What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-05 compared with 2024-03-06 · 123 added, 130 removed, 275 unchanged (48% of the section changed)

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Discussions of fiscal 2023 items and year-to-year comparisons between fiscal 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.

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

Founded in 1999, we enable companies of every size and industry to take advantage of powerful technologies to connect to their customers in a whole new way and help them transform their businesses around the customer in this digital-first world.

Our Customer 360 platform unites sales, service, marketing, commerce and IT teams by connecting customer data across systems, apps and devices to create a complete view of customers.

With this single source of customer truth, teams can be more responsive, productive and efficient, deliver intelligent, personalized experiences across every channel and increase productivity.

With Slack, we provide a digital headquarters where companies, employees, governments and stakeholders can create success from anywhere.

We continue to invest for growth, including investing in generative AI across all products, which we believe will change how our customers help their customers, and continuously look to expand our leadership role in the cloud computing industry.

Salesforce is a global leader in customer relationship management (“CRM”) technology, enabling companies of every size and industry to connect with their customers through the power of data, artificial intelligence (“AI”), CRM and trust.

Founded in 1999, we bring humans together with AI agents to drive customer success on one deeply unified platform.

Our platform unites sales, service, marketing, commerce and IT teams by connecting customer data across systems, apps and devices to create a complete view of customers.

With this single source of customer truth and integrated AI, teams can be more responsive, productive and efficient, deliver intelligent, personalized experiences across every channel and increase productivity.

During the third quarter of fiscal 2025, we introduced Agentforce, a new layer of our trusted 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.

We continue to invest for growth, including investing in generative and agentic AI across all products, which we believe will change how our customers help their customers, and continuously look to expand our leadership role in the cloud computing industry.

We continue to focus on several key growth levers, including driving multiple service offering adoption, increasing our penetration with enterprise and international customers and expanding our industry-specific reach with more vertical software solutions.

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In addition to our focus on top line growth levers, we are also focused on reducing our operating expenses to improve our operating margin.

For example, in January 2023, we announced a restructuring plan (the “Restructuring Plan”) intended to reduce operating costs, improve operating margins and continue advancing our ongoing commitment to profitable growth.

The Restructuring Plan included a reduction of our workforce by approximately ten percent and office space reductions within certain markets, both of which were substantially complete as of the first quarter of fiscal 2024.

In addition to the Restructuring Plan, we continue to focus on evaluating and operationalizing future programs to further our transformational efforts, including an additional focused workforce reduction that was initiated and substantially completed in the fourth quarter of fiscal 2024.

For example, in January 2023, we announced a restructuring plan intended to reduce operating costs, improve operating margins and continue advancing our ongoing commitment to profitable growth which included a reduction of our workforce by approximately ten percent and office space reductions within certain markets.

The employee actions were substantially completed in fiscal 2024 and the real estate actions are expected to be fully complete in fiscal 2026.

In addition, we continued to evaluate and operationalize future programs to drive further operational efficiencies, optimize our management structure and increase cost optimization efforts to realize long-term sustainable growth, including targeted workforce and office space reductions that were initiated in fiscal 2025 and are expected to be substantially complete in fiscal 2026.

We have started to see improvements in our operating expenses across all operating categories, with the most opportunity in sales a nd marketing expense and general and administrative expenses.

Over the long term, we expect to see additional operating expense improvements, which could include various restructuring initiatives to drive operational efficiencies.

Over the long term, we expect to see additional operating expense improvements, which could include various restructuring initiatives or measured hiring initiatives to drive operational efficiencies.

Highlights from Fiscal 2025

For fiscal 2024, revenue was $34.9 billion , an increase of 11 percent year-over-year.

For fiscal 2025, revenue was $37.9 billion , an increase of nine percent year-over-year.

• Income from Operations:

For fiscal 2025, income from operations was $7.2 billion as compared to $5.0 billion from a year ago.

Operating margin, which represents income from operations as a percentage of total revenue, increased to approximately 14 percent for the fiscal year ended January 31, 2024 compared to approximately three percent for the same period in the prior year.

• Earnings per Share:

For fiscal 2024 , diluted earnings per share was $4.20 as compared to diluted earnings per share of $0.21 from a year ago.

Operating margin, which represents income from operations as a percentage of total revenue, increased to approximately 19 percent for fiscal 2025 compared to approximately 14 percent in the prior year.

• Net Income per Share:

For fiscal 2025 , diluted net income per share was $6.36 as compared to diluted net income per share of $4.20 from a year ago.

Cash provided by operations for fiscal 2025 was $13.1 billion, an increase of 28 percent y ear-over-year.

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Total remaining performance obligation, which represents all future revenue under contract yet to be recognized, as of January 31, 2025 was approximately $63.4 billion, an increase of 11 percent year-over-year .

Current remaining performance obligation as of January 31, 2024 was approximately $27.6 billion , an increase of 12 percent year-over-year.

Current remaining performance obligation as of January 31, 2025 was approximately $30.2 billion , an increase of nine percent year-over-year.

