What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-09-04 compared with 2025-05-29 · 171 added, 107 removed, 243 unchanged (53% 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 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.

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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.

In addition to these growth levers, our mergers and acquisitions framework has included several acquisitions that accelerate our agentic roadmap, including our recently announced acquisition of Regrello Corp.

(“Regrello”).

These acquisitions, along with our pending acquisition of Informatica Inc.

(“Informatica”), are bringing in key talent and technology to accelerate innovation.

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

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

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

Highlights from First Six Months of Fiscal 2026

For the six months ended July 31, 2025, revenue was $20.1 billion , an increase of nine 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.

For the six months ended July 31, 2025, income from operations was $4.3 billion as compared to $3.5 billion from a year ago.

Operating margin, which represents income from operations as a percentage

of total revenue, increased to approximately 22 percent for the six months ended July 31, 2025 compared to approximately 19 percent in the prior year period.

• 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 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.

For the six months ended July 31, 2025 , diluted net income per share was $3.55 as compared to diluted net income per share of $3.03 from a year ago.

Cash provided by operations for the six months ended July 31, 2025 was $7.2 billion , an increase of one percent year-over-year.

Total cash, cash equivalents and marketable securities as of July 31, 2025 was $15.4 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.

Total remaining performance obligation, which represents all future revenue under contract yet to be recognized, as of July 31, 2025 was approximately $59.9 billion, an increase of 12 percent year-over-year .

Current remaining performance obligation as of July 31, 2025 was approximately $29.4 billion , an increase of 11 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.

During the six months ended July 31, 2025, we repurchased approximately 18 million shares of our common stock for approximately $4.9 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.

During the six months ended July 31, 2025, we paid approximately $801 million in dividends and dividend equivalents.

• Pending Informatica Acquisition:

During the six months ended July 31, 2025, we announced our pending acquisition of Informatica, an AI-powered enterprise cloud data management platform, which is expected to close in the fourth quarter of fiscal 2026 or early fiscal 2027, subject to the satisfaction of customary closing conditions, including regulatory approvals, for an estimated $8.0 billion, net of the Company’s current investment in Informatica.

Over the first half of fiscal 2026, we continued to see strong momentum in Data Cloud, Agentforce and our broader AI service offerings.

As we have a diversified portfolio of products and a customer base across various geographies, segments and industries, demand for our offerings has remained relatively resilient in a changing economic environment.

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.

Total revenues in the six months ended July 31, 2025 were minimally impacted by foreign currency fluctuations compared to the six months ended July 31, 2024.

Our current remaining performance obligation growth as of July 31, 2025 compared to July 31, 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 95 percent of our total revenues for the three months ended April 30, 2025.

Subscription and support revenues accounted for approximately 95 percent of our total revenues for the six months ended July 31, 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.

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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 months ended April 30, 2025.

Revenues from term software licenses represent less than ten percent of total subscription and support revenue for the three and six months ended July 31, 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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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.

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

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

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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 .

Generally, our second or 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.

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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 consists of charges related to employee transition, severance payments, employee benefits and stock-based compensation as well as impairment charges associated with long-lived assets.

Restructuring excludes allocated overhead.

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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

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

2025 % of Total Revenues 2024 % of Total Revenues 2025 % of Total Revenues 2024 % of Total Revenues

Subscription and support $ 9,690 95 % $ 8,764 94 % $ 18,987 95 % $ 17,349 94 %

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(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

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

2025 % of Total Revenues 2024 % of Total Revenues 2025 % of Total Revenues 2024 % of Total Revenues

Cost of revenues $ 150 2 % $ 231 3 % $ 312 2 % $ 469 3 %

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(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

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

2025 % of Total Revenues 2024 % of Total Revenues 2025 % of Total Revenues 2024 % of Total Revenues

Cost of revenues $ 126 1 % $ 132 2 % $ 277 1 % $ 251 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):

April 30, 2025

July 31, 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 April 30, Variance

Three Months Ended July 31, Variance

(in millions) 2025 2024 Dollars Percent

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Total revenues $ 10,236 $ 9,325 $ 911 10 %

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.

Six Months Ended July 31, Variance

(in millions) 2025 2024 Dollars Percent

Subscription and support $ 18,987 $ 17,349 $ 1,638 9 %

Professional services and other 1,078 1,109 (31) (3)

Total revenues $ 20,065 $ 18,458 $ 1,607 9 %

The increase in s ubscription and support revenues for the three and six months ended July 31, 2025 was primarily caused by volume-driven increases from new business, which includes new customers, upgrades, and additional subscriptions from existing customers.

