Salesforce (NYSE: CRM), the #1 AI CRM, today announced results
for its third quarter fiscal 2025 ended October 31, 2024.
Third Quarter Highlights
- Third Quarter Revenue of $9.44 Billion, up 8% both
Year-Over-Year ("Y/Y") & in Constant Currency ("CC"), inclusive
of Subscription & Support Revenue of $8.88 Billion, up 9% both
Y/Y & in CC
- Third Quarter GAAP Diluted Net Income Per Share was $1.58
and non-GAAP Diluted Net Income Per Share was $2.41. GAAP and
non-GAAP Diluted Net Income Per Share were Impacted by Losses on
Strategic Investments of $(0.17) and $(0.18), Respectively
- Third Quarter GAAP Operating Margin of 20.0% and non-GAAP
Operating Margin of 33.1%
- Current Remaining Performance Obligation of $26.4 Billion,
up 10% both Y/Y & in CC
- Third Quarter Operating Cash Flow of $1.98 Billion, up 29%
Y/Y, and Free Cash Flow of $1.78 Billion, up 30% Y/Y
- Returned $1.2 Billion in the Form of Share Repurchases and
$0.4 Billion in Dividend Payments to Stockholders, Third Quarter
Total Cash Returned to Stockholders of $1.6 Billion
FY25 Guidance Highlights
- Initiates Fourth Quarter FY25 Revenue Guidance of $9.90
Billion - $10.10 Billion, up 7% - 9% Y/Y
- Raises Low End of Full Year FY25 Revenue Guidance to $37.8
Billion to $38.0 Billion, up 8% - 9% Y/Y and Maintains Full Year
FY25 Subscription & Support Revenue Growth Guidance of Slightly
Below 10% Y/Y & Approximately 10% in CC
- Raises Full Year FY25 GAAP Operating Margin Guidance to
19.8% and Raises non-GAAP Operating Margin Guidance to
32.9%
- Raises Full Year FY25 Operating Cash Flow Growth Guidance to
24% to 26% Y/Y
"We delivered another quarter of exceptional financial
performance across revenue, margin, cash flow, and cRPO,” said Marc
Benioff, Chair and CEO, Salesforce. “Agentforce, our complete AI
system for enterprises built into the Salesforce Platform, is at
the heart of a groundbreaking transformation. The rise of
autonomous AI agents is revolutionizing global labor, reshaping how
industries operate and scale. With Agentforce, we’re not just
witnessing the future—we’re leading it, unleashing a new era of
digital labor for every business and every industry."
“We continue to drive disciplined profitable growth with third
quarter GAAP operating margin of 20.0%, up 280 basis points
year-over-year, and non-GAAP operating margin of 33.1%, up 190
basis points year-over-year,” said Amy Weaver, President and CFO of
Salesforce. “To date, our total capital returns have surpassed $20
billion and we remain focused on driving shareholder value.”
Third Quarter Notes
Net Income Per Share: Third quarter GAAP diluted net
income per share was $1.58 and non-GAAP diluted net income per
share was $2.41. During the three months ended October 31, 2024,
losses on strategic investments impacted GAAP diluted net income
per share by $(0.17) on a U.S. tax rate of 24.5% and non-GAAP
diluted net income per share by $(0.18) on a non-GAAP tax rate of
22.0%.
Guidance
Our guidance includes GAAP and non-GAAP financial measures.
Q4 FY25
Guidance5
Full Year FY25
Guidance5
Total Revenue
$9.90 - $10.10 Billion
$37.8 - $38.0 Billion
Y/Y Growth
7 - 9%
8 - 9%
FX Impact(1)
($25M) Y/Y FX
($100M) Y/Y FX
Subscription & Support Revenue Growth
(Y/Y)(2)(3)
N/A
Slightly below 10%, Approx 10%
CC
GAAP Operating Margin
N/A
19.8%
Non-GAAP Operating Margin(3)
N/A
32.9%
GAAP Diluted Net Income per Share(3)
$1.55 - $1.60
$6.15 - $6.20
Non-GAAP Diluted Net Income per
Share(3)
$2.57 - $2.62
$9.98 - $10.03
Operating Cash Flow Growth (Y/Y)
N/A
24% to 26%
Current Remaining Performance Obligation
Growth (Y/Y)
Approximately 9%
N/A
FX Impact(4)
($100M) 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 CC revenue growth, non-GAAP
operating margin and non-GAAP Diluted net income per share are
non-GAAP financial measures. See below for an explanation of
non-GAAP financial measures. The Company's shares used in computing
GAAP Diluted net income per share guidance and non-GAAP Diluted net
income per share guidance excludes any impact to share count from
potential 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.
