01—Abstract
Summary
Summary of the 10-Q filed May 22, 2017. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc. (CRM) reported its first-quarter fiscal year 2018 results for the period ending April 30, 2017.
The company demonstrated robust revenue growth, with total revenues increasing by 25% year-over-year to $2.39 billiona. This growth was primarily driven by a strong performance in Subscription and Support revenues, which rose 24% to $2.20 billion, indicating continued customer adoption and expansion of its cloud-based CRM services. While the company experienced a net loss of $9.2 million for the quarter, this was a significant improvement from the prior year's net income, reflecting increased operating expenses, particularly in Research and Development and Marketing and Sales, likely due to strategic investments in growth and recent acquisitions.
The company maintained a healthy cash position, with cash and cash equivalents and marketable securities totaling $3.2 billionb, and generated substantial operating cash flow of $1.23 billion. This financial strength positions Salesforce well to fund its growth initiatives, invest in product innovation, and integrate acquired businesses. Investors should note the ongoing investment in R&D and marketing, which are crucial for maintaining Salesforce's competitive edge in the dynamic enterprise cloud market, alongside the strategic acquisitions that contribute to revenue diversification and market expansion.
02—Key points
Key Highlights
- Total revenues increased by 25% to $2.39 billion, driven by strong subscription and support growth.
- Subscription and Support revenues grew 24% to $2.20 billion, accounting for 92% of total revenues.
- Net loss of $9.2 million, a shift from a net income of $38.8 million in the prior year, primarily due to increased operating expenses.
- Operating expenses increased by 30% to $1.75 billion, with significant investments in R&D (up 44%) and Marketing & Sales (up 24%).
- Operating cash flow remained strong, increasing by 17% to $1.23 billion.
- Cash and cash equivalents and marketable securities totaled $3.2 billion, providing significant liquidity.
- Acquisition of Demandware in July 2016 contributed $56.5 million to subscription revenue.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2018, Salesforce, Inc. kept $0.00.
- Revenue$2.40B100.0%
- Cost of revenue−$651.0M27.2%
- Gross profit$1.75B72.8%
- Operating costs−$1.74B72.7%
- Operating income$4.0M0.2%
- Interest, other & tax−$3.0M0.1%
- Net income$1.0M0.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2018filed May 22, 2017Financial Statements
Q1 FY2018 against Q1 FY2017
| Line item | Q1 FY2018Q1 FY2017 | Change |
|---|---|---|
| Revenue | $2.40B$1.92B | +25.1% |
| Gross Profit | $1.75B$1.42B | +23.0% |
| R&D Expenses | $376.00M$260.97M | +44.1% |
| Operating Expenses | $1.74B$1.37B | +27.4% |
| Operating Income | $4.00M$51.99M | −92.3% |
| Interest Expense | $13.00M$22.01M | −40.9% |
| Net Income | $1.00M$38.76M | −97.4% |
| Shares Outstanding (Basic) | 706.00M688.00M | +2.6% |
| Shares Outstanding (Diluted) | 722.00M700.00M | +3.1% |
05—Questions
Frequently Asked Questions
What was Salesforce's revenue performance in the first quarter of fiscal year 2018?
Salesforce reported total revenues of $2.39 billion for the three months ended April 30, 2017, a 25% increase compared to $1.92 billion in the same period last year. Subscription and Support revenues, the primary driver, grew 24% to $2.20 billion.
What is the reason for the company reporting a net loss this quarter, whereas it reported a net income last year?
The company reported a net loss of $9.2 million compared to a net income of $38.8 million in the prior year. This shift is primarily due to significant increases in operating expenses, notably in Research and Development (up 44% to $376.1 million) and Marketing and Sales (up 24% to $1.11 billion), reflecting ongoing investments in growth, product innovation, and integration of acquisitions like Demandware.
How is Salesforce's liquidity and cash generation looking?
Salesforce maintains a strong liquidity position with $3.2 billion in cash, cash equivalents, and marketable securities as of April 30, 2017. The company also generated robust operating cash flow of $1.23 billion for the quarter, an increase of 17% year-over-year, indicating healthy cash generation from its core operations.
What impact did recent acquisitions have on the financial results?
The acquisition of Demandware in July 2016 contributed approximately $56.5 million to subscription and support revenue for Marketing and Commerce Cloud in the current quarter. While acquisitions are driving revenue growth, they also contribute to increased operating expenses and amortization of intangible assets, impacting profitability in the short term.
06—Continue