What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-29 compared with 2024-12-04 · 126 added, 196 removed, 224 unchanged (59% of the section changed)

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Words such as “aims,” “anticipates,” “assumes,” “believes,” “commitments,” “could,” “estimates,” “expects,” “forecasts,” “foresees,” “goals,” “intends,” “may,” “plans,” “predicts,” “projects,” “seeks,” “should,” “targets” and “would,” and variations of such words and similar expressions are intended to identify such forward-looking statements.

These forward-looking statements are inherently uncertain and based on management’s current expectations and assumptions, which are subject to risks and uncertainties that are difficult to predict, including those described in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk,” Part II, Item 1A, “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q.

and those described in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk,” Part II, Item 1A, “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q.

Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time.

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Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Salesforce is a global leader in customer relationship management (“CRM”) technology that brings humans together with artificial intelligence (“AI”) agents to drive customer success on one integrated platform.

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.

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 artificial intelligence (“AI”), teams can be more responsive, productive and efficient, deliver intelligent, personalized experiences across every channel and increase productivity.

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.

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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 which included a reduction of our workforce by approximately ten percent and office space reductions within certain markets.

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

In addition to the Restructuring Plan, 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 the first half of fiscal 2025 and are expected to be substantially complete in fiscal 2025.

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 or measured hiring initiatives to drive operational efficiencies.

Highlights from the First Nine Months of Fiscal 2025

For the nine months ended October 31, 2024, revenue was $27.9 billion , an increase of 9 percent year-over-year.

We have undertaken various restructuring initiatives to improve operating margins and continue advancing our ongoing commitment to profitable growth which included a reduction of our workforce and office space reductions within certain markets.

We continue 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.

We expect to continue to experience improvements in our operating expenses, which could include various restructuring initiatives or measured hiring initiatives to drive operational efficiencies.

Highlights from First Quarter of Fiscal 2026

For the three months ended April 30, 2025, revenue was $9.8 billion , an increase of eight percent year-over-year.

• Income from Operations:

For the nine months ended October 31, 2024, income from operations was $5.4 billion as compared to $3.4 billion from a year ago.

Operating margin, which represents income from operations as a percentage of total revenue, increased to approximately 19 percent for the nine months ended October 31, 2024 compared to approximately 13 percent for the same period in the prior year.

For the three months ended April 30, 2025, income from operations was $1.9 billion as compared to $1.7 billion from a year ago.

Operating margin, which represents income from operations as a percentage of total revenue, increased to approximately 20 percent for the three months ended April 30, 2025 compared to approximately 19 percent in the prior year period.

• Net Income per Share:

For the nine months ended October 31, 2024 , diluted net income per share was $4.60 as compared to diluted net income per share of $2.73 from a year ago.

Cash provided by operations for the nine months ended October 31, 2024 was $9.1 billion, an increase of 34 percent y ear-over-year.

Total cash, cash equivalents and marketable securities as of October 31, 2024 was $12.8 billion.

For the three months ended April 30, 2025 , diluted net income per share was $1.59 as compared to diluted net income per share of $1.56 from a year ago.

Cash provided by operations for the three months ended April 30, 2025 was $6.5 billion, an increase of 4 percent y ear-over-year.

Total cash, cash equivalents and marketable securities as of April 30, 2025 was $17.4 billion.

• Remaining Performance Obligation:

Total remaining performance obligation, which represents all future revenue under contract yet to be recognized, as of October 31, 2024 was approximately $53.1 billion, an increase of 10 percent year-over-year .

Current remaining performance obligation as of October 31, 2024 was approximately $26.4 billion , an increase of 10 percent year-over-year.

Total remaining performance obligation, which represents all future revenue under contract yet to be recognized, as of April 30, 2025 was approximately $60.9 billion, an increase of 13 percent year-over-year .

Current remaining performance obligation as of April 30, 2025 was approximately $29.6 billion , an increase of 12 percent year-over-year.

