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Item 8. Financial Statements and Supplementary Data

2025-03-05 compared with 2024-03-06 · 242 added, 161 removed, 1003 unchanged (29% of the section changed)

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 6, 2024 expressed an unqualified opinion thereon .

Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 5, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Revenue Recognition

Description of the Matter As described in Note 1 to the consolidated financial statements, the Company recognizes revenue primarily from subscription and support services and professional services contracts in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

Description of the Matter As described in Notes 1 and 2 to the consolidated financial statements, the Company recognizes revenue primarily from subscription and support services and professional services contracts in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

The Company enters into contracts with its customers that may include promises to transfer multiple cloud services, software licenses, premium support and professional services.

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Impairment of Strategic Investments

Description of the Matter As described in Note 1 to the consolidated financial statements, the Company holds investments in privately held equity securities, which are assessed for impairment at least quarterly.

Description of the Matter As described in Notes 1 and 3 to the consolidated financial statements, the Company holds investments in privately held equity securities, which are assessed for impairment at least quarterly.

The Company’s impairment analysis encompasses an assessment of both qualitative and quantitative factors, including the investee's financial metrics, market acceptance of the investee's product or technology and the rate at which the investee is using its cash.

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Research and development 5,493 4,906 5,055

Marketing and sales 12,877 13,526 11,855

Sales and marketing 13,257 12,877 13,526

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

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Income from operations 7,205 5,011 1,030

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

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

Other income (expense) 354 216 ( 131 )

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Cost of revenues $ 750 $ 978 $ 1,035

Marketing and sales 891 916 727

Sales and marketing 901 891 916

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

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Research and development 1,091 972 1,136

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

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

General and administrative 367 299 368

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Common stock issued 20 0 0 0 849 0 0 849

Shares issued related to business combinations 46 0 0 0 11,269 0 0 11,269

Common stock repurchased 0 0 ( 28 ) ( 4,000 ) 0 0 0 ( 4,000 )

Stock-based compensation 0 0 0 0 3,279 0 3,279

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Stock-based compensation 0 0 0 0 2,800 0 0 2,800

Other comprehensive loss, net of tax 0 0 0 0 0 ( 108 ) 0 ( 108 )

Other comprehensive income, net of tax 0 0 0 0 0 49 0 49

Net income 0 0 0 0 0 0 4,136 4,136

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Stock-based compensation 0 0 0 0 3,200 0 0 3,200

Other comprehensive income, net of tax 0 0 0 0 0 49 0 49

Other comprehensive loss, net of tax 0 0 0 0 0 ( 41 ) 0 ( 41 )

Cash dividends declared 0 0 0 0 0 0 ( 1,549 ) ( 1,549 )

Net income 0 0 0 0 0 0 6,197 6,197

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Stock-based compensation expense 3,183 2,787 3,279

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

Losses on strategic investments, net 121 277 239

Changes in assets and liabilities, net of business combinations:

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Financing activities:

Proceeds from issuance of debt, net of issuance costs 0 0 7,906

Repayments of Slack Convertible Notes, net of capped call proceeds 0 0 ( 1,197 )

Repurchases of common stock ( 7,829 ) ( 7,620 ) ( 4,000 )

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Repayments of debt ( 1,000 ) ( 1,182 ) ( 4 )

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

Payments of dividends ( 1,537 ) 0 0

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

Effect of exchange rate changes ( 124 ) 26 ( 8 )

Net increase (decrease) in cash and cash equivalents 1,456 1,552 ( 731 )

Net increase in cash and cash equivalents 376 1,456 1,552

Cash and cash equivalents, beginning of period 8,472 7,016 5,464

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Income taxes, net of tax refunds $ 2,061 $ 1,027 $ 510

Non-cash investing and financing activities:

Fair value of equity awards assumed $ 0 $ 7 $ 205

Fair value of common stock issued as consideration for business combinations $ 0 $ 0 $ 11,064

See accompanying Notes.

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(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, Salesforce has pioneered innovations in cloud, mobile, social, analytics and artificial intelligence, enabling companies of every size and industry to transform their businesses in the all-digital, work-from-anywhere era.

With the deeply unified 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.

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The Company operates as one operating segment.

Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance.

Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance.

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 net income basis.

Additionally, the measure of segment assets is reported on the balance sheet as total consolidated assets.

The Company’s significant segment expenses, which are the expenses included in operating income as well as losses on strategic investments, and other segment items, which includes other income (expense) and benefit from (provision for) income taxes, are included in the Company’s consolidated statement of operations.

Additionally, further components of the Company’s measure of profit or loss, which is net income, are included throughout the Company’s financial statements.

Concentrations of Credit Risk, Significant Customers and Investments

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The Company maintains an allowance for its doubtful accounts receivable for estimated credit losses.

reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss patterns.

