01—Abstract
Summary
Summary of the 10-K filed March 8, 2019. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc. concluded its fiscal year ended January 31, 2019, with robust revenue growth, demonstrating continued strong performance in the enterprise cloud computing market.
The company's core strategy revolves around expanding its Customer Success Platform, which encompasses sales automation, customer service, marketing, commerce, and platform services, all built on a single, trusted cloud platform. Key acquisitions, including MuleSoft and Datorama, significantly bolstered its integration and marketing capabilities, contributing to a consolidated revenue increase of 26%a year-over-year. Salesforce's commitment to innovation, customer success, and a strong value system, including trust and equality, underpins its growth strategy, which focuses on cross-selling, upselling, and expanding its partner ecosystem and international presence.
Financially, Salesforce maintained a healthy gross profit margin and managed its operating expenses effectively, even while investing heavily in research and development and sales and marketing to fuel future growth. The company's substantial remaining performance obligation of $25.7 billionb indicates strong future revenue potential.
Despite significant investments in growth initiatives and acquisitions, Salesforce generated positive operating cash flow. Investors should note the company's continued focus on reinvesting revenue back into the business, its ongoing international expansion, and its strategic acquisitions as key drivers of its future financial performance.
02—Key points
Key Highlights
- Total revenues increased by 26% to $13.3 billion for the fiscal year ended January 31, 2019.
- Subscription and support revenue, the primary revenue driver, grew by 27% to $12.4 billion.
- Acquisitions of MuleSoft and Datorama significantly expanded integration and marketing capabilities, contributing to overall revenue growth.
- Operating expenses, particularly marketing and sales (46% of revenue), and research and development, increased to support growth initiatives.
- The company ended the fiscal year with a strong remaining performance obligation of $25.7 billion, indicating robust future revenue.
- Salesforce generated positive net income of $1.11 billion, a significant increase from $360 million in the prior year.
- The company continues to invest in its cloud platform, AI capabilities (Einstein), and expanding its global infrastructure and go-to-market strategies.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Salesforce, Inc. kept $0.08.
- Revenue$13.28B100.0%
- Cost of revenue−$3.45B26.0%
- Gross profit$9.83B74.0%
- Operating costs−$9.30B70.0%
- Operating income$535.0M4.0%
- Interest, other & tax$575.0M4.3%
- Net income$1.11B8.4%
Where FY2019 revenue went
$13.28B- Other operating costs: $7.41B, 56% of revenue
- Cost of revenue: $3.45B, 26% of revenue
- R&D: $1.89B, 14% of revenue
- Operating income: $535.0M, 4.0% of revenue
Kept 4.0% as operating incomeOperating income $535.0M · 4.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed March 8, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $13.28B$10.48B | +26.7% |
| Cost of Revenue | $3.45B$2.77B | +24.5% |
| Gross Profit | $9.83B$7.77B | +26.6% |
| R&D Expenses | $1.89B$1.55B | +21.4% |
| Operating Expenses | $9.30B$7.31B | +27.1% |
| Operating Income | $535.00M$454.00M | +17.8% |
| Interest Expense | $126.00M$54.00M | +133.3% |
| Net Income | $1.11B$360.00M | +208.3% |
| EPS (Basic) | $1.48$0.50 | +196.0% |
| EPS (Diluted) | $1.43$0.49 | +191.8% |
| Shares Outstanding (Basic) | 751.00M715.00M | +5.0% |
| Shares Outstanding (Diluted) | 775.00M735.00M | +5.4% |
05—Questions
Frequently Asked Questions
What were the key drivers of Salesforce's revenue growth in fiscal year 2019?
Salesforce experienced robust revenue growth driven primarily by its subscription and support services, which saw a 27% increase. This growth was fueled by acquiring new customers, upselling existing customers with additional services and premium editions, and the successful integration of recent acquisitions, notably MuleSoft and Datorama, which enhanced its platform capabilities.
How did Salesforce's acquisitions impact its financial performance?
The acquisitions of MuleSoft and Datorama in fiscal year 2019 were strategic moves to bolster Salesforce's integration and marketing technology offerings. These acquisitions contributed to the overall revenue growth and expanded the company's platform capabilities, though they also contributed to increased operating expenses, particularly in amortization of acquired intangibles and integration costs.
What is Salesforce's outlook on future growth and investment?
Salesforce is committed to reinvesting a significant portion of its incremental revenue into future growth initiatives. This includes continued investment in expanding its sales and marketing teams, enhancing its research and development for new features and technologies, further developing its platform, and pursuing strategic acquisitions and partnerships to broaden its market reach and service offerings.
How does Salesforce manage its expenses while investing for growth?
Salesforce manages its expenses by investing in key areas like sales and marketing and R&D to drive revenue growth. While these expenses represent a substantial portion of revenue, the company aims to achieve operating leverage over time. The growth in revenue, coupled with the subscription-based model, allows for scalable operations. The company also benefits from the multi-tenant architecture, which helps manage R&D costs relative to traditional software vendors.
06—Continue