
7
6
7
6
Total cost of revenues
27
26
26
26
Gross profit
73
74
74
74
Operating expenses (1)(2):
Research and development
18
17
17
17
Marketing and sales
45
44
44
45
General and administrative
9
9
9
10
Total operating expenses
72
70
70
72
Income from operations
1
4
4
2
Gains on strategic investments, net
5
19
6
12
Other expense
(2
)
0
(1
)
0
Income before benefit from (provision for)
income taxes
4
23
9
14
Benefit from (provision for) income
taxes
3
(3
)
(1
)
11
Net income
7
%
20
%
8
%
25
%
(1) Amounts include amortization of
intangible assets acquired through business combinations as a
percentage of total revenues, as follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Cost of revenues
4
%
3
%
3
%
3
%
Marketing and sales
3
2
3
2
(2) Amounts include stock-based expense as
a percentage of total revenues, as follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Cost of revenues
1
%
1
%
2
%
1
%
Research and development
4
3
3
4
Marketing and sales
5
5
4
5
General and administrative
2
1
2
1
salesforce.com, inc.
Consolidated Balance Sheets
(in millions)
October 31, 2021
January 31, 2021
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
4,753
$
6,195
Marketable securities
4,638
5,771
Accounts receivable, net
4,019
7,786
Costs capitalized to obtain revenue
contracts, net
1,242
1,146
Prepaid expenses and other current
assets
1,305
991
Total current assets
15,957
21,889
Property and equipment, net
2,768
2,459
Operating lease right-of-use assets,
net
2,909
3,204
Noncurrent costs capitalized to obtain
revenue contracts, net
1,850
1,715
Strategic investments
4,004
3,909
Goodwill
47,951
26,318
Intangible assets acquired through
business combinations, net
9,472
4,114
Deferred tax assets and other assets,
net
2,525
2,693
Total assets
$
87,436
$
66,301
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable, accrued expenses and
other liabilities
$
4,231
$
4,355
Operating lease liabilities, current
688
766
Unearned revenue
10,116
12,607
Total current liabilities
15,035
17,728
Noncurrent debt
10,591
2,673
Noncurrent operating lease liabilities
2,722
2,842
Other noncurrent liabilities
2,034
1,565
Total liabilities
30,382
24,808
Stockholders’ equity:
Common stock
1
1
Additional paid-in capital
49,770
35,601
Accumulated other comprehensive loss
(122
)
(42
)
Retained earnings
7,405
5,933
Total stockholders’ equity
57,054
41,493
Total liabilities and stockholders’
equity
$
87,436
$
66,301
salesforce.com, inc.
Consolidated Statements of Cash
Flows
(in millions)
(Unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Operating activities:
Net income
$
468
$
1,081
$
1,472
$
3,805
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
963
670
2,367
1,977
Amortization of costs capitalized to
obtain revenue contracts, net
344
271
992
768
Expenses related to employee stock
plans
812
566
2,016
1,648
Gains on strategic investments, net
(363
)
(1,036
)
(1,177
)
(1,910
)
Tax benefit from intra-entity transfer of
intangible property
0
0
0
(2,003
)
Changes in assets and liabilities, net of
business combinations:
Accounts receivable, net
91
128
3,895
2,873
Costs capitalized to obtain revenue
contracts, net
(405
)
(493
)
(1,223
)
(973
)
Prepaid expenses and other current assets
and other assets
189
80
(1
)
(134
)
Accounts payable and accrued expenses and
other liabilities
(548
)
68
(836
)
4
Operating lease liabilities
(191
)
(204
)
(607
)
(616
)
Unearned revenue
(956
)
(792
)
(2,880
)
(2,812
)
Net cash provided by operating
activities
404
339
4,018
2,627
Investing activities:
Business combinations, net of cash
acquired
(35
)
(24
)
(14,816
)
(1,281
)
Purchases of strategic investments
(147
)
(368
)
(933
)
(942
)
Sales of strategic investments
695
33
2,164
685
Purchases of marketable securities
(2,193
)
(1,453
)
(4,509
)
(3,968
)
Sales of marketable securities
720
662
3,765
1,206
Maturities of marketable securities
150
239
1,802
796
Capital expenditures
(166
)
(124
)
(550
)
(561
)
Net cash used in investing activities
(976
)
(1,035
)
(13,077
)
(4,065
)
Financing activities:
Proceeds from issuance of debt, net of
issuance costs
(6
)
0
7,906
0
Repayments of Slack Convertible Notes, net
of capped call proceeds
(1,348
)
0
(1,180
)
0
Proceeds from employee stock plans
430
381
1,030
1,105
Principal payments on financing
obligations
(45
)
(12
)
(118
)
(84
)
Repayments of debt
(1
)
(1
)
(3
)
(3
)
Net cash provided by (used in) financing
activities
(970
)
368
7,635
1,018
Effect of exchange rate changes
(4
)
0
(18
)
(1
)
Net decrease in cash and cash
equivalents
(1,546
)
(328
)
(1,442
)
(421
)
Cash and cash equivalents, beginning of
period
6,299
4,052
6,195
4,145
Cash and cash equivalents, end of
period
$
4,753
$
3,724
$
4,753
$
3,724
salesforce.com, inc.
