CRM
$150.82
Salesforce.com
$.53
.35%
Earnings Details
1st Quarter April 2019
Tuesday, June 4, 2019 4:05:00 PM
Tweet Share Watch
Summary

Salesforce.com Beats

Salesforce.com (CRM) reported 1st Quarter April 2019 earnings of $0.91 per share on revenue of $3.7 billion. The consensus earnings estimate was $0.61 per share on revenue of $3.7 billion. The Earnings Whisper number was $0.64 per share. Revenue grew 24.3% on a year-over-year basis.

The company said it expects second quarter non-GAAP earnings of $0.46 to $0.47 per share on revenue of $3.94 billion to $3.95 billion. The current consensus earnings estimate is $0.66 per share on revenue of $3.93 billion for the quarter ending July 31, 2019. However, the company also said it now expects fiscal year earnings of $2.88 to $2.90 per share on revenue of $16.10 billion to $16.25 billion. The company's previous guidance was earnings of $2.74 to $2.76 per share on revenue of $15.95 billion to $16.05 billion and the current consensus earnings estimate is $2.69 per share on revenue of $16.11 billion for the year ending January 31, 2020.

Salesforce.com Inc provides enterprise cloud computing solutions, offering social and mobile cloud apps and platform services, as well as professional services to facilitate the adoption of its solutions.

Results
Reported Earnings
$0.91
Earnings Whisper
$0.64
Consensus Estimate
$0.61
Reported Revenue
$3.74 Bil
Revenue Estimate
$3.68 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Salesforce Announces Record First Quarter Fiscal 2020 Results

SAN FRANCISCO, June 4, 2019 /PRNewswire/ -- Salesforce (NYSE: CRM), the global leader in CRM, today announced results for its fiscal first quarter ended April 30, 2019.

Salesforce (PRNewsFoto/salesforce.com) (PRNewsfoto/Salesforce)

"I am thrilled with our results this quarter, and I am especially excited to have delivered record revenue in Q1 and operating cash flow of almost $2 billion, up 34% year-over-year," said Marc Benioff, chairman and co-CEO, Salesforce. "We have a massive opportunity in front of us and are well-positioned for long-term growth as the world's #1 CRM."

"Our strong revenue growth in the quarter reflects the strength of our business and the tremendous demand we're seeing from customers worldwide," said Keith Block, co-CEO, Salesforce. "Companies of every size and industry are undergoing a digital transformation to better serve their customers and they are choosing Salesforce as their partner."

Salesforce delivered the following results for its fiscal first quarter:

Revenue: Total first quarter revenue was $3.74 billion, an increase of 24% year-over-year, and 26% in constant currency. Subscription and support revenues were $3.50 billion, an increase of 24% year-over-year. Professional services and other revenues were $241 million, an increase of 23% year-over-year.

Earnings per Share: First quarter GAAP diluted earnings per share was $0.49, and non-GAAP diluted earnings per share was $0.93. Mark-to-market accounting of the company's strategic investments, required by ASU 2016-01, benefited GAAP diluted earnings per share by $0.27 based on the US tax rate of 25% and non-GAAP diluted earnings per share by $0.27 based on our non-GAAP tax rate of 22.5%.

Cash: Cash generated from operations for the first quarter was $1.97 billion, an increase of 34% year-over-year. Total cash, cash equivalents and marketable securities ended the first quarter at $6.38 billion.

Remaining Performance Obligation: Remaining performance obligation ended the first quarter at approximately $24.9 billion, an increase of 22% year-over-year. This includes approximately $500 million related to the remaining performance obligation from MuleSoft. Current remaining performance obligation ended the first quarter at approximately $11.8 billion, an increase of 23% year-over-year, 24% in constant currency.

As of June 4, 2019, the company is initiating revenue, earnings per share and current remaining performance obligation growth guidance for its second quarter of fiscal year 2020. For the full fiscal year 2020, the company is maintaining its revenue and operating cash flow guidance, and raising its non-GAAP earnings per share guidance, previously provided April 15, 2019. The company is also raising its GAAP earnings per share guidance previously provided on March 4, 2019. The guidance below 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 our investment portfolio has had a positive impact on our financial results, that may not be true for future periods, particularly in periods of significant market fluctuations that affect the publicly traded companies within our strategic investment portfolio. The impact of future gains or losses from our strategic portfolio could be material. 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.