• Share Repurchase Program:

During the nine months ended October 31, 2024, we repurchased approximately 30 million shares of our common stock for approximately $7.7 billion.

During the three months ended April 30, 2025, we repurchased approximately 10 million shares of our common stock for approximately $2.7 billion.

• Dividend Program :

During the nine months ended October 31, 2024, we paid approximately $1.2 billion in dividends.

In the third quarter 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.

During the three months ended April 30, 2025, we paid approximately $402 million in dividends and dividend equivalents.

In the first quarter of fiscal 2026, we continued seeing momentum for Data Cloud, Agentforce and other AI service offerings.

In general, the buying environment trends seen over the past two fiscal years have stabilized.

Unpredictability around economic policies or international trade, including tariffs, could result in consumer and economic uncertainty which may lead to slower growth in new and renewal business, potentially impacting our financial results.

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.

Total revenues in the nine months ended October 31, 2024 were minimally impacted by foreign currency fluctuations compared to the nine months ended October 31, 2023.

Our current remaining performance obligatio n as of October 31, 2024 was minimally impacted by foreign currency fluctuations compared to our remaining performance obligation as of October 31, 2023.

Total revenues in the three months ended April 30, 2025 were minimally impacted by foreign currency fluctuations compared to the three months ended April 30, 2024.

Our current remaining performance obligation growth as of April 30, 2025 compared to April 30, 2024 was positively impacted by one 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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(1) subscription and support revenues and (2) professional services and other revenues.

Subscription and support revenues accounted for approximately 94 percent of our total revenues for the nine months ended October 31, 2024.

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.

Subscription and support revenues accounted for approximately 95 percent of our total revenues for the three months ended April 30, 2025.

Subscription and support revenues primarily 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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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 the three and nine months ended October 31, 2024.

Revenues from term software licenses represent less than ten percent of total subscription and support revenue for the three months ended April 30, 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.

Additionally, we manage the total balanced product portfolio to deliver solutions to our

customers and, as a result, the revenue result for each offering is not necessarily indicative of the results to be expected for any subsequent quarter.

Additionally, we manage the total balanced product portfolio to deliver solutions to our customers and, as a result, the revenue result for each offering is not necessarily indicative of the results to be expected for any subsequent quarter.

In addition, some of our Cloud Service offerings have similar features and functions.

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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.

As of October 31, 2024, our attrition rate, excluding Slack self service, 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 April 30, 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, allocated overhead and our employee-related costs, which includes salaries, benefits and stock-based compensation expense.

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.

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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.

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.

The cost of professional services may exceed revenues from professional services in future fiscal periods.

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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.

The employee actions associated with the Restructuring Plan were substantially completed in fiscal 2024 and the targeted workforce and office space reductions initiated in the first nine months of fiscal 2025 are expected to be substantially complete in fiscal 2025.

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

Restructuring excludes allocated overhead.

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The following tables set forth selected data for each of the periods indicated (in millions):

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

2024 % of Total Revenues 2023 % of Total Revenues 2024 % of Total Revenues 2023 % of Total Revenues

1 Three Months Ended April 30,

2025 % of Total Revenues 2024 % of Total Revenues

Subscription and support $ 9,297 95 % $ 8,585 94 %

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Income from operations 1,942 20 1,709 19

Losses on strategic investments, net (217) (3) (72) (1) (217) 0 (242) (1)

Gains (losses) on strategic investments, net (63) (1) 37 0

Other income 95 1 121 1

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(1) Amounts related to amortization of intangible assets acquired through business combinations, as follows (in millions):

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

2024 % of Total Revenues 2023 % of Total Revenues 2024 % of Total Revenues 2023 % of Total Revenues

Three Months Ended April 30,

2025 % of Total Revenues 2024 % of Total Revenues

Cost of revenues $ 162 2 % $ 238 3 %

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

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

2024 % of Total Revenues 2023 % of Total Revenues 2024 % of Total Revenues 2023 % of Total Revenues

