Salesforce, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, which may consist of, among other things, trend analyses and statements regarding future events, future financial performance, anticipated growth, and industry prospects, are forward-looking. 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 related to the Company’s proposed acquisition of Informatica Inc. 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. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements. In light of these and other risks and uncertainties, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur as we expect or at all, and our actual results or outcomes may differ materially and adversely from those expressed or implied in our forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason. Overview Salesforce is a global leader in customer relationship management (“CRM”) technology, enabling companies of every size and industry to connect with their customers through the power of data, artificial intelligence (“AI”), CRM and trust. Founded in 1999, we bring humans together with AI agents to drive customer success on one deeply unified platform. Our platform unites sales, service, marketing, commerce and IT teams by connecting customer data across systems, apps and devices to create a complete view of customers. With this single source of customer truth and integrated AI, teams can be more responsive, productive and efficient, deliver intelligent, personalized experiences across every channel and increase productivity. During the third quarter of fiscal 2025, we introduced Agentforce, a new layer of our trusted platform that enables companies to build and deploy AI agents that can respond to inputs, make decisions and take action autonomously across business functions. Agentforce includes a suite of customizable agents for use across sales, service, marketing and commerce. We continue to invest for growth, including investing in generative and agentic AI across all products, which we believe will change how our customers help their customers, and continuously look to expand our leadership role in the cloud computing industry. We continue to focus on several key growth levers, including driving multiple service offering adoption, increasing our penetration with enterprise and international customers and expanding our industry-specific reach with more vertical software solutions. These growth levers often require a more sophisticated go-to-market approach and, as a result, we may incur additional costs upfront to obtain new customers and expand our relationships with existing customers, including additional sales and marketing expenses specific to subscription and support revenue. As a result, we have seen that customers with many of these characteristics drive higher annual revenues and have lower attrition rates than our company average. In addition to our focus on top line growth levers, we are also focused on reducing our operating expenses to improve our operating margin. 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 • Revenue: 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 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. 29 Table of Contents • Net Income per Share: 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: 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 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 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 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 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. The impact of these fluctuations can also be compounded by the seasonality of our business in which our fourth quarter has historically been our strongest quarter for new business and renewals. Fiscal Year Our fiscal year ends on January 31. References to fiscal 2026, for example, refer to the fiscal year ending January 31, 2026. Operating Segments We operate as one segment. See Note 1 “Summary of Business and Significant Accounting Policies” to the condensed consolidated financial statements for further discussion. Sources of Revenues We derive our revenues from two sources: (1) subscription and support revenues and (2) professional services and other revenues. 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. Revenue is generally recognized ratably over the contract term. 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. Revenue from support and updates is recognized as such support and updates are provided, which is generally ratably over the contract term. Changes in contract duration for multi-year 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 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. In addition, some of our Cloud Service offerings have similar features and functions. For example, customers may use our Sales, Service or Platform service offerings to record account and contact information, which are similar features across these service offerings. Depending on a customer’s actual and projected business requirements, more than one service offering may satisfy the customer’s current and future needs. We record revenue based on the individual products ordered by a customer, not according to the customer’s business requirements and usage. 30 Table of Contents Our growth in revenues is also impacted by attrition. Attrition represents the reduction or loss of the annualized value of our contracts with customers. We calculate our attrition rate at a point in time on a trailing twelve-month basis as of the end of each month. 