10-QPeriod: Q1 FY2024

Salesforce, Inc. Quarterly Report for Q1 Ended Apr 30, 2023

Filed June 1, 2023For Securities:CRM

Summary

Salesforce, Inc. reported $8.2 billion in total revenues for the first quarter of fiscal year 2024, an 11% increase year-over-year, demonstrating continued top-line growth. Subscription and support revenue, the primary driver, increased by 11% to $7.6 billion, underscoring the strength of its core cloud services. Despite revenue growth, the company incurred significant restructuring charges of $711 million related to workforce reductions and real estate optimization, impacting profitability. This led to a substantial increase in operating expenses, though research and development and marketing and sales expenses saw year-over-year decreases in absolute terms due to headcount reductions. Net income for the quarter was $199 million, a significant improvement from $28 million in the prior year, translating to $0.20 diluted earnings per share. This was bolstered by strong operating cash flow of $4.5 billion, up 22% year-over-year, showcasing efficient cash generation. The company also returned significant capital to shareholders, repurchasing approximately $2.1 billion of its common stock. While revenue growth remains robust, investors should note the ongoing impact of macroeconomic factors such as elongated sales cycles and more measured customer buying behavior, which the company continues to navigate.

Financial Highlights

50 data points
Beta

Revenue

$8.25B

74.2% Gross Margin

Net Income

$199.00M

2.4% Net Margin

EPS (Diluted)

$0.20

Total Assets

$93.54B

Cash & Equivalents

$9.15B

Free Cash Flow

$4.25B

Financial Statements
Beta
Revenue$8.25B
Cost of Revenue$2.13B
Gross Profit$6.12B
R&D Expenses$1.21B
Operating Expenses$5.71B
Operating Income$412.00M
Net Income$199.00M
EPS (Basic)$0.20
EPS (Diluted)$0.20
Shares Outstanding (Basic)980.00M
Shares Outstanding (Diluted)988.00M

Key Highlights

  • 1Total revenues increased 11% year-over-year to $8.2 billion, driven by subscription and support revenue growth.
  • 2Net income significantly improved to $199 million ($0.20 per diluted share) from $28 million ($0.03 per diluted share) in the prior year.
  • 3Operating cash flow grew 22% year-over-year to $4.5 billion.
  • 4The company repurchased approximately $2.1 billion of its common stock during the quarter.
  • 5Remaining performance obligation (RPO) increased 11% year-over-year to $46.7 billion, indicating strong future revenue potential.
  • 6Significant restructuring charges of $711 million were incurred due to workforce reductions and real estate exits.

Frequently Asked Questions

Salesforce reported total revenues of $8.2 billion, an increase of 11% compared to the first quarter of fiscal year 2023. Subscription and support revenues, which constitute the majority of total revenue, also grew by 11% year-over-year.

The company incurred $711 million in restructuring charges during the quarter, primarily related to workforce reductions and office space consolidation. These charges increased operating expenses but are part of a broader initiative to reduce costs and improve operating margins. While impacting current profitability, the workforce reduction is expected to contribute to efficiency gains.

Salesforce's total remaining performance obligation (RPO) stood at $46.7 billion as of April 30, 2023, an increase of 11% year-over-year. Current RPO, which represents revenue expected within the next 12 months, was $24.1 billion, up 12% year-over-year. This growth in RPO suggests a strong pipeline and provides good visibility into future revenue.

The company generated strong operating cash flow of $4.5 billion, an increase of 22% year-over-year. During the quarter, Salesforce repurchased approximately $2.1 billion of its common stock as part of its ongoing $20 billion share repurchase program, demonstrating a commitment to returning capital to shareholders.