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Salesforce Announces Record Third Quarter Fiscal 2020 Results

Third Quarter Revenue of $4.5 Billion, up 33% Year-Over-Year, 34% in Constant Currency

Salesforce , the global leader in CRM, announced results for its fiscal third quarter ended October 31, 2019.

“We’re now on track to double our revenue in five years,” said Marc Benioff, Chairman and co-CEO, Salesforce. “With Customer 360, only Salesforce is providing companies with a single source of truth, bringing them even closer to their customers across every touchpoint.”

“We had strong growth across our clouds and regions in the quarter as more companies turn to Salesforce as a trusted advisor in their digital transformations,” said Keith Block, co-CEO, Salesforce. “With these trusted customer relationships, continuous innovation and our phenomenal Trailblazer ecosystem, we have never been better positioned for the future.”

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Salesforce delivered the following results for its fiscal third quarter:

Revenue: Total third quarter revenue was $4.5 billion, an increase of 33% year-over-year, and 34% in constant currency. Subscription and support revenues were $4.24 billion, an increase of 34% year-over-year. Professional services and other revenues were $274 million, an increase of 22% year-over-year.

Earnings per Share: Third quarter GAAP loss per share was $0.12, and non-GAAP diluted earnings per share was $0.75. Mark-to-market accounting of the company’s strategic investments, required by ASU 2016-01, benefited GAAP loss 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 22.5%.

Cash: Cash generated from operations for the third quarter was $298 million, an increase of 108% year-over-year. Total cash, cash equivalents and marketable securities ended the third quarter at $6.53 billion.

Remaining Performance Obligation: Remaining performance obligation ended the third quarter at approximately $25.9 billion, an increase of 22% year-over-year. Current remaining performance obligation ended the third quarter at approximately $12.8 billion, an increase of 28% year-over-year, 28% in constant currency.

As of December 3, 2019, the company is initiating revenue, earnings per share and current remaining performance obligation growth guidance for its fourth quarter of fiscal year 2020. The company is maintaining its revenue guidance previously provided on November 20, 2019, and raising its GAAP earnings per share guidance, non-GAAP earnings per share guidance, and operating cash flow guidance previously provided on August 22, 2019 for the full fiscal year 2020. The company is initiating revenue guidance for its first quarter of fiscal year 2021. The company is maintaining its revenue guidance previously provided on November 20, 2019 for full fiscal year 2021.

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This guidance assumes no change to the value of the company’s strategic investment portfolio resulting from ASU 2016-01 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.

Q4 FY20
 Guidance

Full Year FY20
Guidance

Q1 FY21
Guidance

Full Year FY21
Guidance

Revenue

$4.743 – $4.753 billion

$16.99 – $17.00 billion

$4.800 – $4.835 billion

$20.80 – $20.90 billion

Y/Y Growth

~32%

~28%

28% – 29%

22% – 23%

GAAP (loss) earnings per share

($0.04) – ($0.03)

$0.44 -$0.45

N/A

N/A

Non-GAAP earnings per share

$0.54 – $0.55

$2.89 – $2.90

N/A

N/A

Operating Cash Flow Growth (Y/Y)

N/A

22% – 23%

N/A

N/A

Current Remaining Performance Obligation Growth (Y/Y)

~21%

N/A

N/A

N/A

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

Fiscal 2020

Q4

FY20

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

($0.04) – ($0.03)

$0.44 -$0.45

Plus

Amortization of purchased intangibles

$

0.30

$

0.94

Stock-based expense

$

0.55

$

2.09

Less

Income tax effects and adjustments(3)

$

(0.27)

$

(0.58)

Non-GAAP diluted earnings per share(2)

$0.54 – $0.55

$2.89 – $2.90

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

888

829

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

914

850

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