Additional Metrics
(Unaudited)
October 31, 2021
July 31, 2021
April 30, 2021
January 31, 2021
October 31, 2020
July 31, 2020
Full time equivalent headcount
(1)
69,530
65,595
59,895
56,606
54,557
54,255
Financial data (in millions):
Cash, cash equivalents and marketable
securities (2)
$
9,391
$
9,650
$
15,023
$
11,966
$
9,492
$
9,283
Strategic investments
4,004
4,105
3,944
3,909
3,927
2,555
Principal due on the Company's outstanding
debt obligations (2)(3)
10,698
11,551
2,689
2,690
2,691
2,692
(1) Full time equivalent headcount
includes 2,814 from the second quarter fiscal 2022 acquisition of
Slack.
(2) On July 21, 2021, the Company acquired
Slack Technologies, Inc. ("Slack") for approximately $15.8 billion
of cash and 46 million shares of Salesforce common stock. The
Company funded the cash portion of the consideration with a
combination of new fixed rate Senior Notes ("the July 2021 Notes")
raised in a public offering in July 2021 of approximately $7.9
billion, net of discounts and debt issuance costs, and cash on the
Company's balance sheet. The July 2021 Notes include $1.0 billion
of 2028 Senior Sustainability Notes. The net proceeds from the 2028
Senior Sustainability Notes will be allocated to finance or
refinance, in whole or in part, one or more new or existing green
or social projects that satisfy certain criteria.
(3) In connection with the July 2021
acquisition of Slack, the Company assumed Slack Convertible Notes
with an aggregate par value of $863 million and an estimated fair
value of $1.3 billion. For the three months ended October 31, 2021,
the Company paid $1.3 billion in cash to settle approximately $852
million of the $863 million aggregate principal balance of the
Slack Convertible Notes.
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 October 31, 2021 (1)
$
18.8
$
17.5
$
36.3
As of July 31, 2021 (2)
18.7
17.5
36.2
As of April 30, 2021
17.8
17.2
35.0
As of January 31, 2021
18.0
18.1
36.1
As of October 31, 2020
15.3
15.0
30.3
As of July 31, 2020
15.2
15.4
30.6
(1) Includes approximately $900 million of
remaining performance obligation related to the Slack
acquisition.
(2) Includes approximately $800 million of
remaining performance obligation related to the Slack
acquisition.
Unearned Revenue
Unearned revenue represents amounts that have been invoiced in
advance of revenue recognition and is recognized as revenue when
transfer of control to customers has occurred or services have been
provided. The change in unearned revenue was as follows (in
millions):
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Unearned revenue, beginning of period
$
11,067
$
8,711
$
12,607
$
10,662
Billings and other (1)
5,810
4,561
16,019
12,498
Contribution from contract asset
97
66
267
125
Revenue recognized over time
(6,511
)
(5,103
)
(18,070
)
(14,594
)
Revenue recognized at a point in time
(352
)
(316
)
(1,096
)
(841
)
Unearned revenue from business
combinations
5
4
389
73
Unearned revenue, end of period
$
10,116
$
7,923
$
10,116
$
7,923
(1) Other includes, for example, the
impact of foreign currency translation.
Disaggregation of Revenue
Subscription and Support Revenue by the Company's service
offerings
Subscription and support revenues consisted of the following (in
millions):
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Sales
$
1,538
$
1,311
$
4,403
$
3,835
Service
1,658
1,376
4,764
3,931
Platform and Other (1)
1,277
844
3,159
2,439
Marketing and Commerce
1,006
804
2,856
2,264
Data (2)
900
750
2,647
2,031
$
6,379
$
5,085
$
17,829
$
14,500
(1) Platform and Other includes
approximately $276 million of Slack subscription and support
revenues for the three and nine months ended October 31, 2021.
(2) Data is comprised of revenue from
Analytics, which includes Tableau, and Integration, which includes
Mulesoft, which were reclassified from Platform and Other beginning
in the third quarter of fiscal 2022.
