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CRM

Salesforce announces strong Fourth Quarter Fiscal 2024 Results

Comments Off on Salesforce announces strong Fourth Quarter Fiscal 2024 Results
Salesforce

Salesforce (NYSE: CRM), the #1 AI CRM, today announced results for its fiscal fourth quarter and full fiscal year 2024 ended January 31, 2024.

  • Fourth Quarter Revenue of $9.29 Billion, up 11% Year-Over-Year (“Y/Y”), up 10% in Constant Currency (“CC”)
  • Current Remaining Performance Obligation of $27.6 Billion, up 12% Y/Y, up 13% CC
  • FY24 Revenue of $34.9 Billion, up 11% Y/Y, up 11% CC
  • FY24 GAAP Operating Margin of 14.4% and non-GAAP Operating Margin of 30.5%
  • FY24 Operating Cash Flow of $10.2 Billion, up 44% Y/Y
  • Initiates a Quarterly Dividend of $0.40 per Share of Outstanding Common Stock
  • Announced Share Repurchase Program Authorization Increased by $10 Billion
  • Returned $1.7 Billion in the Form of Share Repurchases to Stockholders in Q4 and $11.7 Billion Since Inception of our Share Repurchase Program
  • Initiates Full Year FY25 Revenue Guidance of $37.7 Billion to $38.0 Billion, up 8% – 9% Y/Y
  • Initiates Full Year FY25 Subscription & Support Revenue Growth Guidance of Approximately 10% Y/Y, Slightly Above 10% Y/Y CC
  • Initiates Full Year FY25 GAAP Operating Margin Guidance of 20.4% and non-GAAP Operating Margin Guidance of 32.5%
  • Initiates Full Year FY25 Operating Cash Flow Growth Guidance of 21% to 24% Y/Y

“It’s been a phenomenal year of transformation for Salesforce with strong performance across all our key metrics, including record cash flow and margin growth. Our total remaining performance obligation ended the fourth quarter at $56.9 billion, an increase of 17% year-over-year. We’re also thrilled to initiate our first-ever Salesforce dividend and increase our share buyback plan by $10 billion,” said Marc Benioff, Chair & CEO, Salesforce. “With our trusted, unified Einstein 1 Platform, we’re incredibly well positioned to build on our success and capitalize on the massive surge in tech spending expected over the coming years, delivering an unprecedented level of intelligence to our customers as AI transforms every company and industry.”

“We had a strong close to our fiscal year and demonstrated significant progress on the profitable growth strategy we announced last year, delivering full year GAAP operating margin of 14.4% and Non-GAAP operating margin of 30.5%,” said Amy Weaver, President and CFO of Salesforce. “We have had an extraordinary year of transformation and, looking ahead, we remain committed to driving shareholder value.”

Salesforce delivered the following results for its fiscal fourth quarter and full fiscal year:

Revenue: Total fourth quarter revenue was $9.29 billion, an increase of 11% Y/Y and 10% CC. Subscription and support revenues were $8.75 billion, an increase of 12% Y/Y. Professional services and other revenues were $0.54 billion, a decrease of (9)% Y/Y.

Fiscal 2024 revenue was $34.86 billion, an increase of 11% Y/Y and 11% CC. Subscription and support revenues were $32.54 billion, an increase of 12% Y/Y. Professional services and other revenues were $2.32 billion, flat Y/Y.

Operating Margin: Fourth quarter GAAP operating margin was 17.5%. Fourth quarter non-GAAP operating margin was 31.4%. Restructuring negatively impacted fourth quarter GAAP operating margin by (190) bps.

Fiscal 2024 GAAP operating margin was 14.4%. Fiscal 2024 non-GAAP operating margin was 30.5%. Restructuring negatively impacted fiscal 2024 GAAP operating margin by (280) bps.

Earnings per Share: Fourth quarter GAAP diluted EPS was $1.47 and non-GAAP diluted EPS was $2.29. Losses on the Company’s strategic investments negatively impacted GAAP diluted EPS by $(0.03) based on a U.S. tax rate of 24.5% and non-GAAP diluted EPS by $(0.03) based on a non-GAAP tax rate of 23.5%. Restructuring negatively impacted fourth quarter GAAP diluted EPS by $(0.18).