Q2 FY20

Guidance


Full Year FY20

Guidance

Revenue

$3.94 - $3.95 billion


$16.10 - $16.25 billion

Y/Y Growth

20%


21% - 22%

GAAP (loss) earnings per share

($0.08) - ($0.07)


$0.78 - $0.80

Non-GAAP earnings per share

$0.46 - $0.47


$2.88 - $2.90

Operating Cash Flow Growth (Y/Y)

N/A


20% - 21%

Current Remaining Performance Obligation Growth (Y/Y)

20% to 21%


N/A

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


Fiscal 2020


Q2


FY20

GAAP (loss) earnings per share range*

($0.08) - ($0.07)


$0.78 - $0.80

Plus




Amortization of purchased intangibles

$

0.16



$

0.60


Stock-based expense

$

0.49



$

1.87


Less




Income tax effects and adjustments**

$

(0.11)



$

(0.37)


Non-GAAP diluted earnings per share***

$0.46 - $0.47


$2.88 - $2.90





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

778



781


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

805



807



* The Company's GAAP (loss) earnings per share range includes the impact of the one-time non-cash accounting charge of approximately $200 million resulting from the termination of its reseller agreement with Salesforce.org as previously discussed on April 15, 2019. The Company's GAAP tax provision is expected to be approximately (58%) for the three months ended July 31, 2019 and approximately 37% for the year ended January 31, 2020. The GAAP tax rates may fluctuate due to discrete tax items, future acquisitions or other transactions. The Company's projected GAAP basic and diluted (loss) earnings 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.

** The Company's non-GAAP tax provision uses a long-term projected tax rate of 22.5%, which reflects currently available information and could be subject to change.

*** The Company's projected non-GAAP basic and diluted (loss) earnings 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.

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

Quarterly Conference Call
Salesforce will host a conference call at 2:00 p.m. (PT) / 5:00 p.m. (ET) today to discuss its financial results with the investment community.  A live web broadcast of the event will be available on the Salesforce Investor Relations website at www.salesforce.com/investor.  A live dial-in is available domestically at 866-901-SFDC or 866-901-7332 and internationally at 706-902-1764, passcode 7177678.  A replay will be available at (800) 585-8367 or (855) 859-2056 until midnight (ET) July 4, 2019.

About Salesforce
Salesforce, the global leader in CRM, empowers companies to connect with their customers in a whole new way. Salesforce has headquarters in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol "CRM." For more information about Salesforce, visit: www.salesforce.com.

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:  This press release contains forward-looking statements about our financial and operating results, which may include expected GAAP and non-GAAP financial and other operating and non-operating results, including revenue, net income, diluted earnings per share, operating cash flow growth, operating margin improvement, expected revenue growth, expected current remaining performance obligation growth, expected tax rates, the one-time accounting non-cash charge that will be incurred in connection with the Salesforce.org combination; stock-based compensation expenses, amortization of purchased intangibles, shares outstanding, market growth and sustainability goals.  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 could differ materially from the results expressed or implied by the forward-looking statements we make.

The risks and uncertainties referred to above include -- but are not limited to -- risks associated with the effect of general economic and market conditions; the impact of geopolitical events; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our business strategy and our plan to build our business, including our strategy to be the leading provider of enterprise cloud computing applications and platforms; the pace of change and innovation in enterprise cloud computing services; the seasonal nature of our sales cycles; the competitive nature of the market in which we participate; our international expansion strategy; our service performance and security, including the resources and costs required to avoid unanticipated downtime and prevent, detect and remediate potential security breaches; the expenses associated with new data centers and third-party infrastructure providers; additional data center capacity; real estate and office facilities space; our operating results and cash flows; new services and product features; our strategy of acquiring or making investments in complementary businesses, joint ventures, services, technologies and intellectual property rights; the performance and fair value of our investments in complementary businesses through our strategic investment portfolio; our ability to realize the benefits from strategic partnerships, joint ventures and investments; the impact of future gains or losses from our strategic investment portfolio, including gains or losses from overall market conditions that may affect the publicly traded companies within the company's strategic investment portfolio; our ability to execute our business plans; our ability to successfully integrate acquired businesses and technologies; our ability to continue to grow unearned revenue and remaining performance obligation; our ability to protect our intellectual property rights; our ability to develop our brands; our reliance on third-party hardware, software and platform providers; our dependency on the development and maintenance of the infrastructure of the Internet; the effect of evolving domestic and foreign government regulations, including those related to the provision of services on the Internet, those related to accessing the Internet, and those addressing data privacy, cross-border data transfers and import and export controls; the valuation of our deferred tax assets and the release of related valuation allowances; the potential availability of additional tax assets in the future; the impact of new accounting pronouncements and tax laws; uncertainties affecting our ability to estimate our tax rate; the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; factors related to our outstanding debt, revolving credit facility, term loan and loan associated with 50 Fremont; compliance with our debt covenants and lease obligations; current and potential litigation involving us; and the impact of climate change.

