Salesforce, Inc. on 2025-09-04 has filed its latest earnings report for the period ending 2026Q2. Here's what you need to know.

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Key financial & strategic metrics

• Revenue Growth: Revenue in 2025 increased by USD 3.0 billion (+8.7%) compared to 2024, reaching USD 37.9 billion, driven by strong sales execution and strategic customer engagements
• Profitability Improvement: EBITDA rose by USD 1.9 billion (+20.8%) to USD 11.1 billion in 2025, reflecting enhanced operational efficiency and cost management
• Net Income Surge: Net income in 2025 was USD 6.2 billion, an increase of USD 2.1 billion (+49.8%) from 2024, attributed to higher revenue and improved margins
• Capital Allocation: The company allocated USD 7.8 billion to stock repurchases in 2025, marking a USD 0.2 billion (+2.7%) increase from 2024, demonstrating a commitment to returning capital to shareholders
• Strategic Acquisitions: Acquisitions totaled USD 2.7 billion in 2025, a significant increase from 2024, indicating a focus on expanding capabilities and market presence
• Free Cash Flow Expansion: Free cash flow in 2025 was USD 12.4 billion, up USD 2.9 billion (+30.9%) from 2024, supported by robust cash generation and disciplined capital expenditure
• Debt Reduction: Net debt by EBITDA decreased by USD 0.1 billion (-35.2%) in 2025, underscoring the company's focus on strengthening its balance sheet.
• Revenue Growth: Revenue in 2025 increased by USD 3.0 billion (+8.7%) compared to 2024, reaching USD 37.9 billion, driven by strong sales execution and strategic customer engagements
• Profitability Improvement: EBITDA rose by USD 1.9 billion (+20.8%) to USD 11.1 billion in 2025, reflecting enhanced operational efficiency and cost management
• Net Income Surge: Net income in 2025 was USD 6.2 billion, an increase of USD 2.1 billion (+49.8%) from 2024, attributed to higher revenue and improved margins
• Capital Allocation: The company allocated USD 7.8 billion to stock repurchases in 2025, marking a USD 0.2 billion (+2.7%) increase from 2024, demonstrating a commitment to returning capital to shareholders
• Strategic Acquisitions: Acquisitions totaled USD 2.7 billion in 2025, a significant increase from 2024, indicating a focus on expanding capabilities and market presence
• Free Cash Flow Expansion: Free cash flow in 2025 was USD 12.4 billion, up USD 2.9 billion (+30.9%) from 2024, supported by robust cash generation and disciplined capital expenditure
• Debt Reduction: Net debt by EBITDA decreased by USD 0.1 billion (-35.2%) in 2025, underscoring the company's focus on strengthening its balance sheet.

Management highlights

• Company Strategy: Salesforce emphasizes the "Agentic enterprise" as a transformative vision, integrating AI to enhance workflows and customer interactions
• Capital Discipline: Management highlights disciplined capital allocation, balancing share repurchases, dividends, and strategic acquisitions to fuel growth
• Durability & Moat: Salesforce's Data Cloud and AI capabilities are positioned as critical components for customer success and competitive advantage
• Profitability & Efficiency: The company focuses on operational excellence, leveraging AI to drive productivity and margin expansion
• Innovation & Growth Platforms: Salesforce invests in AI and data cloud technologies, aiming to redefine enterprise software with agentic capabilities
• Risks & Uncertainties: Management acknowledges the need for change management as companies transition to agentic enterprises, highlighting potential organizational challenges
• Management Tone: Leadership expresses strong confidence in the strategic direction and growth potential of the agentic enterprise model.

Company overview

Business model, strategy & markets

Salesforce operates as a leading provider of customer relationship management (CRM) software, focusing on cloud-based solutions that enhance customer engagement and operational efficiency. The company's strategic priorities include accelerating data and AI adoption, as evidenced by its AgentForce and Data Cloud offerings, which are integrated across its product portfolio to drive customer success and operational excellence. Salesforce's product segments encompass sales, service, marketing, commerce, and analytics, with a strong emphasis on embedding AI capabilities to augment human productivity. The company serves a diverse customer base across various industries, including technology, communications, media, retail, and public sector, with notable growth in small and mid-market businesses. Geographically, Salesforce has seen robust new business growth in the United States and parts of Europe, particularly the Netherlands and Switzerland, while facing constraints in the UK and Japan. The company leverages multiple channels, including direct sales and partnerships, to deliver its solutions globally.

Key risk factors

Salesforce faces several operational and strategic risks, including the challenge of integrating AI capabilities into its existing product suite and maintaining competitive differentiation in a rapidly evolving technology landscape. Financial risks are present in the form of significant capital allocation towards acquisitions, which could impact liquidity and leverage. Legal and regulatory risks are noted in the company's SEC filings, which highlight potential compliance issues and ongoing litigation. The company must navigate these risks while executing its strategy to transform into an "agentic enterprise" leveraging AI and data cloud technologies.

Financial performance

Revenue in 2025 reached USD 37.9 billion, marking an increase of USD 3.0 billion or 8.7% compared to 2024. Gross profit for the same period was USD 29.3 billion, reflecting an increase of USD 2.9 billion or 11.2% from the previous year. EBITDA in 2025 amounted to USD 11.1 billion, representing a rise of USD 1.9 billion or 20.8% over 2024.

Growth trends

Growth plus profitability in 2025 was 38.1%, up 0.5% from 2024. This high ratio suggests a robust combination of growth and profitability, supporting strong earnings quality and long-term sustainability.