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

Revenues from term software licenses, which are recognized at a point in time, represented approximately six percent of total subscription and support revenues for the three and six months ended July 31, 2025, and five percent of total subscription and support revenues for the three and six months ended July 31, 2024.

Subscription and support revenues accounted for approximately 95 percent of our total revenues for the three and six months ended July 31, 2025 and 94 percent for the three and six months ended July 31, 2024.

The decrease in professional services and other revenues for the three and six months ended July 31, 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,

Three Months Ended July 31,

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 $ 9,690 100 % $ 8,764 100 % 11 %

Six Months Ended July 31,

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

Sales $ 4,398 23 % $ 4,069 23 % 8 %

Service 4,792 25 4,439 26 8

Platform and Other 4,047 22 3,504 20 15

Marketing and Commerce 2,690 14 2,590 15 4

Integration and Analytics 3,060 16 2,747 16 11

Total $ 18,987 100 % $ 17,349 100 % 9 %

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 April 30,

Three Months Ended July 31,

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

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Asia Pacific 1,071 10 940 10 14

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

$ 10,236 100 % $ 9,325 100 % 10 %

Six Months Ended July 31,

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

Americas $ 13,205 66 % $ 12,263 66 % 8 %

Europe 4,766 24 4,329 24 10

Asia Pacific 2,094 10 1,866 10 12

$ 20,065 100 % $ 18,458 100 % 9 %

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.

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.

Total revenues were positively impacted by approximately one percent due to fluctuations in foreign currencies during the three months ended July 31, 2025 compared to the three months ended July 31, 2024, and were minimally impacted by foreign currency fluctuations during the six months ended July 31, 2025 compared to the six months ended July 31, 2024.

Cost of Revenues

Three Months Ended April 30, Variance

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

Three Months Ended July 31, Variance

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

Subscription and support $ 1,645 16 % $ 1,556 17 % $ 89

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Total cost of revenues $ 2,242 22 % $ 2,159 23 % $ 83

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.

Six Months Ended July 31, Variance

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

Subscription and support $ 3,256 16 % $ 3,116 17 % $ 140

Professional services and other 1,251 6 1,205 6 46

Total cost of revenues $ 4,507 22 % $ 4,321 23 % $ 186

Cost of revenue as a percentage of total revenue during the three and six months ended July 31, 2025 decreased by one percent fr om the same periods a year ago primarily as a result of a decrease in amortization of intangible assets acquired through business combinations.

For the three and six months ended July 31, 2025 , the increase in cost of revenues in absolute dollars was primarily due to an increase in service delivery expenses associated with our platform and an increase in employee-related costs, primarily in lower cost regions, partially offset by a decrease in amortization of intangible assets acquired through business combinations.

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.

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Operating Expenses

Three Months Ended April 30, Variance

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

Three Months Ended July 31, Variance

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

Research and development $ 1,481 14 % $ 1,349 14 % $ 132

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Total operating expenses $ 5,662 55 % $ 5,383 58 % $ 279

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.

Six Months Ended July 31, Variance

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

Research and development $ 2,941 15 % $ 2,717 15 % $ 224

Sales and marketing 6,872 34 6,463 35 409

General and administrative 1,431 7 1,358 7 73

Restructuring 40 0 107 1 (67)

Total operating expenses $ 11,284 56 % $ 10,645 58 % $ 639

Research and development expenses as a percentage of total revenues during the three and six months ended July 31, 2025 were consistent with the same periods a year ago.

For the three and six months ended July 31, 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, 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 AI, agents and our Data Cloud service offerings, and the integration of acquired technologies.

Sales and marketing expenses as a percentage of total revenues during the three and six months ended July 31, 2025 decreased by one percent from the same periods a year ago due to a decrease in relative employee-related costs.

For the three and six months ended July 31, 2025, the increase in sales and marketing expenses in absolute dollars was primarily due to an increase in employee-related costs and an increase in marketing events, which includes our Agentforce World Tours.

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

(in millions) 2025 2024

General and administrative expenses as a percentage of total revenues during the three months ended July 31, 2025 decreased by one percent from the same period a year ago due to decreased bad debt expenses and were consistent during the six months ended July 31, 2025 compared to the same period a year ago.