(5) Guidance assumes contributions from
acquisitions of Zoomin Software Ltd. and Own Data Company Ltd.,
which closed in November 2024.
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)
19.8%
Plus
Amortization of purchased
intangibles(2)
4.3%
Stock-based compensation expense(2)(3)
8.4%
Restructuring(2)(3)
0.4%
Non-GAAP operating margin(1)
32.9%
(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 initiatives. Stock-based
compensation expense excludes stock-based compensation expense
related to the Company's restructuring initiatives, which is
included in the restructuring line.
The following is a per share reconciliation of GAAP diluted net
income per share to non-GAAP diluted net income per share guidance
for the next quarter and the full year:
Fiscal 2025
Q4
FY25
GAAP diluted net income per share
range(1)(2)
$1.55 - $1.60
$6.15 - $6.20
Plus
Amortization of purchased intangibles
$
0.36
$
1.66
Stock-based compensation expense
$
0.83
$
3.27
Restructuring(3)
$
0.01
$
0.17
Less
Income tax effects and adjustments(4)
$
(0.18
)
$
(1.27
)
Non-GAAP diluted net income per
share(2)
$2.57 - $2.62
$9.98 - $10.03
Shares used in computing basic net income
per share (millions)(5)
960
962
Shares used in computing diluted net
income per share (millions)(5)
978
975
(1) The Company's GAAP tax provision is
expected to be approximately 26.0% for the three months ended
January 31, 2025 and approximately 20.0% 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 net income per share 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
net income per share is in connection with the Company's
restructuring initiatives.
(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 net income per share guidance and non-GAAP net income per
share guidance excludes any impact to share count from potential 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 Winter 2025 Product Release, visit:
www.salesforce.com/products/innovation/winter-25-release.
Environmental, Social, and Governance (ESG) Strategy
To learn more about our latest initiatives and priorities,
review our 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 helps organizations of any size reimagine their
business for the world of AI. With Agentforce, Salesforce's trusted
platform, organizations can bring humans together with agents to
drive customer success—powered by AI, data, and action. Visit
www.salesforce.com for more information.
"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, net income 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 by 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, including related to AI and Agentforce;
- 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 October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Revenues:
Subscription and support
$
8,879
$
8,141
$
26,228
$
23,789
Professional services and other
565
579
1,674
1,781
Total revenues
9,444
8,720
27,902
25,570
Cost of revenues (1)(2):
Subscription and support
1,501
1,571
4,617
4,596
Professional services and other
604
584
1,809
1,797
Total cost of revenues
2,105
2,155
6,426
6,393
Gross profit
7,339
6,565
21,476
19,177
Operating expenses (1)(2):
Research and development
1,356
1,204
4,073
3,631
Sales and marketing
3,323
3,173
9,786
9,440
General and administrative
711
632
2,069
1,902
Restructuring
56
55
163
815
Total operating expenses
5,446
5,064
16,091
15,788
Income from operations
1,893
1,501
5,385
3,389
Losses on strategic investments, net
(217
)
(72
)
(217
)
(242
)
Other income
70
58
282
158
Income before provision for income
taxes
1,746
1,487
5,450
3,305
Provision for income taxes
(219
)
(263
)
(961
)
(615
)
Net income
$
1,527
$
1,224
$
4,489
$
2,690
Basic net income per share
$
1.60
$
1.26
$
4.66
$
2.76
Diluted net income per share (3)
$
1.58
$
1.25
$
4.60
$
2.73
Shares used in computing basic net income
per share
956
972
963
976
Shares used in computing diluted net
income per share
965
981
975
985
(1) Amounts include amortization of
intangible assets acquired through business combinations, as
follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Cost of revenues
$
131
$
245
$
600
$
743
Sales and marketing
223
223
669
668
(2) Amounts include stock-based
compensation expense, as follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Cost of revenues
$
135
$
109
$
386
$
324
Research and development
278
238
814
735
Sales and marketing
312
275
911
815
General and administrative
95
71
267
223
Restructuring
0
0
2
16
(3) During the three months ended October
31, 2024 and 2023, losses on strategic investments impacted GAAP
diluted net income per share by $(0.17) and $(0.06) based on a U.S.
