01—Abstract
Summary
Summary of the 10-K filed March 9, 2018. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc.'s 2018 10-K filing reveals a company experiencing robust growth, with total revenues increasing by 25% year-over-year to $10.5 billiona, primarily driven by a 25% surge in subscription and support revenues.
The company's strategy focuses on cross-selling and upselling to existing customers, expanding its service offerings, strengthening its partner ecosystem, and international growth. Salesforce continues to invest heavily in research and development and marketing and sales to maintain its competitive edge. Despite significant investments in these areas and the costs associated with acquisitions, Salesforce demonstrates a commitment to improving operating margins.
Key financial highlights include strong revenue growth, a healthy balance sheet with substantial cash reserves, and positive operating cash flow. While the company faces competition and manages various risks associated with its cloud-based business model, its diversified service portfolio and strategic growth initiatives position it for continued expansion in the enterprise cloud computing market.
02—Key points
Key Highlights
- Total revenues grew 25% to $10.5 billion in fiscal year 2018.
- Subscription and support revenues increased 25% to $9.7 billion, comprising 93% of total revenues.
- Professional services and other revenues grew 21% to $769.5 million.
- Marketing and sales expenses represented 46% of total revenues, indicating continued investment in growth.
- Research and development expenses increased to 15% of total revenues, reflecting ongoing innovation efforts.
- The company reported net income of $127.5 million for fiscal year 2018, a decrease from $179.6 million in fiscal 2017, impacted by increased operating expenses and a change in tax provision.
- Cash, cash equivalents, and marketable securities totaled $4.5 billion at the end of fiscal year 2018.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Salesforce, Inc. kept $0.03.
- Revenue$10.48B100.0%
- Cost of revenue−$2.71B25.9%
- Gross profit$7.77B74.1%
- Operating costs−$7.31B69.8%
- Operating income$454.0M4.3%
- Interest, other & tax−$94.0M0.9%
- Net income$360.0M3.4%
Where FY2018 revenue went
$10.48B- Other operating costs: $5.70B, 54% of revenue
- Cost of revenue: $2.77B, 26% of revenue
- R&D: $1.55B, 15% of revenue
- Net income: $360.0M, 3.4% of revenue
- Interest, other & tax: $94.0M, 0.9% of revenue
Kept 3.4% as net incomeNet income $360.0M · 3.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed March 9, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $10.48B$8.39B | +24.9% |
| Cost of Revenue | $2.77B$2.23B | +24.1% |
| Gross Profit | $7.77B$6.20B | +25.2% |
| R&D Expenses | $1.55B$1.21B | +28.6% |
| Operating Expenses | $7.31B$5.99B | +22.2% |
| Operating Income | $454.00M$218.00M | +108.3% |
| Interest Expense | $54.00M$89.00M | −39.3% |
| Net Income | $360.00M$323.00M | +11.5% |
| EPS (Basic) | $0.50$0.47 | +6.4% |
| EPS (Diluted) | $0.49$0.46 | +6.5% |
| Shares Outstanding (Basic) | 715.00M688.00M | +3.9% |
| Shares Outstanding (Diluted) | 735.00M700.00M | +5.0% |
05—Questions
Frequently Asked Questions
What is Salesforce's primary source of revenue?
Salesforce's primary source of revenue is from subscription and support fees for its enterprise cloud computing services, which accounted for approximately 93% of total revenues in fiscal year 2018. The remaining revenue comes from professional services.
How is Salesforce expanding its business?
Salesforce's growth strategy focuses on cross-selling and upselling to existing customers, extending its service offerings, strengthening its partner ecosystem, expanding internationally, targeting vertical industries, and developing new horizontal markets. The company also invests in new technologies and pursues strategic acquisitions.
What is Salesforce's financial performance in terms of profitability and cash flow?
For fiscal year 2018, Salesforce reported net income of $127.5 million, a decrease from the previous year, due to increased investments in operations. The company generated significant positive operating cash flow of $2.7 billion, indicating strong operational cash generation.
How does Salesforce manage its debt obligations?
As of January 31, 2018, Salesforce had $1.03 billion in outstanding 0.25% convertible senior notes due April 2018, which were classified as a current liability. The company also had a $500 million term loan due July 2019 and a $200 million loan related to its 50 Fremont property. Salesforce generally maintained compliance with its debt covenants and had a revolving credit facility available.
06—Continue