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Salesforce, Inc. (CRM) SEC Filing 8-K Material Event for the period ending Tuesday, May 31, 2022

Salesforce Com Inc

CIK: 1108524 Ticker: CRM
Exhibit 99.1
Evan Goldstein
Salesforce
Investor Relations
415-819-2987
evan.goldstein@salesforce.com

Carolyn Guss
Salesforce
Public Relations
415-536-4966
cguss@salesforce.com


Salesforce Announces Strong First Quarter Fiscal 2023 Results
Raises FY23 GAAP Operating Margin Guidance to ~3.8% and Non-GAAP Operating Margin Guidance to ~20.4%

First Quarter Revenue of $7.41 Billion, up 24% Year-Over-Year, 26% in Constant Currency
Current Remaining Performance Obligation of $21.5 Billion, up 21% Year-Over-Year, 24% in Constant Currency
First Quarter Operating Cash Flow of $3.68 Billion, up 14% Year-Over-Year
Initiates Second Quarter FY23 Revenue Guidance of $7.69 Billion to $7.70 Billion, up ~21% Year-Over-Year
Updates Full Year FY23 Revenue Guidance to $31.7 Billion to $31.8 Billion, up ~20% Year-Over-Year


SAN FRANCISCO, Calif. - May 31, 2022 -
Salesforce (NYSE: CRM), the global leader in CRM, today announced results for its first quarter fiscal 2023 ended April 30, 2022.

“We had another great quarter, delivering $7.4 billion in revenue, up 24% year-over-year,” said Marc Benioff, Co-CEO, Salesforce. “There is no greater measure of our resilience and the momentum in our business than the $42 billion we have in remaining performance obligation, representing all future revenue under contract. While delivering incredible growth at scale, we’re committed to consistent margin expansion and cash flow growth as part of our long-term plan to drive both top and bottom line performance.”

“Our financial results once again demonstrate the strength and durability of our business model as we continue to see strong demand from customers across the entire Customer 360 portfolio,” said Bret Taylor, Co-CEO, Salesforce. “Salesforce has become even more strategic and relevant to our customers as we are providing them with the agility and resilience they need to drive growth and efficiency in these uncertain economic times.”

“Our portfolio of products remains well-positioned to serve our broad set of customers,” said Amy Weaver, President and CFO, Salesforce. “We have been able to deliver strong growth while also driving disciplined decision-making, enabling us to expand our operating margin guidance for the full year.”


Salesforce delivered the following results for its fiscal first quarter:

Revenue: Total first quarter revenue was $7.41 billion, an increase of 24% year-over-year, and 26% in constant currency. Subscription and support revenues for the quarter were $6.86 billion, an increase of 24% year-over-year. Professional services and other revenues for the quarter were $0.56 billion, an increase of 30% year-over-year.

Operating Margin: First quarter GAAP operating margin was 0.3%. First quarter non-GAAP operating margin was 17.6%.

Earnings per Share: First quarter GAAP diluted earnings per share was $0.03, and non-GAAP diluted earnings per share was $0.98. Mark-to-market accounting of the company’s strategic investments benefited GAAP




diluted earnings per share by $0.01 based on a U.S. tax rate of 25% and non-GAAP diluted earnings per share by $0.01 based on a non-GAAP tax rate of 22%.

Cash: Cash generated from operations for the first quarter was $3.68 billion, an increase of 14% year-over-year. Total cash, cash equivalents and marketable securities ended the first quarter at $13.50 billion.

Remaining Performance Obligation: Remaining performance obligation ended the first quarter at approximately $42.0 billion, an increase of 20% year-over-year. Current remaining performance obligation ended the first quarter at approximately $21.5 billion, an increase of 21% year-over-year, 24% in constant currency.

