Salesforce reported fiscal third-quarter earnings on Tuesday for the period ending Oct. 31, beating Wall Street expectations on earnings and sales. But shares fell over 6% in extended trading after earnings guidance for the fourth quarter fell short of expectations.
“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.”
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%. The third quarter non-GAAP operating margin was 19.8%.
Earnings per Share: Third quarter GAAP diluted earnings per share were $0.47, and non-GAAP diluted earnings per share were $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. The current remaining performance obligation ended the third quarter at approximately $18.8 billion, an increase of 23% year-over-year, 23% in constant currency.
Sales Cloud, the company’s core product that salespeople use to track leads and opportunities, reported $1.54 billion in sales, up 17% from last year. Salesforce’s Service Cloud business was up over 20% from last year to $1.66 billion in sales.
“No other software company of our size or scale is really performing at this level,” Benioff said on a call with analysts. “We know that because we’re talking to other cloud CEOs every day.”
Salesforce, a bellwether in the Customer Relationship Management (CRM) sector, has seen a boost in demand due to the pandemic accelerating businesses’ transition to cloud-based platforms.
Financial Statement :
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salesforce.com, inc. Consolidated Statements of Operations (in millions, except per share data) (Unaudited) |
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Three Months Ended October 31, |
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Nine Months Ended October 31, |
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|
2021 |
|
2020 |
|
2021 |
|
2020 |
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Revenues: |
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|
|
|
|
|
|
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Subscription and support |
$ |
6,379 |
|
|
|
$ |
5,085 |
|
|
|
$ |
17,829 |
|
|
|
$ |
14,500 |
|
|
|
Professional services and other |
484 |
|
|
|
334 |
|
|
|
1,337 |
|
|
|
935 |
|
|
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Total revenues |
6,863 |
|
|
|
5,419 |
|
|
|
19,166 |
|
|
|
15,435 |
|
|
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Cost of revenues (1)(2): |
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|
|
|
|
|
|
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Subscription and support |
1,335 |
|
|
|
1,060 |
|
|
|
3,603 |
|
|
|
3,039 |
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|
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Professional services and other |
509 |
|
|
|
334 |
|
|
|
1,409 |
|
|
|
920 |
|
|
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The total cost of revenues |
1,844 |
|
|
|
1,394 |
|
|
|
5,012 |
|
|
|
3,959 |
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|
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Gross profit |
5,019 |
|
|
|
4,025 |
|
|
|
14,154 |
|
|
|
11,476 |
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|
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Operating expenses (1)(2): |
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|
|
|
|
|
|
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Research and development |
1,203 |
|
|
|
902 |
|
|
|
3,174 |
|
|
|
2,659 |
|
|
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Marketing and sales |
3,111 |
|
|
|
2,377 |
|
|
|
8,391 |
|
|
|
7,042 |
|
|
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General and administrative |
667 |
|
|
|
522 |
|
|
|
1,865 |
|
|
|
1,513 |
|
|
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Total operating expenses |
4,981 |
|
|
|
3,801 |
|
|
|
13,430 |
|
|
|
11,214 |
|
|
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Income from operations |
38 |
|
|
|
224 |
|
|
|
724 |
|
|
|
262 |
|
|
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Gains on strategic investments, net |
363 |
|
|
|
1,036 |
|
|
|
1,177 |
|
|
|
1,910 |
|
|
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Other expense |
(102 |
) |
|
|
(10 |
) |
|
|
(172 |
) |
|
|
(36 |
) |
|
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Income before benefit from (provision for) income taxes |
299 |
|
|
|
1,250 |
|
|
|
1,729 |
|
|
|
2,136 |
|
|
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|
Benefit from (provision for) income taxes (3) |
169 |
|
|
|
(169 |
) |
|
|
(257 |
) |
|
|
1,669 |
|
|
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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 |
|
|
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|
Shares used in computing diluted net income per share |
1,001 |
|
|
|
939 |
|
|
|
964 |
|
|
|
926 |
|
|
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(1) Amounts include amortization of intangible assets acquired through business combinations, as follows: |
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