Three Months Ended April 30,

2025 % of Total Revenues 2024 % of Total Revenues

Cost of revenues $ 151 1 % $ 119 1 %

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The following table sets forth selected balance sheet data and other metrics for each of the periods indicated (in millions, except remaining performance obligation, which is presented in billions):

October 31, 2024

April 30, 2025

January 31, 2025

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

Three Months Ended October 31, Variance

(in millions) 2024 2023 Dollars Percent

Subscription and support $ 8,879 $ 8,141 $ 738 9 %

Professional services and other 565 579 (14) (2)

Total revenues $ 9,444 $ 8,720 $ 724 8 %

Nine Months Ended October 31, Variance

Three Months Ended April 30, Variance

(in millions) 2025 2024 Dollars Percent

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Total revenues $ 9,829 $ 9,133 $ 696 8 %

The increase in s ubscription and support revenues for the three and nine months ended October 31, 2024 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 five percent and six percent of total subscription and support revenues for the three and nine months ended October 31, 2024, respectively, and six percent for the three and nine months ended October 31, 2023.

Subscription and support revenues accounted for approximately 94 percent of our total revenues for the three and nine months ended October 31, 2024 and 93 percent for the three and nine months ended October 31, 2023.

The decrease in professional services and other revenues for the three and nine months ended October 31, 2024 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.

The increase in subscription and support revenues for the three months ended April 30, 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 the period.

Revenues from term software licenses, which are recognized at a point in time, represented approximately seven percent of total subscription and support revenues for the three months ended April 30, 2025 and 2024.

Subscription and support revenues accounted for approximately 95 percent and 94 percent of our total revenues for the three months ended April 30, 2025 and 2024, respectively.

The decrease in professional services and other revenues for the three months ended April 30, 2025 was primarily due to less demand for larger, multi-year transformation engagements, which may continue in the near term.

Subscription and Support Revenues by Service Offering

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

Three Months Ended October 31,

2024 As a % of Total Subscription and Support Revenues 2023 As a % of Total Subscription and Support Revenues Growth Rate

Sales $ 2,119 24 % $ 1,906 23 % 11 %

Service 2,288 26 2,074 26 10

Platform and Other 1,825 20 1,686 21 8

Marketing and Commerce 1,334 15 1,230 15 8

Integration and Analytics (1) 1,313 15 1,245 15 5

Total $ 8,879 100 % $ 8,141 100 % 9 %

(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.

Nine Months Ended October 31,

Three Months Ended April 30,

2025 As a % of Total Subscription and Support Revenues 2024 As a % of Total Subscription and Support Revenues Growth Rate

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Total $ 9,297 100 % $ 8,585 100 % 8 %

(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.

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Revenues by Geography

Three Months Ended October 31,

(in millions) 2024 As a % of Total Revenues 2023 As a % of Total Revenues Growth Rate

Americas $ 6,220 66 % $ 5,862 67 % 6 %

Europe 2,228 24 1,998 23 12

Asia Pacific 996 10 860 10 16

$ 9,444 100 % $ 8,720 100 % 8 %

Nine Months Ended October 31,

Three Months Ended April 30,

(in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Growth Rate

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Asia Pacific 1,023 10 926 10 10

$ 27,902 100 % $ 25,570 100 % 9 %

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

region of the customer.

Revenue growth in the Americas was driven by investment of additional sales resources from previous periods.

Revenue growth in Europe and Asia Pacific was primarily driven by our focus on marketing our services internationally and increased productivity, as well as investment in additional resources.

Total revenue during the three and nine months ended October 31, 2024 was minimally impacted by foreign currency fluctuations compa red to the three and nine months ended October 31, 2023.

