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Salesforce Announces First Quarter Fiscal 2025 Results

Salesforce (NYSE: CRM), the #1 AI CRM, today announced results for its first quarter fiscal 2025 ended April 30, 2024. First Quarter Highlights First Quarter Revenue of $9.13 Billion, up 11% Year-Ove...

Business Wire

SAN FRANCISCO: Salesforce (NYSE: CRM), the #1 AI CRM, today announced results for its first quarter fiscal 2025 ended April 30, 2024.

First Quarter Highlights

  • First Quarter Revenue of $9.13 Billion, up 11% Year-Over-Year ("Y/Y"), up 11% in Constant Currency ("CC"), inclusive of Subscription & Support Revenue of $8.59 Billion, up 12% Y/Y
  • First Quarter GAAP Operating Margin of 18.7% and non-GAAP Operating Margin of 32.1%
  • Current Remaining Performance Obligation of $26.4 Billion, up 10% Y/Y, up 10% in CC
  • First Quarter Operating Cash Flow of $6.25 Billion, up 39% Y/Y, and Free Cash Flow of $6.08 Billion, up 43% Y/Y
  • Returned $2.2 Billion in the Form of Share Repurchases and $0.4 Billion in Dividend Payments to Stockholders

FY25 Guidance Highlights

  • Initiates Second Quarter FY25 Revenue Guidance of $9.20 Billion to $9.25 Billion, up 7% - 8% Y/Y
  • Maintains Full Year FY25 Revenue Guidance of $37.7 Billion to $38.0 Billion, up 8% - 9% Y/Y and Lowers Full Year FY25 Subscription & Support Revenue Growth Guidance to Slightly Below 10% Y/Y & Approximately 10% in CC
  • Lowers Full Year FY25 GAAP Operating Margin Guidance to 19.9% and Maintains non-GAAP Operating Margin Guidance of 32.5%
  • Maintains Full Year FY25 Operating Cash Flow Growth Guidance of 21% to 24% Y/Y

“Our profitable growth trajectory continues to drive strong cash flow generation. Q1 operating cash flow was $6.25 billion, up 39% year-over-year. Q1 free cash flow was $6.1 billion, up 43% year-over-year,” said Marc Benioff, Chair and CEO, Salesforce. “We are at the beginning of a massive opportunity for our customers to connect with their customers in a whole new way with AI. As the world’s #1 AI CRM, we’re incredibly well positioned to help companies realize the promise of AI over the next decade.”

“We delivered another quarter of disciplined profitable growth, with GAAP operating margin of 18.7%, up 1,370 basis points year-over-year, and Non-GAAP operating margin of 32.1%, up 450 basis points year-over year,” said Amy Weaver, President and CFO of Salesforce. “We’ve also made significant progress on our capital return program, returning more than $14 billion to shareholders since inception, including the payout of our first ever quarterly dividend in Q1.”

Guidance

Our guidance includes GAAP and non-GAAP financial measures.

 

Q2 FY25
Guidance

 

Full Year FY25
Guidance

Total Revenue

$9.20 - $9.25 Billion

 

$37.7 - $38.0 Billion

Y/Y Growth

7 - 8%

 

8 - 9%

FX Impact(1)

($50M) Y/Y FX

 

($100M) Y/Y FX

Subscription & Support Revenue Growth (Y/Y)(2)

N/A

 

Slightly below 10%, Approx 10% CC

GAAP Operating Margin

N/A

 

19.9%

Non-GAAP Operating Margin(3)

N/A

 

32.5%

GAAP Diluted Earnings per Share(3)

$1.31 - $1.33

 

$6.04 - $6.12

Non-GAAP Diluted Earnings per Share(3)

$2.34 - $2.36

 

$9.86 - $9.94

Operating Cash Flow Growth (Y/Y)

N/A

 

21% - 24%

Current Remaining Performance Obligation Growth (Y/Y)

9%

 

N/A

FX Impact(4)

($200M) Y/Y FX

 

N/A

(1)

 

Revenue FX impact is calculated by taking the current period rates compared to the prior period average rates.

(2)

 

Subscription & Support revenue excludes professional services revenue.

(3)

 

Non-GAAP operating margin and non-GAAP Diluted EPS are non-GAAP financial measures. See below for an explanation of non-GAAP financial measures. The Company's shares used in computing GAAP Diluted EPS guidance and non-GAAP Diluted EPS guidance excludes any impact to share count from potential Q2 - Q4 FY25 repurchase activity under our share repurchase program.

(4)

 

Current Remaining Performance Obligation FX impact is calculated by taking the current period rates compared to the prior period ending rates.

