What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-12-04 compared with 2025-09-04 · 119 added, 126 removed, 288 unchanged (46% 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.

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.

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

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

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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 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.

In addition to these growth levers, our mergers and acquisitions framework has included several acquisitions that accelerate our agentic roadmap, including our October 2025 acquisition of Regrello Corp.

(“Regrello”) and our November 2025 acquisition of Informatica Inc.

(“Informatica”).

These acquisitions are bringing in key talent and technology to accelerate innovation.

We are also focused on reducing our operating expenses to improve our operating margin.

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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.

Highlights from First Nine Months of Fiscal 2026

For the nine months ended October 31, 2025, revenue was $30.3 billion , an increase of nine percent year-over-year.

• Income from Operations:

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.

For the nine months ended October 31, 2025, income from operations was $6.5 billion as compared to $5.4 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 nine months ended October 31, 2025 compared to approximately 19 percent in the prior year period.

• Net Income per Share:

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.

For the nine months ended October 31, 2025 , diluted net income per share was $5.73 as compared to diluted net income per share of $4.60 from a year ago.

Cash provided by operations for the nine months ended October 31, 2025 was $9.5 billion , an increase of four percent year-over-year.

Total cash, cash equivalents and marketable securities as of October 31, 2025 was $11.3 billion.

• Remaining Performance Obligation:

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.

Total remaining performance obligation, which represents all future revenue under contract yet to be recognized, as of October 31, 2025 was approximately $59.5 billion, an increase of 12 percent year-over-year .

Current remaining performance obligation as of October 31, 2025 was approximately $29.4 billion , an increase of 11 percent year-over-year.

• Share Repurchase Program:

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

During the nine months ended October 31, 2025, we repurchased approximately 33 million shares of our common stock for approximately $8.7 billion.

• Dividend Program :

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.

During the nine months ended October 31, 2025, we paid approximately $1.2 billion in dividends and dividend equivalents.

• Informatica Acquisition:

In November 2025, we completed our acquisition of Informatica, an AI-powered enterprise cloud data management platform, for approximately $9.6 billion.

Over the first three quarters 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 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 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.

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

Our current remaining performance obligation growth as of October 31, 2025 compared to October 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 six months ended July 31, 2025.

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

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

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.

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.

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

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

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

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

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

We believe that our professional services

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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):

July 31, 2025

October 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 July 31, Variance

Three Months Ended October 31, Variance

(in millions) 2025 2024 Dollars Percent

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Total revenues $ 10,259 $ 9,444 $ 815 9 %

Six Months Ended July 31, Variance

Nine Months Ended October 31, Variance

(in millions) 2025 2024 Dollars Percent

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Total revenues $ 30,324 $ 27,902 $ 2,422 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.

The increase in s ubscription and support revenues for the three and nine months ended October 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.

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

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

The decrease in professional services and other revenues for the three and nine months ended October 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 (1)

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

Three Months Ended July 31,

Three Months Ended October 31,

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

Sales $ 2,267 23 % $ 2,071 24 % 9 %

Service 2,458 25 2,257 26 9

Platform and Other 2,084 22 1,786 20 17

Marketing and Commerce 1,365 14 1,308 15 4

Integration and Analytics 1,516 16 1,342 15 13

Agentforce Sales $ 2,297 24 % $ 2,119 24 % 8 %

Agentforce Service 2,495 26 2,288 26 9

Agentforce 360 Platform, Slack and Other 2,180 22 1,825 20 19

Agentforce Marketing and Agentforce Commerce 1,361 14 1,334 15 2

Agentforce Integration and Agentforce Analytics 1,393 14 1,313 15 6

Total $ 9,726 100 % $ 8,879 100 % 10 %

Six Months Ended July 31,

Nine Months Ended October 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

Agentforce Sales $ 6,695 23 % $ 6,188 24 % 8 %

Agentforce Service 7,287 25 6,727 26 8

Agentforce 360 Platform, Slack and Other 6,227 22 5,329 20 17

Agentforce Marketing and Agentforce Commerce 4,051 14 3,924 15 3

Agentforce Integration and Agentforce Analytics 4,453 16 4,060 15 10

Total $ 28,713 100 % $ 26,228 100 % 9 %

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.