As of May 31, 2022, the company is initiating its second quarter GAAP and non-GAAP earnings (loss) per share guidance, second quarter current remaining performance obligation growth guidance, and second quarter revenue guidance. As of May 31, 2022, the company is updating its full year FY23 revenue guidance, full year FY23 GAAP and non-GAAP earnings per share guidance, full year GAAP operating margin guidance, and full year non-GAAP operating margin guidance. As of May 31, 2022 the company is reiterating its full year FY23 operating cash flow guidance.

Management will provide further commentary around these guidance assumptions on its earnings call, which is expected to occur on May 31, 2022 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.
Q2 FY23
Guidance
Full Year FY23
Guidance
Revenue(1)
$7.69 - $7.70 Billion$31.7 - $31.8 Billion
        Y/Y Growth
~21%~20%
        FX Impact(2)
~($200M) y/y FX
~($600M) y/y FX(3)
GAAP operating marginN/A~3.8%
Non-GAAP operating margin(4)
N/A~20.4%
GAAP earnings (loss) per share($0.03) - ($0.02)$0.38 - $0.40
Non-GAAP earnings per share$1.01 - $1.02$4.74 - $4.76
Operating Cash Flow Growth (Y/Y)N/A~21% - 22%
Current Remaining Performance Obligation Growth (Y/Y)~15%N/A
        FX Impact(5)
~(3 pts)N/A
(1) Full Year fiscal 2023 revenue guidance includes contributions from Slack Technologies, Inc. of approximately $1.5 billion, net of purchase accounting.
(2) Revenue FX impact is calculated by taking the current period rates compared to the prior period average rates.
(3)~($600M) y/y FX headwind represents an incremental ~($300M) y/y headwind, in addition to the ~($300M) y/y headwind provided as of Q4 fiscal 2022 earnings.
(4) Non-GAAP operating margin is a non-GAAP financial measure. Refer to the Appendix for an explanation of non-GAAP financial measures, and why we believe these measures can be useful, as well as a reconciliation of non-GAAP financial measures to the most comparable GAAP measures, when applicable.
(5) cRPO FX impact is calculated by taking the current period rates compared to the prior period ending rates. FX impact of ~(3 pts) represents a headwind of 3 points of growth.

The following is a reconciliation of GAAP operating margin guidance to non-GAAP operating margin guidance for the full year:




Full Year FY23
Guidance
GAAP operating margin(1)
~3.8%
Plus
Amortization of purchased intangibles(2)
6.1%
Stock-based compensation expense(2)
10.5%
Non-GAAP operating margin(1)
~20.4%
(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 FY23.

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 2023
 Q2FY23
GAAP earnings (loss) per share range(1)(2)
($0.03) - ($0.02)$0.38 - $0.40
Plus
Amortization of purchased intangibles$0.49 $1.92 
Stock-based compensation expense$0.84 $3.28 
Less
Income tax effects and adjustments(3)
$(0.29)$(0.84)
Non-GAAP diluted earnings per share(2)
$1.01 - $1.02$4.74 - $4.76
Shares used in computing basic GAAP net income per share (millions)998 1,001 
Shares used in computing diluted Non-GAAP net income per share (millions)1,011 1,014 
(1) The Company's GAAP tax provision is expected to be approximately 57% for the three months ended July 30, 2022, and approximately 55% for the year ended January 31, 2023. 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 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 22.0%, which reflects currently available information and could be subject to change.

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

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, the global CRM leader, empowers companies of every size and industry to digitally transform and create a 360° view of their customers. For more information about Salesforce (NYSE: CRM), visit: www.salesforce.com.


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"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, which may include 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 current remaining performance obligation growth, expected tax rates, stock-based compensation expenses, amortization of purchased intangibles, shares outstanding, market growth, environmental, social and governance goals, expected capital allocation, including mergers and acquisitions, capital expenditures and other investments, and expected contributions from acquired companies. 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 it makes.

