What changed in this filing

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Item 1. Financial Statements

2024-12-04 compared with 2024-08-29 · 136 added, 105 removed, 773 unchanged (24% of the section changed)

3 unchanged sentences

(in millions)

July 31, 2024 January 31, 2024

October 31, 2024 January 31, 2024

Assets (unaudited)

39 unchanged sentences

(in millions, except per share data)

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

24 unchanged sentences

(1) Amounts include amortization of intangible assets acquired through business combinations, as follows:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

2 unchanged sentences

(2) Amounts include stock-based compensation expense, as follows:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

8 unchanged sentences

(in millions)

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

11 unchanged sentences

(in millions)

Three and Six Months Ended July 31, 2024

Three and Nine Months Ended October 31, 2024

Common Stock Treasury Stock Additional

17 unchanged sentences

Balance at July 31, 2024 1,047 1 ( 89 ) ( 18,182 ) 62,143 ( 236 ) 13,907 57,633

Three and Six Months Ended July 31, 2023

Common stock issued 3 0 0 0 148 0 0 148

Common stock repurchased 0 0 ( 5 ) ( 1,232 ) 0 0 0 ( 1,232 )

Stock-based compensation 0 0 0 0 823 0 0 823

Other comprehensive income, net of tax 0 0 0 0 0 11 0 11

Cash dividends declared 0 0 0 0 0 0 ( 385 ) ( 385 )

Net income 0 0 0 0 0 0 1,527 1,527

Balance at October 31, 2024 1,050 $ 1 ( 94 ) $ ( 19,414 ) $ 63,114 $ ( 225 ) $ 15,049 $ 58,525

Three and Nine Months Ended October 31, 2023

Common Stock Treasury Stock Additional

15 unchanged sentences

Balance at July 31, 2023 1,023 1 ( 48 ) ( 8,057 ) 57,345 ( 258 ) 9,051 58,082

Common stock issued 3 0 0 0 111 0 0 111

Common stock repurchased 0 0 ( 9 ) ( 1,947 ) 0 0 0 ( 1,947 )

Stock-based compensation expense 0 0 0 0 693 0 0 693

Other comprehensive loss, net of tax 0 0 0 0 0 ( 73 ) 0 ( 73 )

Net income 0 0 0 0 0 0 1,224 1,224

Balance at October 31, 2023 1,026 1 ( 57 ) ( 10,004 ) 58,149 ( 331 ) 10,275 58,090

See accompanying Notes.

2 unchanged sentences

(in millions)

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

22 unchanged sentences

Capital expenditures ( 204 ) ( 166 ) ( 504 ) ( 589 )

Net cash provided by (used in) investing activities 2,641 ( 1,152 ) ( 10 ) ( 805 )

Net cash used in investing activities ( 217 ) ( 54 ) ( 227 ) ( 859 )

Financing activities:

6 unchanged sentences

Effect of exchange rate changes ( 5 ) ( 32 ) ( 14 ) ( 4 )

Net decrease in cash and cash equivalents ( 2,276 ) ( 2,383 ) ( 790 ) ( 244 )

Net increase (decrease) in cash and cash equivalents 315 ( 319 ) ( 475 ) ( 563 )

Cash and cash equivalents, beginning of period 7,682 6,772 8,472 7,016

6 unchanged sentences

(in millions)

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

10 unchanged sentences

(the “Company”) is a global leader in customer relationship management technology that brings companies and customers together.

With the Customer 360 platform, the Company delivers a single source of truth, connecting customer data with integrated artificial intelligence across systems, apps and devices to help companies sell, service, market and conduct commerce from anywhere.

Since its founding in 1999, the Company has pioneered innovations in cloud, mobile, social, analytics and artificial intelligence, enabling companies of every size and industry to transform their businesses in the digital-first world.

With the Salesforce platform, the Company delivers a single source of truth, connecting customer data with integrated artificial intelligence (“AI”) across systems, apps and devices to help companies sell, service, market and conduct commerce from anywhere.

During the third quarter of fiscal 2025, the Company introduced Agentforce, a new layer of the trusted Salesforce platform that enables companies to build and deploy AI agents that can respond to inputs, make decisions and take action autonomously across business functions.

Agentforce includes a suite of customizable agents for use across sales, service, marketing and commerce.

Since its founding in 1999, the Company has pioneered innovations in cloud, mobile, social, analytics and AI, enabling companies of every size and industry to transform their businesses in the digital-first world.

The Company’s fiscal year ends on January 31.