Profitability

Margin profile

Gross profit ratio in 2025 was 77.2%, up 1.7% from 2024. EBITDA ratio in 2025 was 29.4%, up 2.9% from 2024.

Peer margin benchmark

Efficiency metrics

R&D expenditure in 2025 was 14.5% of revenue, reflecting a 0.4 percentage point increase from 2024, indicating a commitment to innovation. SG&A expenses decreased by 1.7 percentage points to 42.5% of revenue, suggesting improved cost discipline.

Balance sheet strength

Assets & capital

Cash increased by USD 0.4 billion (+4.4%) in 2025 compared to 2024, reflecting enhanced liquidity. Current assets rose by USD 0.3 billion (+1.3%) for the year, while non-current assets grew by USD 2.5 billion (+3.5%), indicating reinvestment in long-term capacity.

Liabilities & leverage

Equity increased by USD 1.5 billion (+2.6%) in 2025 compared to 2024, indicating earnings retention and conservative capital management. Debt decreased by USD 0.5 billion (-4.1%) for the year, reflecting reduced leverage. Short-term debt was absent, while accounts payable stood at USD 3.5 billion.

Financial stability

Capital structure

The company's leverage profile shows a conservative approach, with a debt-to-equity ratio of 19.7%, a debt-to-assets ratio of 11.7%, and a debt-to-capital ratio of 16.5% in 2025, all reflecting a decline compared to 2024.

Liquidity ratios

The current ratio in 2025 was 1.1, indicating acceptable liquidity, while the cash ratio was 0.3, reflecting a reasonable cash buffer. Both metrics remained consistent compared to 2024, suggesting stable short-term financial health.

Leverage

The company's financial leverage ratio in 2025 was 1.7, reflecting a conservative capital structure, as it remained below the threshold of 2.0. This suggests prudent financial management with limited reliance on debt to finance assets.

Debt coverage

Debt service coverage ratio increased by USD 28.0 billion (+332.6%) to USD 36.4 billion in 2025 compared to 2024. Interest coverage ratio was USD 26.5 billion.

Cash flow performance

Operating cash flow in 2025 was USD 13.1 billion, up USD 2.9 billion (+27.9%) from 2024, indicating strong core earnings. Investing cash flow was USD -3.2 billion, down USD 1.8 billion (+138.4%) from 2024, reflecting reinvestment activities. Financing cash flow was USD -9.4 billion, down USD 2.0 billion (+26.1%) from 2024, signifying outflows for debt repayment or shareholder returns.

Capital allocation

Acquisitions and investments

Acquisitions in 2025 amounted to USD 2.7 billion, reflecting a significant increase from the previous year. This strategic investment aligns with Salesforce's focus on enhancing its agentic capabilities, as evidenced by the acquisitions of Convergence AI, Bluebirds, and Regrello. These acquisitions are intended to bolster Salesforce's innovation and expand its data and agentic capabilities for customers.

Debt repayment

Net debt issuance in 2025 was USD -1.6 billion, indicating a deleveraging trend compared to the previous year (2024), when net debt issuance was USD -1.8 billion. This reflects a strategic focus on reducing leverage and strengthening the balance sheet.

Dividends

Dividend payout ratio in 2025 was 24.8%.

Share buybacks & issuances

The company executed a stock repurchase of USD 7.8 billion in 2025, reflecting a 2.7% decrease from the previous year. Stock issuance was absent, leading to a 1.2% reduction in weighted average shares outstanding, enhancing per-share value focus.

Capital returns

The company's ROIC increased to 7.9% in 2025, significantly outperforming the peer median of 3.2%. This improvement, alongside a 6.0% ROA, underscores enhanced capital efficiency and effective asset utilization compared to 2024.

Valuation

As of 2025-01-31 (price per share: 341.7 USD)

Trading multiples

EPS in 2025 was USD 6.4, representing an increase of USD 2.2 or 52.4% compared to 2024. Meanwhile, the stock price rose by USD 60.6 or 21.6% over the same period, indicating a positive alignment between earnings growth and market valuation.

The PE ratio in 2025 was USD 53.0, reflecting a decrease of USD 13.2 or 19.9% compared to 2024. The PS ratio increased by USD 0.8 or 10.4% to USD 8.7, while the PB ratio rose by USD 0.8 or 17.1% to USD 5.4.

EV to EBITDA decreased to USD 29.8 in 2025, while EV to FCF fell to USD 26.7. Both ratios remain in the high valuation range, indicating market expectations of growth or a premium.

Yield metrics

The earnings yield in 2025 was 1.9%, reflecting a 0.4% increase from 2024. The 10-year Treasury yield data for 2025 is unavailable; therefore, no conclusion can be drawn regarding the relative attractiveness compared to fixed income investments.

Intrinsic value

The stock price of USD 341.7 in 2025 exceeds the Graham Number of USD 96.0, indicating a premium valuation. The book value per share increased to USD 63.6, suggesting modest asset growth relative to the stock price appreciation.

Disclaimer

This presentation is for informational and educational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security or financial product. The content herein is based on publicly available information, believed to be accurate and reliable at the time of publication, but no representation or warranty, express or implied, is made as to its accuracy, completeness, or correctness. Any opinions, projections, or forward-looking statements expressed in this material reflect our judgment as of the date of publication and are subject to change without notice. Past performance is not indicative of future results. Investing involves risks, including the potential loss of principal. The recipient is solely responsible for their own investment decisions and should seek independent financial, legal, and tax advice where appropriate. We disclaim any liability for any direct or consequential loss arising from any use of this presentation or its contents.