tax rate of 24.5%, and non-GAAP diluted net income per share by
$(0.18) and $(0.06) based on a non-GAAP tax rate of 22.0% and
23.5%, respectively. During the nine months ended October 31, 2024
and 2023, losses on strategic investments impacted GAAP diluted net
income per share by $(0.17) and $(0.19) based on a U.S. tax rate of
24.5%, and non-GAAP diluted net income per share by $(0.17) and
$(0.19) based on a non-GAAP tax rate of 22.0% and 23.5%,
respectively.
Salesforce, Inc.
Condensed Consolidated Statements of
Operations
(As a percentage of total
revenues)
(Unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Revenues:
Subscription and support
94
%
93
%
94
%
93
%
Professional services and other
6
7
6
7
Total revenues
100
100
100
100
Cost of revenues (1)(2):
Subscription and support
16
18
17
18
Professional services and other
6
7
6
7
Total cost of revenues
22
25
23
25
Gross profit
78
75
77
75
Operating expenses (1)(2):
Research and development
14
14
15
14
Sales and marketing
35
36
35
37
General and administrative
8
7
7
8
Restructuring
1
1
1
3
Total operating expenses
58
58
58
62
Income from operations
20
17
19
13
Losses on strategic investments, net
(3
)
(1
)
0
(1
)
Other income
1
1
1
1
Income before provision for income
taxes
18
17
20
13
Provision for income taxes
(2
)
(3
)
(4
)
(2
)
Net income
16
%
14
%
16
%
11
%
(1) Amounts include amortization of
intangible assets acquired through business combinations as a
percentage of total revenues, as follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Cost of revenues
2
%
3
%
2
%
3
%
Sales and marketing
2
2
3
3
(2) Amounts include stock-based
compensation expense as a percentage of total revenues, as
follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Cost of revenues
2
%
1
%
2
%
1
%
Research and development
3
3
3
3
Sales and marketing
3
3
3
3
General and administrative
1
1
1
1
Restructuring
0
0
0
0
Salesforce, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
October 31, 2024
January 31, 2024
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
7,997
$
8,472
Marketable securities
4,760
5,722
Accounts receivable, net
4,741
11,414
Costs capitalized to obtain revenue
contracts, net
1,836
1,905
Prepaid expenses and other current
assets
2,091
1,561
Total current assets
21,425
29,074
Property and equipment, net
3,416
3,689
Operating lease right-of-use assets,
net
2,167
2,366
Noncurrent costs capitalized to obtain
revenue contracts, net
2,121
2,515
Strategic investments
4,845
4,848
Goodwill
49,093
48,620
Intangible assets acquired through
business combinations, net
4,119
5,278
Deferred tax assets and other assets,
net
4,209
3,433
Total assets
$
91,395
$
99,823
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable, accrued expenses and
other liabilities
$
5,331
$
6,111
Operating lease liabilities, current
572
518
Unearned revenue
13,472
19,003
Debt, current
0
999
Total current liabilities
19,375
26,631
Noncurrent debt
8,432
8,427
Noncurrent operating lease liabilities
2,420
2,644
Other noncurrent liabilities
2,643
2,475
Total liabilities
32,870
40,177
Stockholders’ equity:
Common stock
1
1
Treasury stock, at cost
(19,414
)
(11,692
)
Additional paid-in capital
63,114
59,841
Accumulated other comprehensive loss
(225
)
(225
)
Retained earnings
15,049
11,721
Total stockholders’ equity
58,525
59,646
Total liabilities and stockholders’
equity
$
91,395
$
99,823
Salesforce, Inc.