This allowance is based upon historical loss patterns, the number of days that billings are past due, an evaluation of the potential risk of loss associated with delinquent accounts and current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss patterns.

The Company records the allowance against bad debt expense through the consolidated statements of operations, included in general and administrative expense, up to the amount of revenues recognized to date.

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

No single customer accounted for five percent or more of accounts receivable as of January 31, 2024 and January 31, 2023.

No single customer accounted for five percent or more of total revenue during fiscal 2024, 2023 and 2022.

No single customer accounted for ten percent or more of accounts receivable as of January 31, 2025 and January 31, 2024.

No single customer accounted for ten percent or more of total revenue during fiscal 2025, 2024 and 2023.

As of January 31, 2025 and January 31, 2024, assets located outside the Americas were 17 percent and 16 percent of total assets, respectively.

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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 January 31, 2024 and 2023, 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 16 percent of the portfolio in aggregate.

As of January 31, 2025, the Company held four investments, all privately held, with carrying values that were individually greater than five percent of its total strategic investments portfolio and represented approximately 24 percent o f 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.

Revenue Recognition

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Revenue is generally recognized ratably over the contract term.

Substantially all of the Company’s subscription service arrangements are non-cancelable and do not contain refund-type provisions.

Substantially all of the Company’s subscription service arrangements are noncancellable and do not contain refund-type provisions.

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

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Costs Capitalized to Obtain Revenue Contracts

The Company capitalizes incremental costs of obtaining revenue contracts related to non-cancelable Cloud Services subscription, ongoing Cloud Services support and license support and updates.

For contracts with on-premises software licenses where revenue is recognized upfront when the software is made available to the customer, costs allocable to those licenses are expensed as they are incurred.

The Company capitalizes incremental costs of obtaining revenue contracts related to noncancellable Cloud Services subscription, ongoing Cloud Services support and license support and updates.

For contracts with term software licenses where revenue is recognized upfront when the software is made available to the customer, costs allocable to those licenses are expensed as they are incurred.

Capitalized amounts consist primarily of sales commissions paid to the Company’s direct sales force.

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Additionally, the Company amortizes capitalized costs for renewals and success fees paid to partners over two years .

The capitalized amounts are recoverable through future revenue streams under all non-cancelable customer contracts.

The capitalized amounts are recoverable through future revenue streams under all noncancellable customer contracts.

The Company periodically evaluates whether there have been any changes in its business, the market conditions in which it operates or other events which would indicate that its amortization period should be changed or if there are potential indicators of impairment.

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

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

There were no impairments of costs to obtain revenue contracts for fiscal 2025 and 2024.

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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 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 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 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 consolidated statements of operations.

Strategic Investments

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Privately held equity securities not accounted for under the equity method are recorded at cost and adjusted only for observable transactions for same or similar investments of the same issuer or impairment events (referred to as the measurement alternative).

All gains and losses on privately held equity securities, realized and unrealized, are recorded through gains (losses) on strategic investments, net on the 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 consolidated balance sheet.

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

Valuations of privately held securities are inherently complex and require judgment due to the lack of readily available market data.

In determining the estimated fair value of its strategic investments in privately held companies, the Company utilizes the most recent data available to the Company.

The Company assesses its privately held debt and equity securities in its strategic investment portfolio at least quarterly for impairment.

The Company assesses its privately held strategic investments quarterly for impairment.

If the investment is considered impaired, the Company estimates the fair value of the investment and recognizes any resulting impairment through the consolidated statements of operations.

Publicly held equity securities are measured at fair value with changes recorded through gains (losses) on strategic investments, net on the consolidated statements of operations.

The Company may enter into strategic investments or other investments that are considered variable interest entities (“VIEs”).

If the Company is a primary beneficiary of a VIE, it is required to consolidate the entity.

To determine if the Company is the primary beneficiary of a VIE, the Company evaluates whether it has (1) the power to direct the activities that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The assessment of whether the Company is the primary beneficiary of its VIE investments requires significant assumptions and judgments.

VIEs that are not consolidated are accounted for under the measurement alternative, equity method, amortized cost, or other appropriate methodology based on the nature of the interest held.

The Company did not consolidate any VIEs as of January 31, 2024 and January 31, 2023.

Publicly held equity securities are measured at fair value with changes recorded through losses on strategic investments, net on the consolidated statements of operations.

Fair Value Measurement

The Company measures its cash and cash equivalents, marketable securities, publicly held equity securities and foreign currency derivative contracts at fair value.

In addition, the Company measures certain of its strategic investments, including its privately held debt securities and privately held equity securities, at fair value on a nonrecurring basis when there has been an observable price change in a same or similar security or an impairment.

In addition, the Company measures certain of its strategic investments, including its privately held debt and equity securities, at fair value on a nonrecurring basis when there has been an observable price change in a same or similar security or an impairment event.

