10-QPeriod: Q2 FY2023

Salesforce, Inc. Quarterly Report for Q2 Ended Jul 31, 2022

Filed August 25, 2022For Securities:CRM

Summary

Salesforce, Inc. (CRM) reported its second quarter fiscal year 2023 results, showcasing continued revenue growth driven by its subscription and support services. Total revenues increased by 22% year-over-year to $7.72 billion for the quarter, and 23% to $15.13 billion for the first six months of the fiscal year. While revenue growth remains robust, the company highlighted a more measured buying behavior from customers in July 2022, leading to stretched sales cycles and deal compression, which could impact future growth if sustained. Profitability saw a notable decline compared to the prior year, with net income for the quarter at $68 million ($0.07 diluted EPS) compared to $535 million ($0.56 diluted EPS) in the prior year. This decrease was influenced by factors such as increased operating expenses, particularly in research and development and marketing and sales, as well as gains on strategic investments in the prior year. Despite these profitability pressures, the company maintained strong operating cash flow, generating $4.0 billion for the first six months of the fiscal year. Salesforce also announced a new $10.0 billion share repurchase program in August 2022, signaling confidence and a commitment to returning value to shareholders.

Financial Highlights

48 data points
Beta

Revenue

$7.72B

72.4% Gross Margin

Net Income

$68.00M

0.9% Net Margin

EPS (Diluted)

$0.07

Total Assets

$94.15B

Cash & Equivalents

$6.93B

Free Cash Flow

$131.00M

Financial Statements
Beta
Revenue$7.72B
Cost of Revenue$2.13B
Gross Profit$5.59B
R&D Expenses$1.33B
Operating Expenses$5.40B
Operating Income$193.00M
Net Income$68.00M
EPS (Basic)$0.07
EPS (Diluted)$0.07
Shares Outstanding (Basic)997.00M
Shares Outstanding (Diluted)1.00B

Key Highlights

  • 1Total revenues increased by 22% year-over-year to $7.72 billion for the second quarter and 23% to $15.13 billion for the first six months of fiscal 2023.
  • 2Net income for the quarter decreased to $68 million from $535 million in the prior year, impacted by higher operating expenses and lower strategic investment gains.
  • 3Diluted EPS decreased to $0.07 for the quarter, down from $0.56 in the prior year.
  • 4Operating cash flow for the first six months of fiscal 2023 was strong at $4.0 billion, an increase of 11% year-over-year.
  • 5Remaining performance obligation (RPO) grew 15% year-over-year to $41.6 billion as of July 31, 2022, indicating strong future revenue potential.
  • 6The company noted a "measured buying behavior" from customers in July 2022, leading to stretched sales cycles and deal compression.
  • 7Salesforce announced a new $10.0 billion share repurchase program in August 2022.

Frequently Asked Questions

Salesforce reported robust revenue growth for the second quarter and the first six months of fiscal year 2023. Total revenues increased by 22% year-over-year to $7.72 billion for the quarter and by 23% to $15.13 billion for the six-month period. This growth was primarily driven by subscription and support revenues.

Net income and diluted EPS declined significantly compared to the prior year. For the second quarter, net income was $68 million ($0.07 diluted EPS), down from $535 million ($0.56 diluted EPS) in the same period last year. This decline was attributed to increased operating expenses, particularly in research and development and marketing and sales, and a notable decrease in gains on strategic investments compared to the prior year's strong performance.

Yes, Salesforce noted a "measured buying behavior" from customers starting in July 2022. This has resulted in stretched sales cycles and deal compression, which could negatively affect future revenue growth if sustained. However, the company stated there was no material impact on consolidated revenues or remaining performance obligation for the reported periods due to this trend.

Salesforce demonstrated strong operating cash flow, generating $4.0 billion in the first six months of fiscal 2023, an 11% increase year-over-year. Additionally, the company announced a new $10.0 billion share repurchase program in August 2022, indicating management's confidence in the business and its commitment to returning capital to shareholders.