The risks and uncertainties referred to above include -- but are not limited to -- risks associated with the impact of, and actions we may take in response to, the COVID-19 pandemic, related public health measures and resulting economic downturn and market volatility; our ability to maintain security levels and service performance meeting the expectations of our customers, and the resources and costs required to avoid unanticipated downtime and prevent, detect and remediate performance degradation and security breaches; the expenses associated with our data centers and third-party infrastructure providers; our ability to secure additional data center capacity; our reliance on third-party hardware, software and platform providers; 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; current and potential litigation involving us or our industry, including litigation involving acquired entities such as Tableau Software, Inc. and Slack Technologies, Inc., and the resolution or settlement thereof; regulatory developments and regulatory investigations involving us or affecting our industry; our ability to successfully introduce new services and product features, including any efforts to expand our services; the success of our strategy of acquiring or making investments in complementary businesses, joint ventures, services, technologies and intellectual property rights; our ability to complete, on a timely basis or at all, announced transactions; our ability to realize the benefits from acquisitions, strategic partnerships, joint ventures and investments, including our July 2021 acquisition of Slack Technologies, Inc., and successfully integrate acquired businesses and technologies; our ability to compete in the markets in which we participate; the success of our business strategy and our plan to build our business, including our strategy to be a leading provider of enterprise cloud computing applications and platforms; our ability to execute our business plans; our ability to continue to grow unearned revenue and remaining performance obligation; the pace of change and innovation in enterprise cloud computing services; the seasonal nature of our sales cycles; our ability to limit customer attrition and costs related to those efforts; the success of our international expansion strategy; the demands on our personnel and infrastructure resulting from significant growth in our customer base and operations, including as a result of acquisitions; our ability to preserve our workplace culture, including as a result of our decisions regarding our current and future office environments or work-from-home policies; our dependency on the development and maintenance of the infrastructure of the Internet; our real estate and office facilities strategy and related costs and uncertainties; fluctuations in, and our ability to predict, our operating results and cash flows; the variability in our results arising from the accounting for term license revenue products; the performance and fair value of our investments in complementary businesses through our strategic investment portfolio; 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 our strategic investment portfolio; our ability to protect our intellectual property rights; our ability to develop our brands; the impact of foreign currency exchange rate and interest rate fluctuations on our results; 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; uncertainties regarding our tax obligations in connection with potential jurisdictional transfers of intellectual property, including the tax rate, the timing of the transfer and the value of such transferred intellectual property; uncertainties regarding the effect of general economic and market conditions; the impact of geopolitical events; uncertainties regarding the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; our ability to comply with our debt covenants and lease obligations; the impact of climate change, natural disasters and actual or threatened public health emergencies; and our ability to achieve our aspirations, goals and projections related to our environmental, social and governance initiatives.

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 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 update these forward-looking statements, except as required by law.

© 2022 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.

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Salesforce, Inc.
Consolidated Statements of Operations
(in millions, except per share data)
(Unaudited)
1Three Months Ended April 30,
20222021
Revenues:
Subscription and support$6,856 $5,536 
Professional services and other555 427 
Total revenues7,411 5,963 
Cost of revenues (1)(2):
Subscription and support 1,440 1,122 
Professional services and other 605 433 
Total cost of revenues2,045 1,555 
Gross profit5,366 4,408 
Operating expenses (1)(2):
Research and development1,318 951 
Marketing and sales3,372 2,544 
General and administrative656 559 
Total operating expenses5,346 4,054 
Income from operations20 354 
Gains on strategic investments, net288 
Other expense(56)(38)
Income (loss) before benefit from (provision for) income taxes(29)604 
Benefit from (provision for) income taxes57 (135)
Net income$28 $469 
Basic net income per share$0.03 $0.51 
Diluted net income per share$0.03 $0.50 
Shares used in computing basic net income per share991 921 
Shares used in computing diluted net income per share1,001 940 
(1)Amounts include amortization of intangible assets acquired through business combinations, as follows:
 Three Months Ended April 30,
 20222021
Cost of revenues$275 $168 
Marketing and sales237 120 
(2)Amounts include stock-based compensation expense, as follows:
 Three Months Ended April 30,
 20222021
Cost of revenues$112 $82 
Research and development279 173 
Marketing and sales291 238 
General and administrative94 71 