The additional disclosures regarding the Company’s fair value measurements are included in Note 4 “Fair Value Measurement.”

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The Company uses forward currency derivative contracts, which are not designated as hedging instruments, to minimize the Company’s exposure to balances primarily denominated in the Euro, British Pound Sterling, Canadian Dollar, Australian Dollar, Brazilian Real and Japanese Yen.

The Company’s derivative financial instruments

program is not designated for trading or speculative purposes.

The Company’s derivative financial instruments program is not designated for trading or speculative purposes.

The Company generally enters into master netting arrangements with the financial institutions with which it contracts for such derivatives, which permit net settlement of transactions with the same counterparty, thereby reducing risk of credit-related losses from a financial institutions' nonperformance.

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 foreign currency derivative contracts as of January 31, 2024 and January 31, 2023 was $ 8.6 billion and $ 6.0 billion, respectively.

The notional amount of outstanding foreign currency derivative contracts as of January 31, 2025 and January 31, 2024 was $ 10.7 billion and $ 8.6 billion, respectively.

Outstanding foreign currency derivative contracts are recorded at fair value on the 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 (expense) in the 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

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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.

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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

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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 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 gains (losses) on strategic investments in the 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 consolidated statements of operations.

Restructuring

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Stock-Based Compensation Expense

Stock-based compensation expense is measured based on grant date at fair value using the Black-Scholes option pricing model for stock options and the grant date closing stock price for restricted stock awards.

The Company recognizes stock-based compensation expense related to stock options and restricted stock awards on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term of four years .

Stock-based compensation expense is measured based on grant date at fair value using the grant date closing stock price for restricted stock units and restricted stock awards and using the Black-Scholes option pricing model for stock options.

The Company recognizes stock-based compensation expense related to restricted stock units, restricted stock awards, and stock

options on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term of four years .

The estimated forfeiture rate applied is based on historical forfeiture rates.

The Company grants performance share awards to executive officers and other members of senior management, which may include a market condition, a performance condition, or both.

Stock-based compensation expense related to awards with a market condition are measured at fair value using a Monte Carlo simulation model and the expense related to these awards is recognized on a graded-vesting basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term.

Stock-based compensation expense related to awards with a performance condition are measured based on the grant date closing stock price and the expense related to these awards is recognized based on the requisite service period elapsed, as well as the probability of achievement and estimated attainment of the performance condition as of the end of our reporting period.

Stock-based compensation expense related to the Company’s Amended and Restated 2004 Employee Stock Purchase Plan (“ESPP” or “2004 Employee Stock Purchase Plan”) is measured based on grant date at fair value using the Black-Scholes option pricing model.

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The ESPP allows employees to purchase shares of the Company's common stock at a 15 percent discount from the lower of the Company’s stock price on (i) the first day of the offering period or on (ii) the last day of the purchase period.

The ESPP also allows employees to

reduce their percentage election once during a six-month purchase period (December 15 and June 15 of each fiscal year), but not to increase that election until the next one-year offering period.

The ESPP also allows employees to reduce their percentage election once during a six-month purchase period (December 15 and June 15 of each fiscal year), but not to increase that election until the next one-year offering period.

The ESPP includes a reset provision for the purchase price if the stock price on the purchase date is less than the stock price on the offering date.

The Company, at times, grants performance share awards to executive officers and other members of senior management, which may include a market condition, performance condition, or both.

Stock-based compensation expense related to awards with a market condition are measured at fair value using a Monte Carlo simulation model and the expense related to these awards is recognized on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term.

The Company, at times, grants unvested restricted shares to employee stockholders of certain acquired companies in lieu of cash consideration.

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

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

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

Warranties and Indemnification

The Company’s enterprise cloud computing services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company’s online help documentation under normal use and circumstances.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights.

To date, the Company has not incurred any material

costs as a result of such obligations and has not accrued any material liabilities related to such obligations in the accompanying consolidated financial statements.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe on a third party’s intellectual property rights.

To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any material liabilities related to such obligations in the accompanying consolidated financial statements.

The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request.

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The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

New Accounting Pronouncement Pending Adoption

New Accounting Pronouncements Adopted in Fiscal 2025

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

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Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires additional operating segment disclosures in annual and interim consolidated financial statements.

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 of adopting ASU 2023-07.

The Company adopted ASU 2023-07 in the fourth quarter of fiscal year 2025 on a retrospective basis.

New Accounting Pronouncements Pending Adoption

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

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ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a retrospective or prospective basis.

The Company is evaluating the effect of adopting ASU 2023-09.

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 within fiscal years 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

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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, 93 percent and 94 percent during fiscal 2024, 2023 and 2022, respectively.

Americas revenue attributed to the United States was approximately 93 percent during fiscal 2025, 2024 and 2023, respectively.

