PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) Salesforce, Inc.'s unaudited condensed consolidated financial statements for the three and six months ended July 31, 2025 and 2024, including detailed notes, are presented [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of Salesforce's financial position, detailing assets, liabilities, and stockholders' equity at specific dates | Metric | July 31, 2025 (in millions) | January 31, 2025 (in millions) | | :----------------------------------- | :-------------------------- | :--------------------------- | | **Assets** | | | | Total current assets | $25,331 | $29,727 | | Total assets | $97,573 | $102,928 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $22,532 | $27,980 | | Total liabilities | $36,245 | $41,755 | | Total stockholders' equity | $61,328 | $61,173 | - Total assets decreased from $102,928 million as of January 31, 2025, to $97,573 million as of July 31, 2025, a decrease of approximately **5.2%**[8](index=8&type=chunk) - Total current liabilities decreased significantly from $27,980 million to $22,532 million, a reduction of approximately **19.5%** over the six-month period[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement outlines Salesforce's financial performance, presenting revenues, expenses, and net income over specific periods | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Total revenues | $10,236 | $9,325 | $20,065 | $18,458 | | Gross profit | $7,994 | $7,166 | $15,558 | $14,137 | | Income from operations | $2,332 | $1,783 | $4,274 | $3,492 | | Net income | $1,887 | $1,429 | $3,428 | $2,962 | | Diluted net income per share | $1.96 | $1.47 | $3.55 | $3.03 | - Total revenues increased by **10%** for the three months ended July 31, 2025, and by **9%** for the six months ended July 31, 2025, compared to the prior year periods[11](index=11&type=chunk) - Net income grew by **32%** for the three months ended July 31, 2025, and by **16%** for the six months ended July 31, 2025, year-over-year[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents Salesforce's net income and other comprehensive income, reflecting changes in equity from non-owner sources | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Net income | $1,887 | $1,429 | $3,428 | $2,962 | | Other comprehensive income (loss), net | $177 | $34 | $313 | $(11) | | Comprehensive income | $2,064 | $1,463 | $3,741 | $2,951 | - Other comprehensive income significantly improved, moving from a loss of **$11 million** in the six months ended July 31, 2024, to a gain of **$313 million** in the same period of 2025, primarily driven by foreign currency translation gains[13](index=13&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement details changes in Salesforce's equity accounts, including common stock, retained earnings, and treasury stock | Metric | January 31, 2025 (in millions) | July 31, 2025 (in millions) | | :-------------------------------- | :--------------------------- | :-------------------------- | | Total Stockholders' Equity | $61,173 | $61,328 | | Treasury Stock, at cost | $(19,507) | $(24,408) | | Retained Earnings | $16,369 | $18,987 | | Additional Paid-in Capital | $64,576 | $66,701 | - Treasury stock increased by **$4,901 million** from January 31, 2025, to July 31, 2025, reflecting significant share repurchases[16](index=16&type=chunk) - Retained earnings increased by **$2,618 million**, indicating strong net income generation over the period[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes Salesforce's cash inflows and outflows from operating, investing, and financing activities | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $740 | $892 | $7,216 | $7,139 | | Net cash provided by (used in) investing activities | $1,165 | $2,641 | $(402) | $(10) | | Net cash used in financing activities | $(2,503) | $(5,802) | $(5,423) | $(7,910) | | Net increase (decrease) in cash and cash equivalents | $(563) | $(2,276) | $1,517 | $(790) | | Cash and cash equivalents, end of period | $10,365 | $7,682 | $10,365 | $7,682 | - Net cash provided by operating activities increased slightly by **1%** to **$7,216 million** for the six months ended July 31, 2025, compared to **$7,139 million** in the prior year[18](index=18&type=chunk) - Net cash used in investing activities significantly increased to **$402 million** for the six months ended July 31, 2025, from **$10 million** in the prior year, primarily due to strategic investment outflows and capital expenditures[18](index=18&type=chunk) - Net cash used in financing activities decreased by **31.4%** to **$5,423 million** for the six months ended July 31, 2025, mainly due to lower common stock repurchases compared to the prior year[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of Salesforce's accounting policies and specific line items within the financial statements [Note 1. Summary of Business and Significant Accounting Policies](index=11&type=section&id=Note%201.%20Summary%20of%20Business%20and%20Significant%20Accounting%20Policies) This note describes Salesforce's core CRM business, AI platform, fiscal year, and significant accounting policies for various financial elements - Salesforce is a global leader in CRM technology, leveraging its unified platform with integrated AI to help companies across sales, service, marketing, and commerce[24](index=24&type=chunk) - The company introduced Agentforce during the third quarter of fiscal 2025, a new AI layer enabling autonomous AI agents across business functions[24](index=24&type=chunk) - Salesforce operates as one operating segment, with the CEO evaluating financial information and resources on a consolidated net income basis[32](index=32&type=chunk) - Revenue is primarily derived from subscription and support services (Cloud Services, software licenses, support) and professional services, recognized upon transfer of control[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 2. Revenues](index=20&type=section&id=Note%202.%20Revenues) This note disaggregates Salesforce's revenue by service offering and geographic region, detailing contract balances and performance obligations | Service Offering | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :------------------------ | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Sales | $2,267 | $2,071 | $4,398 | $4,069 | | Service | $2,458 | $2,257 | $4,792 | $4,439 | | Platform and Other | $2,084 | $1,786 | $4,047 | $3,504 | | Marketing and Commerce | $1,365 | $1,308 | $2,690 | $2,590 | | Integration and Analytics | $1,516 | $1,342 | $3,060 | $2,747 | | Total Subscription & Support | $9,690 | $8,764 | $18,987 | $17,349 | | Geographic Region | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :------------------ | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Americas | $6,736 | $6,201 | $13,205 | $12,263 | | Europe | $2,429 | $2,184 | $4,766 | $4,329 | | Asia Pacific | $1,071 | $940 | $2,094 | $1,866 | | Total Revenues | $10,236 | $9,325 | $20,065 | $18,458 | - Remaining performance obligation decreased from **$63.4 billion** as of January 31, 2025, to **$59.9 billion** as of July 31, 2025[99](index=99&type=chunk) [Note 3. Investments](index=22&type=section&id=Note%203.%20Investments) This note details Salesforce's marketable securities and strategic equity investments, including fair values, gains, and losses | Metric | July 31, 2025 (in millions) | January 31, 2025 (in millions) | | :-------------------------- | :-------------------------- | :--------------------------- | | Total marketable securities | $5,007 | $5,184 | | Total strategic investments | $5,085 | $4,852 | | Gains (losses) on Strategic Investments, Net | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Unrealized gains (losses) on publicly traded equity securities, net | $13 | $(22) | $(3) | $(19) | | Unrealized gains recognized on privately held equity securities, net | $53 | $44 | $60 | $149 | | Impairments on privately held equity securities and other investments | $(86) | $(60) | $(133) | $(190) | | Realized gains on sales of securities, net | $26 | $1 | $19 | $60 | | Total Gains (losses) on strategic investments, net | $6 | $(37) | $(57) | $0 | - Gains (losses) on strategic investments, net, improved significantly from a loss of **$37 million** in Q3 2024 to a gain of **$6 million** in Q3 2025, primarily driven by unrealized gains on privately held equity investments and realized gains on sales of securities[104](index=104&type=chunk) [Note 4. Fair Value Measurement](index=23&type=section&id=Note%204.%20Fair%20Value%20Measurement) This note describes Salesforce's fair value measurement hierarchy for financial assets, including cash equivalents, marketable securities, and strategic investments - All cash equivalents, marketable securities, and foreign currency derivative contracts are classified within **Level 1 or Level 2**, indicating valuation using quoted market prices or observable market inputs[107](index=107&type=chunk) - Privately held equity securities and other investments are primarily recorded at fair value on a non-recurring basis and are deemed **Level 3**, requiring significant unobservable inputs and management judgment[110](index=110&type=chunk) [Note 5. Leases and Other Commitments](index=25&type=section&id=Note%205.