Total Revenue by Geographic Locations
Revenues by geographical region consisted of the following (in
millions):
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Americas
$
4,638
$
3,758
$
13,044
$
10,724
Europe
1,581
1,149
4,299
3,253
Asia Pacific
644
512
1,823
1,458
$
6,863
$
5,419
$
19,166
$
15,435
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
October 31, 2021
compared to Three
Months
Ended October 31, 2020
Three Months Ended
July 31, 2021
compared to Three
Months
Ended July 31, 2020
Three Months Ended
October 31, 2020
compared to Three
Months
Ended October 31, 2019
Americas
23%
20%
17%
Europe
35%
24%
26%
Asia Pacific
29%
25%
20%
Total growth
26%
21%
19%
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:
October 31, 2021
compared to
October 31, 2020
July 31, 2021
compared to
July 31, 2020
October 31, 2020
compared to
October 31, 2019
Total growth
23%
23%
19%
Supplemental Debt Information
The carrying values of the Company's borrowings were as follows
(in millions):
Instrument
Date of issuance
Maturity date
October 31, 2021
January 31, 2021
2023 Senior Notes
April 2018
April 2023
$
998
$
996
Loan assumed on 50 Fremont
February 2015
June 2023
187
190
2024 Senior Notes
July 2021
July 2024
997
0
Slack Convertible Notes
July 2021 (1)
April 2025
16
0
2028 Senior Notes
April 2018
April 2028
1,492
1,491
2028 Senior Sustainability Notes
July 2021
July 2028
990
0
2031 Senior Notes
July 2021
July 2031
1,487
0
2041 Senior Notes
July 2021
July 2041
1,234
0
2051 Senior Notes
July 2021
July 2051
1,976
0
2061 Senior Notes
July 2021
July 2061
1,234
0
Total carrying value of debt
10,611
2,677
Less current portion of debt
(20
)
(4
)
Total noncurrent debt
$
10,591
$
2,673
(1) Assumed in July 2021 acquisition of
Slack.
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 October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Non-GAAP income
from operations
GAAP income from operations
$
38
$
224
$
724
$
262
Plus:
Amortization of purchased intangibles
(1)
508
283
1,115
838
Stock-based expense (2)
812
566
2,016
1,648
Non-GAAP income from operations
$
1,358
$
1,073
$
3,855
$
2,748
Non-GAAP
operating margin as a percentage of revenues
Total revenues
$
6,863
$
5,419
$
19,166
$
15,435
GAAP operating margin (3)
0.6
%
4.1
%
3.8
%
1.7
%
Non-GAAP operating margin (3)
19.8
%
19.8
%
20.1
%
17.8
%
Non-GAAP net
income
GAAP net income
$
468
$
1,081
$
1,472
$
3,805
Plus:
Amortization of purchased intangibles
(1)
508
283
1,115
838
Stock-based expense (2)
812
566
2,016
1,648
Income tax effects and adjustments
(515
)
(293
)
(787
)
(2,686
)
Non-GAAP net income
$
1,273
$
1,637
$
3,816
$
3,605
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Non-GAAP diluted
net income per share
GAAP diluted net income per share
$
0.47
$
1.15
$
1.53
$
4.11
Plus:
Amortization of purchased intangibles
0.51
0.30
1.16
0.90
Stock-based expense
0.81
0.60
2.09
1.78
Income tax effects and adjustments
(0.52
)
(0.31
)
(0.82
)
(2.90
)
Non-GAAP diluted net income per share
$
1.27
$
1.74
$
3.96
$
3.89
Shares used in computing Non-GAAP diluted
net income per share
1,001
939
964
926
(1) Amortization of purchased intangibles
was as follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Cost of revenues
$
272
$
169
$
624
$
494
Marketing and sales
236
114
491
344
$
508
$
283
$
1,115
$
838
(2) Stock-based expense was as
follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Cost of revenues
$
103
$
65
$
280
$
180
Research and development
276
181
646
531
Marketing and sales
316
242
817
718
General and administrative
117
78
273
219
$
812
$
566
$
2,016
$
1,648
(3) 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 and stock-based expense.
