Ladies and gentlemen, thank you for standing by, and welcome to the Salesforce and Salesforce.org conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask questions during this time, simply press star then 1 on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. I would now like to hand the conference over to your speaker for today, Mr. John Cummings. You may begin your conference.
Thanks so much, Mikey, and good afternoon, everyone. Earlier today, Salesforce announced it intends to combine with Salesforce.org, the independent nonprofit social enterprise formed by Salesforce. Copy of the press release and the related SEC filing discussing this intended business combination and a replay of today's call can be found on our website at www.salesforce.com/investor. Joining me today to discuss the news are Keith Block, Vice Chairman and co-CEO of Salesforce, and Mark Hawkins, President and Chief Financial Officer. As a reminder, our commentary today will primarily be in non-GAAP terms. Some of our comments today may contain forward-looking statements which are subject to risks, uncertainties, and assumptions. Should any of these materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these forward-looking statements.
Description of these risks, uncertainties, and assumptions and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Form 10-K. With that, let me turn it over to you, Keith.
Hey, thanks, John. Good afternoon, everyone. Thanks for joining today's call. We're excited to be here today to talk to you about our plans to combine Salesforce.org and Salesforce. I think everybody knows that giving back to our communities has been a core part of our culture for more than 20 years. In fact, in 1999, we pioneered the 1-1-1 model of integrated corporate philanthropy. In that, we dedicated 1% of our equity, 1% of our products, and 1% of our employee time to communities where we live and work. As we've grown, this founding principle has created truly incredible impact in our communities and, very important, goodwill with our customers. In addition to our market-leading technology, customers strategically align on our values, and that's why they bet on Salesforce.
In 2008, we founded Salesforce.org to scale the 1-1-1 model and deliver innovative technology to nonprofits, educational institutions, and philanthropies. To date, Salesforce and Salesforce.org have provided technology to more than 40,000 nonprofits and education institutions. Collectively, employees of Salesforce and Salesforce.org have volunteered 3.8 million hours of their time in their communities. Together with Salesforce.org and the Salesforce Foundation, we've donated more than $260 million in grants back to our community. Rob Acker, Salesforce.org CEO, and his team have built an incredible organization delivering the world's number one CRM to customers, including the American Red Cross, the ADL, University of San Diego, Southern New Hampshire University, and the list goes on and on.
By joining Salesforce.org will have the opportunity to tap into our company's vast resources, driving even greater innovation and efficiency for these nonprofit education and philanthropy customers. Salesforce will create a new nonprofit and education vertical led by Rob, which will be responsible for the sales, marketing, and support to the Salesforce Customer Success Platform to the nonprofit and education communities, as well as the development of Salesforce's Nonprofit Cloud, Education Cloud, and the Philanthropy Cloud. We also remain as dedicated as ever to giving back. This is important. In fact, the one-time cash purchase price of $300 million that we'll pay for Salesforce.org shares will be distributed to the Salesforce Foundation to be invested back into the communities where we live and work. We will make additional contributions to the Salesforce Foundation going forward.
Combining Salesforce and Salesforce.org reinforces the strength of our philanthropic model, and Salesforce will extend this model by continuing to provide software to nonprofits and education institutions around the world, and by investing in local communities through employee volunteering, strategic grants, and matching employee giving up to $5,000 per employee annually. To close, I want to express my deep gratitude to our entire Ohana, including each and every Salesforce.org employee, for being part of this amazing work. Now I want to turn the call over to Salesforce CFO, Mark Hawkins.
Thanks, Keith. As we discussed, by joining the two organizations, our goal is to better serve our customer and increase our positive impact within the community. Let me provide a bit of background on Salesforce.org and the way it operates. Today, Salesforce.org is enabled by a reseller agreement with Salesforce, which also allows Salesforce.org to donate or sell at a discount some of our products to nonprofit organizations and certain educational institutions. Salesforce does not charge Salesforce.org for these subscriptions, and the revenue generated by Salesforce.org allows them to self-fund their operations. This also enables Salesforce.org to donate excess profits back to the community through strategic grants. Going forward, Salesforce.org will be fully integrated inside of Salesforce, enabling us to reallocate resources for greater impact and scale. We plan to streamline areas of operational duplication to create a more efficient model.
We intend to reinvest some of these efficiency gains back into our nonprofit and education vertical, in addition to continuing to invest in our community by donating directly to the Salesforce Foundation. We also expect to drive increased customer success by providing greater access to our entire product portfolio. All of this will accelerate impact for our nonprofit, education, and philanthropy customers. Given the unique nature of this transaction, let me talk through some of the details. In order to combine the two companies, Salesforce.org will convert from a California nonprofit public benefit corporation into a California business corporation. As Keith mentioned, Salesforce will pay one-time cash purchase price of $300 million for shares of Salesforce.org. The cash consideration will be distributed to the Salesforce Foundation, which will remain an independent California nonprofit public benefit corporation and 501(c)(3) organization.