Total $ 9,829 100 % $ 9,133 100 % 8 %

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 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

Three Months Ended October 31, Variance

(in millions) 2024 As a % of Total Revenues 2023 As a % of Total Revenues Dollars

Subscription and support $ 1,501 16 % $ 1,571 18 % $ (70)

Professional services and other 604 6 584 7 20

Total cost of revenues $ 2,105 22 % $ 2,155 25 % $ (50)

Nine Months Ended October 31, Variance

(in millions) 2024 As a % of Total Revenues 2023 As a % of Total Revenues Dollars

Three Months Ended April 30, Variance

(in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues

Subscription and support $ 1,611 16 % $ 1,560 17 % $ 51

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Total cost of revenues $ 2,265 23 % $ 2,162 24 % $ 103

For the three months ended October 31, 2024, the decrease in cost of revenues in absolute dollars was primarily due to a decrease in service delivery expenses and a decrease in amortization of intangible assets acquired through business combinations, partially offset by an increase in employee-related costs, primarily in lower cost regions.

For the nine months ended October 31, 2024, the increase in cost of revenues in absolute dollars was primarily due to an increase in employee-related costs, primarily in lower cost regions, partially offset by a decrease in service delivery expenses and reduced amortization of intangible assets acquired through business combinations .

Cost of revenue as a percentage of total revenue during the three and nine months ended October 31, 2024 decreased by three and two percent, respectively, from the same periods a year ago primarily as a result of reduced service delivery expenses and a decrease in amortization of intangible assets acquired through business combinations.

For the three months ended April 30, 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, and an increase in service delivery expenses partially offset by a decrease in amortization of purchased intangibles.

Our cost of revenues headcount increased by three percent during the three months ended April 30, 2025, primarily in lower cost regions.

Cost of revenues as a percentage of total revenues during the three months ended April 30, 2025 decreased by one percent from the same period a year ago due to our total revenues growth outpacing our cost of revenues growth, which was primarily attributable to a decrease in the amortization of purchased intangibles.

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 may cause our cost of revenues as a percentage of revenues to fluctuate over time due to changes in demand for our service offerings.

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

Three Months Ended October 31, Variance

(in millions) 2024 As a % of Total Revenues 2023 As a % of Total Revenues Dollars

Research and development $ 1,356 14 % $ 1,204 14 % $ 152

Sales and marketing 3,323 35 3,173 36 150

General and administrative 711 8 632 7 79

Restructuring 56 1 55 1 1

Total operating expenses $ 5,446 58 % $ 5,064 58 % $ 382

Nine Months Ended October 31, Variance

(in millions) 2024 As a % of Total Revenues 2023 As a % of Total Revenues Dollars

Three Months Ended April 30, Variance

(in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues

Research and development $ 1,460 15 % $ 1,368 15 % $ 92

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Total operating expenses $ 5,622 57 % $ 5,262 57 % $ 360

For the three and nine months ended October 31, 2024, the increase in research and development expenses in absolute dollars was primarily due to an increase in employee-related costs, primarily in lower cost regions.

Research and development expenses as a percentage of total revenues during the three months ended October 31, 2024 was consistent with the same period a year ago.

For the nine months ended October 31, 2024, the one percent increase as a percentage of total revenues compared to the same period a year ago was primarily due to increased employee-related costs, primarily in lower cost regions.

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

For the three and nine months ended October 31, 2024, the increase in sales and marketing expenses in absolute dollars was primarily due to an increase in employee-related costs.

Sales and marketing expenses as a percentage of total revenues during the three and nine months ended October 31, 2024 decreased by one and two percent, respectively, from the same periods a year ago due to a decrease in relative employee-related costs and a decrease in absolute advertising expenses.

For the three months ended April 30, 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 the three months ended April 30, 2025 was consistent with the same period a year ago.

Our research and development headcount increased by ten percent during the three months ended April 30, 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 the development of new, and improve existing, technologies, including AI, agents and our Data Cloud service offerings, and the integration of acquired technologies.

For the three months ended April 30, 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, and increased advertising expenses.

Sales and marketing expenses as a percentage of total revenues during the three months ended April 30, 2025 was consistent

with the same period a year ago.