The following is a reconciliation of GAAP operating margin guidance to non-GAAP operating margin guidance for the full year:

 

 

Full Year FY25
Guidance

GAAP operating margin(1)

 

19.9%

Plus

 

 

Amortization of purchased intangibles(2)

 

4.3%

Stock-based compensation expense(2)(3)

 

8.2%

Restructuring(2)(3)

 

0.1%

Non-GAAP operating margin(1)

 

32.5%

(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 year FY25.

(3)

 

The percentages shown in the restructuring line have been calculated based on charges associated with the Company's restructuring activities. Stock-based compensation expense included in the full year FY25 guidance GAAP to non-GAAP reconciliation table excludes stock-based compensation expense related to the Company's restructuring activities, which is included in the restructuring line.

The following is a per share reconciliation of GAAP diluted EPS to non-GAAP diluted EPS guidance for the next quarter and the full year:

 

Fiscal 2025

 

Q2

 

FY25

GAAP diluted earnings per share range(1)(2)

$1.31 - $1.33

 

$6.04 - $6.12

Plus

 

 

 

Amortization of purchased intangibles

$ 0.46

 

$ 1.63

Stock-based compensation expense

$ 0.79

 

$ 3.12

Restructuring(3)

$ 0.02

 

$ 0.06

Less

 

 

 

Income tax effects and adjustments(4)

$ (0.24)

 

$ (0.99)

Non-GAAP diluted earnings per share(2)

$2.34 - $2.36

 

$9.86 - $9.94

Shares used in computing basic net income per share (millions)(5)

974

 

977

Shares used in computing diluted net income per share (millions)(5)

988

 

992

(1)

 

The Company's GAAP tax provision is expected to be approximately 24.5% for the three months ended July 31, 2024, and approximately 23.0% for the year ended January 31, 2025. 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 EPS assumes no change to the value of our strategic investment portfolio as it is not possible to forecast future gains and losses. The impact of future gains or losses from the Company’s strategic investment portfolio could be material.

(3)

 

The estimated impact to GAAP diluted EPS is in connection with the Company's restructuring activities.

(4)

 

The Company’s non-GAAP tax provision uses a long-term projected tax rate of 22.0%, which reflects currently available information and could be subject to change.

(5)

 

The Company's shares used in computing GAAP earnings per share guidance and non-GAAP earnings per share guidance excludes any impact to share count from potential Q2 - Q4 FY25 repurchase activity under our share repurchase program.

For additional information regarding non-GAAP financial measures see the reconciliation of results and related explanations below.

Management will provide further commentary around these guidance assumptions on its earnings call.

Product Releases and Enhancements

Three times a year Salesforce delivers new product releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments made over multiple years, designed to help customers drive cost savings, boost efficiency, and build trust.

To view our major product releases and other highlights as part of the Summer 2024 Product Release, visit: www.salesforce.com/products/summer-24-release.

Environmental, Social, and Governance (ESG) Strategy

To learn more about our latest initiatives and priorities, visit our recently published Stakeholder Impact Report: https://salesforce.com/stakeholder-impact-report.

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.

About Salesforce

Salesforce is the #1 AI CRM, empowering companies to connect with their customers in a whole new way through the power of CRM + AI + Data + Trust on one unified platform: Einstein 1. For more information visit: www.salesforce.com (NYSE: CRM).

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements about the Company's financial and operating results and guidance, which include, but are not limited to, expected GAAP and non-GAAP financial and other operating and non-operating results, including revenue, net income, earnings per share, operating cash flow growth, operating margin, expected revenue growth, expected foreign currency exchange rate impact, expected current remaining performance obligation growth, expected tax rates or provisions, stock-based compensation expenses, amortization of purchased intangibles, shares outstanding, market growth, strategic investments, expected restructuring expense or charges and expected timing of product releases and enhancements. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company’s results or outcomes could differ materially and adversely from those expressed or implied in our forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements.