Further information on these and other factors that could affect the company's financial results is included in the reports on Forms 10-K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time.  These documents are available on the SEC Filings section of the Investor Information section of the company's website at www.salesforce.com/investor.

Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

© 2019 salesforce.com, inc.  All rights reserved.  Salesforce and other marks are trademarks of salesforce.com, inc.  Other brands featured herein may be trademarks of their respective owners.

 

salesforce.com, inc.

Consolidated Statements of Operations

(in millions, except per share data)

(Unaudited)



Three Months Ended April 30,


2019


2018

Revenues:




Subscription and support

$

3,496



$

2,810


Professional services and other

241



196


Total revenues

3,737



3,006


Cost of revenues (1)(2):




Subscription and support

678



573


Professional services and other

236



194


Total cost of revenues

914



767


Gross profit

2,823



2,239


Operating expenses (1)(2):




Research and development

554



424


Marketing and sales

1,697



1,329


General and administrative

362



295


Total operating expenses

2,613



2,048


Income from operations

210



191


Gains on strategic investments, net

281



211


Other expense

(9)



(17)


Income before provision for income taxes

482



385


Provision for income taxes

(90)



(41)


Net income

$

392



$

344


Basic net income per share

$

0.51



$

0.47


Diluted net income per share

$

0.49



$

0.46


Shares used in computing basic net income per share

771



729


Shares used in computing diluted net income per share

793



754



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



Three Months Ended April 30,


2019


2018

Cost of revenues

$

61



$

39


Marketing and sales

68



30



(2)  Amounts include stock-based expense, as follows:



Three Months Ended April 30,


2019


2018

Cost of revenues

$

43



$

34


Research and development

81



66


Marketing and sales

177



120


General and administrative

42



32


 

salesforce.com, inc.

Consolidated Statements of Operations

(As a percentage of total revenues)

(Unaudited)



Three Months Ended April 30,


2019


2018

Revenues:




Subscription and support

94

%


93

%

Professional services and other

6



7


Total revenues

100



100


Cost of revenues (1)(2):




Subscription and support

18



19


Professional services and other

6



7


Total cost of revenues

24



26


Gross profit

76



74


Operating expenses (1)(2):




Research and development

15



14


Marketing and sales

45



44


General and administrative

10



10


Total operating expenses

70



68


Income from operations

6



6


Gains on strategic investments, net

7



7


Other expense

0



0


Income before provision for income taxes

13



13


Provision for income taxes

(3)



(2)


Net income

10

%


11

%


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



Three Months Ended April 30,


2019


2018

Cost of revenues

2

%


1

%

Marketing and sales

2



1



(2)  Stock-based expense as a percentage of total revenues, as follows:



Three Months Ended April 30,


2019


2018

Cost of revenues

1

%


1

%

Research and development

2



2


Marketing and sales

5



4


General and administrative

1



1


 

salesforce.com, inc.

Consolidated Balance Sheets

(in millions)

(Unaudited)



April 30, 2019


January 31, 2019

Assets




Current assets:




Cash and cash equivalents

$

4,110



$

2,669


Marketable securities

2,269



1,673


Accounts receivable, net

2,153



4,924


Costs capitalized to obtain revenue contracts, net

786



788


Prepaid expenses and other current assets

717



629


Total current assets

10,035



10,683


Property and equipment, net

2,243



2,051


Operating lease right-of-use assets (1)

2,854



0


Costs capitalized to obtain revenue contracts, noncurrent, net

1,149



1,232


Strategic investments

1,548



1,302


Goodwill

12,854



12,851


Intangible assets acquired through business combinations, net

1,794



1,923


Capitalized software and other assets, net

677



695


Total assets

$

33,154



$

30,737


Liabilities and stockholders' equity




Current liabilities:




Accounts payable, accrued expenses and other liabilities

$

2,228



$

2,691


Operating lease liabilities, current (1)

675



0


Unearned revenue

7,585



8,564


Total current liabilities

10,488



11,255


Noncurrent debt

3,173



3,173


Noncurrent operating lease liabilities (1)

2,383



0


Other noncurrent liabilities

664



704


Total liabilities

16,708



15,132


Stockholders' equity:




Common stock

1



1


Additional paid-in capital

14,383



13,927


Accumulated other comprehensive loss

(65)



(58)


Retained earnings

2,127



1,735


Total stockholders' equity

16,446



15,605


Total liabilities and stockholders' equity

$

33,154



$

30,737




(1)

Reflects the prospective adoption of Accounting Standards Update No. 2016-02, "Leases (Topic 842)", which the Company adopted on February 1, 2019.

