Salesforce, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, which may consist of, among other things, trend analyses and statements regarding future events, future financial performance, anticipated growth, and industry prospects, are forward-looking. Words such as “aims,” “anticipates,” “assumes,” “believes,” “commitments,” “could,” “estimates,” “expects,” “forecasts,” “foresees,” “goals,” “intends,” “may,” “plans,” “predicts,” “projects,” “seeks,” “should,” “targets” and “would,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are inherently uncertain and based on management’s current expectations and assumptions, which are subject to risks and uncertainties that are difficult to predict, including those described in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk,” Part II, Item 1A, “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements. In light of these and other risks and uncertainties, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur as we expect or at all, and our actual results or outcomes may differ materially and adversely from those expressed or implied in our forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason. Overview Salesforce is a global leader in customer relationship management (“CRM”) technology, enabling companies of every size and industry to connect with their customers through the power of data, artificial intelligence (“AI”), CRM and trust. Founded in 1999, we bring humans together with AI agents to drive customer success on one deeply unified platform. Our platform unites sales, service, marketing, commerce and IT teams by connecting customer data across systems, apps and devices to create a complete view of customers. With this single source of customer truth and integrated AI, teams can be more responsive, productive and efficient, deliver intelligent, personalized experiences across every channel and increase productivity. During the third quarter of fiscal 2025, we introduced Agentforce, a new layer of our trusted platform that enables companies to build and deploy AI agents that can respond to inputs, make decisions and take action autonomously across business functions. Agentforce includes a suite of customizable agents for use across sales, service, marketing and commerce. We continue to invest for growth, including investing in generative and agentic AI across all products, which we believe will change how our customers help their customers, and continuously look to expand our leadership role in the cloud computing industry. We continue to focus on several key growth levers, including driving multiple service offering adoption, increasing our penetration with enterprise and international customers and expanding our industry-specific reach with more vertical software solutions. These growth levers often require a more sophisticated go-to-market approach and, as a result, we may incur additional costs upfront to obtain new customers and expand our relationships with existing customers, including additional sales and marketing expenses specific to subscription and support revenue. As a result, we have seen that customers with many of these characteristics drive higher annual revenues and have lower attrition rates than our company average. In addition to 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. 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 as a percentage of revenue, which could include various restructuring initiatives or measured hiring initiatives to drive operational efficiencies. Highlights from First Nine Months of Fiscal 2026 • Revenue: 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 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. 30 Table of Contents • Net Income per Share: 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: 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 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 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 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 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. The impact of these fluctuations can also be compounded by the seasonality of our business in which our fourth quarter has historically been our strongest quarter for new business and renewals. Fiscal Year Our fiscal year ends on January 31. References to fiscal 2026, for example, refer to the fiscal year ending January 31, 2026. Operating Segments We operate as one segment. See Note 1 “Summary of Business and Significant Accounting Policies” to the condensed consolidated financial statements for further discussion. Sources of Revenues We derive our revenues from two sources: (1) subscription and support revenues and (2) professional services and other revenues. Subscription and support revenues accounted for approximately 95 percent of our total revenues for the 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. Our Cloud Services allow customers to use our multi-tenant software without taking possession of the software. Revenue is generally recognized ratably over the contract term. Subscription and support revenues also include revenues associated with term software licenses that provide the customer with a right to use the software as it exists when made available. Revenues from term software licenses are generally recognized at the point in time when the software is made available to the customer. Revenue from support and updates is recognized as such support and updates are provided, which is generally ratably over the contract term. Changes in contract duration for multi-year term software licenses can impact the amount of revenues recognized upfront. Revenues from term software licenses represent less than ten percent of total subscription and support revenue for the three 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. 