10-QPeriod: Q2 FY2022

Salesforce, Inc. Quarterly Report for Q2 Ended Jul 31, 2021

Filed August 27, 2021For Securities:CRM

Summary

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 billion. This growth was primarily driven by a strong performance in subscription and support revenues, which climbed 22% to $11.45 billion, 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 billion 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.

Financial Highlights

48 data points
Beta

Revenue

$6.34B

74.6% Gross Margin

Net Income

$535.00M

8.4% Net Margin

EPS (Diluted)

$0.56

Total Assets

$88.66B

Cash & Equivalents

$6.30B

Free Cash Flow

$173.00M

Financial Statements
Beta
Revenue$6.34B
Cost of Revenue$1.61B
Gross Profit$4.73B
R&D Expenses$1.02B
Operating Expenses$4.39B
Operating Income$332.00M
Interest Expense$40.00M
Net Income$535.00M
EPS (Basic)$0.57
EPS (Diluted)$0.56
Shares Outstanding (Basic)933.00M
Shares Outstanding (Diluted)950.00M

Key Highlights

  • 1Total revenues increased 23% year-over-year to $12.3 billion for the six months ended July 31, 2021.
  • 2Subscription and support revenues grew 22% year-over-year to $11.45 billion, driven by new business and customer upgrades.
  • 3Cash provided by operating activities increased significantly by 58% to $3.6 billion for the six months ended July 31, 2021.
  • 4Completed the acquisition of Slack Technologies, Inc. for approximately $27.1 billion, comprising cash and stock.
  • 5Goodwill increased substantially from $26.3 billion to $48.1 billion, primarily due to the Slack acquisition.
  • 6Remaining Performance Obligation stood at $36.2 billion as of July 31, 2021, indicating strong future revenue visibility.
  • 7Diluted earnings per share decreased to $1.06 from $2.96 year-over-year, impacted by a prior year tax benefit and increased operating expenses.

Frequently Asked Questions

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.

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.

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.

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.