Salesforce Announces Strong Second Quarter Fiscal 2022 Results
Raises FY22 Revenue Guidance to $26.2 Billion to $26.3 Billion
- Second Quarter Revenue of $6.34 Billion, up 23% Year-Over-Year, 21% in Constant Currency
- Current Remaining Performance Obligation of Approximately $18.7 Billion, up 23% Year-Over-Year, 23% in Constant Currency
- Second Quarter Operating Cash Flow of $0.39 Billion, down 10% Year-Over-Year
- Second Quarter GAAP Operating Margin of 5.2% and Non-GAAP Operating Margin of 20.4%
- Raises FY22 GAAP Operating Margin Guidance to Approximately 1.8% and Non-GAAP Operating Margin Guidance to Approximately 18.5%
- Initiates Third Quarter FY22 Revenue Guidance of $6.78 Billion to $6.79 Billion, up Approximately 25% Year-Over-Year
Salesforce (NYSE: CRM), the global leader in CRM, today announced results for its second quarter of fiscal 2022 ended July 31, 2021.
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“Salesforce has never seen better execution or greater momentum. Our Customer 360 platform is now fueled by a herd of unicorns perfectly designed for this all-digital world. Sales, Service, Marketing & Commerce, Platform, Tableau, MuleSoft and now Slack are all billion dollar-plus products delivering customer success like no other company.”
“With companies and governments around the world continuing to accelerate their digital transformations, we delivered our fifth phenomenal quarter in a row,” said Marc Benioff, Chair & CEO, Salesforce. “Salesforce has never seen better execution or greater momentum. Our Customer 360 platform is now fueled by a herd of unicorns perfectly designed for this all-digital world. Sales, Service, Marketing & Commerce, Platform, Tableau, MuleSoft and now Slack are all billion dollar-plus products delivering customer success like no other company.”
“We had another remarkable quarter of top and bottom line performance, making this an impressive first half of this fiscal year,” said Amy Weaver, President and CFO. “We exceeded our financial expectations in the quarter, achieving record levels of new business, and saw strong demand across our portfolio. And we are excited to build on Slack’s momentum with the power of our two companies now together.”
Salesforce delivered the following results for its fiscal second quarter:
Revenue: Total second quarter revenue was $6.34 billion, an increase of 23% year-over-year, and 21% in constant currency. Subscription and support revenues for the quarter were $5.91 billion, an increase of 22% year-over-year. Professional services and other revenues for the quarter were $0.43 billion, an increase of 37% year-over-year.
Operating Margin: Second quarter GAAP operating margin was 5.2%. Second quarter non-GAAP operating margin was 20.4%.
Earnings per Share: Second quarter GAAP diluted earnings per share was $0.56, and non-GAAP diluted earnings per share was $1.48. Mark-to-market accounting of the company’s strategic investments benefited GAAP diluted earnings per share by $0.42 based on a U.S. tax rate of 25% and non-GAAP diluted earnings per share by $0.43 based on a non-GAAP tax rate of 21.5%.
Cash: Cash generated from operations for the second quarter was $0.39 billion, a decrease of 10% year-over-year. Total cash, cash equivalents and marketable securities ended the second quarter at $9.65 billion.
Remaining Performance Obligation: Remaining performance obligation ended the second quarter at approximately $36.2 billion, an increase of 18% year-over-year. Current remaining performance obligation ended the second quarter at approximately $18.7 billion, an increase of 23% year-over-year, 23% in constant currency.
As of August 25, 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 third quarter of fiscal year 2022. As of August 25, 2021, the company is raising its revenue guidance previously provided on December 1, 2020 and updated on February 25, 2021 and May 27, 2021 for its full fiscal year 2022. As of August 25, 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 provided on February 25, 2021 and updated on May 27, 2021 for its full fiscal year 2022.
Management will provide further commentary around these guidance assumptions on its earnings call, which is expected to occur on August 25, 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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|
|
Q3 FY22 Guidance |
|
Full Year FY22 Guidance |
|
Revenue(1) |
$6.78 – $6.79 Billion |
|
$26.2 – $26.3 Billion |
|
Y/Y Growth |
~25% |
|
~23% to ~24% |
|
GAAP operating margin |
N/A |
|
~1.8% |
|
Non-GAAP operating margin |
N/A |
|
~18.5% |
|
GAAP earnings (loss) per share |
($0.06) – ($0.05) |
|
$0.81 – $0.83 |
|
Non-GAAP earnings per share |
$0.91 – $0.92 |
|
$4.36 – $4.38 |
|
Operating Cash Flow Growth (Y/Y) |
N/A |
|
~14% – 15% |
|
Current Remaining Performance Obligation Growth (Y/Y) |
~22% |
|
N/A |
|
(1) Full Year FY22 revenue guidance includes contributions from Slack Technologies, Inc. of approximately $530 million, net of purchase accounting. |
|||
The following is a reconciliation of GAAP operating margin guidance to non-GAAP operating margin guidance for the full year:
|
|
|
Full Year FY22 Guidance |
|
GAAP operating margin(1) |
|
1.8% |
|
Plus |
|
|
|
Amortization of purchased intangibles(2) |
|
6.1% |
|
Stock-based expense(2) |
|
10.6% |
|
Non-GAAP operating margin(1) |
|
18.5% |
|
(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 FY22. |
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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:
|
|
Fiscal 2022 |
||||||
|
|
Q3 |
|
FY22 |
||||
|
GAAP earnings (loss) per share range(1)(2) |
($0.06) – ($0.05 |
) |
|
$0.81 – $0.83 |
|||
|
Plus |
|
|
|
||||
|
Amortization of purchased intangibles |
$ |
0.50 |
|
|
$ |
1.64 |
|
|
Stock-based expense |
$ |
0.82 |
|
|
$ |
2.86 |
|
|
Less |
|
|
|
||||
|
Income tax effects and adjustments(3) |
$ |
(0.35 |
) |
|
$ |
(0.95 |
) |
|
Non-GAAP diluted earnings per share(2) |
$0.91 – $0.92 |
|
$4.36 – $4.38 |
||||
|
Shares used in computing basic GAAP net income per share (millions) |
980 |
|
|
955 |
|
||
|
Shares used in computing diluted Non-GAAP net income per share (millions) |
1,006 |
|
|
978 |
|
||
|
(1)The Company’s GAAP tax provision is expected to be approximately 67% for the three months ended October 31, 2021, and approximately 23% 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. |
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