(1) In the third quarter of fiscal 2026, we renamed our service offerings to reference Agentforce.

There were no changes in the allocation of revenue between these service offerings coming from this change.

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

Revenues by Geography

Three Months Ended July 31,

Three Months Ended October 31,

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

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$ 10,259 100 % $ 9,444 100 % 9 %

Six Months Ended July 31,

Nine Months Ended October 31,

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

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

The increase in revenues across all regions was 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.

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 October 31, 2025 compared to the three months ended October 31, 2024, and were minimally impacted by foreign currency fluctuations during the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024.

Cost of Revenues

Three Months Ended July 31, Variance

Three Months Ended October 31, Variance

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

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Total cost of revenues $ 2,255 22 % $ 2,105 22 % $ 150

Six Months Ended July 31, Variance

Nine Months Ended October 31, Variance

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

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Total cost of revenues $ 6,762 22 % $ 6,426 23 % $ 336

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.

Cost of revenues as a percentage of total revenues during the three months ended October 31, 2025 were consistent with the same period a year ago and decreased by approximately one percent during the nine months ended October 31, 2025 compared to the same period a year ago, primarily as a result of a decrease in amortization of intangible assets acquired through business combinations.

For the three and nine months ended October 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.

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 July 31, Variance

Three Months Ended October 31, Variance

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

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Total operating expenses $ 5,816 57 % $ 5,446 58 % $ 370

Six Months Ended July 31, Variance

Nine Months Ended October 31, Variance

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

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Total operating expenses $ 17,100 56 % $ 16,091 58 % $ 1,009

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.

Research and development expenses as a percentage of total revenues during the three months ended October 31, 2025 were consistent with the same period a year ago and decreased by approximately one percent during the nine months ended October 31, 2025 compared to the same period a year ago, primarily as a result of employee-related cost growth being outpaced by revenue growth.

For the three and nine months ended October 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.

Sales and marketing expenses as a percentage of total revenues during the three and nine months ended October 31, 2025 decreased by approximately one percent compared to the same periods a year ago, primarily as a result of employee-related cost growth being outpaced by revenue growth during the three months ended October 31, 2025 and a decrease in advertising and marketing events during the nine months ended October 31, 2025, respectively.

For the three and nine months ended October 31, 2025, the increase in sales and marketing expenses in absolute dollars was primarily due to an increase in employee-related costs.

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.

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.

General and administrative expenses as a percentage of total revenues during the three months ended October 31, 2025 decreased by approximately two percent compared to the same period a year ago due to decreased employee-related costs and decreased bad debt expenses and during the nine months ended October 31, 2025 were consistent compared to the same period a year ago.

For the three months ended October 31, 2025, the decrease in general and administrative expenses in absolute dollars was primarily due to a decrease in bad debt expenses.

For the nine months ended October 31, 2025, the general and administrative expenses were relatively flat in absolute dollars compared to the same period a year ago.

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.

In the three and nine months ended October 31, 2025, approximately $260 million and $300 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

Three Months Ended October 31, Variance

(in millions) 2025 2024 Dollars

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Other income 61 70 (9)

Six Months Ended July 31, Variance

Nine Months Ended October 31, Variance

(in millions) 2025 2024 Dollars

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Other income 224 282 (58)

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, impairments and other adjustments.

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.

Gains (losses) on strategic investments, net primarily reflect mark-to-market and observable price adjustments for equity securities, offset by impairments.

For the three months ended October 31, 2025, our strategic investment portfolio gains were primarily driven by unrealized gains on privately held equity investments of $428 million , partially offset by impairments on privately held investments of $169 million .

For the nine months ended October 31, 2025, our strategic investment portfolio gains were primarily driven by unrealized gains on privately held equity investments of $488 million and realized gains on sales of securities of $23 million, partially offset by impairments on privately held investments of $302 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.