Fiscal 2024 GAAP diluted EPS was $4.20 and non-GAAP diluted EPS was $8.22. Losses on the Company’s strategic investments negatively impacted GAAP diluted EPS by $(0.21) based on a U.S. tax rate of 24.5% and non-GAAP diluted EPS by ($0.22) based on a non-GAAP tax rate of 23.5%. Restructuring negatively impacted fiscal 2024 GAAP diluted EPS by $(1.00).

Cash Flow: Cash generated from operations for the fourth quarter was $3.40 billion, an increase of 22% Y/Y. Free cash flow was $3.26 billion, an increase of 27% Y/Y. Restructuring negatively impacted fourth quarter operating cash flow growth by (200) bps.

Cash generated from operations for the fiscal 2024 was $10.23 billion, an increase of 44% Y/Y. Free cash flow was $9.50 billion, an increase of 50% Y/Y. Restructuring negatively impacted fiscal 2024 operating cash flow growth by (1,500) bps.

Remaining Performance Obligation: Remaining performance obligation ended the fourth quarter at $56.9 billion, an increase of 17% Y/Y. Current remaining performance obligation ended at $27.6 billion, an increase of 12% Y/Y, and 13% CC.

Salesforce Initiates Quarterly Dividend

Salesforce’s Board of Directors declared a cash dividend of $0.40 per share of our outstanding common stock, payable on April 11, 2024 to stockholders of record as of the close of business on March 14, 2024. We intend to pay a cash dividend on a quarterly basis going forward, subject to market conditions and approval by our Board of Directors.

Forward Looking Guidance

As of February 28, 2024, the Company is initiating its first quarter GAAP and non-GAAP diluted EPS guidance, current remaining performance obligation growth guidance, and revenue guidance. The Company is initiating its full year FY25 revenue guidance, GAAP and non-GAAP diluted EPS guidance, GAAP and non-GAAP operating margin guidance, subscription and support revenue growth guidance, and operating cash flow growth guidance.

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 discrete tax items and related effects in conjunction with certain provisions in the Tax Cuts and Jobs Act, future acquisitions or other transactions.

Q1 FY25

Guidance

Full Year FY25

Guidance

Total Revenue

$9.12 – $9.17 Billion

$37.7 – $38.0 Billion

Y/Y Growth

11%

9%

FX Impact(1)

($50M) Y/Y FX

($100M) Y/Y FX

Subscription & Support Revenue Y/Y Growth(4)

N/A

Approx 10%, Slightly Above 10% in CC

GAAP Operating Margin

N/A

~20.4%

Non-GAAP Operating Margin(2)

N/A

~32.5%

GAAP Diluted Earnings per Share(2)

$1.42 – $1.44

$6.07 – $6.15

Non-GAAP Diluted Earnings per Share(2)

$2.37 – $2.39

$9.68 – $9.76

Operating Cash Flow Growth (Y/Y)

N/A

21% – 24%

Current Remaining Performance Obligation Growth (Y/Y)

11%

N/A

FX Impact(3)

($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) 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 Q1 – Q4 FY25 repurchase activity under our share repurchase program.

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

(4) Subscription & Support revenue excludes professional services revenue.

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)

~20.4%

Plus

Amortization of purchased intangibles(2)

4.4%

Stock-based compensation expense(2)(3)

7.7%

Restructuring(2)(3)

—%

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

Q1

FY25

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

$1.42 – $1.44

$6.07 – $6.15

Plus

Amortization of purchased intangibles

$

0.47

$

1.64

Stock-based compensation expense

$

0.73

$

2.92

Restructuring(3)

$

—

$

0.02

Less

Income tax effects and adjustments(4)

$

(0.25

)

$

(0.97

)

Non-GAAP diluted earnings per share(2)

$2.37 – $2.39

$9.68 – $9.76

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

976

986

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

994

1,002

(1) The Company’s GAAP tax provision is expected to be approximately 22.5% for the three months ended April 30, 2024, and approximately 22.5% 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 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 Spring 2024 Product Release, visit: www.salesforce.com/products/spring-24-release.

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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