%20Leases%20and%20Other%20Commitments) This note outlines Salesforce's operating and finance lease obligations, including costs and future minimum lease payments | Lease Type | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :----------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Operating lease costs | $149 | $193 | $296 | $351 | - Total operating lease costs decreased by **22.8%** for the three months ended July 31, 2025, and by **15.7%** for the six months ended July 31, 2025, compared to the prior year periods, partly due to restructuring charges[112](index=112&type=chunk) | Fiscal Period | Operating Leases (in millions) | Finance Leases (in millions) | | :-------------------------- | :----------------------------- | :--------------------------- | | Remaining six months of fiscal 2026 | $333 | $170 | | Fiscal 2027 | $609 | $271 | | Fiscal 2028 | $557 | $91 | | Fiscal 2029 | $468 | $45 | | Fiscal 2030 | $316 | $28 | | Thereafter | $867 | $2 | | Total minimum lease payments | $3,150 | $607 | [Note 6. Business Combinations](index=26&type=section&id=Note%206.%20Business%20Combinations) This note discloses Salesforce's pending acquisition of Informatica Inc., an AI-powered enterprise cloud data management platform, for approximately $8 billion in cash, net of current investment - Salesforce entered into a definitive agreement in May 2025 to acquire Informatica Inc., an AI-powered enterprise cloud data management platform[114](index=114&type=chunk) - The acquisition is valued at approximately **$8 billion** in cash, net of Salesforce's current investment in Informatica[114](index=114&type=chunk) - The transaction is anticipated to close in the fourth quarter of fiscal 2026 or early fiscal 2027, pending regulatory clearances and other customary closing conditions[115](index=115&type=chunk) [Note 7. Intangible Assets Acquired Through Business Combinations and Goodwill](index=26&type=section&id=Note%207.%20Intangible%20Assets%20Acquired%20Through%20Business%20Combinations%20and%20Goodwill) This note details intangible assets acquired through business combinations, including amortization, and reports changes in goodwill | Intangible Asset Type | July 31, 2025 (Net, in millions) | January 31, 2025 (Net, in millions) | Weighted Average Remaining Useful Life (Years) | | :------------------------------------ | :------------------------------- | :-------------------------------- | :--------------------------------------------- | | Acquired developed technology | $909 | $1,205 | 0.5 | | Customer relationships | $2,645 | $3,074 | 3.2 | | Other | $115 | $149 | 1.7 | | Total Intangible Assets, Net | $3,669 | $4,428 | 2.5 | - Amortization of intangible assets decreased to **$380 million** for the three months ended July 31, 2025, from **$454 million** in the prior year, and to **$775 million** for the six months ended July 31, 2025, from **$915 million** in the prior year[117](index=117&type=chunk) | Metric | January 31, 2025 (in millions) | July 31, 2025 (in millions) | | :------- | :--------------------------- | :-------------------------- | | Goodwill | $51,283 | $51,438 | [Note 8. Debt](index=27&type=section&id=Note%208.%20Debt) This note details Salesforce's outstanding senior unsecured notes, revolving credit facilities, and new credit agreements for acquisitions | Debt Instrument | Maturity Date | Contractual Interest Rate | Principal as of July 31, 2025 (in millions) | | :------------------------------ | :------------ | :------------------------ | :---------------------------------------- | | 2028 Senior Notes | April 2028 | 3.70% | $1,500 | | 2028 Senior Sustainability Notes | July 2028 | 1.50% | $1,000 | | 2031 Senior Notes | July 2031 | 1.95% | $1,500 | | 2041 Senior Notes | July 2041 | 2.70% | $1,250 | | 2051 Senior Notes | July 2051 | 2.90% | $2,000 | | 2061 Senior Notes | July 2061 | 3.05% | $1,250 | | Total principal outstanding | | | $8,500 | - Salesforce entered into a new **$5.0 billion** unsecured revolving credit facility in October 2024, maturing in October 2029, with no outstanding borrowings as of July 31, 2025[124](index=124&type=chunk) - In June 2025, the company secured two new unsecured credit agreements totaling **$6.0 billion** (**$4.0 billion** 364-day and **$2.0 billion** three-year) to finance the Informatica acquisition, with no outstanding borrowings as of July 31, 2025[126](index=126&type=chunk) [Note 9. Restructuring](index=28&type=section&id=Note%209.%20Restructuring) This note details Salesforce's restructuring initiatives, which began in fiscal 2023, aimed at improving operating margins and achieving profitable growth | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :----------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Restructuring charges | $4 | $99 | $40 | $107 | - Restructuring charges significantly decreased by **95.9%** for the three months ended July 31, 2025, and by **62.6%** for the six months ended July 31, 2025, compared to the prior year periods[127](index=127&type=chunk) - The charges were primarily related to workforce reductions, including employee transition, severance payments, employee benefits, and stock-based compensation[127](index=127&type=chunk) [Note 10. Stockholders' Equity](index=28&type=section&id=Note%2010.%20Stockholders'%20Equity) This note details Salesforce's stock option and restricted stock activity, remaining compensation expense, share repurchase program, and dividends | Metric | As of July 31, 2025 (in millions) | | :--------------------------------------- | :-------------------------------- | | Stock Options Outstanding | 7 | | Restricted Stock Outstanding | 28 | | Aggregate expected stock-based compensation expense remaining to be recognized | $7,037 | - The Board authorized an additional **$20.0 billion** for the Share Repurchase Program in September 2025, increasing the total authorization to **$50.0 billion**[132](index=132&type=chunk) | Quarter Ended | Dividend per Share | Amount (in millions) | | :-------------- | :----------------- | :------------------- | | April 30, 2025 | $0.416 | $406 | | July 31, 2025 | $0.416 | $404 | | April 30, 2024 | $0.40 | $388 | | July 31, 2024 | $0.40 | $388 | [Note 11. Income Taxes](index=30&type=section&id=Note%2011.%20Income%20Taxes) This note details Salesforce's effective tax rate, which was 22% for the six months ended July 31, 2025, primarily due to state and local taxes and non-deductible items | Metric | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :------------------------ | :------------------------------------ | :------------------------------------ | | Pretax income | $4,380 | $3,704 | | Provision for income taxes | $(952) | $(742) | | Effective tax rate | 22% | 20% | - The effective tax rate increased from **20%** in the prior year to **22%** for the six months ended July 31, 2025, mainly due to lower excess tax benefits from stock-based compensation[134](index=134&type=chunk)[136](index=136&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, allows immediate deduction for domestic R&D and reinstates 100% bonus depreciation, with an immaterial impact on the current period's tax provision[135](index=135&type=chunk) [Note 12. Net Income Per Share](index=30&type=section&id=Note%2012.%20Net%20Income%20Per%20Share) This note provides the calculation of basic and diluted net income per share for Salesforce, including the weighted-average shares outstanding and the dilutive effect of employee stock awards | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income (in millions) | $1,887 | $1,429 | $3,428 | $2,962 | | Basic net income per share | $1.97 | $1.48 | $3.58 | $3.06 | | Diluted net income per share | $1.96 | $1.47 | $3.55 | $3.03 | | Shares used in computing basic net income per share (in millions) | 956 | 964 | 958 | 967 | | Shares used in computing diluted net income per share (in millions) | 962 | 973 | 966 | 979 | - Diluted net income per share increased by **33.3%** to **$1.96** for the three months ended July 31, 2025, and by **17.2%** to **$3.55** for the six months ended July 31, 2025, year-over-year[139](index=139&type=chunk) | Anti-dilutive Employee Stock Awards (in millions) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Employee stock awards | 9 | 13 | 5 | 9 | [Note 13. Legal Proceedings and Claims](index=31&type=section&id=Note%2013.