No other country represented more than ten percent of total revenue during fiscal 2025, 2024 and 2023.

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Unearned revenue represents amounts that have been invoiced in advance of revenue recognition and is recognized as revenue when transfer of control to customers has occurred or services have been provided.

The unearned revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements.

The unearned revenue balance does not represent the total contract value of annual or multi-year, noncancellable subscription agreements.

The unearned revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, dollar size and new business linearity within the quarter.

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Revenue recognized over time primarily includes Cloud Services subscription and support revenue, which is generally recognized ratably over time, and professional services and other revenue, which is generally recognized ratably or as delivered.

Revenue recognized at a point in time substantially consists of on-premises software licenses.

Approximately 49 percent of total revenue recognized in fiscal 2024 is from the unearned revenue balance as of January, 31, 2023.

Revenue recognized at a point in time substantially consists of term software licenses.

Approximately 50 percent of total revenue recognized in fiscal 2025 was from the unearned revenue balance as of January 31, 2024.

Remaining Performance Obligation

Remaining performance obligation represents contracted revenue that has not yet been recognized and includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods.

Transaction price allocated to the remaining performance obligation is based on SSP.

Remaining performance obligation is influenced by several factors, including seasonality, the timing of renewals, the timing of software license deliveries, average contract terms and foreign currency exchange rates.

The transaction price allocated to the remaining performance obligation is based on SSP.

Remaining performance obligation is influenced by several factors, including seasonality, the timing of renewals, the timing of term license deliveries, average contract terms and foreign currency exchange rates.

Remaining performance obligation is also impacted by acquisitions.

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$ 5,184 $ 5,722

Interest income from marketable securities for fiscal 2025, 2024 and 2023 was $ 647 million, $ 527 million and $ 199 million, respectively, and is included in other income (expense) in the consolidated statements of operations.

Strategic Investments

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$ 80 $ 4,557 $ 211 $ 4,848

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

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 $ 484 million and $ 382 million, as of January 31, 2025 and January 31, 2024, respectively.

Gains (Losses) on Strategic Investments, Net

The components of gains and losses on strategic investments were as follows (in millions):

Losses on Strategic Investments, Net

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

4 Fiscal Year Ended January 31,

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Impairments on privately held equity and debt securities ( 582 ) ( 466 ) ( 491 )

Unrealized gains (losses), net ( 318 ) ( 310 ) 918

Unrealized losses, net ( 240 ) ( 318 ) ( 310 )

Realized gains on sales of securities, net 119 41 71

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

Losses on strategic investments, net $ ( 121 ) $ ( 277 ) $ ( 239 )

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.

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Significant unobservable inputs which are supported by little or no market activity.

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

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 January 31, 2025 and indicates the fair value hierarchy of the valuation (in millions):

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Property and equipment, net $ 3,236 $ 3,689

Depreciation and amortization expense totaled $ 1.1 billion, $ 903 million and $ 678 million during fiscal 2024, 2023 and 2022, respectively.

Depreciation and amortization expense totaled $ 1.0 billion, $ 1.1 billion and $ 903 million during fiscal 2025, 2024 and 2023, respectively.

Other Balance Sheet Accounts

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Fiscal Year Ended January 31,

2025 2024 2023

Operating lease cost $ 684 $ 1,041 $ 986

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Fiscal Year Ended January 31,

2025 2024 2023

Cash paid for amounts included in the measurement of lease liabilities:

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Fiscal Year 2025

In February 2024, the Company acquired all outstanding stock of Spiff, Inc.

(“Spiff”), an incentive compensation management platform company.

The acquisition date fair value of the consideration transferred for Spiff was $ 419 million, which consisted primarily of $ 374 million in cash.

The Company recorded $ 323 million of goodwill which is primarily attributed to the assembled workforce and expanded market opportunities.

The goodwill associated with the acquisition of Spiff has no basis and is not deductible for U.S.

income tax purposes.

The Company also recorded approximately $ 52 million of intangible assets for developed technology and customer relationships with useful lives of nine and five years , respectively.

The fair values assigned to assets acquired and liabilities assumed are based on management’s estimates and assumptions and may be subject to change as additional information is received and certain tax returns are finalized.

The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The Company has included the financial results of Spiff, which were not material, in its consolidated financial statements from the date of acquisition.

The transaction costs associated with the acquisition were also not material.

Zoomin Software Ltd.

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

(“Zoomin”), a data management company.

The acquisition date fair value of the consideration transferred for Zoomin was $ 374 million, which consisted primarily of $ 344 million in cash.

The Company recorded $ 284 million of goodwill which is primarily attributed to the assembled workforce and expanded market opportunities.

The goodwill associated with the acquisition of Zoomin has no basis and is not deductible for U.S.

income tax purposes.

The Company also recorded approximately $ 94 million of intangible assets for developed technology with a useful life of three years .