Closing of the combination is subject to approval by the Attorney General of California and other customary closing conditions. Because the current reseller agreement provides favorable terms to Salesforce.org and its customers, U.S. GAAP requires us to fair value this agreement when we combine. This accounting treatment will result in a one-time, non-cash accounting charge when this transaction closes, which we estimate to be approximately $200 million. Keep in mind, this is subject to change based on the timing of the close of the transaction and will be reflected as a separate line item under the operating expenses impacting both our GAAP and non-GAAP results. Let me discuss the changes to our fiscal year 2020 guidance.
Assuming the combination is approved by the Attorney General of California, we were able to complete the transaction in our fiscal second quarter or early fiscal third quarter, we estimate that Salesforce.org will contribute approximately $150 million-$200 million in incremental revenue for the remainder of our fiscal 2020. Including the contribution from Salesforce.org, we are raising our FY20 revenue guidance to $16.1 billion-$16.25 billion. Due to the one-time, non-cash accounting charge I had mentioned earlier, we now expect FY20 non-GAAP operating margin improvement of 0-25 basis points year-over-year. Keep in mind, we remain committed to drive the organic operating efficiency goals that we established on our fourth quarter FY19 earnings call. We are lowering our non-GAAP EPS guidance by $0.20 and now expect the full year FY20 non-GAAP EPS of $2.54-$2.56.
We are maintaining our FY20 operating cash flow guidance and growth of 20%-21%, despite absorbing some integration and transaction costs related to this combination. In order to provide an accurate forecast for full-year GAAP EPS, we need to complete the purchase accounting process after the transaction closes. As for the long-term FY23 revenue target, we expect the combination to be additive, and we will update that once we have better visibility to the closing of the transaction and as we integrate the model into our long-range plan. To close, I'm delighted to partner even more closely with Salesforce.org, along with its customers, employees, and partners, to drive even greater impact at scale. With that, I'd like to open up the call for questions. Operator?
At this time, I would like to remind everyone in order to ask questions, please press star then the number one on your telephone keypad. Once again, that is star then the number one on your telephone keypad. Your first question is from the line of Brad Zelnick of Credit Suisse. Your line is now open.
Fantastic. Thanks so much. Mark and Keith, Salesforce has been a standout leader in corporate philanthropy from the very beginning, and the social impact you've made is immeasurable. With this news, what practically changes in terms of the impact you'll have going forward? Why now? Are there any related tax benefits in doing this? Thanks.
Hey, Brad, it's Keith. Thanks for the question. There's a number of reasons why we're doing this, but I think it's important to understand that this is actually something that's been discussed and been worked on for a very long time. Changing the structure of .org and the relationship with Salesforce to eliminate some of the complexity associated with multiple entities is something that we've had very senior people looking at for a lot of reasons. I think there's a lot of great leverage points. In the end, this agreement is the culmination of some fine work on a multi-year effort. I think you guys will see the numbers. It's definitely worth doing. First of all, the total addressable market for this space is about $13 billion, there's a lot of opportunity.
We're very confident that leveraging the combined resources of the distribution organizations and the combined entities will enable Salesforce.org to bring new products to market faster, which means they'll be able to serve the public good, because at the end of the day, the feeling around philanthropy and doing right in the community is very, very important to us. There's a lot of other synergies around scale and acceleration impact in the nonprofit and education market. Again, a much more efficient model, less duplication. The nonprofit and educational community will have access to a broader product portfolio. There's a lot of synergies here, integrated R&D, access to the Philanthropy Cloud, which is new and very innovative that our core customers can have. A lot of opportunity to take share and give back to the community and provide a higher level of service.
With respect to the tax question, Mark, I'll let you handle that one.
Yeah, for sure. Thank you, Keith. In terms of the taxes, Brad, no material impact at that end. Just complementing everything Keith said with all the good reasons, again, our commitment to the 1-1-1 model and just that whole aspect of our company is core, there's no change to that as well. You can see all the reasons why now per Keith's note and message.
Your next question is from the line of Keith Weiss of Morgan Stanley. Your line is now open.
Excellent. Thank you guys for taking the question. Interesting transaction. I just want to make sure I understand the numbers correctly. In terms of the amount of revenue Salesforce.org was doing, if you're thinking it's going to add $150 million-$200 million if we close late in Q2 or early Q3, does that imply that they were doing like $300 million-$400 million in terms of an annualized run rate? Number one. Number two, if I run the quick math, it still seems like it's a little bit dilutive to operating margins for the year, maybe somewhere between 20 and 30 basis points. Am I thinking about that revenue scale and the potential margin dilution correctly?