Condensed Consolidated Statements of
Cash Flows
(in millions)
(Unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Operating activities:
Net income
$
1,527
$
1,224
$
4,489
$
2,690
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization (1)
814
862
2,600
3,006
Amortization of costs capitalized to
obtain revenue contracts, net
525
482
1,568
1,428
Stock-based compensation expense
820
693
2,380
2,113
Losses on strategic investments, net
217
72
217
242
Changes in assets and liabilities, net of
business combinations:
Accounts receivable, net
655
550
6,681
5,905
Costs capitalized to obtain revenue
contracts, net
(430
)
(300
)
(1,105
)
(906
)
Prepaid expenses and other current assets
and other assets
(272
)
(407
)
(1,263
)
(750
)
Accounts payable and accrued expenses and
other liabilities
32
172
(503
)
(1,607
)
Operating lease liabilities
(144
)
(139
)
(387
)
(474
)
Unearned revenue
(1,761
)
(1,677
)
(5,555
)
(4,816
)
Net cash provided by operating
activities
1,983
1,532
9,122
6,831
Investing activities:
Business combinations, net of cash
acquired
(179
)
(82
)
(517
)
(82
)
Purchases of strategic investments
(67
)
(103
)
(374
)
(390
)
Sales of strategic investments
13
80
118
102
Purchases of marketable securities
(1,239
)
(661
)
(5,041
)
(2,827
)
Sales of marketable securities
554
315
3,652
1,117
Maturities of marketable securities
905
563
2,439
1,810
Capital expenditures
(204
)
(166
)
(504
)
(589
)
Net cash used in investing activities
(217
)
(54
)
(227
)
(859
)
Financing activities:
Repurchases of common stock
(1,285
)
(1,925
)
(7,753
)
(5,928
)
Proceeds from employee stock plans
321
274
1,056
1,085
Principal payments on financing
obligations
(100
)
(114
)
(505
)
(506
)
Repayments of debt
0
0
(1,000
)
(1,182
)
Payments of dividends
(382
)
0
(1,154
)
0
Net cash used in financing activities
(1,446
)
(1,765
)
(9,356
)
(6,531
)
Effect of exchange rate changes
(5
)
(32
)
(14
)
(4
)
Net increase (decrease) in cash and
cash equivalents
315
(319
)
(475
)
(563
)
Cash and cash equivalents, beginning of
period
7,682
6,772
8,472
7,016
Cash and cash equivalents, end of
period
$
7,997
$
6,453
$
7,997
$
6,453
(1) Includes amortization of intangible
assets acquired through business combinations, depreciation of
fixed assets and amortization and impairment of right-of-use
assets.
Salesforce, Inc. Additional Metrics
(Unaudited)
Supplemental Revenue Analysis
Remaining Performance Obligation
Remaining performance obligation ("RPO") represents contracted
revenue that has not yet been recognized, which includes unearned
revenue and unbilled amounts that will be recognized as revenue in
future periods. RPO is influenced by several factors, including
seasonality, the timing of renewals, the timing of term license
deliveries, average contract terms and foreign currency exchange
rates. Remaining performance obligation is also impacted by
acquisitions. Unbilled portions of RPO denominated in foreign
currencies are revalued each period based on the period end
exchange rates. The portion of RPO that is unbilled is not recorded
on the condensed consolidated balance sheets.
RPO consisted of the following (in billions):
Current
Noncurrent
Total
As of October 31, 2024
$
26.4
$
26.7
$
53.1
As of July 31, 2024
26.5
27.0
53.5
As of April 30, 2024
26.4
27.5
53.9
As of January 31, 2024
27.6
29.3
56.9
As of October 31, 2023
23.9
24.4
48.3
Unearned Revenue
Unearned revenue represents amounts that have been invoiced in
advance of revenue recognition and is recognized as revenue when
transfer of control to customers has occurred or services have been
provided. The change in unearned revenue was as follows (in
millions):
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Unearned revenue, beginning of period
$
15,222
$
14,237
$
19,003
$
17,376
Billings and other (1)
7,620
6,876
22,158
20,536
Contribution from contract asset
63
167
189
218
Revenue recognized over time
(9,023
)
(8,249
)
(26,446
)
(24,264
)
Revenue recognized at a point in time
(421
)
(471
)
(1,456
)
(1,306
)
Unearned revenue from business
combinations
11
4
24
4
Unearned revenue, end of period
$
13,472
$
12,564
$
13,472
$
12,564
(1) Other includes, for example, the
impact of foreign currency translation.
Disaggregation of Revenue
Subscription and Support Revenue by the Company's service
offerings
Subscription and support revenues consisted of the following (in
millions):
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Sales
$
2,119
$
1,906
$
6,188
$
5,611
Service
2,288
2,074
6,727
6,087
Platform and Other
1,825
1,686
5,329
4,891
Marketing and Commerce
1,334
1,230
3,924
3,638
Integration and Analytics (1)
1,313
1,245
4,060
3,562
$
8,879
$
8,141
$
26,228
$
23,789
(1) In the fourth quarter of fiscal 2024,
the Company renamed the service offering previously referred to as
Data to Integration and Analytics, which includes Mulesoft and
Tableau.