1 unchanged sentence

Basis of Presentation

The accompanying condensed consolidated balance sheet as of July 31, 2024 and the condensed consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the three and six months ended July 31, 2024 and 2023, respectively, are unaudited.

The accompanying condensed consolidated balance sheet as of October 31, 2024 and the condensed consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the three and nine months ended October 31, 2024 and 2023, respectively, are unaudited.

These financial statements have been prepared in accordance with U.S.

3 unchanged sentences

GAAP for complete financial statements.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of July 31, 2024 and its results of operations, including its comprehensive income, stockholders' equity and cash flows for the three and six months ended July 31, 2024 and 2023.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of October 31, 2024 and its results of operations, including its comprehensive income, stockholders' equity and cash flows for the three and nine months ended October 31, 2024 and 2023.

All adjustments are of a normal recurring nature.

The results for the three and six months ended July 31, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2025.

The results for the three and nine months ended October 31, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2025.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2024.

17 unchanged sentences

Over the past few years, the Company has completed a number of acquisitions which have allowed the Company to expand its offerings, presence and reach in various market segments of the enterprise cloud computing market.

While the Company has offerings in multiple enterprise cloud computing market segments, including as a result of the Company's acquisitions, and operates in multiple countries, the Company’s business operates in one operating segment because most of the Company's service offerings operate on the Customer 360 Platform and are deployed in a nearly identical manner, and the Company’s CODM evaluates the Company’s financial information and resources, and assesses the performance of these resources, on a consolidated basis.

While the Company has offerings in multiple enterprise cloud computing market segments, including as a result of the Company's acquisitions, and operates in multiple countries, the Company’s business operates in one operating segment because most of the Company's service offerings operate on the Salesforce platform and are deployed in a nearly identical manner, and the Company’s CODM evaluates the Company’s financial information and resources, and assesses the performance of these resources, on a consolidated basis.

Concentrations of Credit Risk, Significant Customers and Investments

8 unchanged sentences

Receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success.

No single customer accounted for ten percent or more of accounts receivable as of July 31, 2024 and January 31, 2024.

No single customer accounted for ten percent or more of total revenue during the three and six months ended July 31, 2024 and 2023.

As of July 31, 2024 and January 31, 2024, assets located outside the Americas were 15 percent and 16 percent of total assets, respectively.

As of July 31, 2024 and January 31, 2024, assets located in the United States were 83 percent and 82 percent of total assets, respectively.

No single customer accounted for ten percent or more of accounts receivable as of October 31, 2024 and January 31, 2024.

No single customer accounted for ten percent or more of total revenue during the three and nine months ended October 31, 2024 and 2023.

As of October 31, 2024 and January 31, 2024, assets located outside the Americas were 13 percent and 16 percent of total assets, respectively.

As of October 31, 2024 and January 31, 2024, assets located in the United States were 85 percent and 82 percent of total assets, respectively.

The Company is also exposed to concentrations of risk in its strategic investment portfolio, including within specific industries, as the Company primarily invests in enterprise cloud companies, technology st artups and system integrators.

As of July 31, 2024, the Company held two investments, both privately held, with carrying values that were individually greater than five percent of its total strategic investments portfolio and represented approximately 15 percent of the portfolio in the aggregate.

As of October 31, 2024, the Company held two investments, both privately held, with carrying values that were individually greater than five percent of its total strategic investments portfolio and represented approximately 13 percent of the portfolio in the aggregate.

As of January 31, 2024 , the Company held two investments, both privately held, with carrying values that were individually greater than five percent of its strategic investments portfolio and represented approximately 16 percent of the portfolio in the aggregate.

57 unchanged sentences

Amortization of capitalized costs to obtain revenue contracts is included in sales and marketing expense in the accompanying condensed consolidated statements of operations.

There were no impairments of costs to obtain revenue contracts for the three and six months ended July 31, 2024 and 2023.

There were no impairments of costs to obtain revenue contracts for the three and nine months ended October 31, 2024 and 2023.

Cash and Cash Equivalents

6 unchanged sentences

Securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit losses.

Expected credit losses on securities are recognized in other income (expense) on the condensed consolidated statements of operations and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income in stockholders' equity.

Expected credit losses on securities are recognized in other income on the condensed consolidated statements of operations and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive loss in stockholders' equity.

For the purposes of computing realized and unrealized gains and losses, the cost of securities sold is based on the specific-identification method.

Interest on securities classified as available for sale is included as a component of investment income within other income (expense) on the condensed consolidated statements of operations.