 

salesforce.com, inc.

Consolidated Statements of Cash Flows

(in millions)

(Unaudited)



Three Months Ended April 30,


2019


2018

Operating activities:




Net income

$

392



$

344


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

437



197


Amortization of costs capitalized to obtain revenue contracts, net

209



188


Expenses related to employee stock plans

343



252


Gains on strategic investments, net

(281)



(211)


Changes in assets and liabilities, net of business combinations:




Accounts receivable, net

2,774



2,162


Costs capitalized to obtain revenue contracts, net

(124)



(118)


Prepaid expenses and other current assets and other assets

(97)



(90)


Accounts payable

15



50


Accrued expenses and other liabilities

(560)



(506)


Operating lease liabilities

(164)



0


Unearned revenue

(979)



(802)


Net cash provided by operating activities

1,965



1,466


Investing activities:




Business combinations, net of cash acquired

(10)



(182)


Purchases of strategic investments

(159)



(147)


Sales of strategic investments

194



4


Purchases of marketable securities

(734)



(263)


Sales of marketable securities

86



938


Maturities of marketable securities

56



48


Capital expenditures

(159)



(122)


Net cash provided by (used in) investing activities

(726)



276


Financing activities:




Proceeds from issuance of debt, net

0



2,470


Proceeds from employee stock plans

219



201


Principal payments on financing obligations (1)

(11)



(19)


Repayments of debt

(1)



(1,027)


Net cash provided by financing activities

207



1,625


Effect of exchange rate changes

(5)



12


Net increase in cash and cash equivalents

1,441



3,379


Cash and cash equivalents, beginning of period

2,669



2,543


Cash and cash equivalents, end of period

$

4,110



$

5,922




(1)

Previously referred to as principal payments on capital lease obligations.

 

salesforce.com, inc.

Additional Metrics

(Unaudited)



Apr 30,

2019


Jan 31,

2019


Oct 31,

2018


Jul 31,
2018


Apr 30,
2018


Jan 31,

2018

Full Time Equivalent Headcount

37,485



35,995



34,391



32,717



30,149



29,401


Financial data (in millions):












Cash, cash equivalents and marketable securities

$

6,379



$

4,342



$

3,450



$

3,427



$

7,159



$

4,521


Strategic investments (1)

1,548



1,302



1,251



1,202



1,024



677


Operating lease liabilities (2)

3,058



NA


NA


NA


NA


NA

Principal due on the Company's outstanding debt obligations

3,197



3,198



3,699



3,700



3,200



1,727


Net cash provided by operating activities

1,965



1,331



143



458



1,466



1,052


Capital expenditures

159



167



136



170



122



138




(1)

The strategic investments balance as of January 31, 2018 is prior to the adoption of Accounting Standards Update No. 2016-01, "Financial Instruments-Overall (Subtopic 825-10)" on February 1, 2018 which requires fair value adjustments of the Company's publicly traded and privately held equity investments. See discussion below for further details on the fair value adjustments.

(2)

Effective February 1, 2019, the Company prospectively adopted Topic 842. Accordingly, the results for prior periods were not adjusted to conform to the current period measurement or recognition of results.

Supplemental Revenue Analysis

Remaining Performance Obligation

Transaction price allocated to the remaining performance obligations 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. Transaction price allocated to the remaining performance obligation is influenced by several factors, including seasonality, the timing of renewals, average contract terms and foreign currency exchange rates. Unbilled portions of the remaining transaction price denominated in foreign currencies are revalued each period based on the period end exchange rates.