The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The Company has included the financial results of Zoomin, which were not material, in its consolidated financial statements from the date of acquisition.

The transaction costs associated with the acquisition were also not material.

Own Data Company Ltd.

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.

The Company has included the financial results of Own, which were not material, in the consolidated financial statements from the date of acquisition.

The transaction costs associated with the acquisition were not material.

The acquisition date fair value of the consideration transferred for Own was approximately $ 2.1 billion, which consisted of the following (in millions):

Fair value of pre-existing relationship 212

Total $ 2,143

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the date of acquisition (in millions):

Cash and cash equivalents $ 44

Accounts receivable 32

Operating lease right-of-use assets, net 35

Goodwill 1,812

Intangible assets 597

Other assets 10

Accounts payable, accrued expenses and other liabilities, current and noncurrent ( 16 )

Unearned revenue ( 125 )

Operating lease liabilities ( 35 )

Deferred tax liability ( 211 )

Net assets acquired $ 2,143

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities, for which there is no basis for U.S.

income tax purposes.

The fair values assigned to tangible assets acquired and liabilities assumed are preliminary, based on management’s estimates and assumptions and may be subject to change as additional information is received and certain tax returns are finalized.

The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in millions):

Fair Value Useful Life

Developed technology $ 343 6 years

Customer relationships 224 9 years

Other purchased intangible assets 30 2 years

Total intangible assets subject to amortization $ 597

Developed technology represents the fair value of Own’s data analysis technology.

Customer relationships represent the fair values of the underlying relationships with Own customers.

The fair value of the Company’s noncontrolling equity investment in Own prior to the acquisition was $ 172 million.

The Company recognized a gain of approximately $ 40 million as a result of remeasuring its prior equity interest in Own held before the business combination.

The gain is included in losses on strategic investments, net in the consolidated statement of operations.

Fiscal Year 2023

Traction Sales and Marketing Inc.

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The acquisition date fair value of the consideration transferred for Traction on Demand was approximately $ 340 million, which consisted primarily of $ 302 million in cash.

The Company recorded approximately $ 62 million for customer relationships with estimated useful lives of five years .

The Company recorded approximately $ 293 million of goodwill which is primarily attributed to the assembled workforce.

For the goodwill balance, there is some basis for foreign income tax purposes but no basis for U.S.

income tax purposes.

Fiscal Year 2022

Slack Technologies, Inc.

On July 21, 2021, the Company acquired all outstanding stock of Slack Technologies, Inc.

(“Slack”), a leading channel-based messaging platform.

The acquisition date fair value of the consideration transferred for Slack was approximately $ 27.1 billion, which consisted of $ 15.8 billion of cash paid, $ 11.1 billion of common stock issued, and $ 205 million related to the fair value of stock options, restricted stock units and restricted stock awards assumed.

The Company recorded $ 6.4 billion of intangible assets related to customer relationship, developed technology and other purchased intangible assets with useful life of five to eight years .

Developed technology represents the preliminary estimated fair value of Slack's data analysis technologies.

Customer relationships represent the preliminary estimated fair values of the underlying relationships with Slack customers.

The Company recorded $ 21.4 billion of goodwill which is primarily attributed to the assembled workforce and expanded market opportunities, including integrating the Slack product offering with existing Company service offerings in a digital-first, work anywhere world for which there is no basis for U.S.

income tax purposes.

The Company assumed unvested stock options, restricted stock units and restricted stock awards with an estimated fair value of $ 1.7 billion.

Of the total consideration, $ 205 million was allocated to the purchase consideration and $ 1.5 billion was allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

Acumen Solutions, Inc.

In February 2021, the Company acquired all outstanding stock of Acumen Solutions, Inc.

(“Acumen”), a professional services firm that provides innovative and critical solutions to clients using the Company’s service offerings and other advanced cloud technologies.

The acquisition date fair value of the consideration transferred for Acumen was approximately $ 433 million, in cash.

Intangible Assets Acquired Through Business Combinations and Goodwill

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Total $ 11,601 $ ( 1,418 ) $ 10,183 $ ( 6,323 ) $ 568 $ ( 5,755 ) $ 5,278 $ 4,428 2.8

(1) The Company retired $ 261 million of fully depreciated intangible assets during fiscal 2024, of which $ 244 million were included in acquired developed technology, and $ 17 million in customer relationships.

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

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Balance at January 31, 2023 $ 48,568

Traction on Demand 293

Other acquisitions and adjustments (1) 338

Balance as of January 31, 2023 $ 48,568

Acquisitions and adjustments (1) 52

Balance as of January 31, 2024 $ 48,620

(1) Other acquisitions and adjustments include measurement period adjustments for business combinations from the prior year, including approximately $ 249 million in fiscal 2023 related to the Company’s July 2021 acquisition of Slack and the effect of foreign currency translation.

