Summary
Salesforce's third quarter of fiscal year 2020 demonstrated robust revenue growth, reaching $4.5 billion, a notable 33% increase year-over-year. However, the company recorded a loss per share of $0.12, shifting from positive earnings of $0.13 in the previous year. This suggests increased expenditures possibly tied to integration costs and investment in future growth strategies. Cash generated from operations showed impressive growth, standing at $298 million, more than doubling with a 108% increase compared to the same quarter last year.
The company's remaining performance obligation (RPO) also highlighted significant growth, ending the quarter at approximately $25.9 billion, rising 22% from the previous year, while the current RPO was $12.8 billion, up 28%. These metrics underscore Salesforce's strong pipeline of future revenue streams.
On the strategic front, Salesforce finalized the acquisitions of Tableau Software and ClickSoftware, indicating its continued focus on expanding service offerings and enhancing its competitive edge in the cloud computing market. These acquisitions come with challenges, primarily the integration of these large entities, which could lead to significant expenses and complexities in revenue recognition.
The risk landscape for Salesforce is multifaceted. High-impact risks center around the potential for security breaches, especially given the company's handling of sensitive customer data. While Salesforce has security measures in place, the evolving threat environment continually poses potential risks to its operations and reputation. The company stresses the importance of cybersecurity, an area that remains a critical focus.
Integration challenges also pose medium-level risks, particularly concerning the newly acquired businesses. The expenses associated with equity awards and the amortization of purchased intangibles from these acquisitions have already impacted operating income. Furthermore, foreign currency fluctuations add another layer of complexity, potentially impacting revenue due to ongoing global market volatility.
From an operational standpoint, Salesforce's focus on expanding via acquisitions aligns with its strategy to lead in cloud computing innovations across sectors such as AI, IoT, and collaborative productivity tools. However, the aggressive growth trajectory entails risks such as longer sales cycles and more sophisticated product mixes, which could affect forecast accuracy.
In summary, while Salesforce demonstrates significant growth potential as depicted by its strong revenue and future obligations, navigating the integration of acquisitions, mitigating security risks, and handling foreign currency impacts will be imperative in sustaining its growth trajectory. The company remains committed to leveraging its position to innovate and expand within the enterprise software market while adapting to the inherent risks of a rapidly changing digital landscape.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2020 | Q2 FY2020 | QoQ | Q3 FY2019 | YoY |
|---|---|---|---|---|---|
| Revenue | $4.51B | $4.00B | +12.9% | $3.39B | +33.0% |
| Gross profit | $3.38B | $3.03B | +11.5% | $2.50B | +35.0% |
| Gross margin | 74.9% | 75.8% | -0.9 pp | 73.8% | +1.1 pp |
| Research & development | $774.0M | $607.0M | +27.5% | $481.0M | +60.9% |
| Sales & marketing | $2.06B | $1.82B | +13.1% | $1.59B | +29.9% |
| General & administrative | $477.0M | $375.0M | +27.2% | $342.0M | +39.5% |
| Total operating expenses | $3.31B | $2.97B | +11.5% | $2.41B | +37.5% |
| Operating income (loss) | $65.0M | $58.0M | +12.1% | $92.0M | -29.3% |
| Operating margin | 1.4% | 1.4% | -0.0 pp | 2.7% | -1.3 pp |
| Net income (loss) | -$109.0M | $91.0M | -219.8% | $105.0M | -203.8% |
| Net margin | -2.4% | 2.3% | -4.7 pp | 3.1% | -5.5 pp |
| Diluted EPS | -$0.12 | $0.11 | -$0.23 | $0.13 | -$0.25 |
Risks
The company faces risks related to potential unauthorized access and security incidents on its IT systems and customer data, which may lead to reputational harm and legal liabilities.
The integration of acquired companies like Tableau and ClickSoftware entails risks of significant expenses due to equity awards and amortization, potentially affecting operating income.
Revenue results are impacted by foreign currency fluctuations, with continued volatility expected to affect future earnings.
SaaS KPIs
All quarters →Current Remaining Performance Obligation
Remaining Performance Obligation
Summary, forecast, risks and KPIs are extracted from Salesforce, Inc.'s SEC filings for Q3 FY2020 (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 Aug 4, 2026.