Salesforce, Inc.
Consolidated Statements of Operations
(As a percentage of total revenues)
(Unaudited)
 Three Months Ended April 30,
 20222021
Revenues:
Subscription and support93 %93 %
Professional services and other
Total revenues100 100 
Cost of revenues (1)(2):
Subscription and support 20 19 
Professional services and other
Total cost of revenues28 26 
Gross profit72 74 
Operating expenses (1)(2):
Research and development18 16 
Marketing and sales45 43 
General and administrative
Total operating expenses72 68 
Income from operations
Gains on strategic investments, net
Other expense(1)
Income (loss) before benefit from (provision for) income taxes10 
Benefit from (provision for) income taxes(2)
Net income%%

(1)Amounts include amortization of intangible assets acquired through business combinations as a percentage of total revenues, as follows:
 Three Months Ended April 30,
 20222021
Cost of revenues%%
Marketing and sales

(2)Amounts include stock-based compensation expense as a percentage of total revenues, as follows:
 Three Months Ended April 30,
 20222021
Cost of revenues%%
Research and development
Marketing and sales
General and administrative



Salesforce, Inc.
Consolidated Balance Sheets
(in millions)
April 30, 2022January 31, 2022
Assets(unaudited)
Current assets:
Cash and cash equivalents$6,859 $5,464 
Marketable securities6,644 5,073 
Accounts receivable, net 3,952 9,739 
Costs capitalized to obtain revenue contracts, net 1,478 1,454 
Prepaid expenses and other current assets1,478 1,120 
Total current assets20,411 22,850 
Property and equipment, net2,868 2,815 
Operating lease right-of-use assets, net 2,913 2,880 
Noncurrent costs capitalized to obtain revenue contracts, net 2,323 2,342 
Strategic investments4,936 4,784 
Goodwill48,319 47,937 
Intangible assets acquired through business combinations, net8,559 8,978 
Deferred tax assets and other assets, net 2,693 2,623 
Total assets$93,022 $95,209 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other liabilities$4,603 $5,470 
Operating lease liabilities, current 658 686 
Unearned revenue 13,636 15,628 
Debt, current1,002 
Total current liabilities19,899 21,788 
Noncurrent debt9,595 10,592 
Noncurrent operating lease liabilities2,730 2,703 
Other noncurrent liabilities 1,922 1,995 
Total liabilities34,146 37,078 
Stockholders’ equity:
Common stock
Additional paid-in capital51,780 50,919 
Accumulated other comprehensive loss(310)(166)
Retained earnings7,405 7,377 
Total stockholders’ equity58,876 58,131 
Total liabilities and stockholders’ equity$93,022 $95,209 




Salesforce, Inc.
Consolidated Statements of Cash Flows
(in millions)
(Unaudited)
1Three Months Ended April 30,
20222021
Operating activities:
Net income$28 $469 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization906 685 
Amortization of costs capitalized to obtain revenue contracts, net394 314 
Stock-based compensation expense776 564 
Gains on strategic investments, net(7)(288)
Changes in assets and liabilities, net of business combinations:
Accounts receivable, net5,805 4,616 
Costs capitalized to obtain revenue contracts, net(399)(355)
Prepaid expenses and other current assets and other assets(409)(17)
Accounts payable and accrued expenses and other liabilities (1,222)(1,093)
Operating lease liabilities(202)(216)
Unearned revenue(1,994)(1,451)
Net cash provided by operating activities3,676 3,228 
Investing activities:
Business combinations, net of cash acquired(414)(425)
Purchases of strategic investments(223)(277)
Sales of strategic investments45 556 
Purchases of marketable securities(2,572)(1,809)
Sales of marketable securities441 581 
Maturities of marketable securities445 498 
Capital expenditures(179)(171)
Net cash used in investing activities(2,457)(1,047)
Financing activities:
Proceeds from issuance of debt, net of issuance costs(10)
Proceeds from employee stock plans274 225 
Principal payments on financing obligations (72)(49)
Repayments of debt(1)(1)
Net cash provided by financing activities201 165 
Effect of exchange rate changes(25)
Net increase in cash and cash equivalents1,395 2,349 
Cash and cash equivalents, beginning of period5,464 6,195 
Cash and cash equivalents, end of period$6,859 $8,544 