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 31 Table of Contents features across these service offerings. Depending on a customer’s actual and projected business requirements, more than one service offering may satisfy the customer’s current and future needs. We record revenue based on the individual products ordered by a customer, not according to the customer’s business requirements and usage. Our growth in revenues is also impacted by attrition. Attrition represents the reduction or loss of the annualized value of our contracts with customers. We calculate our attrition rate at a point in time on a trailing twelve-month basis as of the end of each month. In general, we exclude service offerings from acquisitions from our attrition calculation until they are fully integrated into our customer success organization. As of 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. Consistent attrition rates play a role in our ability to maintain growth in our subscription and support revenues. Seasonal Nature of Unearned Revenue, Accounts Receivable and Operating Cash Flow Unearned revenue primarily consists of billings to customers for our subscription service. Over 90 percent of the value of our billings to customers is for our subscription and support service. We generally invoice our customers in advance, in annual installments, and typical payment terms provide that our customers pay us within 30 days of invoice. Amounts that have been invoiced are recorded in accounts receivable and in unearned revenue or in revenue depending on whether transfer of control to customers has occurred. In general, we collect our billings in advance of the subscription service period. We typically issue renewal invoices in advance of the renewal service period, and depending on timing, the initial invoice for the subscription and services contract and the subsequent renewal invoice may occur in different quarters. There is a disproportionate weighting toward annual billings in the fourth quarter, primarily as a result of large enterprise account buying patterns. Our fourth quarter has historically been our strongest quarter for new business and renewals. The year-on-year compounding effect of this seasonality in both billing patterns and overall new and renewal business causes the value of invoices that we generate in the fourth quarter for both new business and renewals to increase as a proportion of our total annual billings. Accordingly, because of this billing activity, our first quarter is typically our largest collections and operating cash flow quarter. Generally, our 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. For example, operating cash flows may be adversely impacted by acquisitions due to transaction costs, financing costs such as interest expense and lower operating cash flows from the acquired entity. Remaining Performance Obligation Our remaining performance obligation represents all future revenue under contract that has not yet been recognized as revenue and includes unearned revenue and unbilled amounts. Our current remaining performance obligation represents future revenue under contract that is expected to be recognized as revenue in the next 12 months. Remaining performance obligation is not necessarily indicative of future revenue growth and is influenced by several factors, including seasonality, the timing of renewals, average contract terms, foreign currency exchange rates and fluctuations in new business growth. Remaining performance obligation is also impacted by acquisitions. Unbilled portions of the remaining performance obligation denominated in foreign currencies are revalued each period based on the period end exchange rates. For multi-year subscription agreements billed annually, the associated unbilled balance and corresponding remaining performance obligation are typically high at the beginning of the contract period, zero just prior to renewal, and increase if the agreement is renewed. Low remaining performance obligation attributable to a particular subscription agreement is often associated with an impending renewal but may not be an indicator of the likelihood of renewal or future revenue from such customer. Changes in contract duration or the timing of delivery of professional services can impact remaining performance obligation as well as the allocation between current and non-current remaining performance obligation. Cost of Revenues and Operating Expenses Cost of Revenues Cost of subscription and support revenues primarily consists of expenses related to our employee-related costs, which includes salaries, benefits and stock-based compensation expense, delivering our service and providing support, including the costs of data center capacity, certain fees paid to various third parties for the use of their technology, services and data, and allocated overhead. Our cost of subscription and