01—Abstract
Summary
Summary of the 10-Q filed December 4, 2020. Cited figures are marked; the original filing is the authoritative source.
Salesforce reported strong revenue growth for the third quarter of fiscal 2021, with total revenues reaching $5.4 billiona, a 20% increase year-over-year.
This growth was primarily driven by a 20% increase in subscription and support revenues. The company also demonstrated a significant improvement in profitability, reporting diluted earnings per share of $1.15b compared to a loss of $0.12 in the prior year's quarter. This improvement was partly due to a substantial unrealized gain of $1.1 billion from a strategic investment that went public.
Operating cash flow saw a healthy increase of 14% year-over-year, reaching $339 millionc. The company's remaining performance obligation, a key indicator of future revenue, also grew by 17% year-over-year to $30.3 billion, with current remaining performance obligation up 20% to $15.3 billion. Financially, Salesforce ended the quarter with a robust cash and marketable securities balance of $9.5 billion, indicating strong liquidity.
The company also made strategic acquisitions, notably Vlocity in June 2020, and announced its intention to acquire Slack Technologies, Inc. in December 2020, signaling continued investment in expanding its platform and market reach. Despite the positive financial performance and strategic moves, investors should remain mindful of the ongoing impact of COVID-19 on future business operations and customer spending, as highlighted by management.
02—Key points
Key Highlights
- Total revenues increased by 20% year-over-year to $5.4 billion for the third quarter of fiscal 2021.
- Diluted earnings per share improved significantly to $1.15 from a loss of $0.12 in the prior year's quarter, aided by a $1.1 billion unrealized gain on a strategic investment.
- Cash provided by operating activities increased by 14% year-over-year to $339 million.
- Remaining Performance Obligation (RPO) increased by 17% year-over-year to $30.3 billion, indicating strong future revenue potential.
- The company ended the quarter with $9.5 billion in cash, cash equivalents, and marketable securities, demonstrating strong liquidity.
- Strategic acquisitions, including Vlocity and the announced intent to acquire Slack, highlight the company's commitment to platform expansion and growth.
- The company noted that new business growth in Q2 and Q3 of fiscal 2021 was consistent with historical trends prior to COVID-19.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2021, Salesforce, Inc. kept $0.20.
- Revenue$5.42B100.0%
- Cost of revenue−$1.39B25.7%
- Gross profit$4.03B74.3%
- Operating costs−$3.80B70.1%
- Operating income$224.0M4.1%
- Interest, other & tax$857.0M15.8%
- Net income$1.08B19.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed December 4, 2020Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $5.42B$4.51B | +20.1% |
| Cost of Revenue | $1.39B$1.13B | +22.9% |
| Gross Profit | $4.03B$3.38B | +19.1% |
| R&D Expenses | $902.00M$774.00M | +16.5% |
| Operating Expenses | $3.80B$3.31B | +14.7% |
| Operating Income | $224.00M$65.00M | +244.6% |
| Interest Expense | $25.00M$27.00M | −7.4% |
| Net Income | $1.08B-$109.00M | +1091.7% |
| EPS (Basic) | $1.19$-0.12 | +1091.7% |
| EPS (Diluted) | $1.15$-0.12 | +1058.3% |
| Shares Outstanding (Basic) | 911.00M879.00M | +3.6% |
| Shares Outstanding (Diluted) | 939.00M879.00M | +6.8% |
05—Questions
Frequently Asked Questions
What was Salesforce's revenue performance in the third quarter of fiscal 2021?
Salesforce reported total revenues of $5.4 billion for the third quarter of fiscal 2021, representing a 20% increase compared to the same period in the previous fiscal year. This growth was primarily driven by a 20% increase in subscription and support revenues.
How did Salesforce's profitability change compared to the prior year's quarter?
Profitability saw a significant improvement. Salesforce reported a diluted earnings per share of $1.15 for the third quarter of fiscal 2021, a substantial increase from a loss per share of $0.12 in the prior year's quarter. This improvement was partly due to a $1.1 billion unrealized gain from a strategic investment that had its initial public offering.
What is the company's liquidity position?
Salesforce maintains a strong liquidity position, ending the third quarter of fiscal 2021 with $9.5 billion in cash, cash equivalents, and marketable securities. This provides the company with ample resources to fund its operations, investments, and strategic initiatives.
What is the significance of the 'Remaining Performance Obligation' (RPO)?
The Remaining Performance Obligation (RPO) represents contracted revenue that has not yet been recognized. An increase in RPO, such as the 17% year-over-year growth to $30.3 billion reported by Salesforce, indicates strong future revenue potential and a healthy backlog of contracted business.
06—Continue