CRM Q3 2023 Earnings

Call Details

• Call Title: Salesforce, Inc. Q3 2023 Earnings Call
• Date: November 30, 2022 at 10:00 PM UTC
• Management Team:
  • Mike Spencer (EVP of Finance and Strategy and Investor Relations)
  • Marc Benioff (Chair and CEO)
  • Bret Taylor (Vice Chair and Co-CEO)
  • Amy Weaver (Chief Financial Officer)
  • Brian Millham (President and Chief Operating Officer)

Call Summary

Financial Performance

• Total revenue for Q3 was $7.84 billion, up 14% year over year and up 19% in constant currency.
• Q3 non-GAAP operating margin was 22.7%, which the company stated was a record high for the company.
• Q3 GAAP EPS was $0.21 and Q3 non-GAAP EPS was $1.40, with mark-to-market accounting increasing each by $0.02.
• Operating cash flow for Q3 was $313 million, down 23% year over year, and free cash flow was $115 million, down 52% year over year.
• Remaining performance obligation (RPO) ended Q3 at approximately $40 billion, up 10% year over year, and current RPO (CRPO) was $20.9 billion, up 11% year over year and 15% in constant currency.
• Q3 foreign exchange (FX) was a headwind of $300 million, which was approximately $50 million worse than forecast for the quarter.

Guidance

• The company maintained fiscal 2023 revenue guidance of $30.9 to $31.0 billion, representing 17% year-over-year growth or 20% in constant currency.
• Fiscal 2023 non-GAAP operating margin guidance was raised to 20.7% from 20.4%, representing a 200 basis point expansion year over year.
• Guidance includes an incremental $100 million FX headwind since the prior quarter and a total expected FY23 FX headwind of $900 million.
• The guidance assumes Slack revenue at slightly above $1.5 billion for the fiscal year.
• Q4 GAAP EPS is expected to be $0.23 to $0.25 and Q4 non-GAAP EPS is expected to be $1.35 to $1.37.
• CRPO growth for Q4 is expected to be approximately 7% year over year or 10% in constant currency.
• The company expects fiscal 2023 operating cash flow to be approximately 16% and CapEx to be approximately 2.5% of revenue, resulting in expected free cash flow growth of approximately 17% for the fiscal year.
• The company will not provide FY24 revenue guidance at this time due to the unpredictable macro environment and FX volatility.