(2) Acquisitions and adjustments includes the effect of foreign currency translation .

Acquisition of Spiff 323

Acquisition of Zoomin 284

Acquisition of Own 1,812

Other acquisitions and adjustments (1) 244

Balance as of January 31, 2025 $ 51,283

(1) Includes the effect of foreign currency translation.

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

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Carrying Value as of January 31, 2025 Carrying Value as of January 31, 2024

2023 Senior Notes (1) April 2018 April 2023 3.25 % $ 0 $ 0 $ 1,000

Loan assumed on 50 Fremont (2) February 2015 June 2023 3.75 0 0 182

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

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Total noncurrent debt $ 8,433 $ 8,427

(1) The Company repaid in full the 2023 Senior Notes in the first quarter of fiscal 2024.

(2) The Company repaid in full the Loan assumed on 50 Fremont in the second quarter of fiscal 2024.

(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 January 31, 2025.

The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above was $ 6.6 billion and $ 7.8 billion as of January 31, 2025 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 fourth quarter of fiscal 2024 and the last day of trading of fiscal 2023, respectively, and are deemed Level 2 liabilities within the fair value measurement framework.

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 fiscal 2025 and fiscal 2024, and are deemed Level 2 liabilities within the fair value measurement framework.

The contractual future principal payments for all borrowings as of January 31, 2025 were as follows (in millions):

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Total principal outstanding $ 8,500

Interest expense primarily from out debt instruments for fiscal 2025, 2024 and 2023 was $ 272 million, $ 283 million and $ 300 million, respectively, and is included in other income (expense) in the consolidated statements of operations.

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.

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 January 31, 2025.

Restructuring

In January 2023, the Company announced a restructuring plan (the “Restructuring Plan”) intended to reduce operating costs, improve operating margins and continue advancing the Company’s ongoing commitment to profitable growth.

In January 2023, the Company announced a restructuring plan intended to reduce operating costs, improve operating margins and continue advancing the Company’s ongoing commitment to profitable growth.

This plan included a reduction of the Company’s workforce and select real estate exits and office space reductions within certain markets.

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 fully complete in fiscal 2026.

In the fourth quarter of fiscal 2024, the Company initiated, and has substantially completed, an initiative to drive further operational efficiencies through a focused workforce reduction.

The following table summarizes the activities related to the Company’s restructuring initiatives for fiscal 2024 and fiscal 2023 (in millions):

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

In 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, which are expected to be substantially complete in fiscal 2026.

The following tables summarize the activities related to the Company’s restructuring initiatives for fiscal 2025 and 2024 (in millions):

Fiscal Year Ended January 31, 2025 Fiscal Year Ended January 31, 2024

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The liability for restructuring charges, which is related to workforce and office space reductions, is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets.

The charges reflected in the table above related to workforce reduction included charges for employee transition, severance payments, employee benefits and share-based compensation.

The charges reflected in the table above related to office space reductions included exit charges associated with those reductions.

The charges reflected in the tables above related to workforce reduction included charges for employee transition, severance payments, employee benefits and share-based compensation.

The charges reflected in the tables above related to office space reductions included exit charges associated with those reductions.

Stockholders’ Equity

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government security with the same estimated life at the time of the option grant and the stock purchase rights.

The estimated forfeiture rate applied is based on historical forfeiture rates.

Stock option activity for fiscal 2025 was as follows:

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Exercised 0 ( 4 ) 173.43

Plan shares expired or canceled 2 ( 2 ) 203.25

Balance as of January 31, 2025 73 8 $ 198.89 $ 1,140

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The total intrinsic value of these vested options based on the market value of the stock as of January 31, 2025 was approximately $ 0.9 billion.

The following table summarizes information about stock options outstanding as of January 31, 2025:

Options Outstanding Options Exercisable

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2 3.4 208.80 1 211.81

$ 191.31 to $ 215.17

2 4.1 218.21 1 218.21

$ 218.21 3 5.0 218.21 1 218.21

$ 218.63 to $ 342.02

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8 3.5 $ 198.89 6 $ 187.48

Restricted stock activity for fiscal 2024 was as follows:

Restricted stock activity for fiscal 2025 is as follows:

Restricted Stock Outstanding

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In fiscal 2025, 2024 and 2023, the Company granted performance-based restricted stock unit awards to executive officers and other members of senior management.

The performance-based restricted stock unit awards are subject to vesting based on the achievement of a market-based condition or a performance-based condition and a service-based condition.

At the end of the service periods, which range from approximately one-year to four-years, these performance-based restricted stock units will vest in a percentage of the target number of shares between 0 and 200 percent, depending on the extent the market-based condition or performance-based condition, or both, is achieved.

The performance-based restricted stock unit awards are subject to vesting based on the achievement of a market-based condition and a service-based condition or a performance-based condition and a service-based condition.