Interest on securities classified as available for sale is included as a component of investment income within other income on the condensed consolidated statements of operations.

Strategic Investments

3 unchanged sentences

All gains and losses on privately held equity securities, realized and unrealized, are recorded through losses on strategic investments, net on the condensed consolidated statements of operations.

Privately held debt securities are recorded at fair value with changes in fair value recorded through accumulated other comprehensive loss on the condensed consolidated balance sheet.

Privately held debt securities are recorded at fair value with changes in fair value recorded through accumulated other comprehensive loss on the condensed consolidated balance sheets.

Other privately held investments not classified as debt or equity securities are recorded at cost and adjusted for impairment events, with any associated gains and losses recorded through losses on strategic investments, net on the consolidated statements of operations.

15 unchanged sentences

While the contract or notional amount is often used to express the volume of foreign currency derivative contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of the Company to the counterparties.

The notional amount of outstanding foreign currency derivative contracts as of July 31, 2024 and January 31, 2024 was $ 8.7 billion and $ 8.6 billion, respectively.

The notional amount of outstanding foreign currency derivative contracts as of October 31, 2024 and January 31, 2024 was $ 9.4 billion and $ 8.6 billion, respectively.

Outstanding foreign currency derivative contracts are recorded at fair value on the condensed consolidated balance sheets.

Unrealized gains or losses due to changes in the fair value of these derivative contracts, as well as realized gains or losses from their net settlement, are recognized as other income (expense) consistent with the offsetting gains or losses resulting from the remeasurement or settlement of the underlying foreign currency denominated receivables and payables.

Unrealized gains or losses due to changes in the fair value of these derivative contracts, as well as realized gains or losses from their net settlement, are recognized as other income in the condensed consolidated statements of operations consistent with the offsetting gains or losses resulting from the remeasurement or settlement of the underlying foreign currency denominated receivables and payables.

Property and Equipment

18 unchanged sentences

Periods beyond the noncancellable term of the lease are included in the measurement of the lease liability only when it is reasonably certain that the Company will exercise the associated extension option or waive the termination option.

The Company reassesses the lease term if and when a significant event or change in circumstances occurs within the control of the Company.

As most of the Company’s leases do not provide an

implicit rate, the net present value of future minimum lease payments is determined using the Company’s incremental borrowing rate.

The Company reassesses the lease term if and when a significant

event or change in circumstances occurs within the control of the Company.

As most of the Company’s leases do not provide an implicit rate, the net present value of future minimum lease payments is determined using the Company’s incremental borrowing rate.

The Company's incremental borrowing rate is an estimate of the interest rate the Company would have to pay to borrow on a collateralized basis with similar terms and payments, in the economic environment where the leased asset is located.

2 unchanged sentences

Amortization expense of finance lease ROU assets is recognized on a straight-line basis over the lease term and interest expense for finance lease liabilities is recognized based on the incremental borrowing rate.

Expense for variable lease payments are recognized as incurred.

Expense for variable lease payments is recognized as incurred.

On the lease commencement date, the Company also establishes assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease.

7 unchanged sentences

Impairment Assessment

This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an asset's carrying amount may not be recoverable.

Recoverability of these assets is measured by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate.

The Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, including, but not limited to, significant adverse changes in business climate, market conditions or other events that indicate an asset's carrying amount may not be recoverable.

Recoverability of these assets is measured by comparing the carrying amount of each asset group to the future undiscounted cash flows the asset is expected to generate.

If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during its fourth quarter of each fiscal year or more often if and when circumstances indicate that goodwill may not be recoverable.

The Company evaluates and tests the recoverability of its goodwill for impairment annually during its fourth quarter of each fiscal year or more often if and when circumstances indicate that goodwill may not be recoverable.

Business Combinations

6 unchanged sentences

In the event the Company acquires an entity with which the Company has a preexisting relationship, the Company will generally recognize a gain or loss to settle that relationship as of the acquisition date within operating income on the condensed consolidated statements of operations.

In the event that the Company acquires an entity in which the Company previously held a strategic investment, the difference between the fair value of the shares as of the date of the acquisition and the carrying value of the strategic investment is recorded as a gain or loss and recorded within net losses on strategic investments in the condensed consolidated statements of operations.

In the event that the Company acquires an entity in which the Company previously held a strategic investment, the difference between the fair value of the shares as of the date of the acquisition and the carrying value of the strategic investment is recorded as a gain or loss and recorded within losses on strategic investments, net in the condensed consolidated statements of operations.

