CRM Q3 2020 Earnings

Call Details

• Call Title: Salesforce, Inc. Q3 2020 Earnings Call
• Date: December 3, 2019 at 10:00 PM UTC
• Management Team:
  • John Cummings (Senior Vice President of Investor Relations)
  • Marc Benioff (Chair and CEO)
  • Keith Block (Co-CEO)
  • Mark Hawkins (President and CFO)
  • Bret Taylor (President and Chief Product Officer)
  • Amy Weaver (President, Legal, and Corporate Affairs)

Call Summary

Financial Performance

• Total revenue for Q3 was $4.513B, which management reported as up 34% in constant currency versus prior year.
• Total remaining performance obligation ended the quarter at $25.9B, up 22% year over year.
• Current remaining performance obligation (CRPO) was approximately $12.8B, up 28% year over year.
• Subscription and support growth by product was reported as Sales Cloud up 15%, Service Cloud up 24%, Marketing and Commerce up 32%, and Platform and Other up 73% year over year.
• Tableau contributed approximately $327M of revenue in the quarter and approximately $308M to platform and other revenue, while MuleSoft contributed approximately $185M and grew 77% year over year.
• Dollar attrition remained below 10% and was described as down modestly year over year.
• Q3 non-GAAP operating margin was 19.4%, with management noting timing effects related to Dreamforce when comparing quarters.
• Q3 GAAP loss per share was $0.12, and Q3 non-GAAP diluted EPS was $0.75.
• Q3 operating cash flow was $298M, up 108% year over year, and trailing 12-month operating cash flow growth was about 30%.
• CapEx for the quarter was $170M, resulting in free cash flow of $128M for the quarter and trailing 12-month free cash flow growth of approximately 31%.

Guidance

• Full year FY20 revenue guidance was raised to $16.99B to $17.00B, implying approximately 28% growth for the year.
• Excluding Tableau (~$650M) and Salesforce.org (~$220M), FY20 top-line growth is expected to be approximately 21% year over year.
• FY20 non-GAAP operating margin was expected to be approximately 16.6%, down roughly 50 basis points year over year, while excluding acquisitions management expects more than 150 basis points of year-over-year improvement.
• FY20 GAAP diluted EPS was updated to $0.44 to $0.45, and FY20 non-GAAP diluted EPS was updated to $2.89 to $2.90.
• FY20 operating cash flow growth guidance was raised to 22% to 23% year over year.
• Q4 revenue guidance was provided at $4.743B to $4.753B, representing approximately 32% growth year over year, and assumed about $320M from Tableau and $80M from Salesforce.org.
• Q4 non-GAAP diluted EPS was guided to $0.54 to $0.55, and Q4 GAAP loss per share was guided to $0.04 to $0.03.
• Q4 CRPO growth was guided to approximately 21% year over year, with the guidance assuming approximately five points of growth from recent acquisitions.
• Management provided Q1 FY21 revenue guidance of $4.800B to $4.835B, up 28% to 29% year over year, calling this a one-time data point due to the newly acquired businesses' seasonality.