Salesforce Q2 Earnings Top Forecasts
August 26, 2020
reported results for its fiscal second quarter ended July 31, 2020.
"It's humbling to have had one of the best quarters in Salesforce's
history against the backdrop of multiple crises seriously affecting our
communities around the world," said Marc Benioff, Chair and CEO of
Salesforce. "Salesforce was founded on our belief in stakeholder
capitalism and our core values of trust, customer success, innovation
and equality. Our success in the quarter brought all of this together
with the power of our Customer 360 platform, the resilience of our
business model, putting our customers first and doing our part to take
care of all of our stakeholders. We know that together we have an
opportunity to emerge from these times even stronger."
Salesforce delivered the following results for its fiscal second
Revenue: Total second quarter revenue was $5.15 billion, an increase of
29% year-over-year, and 29% in constant currency. Subscription and
support revenues for the quarter were $4.84 billion, an increase of 29%
year-over-year. Professional services and other revenues for the quarter
were $0.31 billion, an increase of 23% year-over-year.
Wall Street only expected $4.90
billion in revenue.
Earnings per Share: Second quarter GAAP diluted earnings per share was
$2.85, and non-GAAP diluted earnings per share was $1.44. Mark-to-market
accounting of the company's strategic investments, required by ASU
2016-01, benefited GAAP diluted earnings per share by $0.55 based on a
U.S. tax rate of 25% and non-GAAP diluted earnings per share by $0.58
based on a non-GAAP tax rate of 22%. GAAP diluted earnings per share was
also benefited by $2.17 as the company changed its international
corporate structure, which included the consolidation of intangible
property, resulting in a $2 billion net tax benefit related to foreign
deferred tax assets. Please note that this had no impact on Non-GAAP
diluted earnings per share, as the company utilizes a fixed long-term
projected non-GAAP tax rate, which generally excludes effects for
firm's earnings of $1.44 per share, adjusted was well above the 67 cents
per share which was expected.
The cloud company guided at 73 cents
to 74 cents in adjusted earnings per share on $5.24 billion to $5.25
billion in revenue for Q3. Investors were looking for guidance of 77
cents in adjusted earnings per share on $5.01 billion in revenue.
For 2021, Salesforce set expectations at $3.72 to $3.74 in adjusted
earnings per share and $20.70 billion to $20.80 billion in revenue. Wall
Street was only looking for $2.96 in adjusted earnings per share and
$20.07 billion in revenue for that period.
Cash: Cash generated from operations for the second quarter was $0.43
billion, a decrease of 2% year-over-year. Total cash, cash equivalents
and marketable securities ended the second quarter at $9.28 billion.
Remaining Performance Obligation: Remaining performance obligation ended
the second quarter at approximately $30.6 billion, an increase of 21%
year-over-year. Current remaining performance obligation ended the
second quarter at approximately $15.2 billion, an increase of 26%
year-over-year, 24% in constant currency.