• Share Repurchase Program:

During the fiscal year ended January 31, 2025, we repurchased approximately 30 million shares of our common stock for approximately $7.8 billion.

• Restructuring:

For fiscal 2024, we incurred approximately $988 million in costs related to our restructuring activities, primarily related to the Restructuring Plan.

We continue to see the impact of macroeconomic factors and the more measured buying behavior of our customers on our business and our customers’ businesses in ways that are difficult to isolate and quantify.

Throughout fiscal 2024, we continued to experience elongated sales cycles, additional deal approval layers and deal compression.

Slower growth in new and renewal business, particularly if sustained, impacts our remaining performance obligation, revenues and our ability to meet financial guidance and long-term targets.

• Dividend Program :

During the fiscal year ended January 31, 2025, we paid approximately $1.5 billion in dividends.

In the second half of fiscal 2025, we continued seeing increasing momentum for Agentforce and other AI service offerings.

Outside of the demand for AI, the buying environment trends seen over the past two fiscal years have stabilized.

A reemergence of slower growth in new and renewal business could impact our remaining performance obligation, revenues and our ability to meet financial guidance and long-term targets.

In addition, the expanding global scope of our business and the heightened volatility of global markets expose us to the risk of fluctuations in foreign currency markets.

Foreign currency fluctuations minimally impacted revenues in the fiscal year ended January 31, 2024 and our current remaining performance obligatio n was negatively impacted by one percent as of January 31, 2024 compared to what we would have reported as of January 31, 2023 using constant currency rates.

During fiscal 2023, the United States Dollar strengthened significantly against certain foreign currencies in the markets in which we operate, particularly against the Euro, British Pound Sterling and Japanese Yen.

Total revenues in the fiscal year ended January 31, 2025 were minimally impacted by foreign currency fluctuations compared to the fiscal year ended January 31, 2024.

Our current remaining performance obligatio n growth as of January 31, 2025 compared to January 31, 2024 was negatively impacted by two percent compared to what would have been reported using constant currency rates.

The impact of foreign currency fluctuations could impact our near-term results and ability to accurately predict our future results and earnings.

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Subscription and support revenues accounted for approximately 94 percent of our total revenues for fiscal 2025.

Subscription and support revenues include subscription fees from customers accessing our enterprise cloud computing services (collectively, “Cloud Services”), software license revenues from the sales of term and perpetual licenses, and support revenues from the sale of support and updates beyond the basic subscription fees or related to the sales of software licenses.

Subscription and support revenues include subscription fees from customers accessing our enterprise cloud computing services (collectively, “Cloud Services”), software license revenues from the sales of term software licenses, and support revenues from the sale of support and updates beyond the basic subscription fees or related to the sales of software licenses.

Our Cloud Services allow customers to use our multi-tenant software without taking possession of the software.

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Subscription and support revenues also include revenues associated with term software licenses that provide the customer with a right to use the software as it exists when made available.

Revenues from software licenses are generally recognized at the point in time when the software is made available to the customer.

Revenues from term software licenses are generally recognized at the point in time when the software is made available to the customer.

Revenue from support and updates is recognized as such support and updates are provided, which is generally ratably over the contract term.

Changes in contract duration for multi-year licenses can impact the amount of revenues recognized upfront.

Revenues from software licenses represent less than ten percent of total subscription and support revenue for fiscal 2024.

Changes in contract duration for multi-year term software licenses can impact the amount of revenues recognized upfront.

Revenues from term software licenses represent less than ten percent of total subscription and support revenue for fiscal 2025.

The revenue growth rates of each of our service offerings, as described below in “Results of Operations,” fluctuate from quarter to quarter and over time.

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We calculate our attrition rate at a point in time on a trailing twelve-month basis as of the end of each month.

Beg inning in the first quarter of fiscal 2024, we included Mulesoft and Tableau in our attrition calculation.

As of January 31, 2024, our attrition rate, excluding Slack, was approximately eight percent.

In general, we exclude service offerings from acquisitions from our attrition calculation until they are fully

integrated into our customer success organization.

As of January 31, 2025, our attrition rate, excluding Slack self-service, was approximately eight percent.

We continue to maintain a variety of customer programs and initiatives, which, along with increasing enterprise adoption, have helped keep our attrition rate consistent as compared to the prior year.

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Cost of Revenues

Cost of subscription and support revenues primarily consists of expenses related to delivering our service and providing support, including the costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, employee-related costs such as salaries and benefits, and allocated overhead.

Cost of subscription and support revenues primarily consists of expenses related to our employee-related costs, which includes salaries, benefits and stock-based compensation expense, delivering our service and providing support, including the costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and allocated overhead.

Our cost of subscription and support revenues also includes amortization of certain acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts.

Also included in the cost of subscription and support revenues are expenses incurred supporting the free user base of Slack, including third-party hosting costs and employee-related costs, including stock-based compensation expense, specific to customer experience and technical operations.

Cost of professional services and other revenues consists primarily of employee-related costs associated with these services, including stock-based compensation expense, the cost of subcontractors, certain third-party fees and allocated overhead.

