01—Abstract
Summary
Summary of the 10-Q filed June 5, 2019. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc. (CRM) reported its first-quarter fiscal year 2020 results for the period ending April 30, 2019.
The company demonstrated robust revenue growth, with total revenues increasing by 24% year-over-year to $3.74 billiona. Subscription and support revenues, the primary revenue driver, grew by 24% to $3.50 billion, indicating strong demand for its core CRM services. Profitability also saw improvement, with net income rising to $392 million from $344 million in the prior year's comparable period.
Diluted earnings per share increased to $0.49b from $0.46. The company's strategic investments also contributed significantly, with gains on strategic investments netting $281 million. The company ended the quarter with a strong liquidity position, boasting over $6.4 billion in cash, cash equivalents, and marketable securities.
02—Key points
Key Highlights
- Total revenues increased by 24% to $3.74 billion compared to the prior year's quarter.
- Subscription and support revenues grew by 24% to $3.50 billion, driven by new business and customer upgrades.
- Net income increased to $392 million, up from $344 million in the same quarter last year.
- Diluted earnings per share improved to $0.49 from $0.46 year-over-year.
- Gains on strategic investments were a significant contributor, totaling $281 million.
- The company maintained a strong balance sheet with $6.4 billion in cash, cash equivalents, and marketable securities.
- Operating lease right-of-use assets and liabilities were recognized for the first time due to the adoption of new lease accounting standards (Topic 842).
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2020, Salesforce, Inc. kept $0.10.
- Revenue$3.74B100.0%
- Cost of revenue−$914.0M24.5%
- Gross profit$2.82B75.5%
- Operating costs−$2.61B69.9%
- Operating income$210.0M5.6%
- Interest, other & tax$182.0M4.9%
- Net income$392.0M10.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2020filed June 5, 2019Financial Statements
Q1 FY2020 against Q1 FY2019
| Line item | Q1 FY2020Q1 FY2019 | Change |
|---|---|---|
| Revenue | $3.74B$3.01B | +24.3% |
| Cost of Revenue | $914.00M$767.00M | +19.2% |
| Gross Profit | $2.82B$2.24B | +26.1% |
| R&D Expenses | $554.00M$424.00M | +30.7% |
| Operating Expenses | $2.61B$2.05B | +27.6% |
| Operating Income | $210.00M$191.00M | +9.9% |
| Interest Expense | $29.00M$27.00M | +7.4% |
| Net Income | $392.00M$344.00M | +14.0% |
| EPS (Basic) | $0.51$0.47 | +8.5% |
| EPS (Diluted) | $0.49$0.46 | +6.5% |
| Shares Outstanding (Basic) | 771.00M729.00M | +5.8% |
| Shares Outstanding (Diluted) | 793.00M754.00M | +5.2% |
05—Questions
Frequently Asked Questions
How did Salesforce's revenue perform in the first quarter of fiscal year 2020?
Salesforce reported a strong revenue performance, with total revenues increasing by 24% to $3.74 billion compared to the same period last year. Subscription and support revenues, the company's primary revenue stream, grew by 24% to $3.50 billion.
What was Salesforce's profitability for the quarter?
The company demonstrated improved profitability, with net income rising to $392 million from $344 million in the prior year's comparable quarter. Diluted earnings per share also increased to $0.49 from $0.46.
What impact did the adoption of new accounting standards, specifically for leases, have on the financial statements?
Salesforce adopted Topic 842 (Leases) prospectively at the beginning of fiscal year 2020. This resulted in the recognition of operating lease right-of-use assets of approximately $2.9 billion and corresponding operating lease liabilities of $3.1 billion on the balance sheet. While it significantly increased assets and liabilities, it did not have a material impact on the condensed consolidated statement of operations or net cash provided by operating activities.
How did strategic investments perform during the quarter?
Strategic investments contributed positively to the company's results. Gains on strategic investments, net, were $281 million for the three months ended April 30, 2019, compared to $211 million in the prior year's period. This included mark-to-market adjustments for publicly traded securities and observable price adjustments for privately held securities.
06—Continue