The world's largest CRM software service provider Salesforce today announced the company's fiscal 2023 second quarter earnings report. The report shows that Salesforce’s total revenue in the second fiscal quarter was $7.720 billion, an increase of 22% compared with $6.340 billion in the same period last year, and a 26% year-on-year increase excluding the impact of exchange rate changes; net profit was $68 million, compared with $68 million. The year-ago quarter's $535 million was down 87% ; diluted earnings per share were $0.07, compared to $0.56 a year earlier.
Salesforce's fiscal second-quarter revenue and adjusted earnings per share beat Wall Street analysts' expectations, but its outlook for the fiscal third quarter and for the full fiscal year 2023 missed expectations, sending its shares down more than 6 percent after the bell.
Main achievement:
In the quarter ended July 31, Salesforce's net income was $68 million, down 87% from $535 million a year earlier; diluted earnings per share were $0.07, compared with $0.56 a year earlier Dollar.
Excluding certain one-time items (not in accordance with GAAP), Salesforce's second-quarter adjusted net income was $1.190 billion, compared to $1.402 billion in the year-ago period; adjusted earnings per diluted share were $1.19 US dollars, compared with adjusted earnings per diluted share of $1.48 in the same period last year, down from a year earlier, but this performance still beat analysts' expectations. According to data provided by Yahoo Finance, 36 analysts had expected Salesforce's second-quarter adjusted earnings per share to reach $1.02 on average.
Salesforce's total revenue in the fiscal second quarter was $7.720 billion, an increase of 22% compared with $6.340 billion in the same period last year. Excluding the impact of currency changes, it was up 26% year-on-year, also exceeding analysts' expectations. According to data provided by Yahoo Finance, 36 analysts had on average expected Salesforce's second-quarter revenue to reach $7.69 billion.
By business category, Salesforce's subscription and support business reported second-quarter revenue of $7.143 billion, an increase of 21% from $5.914 billion in the same period last year; and accounted for 93% of total revenue, compared with the same period last year The proportion is relatively flat. Salesforce's Professional Services and Other business had second-quarter revenue of $577 million, up 35% from $426 million in the same period last year; and accounted for 7% of total revenue, compared to the same period last year. than flat.
By region, Salesforce Americas second-quarter revenue was $5.261 billion, compared with $4.312 billion a year earlier; Europe's second-quarter revenue was $1.745 billion, compared to 1.416 billion a year earlier Second-quarter revenue in Asia Pacific was $714 million, compared with $612 million in the same period last year.
Salesforce's total cost of revenue in the fiscal second quarter was $2.127 billion, compared with $1.613 billion in the same period last year. Among them, the cost of revenue of subscription and support business was $1.490 billion, compared with $1.146 billion in the same period last year; the cost of revenue of professional services and other business was $637 million, compared with $467 million in the same period last year .
Salesforce's total cost of revenue accounted for 28% of total revenue in the fiscal second quarter, compared with 25% in the same period last year. Among them, the cost of revenue of Salesforce's subscription and support business accounted for 20% of total revenue in the second quarter, compared with 18% in the same period last year; the cost of revenue of professional services and other businesses accounted for 20% of total revenue. 8%, compared with 7% in the same period last year.
Salesforce's total operating expenses in the fiscal second quarter were $5.400 billion, compared with $4.395 billion in the same period last year. Among them, research and development expenses were $1.329 billion, compared with $1.020 billion in the same period last year; marketing and sales expenses were $3.424 billion, compared with $2.736 billion in the same period last year, and general and administrative expenses were $647 million, compared with $647 million. This compares to $639 million in the same period last year.
Salesforce's total operating expenses accounted for 69% of total revenue in the fiscal second quarter, compared with 70% in the same period last year. Among them, Salesforce's R&D expenditure accounted for 17% of total revenue in the second quarter, compared with 16% in the same period last year; marketing and sales expenditure accounted for 44% of total revenue, compared to 16% in the same period last year 43% in the same period last year; general and administrative expenses accounted for 8% of total revenue, compared to 11% in the same period last year.
Salesforce's second-quarter gross profit was $5.593 billion, compared with $4.727 billion a year earlier. Salesforce's second-quarter gross profit as a percentage of total revenue, or gross margin, was 72%, compared with 75% a year earlier.
Salesforce's second-quarter operating profit was $193 million, compared with $332 million in the year-ago period; its percentage of total revenue, or operating margin, was 2.5%. Excluding certain one-time items (not in accordance with GAAP), Salesforce's second-quarter adjusted operating margin was 19.9%.
Salesforce's second-quarter cash from operating activities was $330 million, down 13% from a year earlier. Salesforce's second-quarter free cash flow was $130 million, down 24% from a year earlier.
At the end of the fiscal second quarter, Salesforce had total cash and cash equivalents of $6.931 billion.
At the end of the fiscal second quarter, Salesforce's remaining performance obligations were $41.6 billion, up 15% from a year earlier.
Third-quarter earnings outlook:
Salesforce expects the company's revenue in the third quarter of fiscal 2023 to reach between $7.82 billion and $7.83 billion, an increase of about 14% year-on-year, of which exchange rate changes are expected to have an impact of -$250 million. The outlook missed analysts' expectations; earnings per share were expected to be $0.09 to $0.10; non-GAAP earnings per share were expected to be $1.20 to $1.21, also missing analysts' expectations.
According to data provided by Yahoo Finance Channel, 34 analysts had expected Salesforce's third-quarter revenue on average to reach $8.07 billion, and 38 analysts on average expected Salesforce's third-quarter adjusted earnings per share to reach $1.29.
Annual performance outlook:
Salesforce also expects the company's revenue to reach $30.9 billion to $31 billion in fiscal 2023, an increase of about 17% year-on-year, of which exchange rate changes are expected to have an impact of -$800 million, a performance outlook that fell short of analysis Analysts' expectations; EPS is expected to reach $0.38 to $0.40; non-GAAP EPS is expected to reach $4.71 to $4.73, which also failed to meet analysts' expectations; year-on-year growth rate of operating cash flow is expected will reach 12%, of which exchange rate changes are expected to have a negative impact of 3 percentage points.
According to data provided by Yahoo Finance Channel, 46 analysts had expected Salesforce's full-year revenue to reach $31.73 billion, and 42 analysts expected Salesforce's full-year earnings per share to reach $4.75.
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