%20Legal%20Proceedings%20and%20Claims) This note details Salesforce's involvement in various legal proceedings, including class action lawsuits against Slack related to its registration statement and multiple actions concerning the activities of a former customer, Backpage.com, alleging facilitation of sex trafficking - Salesforce is involved in ongoing Slack litigation, a securities class action lawsuit, which remains stayed pending resolution of appellate proceedings in the Federal Action[145](index=145&type=chunk) - The company is a defendant in multiple state and federal actions related to its former customer, Backpage.com, alleging facilitation of sex trafficking, with trials scheduled for June 2026 in one matter[146](index=146&type=chunk)[147](index=147&type=chunk) - Management believes the resolution of all current legal matters is not expected to have a material adverse impact on the company's financial statements[144](index=144&type=chunk) [Note 14. Subsequent Events](index=32&type=section&id=Note%2014.%20Subsequent%20Events) This note discloses Salesforce's agreement in August 2025 to acquire Regrello Corp., an AI-native business process automation solution developer, for approximately $900 million in cash - In August 2025, Salesforce agreed to acquire Regrello Corp., an AI-native business process automation solution, for approximately **$900 million** in cash[148](index=148&type=chunk) - The Regrello acquisition is expected to close in the third quarter of fiscal 2026, subject to customary closing conditions[148](index=148&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Salesforce's financial condition, operational results, key performance indicators, strategic initiatives, and future outlook, including critical accounting policies and risks [Overview](index=33&type=section&id=Overview) This overview highlights Salesforce's position as a CRM leader, its AI-driven platform, growth strategies, and commitment to improving operating margins - Salesforce is a global leader in CRM technology, connecting customers through data, AI, CRM, and trust, with a unified platform for sales, service, marketing, commerce, and IT[152](index=152&type=chunk)[153](index=153&type=chunk) - The company introduced Agentforce in Q3 fiscal 2025, a new AI layer enabling autonomous AI agents across business functions[153](index=153&type=chunk) - Salesforce focuses on growth levers including multi-service adoption, enterprise/international penetration, industry-specific solutions, and strategic M&A to accelerate AI roadmap[154](index=154&type=chunk) - The company is committed to reducing operating expenses and improving operating margins through restructuring initiatives, workforce reductions, and cost optimization[155](index=155&type=chunk) [Highlights from First Six Months of Fiscal 2026](index=33&type=section&id=Highlights%20from%20First%20Six%20Months%20of%20Fiscal%202026) This section summarizes Salesforce's key financial and operational achievements for the first six months of fiscal 2026, including revenue growth and strategic acquisitions | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Year-over-Year Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Revenue | $20.1 billion | $18.5 billion | +9% | | Income from Operations | $4.3 billion | $3.5 billion | +22.9% | | Operating Margin | 22% | 19% | +3 ppts | | Diluted Net Income per Share | $3.55 | $3.03 | +17.2% | | Cash provided by operations | $7.2 billion | $7.1 billion | +1% | | Total cash, cash equivalents and marketable securities (as of July 31, 2025) | $15.4 billion | N/A | N/A | | Total remaining performance obligation (as of July 31, 2025) | $59.9 billion | N/A | +12% | | Current remaining performance obligation (as of July 31, 2025) | $29.4 billion | N/A | +11% | - Salesforce saw strong momentum in Data Cloud, Agentforce, and broader AI service offerings, with demand remaining resilient despite changing economic conditions[158](index=158&type=chunk) - The pending acquisition of Informatica, an AI-powered enterprise cloud data management platform, for an estimated **$8.0 billion**, is expected to close in Q4 fiscal 2026 or early fiscal 2027[164](index=164&type=chunk) [Fiscal Year](index=34&type=section&id=Fiscal%20Year) This section clarifies Salesforce's fiscal year-end date - Salesforce's fiscal year ends on **January 31**[160](index=160&type=chunk) [Operating Segments](index=34&type=section&id=Operating%20Segments) This section confirms Salesforce operates as a single operating segment for financial reporting purposes - Salesforce operates as a single operating segment, as discussed in Note 1 of the financial statements[161](index=161&type=chunk) [Sources of Revenues](index=34&type=section&id=Sources%20of%20Revenues) This section details Salesforce's revenue streams, primarily from subscription and support services, and discusses customer attrition rates - Salesforce derives revenue from subscription and support (**95%** of total revenue for the six months ended July 31, 2025) and professional services[162](index=162&type=chunk) - Subscription and support revenue includes Cloud Services, software licenses, and support, with Cloud Services revenue generally recognized ratably over the contract term[163](index=163&type=chunk) - The company's attrition rate, excluding Slack self-service, was approximately **eight percent** as of July 31, 2025, consistent with the prior year[166](index=166&type=chunk)[167](index=167&type=chunk) [Seasonal Nature of Unearned Revenue, Accounts Receivable and Operating Cash Flow](index=35&type=section&id=Seasonal%20Nature%20of%20Unearned%20Revenue,%20Accounts%20Receivable%20and%20Operating%20Cash%20Flow) This section explains the seasonal patterns affecting Salesforce's unearned revenue, accounts receivable, and operating cash flow - Unearned revenue primarily consists of advance billings for subscription services, with over **90%** of billings for subscription and support[168](index=168&type=chunk) - The fourth quarter is historically the strongest for new business and renewals, leading to the first quarter typically being the largest for collections and operating cash flow[168](index=168&type=chunk) [Remaining Performance Obligation](index=35&type=section&id=Remaining%20Performance%20Obligation) This section defines Salesforce's remaining performance obligation and factors influencing its balance and future revenue recognition - Remaining performance obligation (RPO) represents all future contracted revenue not yet recognized, including unearned and unbilled amounts[169](index=169&type=chunk) - RPO is influenced by seasonality, renewal timing, contract terms, foreign currency exchange rates, and acquisitions, and is not necessarily indicative of future revenue growth[170](index=170&type=chunk) [Cost of Revenues and Operating Expenses](index=35&type=section&id=Cost%20of%20Revenues%20and%20Operating%20Expenses) This section outlines the components of Salesforce's cost of revenues and various operating expenses, including employee-related costs and amortization - Cost of subscription and support revenues includes employee-related costs, data center capacity, third-party technology fees, and amortization of acquisition-related intangible assets[171](index=171&type=chunk) - Research and development expenses primarily consist of employee-related costs for product development and allocated overhead[174](index=174&type=chunk) - Sales and marketing expenses, the majority of operating expenses, include employee-related costs, commissions, partner payments, marketing programs, and amortization of acquisition-related intangible assets[175](index=175&type=chunk)[176](index=176&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section identifies Salesforce's critical accounting policies and estimates that require significant management judgment - Critical accounting policies and estimates involve significant judgment, including standalone selling price (SSP) for revenue contracts, valuation of privately held strategic investments, fair value of acquired assets/liabilities in business combinations, income tax recognition/measurement, useful lives of intangible assets, and fair value of stock awards[181](index=181&type=chunk)[182](index=182&type=chunk) [Recent Accounting Pronouncements](index=37&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses Salesforce's evaluation of recent accounting pronouncements and their potential impact on financial disclosures - Salesforce is evaluating the effects of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) on its financial statement disclosures[89](index=89&type=chunk)[90](index=90&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section analyzes Salesforce's financial performance, including revenue, cost of revenues, operating expenses, and other income/expense [Revenues](index=38&type=section&id=Revenues) This section provides a detailed analysis of Salesforce's revenue growth by type, service offering, and geographic region | Revenue Type | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Variance (Dollars) | Variance (Percent) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :----------------- | :----------------- | | Subscription and support | $9,690 | $8,764 | $926 | 11% | | Professional services and other | $546 | $561 | $(15) | (3)% | | Total revenues | $10,236 | $9,325 | $911 | 10% | | Revenue