01—Abstract
Summary
Summary of the 10-Q filed June 1, 2022. Cited figures are marked; the original filing is the authoritative source.
Salesforce's first quarter fiscal year 2023 report for the period ending April 30, 2022, shows a robust top-line growth of 24% year-over-year, reaching $7.41 billiona in total revenues.
This growth was primarily driven by a strong performance in Subscription and Support revenues, which increased by 24% to $6.86 billionb, accounting for 93% of total revenue. Professional Services and Other revenues also saw a significant increase of 30%, reaching $555 million. The company demonstrated solid cash flow generation, with net cash provided by operating activities increasing by 14% year-over-year to $3.7 billion, reflecting effective cash management and strong customer collections.
Despite the revenue growth, net income saw a substantial decrease to $28 millionc from $469 million in the prior year's quarter, resulting in a diluted EPS of $0.03 compared to $0.50. This decline is primarily attributable to increased operating expenses, notably in Research and Development (up 39%) and Marketing and Sales (up 33%), largely driven by higher employee-related costs, stock-based compensation, and amortization of acquired intangibles, including those from the significant Slack acquisition. However, the company's future revenue visibility remains strong, with Remaining Performance Obligation reaching $42.0 billion, up 20% year-over-year, indicating continued contractual commitments from customers.
02—Key points
Key Highlights
- Total revenues increased by 24% year-over-year to $7.41 billion, driven by strong Subscription and Support revenue growth.
- Subscription and Support revenue grew 24% to $6.86 billion, representing 93% of total revenues.
- Net income decreased significantly to $28 million from $469 million in the prior year's quarter, impacting diluted EPS to $0.03.
- Operating expenses rose by 32% year-over-year to $5.35 billion, primarily due to increases in R&D, Marketing & Sales, and G&A, driven by investments in personnel and acquisitions.
- Net cash provided by operating activities increased by 14% to $3.7 billion, showcasing strong cash flow generation.
- Remaining Performance Obligation (RPO) stood at $42.0 billion, up 20% year-over-year, indicating robust future contracted revenue.
- The company incurred $512 million in amortization of intangible assets acquired through business combinations, a significant increase from $288 million in the prior year period.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2023, Salesforce, Inc. kept $0.00.
- Revenue$7.41B100.0%
- Cost of revenue−$2.04B27.6%
- Gross profit$5.37B72.4%
- Operating costs−$5.35B72.1%
- Operating income$20.0M0.3%
- Interest, other & tax$8.0M0.1%
- Net income$28.0M0.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2023filed June 1, 2022Financial Statements
Q1 FY2023 against Q1 FY2022
| Line item | Q1 FY2023Q1 FY2022 | Change |
|---|---|---|
| Revenue | $7.41B$5.96B | +24.3% |
| Cost of Revenue | $2.04B$1.55B | +31.5% |
| Gross Profit | $5.37B$4.41B | +21.7% |
| R&D Expenses | $1.32B$951.00M | +38.6% |
| Operating Expenses | $5.35B$4.05B | +31.9% |
| Operating Income | $20.00M$354.00M | −94.4% |
| Net Income | $28.00M$469.00M | −94.0% |
| EPS (Basic) | $0.03$0.51 | −94.1% |
| EPS (Diluted) | $0.03$0.50 | −94.0% |
| Shares Outstanding (Basic) | 991.00M921.00M | +7.6% |
| Shares Outstanding (Diluted) | 1.00B940.00M | +6.5% |
05—Questions
Frequently Asked Questions
What was Salesforce's revenue performance in Q1 FY23?
Salesforce reported total revenues of $7.41 billion for the first quarter of fiscal year 2023, representing a 24% increase compared to the same period last year. Subscription and Support revenues, the primary driver, grew 24% to $6.86 billion, while Professional Services and Other revenues increased by 30% to $555 million.
Why did net income and EPS decline significantly year-over-year?
Net income decreased to $28 million from $469 million in the prior year's quarter, resulting in diluted EPS of $0.03 compared to $0.50. This decline is largely due to increased operating expenses, including higher costs for research and development, marketing and sales, and general and administrative expenses. These increases were driven by investments in personnel, stock-based compensation, and significant amortization expenses related to acquired intangible assets, particularly from acquisitions like Slack.
How is Salesforce's cash flow situation?
The company demonstrated strong cash flow generation. Net cash provided by operating activities increased by 14% year-over-year to $3.7 billion for the quarter. Total cash, cash equivalents, and marketable securities stood at $13.5 billion as of April 30, 2022, indicating a healthy liquidity position.
What is the significance of the Remaining Performance Obligation (RPO) figure?
Salesforce's Remaining Performance Obligation (RPO) of $42.0 billion as of April 30, 2022, up 20% year-over-year, is a key indicator of future contracted revenue that has not yet been recognized. This substantial RPO, which includes $1.2 billion related to Slack, provides strong visibility into future revenue streams and signals continued customer commitment.
06—Continue