Restructuring

The Company generally recognizes employee severance costs when payments are probable and amounts are estimable or when notification occurs, depending on the region an employee works.

Costs related to contracts without future benefit or

contract termination are recognized at the earlier of the contract termination or the cease-use dates.

Costs related to contracts without future benefit or contract termination are recognized at the earlier of the contract termination or the cease-use dates.

Other exit-related costs are recognized as incurred.

35 unchanged sentences

dollars are recorded as a separate component on the condensed consolidated statements of comprehensive income.

Foreign currency transaction gains and losses are included in other income (expense) in the condensed consolidated statements of operations for the period.

Foreign currency transaction gains and losses are included in other income in the condensed consolidated statements of operations.

Warranties and Indemnification

9 unchanged sentences

ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and for interim periods beginning after December 15, 2024 on a retrospective basis, with early adoption permitted.

The Company is evaluating the effect that ASU 2023-07 will have on its financial statement disclosures.

The Company will adopt ASU 2023-07 in the fourth quarter of fiscal year 2025 and does not expect the additional required disclosures to have a material impact on its financial statements.

In December 2023, the FASB issued Accounting Standards Update No.

3 unchanged sentences

The Company is evaluating the effect that ASU 2023-09 will have on its financial statement disclosures.

In November 2024, the FASB issued Accounting Standards Update No.

2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disaggregation of certain costs in a separate note to the financial statements, such as the amounts of employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption in annual and interim consolidated financial statements.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and for interim periods beginning after December 15, 2027 on a retrospective or prospective basis, with early adoption permitted.

The Company is evaluating the effect that ASU 2024-03 will have on its financial statement disclosures.

Disaggregation of Revenue

1 unchanged sentence

Subscription and support revenues consisted of the following (in millions):

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

8 unchanged sentences

Revenues by geographical region consisted of the following (in millions):

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

4 unchanged sentences

Revenues by geography are determined based on the region of the Company's contracting entity, which may be different than the region of the customer.

Americas revenue attributed to the United States was approximately 93 percent during the three and six months ended July 31, 2024 and 2023.

No other country represented more than ten percent of total revenue during the three and six months ended July 31, 2024 and 2023.

Americas revenue attributed to the United States was approximately 93 percent during the three and nine months ended October 31, 2024 and 2023.

No other country represented more than ten percent of total revenue during the three and nine months ended October 31, 2024 and 2023.

Contract Balances

1 unchanged sentence

The Company records a contract asset when revenue recognized on a contract exceeds the billings.

Contract assets were $ 885 million as of July 31, 2024 as compared to $ 758 million as of January 31, 2024, and are included in prepaid expenses and other current assets and deferred tax assets and other assets, net on the condensed consolidated balance sheets.

Contract assets were $ 948 million as of October 31, 2024 as compared to $ 758 million as of January 31, 2024, and are included in prepaid expenses and other current assets and deferred tax assets and other assets, net on the condensed consolidated balance sheets.

Unearned Revenue

3 unchanged sentences

The change in unearned revenue was as follows (in millions):

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

21 unchanged sentences

Current Noncurrent Total

As of July 31, 2024 $ 26.5 $ 27.0 $ 53.5

As of October 31, 2024 $ 26.4 $ 26.7 $ 53.1

As of January 31, 2024 $ 27.6 $ 29.3 $ 56.9

Marketable Securities

At July 31, 2024, marketable securities consisted of the following (in millions):

At October 31, 2024, marketable securities consisted of the following (in millions):

Cost Unrealized

24 unchanged sentences

The contractual maturities of the investments classified as marketable securities were as follows (in millions):

July 31, 2024 January 31, 2024

October 31, 2024 January 31, 2024

Due within 1 year $ 2,019 $ 2,523

3 unchanged sentences

Strategic Investments

Strategic investments by form and measurement category as of July 31, 2024 were as follows (in millions):

Strategic investments by form and measurement category as of October 31, 2024 were as follows (in millions):

Measurement Category

2 unchanged sentences

Debt securities and other investments 0 0 93 93

Balance as of July 31, 2024

Balance as of October 31, 2024

$ 72 $ 4,543 $ 230 $ 4,845

7 unchanged sentences

The Company holds investments in, or management agreements with, variable interest entities (“VIEs”) which the Company does not consolidate because it is not considered the primary beneficiary of these entities.

The carrying value of VIEs within strategic investments was $ 429 million and $ 382 million, as of July 31, 2024 and January 31, 2024, respectively.

The carrying value of VIEs within strategic investments was $ 439 million and $ 382 million, as of October 31, 2024 and January 31, 2024, respectively.