Also included in the cost of subscription and support revenues are expenses incurred supporting the free user base of Slack, including third-party hosting costs and employee-related costs specific to customer experience and technical operations.

Cost of professional services and other revenues consists primarily of employee-related costs associated with these services, the cost of subcontractors, certain third-party fees and allocated overhead.

We believe that our professional services organization facilitates the adoption of our service offerings, helps us to secure larger subscription revenue contracts and supports our customers’ success.

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Research and Development

Research and development expenses consist primarily of salaries and related expenses, including stock-based compensation expense for our engineering staff associated with product development, as well as allocated overhead.

Marketing and Sales

Marketing and sales expenses make up the majority of our operating expenses and consist primarily of salaries and related expenses, including stock-based compensation expense and commissions, for our sales and marketing staff, as well as payments to partners, marketing programs and allocated overhead.

Research and development expenses consist primarily of employee-related costs for our engineering staff associated with product development, as well as allocated overhead.

Sales and Marketing

Sales and marketing expenses make up the majority of our operating expenses and consist primarily of employee-related costs and commissions for our sales and marketing staff, as well as payments to partners, marketing programs and allocated overhead.

Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities.

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As such, the timing of expense recognition for these commissions is not consistent with the timing of the associated cash payment.

Our marketing and sales expenses include amortization of certain acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s trade names, customer lists and customer relationships.

Our sales and marketing expenses include amortization of certain acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s trade names, customer lists and customer relationships.

General and Administrative

General and administrative expenses consist primarily of salaries and related expenses, including stock-based compensation expense, for finance and accounting, legal, internal audit, human resources and management information systems personnel, professional services fees and allocated overhead.

We allocate overhead such as information technology infrastructure, rent and occupancy charges based on headcount.

Employee benefit costs and taxes are allocated based upon a percentage of total compensation expense.

General and administrative expenses consist primarily of employee-related costs for finance and accounting, legal, internal audit, human resources and management information systems personnel, as well as professional services fees and allocated overhead.

We allocate overhead such as information technology infrastructure, rent, occupancy charges and certain employee benefits based on headcount.

As such, these types of expenses are reflected in each cost of revenue and operating expense category.

Restructuring

Restructuring, primarily related to the Restructuring Plan, consists of charges related to employee transition, severance payments, employee benefits and stock-based compensation as well as exit charges associated with office space reductions.

The actions associated with the employee restructuring under the Restructuring Plan, as well as the workforce reduction initiated in the fourth quarter of fiscal 2024, are substantially complete.

The actions associated with the real estate restructuring under the Restructuring Plan are expected to be fully complete in fiscal 2026.

Restructuring consists of charges related to employee transition, severance payments, employee benefits and stock-based compensation as well as exit charges associated with office space reductions.

Restructuring excludes allocated overhead.

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We use a single amount to estimate SSP when it has observable prices.

is not directly observable, for example when pricing is highly variable, we use a range of SSP.

If SSP is not directly observable, for example when pricing is highly variable, we use a range of SSP.

We determine the SSP range using information that may include pricing practices or other observable inputs.

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Depending on our contractual rights as an investor, investee specific information available to us to make this assessment may be limited or may be available on a delayed basis.

If the investment is considered to be impaired, we record the investment at fair value by recognizing an impairment through the consolidated statement of operations and establishing a new carrying value for the investment.

The particular privately held debt and equity securities we hold, and their rights and preferences relative to those of other securities within the capital structure, may impact the magnitude by which our investment value moves in relation to movement of the total enterprise value of the company.

As a result, our investment value in a specific company may move by more or less than any change in the value of that overall company.

An immediate decrease of ten percent in the enterprise values of our

largest privately held equity securities, representing 37 percent of our total strategic investments as of January 31, 2024, could result in a $107 million reduction in the value of our investment portfolio.

If the investment is considered to be impaired, we record the investment at fair value by recognizing an impairment through the consolidated statements of operations and establishing a new carrying value for the investment.

Results of Operations

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Research and development 5,493 15 4,906 14 5,055 16

Marketing and sales 12,877 37 13,526 43 11,855 44

Sales and marketing 13,257 35 12,877 37 13,526 43

General and administrative 2,836 7 2,534 7 2,553 8

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Income from operations 7,205 19 5,011 14 1,030 3

Gains (losses) on strategic investments, net (277) (1) (239) (1) 1,211 5

Losses on strategic investments, net (121) 0 (277) (1) (239) (1)

Other income (expense) 354 1 216 1 (131) 0

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Cost of revenues $ 750 2 % $ 978 3 % $ 1,035 3 %

Marketing and sales 891 2 916 3 727 3

Sales and marketing 901 2 891 2 916 3

(2) Amounts related to stock-based compensation expense, as follows (in millions):

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Research and development 1,091 3 972 3 1,136 3

Marketing and sales 1,062 3 1,256 4 1,104 4

Sales and marketing 1,205 3 1,062 3 1,256 4

General and administrative 367 1 299 1 368 1

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The increase in subscription and support revenues for fiscal 2025 was primarily caused by volume-driven increases from new business, which includes new customers, upgrades and additional subscriptions from existing customers.