For the three and six months ended July 31, 2025, the increase in general and administrative expenses in absolute dollars was primarily due to an increase in employee-related costs and professional services expenses, partially offset by a decrease in bad debt expenses.

We expect that general and administrative expens es 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 and six months ended July 31, 2025, approximately $4 million and $40 million, respectively, of costs were incurred related to our restructuring initiatives, which were primarily related to employee transitions, severance payments and employee benefits.

Other Income and Expense

Three Months Ended July 31, Variance

(in millions) 2025 2024 Dollars

Gains (losses) on strategic investments, net $ 6 $ (37) $ 43

Other income 68 91 (23)

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.

Six Months Ended July 31, Variance

(in millions) 2025 2024 Dollars

Gains (losses) on strategic investments, net $ (57) $ 0 $ (57)

Other income 163 212 (49)

For the three months ended July 31, 2025, our strategic investment portfolio gains were primarily driven by unrealized gains on privately held equity investments of $53 million, realized gains on sales of securities of $26 million and unrealized gains on publicly traded equity securities of $13 million , partially offset by impairments on privately held investments of $86 million .

For the six months ended July 31, 2025, our strategic investment portfolio losses were primarily driven by impairments on privately held equity investments of $133 million, partially offset by unrealized gains on privately held equity securities of $60 million and realized gains on sales of securities of $19 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 $68 million for the three months ended July 31, 2025 and 2024, respectively, and $135 million and $137 million for the six months ended July 31, 2025 and 2024, respectively.

Provision For Income Taxes

Three Months Ended April 30, Variance

(in millions) 2025 2024

Three Months Ended July 31, Variance

(in millions) 2025 2024 Dollars

Provision for income taxes $ (519) $ (408) $ (111)

Effective tax rate 22 % 22 %

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.

Six Months Ended July 31, Variance

(in millions) 2025 2024 Dollars

Provision for income taxes $ (952) $ (742) $ (210)

Effective tax rate 22 % 20 %

We recorded a tax provision of $519 million and $408 million for the three months ended July 31, 2025 and 2024, respectively, and a tax provision of $952 million and $742 million for the six months ended July 31, 2025 and 2024, respectively.

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

The 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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law.

The OBBBA includes significant changes to US corporate tax provisions of the Tax Cuts and Jobs Act.

Notably, it allows an immediate deduction for domestic research and development expenditures, reinstates 100% bonus depreciation, and modifies the international tax framework.

The legislation has multiple effective dates, with certain provisions effective in fiscal 2026 and others in the subsequent years.

The changes had an immaterial impact to the Company’s tax provision for the period ended July 31, 2025.

The Company may record additional impacts to its tax provision in the subsequent quarters as it continues to analyze the new law, other factors such as changes from its business operations, financial results and forecasts, and interrelated items including changes to our valuation allowance assessment related to Corporate Alternative Minimum Tax (“CAMT”) credits.

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.

At July 31, 2025, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $15.4 billion and accounts receivable of $5.6 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 April 30, 2025, 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 July 31, 2025, also serves as a source of liquidity.

Net cash provided by operating activities could continue to be affected by various risks and uncertainties, including, but not limited to, the risks detailed in Part 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 months ended April 30, 2025, 2024, and 2023 our cash flows were as follows (in millions):

1 Three Months Ended April 30,

For example, we entered into certain credit agreements in connection with our pending acquisition of Informatica.

See discussion in “Debt” below.

We expect lower cash taxes primarily due to the immediate deduction of domestic research and development expenditures allowed by the OBBBA.

For the three and six months ended July 31, 2025 and 2024, our cash flows were as follows (in millions):

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

2025 2024 2025 2024

Net cash provided by operating activities $ 740 $ 892 $ 7,216 $ 7,139

Net cash used in investing activities (1,567) (2,651)

Net cash provided by (used in) investing activities 1,165 2,641 (402) (10)

Net cash used in financing activities (2,503) (5,802) (5,423) (7,910)

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.

The net cash provided by operating activities during the six months ended July 31, 2025 was primarily comprised of net income of $3.4 billion, adjusted for non-cash items, including $1.7 billion of depreciation and amortization and $1.6 billion 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 .

Net cash provided by operating activities during the six months ended July 31, 2025 was further benefited by the changes in accounts receivable, net of $6.3 billion, partially offset by the change in unearned revenue of $4.2 billion and the change in accounts payable and accrued expenses and other liabilities of $1.2 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.

