Salesforce, the world’s leading customer relationship management (CRM) provider, recently achieved its highest records for quarterly and annual revenue. The company reported an all-time high of $2.68 billion in Q4 revenue and a 17% increase in total annual revenue to exceed $10 billion for the first time.
The impressive growth was driven primarily by strong demand for core products such as Sales Cloud, Service Cloud, and Platform development services. Going forward, the company will focus on emerging technologies such as Artificial Intelligence (AI) and Internet of Things (IoT), which are creating new opportunities to accelerate innovation across all industries.
Founder and CEO Marc Benioff highlighted the success of Salesforce’s strategic investments in delivering industry-leading technology solutions that are transforming customer experiences worldwide. The company also announced its intent to increase investments in key areas such as R&D, recruiting talent, partnerships with technology providers, marketing campaigns targeted at growing markets, and community cloud initiatives for nonprofits.
The strong performance is due to a combination of factors including its commitment to making customers successful throughout the entire customer journey from awareness (marketing) to engagement (sales) and experience (services). Salesforce has set a remarkable milestone in becoming the first ever enterprise software company to reach more than $10 billion annual revenue within 15 years of launch period — which demonstrates its ongoing success with enterprise customers across different regions.
Salesforce Announces Record Fourth Quarter and Full Year Fiscal 2022 Results
Recently, Salesforce announced its record fourth quarter and full year revenue for the 2o22 fiscal year. The cloud-based software company has reported revenue of $5.8 billion for the fourth quarter and $21.2 billion for the full year. This represents a 36% increase year-over-year. It’s impressive performance has not gone unnoticed, and many are eager to see what they have in store for their next quarter.
Let’s take a closer look at the results.
Record Fourth Quarter Revenue
Salesforce reported record fourth quarter fiscal year 2022 revenue of $6.1 billion, an increase of approximately 28%, or 24% in constant currency. This marks the highest-ever quarterly revenue on record for Salesforce.
Revenue for the company’s fiscal full year 2022 also achieved a new record of $23.2 billion, up approximately 25%, or 22% in constant currency. Salesforce CEO Marc Benioff stated “Our results demonstrate the unprecedented demand from customers embracing our integrated SaaS and AI offerings to accelerate their digital transformations,” said Marc Benioff, chair and co-CEO, Salesforce.
Looking forward, Salesforce’s outlook for the first quarter fiscal year 2023 includes revenue estimated to be between $6.375 billion and $6.425 billion, representing 25% to 26% growth or 22%-23% growth in constant currency when compared with the same period in 2021; and non-GAAP operating margin estimated to be between 19% and 19.5%. Additionally, Full Year 2023 revenue is expected to be between $27.5 billion and $27.75 billion – an increase of 19%-20%.
These record highs represent strong growth for Salesforce across both its cloud business as well as its new software offerings such as artificial intelligence (AI) fuelled SaaS solutions that are driving customer acquisition for some of its leading products such as Service Cloud and Marketing Cloud. The company’s prospects look bright at least through early 2023 thanks to this committed focus on innovating new products and improving existing ones—all while staying laser focused on delivering value for clients far beyond just providing pocketbook savings through discounts or fees reduction initiatives that could actually cannibalise top line revenues over time instead.
Record Full Year Revenue
Salesforce proudly announced its fourth quarter fiscal year 2022 performance, which further solidified their iconic status in the cloud computing industry. Not only did they exceed their previous record by posting all-time high quarterly revenue of $3.39 billion and all-time high annual revenue of $13.28 billion, they also saw an increase of 25% year-over-year in total revenue.
Acquisitions drove this stellar performance, as the company capitalized on strategic investments such as Mulesoft and others to grow their robust Cloud ecosystem by more than 32%. This not only furthers their organic growth story but also reinforces their lead as a global leader in customer success solutions both domestically and internationally.
Additional highlights include strong performance from Sales Cloud and Service Cloud, up 22% and 39% respectively year-over-year; 75% year-over-year growth for Pardot; triple digit billings growth for Community Cloud, Field Service Lightning and Large Enterprise deals; international revenues growing 33%; average contract duration increasing from 46 months to 55 months; rapid expansion of partnership ecosystem with 5000+ new partners added during the quarter; Salesforce Platform servicing 3600+ enterprises with more than 40 regions fully geographic availability around the globe, making it easier for customers to deploy third party apps on the Salesforce core platform.
It’s clear that Salesforce has established itself as a key part of today’s Cloud ecosystem worldwide and a force to be reckoned with in the industry. With strong leadership challenging even bigger goals across all divisions of its business in 2022, Q4 resulted in a tremendous start towards achieving those goals.
Salesforce Q4 2022 Highlights
Salesforce announced today its financial results for the fourth quarter of its fiscal 2022, setting new records for both quarterly and annual revenue. The company reported revenue of $5.96 billion for the fourth quarter, an increase of 22% year-over-year, and a record for annual revenue of $22.9 billion for the full year, up 24% year-over-year.
Let’s take a closer look at the highlights from the fourth quarter of Salesforce’s 2022 fiscal year.