Pricing was not a significant driver of the increase in revenues for either period.

Revenues from term software licenses, which are recognized at a point in time, represented approximately seven percent and six percent of total subscription and support revenues for fiscal 2024 and 2023, respectively.

Subscription and support revenues accounted for approximately 93 percent of our total revenues for fiscal 2024 and 2023.

The decrease in professional services and other revenues was due primarily to less demand for larger, multi-year transformation engagements and, in some cases, delayed projects.

Pricing was not a significant driver of the increase in revenues for the period.

Revenues from term software licenses, which are recognized at a point in time, represented approximately six percent and seven percent of total subscription and support revenues for fiscal 2025 and 2024, respectively.

Subscription and support revenues accounted for approximately 94 percent and 93 percent of our total revenues for fiscal 2025 and 2024, respectively.

The decrease in professional services and other revenues for fiscal 2025 was due primarily to less demand for larger, multi-year transformation engagements and, in some cases, delayed projects.

These trends may continue in the near term.

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Total $ 35,679 100 % $ 32,537 100 % 10 %

(1) In the fourth quarter of fiscal year 2024, the Company renamed the service offering previously referred to as Data to Integration and Analytics, which includes Mulesoft and Tableau.

Our industry vertical service offerings revenue is included in one of the above service offerings depending on the primary service purchased.

Integration and Analytics subscription and support revenues include revenues from term software licenses, which are recognized at the point in time when the software is made available to the customer.

Therefore, we expect Integration and Analytics to experience greater volatility in revenues period to period compared to our other service offerings.

Additionally, as we transition customers within the Integration and Analytics offering from term software licenses to subscription based services, revenue associated with such customers will generally be recognized ratably over the contract term, which we expect may result in potentially less revenue in the period the customer transitions but potentially increasing revenues over the remaining term.

Therefore, we expect Integration and Analytics to experience greater volatility in revenues period to period compared to our other service offerings and recent revenue trends may not be indicative of future performance.

Additionally, as we transition customers within the Integration and Analytics offering from term software licenses to subscription based services, revenue associated with such customers will generally be recognized ratably over the contract term, which we expect may potentially result in less revenue in the period the customer transitions but incremental revenues over the remaining term.

Revenues by Geography

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

The increase in revenues across all regions was due primarily to the continued execution of our business and growth strategy, including increasing our geographic reach primarily through extending our go-to-market capabilities globally.

During fiscal 2024, revenues outside of the Americas were minimally impacted by foreign currency fluctuations compared to fiscal 2023.

The increase in revenues across all regions was primarily due to the continued execution of our business and growth strategy, including increasing our geographic reach primarily through extending our go-to-market capabilities globally.

Foreign currency did not contribute materially to the year over year fluctuations in revenue.

Cost of Revenues

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Total cost of revenues $ 8,643 23 % $ 8,541 25 % $ 102

For fiscal 2024, the increase in cost of revenues in absolute dollars was primarily due to an increase in enterprise cloud computing services and data center capacity, which was partially offset by a reduction of third-party expenses.

The cost of revenues as a percentage of total revenues during fiscal 2024 decreased by two percent from the same period a year ago due to a decrease in relative employee-related costs, including stock-based compensation expense, as well as reduced third-party expenses.

Our cost of revenues headcount decreased by two percent during fiscal 2024 driven by the Restructuring Plan.

We intend to continue to invest additional resources in our enterprise cloud computing services and data center capacity to allow us to scale with our customers and continue to evolve our security measures .

The timing of these expenses may adversely affect our cost of revenues as a percentage of revenues in the near term due to fluctuations in demand for our service offerings.

For fiscal 2025, the increase in cost of revenues in absolute dollars was primarily due to an increase in employee-related costs, including stock-based compensation expense, partially offset by a decrease in amortization of purchased intangibles and a decrease in service delivery expenses.

Our cost of revenues headcount increased by seven percent during fiscal 2025, primarily in lower cost regions.

Cost of revenues as a percentage of total revenues during fiscal 2025 decreased by two percent from the same period a year ago primarily due to our total revenues growth outpacing our cost of revenues growth.

We intend to continue to invest additional resources in enterprise cloud computing services to allow us to scale with our customers and continue to evolve our security measures.

The timing of these expenses, which also includes the use of AI and agents, may cause our cost of revenues as a percentage of revenues to fluctuate over time due to changes in demand for our service offerings.

Operating Expenses

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Research and development $ 5,493 15 % $ 4,906 14 % $ 587

Marketing and sales 12,877 37 13,526 43 (649)

Sales and marketing 13,257 35 12,877 37 380

General and administrative 2,836 7 2,534 7 302

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Total operating expenses $ 22,047 58 % $ 21,305 61 % $ 742

For fiscal 2024, the decrease in research and development expenses in absolute dollars and as a percentage of revenue was primarily due to a decrease in employee-related costs, including stock-based compensation expense.