Salesforce, Inc.
Additional Metrics
(Unaudited)
April 30,
2022
January 31, 2022October 31,
2021
July 31,
2021
April 30, 2021January 31, 2021
Full time equivalent headcount77,810 73,541 69,530 65,595 59,895 56,606 
Financial data (in millions):
Cash, cash equivalents and marketable securities$13,503 $10,537 $9,391 $9,650 $15,023 $11,966 
Strategic investments4,936 4,784 4,004 4,105 3,944 3,909 
Principal due on the Company's outstanding debt obligations10,685 10,686 10,698 11,551 2,689 2,690 
Supplemental Revenue Analysis
Remaining Performance Obligation
Remaining performance obligations ("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, average contract terms and foreign currency exchange rates. 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 balance sheet.
RPO consisted of the following (in billions):
 CurrentNoncurrentTotal
As of April 30, 2022 (1)$21.5 $20.5 $42.0 
As of January 31, 2022 (2)22.0 21.7 43.7 
As of October 31, 2021 (3)18.8 17.5 36.3 
As of July 31, 2021 (4)18.7 17.5 36.2 
As of April 30, 202117.8 17.2 35.0 
(1)     Includes approximately $1.2 billion of RPO related to Slack.
(2)    Includes approximately $1.2 billion of RPO related to Slack.
(3)     Includes approximately $0.9 billion of RPO related to Slack.
(4)     Includes approximately $0.8 billion of RPO related to Slack.
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,
20222021
Unearned revenue, beginning of period$15,628 $12,607 
Billings and other (1)5,328 4,438 
Contribution from contract asset89 74 
Revenue recognized over time(7,056)(5,611)
Revenue recognized at a point in time(355)(352)
Unearned revenue from business combinations
Unearned revenue, end of period$13,636 $11,158 
(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 April 30,
20222021
Sales $1,632 $1,388 
Service 1,761 1,506 
Platform and Other (1)1,419 913 
Marketing and Commerce1,089 895 
Data (2)955 834 
$6,856 $5,536 
(1)     Platform and Other includes approximately $344 million of Slack subscription and support revenues for the three months ended April 30, 2022.
(2)    Data is comprised of revenue from Analytics, which includes Tableau, and Integration, which includes Mulesoft, which were reclassified from Platform and Other beginning in the third quarter of fiscal 2022. Reclassifications to prior period Platform and Other revenues were made to conform to the current period presentation.
Total Revenue by Geographic Locations
Revenues by geographical region consisted of the following (in millions):
Three Months Ended April 30,
 20222021
Americas$4,971 $4,094 
Europe1,738 1,302 
Asia Pacific702 567 
$7,411 $5,963 
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.
Subscription and support revenues constant currency growth rates by the Company's service offerings were as follows:
Three Months Ended
April 30, 2022
compared to Three Months
Ended April 30, 2021
Sales20%
Service19%
Platform and Other58%
Marketing and Commerce24%
Data15%



Revenue constant currency growth rates by geographical region were as follows:
Three Months Ended
April 30, 2022
compared to Three Months
Ended April 30, 2021
Three Months Ended January 31, 2022 compared to Three Months Ended January 31, 2021Three Months Ended
April 30, 2021
compared to Three Months
Ended April 30, 2020
Americas21%23%22%
Europe39%40%17%
Asia Pacific32%28%17%
Total growth26%27%20%
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 were as follows:
April 30, 2022
compared to
April 30, 2021
January 31, 2022 compared to January 31, 2021April 30, 2021
compared to
April 30, 2020
Total growth24%24%20%