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. Consistent attrition rates play a role in our ability to maintain growth in our subscription and support revenues. Seasonal Nature of Unearned Revenue, Accounts Receivable and Operating Cash Flow Unearned revenue primarily consists of billings to customers for our subscription service. Over 90 percent of the value of our billings to customers is for our subscription and support service. We generally invoice our customers in advance, in annual installments, and typical payment terms provide that our customers pay us within 30 days of invoice. Amounts that have been invoiced are recorded in accounts receivable and in unearned revenue or in revenue depending on whether transfer of control to customers has occurred. In general, we collect our billings in advance of the subscription service period. We typically issue renewal invoices in advance of the renewal service period, and depending on timing, the initial invoice for the subscription and services contract and the subsequent renewal invoice may occur in different quarters. There is a disproportionate weighting toward annual billings in the fourth quarter, primarily as a result of large enterprise account buying patterns. Our fourth quarter has historically been our strongest quarter for new business and renewals. The year-on-year compounding effect of this seasonality in both billing patterns and overall new and renewal business causes the value of invoices that we generate in the fourth quarter for both new business and renewals to increase as a proportion of our total annual billings. Accordingly, because of this billing activity, our first quarter is typically our largest collections and operating cash flow quarter. Generally, our third quarter has historically been our smallest operating cash flow quarter . Unearned revenues, accounts receivable and operating cash flow may also be impacted by acquisitions. For example, operating cash flows may be adversely impacted by acquisitions due to transaction costs, financing costs such as interest expense and lower operating cash flows from the acquired entity. Remaining Performance Obligation Our remaining performance obligation represents all future revenue under contract that has not yet been recognized as revenue and includes unearned revenue and unbilled amounts. Our current remaining performance obligation represents future revenue under contract that is expected to be recognized as revenue in the next 12 months. Remaining performance obligation is not necessarily indicative of future revenue growth and is influenced by several factors, including seasonality, the timing of renewals, average contract terms, foreign currency exchange rates and fluctuations in new business growth. Remaining performance obligation is also impacted by acquisitions. Unbilled portions of the remaining performance obligation denominated in foreign currencies are revalued each period based on the period end exchange rates. For multi-year subscription agreements billed annually, the associated unbilled balance and corresponding remaining performance obligation are typically high at the beginning of the contract period, zero just prior to renewal, and increase if the agreement is renewed. Low remaining performance obligation attributable to a particular subscription agreement is often associated with an impending renewal but may not be an indicator of the likelihood of renewal or future revenue from such customer. Changes in contract duration or the timing of delivery of professional services can impact remaining performance obligation as well as the allocation between current and non-current remaining performance obligation. Cost of Revenues and Operating Expenses Cost of Revenues Cost of subscription and support revenues primarily consists of expenses related to our employee-related costs, which includes salaries, benefits and stock-based compensation expense, delivering our service and providing support, including the costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and allocated overhead. Our cost of subscription and support revenues also includes amortization of certain acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts. Also included in the cost of subscription and support revenues are expenses incurred supporting the free user base of Slack, including third-party hosting costs and employee-related costs specific to customer experience and technical operations. Cost of professional services and other revenues consists primarily of employee-related costs associated with these services, the cost of subcontractors, certain third-party fees and allocated overhead. We believe that our professional services organization facilitates the adoption of our service offerings, helps us to secure larger subscription revenue contracts and supports our customers’ success. The cost of professional services may exceed revenues from professional services in future fiscal periods. 31 Table of Contents Research and Development Research and development expenses consist primarily of employee-related costs for our engineering staff associated with product development, as well as allocated overhead. Sales and Marketing Sales and marketing expenses make up the majority of our operating expenses and consist primarily of employee-related costs and commissions for our sales and marketing staff, as well as payments to partners, marketing programs and allocated overhead. Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities. We capitalize certain costs to obtain customer contracts, such as commissions, and amortize these costs on a straight-line basis. As such, the timing of expense recognition for these commissions is not consistent with the timing of the associated cash payment. Our sales and marketing expenses include amortization of certain acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s trade names, customer lists and customer relationships. General and Administrative General and administrative expenses consist primarily of employee-related costs for finance and accounting, legal, internal audit, human resources and management information systems personnel, as well as professional services fees and allocated overhead. We allocate overhead such as information technology infrastructure, rent, occupancy charges and certain employee benefits based on headcount. As such, these types of expenses are reflected in each cost of revenue and operating expense category. Restructuring Restructuring consists of charges related to employee transition, severance payments, employee benefits and stock-based compensation as well as exit charges associated with office space reductions. Restructuring excludes allocated overhead. Critical Accounting Policies and Estimates Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions. We believe that of our significant accounting policies, which are described in Note 1 “Summary of Business and Significant Accounting Policies” to our condensed consolidated financial statements, the following accounting policies and specific estimates involve a greater degree of judgment and complexity. Accordingly, these are the policies and estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations: • the standalone selling price (“SSP”) of performance obligations for revenue contracts with multiple performance obligations; • the valuation of privately held strategic investments; • the fair value of assets acquired and liabilities assumed for business combinations; • the recognition, measurement and valuation of current and deferred income taxes and uncertain tax positions; • the useful lives of intangible assets; and • the fair value of certain stock awards issued. These estimates may change, as new events occur and additional information is obtained, and such changes will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from these estimates and any such differences may be material to our financial statements. Additionally, refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 for further discussion with respect to these policies and estimates. Recent Accounting Pronouncements See Note 1 “Summary of Business and Significant Accounting Policies” to the condensed consolidated financial statements for our discussion about new accounting pronouncements. Results of Operations 32 Table of Contents The following tables set forth selected data for each of the periods indicated (in millions): 1 Three Months Ended April 30, 2025 % of Total Revenues 2024 % of Total Revenues Revenues: Subscription and support $ 9,297 95 % $ 8,585 94 % Professional services and other 532 5 548 6 Total revenues 9,829 100 9,133 100 Cost of revenues (1)(2): Subscription and support 1,611 16 1,560 17 Professional services and other 654 7 602 7 Total cost of revenues 2,265 23 2,162 24 Gross profit 7,564 77 6,971 76 Operating expenses (1)(2): Research and development 1,460 15 1,368 15 Sales and marketing 3,429 35 3,239 35 General and administrative 697 7 647 7 Restructuring 36 0 8 0 Total operating expenses 5,622 57 5,262 57 Income from operations 1,942 20 1,709 19 Gains (losses) on strategic investments, net (63) (1) 37 0 Other income 95 1 121 1 Income before provision for income taxes 1,974 20 1,867 20 Provision for income taxes (433) (4) (334) (3) Net income $ 1,541 16 % $ 1,533 17 % (1) Amounts related to amortization of intangible assets acquired through business combinations, as follows (in millions): Three Months Ended April 30, 2025 % of Total Revenues 2024 % of Total Revenues Cost of revenues $ 162 2 % $ 238 3 % Sales and marketing 233 2 223 2 (2) Amounts related to stock-based compensation expense, as follows (in millions): Three Months Ended April 30, 2025 % of Total Revenues 2024 % of Total Revenues Cost of revenues $ 151 1 % $ 119 1 % Research and development 275 3 260 3 Sales and marketing 285 3 290 3 General and administrative 88 1 81 1 Restructuring 15 0 0 0 33 Table of Contents 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): As of April 30, 2025 January 31, 2025 Cash, cash equivalents and marketable securities $ 17,408 $ 14,032 Unearned revenue 17,799 20,743 Remaining performance obligation 60.9 63.4 Principal due on our outstanding debt obligations (1) 8,500 8,500 (1) Amounts do not include operating or financing lease obligations. 