However, at the end of fiscal 2024, we began to invest in incremental AI resources to accelerate further growth and as a result our research and development headcount increased by five percent during fiscal 2024.

We expect that research and development expenses will likely remain consistent as a percentage of revenue in the near term as we continue to invest in technology to support the development of new, and improve existing, technologies, including our AI technologies and our Data Cloud service offering, and the integration of acquired technologies combined with our anticipated revenue growth in line with these incremental expenses.

For fiscal 2024, the decrease in marketing and sales expenses in absolute dollars and as a percentage of revenue was primarily due to a decrease in employee-related costs, including stock-based compensation expense.

Our marketing and sales headcount decreased by 14 percent during fiscal 2024 driven by our restructuring initiatives and our hiring pause that was in effect during fiscal year 2024.

We expect that marketing and sales expenses will likely decrease as a percentage of revenues in the near term as we continue to focus on leveraging our self-serve and partner-led channels and increasing our sales productivity.

For fiscal 2024, the decrease in general and administrative expenses in absolute dollars and as a percentage of revenue was primarily due to a decrease in employee-related costs, including stock-based compensation expense.

Our general and administrative headcount decreased by 20 percent during fiscal 2024 driven by the Restructuring Plan and our hiring pause that was in effect during fiscal year 2024.

We expect that general and administrative expenses will likely decrease as a percentage of revenues in the near term as we continue to invest in process efficiency initiatives.

In fiscal 2024, approximately $988 million of costs were incurred related to our restructuring initiatives, of which approximately $541 million relates to employee transition, severance payments, employee benefits and stock-based compensation expense and $447 million relates to exit charges associated with office space reductions.

We do not expect to incur significant additional charges in connection with our initiatives in the near term.

For fiscal 2025, the increase in research and development expenses in absolute dollars was primarily due to an increase in employee-related costs, including stock-based compensation expense.

Research and development expenses as a percentage of total revenues during fiscal 2025 increased by one percent from the same period a year ago primarily due to an increase in relative employee-related costs, including stock-based compensation expense.

Our research and development headcount increased by 13 percent during fiscal 2025, primarily in lower cost regions.

We expect that research and development expenses will likely remain consistent as a percentage of revenue over time as we continue to invest in technology to support the development of new, and improve existing, technologies, including AI, agents and our Data Cloud service offerings, and the integration of acquired technologies.

For fiscal 2025, the increase in sales and marketing expenses in absolute dollars was primarily due to an increase in employee-related costs, including stock-based compensation expense.

Sales and marketing expenses as a percentage of total revenues during fiscal 2025 decreased by two percent from the same period a year ago due to a decrease in relative employee-related costs, including stock-based compensation expense and advertising expense.

Our sales and marketing headcount increased by one percent during fiscal 2025, primarily in lower cost regions.

We expect that sales and marketing expenses may decrease as a percentage of revenues over time as we continue to focus on leveraging our self-serve and partner-led channels and increasing our sales productivity, which includes the use of AI and agents.

For fiscal 2025, the increase in general and administrative expenses in absolute dollars was primarily due to an increase in employee-related costs, including stock-based compensation expense, and professional services expenses.

General and administrative expenses as a percentage of total revenues during fiscal 2025 was consistent with the same period a year ago.

Our general and administrative headcount increased by three percent during fiscal 2025.

We expect that general and administrative expenses may decrease as a percentage of revenues over time as we continue to invest in process efficiency initiatives, which includes the use of AI and agents.

In fiscal 2025, approximately $461 million of costs were incurred related to our restructuring initiatives, which was primarily related to employee transitions, severance payments and employee benefits.

We do not expect to incur significant additional charges in connection with our restructuring initiatives in the near term.

Other Income and Expenses

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Losses on strategic investments, net $ (121) $ (277) $ 156

Other income (expense) 216 (131) 347

Other income 354 216 138

Losses on strategic investments, net consists primarily of mark-to-market adjustments related to our publicly held equity securities, observable price adjustments related to our privately held equity securities and other adjustments including impairments.

Our strategic investment portfolio continues to be affected by challenging market conditions for companies in which we hold private equity or debt investments, as well as high public equity market volatility.

Our strategic investment portfolio continues to be affected by challenging market conditions for companies in which we hold private equity, debt or other investments, as well as high public equity market volatility.

In fiscal 2025 these factors resulted in impairments on privately-held equity and debt securities of $582 million, partially offset by $358 million in unrealized gains on privately held equity securities.

Other income (expense) primarily consists of interest income on our marketable securities portfolio, which is partially offset by interest expense on our debt as well as our finance leases.

Other income (expense) increased primarily due to an increase in investment income from rising interest rates.

Benefit From (Provision For) Income Taxes

Other income primarily consists of interest income on our marketable securities portfolio, which is partially offset by interest expense on our debt as well as our finance leases.

Other income increased in fiscal 2025 primarily due to an increase in investment income from higher interest rates.

