Summary
Salesforce closed fiscal 2023 with fourth quarter revenue of $8.38 billion, up 14.4% from the prior-year quarter, and full year revenue of $31.35 billion, up 18.3%. Gross profit was $6.28 billion in the quarter, up 18.3%, and $22.99 billion for the year, up 18.1%. Fourth quarter gross margin reached 75.0%, up from 72.5%, though full-year gross margin slipped to 73.3% from 73.5%. The company swung to operating income of $357 million in the quarter from an operating loss of $176 million a year earlier, and GAAP operating margin rose to 4.3% from -2.4%. Net loss of $98 million in the quarter widened from $28 million in the prior-year quarter. Full-year net income fell to $208 million from $1.44 billion, and full-year diluted earnings per share was $0.21, down from $1.48.
Cash generation looked stronger than the income statement. Operating cash flow was $2.79 billion in the quarter, up 40.7%, and $7.11 billion for the year, up 18.5%. Capital expenditures were $218 million in the quarter, up 30.5%, and $798 million for the year, up 11.3%. Free cash flow, a non-GAAP measure, was $2.57 billion in the quarter, up 42%, and $6.3 billion for the year, up 19%. Deferred revenue stood at $17.38 billion, up 11.2% from the prior-year quarter, and remaining performance obligation was $48.60 billion, up 11.2%. Non-GAAP operating margin was 29.2% in the quarter and 22.5% for the year. Non-GAAP diluted earnings per share was $1.68 in the quarter and $5.24 for the year.
Guidance points to a slower top line. For the first quarter of FY24, Salesforce expects revenue growth of 10% and current remaining performance obligation growth of 11%, with an estimated $150 million foreign currency headwind to revenue. Full fiscal year FY24 guidance calls for revenue growth of 10%, a GAAP operating margin of 10.8%, a non-GAAP operating margin of 27.0%, GAAP earnings per share of $2.59 to $2.61, non-GAAP earnings per share of $7.12 to $7.14, and operating cash flow growth of 15% to 16%. The guidance assumes no change in the value of the company's strategic investment portfolio.
The January 2023 restructuring plan reduces the workforce by approximately 10 percent and includes select real estate exits and office space reductions within certain markets. Salesforce expects $600 million to $1.1 billion in charges tied to the plan in the near term and $1.2 billion to $1.7 billion in future cash expenditures, mostly for workforce costs such as severance. Management described more measured buying behavior from customers starting in July 2022, with stretched sales cycles, extra approval layers and deal compression continuing through the second half of fiscal 2023. Foreign currency moves cut fiscal 2023 revenue by approximately 4 percent and current remaining performance obligation by approximately 1 percent.
Attrition, excluding MuleSoft, Tableau and Slack, was below 7.5 percent as of January 31, 2023. Beginning in the first quarter of fiscal 2024, MuleSoft and Tableau will be included in that calculation, which the company says will slightly raise the rate. The board authorized an additional $10.0 billion in repurchases in February 2023, bringing the total to $20.0 billion, after $6.0 billion remained available under the prior program at year end.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $8.38B | $7.84B | +7.0% | $7.33B | +14.4% |
| Gross profit | $6.28B | $5.75B | +9.3% | $5.31B | +18.3% |
| Gross margin | 75.0% | 73.4% | +1.6 pp | 72.5% | +2.4 pp |
| Research & development | $1.13B | $1.28B | -11.9% | $1.29B | -12.6% |
| Sales & marketing | $3.38B | $3.35B | +1.2% | $3.46B | -2.3% |
| General & administrative | $586.0M | $664.0M | -11.7% | $733.0M | -20.1% |
| Total operating expenses | $5.93B | $5.29B | +12.1% | $5.49B | +8.0% |
| Operating income (loss) | $357.0M | $460.0M | -22.4% | -$176.0M | +302.8% |
| Operating margin | 4.3% | 5.9% | -1.6 pp | -2.4% | +6.7 pp |
| Net income (loss) | -$98.0M | $210.0M | -146.7% | -$28.0M | -250.0% |
| Net margin | -1.2% | 2.7% | -3.9 pp | -0.4% | -0.8 pp |
| Diluted EPS | -$0.10 | $0.21 | -$0.31 | -$0.03 | -$0.07 |
Risks
Beginning in July 2022, Salesforce saw more measured buying behavior from customers, resulting in stretched sales cycles, additional approval layers and deal compression, and these trends continued in the second half of fiscal 2023. Slower growth in new and renewal business, if sustained, impacts remaining performance obligation, revenues and the ability to meet financial guidance and long-term targets.
Volatile and significantly weakened global economic conditions, inflation, trade tensions and conflict in Europe have delayed customer purchasing decisions and may reduce the value and duration of subscription contracts. MD&A states macroeconomic factors impacted Salesforce and its customers in ways that are difficult to isolate and quantify.
The January 2023 restructuring plan includes a workforce reduction of approximately 10 percent and select real estate exits, with approximately $828 million of costs incurred in fiscal 2023 and expected charges of approximately $600 million to $1.1 billion in the near term. These actions may negatively impact Salesforce's ability to attract, integrate, retain and motivate key employees, and periodic changes to the sales organization can reduce productivity and growth rate.
Foreign currency fluctuations negatively impacted revenues by approximately four percent in the fiscal year ended January 31, 2023 and negatively impacted current remaining performance obligation by approximately one percent as of January 31, 2023 compared to constant currency rates. The U.S. Dollar strengthened significantly against the Euro, British Pound Sterling and Japanese Yen, and Salesforce expects lower near-term revenue growth if these conditions continue.
Attrition, excluding MuleSoft, Tableau and Slack, was below 7.5 percent as of January 31, 2023, and beginning in the first quarter of fiscal 2024 MuleSoft and Tableau will be included in the attrition rate calculation, which Salesforce expects will slightly increase its attrition rate going forward. Customers have no obligation to renew subscriptions and may renew for fewer subscriptions, shorter contract lengths or lower cost offerings.
Gains (losses) on strategic investments, net were $(239) million in fiscal 2023 compared to $1,211 million in fiscal 2022, including $491 million of impairments on privately held equity and debt securities. Changes in fair value of the strategic investment portfolio can be material and may fluctuate with public and private market conditions.
The effective tax rate was 68 percent in fiscal 2023 compared to 6 percent in fiscal 2022, with a $452 million provision on pretax income of $660 million, primarily related to profitable non-U.S. jurisdictions and withholding taxes. Global tax developments, including the Inflation Reduction Act's 15 percent corporate minimum tax effective in fiscal 2024 and OECD Pillar Two proposals, may materially affect cash flows and financial results.
Salesforce is increasingly building AI into many offerings, and generative AI may require additional investment in proprietary datasets, machine learning models and testing systems, increase computing costs and impact profit margin if expanded. Social and ethical issues regarding AI use can cause reputational harm, competitive harm or legal liability.
In April 2022, a threat actor obtained unauthorized access to several Heroku databases, downloaded stored customer security credentials and passwords for a subset of customer user accounts, and accessed an encryption key. Although Salesforce does not believe this incident materially affected its business or financial results, future incidents could result in reputational harm, legal exposure and liabilities.
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 Q4 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.