Type | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | Variance (Dollars) | Variance (Percent) | | :-------------------------- | :----------------------------------- | :----------------------------------- | :----------------- | :----------------- | | Subscription and support | $18,987 | $17,349 | $1,638 | 9% | | Professional services and other | $1,078 | $1,109 | $(31) | (3)% | | Total revenues | $20,065 | $18,458 | $1,607 | 9% | - Subscription and support revenues increased primarily due to volume-driven increases from new business, upgrades, and additional subscriptions from existing customers, with pricing not being a significant driver[189](index=189&type=chunk) - Professional services and other revenues decreased due to less demand for larger, multi-year transformation engagements[190](index=190&type=chunk) | Service Offering | Three Months Ended July 31, 2025 (in millions) | Growth Rate | | :------------------------ | :--------------------------------------- | :---------- | | Sales | $2,267 | 9% | | Service | $2,458 | 9% | | Platform and Other | $2,084 | 17% | | Marketing and Commerce | $1,365 | 4% | | Integration and Analytics | $1,516 | 13% | | Total | $9,690 | 11% | | Geographic Region | Three Months Ended July 31, 2025 (in millions) | Growth Rate | | :------------------ | :--------------------------------------- | :---------- | | Americas | $6,736 | 9% | | Europe | $2,429 | 11% | | Asia Pacific | $1,071 | 14% | | Total | $10,236 | 10% | [Cost of Revenues](index=40&type=section&id=Cost%20of%20Revenues) This section analyzes the components and changes in Salesforce's cost of revenues, including subscription and professional services | Cost of Revenues | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Variance (Dollars) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :----------------- | | Subscription and support | $1,645 | $1,556 | $89 | | Professional services and other | $597 | $603 | $(6) | | Total cost of revenues | $2,242 | $2,159 | $83 | - Cost of revenue as a percentage of total revenue decreased by **one percent** for both the three and six months ended July 31, 2025, primarily due to a decrease in amortization of intangible assets[196](index=196&type=chunk) - Absolute dollar increase in cost of revenues was driven by higher service delivery expenses for the platform and increased employee-related costs in lower-cost regions[196](index=196&type=chunk) [Operating Expenses](index=40&type=section&id=Operating%20Expenses) This section details Salesforce's operating expenses, including research and development, sales and marketing, and restructuring charges | Operating Expense | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Variance (Dollars) | | :------------------------ | :--------------------------------------- | :--------------------------------------- | :----------------- | | Research and development | $1,481 | $1,349 | $132 | | Sales and marketing | $3,443 | $3,224 | $219 | | General and administrative | $734 | $711 | $23 | | Restructuring | $4 | $99 | $(95) | | Total operating expenses | $5,662 | $5,383 | $279 | - Total operating expenses as a percentage of total revenues decreased by **three percent** for the three months ended July 31, 2025, and by **two percent** for the six months ended July 31, 2025, compared to the prior year periods[198](index=198&type=chunk) - Sales and marketing expenses as a percentage of total revenues decreased by **one percent**, driven by a decrease in relative employee-related costs[200](index=200&type=chunk) - Restructuring costs significantly decreased to **$4 million** for the three months ended July 31, 2025, from **$99 million** in the prior year, reflecting reduced workforce and office space optimization efforts[203](index=203&type=chunk) [Other Income and Expense](index=41&type=section&id=Other%20Income%20and%20Expense) This section reviews Salesforce's other income and expense items, including strategic investment gains/losses and investment income | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Variance (Dollars) | | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | :----------------- | | Gains (losses) on strategic investments, net | $6 | $(37) | $43 | | Other income | $68 | $91 | $(23) | - Gains (losses) on strategic investments, net, improved by **$43 million** for the three months ended July 31, 2025, primarily due to unrealized gains on privately held equity investments and realized gains on sales of securities[204](index=204&type=chunk) - Other income, primarily investment income, decreased by **$23 million** for the three months ended July 31, 2025, partially offset by interest expense on debt and finance leases[205](index=205&type=chunk) [Provision For Income Taxes](index=41&type=section&id=Provision%20For%20Income%20Taxes) This section discusses Salesforce's provision for income taxes, effective tax rate, and the impact of recent tax legislation | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | Variance (Dollars) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :----------------- | | Provision for income taxes | $(519) | $(408) | $(111) | | Effective tax rate | 22% | 22% | N/A | - The year-to-date effective tax rate increased from **20%** to **22%** primarily due to lower excess tax benefits from stock-based compensation[207](index=207&type=chunk) - The One Big Beautiful Bill Act (OBBBA) had an immaterial impact on the tax provision for the period ended July 31, 2025, but future impacts are being analyzed[208](index=208&type=chunk)[209](index=209&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section outlines Salesforce's primary sources of liquidity and capital, including cash, marketable securities, and credit facilities - As of July 31, 2025, principal sources of liquidity included **$15.4 billion** in cash, cash equivalents, and marketable securities, and **$5.6 billion** in accounts receivable[210](index=210&type=chunk) - The company's **$5.0 billion** unsecured revolving credit facility also serves as a source of liquidity[210](index=210&type=chunk) - Salesforce expects lower cash taxes due to the immediate deduction of domestic R&D expenditures allowed by the OBBBA[213](index=213&type=chunk) [Cash Flows](index=42&type=section&id=Cash%20Flows) This section analyzes Salesforce's cash flows from operating, investing, and financing activities for the reported periods | Cash Flow Activity | Six Months Ended July 31, 2025 (in millions) | Six Months Ended July 31, 2024 (in millions) | | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $7,216 | $7,139 | | Net cash provided by (used in) investing activities | $(402) | $(10) | | Net cash used in financing activities | $(5,423) | $(7,910) | - Net cash provided by operating activities increased by **1%** year-over-year for the six months ended July 31, 2025, driven by net income and changes in accounts receivable, partially offset by changes in unearned revenue[215](index=215&type=chunk) - Net cash used in investing activities increased significantly to **$402 million**, primarily due to strategic investment outflows and capital expenditures[218](index=218&type=chunk) - Net cash used in financing activities decreased to **$5.4 billion**, mainly due to lower common stock repurchases compared to the prior year[220](index=220&type=chunk) [Debt](index=43&type=section&id=Debt) This section details Salesforce's outstanding senior unsecured debt, revolving credit facilities, and new credit agreements - As of July 31, 2025, Salesforce had **$8.4 billion** in senior unsecured debt outstanding, with maturities from April 2028 to July 2061, and was in compliance with all debt covenants[222](index=222&type=chunk) - The company has a **$5.0 billion** unsecured revolving credit facility, maturing in October 2029, with no outstanding borrowings[224](index=224&type=chunk) - New credit agreements totaling **$6.0 billion** were entered into in June 2025 to finance the Informatica acquisition, contingent on the acquisition's consummation[225](index=225&type=chunk) [Share Repurchase Program](index=43&type=section&id=Share%20Repurchase%20Program) This section provides an update on Salesforce's share repurchase program, including authorizations and recent repurchases - Salesforce's Board authorized an additional **$20.0 billion** for the Share Repurchase Program in September 2025, bringing the total authorization to **$50.0 billion**[227](index=227&type=chunk) | Period | Shares Repurchased (in millions) | Average Price Paid Per Share | | :------------------------ | :----------------------------- | :--------------------------- | | Three months ended April 30 | 10 | $273.42 | | Three months ended July 31 | 8 | $269.96 | - As of July 31, 2025, **$5.7 billion** remained authorized under the program, with an additional **$0.8 billion** incurred through August 28, 2025[228](index=228&type=chunk) [Dividends](index=44&type=section&id=Dividends) This section reports on Salesforce's dividend declarations and factors influencing