The portion of the remaining performance obligation that is unbilled is not recorded on the balance sheet. Remaining performance obligation consisted of the following (in billions):


Current


Noncurrent


Total

As of April 30, 2019

$

11.8



$

13.1



$

24.9


As of January 31, 2019

$

11.9



$

13.8



$

25.7


As of October 31, 2018

$

10.0



$

11.2



$

21.2


As of July 31, 2018

$

9.8



$

11.2



$

21.0


As of April 30, 2018

$

9.6



$

10.8



$

20.4


As of January 31, 2018

$

9.6



$

11.0



$

20.6


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
April 30, 2019


Three Months Ended
April 30, 2018

Unearned revenue, beginning of period

$

8,564



$

6,995


Billings and other*

2,714



2,211


Contribution from contract asset

44



(6)


Revenue recognized ratably over time

(3,488)



(2,868)


Revenue recognized over time as delivered

(172)



(137)


Revenue recognized at a point in time

(77)



(1)


Unearned revenue from business combinations

0



7


Unearned revenue, end of period

$

7,585



$

6,201



*Other includes, for example, the impact of foreign currency translation


Disaggregation of Revenue

Subscription and Support Revenue by the Company's core service offerings

Subscription and support revenues consisted of the following (in millions):



Three Months Ended April 30,


2019


2018

Sales Cloud

$

1,073



$

965


Service Cloud

1,020



848


Salesforce Platform and Other

842



575


Marketing and Commerce Cloud

561



422



$

3,496



$

2,810



Total Revenue by Geographic Locations

Revenues by geographical region consisted of the following (in millions):



Three Months Ended April 30,


2019


2018

Americas

$

2,617



$

2,101


Europe

755



606


Asia Pacific

365



299



$

3,737



$

3,006







Three Months Ended April 30,


2019


2018

Americas

70

%


70

%

Europe

20



20


Asia Pacific

10



10



100

%


100

%

Constant Currency Growth Rates

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 this information, 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 for growth rate calculations presented, rather than the actual exchange rates in effect during that period.

Revenue constant currency growth rates were as follows:


Three Months Ended
April 30, 2019
compared to Three Months
Ended April 30, 2018


Three Months Ended
January 31, 2019
compared to Three Months
Ended January 31, 2018


Three Months Ended
April 30, 2018
compared to Three Months
Ended April 30, 2017

Americas

25%


26%


19%

Europe

32%


31%


31%

Asia Pacific

27%


26%


30%

Total growth

26%


27%


22%


The Company presents constant currency information for current remaining performance obligation to provide a framework for assessing how the Company's underlying business performed excluding the effects of foreign currency rate fluctuations. To present the information, the Company converted the current remaining performance obligation balances in local currencies in previous comparable periods using the United States dollar currency exchange rate as of the most recent balance sheet date.


Current remaining performance obligation constant currency growth rates was as follows:







April 30, 2019
compared to
April 30, 2018

Total growth

24%

Supplemental Strategic Investment Information
Gains on strategic investments, net

All fair value adjustments of the Company's publicly traded and privately held equity investments are recorded through the statement of operations.  Therefore, the Company anticipates additional volatility to the Company's statements of operations in future periods, due to changes in market prices of the Company's investments in publicly held equity investments and the valuation and timing of observable price changes and impairments of the Company's investments in privately held securities. These changes could be material based on market conditions and events. The results for the current fiscal period are not indicative of the results to be expected for any subsequent quarter or fiscal year.

Gains and losses recognized on strategic investments were as follows (in millions):


Three Months Ended April 30,


2019


2018

Net gains recognized on publicly traded securities

$

150



$

211


Net gains (losses) recognized on privately held securities (1)

122



(9)


Net gains recognized on sales of equity securities

19



8


Net gains (losses) recognized on debt securities

(10)



1


Gains on strategic investments, net

$

281



$

211




(1)

Gains on strategic investments, net were primarily due to the mark to market of one privately held investment of approximately $106 million during the three months ended April 30, 2019.

 

Supplemental Debt Information

The carrying values of the Company's borrowings were as follows (in millions):


Instrument


Date of issuance


Maturity date


April 30, 2019


January 31, 2019

2021 Term Loan


May 2018


May 2021


$

500



$

499


2023 Senior Notes


April 2018


April 2023


993



993


2028 Senior Notes


April 2018


April 2028


1,488



1,488


Loan assumed on 50 Fremont


February 2015


June 2023


196



196


Total carrying value of debt






3,177



3,176


Less current portion of debt






(4)



(3)


Total noncurrent debt






$

3,173



$

3,173


 

salesforce.com, inc.

GAAP Results Reconciled to non-GAAP Results

The following table reflects selected GAAP results reconciled to non-GAAP results.