Provision For Income Taxes

Fiscal Year Ended January 31, Variance

(in millions) 2025 2024

Benefit from (provision for) income taxes $ (814) $ (452) $ (362)

Provision for income taxes $ (1,241) $ (814) $ (427)

Effective tax rate 17 % 16 %

We recorded a tax provision of $814 million on pretax income of $5.0 billion for fiscal 2024.

We recorded a tax provision of $1.2 billion on pretax income of $7.4 billion for fiscal 2025.

Our tax provision increased from a year ago primarily due to higher pretax income.

Our effective tax rate decreased from a year ago primarily due to discrete benefits from foreign tax credits attributable to recent IRS notices.

Our effective tax rate may fluctuate due to changes in our domestic and foreign earnings, or material discrete tax items, or a combination of these factors resulting from transactions or events, including acquisitions, changes to our operating structure and other macroeconomic factors.

In fiscal 2023, we recognized a tax provision of $452 million on a pretax income of $660 million.

The majority of the tax provision was related to taxes from profitable jurisdictions outside of the United States which includes withholding taxes.

The provision from the Tax Cuts and Jobs Act of 2017 that requires capitalization and amortization of research and development costs became effective in fiscal 2023.

This requirement continues to unfavorably impact our tax provision and cash taxes.

Several countries have enacted legislation to implement the Organization for Economic Cooperation and Development’s 15% global minimum tax regime effective January 1, 2024.

There was no material impact to our income tax provision for fiscal 2025.

We continue to evaluate the impacts of legislation in the jurisdictions in which we operate.

Our effective tax rate and cash tax payment could increase in future years.

Fiscal Year Ended January 31, 2024 and 2023

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agency obligations, asset-backed securities, foreign government obligations, mortgage-backed obligations, covered bonds, time deposits, money market mutual funds and municipal securities.

Our credit agreement (the “Revolving Loan Credit Agreement”), which as of January 31, 2024, provides the ability to borrow up to $3.0 billion in unsecured financing (the “Credit Facility”), also serves as a source of liquidity.

Cash from operations could continue to be affected by various risks and uncertainties, including, but not limited to, the risks detailed in Part I, Item 1A, “Risk Factors.” We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities, unbilled amounts related to contracted non-cancelable subscription agreements, which are not reflected on the balance sheet, and, if necessary, our borrowing capacity under our Credit Facility will be sufficient to meet our working capital, capital expenditure and debt maintenance needs over the next 12 months.

In the future, we may enter into arrangements to acquire or invest in complementary businesses, services and technologies and intellectual property rights.

Our Revolving Loan Credit Agreement (as defined below), which provides the ability to borrow up to $5.0 billion in unsecured financing (the “Credit Facility”) as of January 31, 2025, also serves as a source of liquidity.

Net cash provided by operating activities could continue to be affected by various risks and uncertainties, including, but not limited to, the risks detailed in Part I, Item 1A, “Risk Factors.” We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities, unbilled amounts related to contracted noncancellable subscription agreements, which are not reflected on the balance sheet, and, if necessary, our borrowing capacity under our Credit Facility will be sufficient to meet our working capital, capital expenditure and debt maintenance needs over the next 12 months and thereafter.

In the future, we may enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights.

To facilitate these acquisitions or investments, we may seek additional equity or debt financing, which may not be available on terms favorable to us or at all, impacting our ability to complete subsequent acquisitions or investments.

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Net cash used in investing activities (3,163) (1,327) (1,989)

Net cash provided by (used in) financing activities (7,477) (3,562) 7,838

Net cash used in financing activities (9,429) (7,477) (3,562)

Operating Activities

The net cash provided by operating activities during fiscal 2025 was primarily comprised of net income of $6.2 billion, adjusted for non-cash items, including $3.5 billion of depreciation and amortization and $3.2 billion of stock-based compensation expense.

Cash provided by operating activities can be significantly impacted by factors such as growth in new business, timing of cash receipts from customers, vendor payment terms and timing of payments to vendors.

Cash provided by operating activities during fiscal 2024 was further benefited by the change in unearned revenue of $1.6 billion, partially offset by the changes in accounts receivable, net of $659 million and the change in accounts payable and accrued expenses and other liabilities of $478 million .

Net cash provided by operating activities can be significantly impacted by factors such as growth in new business, timing of cash receipts from customers, vendor payment terms and timing of payments to vendors.

Net cash provided by operating activities during fiscal 2025 was further benefited by the changes in unearned revenue of $1.6 billion and accounts payable and accrued expenses and other liabilities of $1.1 billion, partially offset by the changes in costs capitalized to obtain revenue contracts, net of $2.1 billion, prepaid expenses and other current assets and other assets of $1.5 billion and accounts receivable, net of $490 million.

As our business continues to grow, and assuming our expenses remain in line with or less than our revenue growth, we expect to continue to see growth in net cash provided by operating activities.

The net cash provided by operating activities during fiscal 2023 was related to net income of $208 million, adjusted for non-cash items including $3.8 billion of depreciation and amortization and $3.3 billion related to stock-based compensation expense.