Losses on Strategic Investments, Net

The components of losses on strategic investments, net were as follows (in millions):

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

3 unchanged sentences

Unrealized losses, net ( 216 ) ( 86 ) ( 276 ) ( 290 )

Realized gains on sales of securities, net 1 36 60 34

Realized gains (losses) on sales of securities, net ( 1 ) 14 59 48

Losses on strategic investments, net $ ( 217 ) $ ( 72 ) $ ( 217 ) $ ( 242 )

Unrealized gains and losses recognized on privately held equity securities, net includes upward and downward adjustments from equity securities accounted for under the measurement alternative, as well as gains and losses from private equity securities in other measurement categories.

For privately held securities accounted for under the measurement alternative, the Company recorded upward adjustments of $ 44 million and $ 6 million and impairments and downward adjustments of $ 51 million and $ 81 million for the three months ended July 31, 2024 and 2023 , respectively, and upward adjustments of $ 160 million and $ 52 million and impairments of $ 190 million and $ 256 million for the six months ended July 31, 2024 , and 2023 , respectively.

Realized gains on sales of securities, net reflects the difference between the sale proceeds and the carrying value of the security at the beginning of the period or the purchase date, if later.

For privately held securities accounted for under the measurement alternative, the Company recorded upward adjustments of $ 22 million and $ 14 million and impairments and downward adjustments of $ 245 million and $ 98 million for the three months ended October 31, 2024 and 2023 , respectively, and upward adjustments of $ 182 million and $ 65 million and impairments and downward adjustments of $ 435 million and $ 354 million for the nine months ended October 31, 2024 , and 2023 , respectively.

Realized gains (losses) on sales of securities, net reflects the difference between the sale proceeds and the carrying value of the security at the beginning of the period or the purchase date, if later.

Fair Value Measurement

4 unchanged sentences

All of the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are classified within Level 1 or Level 2 because these assets are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.

The following table presents information about the Company’s assets that were measured at fair value as of July 31, 2024 and indicates the fair value hierarchy of the valuation (in millions):

The following table presents information about the Company’s assets that were measured at fair value as of October 31, 2024 and indicates the fair value hierarchy of the valuation (in millions):

Description Quoted Prices in

20 unchanged sentences

Total assets $ 3,449 $ 7,141 $ 0 $ 10,590

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $ 2.0 billion of cash, as of July 31, 2024.

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $ 2.2 billion of cash, as of October 31, 2024.

The following table presents information about the Company’s assets that were measured at fair value as of January 31, 2024 and indicates the fair value hierarchy of the valuation (in millions):

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When indicators of impairment are observed for privately held equity securities, the Company generally uses the market approach to estimate the fair value of its investment, giving consideration to the latest observable transactions, as well as the investee's current and projected financial performance and other significant inputs and assumptions, including estimated time to exit, selection and analysis of guideline public companies and the rights and obligations of the securities the Company holds.

The Company's privately held debt and equity securities and other investments amounted to $ 5.0 billion and $ 4.8 billion as of July 31, 2024 and January 31, 2024, respectively.

The Company's privately held debt and equity securities and other investments amounted to $ 4.8 billion as of October 31, 2024 and January 31, 2024.

Leases and Other Commitments

The Company has leases for corporate offices, data centers and equipment under noncancellable operating and finance leases with various expiration dates.

Total operating lease costs were $ 193 million and $ 191 million for the three months ended July 31, 2024 and 2023, respectively, and were $ 351 million and $ 660 million for the six months ended July 31, 2024 and 2023, respectively.

Total operating lease costs were $ 162 million and $ 163 million for the three months ended October 31, 2024 and 2023, respectively, and were $ 513 million and $ 823 million for the nine months ended October 31, 2024 and 2023, respectively.

Included in operating lease costs are amounts related to restructuring charges, which are discussed in Note 9 “Restructuring.”

As of July 31, 2024, the maturities of lease liabilities under noncancellable operating and finance leases were as follows (in millions):

As of October 31, 2024, the maturities of lease liabilities under noncancellable operating and finance leases were as follows (in millions):

Operating Leases Finance Leases

Fiscal Period:

Remaining six months of fiscal 2025 $ 316 $ 190

Remaining three months of fiscal 2025 $ 167 $ 91

Fiscal 2026 637 359

7 unchanged sentences

Other Balance Sheet Accounts

Accounts payable, accrued expenses and other liabilities as of July 31, 2024 included approximately $ 1.7 billion of accrued compensation as compared to $ 2.5 billion as of January 31, 2024.