support revenues also includes amortization of certain acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts. Also included in the cost of subscription and support revenues are expenses incurred supporting the free user base of Slack, including third-party hosting costs and employee-related costs specific to customer experience and technical operations. Cost of professional services and other revenues consists primarily of employee-related costs associated with these services, the cost of subcontractors, certain third-party fees and allocated overhead. We believe that our professional services 32 Table of Contents 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. Research and Development Research and development expenses consist primarily of employee-related costs for our engineering staff associated with product development, as well as allocated overhead. Sales and Marketing Sales and marketing expenses make up the majority of our operating expenses and consist primarily of employee-related costs and commissions for our sales and marketing staff, as well as payments to partners, marketing programs and allocated overhead. Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities. We capitalize certain costs to obtain customer contracts, such as commissions, and amortize these costs on a straight-line basis. As such, the timing of expense recognition for these commissions is not consistent with the timing of the associated cash payment. Our sales and marketing expenses include amortization of certain acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s trade names, customer lists and customer relationships. General and Administrative General and administrative expenses consist primarily of employee-related costs for finance and accounting, legal, internal audit, human resources and management information systems personnel, as well as professional services fees and allocated overhead. We allocate overhead such as information technology infrastructure, rent, occupancy charges and certain employee benefits based on headcount. As such, these types of expenses are reflected in each cost of revenue and operating expense category. Restructuring Restructuring consists of charges related to employee transition, severance payments, employee benefits and stock-based compensation as well as impairment charges associated with long-lived assets. Restructuring excludes allocated overhead. Critical Accounting Policies and Estimates Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions. We believe that of our significant accounting policies, which are described in Note 1 “Summary of Business and Significant Accounting Policies” to our condensed consolidated financial statements, the following accounting policies and specific estimates involve a greater degree of judgment and complexity. Accordingly, these are the policies and estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations: • the standalone selling price (“SSP”) of performance obligations for revenue contracts with multiple performance obligations; • the valuation of privately held strategic investments; • the fair value of assets acquired and liabilities assumed for business combinations; • the recognition, measurement and valuation of current and deferred income taxes and uncertain tax positions; • the useful lives of intangible assets; and • the fair value of certain stock awards issued. These estimates may change, as new events occur and additional information is obtained, and such changes will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from these estimates and any such differences may be material to our financial statements. Additionally, refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 for further discussion with respect to these policies and estimates. 33 Table of Contents Recent Accounting Pronouncements See Note 1 “Summary of Business and Significant Accounting Policies” to the condensed consolidated financial statements for our discussion about new accounting pronouncements. Results of Operations The following tables set forth selected data for each of the periods indicated (in millions): 3 Three Months Ended October 31, Nine Months Ended October 31, 2025 % of Total Revenues 2024 % of Total Revenues 2025 % of Total Revenues 2024 % of Total Revenues Revenues: Subscription and support $ 9,726 95 % $ 8,879 94 % $ 28,713 95 % $ 26,228 94 % Professional services and other 533 5 565 6 1,611 5 1,674 6 Total revenues 10,259 100 9,444 100 30,324 100 27,902 100 Cost of revenues (1)(2): Subscription and support 1,665 16 1,501 16 4,921 16 4,617 17 Professional services and other 590 6 604 6 1,841 6 1,809 6 Total cost of revenues 2,255 22 2,105 22 6,762 22 6,426 23 Gross profit 8,004 78 7,339 78 23,562 78 21,476 77 Operating expenses (1)(2): Research and development 1,433 14 1,356 14 4,374 14 4,073 15 Sales and marketing 3,456 34 3,323 35 10,328 34 9,786 35 General and administrative 667 6 711 8 2,098 7 2,069 7 Restructuring 260 3 56 1 300 1 163 1 Total operating expenses 5,816 57 5,446 58 17,100 56 16,091 58 Income from operations 2,188 21 1,893 20 6,462 22 5,385 19 Gains (losses) on strategic investments, net 263 2 (217) (3) 206 0 (217) 0 Other income 61 1 70 1 224 1 282 1 Income before provision for income taxes 2,512 24 1,746 18 6,892 23 5,450 20 Provision for income taxes (426) (4) (219) (2) (1,378) (5) (961) (4) Net