Less than a month after Salesforce slashed its workforce by 8,000 employees, the global CRM company shared impressive fourth-quarter and full-year results for fiscal year 2023 for the period ended on January 31, 2023. The company reported fourth-quarter revenue of $8.38 billion, a 14% increase year-over-year. Subscription and support revenue was $7.79 billion, a 14% increase year-over-year. This represents 93% of total revenue. Professional services and other revenue was $0.6 billion, an increase of 19% year-over-year.
“For the full year we delivered $31.4 billion in revenue, up 18% year-over-year, or 22% in constant currency, one of the best performances of any enterprise software company our size,” said Marc Benioff, Chair and CEO of Salesforce, in a March 1, 2023 news release. “We closed FY23 with operating cash flow reaching $7.1 billion, up 19% year-over-year, the highest cash flow in our company’s history, and one of the highest cash flows of any enterprise software company our size.”
Highlights from the quarter and full fiscal year 2023:
Salesforce shared the following additional financial highlights from their latest earnings report:
- Total revenue for the fiscal year was $31.35 billion, an 18% increase year-over-year. Subscription and support revenue was $29.02 billion, an 18% increase year-over-year and 92.6% of total revenue. Professional services and other revenue was $2.33 billion, a 27% increase year-over-year and 7.4% of total revenue.
- Operating margin for the fourth quarter (GAAP) was 4.3%. Fiscal 2023 operating margin (GAAP) was 3.3%.
- The company reported a net loss of $(0.10) per share for the fourth quarter. For the full year, diluted earnings per share was $0.21.
Future guidance
Salesforce offered the following guidance for the first quarter and full year fiscal 2024:
| Q1 FY24 Guidance | Full Year FY24 Guidance | |
| Revenue | $8.16 – $8.18 billion | $34.5 – $34.7 billion |
| Year-over-year growth | (10)% | (10)% |
| GAAP Operating Margin | N/A | (10.8)% |
| GAAP Earnings Per Share | $0.24 – $0.25 | $2.59 – $2.61 |
Amy Weaver, president and CFO for Salesforce, commented on the company’s results.
“Our relentless focus on execution and proactive management of the current environment allowed us to close out a strong quarter and set us up for a transformational fiscal year 24. It’s a New Day at Salesforce and as we look ahead, I am excited for the opportunity in front of us as we continue to drive profitable growth,” Weaver said.
Tumultuous times
Despite the strong financials, the last several months have been tumultuous for the CRM company. In November 2022, it was announced that co-CEO Bret Taylor would step down effective January 31, 2023. Taylor held the position for a year. Taylor said he had “six fantastic years at Salesforce,” but he wanted to return to his entrepreneurial roots.
“It’s bittersweet that Bret has decided to step down as my Co-CEO,” said Benioff. “He made his mark on Salesforce as an incredible technologist, leader and friend to us all. Bret founded two incredible companies so it’s understandable why he wants to return to his entrepreneurial roots. I’m excited to see his next chapter unfold, as I’ll always be his biggest champion and he’ll always be part of the Salesforce ‘Ohana.”
Three weeks before the end of the fourth quarter and fiscal year 2023, Salesforce announced it was cutting 8,000 jobs globally, or 10% of their workforce. In a filing with the Securities and Exchange Commission, Salesforce estimated they would incur a $1.4 billion to $2.1 billion charge to cut staff and reduce their physical footprint through the closure of some offices and reduction of space in others. About $1.0 billion to $1.4 billion includes employee transition costs, severance, employee benefits and share-based compensation. Another $450 million to $650 million are related to the reduction in office space. Salesforce said the employee restructuring costs would be complete by the end of fiscal year 2024. This round of layoffs followed a November 2022 round of layoffs of fewer than 1,000 employees, according to CNBC.
In January, Salesforce appointed three new independent directors:
- Arnold Donald, former president and CEO of Carnival Corporation & PLC
- Sachin Mehra, CFO of Mastercard
- Mason Morfit, CEO and Chief Investment Officer of ValueAct Capital
“We’re excited to welcome Arnold, Sachin and Mason to the Salesforce Board,” said Benioff in a January 27 news release. “As highly respected business leaders, they each bring valuable experience to further enhance and balance the diverse skills on the Board and advance our value creation initiatives. We look forward to benefiting from their expertise and insights as Salesforce continues to drive durable top- and bottom-line growth and build on our position as the world’s #1 CRM.”
In addition, Elliott Management, known as an activist investor, has nominated a slate of candidates to Salesforce’s board, reports CNBC. As a multibillion dollar investor in Salesforce, Elliott Management has a vested interest in how the company is run. Nominations will be accepted until March 14.
Salesforce stock
Investors seem pleased with Salesforce’s earnings report. On February 28, the day before earnings were reported, Salesforce stock was valued at $163.61 per share. As of 7:35 p.m. EST yesterday, stock was $186.59.
Insider Take
Salesforce is among the top technology companies who ramped up to meet demand during the pandemic and who then found themselves overstaffed in a weakening economy. Despite major changes at Salesforce, it is surprising that they posted such strong growth for their most recent quarter and fiscal year 2023. It will take time for Salesforce to benefit from the major cost reductions resulting from the layoffs and office reductions, and the changes on the Salesforce’s board could instigate further restricting and leadership changes. Salesforce may have an unpredictable year ahead.