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 October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
GAAP Basic Net Income Per Share
Net income
$
468
$
1,081
$
1,472
$
3,805
Basic net income per share
$
0.48
$
1.19
$
1.56
$
4.20
Shares used in computing basic net income
per share
980
911
945
905
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Non-GAAP Basic Net Income Per
Share
Non-GAAP net income
$
1,273
$
1,637
$
3,816
$
3,605
Non-GAAP basic net income per share
$
1.30
$
1.80
$
4.04
$
3.98
Shares used in computing Non-GAAP basic
net income per share
980
911
945
905
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
GAAP Diluted Net Income Per
Share
Net income
$
468
$
1,081
$
1,472
$
3,805
Diluted net income per share
$
0.47
$
1.15
$
1.53
$
4.11
Shares used in computing diluted net
income per share
1,001
939
964
926
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
Non-GAAP Diluted Net Income Per
Share
Non-GAAP net income
$
1,273
$
1,637
$
3,816
$
3,605
Non-GAAP diluted net income per share
$
1.27
$
1.74
$
3.96
$
3.89
Shares used in computing Non-GAAP diluted
net income per share
1,001
939
964
926
Supplemental Cash Flow
Information
Free cash flow analysis, a non-GAAP
measure
(in millions)
Three Months Ended October
31,
Nine Months Ended October
31,
2021
2020
2021
2020
GAAP net cash provided by operating
activities
$
404
$
339
$
4,018
$
2,627
Capital expenditures (1)
(166
)
(124
)
(550
)
(561
)
Free cash flow
$
238
$
215
$
3,468
$
2,066
(1) Capital expenditures for the nine
months ended October 31, 2020 includes the Company's purchase of
the property located at 450 Mission St. in San Francisco ("450
Mission") in March 2020 for approximately $150 million.
Non-GAAP Financial Measures: This press release includes
information about non-GAAP operating margin, non-GAAP diluted
earnings per share, non-GAAP tax rates, free cash flow, constant
currency revenue and constant currency current remaining
performance obligation growth rates (collectively the “non-GAAP
financial measures”). These non-GAAP financial measures are
measurements of financial performance that are not prepared in
accordance with U.S. generally accepted accounting principles and
computational methods may differ from those used by other
companies. Non-GAAP financial measures are not meant to be
considered in isolation or as a substitute for comparable GAAP
measures and should be read only in conjunction with the company’s
consolidated financial statements prepared in accordance with GAAP.
Management uses both GAAP and non-GAAP measures when planning,
monitoring and evaluating the company’s performance.
The primary purpose of using non-GAAP measures is to provide
supplemental information that may prove useful to investors and to
enable investors to evaluate the company’s results in the same way
management does. Management believes that supplementing GAAP
disclosure with non-GAAP disclosure provides investors with a more
complete view of the company’s operational performance and allows
for meaningful period-to-period comparisons and analysis of trends
in the company’s business. Further to the extent that other
companies use similar methods in calculating non-GAAP measures, the
provision of supplemental non-GAAP information can allow for a
comparison of the company’s relative performance against other
companies that also report non-GAAP operating results.
Non-GAAP Operating Margin is the proportion of non-GAAP income
from operations as a percentage of GAAP revenue. Non-GAAP income
from operations excludes the impact of the following items:
stock-based compensation and amortization of acquisition-related
intangibles. Non-GAAP diluted earnings per share excludes, to the
extent applicable, the impact of the following items: stock-based
compensation, amortization of purchased 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 operating margin and non-GAAP earnings per share, as
applicable, for the periods presented in the Q3 FY22 financial
statements. Gains on Strategic Investments, net, are included in
Non-GAAP earnings per share in its Q3 FY22 financial statements,
and excluded from its non-GAAP estimates for FY22 and FY23:
- 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 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.
- Gains on Strategic Investments, net: The company records all
fair value adjustments to its equity securities held within the
strategic investment portfolio through the statement of operations.
As it is not possible to forecast future gains and losses, the
company assumes no change to the value of its strategic investment
portfolio in its GAAP and non-GAAP estimates for future periods.
Gains on Strategic Investments, net, are included in Q3 FY22
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 2021, the company used a
projected non-GAAP tax rate of 22.0%. For fiscal 2022, the company
uses a projected non-GAAP tax rate of 21.5%, which reflects
currently available information, as well as other factors and
assumptions. The non-GAAP tax rate could be subject to change for a
variety of reasons, including the rapidly evolving global tax
environment, significant changes in the company’s geographic
earnings mix due to acquisition activity, or other changes to the
company’s strategy or business operations. The company will
re-evaluate its long-term rate as appropriate.
The company defines the non-GAAP measure free cash flow as GAAP
net cash provided by operating activities, less capital
expenditures. For this purpose, capital expenditures includes the
cash consideration related to the purchase of 450 Mission in March
2020, but does not include our strategic investments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211130006038/en/
Evan Goldstein Salesforce Investor Relations 415-819-2987
evan.goldstein@salesforce.com
Carolyn Guss Salesforce Public Relations 415-536-4966
cguss@salesforce.com
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