Our sales and marketing headcount increased by one percent during the three months ended April 30, 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 the three and nine months ended October 31, 2024, the increase in general and administrative expenses in absolute dollars was primarily due to an increase in employee-related costs and professional services expenses.

General and administrative expenses as a percentage of total revenues during the three and nine months ended October 31, 2024 were materially consistent compared to the same periods a year ago.

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.

In the three and nine months ended October 31, 2024, approximately $56 million and $163 million, respectively, of costs were incurred related to our restructuring initiatives, primarily related to employee transition, severance payments and employee benefits.

Other Income and Expense

Three Months Ended October 31, Variance

(in millions) 2024 2023 Dollars

Losses on strategic investments, net $ (217) $ (72) $ (145)

Other income 70 58 12

Nine Months Ended October 31, Variance

(in millions) 2024 2023 Dollars

Losses on strategic investments, net $ (217) $ (242) $ 25

For the three months ended April 30, 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 the three months ended April 30, 2025 was consistent with the same period a year ago.

Our general and administrative headcount decreased by one percent during the three months ended April 30, 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 the three months ended April 30, 2025, approximately $36 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

Three Months Ended April 30, Variance

(in millions) 2025 2024

Gains (losses) on strategic investments, net $ (63) $ 37 $ (100)

Other income 95 121 (26)

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, impairments and other adjustments.

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.

For the three months ended October 31, 2024, our strategic investment portfolio losses were primarily driven by impairments on privately held equity investments o f $242 million .

For the nine months ended October 31, 2024, our strategic investment portfolio losses were primarily driven by impairments on privately held equity investments of $432 million, partially offset by unrealized gains on privately held equity securities of $167 million and realized gains on sales of securities of $59 million.

Other income primarily consists of investment income, partially offset by interest expense on our debt and finance leases.

Interest expense was $67 million and $70 million for the three months ended October 31, 2024 and 2023, respectively, and $204 million and $213 million for the nine months ended October 31, 2024 and 2023, respectively.

Provision For Income Taxes

Three Months Ended October 31, Variance

(in millions) 2024 2023 Dollars

Gains (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, debt or other investments, as well as high public equity market volatility.

For the three months ended April 30, 2025, the loss on our strategic investment portfolio was primarily driven by impairments of $47 million and losses on public securities of $16 million.

For the three months ended April 30, 2024, the gain on our strategic investment portfolio was primarily driven by unrealized gains on privately held equity investments of $105 million and realized gains on sales of securities of $59 million, partially offset by impairments of $130 million.

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 decreased in the first quarter of fiscal 2026 primarily due to a decrease in investment income from lower interest rates.

Provision For Income Taxes

Effective tax rate 13 % 18 %

Nine Months Ended October 31, Variance

(in millions) 2024 2023 Dollars

Three Months Ended April 30, Variance

(in millions) 2025 2024

Provision for income taxes $ (433) $ (334) $ (99)

Effective tax rate 22 % 18 %

We recorded a tax provision of $219 million and $263 million for the three months ended October 31, 2024 and 2023, respectively, and a tax provision of $961 million and $615 million for the nine months ended October 31, 2024 and 2023, respectively.

The year-to-date tax provision increased from the same period a year ago due to higher pretax income partially offset by a tax benefit from the foreign-derived intangible income deduction.

Our quarter-to-date tax provision was lower compared to the same period a year ago due to the tax benefit from the foreign-derived intangible income deduction.

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, for example, acquisitions, changes to our operating structure, and other macroeconomic factors.

Several countries have enacted legislation to implement the Organization for Economic Cooperation and Development’s

15% global minimum tax regime effective January 1, 2024.

We expect other countries to follow.

We do not anticipate material

changes 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 payments could increase in future years.

We recorded a tax provision of $433 million on pretax income of $2.0 billion for the three months ended April 30, 2025.

Our effective tax rate increased from a year ago primarily due to lower excess tax benefits from stock-based compensation.