The net cash provided by operating activities during the six months ended July 31, 2024 was primarily comprised of net income of $3.0 billion, adjusted for non-cash items, including $1.8 billion of depreciation and amortization and $1.6 billion of

stock-based compensation expense.

Cash provided by operating activities during the six months ended July 31, 2024 was further benefited by the changes in accounts receivable, net of $6.0 billion partially offset by the change in unearned revenue of $3.8 billion and the change in accounts payable and accrued expenses and other liabilities of $535 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.

The net cash used in investing activities during the six months ended July 31, 2025 was primarily related to net outflows from strategic investment activity of $279 million and capital expenditures of $314 million, partially offset by net inflows from marketable securities activity of $245 million.

The net cash used in investing activities during the six months ended July 31, 2024 was primarily related to net outflows for the acquisition of Spiff of $338 million, net outflows from strategic investment activity of $202 million and capital expenditures of $300 million, partially offset by net inflows from marketable securities activity of $830 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.

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.

The net cash used in financing activities during the six months ended July 31, 2025 was primarily related to $4.9 billion used for repurchases of common stock and $801 million related to payments of dividends, partially offset by $526 million of proceeds from equity plans.

Net cash used in financing activities during the six months ended July 31, 2024 consisted primarily of $6.5 billion used for repurchases of common stock, $1.0 billion related to repayments of debt and $772 million related to payments of dividends, partially offset by $735 million of proceeds from equity plans.

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

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

There were no outstanding borrowings under the Credit Facility as of July 31, 2025.

In June 2025, we entered into a 364-Day Credit Agreement that provides us with the ability to borrow up to $4.0 billion and a three-year Credit Agreement that provides us with the ability to borrow up to $2.0 billion, both on an unsecured basis, to finance a portion of the cash consideration for the pending acquisition of Informatica, the repayment of certain debt of Informatica and the payment of fees, costs and expenses related thereto (collectively, the “Informatica Credit Agreements”).

The availability and funding of each credit agreement is conditioned on the consummation of the acquisition of Informatica in accordance with the terms of the merger agreement and is subject to certain exceptions, qualifications and certain other conditions.

There were no outstanding borrowings under the Informatica Credit Agreements as of July 31, 2025.

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

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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.

In September 2025, the Board authorized an additional $20.0 billion in repurchases under the Share Repurchase Program, for an aggregate total authorized of $50.0 billion.

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

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

Three months ended July 31 8 $ 269.96 $ 2,199 18 $ 246.14 $ 4,288

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.

As of July 31, 2025, we were authorized to purchase a remaining $5.7 billion of the Company’s common stock under the Share Repurchase Program.

Subsequent to July 31, 2025, we have incurred approximately $0.8 billion through August 28, 2025 for additional shares under the Share Repurchase Program.

We announced the following dividends:

Record Date Payment Date Dividend per Share Amount

Quarter Ended 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

April 30, 2025 April 10, 2025 April 24, 2025 $ 0.416 $ 406

July 31, 2025 June 18, 2025 July 10, 2025 $ 0.416 $ 404

April 30, 2024 March 14, 2024 April 11, 2024 $ 0.40 $ 388

July 31, 2024 July 9, 2024 July 25, 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.

As of July 31, 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 July 31, 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 our balance sheet and cash provided by operating activities.

During the six months ended July 31, 2025 and in future years, we have made, and expect to continue to make, additional investments in enterprise cloud computing services to allow us to scale with our customers and continue to evolve 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

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.

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

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

As of July 31, 2025, we expect approximately $30 million to $50 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 our balance sheet and cash provided by operating activities.

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

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

In July 2025, we committed up to $750 million for a strategic investment in Genesys Cloud Services Topco LLC, which offers a cloud-based AI customer experience platform.

We expect to fund this investment in fiscal 2026 with cash on our balance sheet.

Our mergers and acquisitions framework has included several acquisitions that accelerate our agentic roadmap, including our recently announced acquisition of Regrello, a developer of an AI-native business process automation solution.

These acquisitions, along with our pending acquisition of Informatica, are bringing in key talent and technology to accelerate innovation.

Under the terms of the agreement to acquire Regrello, which was entered into in August 2025, we will acquire the company for approximately $900 million in cash, subject to customary purchase price adjustments.

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

The acquisition is expected to close in the third quarter of fiscal 2026, subject to customary closing conditions.

Stakeholder Impact

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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