Summary
Salesforce reported third quarter fiscal 2022 revenue of $6.86 billion, up 26.6% from $5.42 billion in the prior-year quarter and up 26% in constant currency. Subscription and support revenue, which provides the bulk of the top line, grew 25%, and professional services and other revenue grew 45%. Revenue for the nine months ended October 31, 2021 was $19.17 billion, up 24.2%. Slack, acquired in July 2021, contributed about $276 million of subscription and support revenue over that nine-month period. Platform and Other was the fastest growing service offering in the quarter at 51%, and management said Slack showed up in the company's largest deals.
Profitability was mixed. Gross profit rose 24.7% to $5.02 billion, yet gross margin slipped to 73.1% from 74.3% a year earlier. Operating income fell 83% to $38.0 million, and operating margin dropped to 0.6% from 4.1%, a decline of 3.6 percentage points. The non-GAAP operating margin was 19.8%, and non-GAAP diluted earnings per share was $1.27. Net income came in at $468 million, down 56.7% from $1.08 billion, and diluted earnings per share fell 59.1% to $0.47 from $1.15. Much of that gap traces to mark-to-market swings on the strategic investment portfolio, which produced a far larger gain in the prior-year quarter. For the nine months, operating income of $724 million was up 176.3% and the operating margin reached 3.8%. Nine-month net income of $1.47 billion and diluted earnings per share of $1.53 fell 61.3% and 62.8%, respectively, against a prior-year stretch that included a one-time discrete tax benefit tied to an intra-entity transfer of intangible property.
Cash flow was solid. Operating cash flow for the quarter was $404 million, up 19.2% from $339 million, and the nine-month total of $4.02 billion was up 53.0%. Capital expenditures rose 33.9% in the quarter to $166 million, while the nine-month figure of $550 million was down 2.0%. Free cash flow, a non-GAAP measure that the company reports separately from operating cash flow, was $238 million for the quarter and $3.47 billion for the nine months. Deferred revenue, current portion, reached $10.12 billion, up 27.7%, and total remaining performance obligation was $36.3 billion, up 19.8%. Current remaining performance obligation was about $18.8 billion, up 23% and 23% in constant currency.
Guidance leans on the fourth quarter, historically the strongest period for new business and renewals. Fourth quarter fiscal 2022 revenue is guided to $7.224 billion to $7.234 billion, up about 24%, with current remaining performance obligation growth of 19%, a GAAP diluted loss per share of $0.24 to $0.23, and non-GAAP diluted earnings per share of $0.72 to $0.73. For the full fiscal year 2022, revenue guidance rose to $26.39 billion to $26.40 billion, up about 24%, alongside GAAP operating margin of about 1.8%, non-GAAP operating margin of about 18.6%, GAAP diluted earnings per share of $1.28 to $1.29, non-GAAP diluted earnings per share of $4.68 to $4.69, and operating cash flow growth of 18% to 19%. That full-year revenue figure includes contributions from Slack, net of purchase accounting. First quarter fiscal 2023 revenue guidance is $7.215 billion to $7.250 billion, up 21% to 22%, and full fiscal year 2023 revenue guidance was reiterated at $31.7 billion to $31.8 billion, with GAAP operating margin of 3.0% to 3.5% and non-GAAP operating margin of 20%.