Accounts payable, accrued expenses and other liabilities as of October 31, 2024 included approximately $ 2.0 billion of accrued compensation as compared to $ 2.5 billion as of January 31, 2024.

Business Combinations

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Remaining Useful Life (Years)

January 31, 2024 Additions and retirements, net July 31, 2024 January 31, 2024 Expense and retirements, net July 31, 2024 January 31, 2024 July 31, 2024 July 31, 2024

January 31, 2024 Additions and retirements, net October 31, 2024 January 31, 2024 Expense and retirements, net October 31, 2024 January 31, 2024 October 31, 2024 October 31, 2024

Acquired developed technology $ 4,624 $ 102 $ 4,726 $ ( 3,208 ) $ ( 600 ) $ ( 3,808 ) $ 1,416 $ 918 1.6

3 unchanged sentences

(1) Included in Other are in-place leases, trade names, trademarks and territory rights.

Amortization of intangible assets resulting from business combinations for the three months ended July 31, 2024 and 2023 was $ 454 million and $ 472 million, respectively, and for the six months ended July 31, 2024 and 2023 was $ 915 million, and $ 943 million, respectively.

The expected future amortization expense for intangible assets as of July 31, 2024 was as follows (in millions):

Amortization of intangible assets resulting from business combinations for the three months ended October 31, 2024 and 2023 was $ 354 million and $ 468 million, respectively, and for the nine months ended October 31, 2024 and 2023 was $ 1.3 billion, and $ 1.4 billion, respectively.

The expected future amortization expense for intangible assets as of October 31, 2024 was as follows (in millions):

Fiscal Period:

Remaining six months of fiscal 2025 $ 699

Remaining three months of fiscal 2025 $ 353

Fiscal 2026 1,392

8 unchanged sentences

Acquisition of Spiff 323

Adjustments (1) ( 2 )

Balance as of July 31, 2024 $ 48,941

Other acquisitions and adjustments (1) 150

Balance as of October 31, 2024 $ 49,093

(1) Adjustments include the effect of foreign currency translation .

The components of the Company's borrowings were as follows (in millions):

Instrument Date of Issuance Maturity Date Contractual Interest Rate Outstanding Principal as of July 31, 2024

Carrying Value as of July 31, 2024 Carrying Value as of January 31, 2024

Instrument Date of Issuance Maturity Date Contractual Interest Rate Outstanding Principal as of October 31, 2024

Carrying Value as of October 31, 2024 Carrying Value as of January 31, 2024

2024 Senior Notes (1) July 2021 July 2024 0.625 % 0 0 999

9 unchanged sentences

(1) The Company repaid in full the 2024 Senior Notes in the second quarter of fiscal 2025.

The Company was in compliance with all debt covenants as of July 31, 2024.

The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above was $ 6.7 billion and $ 7.8 billion as of July 31, 2024 and January 31, 2024 , respectively.

The fair value was determined based on the closing trading price per $ 100 of the Senior Notes as of the last day of trading of the second quarter of fiscal 2025 and the last day of trading of fiscal 2024, respectively, and are deemed Level 2 liabilities within the fair value measurement framework.

The contractual future principal payments for all borrowings as of July 31, 2024 were as follows (in millions):

The Company was in compliance with all debt covenants as of October 31, 2024.

The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above was $ 6.7 billion and $ 7.8 billion as of October 31, 2024 and January 31, 2024 , respectively.

The fair value was determined based on the closing trading price per $ 100 of the Senior Notes as of the last day of trading of the third quarter of fiscal 2025 and the last day of trading of fiscal 2024, respectively, and are deemed Level 2 liabilities within the fair value measurement framework.

The contractual future principal payments for all borrowings as of October 31, 2024 were as follows (in millions):

Fiscal Period:

Remaining six months of fiscal 2025 $ 0

Remaining three months of fiscal 2025 $ 0

Fiscal 2026 0

5 unchanged sentences

Revolving Credit Facility

In December 2020, the Company entered into a Credit Agreement with Citibank, N.A., as administrative agent, and certain other institutional lenders (the “Revolving Loan Credit Agreement”) that provides for a $ 3.0 billion unsecured revolving credit facility (“Credit Facility”) and matures in December 2025.

The Company may use the proceeds of future borrowings under the Credit Facility for general corporate purposes, which may include, without limitation, the consideration, fees, costs and expenses related to any acquisition.

The Company amended the Revolving Loan Credit Agreement in April 2022 and May 2023, in each case to reflect certain administrative changes.