future dividend payments | Quarter Ended | Dividend per Share | Amount (in millions) | | :-------------- | :----------------- | :------------------- | | April 30, 2025 | $0.416 | $406 | | July 31, 2025 | $0.416 | $404 | | April 30, 2024 | $0.40 | $388 | | July 31, 2024 | $0.40 | $388 | - The declaration and payment of future cash dividends are subject to Board determination, capital availability, economic conditions, and applicable laws[229](index=229&type=chunk) [Contractual Obligations](index=44&type=section&id=Contractual%20Obligations) This section discusses Salesforce's contractual obligations and commitments, including expected investments in cloud services - No significant changes to estimates of future payments under fixed contractual obligations and commitments were reported as of July 31, 2025[230](index=230&type=chunk) - The company expects to continue investments in enterprise cloud computing services and infrastructure to scale with customer growth and evolve security measures[231](index=231&type=chunk) [Other Future Obligations](index=44&type=section&id=Other%20Future%20Obligations) This section outlines Salesforce's future cash payment expectations for restructuring, acquisitions, and strategic investments - Salesforce expects **$30 million to $50 million** in future cash payments for restructuring initiatives, primarily workforce costs[232](index=232&type=chunk) - The pending acquisition of Informatica for approximately **$8 billion** will be funded by new debt and cash on the balance sheet[233](index=233&type=chunk) - In July 2025, Salesforce committed up to **$750 million** for a strategic investment in Genesys Cloud Services Topco LLC, an AI customer experience platform, to be funded in fiscal 2026[234](index=234&type=chunk) - In August 2025, Salesforce agreed to acquire Regrello Corp. for approximately **$900 million** in cash, accelerating its agentic roadmap[235](index=235&type=chunk) [Stakeholder Impact](index=45&type=section&id=Stakeholder%20Impact) This section highlights Salesforce's commitment to transparency and stakeholder trust through its annual impact report - Salesforce emphasizes transparency and stakeholder trust, publishing an annual Stakeholder Impact Report on sustainability, impact, and equality strategies[236](index=236&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Salesforce's exposure to financial market risks, including foreign currency, interest rates, and equity investments, and their management [Foreign Currency Exchange Risk](index=46&type=section&id=Foreign%20Currency%20Exchange%20Risk) This section discusses Salesforce's exposure to foreign currency fluctuations and its strategies for minimizing exchange risk - Salesforce is exposed to foreign currency fluctuations, particularly in EUR, GBP, JPY, CAD, AUD, and BRL against USD, due to international sales and operations[239](index=239&type=chunk) - The company uses short-term foreign currency forward contracts to minimize foreign exchange risk, not for speculative purposes[241](index=241&type=chunk) - Foreign currency fluctuations positively impacted total revenue by approximately **one percent** for the three months ended July 31, 2025, and current remaining performance obligation growth by **one percent**[242](index=242&type=chunk) [Interest Rate Sensitivity](index=46&type=section&id=Interest%20Rate%20Sensitivity) This section assesses Salesforce's interest rate sensitivity on its cash, cash equivalents, and marketable securities portfolio - As of July 31, 2025, Salesforce held **$15.4 billion** in cash, cash equivalents, and marketable securities, primarily in investment-grade debt securities, for capital preservation[243](index=243&type=chunk) - A **100 basis point** increase or decrease in interest rates at July 31, 2025, could result in a **$66 million** market value reduction or increase, respectively, for the fixed-income portfolio[245](index=245&type=chunk) [Market Risk and Market Interest Risk (Debt)](index=48&type=section&id=Market%20Risk%20and%20Market%20Interest%20Risk%20(Debt)) This section describes Salesforce's market and interest rate risks related to its fixed-rate debt and floating-rate credit facilities - Salesforce's debt obligations include fixed-rate Senior Notes and floating-rate credit facilities (Informatica Credit Agreements and Revolving Loan Credit Agreement), with no outstanding borrowings on floating-rate facilities as of July 31, 2025[247](index=247&type=chunk)[248](index=248&type=chunk) - The company mitigates credit risk from derivative counterparties by contracting with institutions meeting minimum requirements and monitoring ratings[249](index=249&type=chunk) [Strategic Investments](index=48&type=section&id=Strategic%20Investments) This section details Salesforce's strategic investment portfolio, including its composition, carrying value, and potential for future volatility - Salesforce's strategic investment portfolio, valued at **$5.1 billion** as of July 31, 2025, includes over **400 companies**, primarily enterprise cloud, technology startups, and system integrators[250](index=250&type=chunk) | Investment Type | Capital Invested (in millions) | Unrealized Gains (Cumulative, in millions) | Unrealized Losses (Cumulative, in millions) | Carrying Value as of July 31, 2025 (in millions) | | :------------------------ | :----------------------------- | :----------------------------------------- | :------------------------------------------ | :----------------------------------------------- | | Publicly held equity securities | $46 | $40 | $(2) | $84 | | Privately held equity securities | $4,619 | $1,140 | $(803) | $4,956 | | Total equity securities | $4,665 | $1,180 | $(805) | $5,040 | - The company anticipates future volatility in operating results due to changes in market prices, observable price changes, and impairments of strategic investments, especially in uncertain economic conditions[252](index=252&type=chunk) [ITEM 4. Controls and Procedures](index=45&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details management's evaluation of Salesforce's disclosure controls and procedures and internal control over financial reporting. It confirms the effectiveness of disclosure controls and reports on changes to internal controls related to the implementation of a new enterprise resource planning (ERP) system [Evaluation of Disclosure Controls and Procedures](index=50&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms management's conclusion on the effectiveness of Salesforce's disclosure controls and procedures - Management, including the CEO and CFO, concluded that Salesforce's disclosure controls and procedures were **effective** as of July 31, 2025, providing reasonable assurance for timely and accurate reporting[256](index=256&type=chunk)[258](index=258&type=chunk) [Management's Report on Internal Control Over Financial Reporting](index=50&type=section&id=Management's%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on changes to Salesforce's internal control over financial reporting, particularly due to a new ERP system - Salesforce implemented a new enterprise resource planning (ERP) system in Q2 fiscal 2026, leading to certain changes in internal controls over financial reporting[259](index=259&type=chunk) - Except for the ERP implementation and associated processes, no other material changes in internal control over financial reporting occurred during the quarter[259](index=259&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=46&type=section&id=ITEM%201.%20Legal%20Proceedings) This section details Salesforce's involvement in various legal and regulatory proceedings, emphasizing inherent uncertainties and potential impacts - Salesforce is involved in various legal matters, including alleged infringement of third-party patents, commercial, corporate, and securities claims, and labor disputes[261](index=261&type=chunk)[263](index=263&type=chunk) - The outcome of any claims or litigation is inherently uncertain and could be time-consuming, expensive, divert management attention, and potentially affect business operations or reputation[262](index=262&type=chunk) - Management believes that the resolution of all current matters is not expected to have a material adverse impact on the company's financial statements[144](index=144&type=chunk) [ITEM 1A. Risk Factors](index=46&type=section&id=ITEM%201A.