Salesforce, 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,
 20222021
Non-GAAP income from operations
GAAP income from operations$20 $354 
Plus:
Amortization of purchased intangibles (1)512 288 
Stock-based compensation expense (2)776 564 
Non-GAAP income from operations$1,308 $1,206 
Non-GAAP operating margin as a percentage of revenues
Total revenues$7,411 $5,963 
GAAP operating margin (3)0.3 %5.9 %
Non-GAAP operating margin (3)17.6 %20.2 %
Non-GAAP net income
GAAP net income$28 $469 
Plus:
Amortization of purchased intangibles (1)512 288 
Stock-based compensation expense (2)776 564 
Income tax effects and adjustments(334)(180)
Non-GAAP net income$982 $1,141 



Three Months Ended April 30,
20222021
Non-GAAP diluted net income per share
GAAP diluted net income per share$0.03 $0.50 
Plus:
Amortization of purchased intangibles0.51 0.31 
Stock-based compensation expense0.78 0.60 
Income tax effects and adjustments(0.34)(0.20)
Non-GAAP diluted net income per share$0.98 $1.21 
Shares used in computing Non-GAAP diluted net income per share1,001 940


(1)Amortization of purchased intangibles was as follows:
 Three Months Ended April 30,
 20222021
Cost of revenues$275 $168 
Marketing and sales237 120 
$512 $288 

(2)Stock-based compensation expense was as follows:
 Three Months Ended April 30,
 20222021
Cost of revenues$112 $82 
Research and development279 173 
Marketing and sales291 238 
General and administrative94 71 
$776 $564 

(3)    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 and stock-based compensation expense.




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 April 30,
 20222021
GAAP Basic Net Income Per Share
Net income$28 $469 
Basic net income per share$0.03 $0.51 
Shares used in computing basic net income per share991 921 
 Three Months Ended April 30,
 20222021
Non-GAAP Basic Net Income Per Share
Non-GAAP net income$982 $1,141 
Non-GAAP basic net income per share$0.99 $1.24 
Shares used in computing Non-GAAP basic net income per share991 921 
 Three Months Ended April 30,
 20222021
GAAP Diluted Net Income Per Share
Net income$28 $469 
Diluted net income per share$0.03 $0.50 
Shares used in computing diluted net income per share1,001 940 
 Three Months Ended April 30,
 20222021
Non-GAAP Diluted Net Income Per Share
Non-GAAP net income$982 $1,141 
Non-GAAP diluted net income per share$0.98 $1.21 
Shares used in computing Non-GAAP diluted net income per share1,001 940

Supplemental Cash Flow Information
Free cash flow analysis, a non-GAAP measure
(in millions)
 Three Months Ended April 30,
 20222021
GAAP net cash provided by operating activities$3,676 $3,228 
Capital expenditures(179)(171)
Free cash flow$3,497 $3,057 



Non-GAAP Financial Measures: This press release includes information about non-GAAP operating margin, non-GAAP diluted earnings per share, non-GAAP tax rates, free cash flow, 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 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 and amortization of acquisition-related intangibles. Non-GAAP diluted earnings per share excludes, to the extent applicable, the impact of the following items: stock-based compensation expense, amortization of purchased intangibles, 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.

Gains 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 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 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 2022, the company used a projected non-GAAP tax rate of 21.5%. For fiscal 2023, the company uses a projected non-GAAP tax rate of 22%, 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 defines the non-GAAP measure free cash flow as GAAP net cash provided by operating activities, less capital expenditures.


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Salesforce Com Inc provided additional information to their SEC Filing as exhibits

Ticker: CRM
CIK: 1108524
Form Type: 8-K Corporate News
Accession Number: 0001108524-22-000019
Submitted to the SEC: Tue May 31 2022 4:08:00 PM EST
Accepted by the SEC: Tue May 31 2022
Period: Tuesday, May 31, 2022
Industry: Prepackaged Software
Events:
  1. Earnings Release
  2. Financial Exhibit

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