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. Revenues Three Months Ended April 30, Variance (in millions) 2025 2024 Dollars Percent Subscription and support $ 9,297 $ 8,585 $ 712 8 % Professional services and other 532 548 (16) (3) Total revenues $ 9,829 $ 9,133 $ 696 8 % 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 April 30, 2025 As a % of Total Subscription and Support Revenues 2024 As a % of Total Subscription and Support Revenues Growth Rate Sales $ 2,131 23 % $ 1,998 23 % 7 % Service 2,334 25 2,182 26 7 Platform and Other 1,963 21 1,718 20 14 Marketing and Commerce 1,325 14 1,282 15 3 Integration and Analytics 1,544 17 1,405 16 10 Total $ 9,297 100 % $ 8,585 100 % 8 % Our industry vertical service offerings revenue is included in one of the above service offerings depending on the primary service purchased. Integration and Analytics subscription and support revenues include revenues from term software licenses, which are recognized at the point in time when the software is made available to the customer. Therefore, we expect Integration and Analytics to experience greater volatility in revenues period to period compared to our other service offerings and recent revenue trends may not be indicative of future performance. Additionally, as we transition customers within the Integration and Analytics offering from term software licenses to subscription based services, revenue associated with such customers will generally be recognized ratably over the contract term, which we expect may potentially result in less revenue in the period the customer transitions but incremental revenues over the remaining term. 34 Table of Contents Revenues by Geography Three Months Ended April 30, (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Growth Rate Americas $ 6,469 66 % $ 6,062 66 % 7 % Europe 2,337 24 2,145 24 9 Asia Pacific 1,023 10 926 10 10 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 April 30, Variance Dollars (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Subscription and support $ 1,611 16 % $ 1,560 17 % $ 51 Professional services and other 654 7 602 7 52 Total cost of revenues $ 2,265 23 % $ 2,162 24 % $ 103 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, 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 April 30, Variance Dollars (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Research and development $ 1,460 15 % $ 1,368 15 % $ 92 Sales and marketing 3,429 35 3,239 35 190 General and administrative 697 7 647 7 50 Restructuring 36 0 8 0 28 Total operating expenses $ 5,622 57 % $ 5,262 57 % $ 360 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 35 Table of Contents 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 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 Dollars (in millions) 2025 2024 Gains (losses) on strategic investments, net $ (63) $ 37 $ (100) Other income 95 121 (26) 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 Three Months Ended April 30, Variance Dollars (in millions) 2025 2024 Provision for income taxes $ (433) $ (334) $ (99) Effective tax rate 22 % 18 % 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 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. treasury securities, U.S. 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 April 30, 2025, also serves as a source of liquidity. 36 Table of Contents 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. In the future, we may enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. To facilitate these acquisitions or investments, we may seek additional equity or debt financing, which may not be available on terms favorable to us or at all, impacting our ability to complete subsequent acquisitions or investments. Cash Flows 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, 2025 2024 Net cash provided by operating activities $ 6,476 $ 6,247 Net cash used in investing activities (1,567) (2,651) Net cash used in financing activities (2,920) (2,108) Operating Activities 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 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 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 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 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. Debt 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. 37 Table of Contents In October 2024, we entered into a Credit Agreement with the lenders and issuing lenders party thereto, and Bank of America, N.A., as administrative agent (the “Revolving Loan Credit Agreement”). The Revolving Loan Credit Agreement replaced the Credit Agreement, dated December 23, 2020 (as amended, the “Prior Credit Agreement”), among us, the lenders and the issuing lenders party thereto, and Citibank, N.A., as administrative agent, which provided for a $3.0 billion unsecured revolving credit facility that was scheduled to mature on December 23, 2025. There were no outstanding borrowings under the Prior Credit Agreement. The Revolving Loan Credit Agreement provides for a $5.0 billion 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 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 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. We repurchased the following under the Share Repurchase Program (in millions, except average price per share): 2025 2024 Shares Average price per share Amount Shares Average price per share Amount Three months ended April 30 10 $ 273.42 $ 2,681 7 $ 293.00 $ 2,168 All repurchases were made in open market transactions. 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. Dividends We announced the following dividends: Record Date Payment Date Dividend per Share Amount (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 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 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. While we continue to make investments in our infrastructure and with infrastructure service providers to provide capacity for the growth of our business, our strategy may continue to change related to these investments and we may slow the pace of our investments. Other Future Obligations As of 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. 38 Table of Contents 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. 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 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. 39 Table of Contents