%20Risk%20Factors) This section outlines material risks to Salesforce's business, operations, financial results, and stock price, categorized across various domains [Risk Factor Summary](index=51&type=section&id=Risk%20Factor%20Summary) This summary highlights key operational, strategic, legal, financial, and general risks facing Salesforce's business - Key risks include security breaches, service defects, reliance on third-party infrastructure, acquisition integration challenges, customer attrition, international operation risks, and intense competition[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) - Financial risks involve revenue recognition fluctuations, tax rate changes, currency exchange rate volatility, and debt obligations[268](index=268&type=chunk) - General risks encompass volatile global economic conditions, natural disasters, and climate change impacts[269](index=269&type=chunk) [Operational and Execution Risks](index=52&type=section&id=Operational%20and%20Execution%20Risks) This section details risks related to Salesforce's day-to-day operations and execution, including security, service defects, and acquisitions - Breaches in security measures, whether internal or external, could lead to unauthorized data access, service disruptions, reputational harm, and significant legal and financial liabilities[269](index=269&type=chunk)[273](index=273&type=chunk) - Defects or disruptions in services, including those from third-party providers or due to complex integrations, could diminish demand, lead to customer dissatisfaction, and incur substantial liability[274](index=274&type=chunk)[279](index=279&type=chunk) - Acquisitions, such as the pending Informatica deal, pose risks including integration difficulties, failure to realize expected benefits, and potential dilution of stockholder value[284](index=284&type=chunk)[285](index=285&type=chunk) - Supporting a growing customer base strains personnel and infrastructure, requiring significant investments in scaling operations and increasing productivity, which may not be achieved effectively[289](index=289&type=chunk)[291](index=291&type=chunk) - Customer attrition or reduced subscriptions at renewal, especially with consumption-based models, could negatively impact revenue and current remaining performance obligation[292](index=292&type=chunk)[295](index=295&type=chunk) - International operations expose the company to risks like regional economic conditions, foreign currency fluctuations, complex regulations, and geopolitical events[297](index=297&type=chunk) - Targeting larger enterprise customers can lead to longer, more expensive sales cycles, pricing pressure, and implementation challenges, potentially delaying revenue recognition[299](index=299&type=chunk)[300](index=300&type=chunk) - Loss of key management or development personnel, or inability to attract and retain skilled employees (especially in AI), could severely harm business and growth prospects[302](index=302&type=chunk)[303](index=303&type=chunk) [Strategic and Industry Risks](index=62&type=section&id=Strategic%20and%20Industry%20Risks) This section outlines risks stemming from Salesforce's competitive landscape, technological advancements, brand management, and strategic investments - Salesforce operates in intensely competitive markets, facing diverse competitors from packaged software vendors to cloud application providers, and new AI offerings may disrupt demand[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk) - Failure to expand service offerings, develop enhancements, or keep pace with rapid technological developments, particularly in AI and Data Cloud, could harm revenue growth[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk) - Maintaining and enhancing Salesforce's brand is critical, but entry into new markets or negative publicity related to facilities could adversely impact brand strength[314](index=314&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk) - Strategic investments carry risks of partial or total capital loss, and significant changes in fair value, especially in volatile market conditions, could negatively impact financial results[317](index=317&type=chunk)[318](index=318&type=chunk) - Reliance on third-party developers and providers for complementary applications and integrations, and potential customer demands for warranties on third-party offerings, could harm the business[319](index=319&type=chunk) - Social and ethical issues, particularly concerning the use and capabilities of AI in offerings, may lead to reputational harm, increased regulatory scrutiny, and legal liability[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk) - The evolving landscape of environmental, social, and governance (ESG) matters, including new regulations and stakeholder expectations, may expose the company to reputational harm and increased costs[323](index=323&type=chunk) [Legal and Regulatory Risks](index=66&type=section&id=Legal%20and%20Regulatory%20Risks) This section covers risks related to evolving data privacy laws, industry regulations, intellectual property, and government contracts - Evolving data privacy laws (e.g., GDPR, CCPA, India's DPDP Act) and regulations on cloud computing and cross-border data transfers may limit service adoption and increase compliance costs and liability[324](index=324&type=chunk)[327](index=327&type=chunk) - The potential repeal or limitation of safe harbors for content hosting could require altering services or increasing contractual terms to avoid liability for customer misconduct[325](index=325&type=chunk)[326](index=326&type=chunk) - Industry-specific regulations (e.g., DORA for financial services, AI Acts) and voluntary certification standards are evolving, potentially limiting service use and increasing compliance costs[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk) - Salesforce faces risks from lawsuits by third parties for alleged infringement of proprietary rights and for actions taken by its customers, which can be costly and divert management attention[335](index=335&type=chunk)[336](index=336&type=chunk)[338](index=338&type=chunk)[340](index=340&type=chunk) - Failure to obtain or protect intellectual property rights could allow competitors access to technology, harm the brand, and lead to significant expenses and litigation[342](index=342&type=chunk)[343](index=343&type=chunk) - Government contracts expose the company to procurement regulations, audits, and potential penalties, which could adversely affect business and operating results[344](index=344&type=chunk)[345](index=345&type=chunk) - Compliance with governmental sanctions and export/import controls is critical; non-compliance could lead to substantial civil/criminal penalties and reputational harm[346](index=346&type=chunk) [Financial Risks](index=70&type=section&id=Financial%20Risks) This section addresses financial risks such as revenue recognition, growth rate fluctuations, tax rate changes, and debt obligations - Revenue recognition over subscription terms means downturns or upturns in new business are not immediately reflected in operating results, making rapid revenue increases difficult[347](index=347&type=chunk) - Significant fluctuations in growth rate and failure to balance expenses with revenue forecasts could harm the business, as expenses may be fixed and difficult to reduce quickly[349](index=349&type=chunk) - Unanticipated changes in the effective tax rate, additional tax liabilities, and global tax developments (e.g., OBBBA, Pillar Two) may impact financial results and cash flows[350](index=350&type=chunk)[351](index=351&type=chunk)[354](index=354&type=chunk) - Fluctuations in currency exchange rates, amplified by global events, can negatively impact financial results and cash flows, despite hedging efforts[355](index=355&type=chunk)[356](index=356&type=chunk) - Substantial debt service obligations, lease commitments, and other contractual obligations could impair future financing, dedicate cash flow to repayments, and increase vulnerability to economic downturns[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) [Risks Related to Owning Our Common Stock](index=72&type=section&id=Risks%20Related%20to%20Owning%20Our%20Common%20Stock) This section discusses risks associated with Salesforce's common stock, including price volatility and dividend policy - Quarterly results are likely to fluctuate due to various factors, including economic conditions, customer retention, sales cycle length, and operating costs, potentially causing stock price decline[365](index=365&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk) - The market price of common stock is volatile, influenced by financial results, analyst expectations, market conditions, and corporate announcements, potentially leading to securities class action litigation[368](index=368&type=chunk)[370](index=370&type=chunk) - Provisions in the company's certificate of incorporation and bylaws, along with Delaware law, could discourage, delay, or prevent a change of control or management, potentially depressing stock price[371](index=371&type=chunk)[372](index=372&type=chunk) - There is no assurance of continued cash dividend declarations, and any reduction or discontinuation could negatively affect the stock price[373](index=373&type=chunk) [General Risks](index=75&type=section&id=General%20Risks) This section covers broad risks such as global economic conditions, geopolitical events, natural disasters, and climate change impacts - Volatile global economic conditions, including geopolitical developments and inflation, can