At the end of the service periods, which range from approximately one -year to four -years, these performance-based restricted stock units will vest in a percentage of the target number of shares between 0 and 200 percent, depending on the extent the market-based condition or performance-based condition, or both, are achieved.

The aggregate expected stock-based compensation expense remaining to be recognized as of January 31, 2025 was as follows (in millions):

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In August 2022, the Board of Directors authorized a program to repurchase up to $ 10.0 billion of the Company’s common stock (the “Share Repurchase Program”).

In February 2023, the Board of Directors authorized an additional $ 10.0 billion in repurchases under the Share Repurchase Program, for an aggregate total authorized of $ 20.0 billion.

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

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

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

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The Company accounts for treasury stock under the cost method.

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

The Company repurchased the following under its 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, the Company was authorized to purchase a remaining $ 10.6 billion of its common stock under the Share Repurchase Program.

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

The Company announced the following dividends in the fiscal year ended January 31, 2025 (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 domestic and foreign components of income before provision for (benefit from) income taxes consisted of the following (in millions):

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(1) Fiscal 2024 effects of non-U.S.

operations included tax benefits from foreign tax credits attributable to recent IRS notices.

operations included tax benefits from foreign tax credits attributable to IRS notices.

(2) Fiscal 2025 foreign-derived intangible income deduction included tax benefits related to an adjustment for fiscal 2023 and 2024.

Deferred Income Taxes

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Net deferred tax assets (liabilities) $ 3,489 $ 2,403

At January 31, 2024, for federal income tax purposes, the Company had net operating loss carryforwards of approximately $ 168 million, which expire in fiscal 2025 and through fiscal 2038 with the exception of post-2017 losses that do not expire, federal research and development tax credits of approximately $ 259 million, which expire in fiscal 2037 through fiscal 2044, foreign tax credits of approximately $ 164 million, which expire in fiscal 2029 through fiscal 2034.

For California income tax purposes, the Company had net operating loss carryforwards of approximately $ 639 million which expire beginning in fiscal 2029 through fiscal 2043, California research and development tax credits of approximately $ 834 million, which do not expire.

At January 31, 2025, the Company had federal net operating loss carryforwards of approximately $ 415 million, which expire in fiscal 2026 and through fiscal 2038 with the exception of post-2017 losses that do not expire, federal research and development tax credits of approximately $ 5 million, which expire in fiscal 2029 through fiscal 2045, foreign tax credits of approximately $ 164 million, which expire in fiscal 2029 through fiscal 2035.

The Company had California net operating loss carryforwards of approximately $ 480 million which expire beginning in fiscal 2029 through fiscal 2045, California research and development tax credits of approximately $ 932 million, which do not expire.

For other states' income tax purposes, the Company had tax credits of approximately $ 75 million, which expire beginning in fiscal 2026 through fiscal 2034, and insignificant net operating loss carryforwards.

Utilization of the Company’s net operating loss carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions.

Utilization of the Company’s net operating loss carryforwards are subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions.

Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization.

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Interest and penalties accrued as of January 31, 2025, 2024 and 2023, were $ 225 million, $ 136 million and $ 107 million, respectively.

Certain prior year tax returns are currently being examined by various taxing authorities in major tax jurisdictions including the United States, France and Israel.

Certain prior year tax returns are currently being examined by various taxing authorities in major tax jurisdictions including the United States, Germany and Israel.

The Company currently considers U.S.

federal, Japan, Australia, Germany, France, United Kingdom, Ireland and Israel to be major tax jurisdictions.

federal, Japan, Australia, Germany, France, United Kingdom, Ireland, Canada, India and Israel to be major tax jurisdictions.

The Company’s U.S.

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As the outcome of the tax audits cannot be predicted with certainty, if any issues addressed in the Company's tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future.

The Company anticipates it is reasonably possible that an inconsequential decrease of its unrecognized tax benefits may occur in the next 12 months, as the applicable statutes of limitations lapse, ongoing examinations are completed, or tax positions meet the conditions of being effectively settled.

The Company anticipates it is reasonably possible that an insignificant decrease of its unrecognized tax benefits may occur in the next 12 months, as the applicable statutes of limitations lapse, ongoing examinations are completed, or tax positions meet the conditions of being effectively settled.

Net Income Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the fiscal period.

Diluted earnings per share is computed by giving effect to all potential weighted average dilutive common stock, including options and restricted stock units.

The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method.

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

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the fiscal period.

Diluted net income per share is computed by giving effect to all potential weighted average dilutive common stock, including options and restricted stock units.

The dilutive effect of outstanding awards is reflected in diluted net income per share by application of the treasury stock method.