(in millions, except per share data)

(Unaudited) 



Three Months Ended April 30,


2019


2018

Non-GAAP gross profit




GAAP gross profit

$

2,823



$

2,239


Plus:




Amortization of purchased intangibles (1)

61



39


Stock-based expense (2)

43



34


Non-GAAP gross profit

$

2,927



$

2,312


Non-GAAP operating expenses




GAAP operating expenses

$

2,613



$

2,048


Less:




Amortization of purchased intangibles (1)

68



30


Stock-based expense (2)

300



218


Non-GAAP operating expenses

$

2,245



$

1,800


Non-GAAP income from operations




GAAP income from operations

$

210



$

191


Plus:




Amortization of purchased intangibles (1)

129



69


Stock-based expense (2)

343



252


Non-GAAP income from operations

$

682



$

512


Non-GAAP non-operating income (3)




GAAP non-operating income

$

272



$

194


Plus:




Amortization of debt discount, net

0



4


Non-GAAP non-operating income

$

272



$

198


Non-GAAP net income




GAAP net income

$

392



$

344


Plus:




Amortization of purchased intangibles (1)

129



69


Stock-based expense (2)

343



252


Amortization of debt discount, net

0



4


Less:




Income tax effects and adjustments

(125)



(112)


Non-GAAP net income

$

739



$

557





Three Months Ended April 30,


2019


2018

Non-GAAP diluted earnings per share




GAAP diluted net income per share

$

0.49



$

0.46


Plus:




Amortization of purchased intangibles

0.16



0.09


Stock-based expense

0.43



0.33


Amortization of debt discount, net

0.00



0.01


Less:




Income tax effects and adjustments

(0.15)



(0.15)


Non-GAAP diluted earnings per share

$

0.93



$

0.74


Shares used in computing Non-GAAP diluted net income per share

793



754



1)  Amortization of purchased intangibles were as follows:



Three Months Ended April 30,


2019


2018

Cost of revenues

$

61



$

39


Marketing and sales

68



30



$

129



$

69



2)  Stock-based expense was as follows:



Three Months Ended April 30,


2019


2018

Cost of revenues

$

43



$

34


Research and development

81



66


Marketing and sales

177



120


General and administrative

42



32



$

343



$

252



3)  GAAP non-operating income consists of investment income, interest expense, gains on strategic investments, net and other income.


salesforce.com, inc.

Computation of Basic and Diluted GAAP and non-GAAP Net Income Per Share

(in millions, except per share data)

(Unaudited)



Three Months Ended April 30,


2019


2018

GAAP Basic Net Income Per Share




Net income

$

392



$

344


Basic net income per share

$

0.51



$

0.47


Shares used in computing basic net income per share

771



729







Three Months Ended April 30,


2019


2018

Non-GAAP Basic Net Income Per Share




Non-GAAP net income

$

739



$

557


Basic Non-GAAP net income per share

$

0.96



$

0.76


Shares used in computing basic Non-GAAP net income per share

771



729







Three Months Ended April 30,


2019


2018

GAAP Diluted Net Income Per Share




Net income

$

392



$

344


Diluted net income per share

$

0.49



$

0.46


Shares used in computing diluted net income per share

793



754







Three Months Ended April 30,


2019


2018

Non-GAAP Diluted Net Income Per Share




Non-GAAP net income

$

739



$

557


Diluted Non-GAAP net income per share

$

0.93



$

0.74


Shares used in computing diluted Non-GAAP net income per share

793



754


Non-GAAP Financial Measures:  This press release includes information about non-GAAP diluted earnings per share, non-GAAP tax rates and constant currency revenue 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 diluted earnings per share excludes, to the extent applicable, the impact of the following items:  stock-based compensation, amortization of acquisition-related intangibles, and previously the net amortization of debt discount on the company's convertible senior notes, as well as 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.

Specifically, management is excluding the following items from its non-GAAP earnings per share, as applicable, for the periods presented in the Q1 FY20 financial statements and for its non-GAAP estimates for Q2 and FY20:

  • Stock-Based Expenses: The company's compensation strategy includes the use of stock-based compensation 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, one that is not typically affected by operations during any particular period.
  • Gains on Strategic Investments, net: Upon the adoption of Accounting Standards Update 2016-01 on February 1, 2018, the company is required to record 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.
  • 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 expenses and the amortization of purchased intangibles. The projected rate also assumes no new acquisitions in the three-year period, and considers other 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 2020, the company uses a projected non-GAAP tax rate of 22.5%, 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.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/salesforce-announces-record-first-quarter-fiscal-2020-results-300861943.html

SOURCE Salesforce