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...
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
FY25 Guidance Highlights
“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 |
| Full Year FY25 |
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 |
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:
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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