01—Abstract
Summary
Summary of the 10-Q filed August 27, 2021. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc. reported solid revenue growth for the six months ended July 31, 2021, with total revenues increasing by 23% year-over-year to $12.3 billiona.
This growth was primarily driven by a strong performance in subscription and support revenues, which climbed 22% to $11.45 billionb, indicating continued demand for their core CRM offerings. The company also highlighted a significant increase in cash provided by operations, up 58% to $3.6 billion, demonstrating improving operational efficiency and cash generation capabilities. However, diluted earnings per share saw a decrease to $1.06 from $2.96 in the prior year.
This was largely attributed to a one-time $2.0 billionc tax benefit recognized in the prior year's comparable period, as well as increased operating expenses, including those related to recent acquisitions and ongoing investments in growth. Notably, the company completed the substantial acquisition of Slack Technologies, Inc. for approximately $27.1 billion, which significantly impacted the balance sheet with increased goodwill and intangible assets, and will require further integration efforts. The company's Remaining Performance Obligation remained robust at $36.2 billion, suggesting strong future revenue potential.
02—Key points
Key Highlights
- Total revenues increased 23% year-over-year to $12.3 billion for the six months ended July 31, 2021.
- Subscription and support revenues grew 22% year-over-year to $11.45 billion, driven by new business and customer upgrades.
- Cash provided by operating activities increased significantly by 58% to $3.6 billion for the six months ended July 31, 2021.
- Completed the acquisition of Slack Technologies, Inc. for approximately $27.1 billion, comprising cash and stock.
- Goodwill increased substantially from $26.3 billion to $48.1 billion, primarily due to the Slack acquisition.
- Remaining Performance Obligation stood at $36.2 billion as of July 31, 2021, indicating strong future revenue visibility.
- Diluted earnings per share decreased to $1.06 from $2.96 year-over-year, impacted by a prior year tax benefit and increased operating expenses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2022, Salesforce, Inc. kept $0.08.
- Revenue$6.34B100.0%
- Cost of revenue−$1.61B25.4%
- Gross profit$4.73B74.6%
- Operating costs−$4.39B69.3%
- Operating income$332.0M5.2%
- Interest, other & tax$203.0M3.2%
- Net income$535.0M8.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2022filed August 27, 2021Financial Statements
Q2 FY2022 against Q2 FY2021
| Line item | Q2 FY2022Q2 FY2021 | Change |
|---|---|---|
| Revenue | $6.34B$5.15B | +23.1% |
| Cost of Revenue | $1.61B$1.31B | +23.0% |
| Gross Profit | $4.73B$3.84B | +23.1% |
| R&D Expenses | $1.02B$898.00M | +13.6% |
| Operating Expenses | $4.39B$3.66B | +20.0% |
| Operating Income | $332.00M$178.00M | +86.5% |
| Interest Expense | $40.00M$25.00M | +60.0% |
| Net Income | $535.00M$2.63B | −79.6% |
| EPS (Basic) | $0.57$2.90 | −80.3% |
| EPS (Diluted) | $0.56$2.85 | −80.4% |
| Shares Outstanding (Basic) | 933.00M904.00M | +3.2% |
| Shares Outstanding (Diluted) | 950.00M922.00M | +3.0% |
05—Questions
Frequently Asked Questions
What was Salesforce's revenue performance for the period?
Salesforce reported a 23% increase in total revenues to $12.3 billion for the six months ended July 31, 2021, compared to $10.0 billion in the same period last year. Subscription and support revenues, the primary revenue driver, grew 22% to $11.45 billion.
How did the acquisition of Slack impact Salesforce's financial position?
The acquisition of Slack, completed on July 21, 2021, for approximately $27.1 billion, significantly increased Salesforce's assets, particularly goodwill, which rose from $26.3 billion to $48.1 billion. The company also assumed Slack's convertible notes, adding $1.3 billion in debt. The integration of Slack is expected to be a key focus for future growth and operational efficiency.
What is the outlook for Salesforce's future revenue based on their performance obligations?
Salesforce's Remaining Performance Obligation (RPO) was $36.2 billion as of July 31, 2021, a slight increase from $36.1 billion in January 2021. This metric represents contracted revenue not yet recognized, providing strong visibility into future revenue streams. The current RPO, representing obligations within the next 12 months, increased by 23% year-over-year, indicating healthy near-term growth potential.
How did Salesforce's profitability change compared to the previous year?
While revenues grew, Salesforce's diluted earnings per share decreased from $2.96 to $1.06 for the six months ended July 31, 2021. This decline was primarily due to a significant one-time tax benefit of $2.0 billion recognized in the prior year's period and increased operating expenses, including those related to the Slack acquisition and ongoing investments in research and development and sales and marketing.
06—Continue