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.

Liquidity and Capital Resources

At October 31, 2024, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $12.8 billion and accounts receivable of $4.7 billion.

At April 30, 2025, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $17.4 billion and accounts receivable of $4.4 billion.

Our cash equivalents and marketable securities are comprised primarily of corporate notes and obligations, U.S.

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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 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 October 31, 2024, also serves as a source of liquidity.

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 April 30, 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 II, 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.

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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.

For the three and nine months ended October 31, 2024 and 2023, our cash flows were as follows (in millions):

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

2024 2023 2024 2023

For the three months ended April 30, 2025, 2024, and 2023 our cash flows were as follows (in millions):

1 Three Months Ended April 30,

Net cash provided by operating activities $ 6,476 $ 6,247

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Operating Activities

The net cash provided by operating activities during the nine months ended October 31, 2024 was primarily comprised of net income of $4.5 billion, adjusted for non-cash items, including $2.6 billion of depreciation and amortization and $2.4 billion of stock-based compensation expense.

The net cash provided by operating activities during the three months ended April 30, 2025 was primarily comprised of net income of $1.5 billion, adjusted for non-cash items, including $843 million of depreciation and amortization and $814 million of stock-based compensation expense.

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 the nine months ended October 31, 2024 was further benefited by the changes in accounts receivable, net of $6.7 billion partially offset by the change in unearned revenue of $5.6 billion and the change in accounts payable and accrued expenses and other liabilities of $503 million .

Net cash provided by operating activities during the three months ended April 30, 2025 was further benefited by the changes in accounts receivable, net of $7.6 billion, partially offset by the change in unearned revenue of $2.9 billion and the change in accounts payable and accrued expenses and other liabilities of $1.0 billion .

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 the nine months ended October 31, 2023 was primarily comprised of net income of $2.7 billion, adjusted for non-cash items including $3.0 billion of depreciation and amortization and $2.1 billion of stock-based compensation expense.

Net cash provided by operating activities during the nine months ended October 31, 2023 was further benefited by the change in accounts receivable, net of $5.9 billion due to cash collections and was partially offset by the change in unearned revenue of $4.8 billion and the change in accounts payable and accrued expenses and other liabilities of $1.6 billion.

The net cash provided by operating activities during the three months ended April 30, 2024 was primarily comprised of net income of $1.5 billion, adjusted for non-cash items, including $879 million of depreciation and amortization and $750 million of stock-based compensation expense.

Cash provided by operating activities during the three months ended April 30, 2024 was further benefited by the changes in accounts receivable, net of $7.2 billion, partially offset by the change in unearned revenue of $3.0 billion and the change in accounts payable and accrued expenses and other liabilities of $755 million.

Investing Activities

The net cash used in investing activities during the nine months ended October 31, 2024 was primarily related to net outflows for acquisitions of $517 million, net outflows from strategic investment activity of $256 million and capital expenditures of $504 million, partially offset by net inflows from marketable securities activity of $1.1 billion.

The net cash used in investing activities during the nine months ended October 31, 2023 was primarily related to capital expenditures of $589 million and net outflows from strategic investment activity of $288 million, partially offset by net inflows related to marketable securities activity of $100 million.

The net cash used in investing activities during the three months ended April 30, 2025 was primarily related to net outflows from marketable securities activity of $1.2 billion, net outflows from strategic investment activity of $143 million and capital expenditures of $179 million.

The net cash used in investing activities during the three months ended April 30, 2024 was primarily related to net outflows from marketable securities activity of $2.0 billion, net outflows for the acquisition of Spiff of $338 million, net outflows from strategic investment activity of $150 million and capital expenditures of $163 million.

Financing Activities

The net cash used in financing activities during the nine months ended October 31, 2024 was primarily related to $7.8 billion used for repurchases of common stock, $1.0 billion related to repayments of debt and $1.2 billion related to payments of dividends, partially offset by $1.1 billion from proceeds from equity plans.