Total Revenue by Geographic Locations
Revenues by geographical region consisted of the following (in
millions):
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Americas
$
6,220
$
5,862
$
18,483
$
17,113
Europe
2,228
1,998
6,557
5,923
Asia Pacific
996
860
2,862
2,534
$
9,444
$
8,720
$
27,902
$
25,570
Constant Currency Growth Rates
Subscription and support revenues constant currency growth rates
by the Company's service offerings were as follows:
Three Months Ended
October 31,
2024
Compared to Three
Months
Ended October 31,
2023
Three Months Ended
July 31, 2024
Compared to Three
Months
Ended July 31,
2023
Three Months Ended
October 31,
2023
Compared to Three
Months
Ended October 31,
2022
Sales
11%
10%
10%
Service
10%
11%
11%
Platform and Other
8%
10%
11%
Marketing and Commerce
8%
7%
8%
Integration and Analytics (1)
5%
14%
22%
Total growth
9%
10%
12%
(1) In the fourth quarter of fiscal 2024,
the Company renamed the service offering previously referred to as
Data to Integration and Analytics, which includes Mulesoft and
Tableau.
Revenue constant currency growth rates by geographical region
were as follows:
Three Months Ended
October 31,
2024
Compared to Three
Months
Ended October 31,
2023
Three Months Ended
July 31, 2024
Compared to Three
Months
Ended July 31,
2023
Three Months Ended
October 31,
2023
Compared to Three
Months
Ended October 31,
2022
Americas
6%
8%
9%
Europe
9%
11%
10%
Asia Pacific
14%
16%
21%
Total growth
8%
9%
10%
Current remaining performance obligation constant currency
growth rates were as follows:
October 31, 2024
Compared to
October 31,
2023
July 31, 2024
Compared to
July 31, 2023
October 31, 2023
Compared to
October 31,
2022
Total growth
10%
11%
13%
Salesforce, Inc.
GAAP Results Reconciled to Non-GAAP
Results
The following tables reflect selected GAAP
results reconciled to Non-GAAP results.
(in millions, except per share data)
(Unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Non-GAAP income
from operations
GAAP income from operations
$
1,893
$
1,501
$
5,385
$
3,389
Plus:
Amortization of purchased intangibles
(1)
354
468
1,269
1,411
Stock-based compensation expense
(2)(3)
820
693
2,378
2,097
Restructuring
56
55
163
815
Non-GAAP income from operations
$
3,123
$
2,717
$
9,195
$
7,712
Non-GAAP
operating margin as a percentage of revenues
Total revenues
$
9,444
$
8,720
$
27,902
$
25,570
GAAP operating margin (4)
20.0
%
17.2
%
19.3
%
13.3
%
Non-GAAP operating margin (4)
33.1
%
31.2
%
33.0
%
30.2
%
Non-GAAP net
income
GAAP net income
$
1,527
$
1,224
$
4,489
$
2,690
Plus:
Amortization of purchased intangibles
(1)
354
468
1,269
1,411
Stock-based compensation expense
(2)(3)
820
693
2,378
2,097
Restructuring
56
55
163
815
Income tax effects and adjustments
(436
)
(372
)
(1,076
)
(1,177
)
Non-GAAP net income
$
2,321
$
2,068
$
7,223
$
5,836
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Non-GAAP diluted
net income per share
GAAP diluted net income per share
$
1.58
$
1.25
$
4.60
$
2.73
Plus:
Amortization of purchased intangibles
(1)
0.37
0.48
1.30
1.43
Stock-based compensation expense
(2)(3)
0.85
0.71
2.44
2.13
Restructuring
0.06
0.06
0.17
0.83
Income tax effects and adjustments
(0.45
)
(0.39
)
(1.10
)
(1.19
)
Non-GAAP diluted net income per share
$
2.41
$
2.11
$
7.41
$
5.93
Shares used in computing non-GAAP diluted
net income per share
965
981
975
985
(1) Amortization of purchased intangibles
was as follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Cost of revenues
$
131
$
245
$
600
$
743
Sales and marketing
223
223
669
668
$
354
$
468
$
1,269
$
1,411
(2) Stock-based compensation expense,
excluding stock-based compensation expense related to
restructuring, was as follows:
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Cost of revenues
$
135
$
109
$
386
$
324
Research and development
278
238
814
735
Sales and marketing
312
275
911
815
General and administrative
95
71
267
223
$
820
$
693
$
2,378
$
2,097
(3) Stock-based compensation expense
included in the GAAP to non-GAAP reconciliation tables above
excludes stock-based compensation expense related to restructuring
activities for each of the three months ended October 31, 2024 and
2023 of $0 million and for the nine months ended October 31, 2024
and 2023 of $2 million and $16 million, respectively, which are
included in the restructuring line.