income $ 2,086 20 % $ 1,527 16 % $ 5,514 18 % $ 4,489 16 % (1) Amounts related to amortization of intangible assets acquired through business combinations, as follows (in millions): Three Months Ended October 31, Nine Months Ended October 31, 2025 % of Total Revenues 2024 % of Total Revenues 2025 % of Total Revenues 2024 % of Total Revenues Cost of revenues $ 156 2 % $ 131 2 % $ 468 2 % $ 600 2 % Sales and marketing 230 2 223 2 693 2 669 3 (2) Amounts related to stock-based compensation expense, as follows (in millions): 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 Cost of revenues $ 129 1 % $ 135 2 % $ 406 1 % $ 386 2 % Research and development 271 3 278 3 826 3 814 3 Sales and marketing 296 3 312 3 874 3 911 3 General and administrative 109 1 95 1 291 1 267 1 Restructuring 14 0 0 0 29 0 2 0 34 Table of Contents The following table sets forth selected balance sheet data and other metrics for each of the periods indicated (in millions, except remaining performance obligation, which is presented in billions): As of October 31, 2025 January 31, 2025 Cash, cash equivalents and marketable securities $ 11,323 $ 14,032 Unearned revenue 14,996 20,743 Remaining performance obligation 59.5 63.4 Principal due on our outstanding debt obligations (1) 8,500 8,500 (1) Amounts do not include operating or financing lease obligations. Remaining performance obligation represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Revenues Three Months Ended October 31, Variance (in millions) 2025 2024 Dollars Percent Subscription and support $ 9,726 $ 8,879 $ 847 10 % Professional services and other 533 565 (32) (6) Total revenues $ 10,259 $ 9,444 $ 815 9 % Nine Months Ended October 31, Variance (in millions) 2025 2024 Dollars Percent Subscription and support $ 28,713 $ 26,228 $ 2,485 9 % Professional services and other 1,611 1,674 (63) (4) Total revenues $ 30,324 $ 27,902 $ 2,422 9 % 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 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. 35 Table of Contents Subscription and Support Revenues by Service Offering (1) Subscription and support revenues consisted of the following (in millions): 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 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 % 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 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 % (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 October 31, (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Growth Rate Americas $ 6,703 65 % $ 6,220 66 % 8 % Europe 2,470 24 2,228 24 11 Asia Pacific 1,086 11 996 10 9 $ 10,259 100 % $ 9,444 100 % 9 % 36 Table of Contents Nine Months Ended October 31, (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Growth Rate Americas $ 19,908 66 % $ 18,483 66 % 8 % Europe 7,236 24 6,557 24 10 Asia Pacific 3,180 10 2,862 10 11 $ 30,324 100 % $ 27,902 100 % 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. 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 October 31, Variance (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Dollars Subscription and support $ 1,665 16 % $ 1,501 16 % $ 164 Professional services and other 590 6 604 6 (14) Total cost of revenues $ 2,255 22 % $ 2,105 22 % $ 150 Nine Months Ended October 31, Variance (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Dollars Subscription and support $ 4,921 16 % $ 4,617 17 % $ 304 Professional services and other 1,841 6 1,809 6 32 Total cost of revenues $ 6,762 22 % $ 6,426 23 % $ 336 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. The timing of these expenses, which also includes the use of AI and agents, may cause our cost of revenues as a percentage of revenues to fluctuate over time due to changes in demand for our service offerings. 37 Table of Contents Operating Expenses Three Months Ended October 31, Variance (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Dollars Research and development $ 1,433 14 % $ 1,356 14 % $ 77 Sales and marketing 3,456 34 3,323 35 133 General and administrative 667 6 711 8 (44) Restructuring 260 3 56 1 204 Total operating expenses $ 5,816 57 % $ 5,446 58 % $ 370 Nine Months Ended October 31, Variance (in millions) 2025 As a % of Total Revenues 2024 As a % of Total Revenues Dollars Research and development $ 4,374 14 % $ 4,073 15 % $ 301 Sales and marketing 10,328 34 9,786 35 542 General and administrative 2,098 7 2,069 7 29 Restructuring 300 1 163 1 137 Total operating expenses $ 17,100 56 % $ 16,091 58 % $ 1,009 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 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 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 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. 38 Table of Contents Other Income and Expense Three Months Ended October 31, Variance (in millions) 2025 2024 Dollars Gains (losses) on strategic investments, net $ 263 $ (217) $ 480 Other income 61 70 (9) Nine Months Ended October 31, Variance (in millions) 2025 2024 Dollars Gains (losses) on strategic investments, net $ 206 $ (217) $ 423 Other income 224 282 (58) 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 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 October 31, Variance (in millions) 2025 2024 Dollars Provision for income taxes $ (426) $ (219) $ (207) Effective tax rate 17 % 13 % Nine Months Ended October 31, Variance (in millions) 2025 2024 Dollars Provision for income taxes $ (1,378) $ (961) $ (417) Effective tax rate 20 % 18 % 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. 