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

4 Fiscal Year Ended January 31,

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Net income $ 6,197 $ 4,136 $ 208

Weighted-average shares outstanding for basic earnings per share 974 992 955

Weighted-average shares outstanding for basic net income per share 962 974 992

Effect of dilutive securities:

Employee stock awards 12 10 5

Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share 984 997 974

The weighted-average number of shares outstanding used in the computation of diluted earnings 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 earnings per share because the effect would have been anti-dilutive (in millions):

Weighted-average shares outstanding for diluted net income per share 974 984 997

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 millions):

Fiscal Year Ended January 31,

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The Ninth Circuit ordered the parties to submit additional briefing in light of the Supreme Court’s decision.

That briefing has concluded, and the parties await rulings from the Ninth Circuit.

On February 10, 2025, the Ninth Circuit issued an opinion reversing the district court’s order and instructing the district court to dismiss the complaint with prejudice.

The state court actions were consolidated in November 2019, and the consolidated action is captioned In re Slack Technologies, Inc.

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The State Court Action remains stayed pending resolution of the appellate proceedings in the Federal Action.

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

Business Combination

In February 2024, the Company acquired all outstanding stock of Spiff, Inc.

("Spiff”), a software company that provides incentive compensation management solutions.

The acquisition date fair value of the consideration transferred for Spiff, inclusive of the Company's previous ownership interest, was approximately $ 429 million, and consisted primarily of $ 374 million in cash paid at closing.

Dividend Declaration

On February 28, 2024, the Company announced a cash dividend of $ 0.40 per share of the Company’s outstanding common stock, payable on April 11, 2024 to stockholders of record as of the close of business on March 14, 2024.

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.

Backpage Litigation

The Company has been named as a defendant in a number of state and federal actions relating to the activities of one of its former customers, Website Technologies, LLC (“Website Technologies”), an affiliate of Backpage.com, LLC (“Backpage”).

Plaintiffs in these actions generally allege that they were victims of sex trafficking by individuals who advertised them on backpage.com, a website operated by Backpage, and assert various claims and theories premised on the Company’s provision to Website Technologies of Salesforce CRM Software and related products, which the plaintiffs allege facilitated the operation and growth of Backpage’s business.

The initial action, filed in the Superior Court of California for the County of San Francisco on behalf of numerous plaintiffs, was dismissed with prejudice under Section 230 of the Communications Decency Act (“Section 230”), and that dismissal was affirmed by the California Court of Appeal in December 2021.

In April 2020, an action was filed on behalf of a single plaintiff in the U.S.

District Court for the Northern District of Illinois.

The district court granted the Company’s motion to dismiss the action, and the Seventh Circuit Court of Appeals reversed that ruling in August 2023.

The court has scheduled trial in that matter for June 2026.

Beginning in April 2020, five actions involving six plaintiffs were filed and consolidated in the U.S.

District Court for the Southern District of Texas as A.B.

Salesforce, Inc., Case No.

4:20-CV-01254.

The Company moved for summary judgment on the basis that the claims were barred by Section 230.

In November 2023, the court denied the Company’s motion and in December 2024, the Fifth Circuit Court of Appeals affirmed that ruling.

Beginning in May 2023, a number of similar actions have been filed in Texas federal and state courts, including principally:

(1) 30 actions filed in the U.S.

District Court for the Northern District of Texas, which were consolidated as S.M.A.

Salesforce, Inc., Case No.

3:23-CV-0915-B (“S.M.A”);

(2) 21 actions filed in Texas state court in Dallas County, which were removed by the Company to the Northern District of Texas, and consolidated as A.S.

Salesforce, Inc., Case No.

3:23-CV-1039-B (“A.S.”);

and (3) one action filed in Texas state court in Harris County, which was removed to the U.S.

District Court for the Southern District of Texas as T.S.

Salesforce, Inc., Case No.

4:23-CV-01792 (“T.S.”).

Separately, 19 actions have been filed in Texas state court, which are proceeding in a Texas state court multidistrict litigation in Harris County District Court, captioned In re Jane Doe Cases, MDL 2020-28545.

In March 2024, the district court in S.M.A.

granted the Company’s consolidated motion to dismiss the complaint on the ground that plaintiffs had not alleged the requisite intent element under the federal trafficking statute, and in April 2024 an amended complaint was filed amending the federal law claim and adding a Texas state law claim.

In May 2024, the Company moved to dismiss the amended complaint.

In September 2024, the district court in A.S.

denied the Company’s motion to dismiss and the court has scheduled trial for November 2025.

In November 2024, the Company moved for judgment on the pleadings in A.S.

In June 2023, the Company moved to dismiss the T.S.

action, and that motion remains pending.

Plaintiffs’ counsel in these actions have stated that they represent several hundred additional possible claimants.

All of the foregoing actions seek unspecified monetary damages, attorneys’ fees, and costs.

The Company intends to defend its interests in these proceedings vigorously.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data