Well, a couple of things I would say, you can see the actual disclosure, in the past that we've had footnoted in terms of the revenue for like last year, for example, you can think of it as about $250 million for the subscription revenue, growing at about 38% year-on-year. It's a really nice business. You can see that, and that's what happened last year. You can see, obviously, the stub. A lot of this is going to depend on exactly when it closes, you can get a general sense of magnitude and quantum there, number one. Number two, in terms of the operating margin, this is a business that does have a lower operating margin at this stage. They have invested quite considerably as far as this great opportunity.
It's also going to be on a pathway and a convergence over time to our overall Salesforce operating margin over the longer term. At a point in time, I certainly confirm that with you. We're obviously very pleased with the opportunity, the TAM, and all the reasons that Keith said. We see a real opportunity to improve that operating margin over time while we grow this business. Thanks, Keith.
Your next question is from the line of Tom Roderick of Stifel. Your line is now open.
Hey, gentlemen. Thank you for taking my question. I want to think a little bit more about just some of the vertical specificity in this product, and certainly you rolled a lot of that out with the introduction of the Philanthropy Cloud last year. Kind of in thinking about this market, and what it means for, say, capital campaigns, annual giving, all the way through to, say, corporate social responsibility, where do you feel like you are in the life cycle of that vertical specificity in the product, and how fast can you accelerate that relative to joining forces with Salesforce itself?
The second part of the question, Keith, I don't know if you can just provide some details around how big that Salesforce is today or how fast you've been growing it, but it'd be really useful to understand what you can do from a distribution standpoint to accelerate what's already been a really nice growing business. Thank you.
Tom, thanks for the question. No problem. Look, here's the great news. I think everybody knows that we've pivoted pretty hard to a vertical strategy over the last six years. .org has actually done a very nice job in serving the community, and also if you think about the education vertical, which is kind of an interesting market. It's always personally been an interesting market for me. Today, there's a handful of these specific vertical solutions that you've mentioned, actually one of them, which is Philanthropy Cloud. You think about the Nonprofit Cloud, that really is a bundle of several products like the Salesforce platform and the success pack. There's the Education Cloud, that really is all about driving success for students in the life cycle, whether you're a prospect to an alumni. There's a lot of goodness there. I think we're very early.
There's a lot of lessons learned for both the .org as well as Salesforce in terms of how to assemble these solutions, and how to bundle these solutions in a meaningful way in the marketplace. There's synergy there. When I talk to Rob Acker about some of the things that he's been doing, it's actually very cool in terms of what his focus is. Likewise, I think there's some lessons learned that Rob's team can learn from what Jujhar is doing on our side in terms of building vertical products. I think it's early innings. I think there's an opportunity for both sides to learn from each other and to continue to fill out the portfolio.
Your next question is from the line of James Rutherford of Stephens Inc.. Your line is now open.
Hey, thanks for taking the questions. Just have a couple here. The first is, what's your perception of the health and unique challenges of this end market, the nonprofit education end market? Secondly, what do you think of the competition in the nonprofit space? I know there's one large competitor in there, and just kind of your thoughts around those two topics. Thank you.
I think there's a couple of things to think about. Every industry and sector has its own language, its own culture, its own way of serving its constituents as well as the way that they buy. It comes back to this governing theme that we've used here at Salesforce, which is speaking the language of the customer. I think that this is, again, a great opportunity and proof point with what the .org has done historically, excuse me, to not just take horizontal capability, but really verticalize those capabilities and go after that market. I think that that is a market that is underserved. That's why we think there's such a great opportunity, and the team's done a great job. Again, I'll point back to the $13 billion TAM. There are some other players in this space.
We believe that with our momentum, our innovation, our culture, I think we feel very strongly that the Nonprofit Cloud and Education Cloud and now the Philanthropy Cloud and other innovations that we'll be announcing puts us in a very competitive position to go after this space. I would just add to Keith's point, this has the signature of where we do really well. It's a fractionalized market, and it's really open to all the innovations that we provide from a cloud capability and from a full Customer Success Platform capability. This has all the signature, I think, just adding to Keith's point, where I think we can do really well, and it's fast-growing and it's big.
There are no further question at this time. Please continue.
Great. Thank you, everyone. Thanks for joining us today. We appreciate the time. If you have any follow-up questions on the transaction and the announcement today, feel free to send an email to investor@salesforce.com. Thank you so much. Thank you so much.
This concludes today's conference call. Thank you all for participating. You may now disconnect.