Cash provided by operating activities during fiscal 2023 was further benefited by the change in unearned revenue of $1.7 billion, partially offset by the change in costs capitalized to obtain revenue contracts, net of $2.3 billion and accounts receivable, net of $1.0 billion due to cash collections.

Cash provided by operating activities was impacted by the provision from the Tax Cuts and Jobs Act of 2017 which became effective in fiscal 2023 and requires the capitalization and amortization of research and development costs.

The change increased our cash taxes paid in fiscal 2023.

The net cash provided by operating activities during fiscal 2024 was primarily comprised of net income of $4.1 billion, adjusted for non-cash items, including $4.0 billion of depreciation and amortization and $2.8 billion of stock-based compensation expense.

Net cash provided by operating activities during fiscal 2024 was further benefited by the change in unearned revenue of $1.6 billion, partially offset by the changes in accounts receivable, net of $659 million and the change in accounts payable and accrued expenses and other liabilities of $478 million.

Investing Activities

The net cash used in investing activities during fiscal 2025 was primarily related to net outflows for acquisitions of $2.7 billion, net outflows from strategic investment activity of $413 million and capital expenditures of $658 million, partially offset by net inflows from marketable securities activity of $642 million.

The net cash used in investing activities during fiscal 2024 was primarily related to capital expenditures of $736 million, net outflows from strategic investment activity of $388 million, and net outflows related to marketable securities activity of $121 million.

The net cash used in investing activities during fiscal 2023 was primarily related to capital expenditures of $798 million, net outflows of $557 million from marketable securities activity, cash consideration for acquisitions of approximately $439 million and net outflows of $195 million from strategic investment activity.

Financing Activities

Net cash used in financing activities during fiscal 2024 consisted primarily of $7.6 billion from repurchases of common stock and $1.2 billion related to repayments of debt, partially offset by $2.0 billion from proceeds from equity plans.

Net cash used in financing activities during fiscal 2023 consisted primarily of $4.0 billion from repurchases of common stock partially offset by $861 million from proceeds from equity plans.

As of January 31, 2024, we had senior unsecured debt outstanding, with maturities starting in July 2024 and extending through July 2061 with a total carrying value of $9.4 billion, of which $1.0 billion was related to the 2024 Senior Notes due in the next 12 months.

The net cash used in financing activities during fiscal 2025 was primarily related to $7.8 billion used for repurchases of common stock, $1.5 billion related to payments of dividends and $1.0 billion related to repayments of debt, partially offset by $1.5 billion from proceeds from equity plans.

Net cash used in financing activities during fiscal 2024 was primarily related to $7.6 billion from repurchases of common stock and $1.2 billion related to repayments of debt, partially offset by $2.0 billion from proceeds from equity plans.

As of January 31, 2025, we had senior unsecured debt outstanding, with maturities starting in April 2028 and extending through July 2061 with a total carrying value of $8.4 billion.

We were in compliance with all debt covenants as of January 31, 2025.

In December 2020, we entered into the Revolving Loan Credit Agreement, which provides for a $3.0 billion unsecured revolving Credit Facility that matures in December 2025.

In October 2024, we 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 us, 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.

We 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 January 31, 2025.

We 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.

In April 2022 and May 2023, we amended the Revolving Loan Credit Agreement to reflect certain immaterial administrative changes.

We do not have any special purpose entities and we do not engage in off-balance sheet financing arrangements.

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The Share Repurchase Program does not have a fixed expiration date and does not obligate us to acquire any specific number of shares.

In February 2023, the Board authorized an additional $10.0 billion in repurchases under the Share Repurchase Program.

In February 2024, the Board authorized an additional $10.0 billion in repurchases under the Share Repurchase Program for an aggregate total authorization of $30.0 billion.

During the fiscal years ended January 31, 2024 and 2023, we repurchased approximately 36 million and 28 million shares of our common stock for approximately $7.7 billion and $4.0 billion at an average cost of $210.30 and $144.94 per share, respectively.

We repurchased the following under the Share Repurchase Program (in millions, except average price per share):

2025 2024 2023

Shares Average price per share Amount Shares Average price per share Amount Shares Average price per share Amount

Fiscal year ended January 31 30 $ 260.12 $ 7,757 36 $ 210.30 $ 7,674 28 $ 144.94 $ 4,000

All repurchases were made in open market transactions.

As of January 31, 2025, we were authorized to purchase a remaining $10.6 billion of the Company’s common stock under the Share Repurchase Program.

In February 2024, the Board authorized an additional $10.0 billion in repurchases under the Share Repurchase Program, for an aggregate total authorization of $30.0 billion.

Subsequent to January 31, 2024, we have paid approximately $0.5 billion through February 29, 2024 for additional shares under the Share Repurchase Program.

The Inflation Reduction Act introduced a new one percent excise tax imposed on certain stock repurchases made after December 31, 2022.

The excise tax is assessed on an annual fiscal year basis, reported and paid in the subsequent year.