There were no outstanding borrowings under the Credit Facility as of July 31, 2024.

In October 2024, the Company entered into a Credit Agreement with the lenders and issuing lenders party thereto, and Bank of America, N.A., as administrative agent (the “Revolving Loan Credit Agreement”).

The Revolving Loan Credit Agreement replaced the Credit Agreement, dated December 23, 2020 (as amended, the “Prior Credit Agreement”), among the Company, the lenders and the issuing lenders party thereto, and Citibank, N.A., as administrative agent, which provided for a $ 3.0 billion unsecured revolving credit facility that was scheduled to mature on December 23, 2025.

There were no outstanding borrowings under the Prior Credit Agreement.

The Revolving Loan Credit Agreement provides for a $ 5.0 billion unsecured revolving credit facility (“Credit Facility”) and matures in October 2029.

The Company may use the proceeds of future borrowings under the Credit Facility for general corporate purposes.

There were no outstanding borrowings under the Credit Facility as of October 31, 2024.

Restructuring

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The actions associated with the employee restructuring under the Restructuring Plan were substantially completed in fiscal 2024 and the actions associated with the real estate portion of the Restructuring Plan are expected to be substantially complete in fiscal 2026.

In the first half of fiscal 2025, the Company approved restructuring initiatives focused on driving further operational efficiencies, optimizing our management structure and increasing cost optimization efforts to realize long-term sustainable growth through a targeted workforce reduction.

In the first nine months of fiscal 2025, the Company approved restructuring initiatives focused on driving further operational efficiencies, optimizing our management structure and increasing cost optimization efforts to realize long-term

sustainable growth through a targeted workforce reduction.

The actions associated with these initiatives are expected to be substantially complete in fiscal 2025.

The following tables summarize the activities related to the Company’s restructuring initiatives for the three and six months ended July 31, 2024 and 2023 (in millions):

Three Months Ended July 31, 2024 Six Months Ended July 31, 2024

Workforce Reduction

Office Space Reductions

Workforce Reduction Office Space Reductions Total

The following tables summarize the activities related to the Company’s restructuring initiatives for the three and nine months ended October 31, 2024 and 2023 (in millions):

Three Months Ended October 31, 2024 Nine Months Ended October 31, 2024

Workforce Reduction Office Space Reductions Total Workforce Reduction Office Space Reductions Total

Liability, beginning of the period $ 69 $ 0 $ 69 $ 118 $ 2 $ 120

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Liability, end of the period $ 77 $ 0 $ 77 $ 77 $ 0 $ 77

Three Months Ended July 31, 2023 Six Months Ended July 31, 2023

Three Months Ended October 31, 2023 Nine Months Ended October 31, 2023

Workforce Reduction Office Space Reductions Total Workforce Reduction Office Space Reductions Total

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Stockholders’ Equity

Stock option activity for the six months ended July 31, 2024 was as follows:

Stock option activity for the nine months ended October 31, 2024 was as follows:

Options Outstanding

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Exercised ( 3 ) 173.21

Balance as of July 31, 2024 10 $ 191.95 $ 738

Balance as of October 31, 2024 9 $ 192.60 $ 965

Vested or expected to vest 9 $ 192.30 $ 952

Exercisable as of July 31, 2024 7 $ 179.24 $ 576

Restricted stock activity for the six months ended July 31, 2024 was as follows:

Exercisable as of October 31, 2024 7 $ 181.72 $ 762

Restricted stock activity for the nine months ended October 31, 2024 was as follows:

Restricted Stock Outstanding

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Vested and converted to shares ( 10 ) 201.53

Balance as of July 31, 2024 30 $ 242.17 $ 7,873

Balance as of October 31, 2024 28 $ 245.96 $ 8,181

Expected to vest 24 $ 7,051

The aggregate expected stock-based compensation expense remaining to be recognized as of July 31, 2024 was as follows (in millions):

The aggregate expected stock-based compensation expense remaining to be recognized as of October 31, 2024 was as follows (in millions):

Fiscal Period:

Remaining six months of fiscal 2025 $ 1,721

Remaining three months of fiscal 2025 $ 844

Fiscal 2026 2,536

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Total stock-based compensation expense $ 6,285

The aggregate expected stock-based compensation expense remaining to be recognized reflects only outstanding stock awards as of July 31, 2024 and assumes no forfeiture activity and no changes in the expected level of attainment of performance share grants based on the Company’s financial performance relative to certain targets.

