Reiterates FY23 Revenue Guidance of $31.7 Billion to $31.8 Billion
- Third Quarter Revenue of $6.86 Billion, up 27% Year-Over-Year, 26% in Constant Currency
- Current Remaining Performance Obligation of Approximately $18.8 Billion, up 23% Year-Over-Year, 23% in Constant Currency
- Third Quarter GAAP Operating Margin of 0.6% and Non-GAAP Operating Margin of 19.8%
- Initiates Fourth Quarter FY22 Revenue Guidance of $7.224 Billion to $7.234 Billion, up Approximately 24% Year-Over-Year
- Raises FY22 Revenue Guidance to $26.39 Billion to $26.40 Billion, up Approximately 24% Year-Over-Year
- Raises FY22 GAAP Operating Margin Guidance to Approximately 1.8% and Non-GAAP Operating Margin Guidance to Approximately 18.6%
- Raises FY22 Operating Cash Flow Growth Guidance to Approximately 18% to 19% Growth Year-Over-Year
- Initiates First Quarter FY23 Revenue Guidance of $7.215 Billion to $7.250 Billion, up Approximately 21% to 22% Year-Over-Year
- Reiterates FY23 GAAP Operating Margin Guidance of Approximately 3.0% to 3.5% and Non-GAAP Operating Margin of Approximately 20%
Salesforce (NYSE: CRM), the global leader in CRM, today announced results for its third quarter of fiscal 2022 ended October 31, 2021.
"We delivered another phenomenal quarter, fueling strong revenue growth, margin and cash flow," said Marc Benioff, Chair and CEO of Salesforce. "Salesforce is more relevant and strategic than ever as every company accelerates their digital transformation journey. Just as we've helped our customers navigate the pandemic, we're now guiding them toward greater growth, customer success, health and safety, and trust. With the tremendous strength of our Customer 360 platform and Slack, we're on track to reach $50 billion revenue in FY26."
"Our disciplined approach continues to deliver record levels of operating margin this year," said Amy Weaver, President and CFO. "During the third quarter, we again executed against the strong demand environment in front of us. Slack saw another strong quarter, and we are pleased with Slack's representation in our largest deals. In this new world, Slack and our Customer 360 have never been more relevant."
Salesforce delivered the following results for its fiscal third quarter:
Revenue: Total third quarter revenue was $6.86 billion, an increase of 27% year-over-year, and 26% in constant currency. Subscription and support revenues for the quarter were $6.38 billion, an increase of 25% year-over-year. Professional services and other revenues for the quarter were $0.48 billion, an increase of 45% year-over-year.
Operating Margin: Third quarter GAAP operating margin was 0.6%. Third quarter non-GAAP operating margin was 19.8%.
Earnings per Share: Third quarter GAAP diluted earnings per share was $0.47, and non-GAAP diluted earnings per share was $1.27. Mark-to-market accounting of the company's strategic investments benefited GAAP diluted earnings per share by $0.27 based on a U.S. tax rate of 25% and non-GAAP diluted earnings per share by $0.28 based on a non-GAAP tax rate of 21.5%.
Cash: Cash generated from operations for the third quarter was $0.40 billion, an increase of 19% year-over-year. Total cash, cash equivalents and marketable securities ended the third quarter at $9.39 billion.
Remaining Performance Obligation: Remaining performance obligation ended the third quarter at approximately $36.3 billion, an increase of 20% year-over-year. Current remaining performance obligation ended the third quarter at approximately $18.8 billion, an increase of 23% year-over-year, 23% in constant currency.
As of November 30, 2021, the company is initiating its revenue guidance, GAAP earnings per share guidance, non-GAAP earnings per share guidance, and current remaining performance obligation growth guidance for its fourth quarter of fiscal year 2022. As of November 30, 2021, the company is raising its revenue guidance previously updated on September 23, 2021 for its full fiscal year 2022. As of November 30, 2021 the company is raising its operating cash flow guidance, GAAP earnings per share guidance, non-GAAP earnings per share guidance, GAAP operating margin guidance and non-GAAP operating margin guidance previously updated on August 25, 2021 for its full fiscal year 2022. As of November 30, 2021 the company is initiating its revenue guidance for its first quarter of fiscal year 2023. As of November 30, 2021 the company is reiterating its revenue guidance, GAAP operating margin guidance and non-GAAP operating margin guidance for its full fiscal year 2023 previously provided on September 23, 2021.
Management will provide further commentary around these guidance assumptions on its earnings call, which is expected to occur on November 30, 2021 at 2:00 PM Pacific Time.
Our guidance assumes no change to the value of the company's strategic investment portfolio as it is not possible to forecast future gains and losses. In addition, the guidance below is based on estimated GAAP tax rates that reflect the company's currently available information, and excludes forecasted discrete tax items such as excess tax benefits from stock-based compensation. The GAAP tax rates may fluctuate due to future acquisitions or other transactions.
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(1) GAAP operating margin is the proportion of GAAP income from operations as a percentage of GAAP revenue. Non-GAAP operating margin is the proportion of non-GAAP income from operations as a percentage of GAAP revenue.
(2) The percentages shown above have been calculated based on the midpoint of the low and high ends of the revenue guidance for full years FY22 and FY23.
The following is a per share reconciliation of GAAP diluted earnings (loss) per share to non-GAAP diluted earnings per share guidance for the next quarter and the full year:
(1)The Company's GAAP tax provision is expected to be approximately 34% for the three months ended January 31, 2022, and approximately 11% for the year ended January 31, 2022. The GAAP tax rates may fluctuate due to discrete tax items and related effects in conjunction with certain provisions in the Tax Cuts and Jobs Act, future acquisitions or other transactions.
(2) The Company's projected GAAP and Non-GAAP diluted earnings (loss) per share assumes no change to the value of our strategic investment portfolio resulting from ASU 2016-01 as it is not possible to forecast future gains and losses. While historically the company's strategic investment portfolio has had a positive impact on the company's financial results, that may not be true for future periods, particularly in periods of significant market fluctuations that affect the publicly traded companies within the company's strategic investment portfolio. The impact of future gains or losses from the company's strategic investment portfolio could be material.
(3) The Company's Non-GAAP tax provision uses a long-term projected tax rate of 21.5%, which reflects currently available information and could be subject to change.
For additional information regarding non-GAAP financial measures see the reconciliation of results and related explanations below.
Quarterly Conference Call
Salesforce plans to host a conference call at 2:00 p.m. (PT) / 5:00 p.m. (ET) to discuss its financial results with the investment community. A live webcast and replay details of the event will be available on the Salesforce Investor Relations website at www.salesforce.com/investor.
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