adversely affect the industry, customer purchasing decisions, and overall operating results[374](index=374&type=chunk) - Geopolitical crises, natural disasters, and other catastrophic events can disrupt operations, international commerce, and the global economy, potentially causing significant negative effects[375](index=375&type=chunk)[377](index=377&type=chunk) - Climate change, including increased energy consumption from AI growth and extreme weather events, may increase operational costs and disrupt business, impacting resilience and potentially leading to higher attrition[378](index=378&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on Salesforce's unregistered equity sales related to an acquisition and common stock repurchases under its Share Repurchase Program [Recent Sales of Unregistered Securities](index=78&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) This section details Salesforce's issuance of common stock in connection with a recent acquisition, exempt from registration - On June 11, 2025, Salesforce issued **57,276 shares** of common stock to former stockholders of Convergence Labs Ltd. as part of an acquisition, relying on exemptions from registration requirements[380](index=380&type=chunk) [Issuer Purchases of Equity Securities](index=78&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This section reports on Salesforce's common stock repurchases under its Share Repurchase Program for the recent quarter | Period | Total Number of Shares Purchased (in millions) | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) | | :------- | :------------------------------------------- | :--------------------------- | :--------------------------------------------------------------------------------------- | | May 2025 | 2 | $279.48 | $7,193 | | June 2025 | 3 | $266.22 | $6,479 | | July 2025 | 3 | $265.37 | $5,689 | | Total | 8 | | | - Salesforce repurchased **8 million shares** of common stock for the three months ended July 31, 2025, under its Share Repurchase Program[381](index=381&type=chunk) - The Board authorized an additional **$20.0 billion** for the Share Repurchase Program in September 2025, increasing the total authorization to **$50.0 billion**[381](index=381&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=78&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no defaults upon senior securities to report - Not applicable, indicating no defaults upon senior securities[382](index=382&type=chunk) [ITEM 4. Mine Safety Disclosures](index=78&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that there are no mine safety disclosures to report - Not applicable, indicating no mine safety disclosures[383](index=383&type=chunk) [ITEM 5. Other Information](index=78&type=section&id=ITEM%205.%20Other%20Information) This section reports that no directors or officers informed the company of the adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended July 31, 2025 - No directors or officers reported adopting or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended July 31, 2025[384](index=384&type=chunk) [ITEM 6. Exhibits](index=78&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents and certifications - The exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Equity Incentive Plan, Consulting Agreement, Aircraft Time Sharing Agreement, and various Credit Agreements[386](index=386&type=chunk) - Certifications of the Chief Executive Officer, Chief Operating and Financial Officer, and Chief Accounting Officer are also included[386](index=386&type=chunk) [Signatures](index=80&type=section&id=Signatures) This section contains the official signatures of Salesforce, Inc.'s authorized representatives, including the President and Chief Operating and Financial Officer, and the Executive Vice President and Chief Accounting Officer, certifying the filing of the report - The report is signed by Robin Washington, President and Chief Operating and Financial Officer, and Sundeep Reddy, Executive Vice President and Chief Accounting Officer, on September 3, 2025[390](index=390&type=chunk)[391](index=391&type=chunk)

Core Viewpoint - Salesforce (CRM.US) experienced a decline of approximately 5.7% in after-hours trading, closing at $241.87 following the release of its Q2 earnings report [1] Financial Performance - Salesforce reported a year-over-year revenue growth of about 9.8%, reaching $10.24 billion, surpassing analyst expectations of $10.14 billion [1] - The adjusted earnings per share (EPS) were $2.91, exceeding the analyst forecast of $2.78 [1] - The remaining performance obligations stood at $29.4 billion, reflecting an 11% year-over-year increase [1] Guidance - For Q3, Salesforce expects revenue to be between $10.24 billion and $10.29 billion, indicating a year-over-year growth of 8% to 9%, while analysts anticipated $10.29 billion [1] - The adjusted EPS guidance for Q3 is projected to be between $2.84 and $2.86, slightly below the analyst expectation of $2.85 [1]

Financial Performance - Salesforce achieved $104 billion in revenue for the quarter, a 10% year-over-year increase [2] - Salesforce's cash flow for the year reached $15 billion [2] - The company is raising its cash flow forecast for the year [3] Agentic Enterprise Transformation - Every enterprise is undergoing a transformation into an "Agentic Enterprise," where software, apps, and agents collaborate to enhance customer success [4] - Salesforce has facilitated approximately 15 million conversations between its agents and customers, alongside 15 million customer service conversations, maintaining similar satisfaction scores [5] - Salesforce is expanding the "Agentic Enterprise" model from support to sales, introducing new sales agents [6] Sales and Customer Engagement - Salesforce's sales agents are actively engaging prospects, closing deals, and scheduling appointments [7] - Salesforce can now re-engage with a significant portion of its 20 million to 100 million past customers [7] - The company's pipeline is experiencing unprecedented richness and fullness due to the new sales agent capabilities [8]

Financial Performance - Salesforce achieved $1025 billion in revenue for the quarter, up 10% year-over-year [3][17] - Salesforce's cash flow for the year reached $15 billion [3][4] - The AI business has exceeded $1 billion in sales and is the fastest-growing business [13] - Agent force and data cloud are up 120% year-over-year [29] Guidance and Expectations - Salesforce has raised its guidance for the year, margins, and cash flow [9] - The current remaining performance obligation (CRPO) is up 11% year-over-year [11] - Salesforce is appropriately conservative with its guidance [12][23] Strategic Initiatives and Transformation - Salesforce is undergoing a transformation into an "Agentic Enterprise," integrating AI agents with human employees [5][6][14][26] - Salesforce has reshaped its customer support, lowering costs by 17% through the use of agents [15] - Salesforce's sales agents are now calling prospects and generating appointments, expanding reach [8] - Every Salesforce product is becoming fully agentic, including Slack, which saw revenue up 10% year-over-year [17] - The US government is Salesforce's largest customer, with success against Palantir in the US Army due to competitive pricing [31][32]

Group 1 - Salesforce has reduced approximately 4,000 customer support positions due to the integration of artificial intelligence, decreasing the workforce from 9,000 to around 5,000. AI agents are completing 30% to 50% of the company's work, particularly in support and sales roles. This shift has led to a 17% reduction in support costs [2] - Anthropic has completed a new funding round, raising $13 billion, exceeding initial expectations and increasing its valuation to $183 billion, nearly three times its valuation at the beginning of the year. This funding round is one of the largest for an AI company to date, with participation from major investors including Iconiq Capital and Fidelity Management and Research [2] - A study published in Nature Machine Intelligence indicates that an AI-assisted brain-computer interface can significantly enhance the task performance of paralyzed individuals, improving their ability to control devices by nearly four times [2] - Amazon has launched a new AI shopping feature called Lens Live, which allows consumers to discover products by simply pointing their phone at real-world items. This feature enhances the existing Amazon Lens tool by adding real-time interaction capabilities [2][3]