It was applicable to stock repurchases made in fiscal 2024 and impacted in fiscal 2025 by factors such as the Company’s share price.

Any excise tax for fiscal 2024 will impact financing cash flows.

Cash Dividend

On February 28, 2024, we announced a quarterly dividend policy and the declaration of our first-ever cash dividend.

This cash dividend of $0.40 per share of the Company’s outstanding common stock will be paid on April 11, 2024 to stockholders of record as of the close of business on March 14, 2024.

The payment of future cash dividends is subject to future declaration by our Board, which will be based in part on continued capital availability, general economic and market conditions, applicable laws and agreements and our Board continuing to determine that the declaration of dividends is in the best interests of the Company and its stockholders.

Subsequent to January 31, 2025, we have incurred approximately $535 million through February 28, 2025 for additional shares under the Share Repurchase Program.

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

Record Date Payment Date Dividend per Share Amount

March 14, 2024 April 11, 2024 $ 0.40 $ 388

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

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

December 18, 2024 January 9, 2025 $ 0.40 $ 388

The declaration and payment of future cash dividends is subject to our Board continuing to determine that the declaration of dividends is in the best interests of the Company and our stockholders, after giving consideration to continued capital availability, general economic and market conditions, and applicable laws and agreements.

Contractual Obligations

Our principal commitments consist of obligations under leases for office space, co-location data center facilities and our development and test data center, as well as leases for computer equipment, software, furniture and fixtures.

As of January 31, 2024, the future non-cancelable minimum payments under these commitments were approximately $4.6 billion, with payments of $1.0 billion due in the next 12 months and $3.6 billion due thereafter.

As of January 31, 2024, we have additional operating leases that have not yet commenced totaling $77 million.

As of January 31, 2025, the future noncancellable minimum payments under these commitments were approximately $4.0 billion, with payments of $1.0 billion due in the next 12 months and $3.0 billion due thereafter.

In addition to our leasing arrangements, we have other contractual commitments associated with agreements that are enforceable and legally binding, including those with infrastructure service providers.

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We generally expect to satisfy these commitments with cash on hand and cash provided by operating activities.

During the fiscal 2024 and in future years, we have made, and expect to continue to make, additional investments in our infrastructure to scale our operations to increase productivity and enhance our security measures.

During fiscal 2025 and in future years, we have made, and expect to continue to make, additional investments in our infrastructure to scale our operations to increase productivity and enhance our security measures.

We plan to upgrade or replace various internal systems to scale with our overall growth.

While we continue to make investments in our infrastructure, including offices, information technology and data centers, as well as investments with infrastructure service providers, to provide capacity for the growth of our business, our strategy may continue to change related to these investments and we may slow the pace of our investments.

While we continue to make investments in our infrastructure and with infrastructure service providers to provide capacity for the growth of our business, our strategy may continue to change related to these investments and we may slow the pace of our investments.

Other Future Obligations

As of January 31, 2024, we expect approximate ly $100 million to $125 million in future cash payments related to our restructuring initiatives, primarily related to workforce costs such as severance payments.

As of January 31, 2025, we expect approximately $300 million to $325 million in future cash payments related to our restructuring initiatives, primarily related to workforce costs such as severance payments.

We generally expect to satisfy these commitments with cash on hand and cash provided by operating activities.

Additionally, as we have utilized the majority of our net operating loss and tax credits carryforward, we expect an increase in cash taxes

Environmental, Social and Governance

Stakeholder Impact

We believe that business is the greatest platform for change.

By focusing on environmental, social and governance (ESG) excellence, Salesforce strives to be a leading example of an ethical, resilient company delivering value to stakeholders now and in the future.

We aim to maintain our public commitments with the highest standards of integrity and transparency, and enable compliance with global ESG regulations.

Guided by our values, we work to earn the trust of our stakeholders.

Transparency is key to trust, which is why we have published an annual ESG report for over ten years to keep our stakeholders informed and to hold ourselves accountable to our ESG strategy, as well as our key programs, goals, commitments and metrics.

Our ESG disclosures are also informed by relevant topics identified through ESG relevancy assessments and third-party ESG reporting organizations, frameworks and standards, such as the Sustainability Accounting Standards Board (“SASB”) Standards and the Task Force on Climate-Related Financial Disclosures (“TCFD”).

Transparency is key to trust, which is why we have published an annual Stakeholder Impact Report for over ten years to keep our stakeholders informed and to hold ourselves accountable to our sustainability, impact and equality strategies.

Our disclosures in these areas are also informed by topics identified through relevancy assessments and third-party ESG reporting organizations, frameworks and standards, such as the Sustainability Accounting Standards Board (“SASB”) Standards.

Read more about these initiatives and view our Stakeholder Impact Report at https://salesforce.com/stakeholder-impact-report.

Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this report.

While we believe that our ESG goals align with our long-term growth strategy and financial and operational priorities, they are aspirational and may change, and there is no guarantee or promise that they will be met.

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-K

Item 7. Management’s Discussion and Analysis