Interest expense was $67 million for the three months ended October 31, 2025 and 2024, respectively, and $202 million and $204 million for the nine months ended October 31, 2025 and 2024, respectively.

Provision For Income Taxes

Three Months Ended July 31, Variance

Three Months Ended October 31, Variance

(in millions) 2025 2024 Dollars

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Effective tax rate 17 % 13 %

Six Months Ended July 31, Variance

Nine Months Ended October 31, Variance

(in millions) 2025 2024 Dollars

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Effective tax rate 20 % 18 %

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.

We recorded a tax provision of $426 million and $219 million for the three months ended October 31, 2025 and 2024, respectively, and a tax provision of approximately $1.4 billion and $961 million for the nine months ended October 31, 2025 and 2024, respectively.

Our effective tax rates 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.

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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.

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

Liquidity and Capital Resources

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.

As of October 31, 2025, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $11.3 billion and accounts receivable of $5.5 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 July 31, 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 October 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 example, we entered into certain credit agreements in connection with our pending acquisition of Informatica.

For example, we entered into certain credit agreements in connection with our 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,

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

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

2025 2024 2025 2024

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Operating Activities

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.

The net cash provided by operating activities during the nine months ended October 31, 2025 was primarily comprised of net income of $5.5 billion, adjusted for non-cash items, including $2.5 billion of depreciation and amortization and $2.4 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 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.

Net cash provided by operating activities during the nine months ended October 31, 2025 was further benefited by the changes in accounts receivable, net of $6.5 billion, partially offset by the change in unearned revenue of $5.7 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 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.

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

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

Investing Activities

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.

The net cash provided by investing activities during the nine months ended October 31, 2025 was primarily related to net inflows from marketable securities activity of $2.9 billion, partially offset by net outflows from strategic investment activity of $1.3 billion and capital expenditures of $453 million.

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

Financing Activities

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.

The net cash used in financing activities during the nine months ended October 31, 2025 was primarily related to $8.7 billion used for repurchases of common stock and $1.2 billion related to payments of dividends, partially offset by $765 million of proceeds from equity plans.

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

As of October 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 October 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 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.

There were no outstanding borrowings under the Credit Facility as of October 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 (the “364-Day Informatica Credit Agreement”) and a three-year Credit Agreement that provides us with the ability to borrow up to $2.0 billion (the “Three-Year Informatica Credit Agreement” and, together with the 364-Day Informatica Credit Agreement, the “Informatica Credit Agreements”), both on an unsecured basis, to finance a portion of the cash consideration for the acquisition of Informatica, the repayment of certain debt of Informatica and the payment of fees, costs and expenses related thereto.

The availability and funding of each credit agreement is subject to certain exceptions, qualifications and certain other conditions.

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

In November 2025, as part of the acquisition of Informatica, we borrowed the full $6.0 billion available under the credit facilities associated with the Informatica Credit Agreements.

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.

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.

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.

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

Three months ended October 31 15 $ 246.33 $ 3,814 5 $ 257.00 $ 1,228

All repurchases were made in open market transactions.

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.

As of October 31, 2025, we were authorized to purchase a remaining $21.9 billion of the Company’s common stock under the Share Repurchase Program.

Subsequent to October 31, 2025, we have incurred approximately $1.2 billion through November 28, 2025 for additional shares repurchased under the Share Repurchase Program.

We announced the following dividends:

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

October 31, 2025 September 17, 2025 October 9, 2025 $ 0.416 $ 400

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

July 31, 2024 July 9, 2024 July 25, 2024 $ 0.40 $ 388

October 31, 2024 September 18, 2024 October 8, 2024 $ 0.40 $ 385

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 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.

As of October 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 October 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.

During the nine months ended October 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 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.

As of October 31, 2025, we expect approximately $160 million to $180 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.

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.

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.

In November 2025, we acquired all outstanding stock of Informatica, an AI-powered enterprise cloud data management platform for approximately $9.6 billion, comprised primarily of $9.5 billion in cash.

The cash portion included proceeds from the Informatica Credit Agreements of $6.0 billion.

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