The aggregate expected stock-based compensation expense remaining to be recognized reflects only outstanding stock awards as of October 31, 2024 and assumes no forfeiture activity and no changes in the expected level of attainment of performance share grants based on the Company’s financial performance relative to certain targets.

Share Repurchase Program

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Three months ended July 31 18 $ 246.14 $ 4,288 9 $ 211.83 $ 1,913

Three months ended October 31 5 $ 257.00 $ 1,228 9 $ 209.33 $ 1,924

All repurchases were made in open market transactions.

As of July 31, 2024, the Company was authorized to purchase a remaining $ 11.9 billion of its common stock under the Share Repurchase Program.

As of October 31, 2024, the Company was authorized to purchase a remaining $ 10.6 billion of its common stock under the Share Repurchase Program.

The Company announced the following dividends (in millions, except dividend per share):

2 unchanged sentences

July 9, 2024 July 25, 2024 $ 0.40 $ 388

September 18, 2024 October 8, 2024 $ 0.40 $ 385

Effective Tax Rate

The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period.

For the six months ended July 31, 2024, the Company reported a tax provision of $ 742 million on pretax income of $ 3.7 billion, which resulted in an effective tax rate of 20 percent.

For the nine months ended October 31, 2024, the Company reported a tax provision of $ 961 million on pretax income of $ 5.5 billion, which resulted in an effective tax rate of 18 percent.

The Company’s effective tax rate differed from the U.S.

statutory rate of 21 percent primarily due to research and development credits and excess tax benefits from stock-based compensation.

For the six months ended July 31, 2023, the Company reported a tax provision of $ 352 million on pretax income of $ 1.8 billion, which resulted in an effective tax rate of 19 percent.

statutory rate of 21 percent primarily due to research and development credits, the foreign-derived intangible income deduction, and excess tax benefits from stock-based compensation.

For the nine months ended October 31, 2023, the Company reported a tax provision of $ 615 million on pretax income of $ 3.3 billion, which resulted in an effective tax rate of 19 percent.

The Company’s effective tax rate differed from the U.S.

statutory rate of 21 percent primarily due to discrete benefits from foreign tax credits attributable to the IRS Notice 2023-55 and certain adjustments resulted from a transfer pricing agreement in a foreign tax jurisdiction, partially offset by profitable jurisdictions outside of the United States subject to tax rates greater than 21 percent and withholding taxes.

statutory rate of 21 percent primarily due to discrete benefits from research and development credits, foreign tax credits attributable to the IRS Notice 2023-55, and certain adjustments resulted from a transfer pricing agreement in a foreign tax jurisdiction, partially offset by profitable jurisdictions outside of the United States subject to tax rates greater than 21 percent and withholding taxes.

Unrecognized Tax Benefits and Other Considerations

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A reconciliation of the denominator used in the calculation of basic and diluted net income per share is as follows (in millions):

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

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The weighted-average number of shares outstanding used in the computation of diluted net income per share does not include the effect of the following potentially outstanding common stock.

The effects of these potentially outstanding shares were not included in the calculation of diluted net income per share because the effect would have been anti-dilutive (in

Three Months Ended July 31, Six Months Ended July 31,

The effects of these potentially outstanding shares were not included in the calculation of diluted net income per share because the effect would have been anti-dilutive (in millions):

Three Months Ended October 31, Nine Months Ended October 31,

2024 2023 2024 2023

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Oral argument was heard in May 2021.

On September 20, 2021, the Ninth Circuit affirmed the district court’s ruling.

On September 20, 2021, the

Ninth Circuit affirmed the district court’s ruling.

Slack filed a petition for rehearing with the Ninth Circuit on November 3, 2021, which was denied on May 2, 2022.

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The Federal Action and the State Court Action seek unspecified monetary damages and other relief on behalf of investors who purchased Slack’s Class A common stock issued pursuant and/or traceable to the Registration Statement.

Subsequent Events

In November 2024, the Company acquired all outstanding stock of Zoomin Software Ltd.

(“Zoomin”), a data management company.

Prior to the acquisition, the Company owned less than ten percent of the outstanding stock of Zoomin.

The total consideration for the remaining shares of Zoomin was approximately $ 344 million in cash, subject to customary purchase price adjustments.

In November 2024, the Company acquired all outstanding stock of Own Data Company Ltd.

(“Own”), a leading provider of data protection and data management solutions.

Prior to the acquisition, the Company owned approximately ten percent of the outstanding stock of Own.

The total consideration for the remaining shares of Own was approximately $ 1.9 billion in cash, subject to customary purchase price adjustments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements