Summary
Salesforce opened fiscal 2023 with $7.41 billion of revenue for the quarter ended April 30, 2022, up 24.3% from $5.96 billion a year earlier. Constant currency growth was 26%, so foreign exchange trimmed the reported rate. Subscription and support revenue, which accounted for about 93% of the total, rose 24%, and professional services and other revenue rose 30%. Headcount reached 77,810, up from 59,895 at April 30, 2021.
Profitability is the weak point. Gross profit rose 21.7% to $5.37 billion, but gross margin slipped to 72.4% from 73.9%. Operating income fell 94.4% to $20.0 million from $354.0 million, and operating margin dropped to 0.3% from 5.9%. Net income was $28 million, down 94.0% from $469 million, and diluted earnings per share was $0.03 versus $0.50. A tax benefit on a pretax loss kept net income in positive territory. The spread between reported and adjusted results stays wide. Non-GAAP operating margin was 17.6% against 20.2%, and non-GAAP diluted earnings per share was $0.98 against $1.21. Stock-based compensation and amortization of purchased intangibles explain most of that gap. Hiring explains the rest, with headcount up 42% in data center, customer support and professional services roles, 28% in research and development, and 26% in both marketing and sales and general and administrative.
Cash generation held up better than earnings. Operating cash flow was $3.68 billion, up 13.9% from $3.23 billion, and capital expenditures were $179.0 million, up 4.7%. Free cash flow, a non-GAAP measure the company defines as operating cash flow less capital expenditures, was $3,497 million versus $3,057 million. The first quarter is normally the largest collections quarter, so part of that strength is seasonal. Deferred revenue rose 22.2% to $13.64 billion, and remaining performance obligation rose 20.0% to $42.0 billion. Current remaining performance obligation was approximately $21.5 billion, up 21%, or 24% in constant currency.
The operational picture is mixed. Attrition, excluding MuleSoft, Tableau and Slack, was between 7.0 and 7.5 percent, and management expects it to stay consistent in the near term. Data, the offering that houses MuleSoft and Tableau, grew subscription and support revenue 15%, the slowest of the five offerings, after go-to-market changes created more disruption than expected and slowed new business. Sales grew 18% and Service grew 17%. Platform and Other, which includes Slack, grew 55%. Marketing and Commerce grew 22%. By region, constant currency growth was 21% in the Americas, 39% in Europe and 32% in Asia Pacific, while revenue outside the Americas was negatively impacted by foreign currency fluctuations by approximately six percent.
Guidance points to a tougher near term on the top line. Second quarter fiscal 2023 revenue guidance is $7.69 billion to $7.70 billion, up 21%, and assumes a $200 million foreign exchange headwind. Second quarter current remaining performance obligation growth is guided to 15%, including a 3 point currency drag. Full year fiscal 2023 revenue guidance is $31.7 billion to $31.8 billion, up 20%, and includes contributions from Slack of roughly $1.5 billion, net of purchase accounting. Management raised full year GAAP operating margin guidance to 3.8% and non-GAAP operating margin guidance to 20.4%. Full year GAAP earnings per share guidance is $0.38 to $0.40, against non-GAAP earnings per share guidance of $4.74 to $4.76. Operating cash flow growth guidance was reiterated at 21% to 22%.
Currency is the clearest risk. Foreign exchange cut revenue growth by about two percent in the quarter and reduced remaining performance obligation by roughly four percent, and the full year revenue guide carries a $600 million headwind, which includes an incremental $300 million beyond the amount disclosed last quarter. The dollar has strengthened against the Euro, British Pound Sterling and Japanese Yen, and management expects lower revenue growth near term as a result, with the currency drag compounded by the seasonal fourth quarter weighting of new business and renewals. Two other items matter. First, a Tax Cuts and Jobs Act provision requiring capitalization and amortization of research and development costs takes effect in fiscal 2023 and is expected to materially increase future cash taxes. Second, guidance assumes no change in the value of the strategic investment portfolio, which was hit by public market volatility during the quarter and can swing results in either direction.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $7.41B | $7.33B | +1.2% | $5.96B | +24.3% |
| Gross profit | $5.37B | $5.31B | +1.0% | $4.41B | +21.7% |
| Gross margin | 72.4% | 72.5% | -0.1 pp | 73.9% | -1.5 pp |
| Research & development | $1.32B | $1.29B | +2.1% | $951.0M | +38.6% |
| Sales & marketing | $3.37B | $3.46B | -2.7% | $2.54B | +32.5% |
| General & administrative | $656.0M | $733.0M | -10.5% | $559.0M | +17.4% |
| Total operating expenses | $5.35B | $5.49B | -2.6% | $4.05B | +31.9% |
| Operating income (loss) | $20.0M | -$176.0M | +111.4% | $354.0M | -94.4% |
| Operating margin | 0.3% | -2.4% | +2.7 pp | 5.9% | -5.7 pp |
| Net income (loss) | $28.0M | -$28.0M | +200.0% | $469.0M | -94.0% |
| Net margin | 0.4% | -0.4% | +0.8 pp | 7.9% | -7.5 pp |
| Diluted EPS | $0.03 | -$0.03 | +$0.06 | $0.50 | -$0.47 |
Risks
In April 2022, a threat actor obtained unauthorized access to several Heroku databases, downloaded stored customer security credentials and GitHub passwords, and accessed an encryption key. Although Salesforce stated the incident has not materially affected business or financial results, it could lead to reputational harm, customer loss, and future material adverse effects.
Foreign currency fluctuations negatively impacted revenue by approximately 2% in the three months ended April 30, 2022 and remaining performance obligation by approximately 4% as of April 30, 2022 versus constant currency rates. MD&A expects the strengthened U.S. Dollar, particularly against the Euro, British Pound Sterling, and Japanese Yen, to lower near-term revenue growth and affect forecast accuracy.
The Tax Cuts and Jobs Act provision requiring capitalization and amortization of research and development costs became effective in fiscal 2023. If not deferred, modified, or repealed, it is expected to materially increase future cash taxes.
Changes to the MuleSoft go-to-market organization within the Data offering created greater short-term disruption than anticipated, causing go-to-market volatility and slower new business growth in the second half of fiscal 2022 and the first quarter of fiscal 2023. MD&A expects lower near-term revenue growth in the Data offering compared to past results.
MD&A notes the strategic investment portfolio continues to be affected by high public equity market volatility, with an unrealized loss on publicly held investments for the three months ended April 30, 2022 partially offset by unrealized gains on privately held equity investments. Fair value adjustments flow through the statements of operations and could cause quarterly volatility.
Evolving privacy laws, including GDPR, CCPA/CPRA, and new state privacy acts, plus cross-border transfer restrictions after the invalidation of the EU-US Privacy Shield, may limit use and adoption of Salesforce services, increase compliance costs, and expose the company to fines and private litigation such as the Dutch Privacy Collective case.
Salesforce has substantial outstanding debt, including senior notes with maturities starting in April 2023, and MD&A reports increased interest expense for the three months ended April 30, 2022 primarily due to the July 2021 senior notes issuance. Debt service obligations and related covenants may impair financial flexibility.
The Slack acquisition, Salesforce's largest to date, may fail to realize all anticipated benefits and synergies, and integration efforts may disrupt operations or take longer than expected. The company is devoting significant attention and resources to aligning Salesforce and Slack business practices and operations.
SaaS KPIs
All quarters →Free cash flow
Non-GAAP operating margin
Billings and other
Current Remaining Performance Obligation
Remaining Performance Obligation
Operating Cash Flow
Summary, forecast, risks and KPIs are extracted from Salesforce, Inc.'s SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.