Costs are rising faster than revenue on several lines. Headcount reached 69,530, up 37% since October 31, 2020, with hiring across sales, research and development, and general and administrative roles, and Slack added to that total. Professional services ran at a negative gross margin in the quarter as capacity was built for enterprise customers. Data revenue growth slowed to 20% after changes to the Mulesoft sales organization disrupted term and perpetual license activity. Attrition, tracked on a trailing twelve-month basis and excluding Integration, Salesforce.org, Tableau and Slack, has stayed consistent with the prior year, and management expects it to remain consistent for the rest of fiscal 2022. Other risks include integrating Slack, the uncertain path of return-to-work planning and related real estate costs, foreign currency movement that benefited revenue in the quarter, and a seasonal pattern that makes the first quarter the largest for collections and the third quarter the smallest for operating cash flow. Management also flagged longer and less predictable sales cycles, the ongoing COVID-19 pandemic, and the variability of a portfolio that holds large publicly traded equity stakes.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $6.86B | $6.34B | +8.2% | $5.42B | +26.6% |
| Gross profit | $5.02B | $4.73B | +6.2% | $4.03B | +24.7% |
| Gross margin | 73.1% | 74.6% | -1.4 pp | 74.3% | -1.2 pp |
| Research & development | $1.20B | $1.02B | +17.9% | $902.0M | +33.4% |
| Sales & marketing | $3.11B | $2.74B | +13.7% | $2.38B | +30.9% |
| General & administrative | $667.0M | $639.0M | +4.4% | $522.0M | +27.8% |
| Total operating expenses | $4.98B | $4.39B | +13.3% | $3.80B | +31.0% |
| Operating income (loss) | $38.0M | $332.0M | -88.6% | $224.0M | -83.0% |
| Operating margin | 0.6% | 5.2% | -4.7 pp | 4.1% | -3.6 pp |
| Net income (loss) | $468.0M | $535.0M | -12.5% | $1.08B | -56.7% |
| Net margin | 6.8% | 8.4% | -1.6 pp | 19.9% | -13.1 pp |
| Diluted EPS | $0.47 | $0.56 | -$0.09 | $1.15 | -$0.68 |
Risks
The July 2021 Slack acquisition is Salesforce's largest to date, and the company may fail to realize the anticipated benefits or may take longer than expected to integrate Slack; MD&A devotes significant attention to Slack integration and its contribution to growth.
Periodic changes to the sales organization can disrupt productivity; MD&A states changes to the MuleSoft sales organization created greater short-term disruption than anticipated and impacted Data revenues during the three months ended October 31, 2021 due to the timing of Mulesoft term and perpetual software license revenue recognition.
Debt obligations increased materially after the July 2021 issuance of $8.0 billion of Senior Notes; interest expense increased for the three and nine months ended October 31, 2021 compared with prior-year periods, and covenants may constrain liquidity or force refinancing at higher rates.
Fair value adjustments on public and private equity investments flow through the statement of operations; gains on strategic investments, net, were lower in the three and nine months ended October 31, 2021 compared with prior-year periods, and future market fluctuations could materially affect results.
Current quarter gross margin was 73.1%, down 1.1 percentage points from 74.3% a year earlier, and operating margin was 0.6%, down 3.6 percentage points from 4.1%; operating income was down 83.0% in the current quarter.
COVID-19 created significant global economic uncertainty, adversely impacted customers and partners, and may continue to affect results and cash flows; due to the subscription model, the effect may not be fully reflected until future periods, and return-to-work plans may require additional investments or real estate impairments.
Salesforce faces significant competition for engineers, sales executives, data scientists and operations personnel, and MD&A reports headcount increased 37 percent since October 31, 2020; work-from-home and office reopening flexibility may strain corporate culture and retention, and loss of key personnel could harm growth.
Customers have no obligation to renew subscriptions, and attrition was between 7.5 and 8.0 percent as of October 31, 2021 excluding Integration, Salesforce.org, Tableau and Slack; the filing says attrition may increase over time, including due to COVID-19, which could reduce revenue and current remaining performance obligation.
Sales efforts increasingly target larger enterprise customers, which can lengthen and make the sales cycle more expensive, create pricing pressure, require implementation resources and delay revenue recognition; MD&A also cites longer and less predictable sales cycles and an expanded product and revenue model mix.
The filing states Salesforce is and has been the target of malicious cyberattack attempts and has experienced other security incidents; a material breach could expose customer data, damage reputation, disrupt sales and lead to regulatory, legal and financial liability, even though identified events have not been material to date.
Evolving privacy and data protection laws, including GDPR, CCPA and upcoming California, Virginia and Colorado privacy laws, as well as cross-border data transfer restrictions, impose direct obligations and may limit adoption or increase compliance burdens.
Salesforce is increasingly building AI into its offerings, and the filing warns that AI and Customer 360 present ethical issues; controversy over perceived or actual impacts on human rights, privacy or employment could cause brand, competitive or legal harm and impair adoption.
SaaS KPIs
All quarters →Free cash flow
Non-GAAP operating margin
Billings and other
Current Remaining Performance Obligation
Remaining Performance Obligation
Summary, forecast, risks and KPIs are extracted from Salesforce, Inc.'s SEC filings for Q3 FY2022 (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.