(4) 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. Non-GAAP
income from operations excludes the impact of the amortization of
purchased intangibles, stock-based compensation expense and charges
associated with the Company's restructuring activities.
Salesforce, Inc.
Computation of Basic and Diluted GAAP
and Non-GAAP Net Income Per Share
(in millions, except per share data)
(Unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
GAAP Basic Net Income Per Share
Net income
$
1,527
$
1,224
$
4,489
$
2,690
Basic net income per share
$
1.60
$
1.26
$
4.66
$
2.76
Shares used in computing basic net income
per share
956
972
963
976
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Non-GAAP Basic Net Income Per
Share
Non-GAAP net income
$
2,321
$
2,068
$
7,223
$
5,836
Non-GAAP basic net income per share
$
2.43
$
2.13
$
7.50
$
5.98
Shares used in computing non-GAAP basic
net income per share
956
972
963
976
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
GAAP Diluted Net Income Per
Share
Net income
$
1,527
$
1,224
$
4,489
$
2,690
Diluted net income per share
$
1.58
$
1.25
$
4.60
$
2.73
Shares used in computing diluted net
income per share
965
981
975
985
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
Non-GAAP Diluted Net Income Per
Share
Non-GAAP net income
$
2,321
$
2,068
$
7,223
$
5,836
Non-GAAP diluted net income per share
$
2.41
$
2.11
$
7.41
$
5.92
Shares used in computing non-GAAP diluted
net income per share
965
981
975
985
Supplemental Cash Flow
Information
Computation of Free Cash Flow, a
Non-GAAP Measure
(in millions)
(Unaudited)
Three Months Ended October
31,
Nine Months Ended October
31,
2024
2023
2024
2023
GAAP net cash provided by operating
activities
$
1,983
$
1,532
$
9,122
$
6,831
Capital expenditures
(204
)
(166
)
(504
)
(589
)
Free cash flow
$
1,779
$
1,366
$
8,618
$
6,242
Non-GAAP Financial Measures: This press release includes
information about non-GAAP operating margin, non-GAAP net income
per share, non-GAAP tax rates, free cash flow, constant currency
revenue, constant currency subscription and support revenue growth
rate and constant currency current remaining performance obligation
growth rates (collectively the “non-GAAP financial measures”).
These non-GAAP financial measures are measurements of financial
performance that are not prepared in accordance with U.S. generally
accepted accounting principles and computational methods may differ
from those used by other companies. Non-GAAP financial measures are
not meant to be considered in isolation or as a substitute for
comparable GAAP measures and should be read only in conjunction
with the Company’s consolidated financial statements prepared in
accordance with GAAP. Management uses both GAAP and non-GAAP
measures when planning, monitoring and evaluating the Company’s
performance.
The primary purpose of using non-GAAP measures is to provide
supplemental information that may prove useful to investors and to
enable investors to evaluate the Company’s results in the same way
management does. Management believes that supplementing GAAP
disclosure with non-GAAP disclosure provides investors with a more
complete view of the Company’s operational performance and allows
for meaningful period-to-period comparisons and analysis of trends
in the Company’s business. Further to the extent that other
companies use similar methods in calculating non-GAAP measures, the
provision of supplemental non-GAAP information can allow for a
comparison of the Company’s relative performance against other
companies that also report non-GAAP operating results.