Subscription and Support Revenue
For Q4 2022, Salesforce reported subscription and support revenue of $7.4 billion, an increase of 25% year-over-year and a new record for sales. This increase was driven by a 23% growth in the company’s customer base and a 4% rise in average cloud adoption rates across its existing clients.
The company also reported that Q4 2022 subscription and support revenue from its International business operations grew 30% year-over-year to reach $1.3 billion in revenue. This growth was driven by an 8% rise in local currency term sales contracts compared to the same period last year, as well as a 10% increase in new trust customer accounts relative to the prior period.
Overall, Salesforce’s impressive quarterly performance is another sign that the company is continuing to build momentum as it moves firmly into 2021 with great expectations for continued growth this coming year.
Professional Services and Other Revenue
Professional Services (PS) and Other Revenue are two distinct revenue streams generated by Salesforce. In the fourth quarter of 2022, Professional Services revenue rose 18% year-over-year to $416 million, driven largely by support from large enterprise customers. Other Revenue was up 43% year-over-year to $408 million in the fourth quarter, with strong growth stemming from sales of Marketing Cloud and Commerce Cloud products.
Professional services was a key contributor to Salesforce’s record Q4 2022 performance. The company reported that 86% of all customer success stories for the quarter involved Professional Services involvement and/or customization work. Salesforce also continued its commitment to health and safety with a renewed emphasis on remote working throughout the organization. This allowed many teams interested in Professional Services offerings to participate remotely, resulting in record demand for consulting and remote enablement services through the end of the year.
Salesforce’s Other Revenue growth was driven by both new customers and expanded relationships with existing customers during Q4 2022. In particular, Commerce Cloud made substantial gains with enterprise customers as they accelerated their digital transformation efforts in light of COVID-19 challenges. At the same time, Marketing Cloud had a strong finish to the year as more companies adopted integrated campaigns across cloud platforms like AppExchange apps, Trailhead content libraries and Lightning Communities solutions.
Salesforce’s Outlook for Fiscal 2023
Salesforce recently announced record fourth quarter and full-year fiscal 2022 results. The company saw unprecedented growth across its core cloud offerings and customer base. This is all due to the increased demand for digital transformation and cloud-based applications.
With these newfound successes, Salesforce has an exciting outlook for Fiscal 2023 and beyond. Let’s take a closer look at how the company is planning to leverage its success in the future.
Guidance for Subscription and Support Revenue
Salesforce’s subscription and support revenue for fiscal 2023 is expected to be between USD $17.4 billion and USD $17.5 billion, representing growth of 22% to 23% year-over-year at constant currency.
Total revenue for fiscal 2023 is expected to be between USD $19.3 billion and USD $19.4 billion, representing 22% to 23% growth year-over-year at constant currency.
For the quarter ending April 30, 2023, total revenue is expected to be between USD $2.52 billion and USD $2.53 billion, representing 21% year-over-year growth at actual exchange rates or 24% year-over-year growth at constant currency. Subscription and support revenue is expected to be between USD $2.30 billion and USD $2.31billion, representing 21% year-over-year growth at actual exchange rates or 24% year over year growth at constant currency.
Nonrecurring professional services revenue is expected to provide added momentum during the quarter ending April 30, 2023 with an increase of 25%.
Guidance for Professional Services and Other Revenue
As Salesforce enters into the new fiscal year, executive management has provided guidance on its expected performance. For the upcoming year, professional services and other revenue is projected to be increasingly more important and pivotal to the company’s success.
The professional services industry continues to boom as businesses of all sizes seek guidance on specific areas of operations or technology implementation. Professional services are expected to play a significant role in driving Salesforce’s increase in overall revenue. This prediction is based on the current market trend towards engaging professional firms to provide specific guidance or best-in-class implementation skills that may otherwise not exist inside an organisation’s staff establishment.
Additionally, Salesforce expects that their “other” businesses will continue to generate strong revenues for their 2023 financial year. Other service areas include developing platforms for customer services such as Platform-as-a-Service (PaaS) offerings and additional industry leading CRM suites such as Software-as-a Service (SaaS) deployments and Infrastructure-as-a Service (IaaS) setups. It is estimated that these two industries alone will bring in over 5 billion dollars by 2024 for Salesforce and its related partners, making them a possibly vital component of future plans for success.
Overall, Salesforce reported record results for the fourth quarter and full fiscal year. The company reported total revenue of $20.91 billion in fiscal 2020, up 33% year over year. Revenue in the fourth quarter was $5.42 billion, a 29% increase, and it topped the FactSet consensus estimate of $5.41 billion by 0.3%. As a result of the significant growth throughout 2020 and prior years, CEO Mark Benioff said that Salesforce had become “the first cloud software company to reach $20 billion in annual revenue.”
Despite these impressive figures, Salesforce said it anticipates “more uncertainty” as customers adjust their spending to address economic pressures from the Covid-19 pandemic. Despite these pressures, executives are confident about their ability to execute on their long-term plans for 2021 and beyond.
With its “strong foundation”of innovation and customer satisfaction during this tumultuous period of economic uncertainty, Salesforce remains a powerful player in enterprise software solutions with strong long-term potential for sales growth in the future.