The risks and uncertainties referred to above include -- but are not limited to -- risks associated with:

  • our ability to maintain sufficient security levels and service performance, avoid downtime and prevent, detect and remediate performance degradation and security breaches;
  • our ability to secure sufficient data center capacity;
  • our reliance on third-party infrastructure providers, including hardware, software and platform providers and the organizations responsible for the development and maintenance of the infrastructure of the Internet;
  • uncertainties regarding AI technologies and their integration into our product offerings;
  • our ability to achieve our aspirations, goals and projections related to our environmental, social and governance (“ESG”) initiatives;
  • the effect of evolving government regulations, including those related to our industry and providing services on or accessing the Internet, and those addressing ESG matters, data privacy, cybersecurity, cross-border data transfers, government contracting and procurement, and import and export controls;
  • current and potential litigation and regulatory investigations involving us or our industry;
  • our ability to successfully expand or introduce new services and product features;
  • our ability to successfully complete, integrate and realize the benefits from acquisitions or other strategic transactions;
  • uncertainties regarding the pace of change and innovation and our ability to compete in the markets in which we participate;
  • our ability to successfully execute our business strategy and our business plans, including efforts to expand internationally and related risks;
  • our ability to predict and meet expectations regarding our operating results and cash flows, including revenue and remaining performance obligation, including as a result of the seasonal nature of our sales cycle and the variability in our results arising from the accounting for term license revenue products and some complex transactions;
  • our ability to predict and limit customer attrition and costs related to those efforts;
  • the demands on our personnel and infrastructure resulting from significant growth in our customer base and operations, including as a result of acquisitions;
  • our real estate and office facilities strategy and related costs and uncertainties;
  • the performance of our strategic investment portfolio, including fluctuations in the fair value of our investments;
  • our ability to protect our intellectual property rights;
  • our ability to maintain and enhance our brands;
  • uncertainties regarding the valuation and potential availability of certain tax assets;
  • the impact of new accounting pronouncements and tax laws;
  • uncertainties affecting our ability to estimate our tax rate, including our tax obligations in connection with potential jurisdictional transfer of intellectual property;
  • uncertainties regarding the effect of geopolitical events, inflationary pressures, market and macroeconomic volatility, financial institution instability, changes in monetary policy, foreign currency exchange rate and interest rate fluctuations, a potential shutdown of the U.S. federal government and climate change, natural disasters and actual or threatened public health emergencies on our workforce, business, and operating results;
  • uncertainties regarding the impact of expensing stock options and other equity awards;
  • the sufficiency of our capital resources, including our ability to execute our share repurchase program and declare future cash dividends;
  • our ability to comply with our debt covenants and lease obligations; and
  • uncertainties regarding impacts to our workforce and workplace culture, such as those arising from our current and future office environments or remote work policies or our ability to realize the expected benefits of the restructuring plan.

Further information on these and other factors that could affect the Company’s actual results or outcomes is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings it makes with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Financials section of the Company’s website at http://investor.salesforce.com/financials/.

Salesforce, Inc. assumes no obligation and does not intend to revise or update publicly any forward-looking statements for any reason, except as required by law.

© 2024 Salesforce, Inc. All rights reserved. Salesforce and other marks are trademarks of Salesforce, Inc. Other brands featured herein may be trademarks of their respective owners.

Salesforce, Inc.

Condensed Consolidated Statements of Operations

(in millions, except per share data)

(Unaudited)

 

Three Months Ended April 30,

 

 

2024

 

 

 

2023

 

Revenues:

 

 

 

Subscription and support

$

8,585

 

 

$

7,642

 

Professional services and other

 

548

 

 

 

605

 

Total revenues

 

9,133

 

 

 

8,247

 

Cost of revenues (1)(2):

 

 

 

Subscription and support

 

1,560

 

 

 

1,510

 

Professional services and other

 

602

 

 

 

615

 

Total cost of revenues

 

2,162

 

 

 

2,125

 

Gross profit

 

6,971

 

 

 

6,122

 

Operating expenses (1)(2):

 

 

 

Research and development

 

1,368

 

 

 

1,207

 

Sales and marketing

 

3,239

 

 

 

3,154

 

General and administrative

 

647

 

 

 

638

 

Restructuring

 

8

 

 

 

711

 

Total operating expenses

 

5,262

 

 

 

5,710

 

Income from operations

 

1,709

 

 

 

412

 

Gains (losses) on strategic investments, net (3)

 

37

 

 

 

(141

)

Other income

 

121

 

 

 

55

 

Income before provision for income taxes

 

1,867

 

 

 

326

 

Provision for income taxes

 

(334

)

 

 

(127

)

Net income

$

1,533

 

 

$

199

 

Basic net income per share

$

1.58

 

 

$

0.20

 

Diluted net income per share (3)

$

1.56

 

 

$

0.20

 

Shares used in computing basic net income per share

 

970

 

 

 

980

 

Shares used in computing diluted net income per share

 

985

 

 

 

988

 

(1) Amounts include amortization of intangible assets acquired through business combinations, as follows:

 

Three Months Ended April 30,

 

 

2024

 

 

 

2023

Cost of revenues

$

238

 

$

248

<
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