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 October 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”). Liquidity and Capital Resources 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. treasury securities, U.S. agency obligations, asset-backed securities, foreign government obligations, mortgage-backed obligations, covered bonds, time deposits, money market mutual funds and municipal securities. Our Revolving Loan Credit Agreement (as defined below), which provides the ability to borrow up to $5.0 billion in unsecured financing (the “Credit Facility”) as of October 31, 2025, also serves as a source of liquidity. 39 Table of Contents Net cash provided by operating activities could continue to be affected by various risks and uncertainties, including, but not limited to, the risks detailed in Part II, Item 1A, “Risk Factors.” We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities, unbilled amounts related to contracted noncancellable subscription agreements, which are not reflected on the balance sheet, and, if necessary, our borrowing capacity under our Credit Facility will be sufficient to meet our working capital, capital expenditure and debt maintenance needs over the next 12 months and thereafter. In the future, we may enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. To facilitate these acquisitions or investments, we may seek additional equity or debt financing, which may not be available on terms favorable to us or at all, impacting our ability to complete subsequent acquisitions or investments. 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. Cash Flows 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 Net cash provided by operating activities $ 2,316 $ 1,983 $ 9,532 $ 9,122 Net cash provided by (used in) investing activities 519 (217) 117 (227) Net cash used in financing activities (4,244) (1,446) (9,667) (9,356) Operating Activities 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 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 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 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 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. 40 Table of Contents Debt 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”). The Revolving Loan Credit Agreement replaced the Credit Agreement, dated December 23, 2020 (as amended, the “Prior Credit Agreement”), among us, the lenders and the issuing lenders party thereto, and Citibank, N.A., as administrative agent, which provided for a $3.0 billion unsecured revolving credit facility that was scheduled to mature on December 23, 2025. There were no outstanding borrowings under the Prior Credit Agreement. The Revolving Loan Credit Agreement provides for a $5.0 billion Credit Facility and matures in October 2029. We may use the proceeds of future borrowings under the Credit Facility for general corporate purposes. There were no outstanding borrowings under the Credit Facility as of 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. 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. We repurchased the following under the Share Repurchase Program (in millions, except average price per share): 2025 2024 Shares Average price per share Amount Shares Average price per share Amount Three months ended April 30 10 $ 273.42 $ 2,681 7 $ 293.00 $ 2,168 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 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. 41 Table of Contents Dividends We announced the following dividends: Quarter Ended Record Date Payment Date Dividend per Share Amount (in millions) Fiscal 2026 April 30, 2025 April 10, 2025 April 24, 2025 $ 0.416 $ 406 July 31, 2025 June 18, 2025 July 10, 2025 $ 0.416 $ 404 October 31, 2025 September 17, 2025 October 9, 2025 $ 0.416 $ 400 Fiscal 2025 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 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 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. While we continue to make investments in our infrastructure and with infrastructure service providers to provide capacity for the growth of our business, our strategy may continue to change related to these investments and we may slow the pace of our investments. Other Future Obligations As of 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 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 We believe that business is the greatest platform for change. Guided by our values, we work to earn the trust of our stakeholders. Transparency is key to trust, which is why we have published an annual Stakeholder Impact Report for over ten years to keep our stakeholders informed and to hold ourselves accountable to our sustainability, impact and equality strategies. Our disclosures in these areas are also informed by topics identified through relevancy assessments and third-party ESG reporting organizations, frameworks and standards, such as the Sustainability Accounting Standards Board (“SASB”) Standards. Read more about these initiatives and view our Stakeholder Impact Report at https://salesforce.com/stakeholder-impact-report. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this report. 42 Table of Contents