The net cash used in financing activities during the nine months ended October 31, 2023 was primarily related to $5.9 billion used for repurchases of common stock and $1.2 billion related to repayments of debt, partially offset by $1.1 billion from proceeds from equity plans.

As of October 31, 2024, 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 October 31, 2024.

The net cash used in financing activities during the three months ended April 30, 2025 was primarily related to $2.6 billion used for repurchases of common stock and $402 million related to payments of dividends, partially offset by $294 million of proceeds from equity plans.

Net cash used in financing activities during the three months ended April 30, 2024 consisted primarily of $2.1 billion from repurchases of common stock and $388 million related to payments of dividends, partially offset by $533 million of proceeds from equity plans.

As of April 30, 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 April 30, 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”).

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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 Revolving Loan Credit Agreement provides for a $5.0 billion 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 October 31, 2024.

There were no outstanding borrowings under the Credit Facility as of April 30, 2025.

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

Share Repurchase Program

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

Our Board of Directors (the “Board”) authorized a program to repurchase shares of the Company's common stock (the "Share Repurchase Program"), which commenced in August 2022 and had additional authorizations approved by the Board in February 2023 and February 2024, for an aggregate total authorization of $30.0 billion.

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.

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

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Three months ended April 30 10 $ 273.42 $ 2,681 7 $ 293.00 $ 2,168

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

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

All repurchases were made in open market transactions.

As of October 31, 2024, we were authorized to purchase a remaining $10.6 billion of the Company’s common stock under the Share Repurchase Program.

Subsequent to October 31, 2024, we have incurred approximately $31 million through November 27, 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 and generally paid in the subsequent fiscal year.

We expect to pay an insignificant excise tax in fiscal 2025.

The excise tax applies to our fiscal 2025 stock repurchases.

We currently anticipate that it will decrease next year’s financing cash flows, however, the amount could be impacted by factors including the Company’s share price.

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

As of April 30, 2025, we were authorized to purchase a remaining $7.9 billion of the Company’s common stock under the Share Repurchase Program.

Subsequent to April 30, 2025, we have incurred approximately $0.5 billion through May 22, 2025 for additional shares under the Share Repurchase Program.

We announced the following dividends:

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

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.

(in millions)

Three months ended April 30, 2025 April 10, 2025 April 24, 2025 $ 0.416 $ 406

Three months ended April 30, 2024 March 14, 2024 April 11, 2024 $ 0.40 $ 388

The declaration and payment of future cash dividends is subject to the 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 October 31, 2024, the future noncancellable minimum payments under these commitments were approximately $4.2 billion, with payments of $258 million due in the next three months and $3.9 billion due thereafter.

As of April 30, 2025 , there were no significant changes to our estimates of future payments under our fixed contractual obligations and commitments as presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 .

For more information regarding our lease obligations as of April 30, 2025 , see Note 5 “Leases and Other Commitments” to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

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

During the nine months ended October 31, 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 the three months ended April 30, 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.

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Other Future Obligations

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

(“Zoomin”), a data management company.

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

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

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

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

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

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

As of October 31, 2024, we expect approximately $100 million to $150 million in future cash payments related to our restructuring initiatives, primarily related to workforce costs such as severance payments.

As of April 30, 2025, we expect approximately $160 million to $190 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

In May 2025, we entered into a definitive agreement to acquire Informatica Inc.

(“Informatica”), an AI-powered enterprise cloud data management platform.

Under the terms of the agreement, holders of Informatica’s Class A and Class B-1 common stock will receive $25 in cash per share and we will acquire all outstanding shares of common stock of Informatica that it does not already own.

The transaction represents an equity value of approximately $8 billion, net of our current investment in Informatica.

The agreement also provides for our assumption of unvested equity awards held by Informatica employees.

We expect to fund the transaction with a combination of new debt and cash on our balance sheet.

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.

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-Q

Item 2. Management’s Discussion and Analysis