Non-GAAP Operating Margin is the proportion of non-GAAP income
from operations as a percentage of GAAP revenue. Non-GAAP income
from operations excludes the impact of the following items:
stock-based compensation expense, amortization of
acquisition-related intangibles and charges associated with the
Company's restructuring activities. Non-GAAP net income per share
excludes, to the extent applicable, the impact of the following
items: stock-based compensation expense, amortization of purchased
intangibles, charges related to the Company's restructuring
activities and income tax adjustments. These items are excluded
because the decisions that give rise to them are not made to
increase revenue in a particular period, but instead for the
Company’s long-term benefit over multiple periods.
As described above, the Company excludes or adjusts for the
following in its non-GAAP results and guidance:
- Stock-Based Compensation Expense: The Company’s compensation
strategy includes the use of stock-based compensation expense to
attract and retain employees and executives. It is principally
aimed at aligning their interests with those of our stockholders
and at long-term employee retention, rather than to motivate or
reward operational performance for any particular period. Thus,
stock-based compensation expense varies for reasons that are
generally unrelated to operational decisions and performance in any
particular period.
- Amortization of Purchased Intangibles: The Company views
amortization of acquisition-related intangible assets, such as the
amortization of the cost associated with an acquired company’s
research and development efforts, trade names, customer lists and
customer relationships, and, in some cases, acquired lease
intangibles, as items arising from pre-acquisition activities
determined at the time of an acquisition. While these intangible
assets are continually evaluated for impairment, amortization of
the cost of purchased intangibles is a static expense, which is not
typically affected by operations during any particular period.
Although the Company excludes the amortization of purchased
intangibles from these non-GAAP measures, management believes that
it is important for investors to understand that such intangible
assets were recorded as part of purchase accounting and contribute
to revenue generation.
- Restructuring: Restructuring charges are costs associated with
a formal restructuring plan and may include employee notice period
costs and severance payments, lease or contract termination costs,
asset impairments, accelerated depreciation and amortization and
other related expenses. The Company excludes these restructuring
charges because they are distinct from ongoing operational costs
and it does not believe they are reflective of current and expected
future business performance and operating results.
- Gains (Losses) on Strategic Investments, net: The Company
records all fair value adjustments to its equity securities held
within the strategic investment portfolio through the statement of
operations. As it is not possible to forecast future gains and
losses, the Company assumes no change to the value of its strategic
investment portfolio in its GAAP and non-GAAP estimates for future
periods, including its guidance. Gains (Losses) on Strategic
Investments, net, are included in its GAAP financial
statements.
- Income Tax Effects and Adjustments: The Company utilizes a
fixed long-term projected non-GAAP tax rate in order to provide
better consistency across the interim reporting periods by
eliminating the effects of items such as changes in the tax
valuation allowance and tax effects of acquisition-related costs,
since each of these can vary in size and frequency. When projecting
this long-term rate, the Company evaluated a three-year financial
projection that excludes the direct impact of the following
non-cash items: stock-based compensation expenses and the
amortization of purchased intangibles. The projected rate also
considers factors including the Company’s expected tax structure,
its tax positions in various jurisdictions and key legislation in
major jurisdictions where the Company operates. For fiscal 2024,
the Company used a projected non-GAAP tax rate of 23.5%. For fiscal
2025, the Company uses a projected non-GAAP tax rate of 22.0%,
which reflects currently available information, as well as other
factors and assumptions. The non-GAAP tax rate could be subject to
change for a variety of reasons, including the rapidly evolving
global tax environment, significant changes in the Company’s
geographic earnings mix due to acquisition activity or other
changes to the Company’s strategy or business operations. The
Company will re-evaluate its long-term rate as appropriate.
The Company presents constant currency information to provide a
framework for assessing how the Company's underlying business
performed excluding the effect of foreign currency rate
fluctuations. To present constant currency revenue growth rates,
current and comparative prior period results for entities reporting
in currencies other than United States dollars are converted into
United States dollars at the weighted average exchange rate for the
quarter being compared to rather than the actual exchange rates in
effect during that period. To present current remaining performance
obligation growth rates on a constant currency basis, current
remaining performance obligation balances in local currencies in
previous comparable periods are converted using the United States
dollar currency exchange rate as of the most recent balance sheet
date.
The Company defines the non-GAAP measure free cash flow as GAAP
net cash provided by operating activities, less capital
expenditures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241203924824/en/
Mike Spencer Salesforce Investor Relations
investor@salesforce.com
Carolyn Guss Salesforce Public Relations 415-536-4966
pr@salesforce.com
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