Group 1 - Ctrip has implemented a new policy allowing all product and research employees to work from home on Wednesdays and Fridays without needing approval from their direct supervisors, effective from September 1 [4][5] - This policy aims to enhance work-life balance and foster a culture of trust and self-motivation among employees, with 70% of staff already participating in a hybrid work model prior to this change [4][5] Group 2 - 361 Degrees has ended its partnership with marathon runner Zhang Shuihua, known as the "fastest nurse," due to adjustments in both parties' development paths, which will not affect existing collaborations with other athletes [5][6] - Zhang Shuihua gained attention after winning the domestic women's championship at the 2025 Harbin Marathon, where her post-race comments sparked discussions about work-life balance for nurses [5][6] Group 3 - Apple is expected to launch its first foldable iPhone in 2026, with projected shipments of 8 to 10 million units, increasing to 25 million units by 2027 [5] - The foldable iPad is anticipated to follow in 2028, featuring a larger display area and a high-end pricing strategy, with conservative sales expectations [5] Group 4 - The price of domestic gold jewelry has surpassed 1050 yuan per gram, driven by rising international gold prices, which recently hit a historical high of 3546.919 USD per ounce [6] - Major brands like Chow Tai Fook and Luk Fook have reported increased prices for their gold jewelry products [6] Group 5 - BYD has won a defamation lawsuit against a media outlet, receiving over 2 million yuan in damages, which has been executed [7][8] - The lawsuit stemmed from the media's publication of false and defamatory information about BYD [7][8] Group 6 - The global smart home cleaning robot market saw a 33% year-on-year increase in shipments, totaling 15.352 million units in the first half of the year, with lawn mowers experiencing a remarkable 327.2% growth [10] Group 7 - Xiaomi has published a patent for a vehicle inspection method aimed at improving traffic efficiency and reducing congestion [12] - The patent involves a system that collects vehicle and passenger information to streamline the inspection process [12] Group 8 - The "back-to-school economy" is thriving, with over 2.5 million new stationery-related companies registered this year, reflecting a growing demand for educational supplies [19]

Market Overview - Major indexes experienced mixed results, with the Dow closing down -24 points (-0.05%) after a drop of -250 points intra-day, while the S&P 500 rose +32 points (+0.51%) and the Nasdaq gained +218 points (+1.02%) [1] - The Russell 2000 index slipped -2 points (-0.095%) [1] Alphabet and Big Tech - A recent court ruling favored Alphabet, allowing its relationship with Apple to continue, which may have prevented a potential breakup of its conglomerate and provided relief to the broader Big Tech sector [2] Salesforce Performance - Salesforce.com reported Q2 earnings of $2.91 per share, exceeding the Zacks consensus of $2.77 and the previous year's $2.56, with revenues of $10.24 billion surpassing expectations of $10.13 billion [3] - However, guidance for Q3 earnings and full fiscal year was considered lackluster, leading to a -4% decline in after-market trading, compounding a -23.6% loss year-to-date [4] American Eagle Performance - American Eagle posted earnings of 45 cents per share, significantly above the Zacks consensus of 20 cents, with revenues of $1.28 billion exceeding the anticipated $1.23 billion, driven by a successful advertising campaign [5] - The company's shares increased by +23% in late trading, marking a positive year-to-date performance [5] Labor Market and Economic Indicators - The Job Openings and Labor Turnover Survey (JOLTS) for July reported 7.2 million job openings, below the expected 7.4 million, indicating a tightening labor market [6] - Factory Orders for July were reported at -1.3%, an improvement from the previous month's -4.8% [7] - The Beige Book indicated rising costs due to tariffs and utilities, reflecting modest growth across regions [7] Upcoming Economic Reports - Anticipation for tomorrow's market includes the ADP report on private-sector payrolls for August, expected to decrease to 75K from 104K in July, along with other economic indicators [8] - Earnings reports from Broadcom, lululemon, and Docusign are expected, with Broadcom anticipated to report strong profits from AI-related sales, while lululemon and Docusign expect negative year-over-year earnings growth [9]

Core Insights - Salesforce reported Q2 revenue of $10.24 billion, marking a nearly 10% year-over-year growth, the closest to double-digit growth in six quarters, and exceeding analyst expectations [1] - Non-GAAP EPS was $2.91, reflecting a nearly 14% year-over-year increase, significantly surpassing company guidance and analyst forecasts [1] - Subscription and support revenue grew approximately 10.6% year-over-year, while current remaining performance obligations (CRPO) increased by 11%, slightly above analyst expectations [1] Future Guidance - The company anticipates a slowdown in Q3 revenue growth to 8%-9%, with the midpoint of revenue guidance falling below analyst expectations [1] - For the full fiscal year, the maximum revenue growth guidance is set at 9% [1]

Core Viewpoint - Salesforce's (CRM.US) latest quarterly revenue outlook falls short of market expectations, indicating that its AI products have not yet achieved the anticipated market returns amid fierce competition from emerging AI companies [1] Revenue Outlook - For the fiscal quarter ending in October, Salesforce expects revenue to reach between $10.2 billion and $10.3 billion, slightly below Wall Street's average expectation of $10.3 billion [1] - Remaining performance obligations, a key indicator of order volume, are expected to grow "slightly above" 10%, in line with analyst predictions [1] AI Competition Concerns - Investors are increasingly worried that traditional software companies like Salesforce may be replaced by new AI entrants, as AI technology is perceived to take over existing product functionalities, leading to reduced human resource investments by client companies [1] - Barclays analyst Raimo Lenso emphasized the need for investors to monitor the operational data of Agentforce and look forward to potential positive developments from the upcoming Dreamforce conference [1] Agentforce Product Insights - Salesforce's AI tool, Agentforce, launched last year, has signed over 6,000 paying customers and reported an annual recurring revenue of $100 million as of May, although this figure was not updated in the latest earnings report [1][3] - CFO Robin Washington noted that large enterprises and regulated industries are cautious about deploying AI tools, requiring time to adopt them confidently [3] Stock Performance - Following the earnings announcement, Salesforce's stock price plummeted by 5.5% in after-hours trading, marking a cumulative decline of 23% for the year [3] CEO's Confidence - CEO Marc Benioff expressed strong confidence in the future of Agentforce, highlighting a 60% increase in the number of customers transitioning from trial to full deployment, indicating a significant expansion in application scenarios and usage scale [3] - Benioff dismissed concerns about the potential obsolescence of enterprise SaaS applications, asserting that he sees no viable alternatives to their current business operations [4] Financial Performance - For the second quarter of fiscal year 2025, Salesforce reported a year-over-year revenue growth of 9.8%, reaching $10.2 billion, surpassing analyst expectations of $10.1 billion [6] - Remaining performance obligations increased by 11% to $29.4 billion, and adjusted earnings per share were $2.91, exceeding the expected $2.78 [6] Strategic Developments - Salesforce announced an expansion of its stock buyback program by $20 billion, bringing the total to $50 billion [6] - The company plans to focus more on developing IT service management products, potentially positioning itself in direct competition with industry leader ServiceNow (NOW.US) [6] - The acquisition of data software company Informatica (INFA.US) is expected to close in the first quarter of 2026 or later [6]

Core Viewpoint - Salesforce's CEO Marc Benioff defended the company's conservative guidance despite disappointing figures, emphasizing the strength of their results [1] Financial Performance - Salesforce reported quarterly results that beat earnings and revenue estimates, but provided disappointing guidance, leading to a stock dip of over 5% in extended trading [2] - The company's revenue growth has stalled in the single digits since mid-last year, contributing to a year-to-date stock decline of over 23% [2] Product and Technology - Benioff highlighted customer satisfaction with Salesforce's artificial intelligence agent product, which he claims is not merely a rebranded version of ChatGPT but a transformative technology for businesses [3] - The company has integrated AI agents into its operations, resulting in a reduction of service and support staff [3] Competitive Positioning - Salesforce achieved success against competitor Palantir, particularly in securing contracts with the U.S. government, including the Department of Defense [3] - Benioff noted that Salesforce offers a competitive product at significantly lower prices compared to Palantir [4]