Salesforce, Inc 10-Q for FY2027 Q2
Salesforce, Inc. (CRM)
10-Q
2026-08-27
For: 2026-07-31
View Original
Added on
August 27, 2026
About this 10-Q
Salesforce, Inc filed this 10-Q on August 27, 2026, covering the quarter ended July 31, 2026 (FY2027 Q2).
Headline figures
Quarter ended July 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $11.35B
- up 10.8% from $10.24B a year earlier
- Net income
- $3.53B
- up 86.9% from net income of $1.89B a year earlier
- Diluted EPS
- $4.29
- up 118.9% from $1.96 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the quarterly period ended July 31, 2026
OR
| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the transition period from to .
Commission File Number: 001-32224
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||
(Address of principal executive offices)
Telephone Number: (415 ) 901-7000
(Registrant’s telephone number, including area code)
| Securities registered pursuant to Section 12(b) of the Act | ||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of August 20, 2026, there were approximately 823 million shares of the Registrant’s Common Stock outstanding.
1
INDEX
| Page No. | ||||||||
| Item 1. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
2
PART I.
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Salesforce, Inc.
Condensed Consolidated Balance Sheets
(in millions)
| July 31, 2026 | January 31, 2026 | ||||||||||
| Assets | (unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Marketable securities | |||||||||||
| Accounts receivable, net | |||||||||||
| Costs capitalized to obtain revenue contracts, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Noncurrent costs capitalized to obtain revenue contracts, net | |||||||||||
| Strategic investments | |||||||||||
| Goodwill | |||||||||||
| Intangible assets acquired through business combinations, net | |||||||||||
| Deferred tax assets and other assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
Accounts payable, accrued expenses and other liabilities | $ | $ | |||||||||
Operating lease liabilities, current | |||||||||||
Unearned revenue | |||||||||||
| Debt, current | |||||||||||
| Total current liabilities | |||||||||||
| Noncurrent debt | |||||||||||
| Noncurrent operating lease liabilities | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Total liabilities | |||||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | |||||||||||
| Treasury stock, at cost | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Retained earnings | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying Notes.
3
Salesforce, Inc.
Condensed Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
| 2 | Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Subscription and support | $ | $ | $ | $ | |||||||||||||||||||||||||
| Professional services and other | |||||||||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||||||||
| Cost of revenues (1)(2): | |||||||||||||||||||||||||||||
| Subscription and support | |||||||||||||||||||||||||||||
| Professional services and other | |||||||||||||||||||||||||||||
| Total cost of revenues | |||||||||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||||||||
| Operating expenses (1)(2): | |||||||||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||
| Restructuring | |||||||||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||||||||
| Gains (losses) on strategic investments, net | ( | ||||||||||||||||||||||||||||
| Other income | |||||||||||||||||||||||||||||
| Income before provision for income taxes | |||||||||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Basic net income per share | $ | $ | $ | $ | |||||||||||||||||||||||||
| Diluted net income per share | $ | $ | $ | $ | |||||||||||||||||||||||||
| Shares used in computing basic net income per share | |||||||||||||||||||||||||||||
| Shares used in computing diluted net income per share | |||||||||||||||||||||||||||||
(1) Amounts include amortization of intangible assets acquired through business combinations, as follows:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Cost of revenues | $ | $ | $ | $ | |||||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||||||||
(2) Amounts include stock-based compensation expense, as follows:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Cost of revenues | $ | $ | $ | $ | |||||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||
| Restructuring | |||||||||||||||||||||||||||||
See accompanying Notes.
4
Salesforce, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in millions)
(unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Other comprehensive income (loss), net of reclassification adjustments: | |||||||||||||||||||||||||||||
| Foreign currency translation and other gains (losses) | ( | ( | |||||||||||||||||||||||||||
| Unrealized gains (losses) on marketable securities | ( | ( | ( | ||||||||||||||||||||||||||
| Cash flow hedges: | |||||||||||||||||||||||||||||
| Changes in net unrealized gains (losses) | |||||||||||||||||||||||||||||
| Reclassification adjustment for net (gains) losses included in net income | ( | ( | |||||||||||||||||||||||||||
| Other comprehensive income (loss), before tax | ( | ( | |||||||||||||||||||||||||||
| Tax effect | ( | ||||||||||||||||||||||||||||
| Other comprehensive income (loss), net | ( | ( | |||||||||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||||||||
See accompanying Notes.
5
Salesforce, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in millions)
(unaudited)
| Three and Six Months Ended July 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at January 31, 2026 | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Common stock issued | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
| Common stock withheld related to net share settlement of equity awards | 0 | 0 | 0 | 0 | ( | 0 | 0 | ( | |||||||||||||||||||||||||||||||||||||||
| Common stock repurchased | 0 | 0 | ( | ( | ( | 0 | 0 | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Cash dividends and dividend equivalents declared | 0 | 0 | 0 | 0 | 0 | 0 | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Balance at April 30, 2026 | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Common stock issued | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
| Common stock withheld related to net share settlement of equity awards | 0 | 0 | 0 | 0 | ( | 0 | 0 | ( | |||||||||||||||||||||||||||||||||||||||
| Common stock repurchased | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | 0 | 0 | 0 | 0 | 0 | ( | 0 | ( | |||||||||||||||||||||||||||||||||||||||
| Cash dividends and dividend equivalents declared | 0 | 0 | 0 | 0 | 0 | 0 | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Balance at July 31, 2026 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Three and Six Months Ended July 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at January 31, 2025 | $ | ( | $ | ( | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Common stock issued | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased | 0 | 0 | ( | ( | 0 | 0 | 0 | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Cash dividends and dividend equivalents declared | 0 | 0 | 0 | 0 | 0 | 0 | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Balance at April 30, 2025 | $ | ( | $ | ( | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Common stock issued | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
| Common stock withheld related to net share settlement of equity awards | 0 | 0 | 0 | 0 | ( | 0 | 0 | ( | |||||||||||||||||||||||||||||||||||||||
| Common stock repurchased | 0 | 0 | ( | ( | 0 | 0 | 0 | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Cash dividends and dividend equivalents declared | 0 | 0 | 0 | 0 | 0 | 0 | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
| Balance at July 31, 2025 | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
See accompanying Notes.
6
Salesforce, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Operating activities: | |||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||||
| Depreciation and amortization (1) | |||||||||||||||||||||||||||||
| Amortization of costs capitalized to obtain revenue contracts, net | |||||||||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||||||||
| (Gains) losses on strategic investments, net | ( | ( | ( | ||||||||||||||||||||||||||
| Changes in assets and liabilities, net of business combinations: | |||||||||||||||||||||||||||||
| Accounts receivable, net | ( | ( | |||||||||||||||||||||||||||
| Costs capitalized to obtain revenue contracts, net | ( | ( | ( | ( | |||||||||||||||||||||||||
| Prepaid expenses and other current assets and other assets | ( | ( | |||||||||||||||||||||||||||
| Accounts payable and accrued expenses and other liabilities | ( | ( | ( | ||||||||||||||||||||||||||
| Operating lease liabilities | ( | ( | ( | ( | |||||||||||||||||||||||||
| Unearned revenue | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||||||||||||||
| Investing activities: | |||||||||||||||||||||||||||||
| Business combinations, net of cash acquired | ( | ( | ( | ( | |||||||||||||||||||||||||
| Purchases of strategic investments | ( | ( | ( | ( | |||||||||||||||||||||||||
| Sales of strategic investments | |||||||||||||||||||||||||||||
| Purchases of marketable securities | ( | ( | ( | ( | |||||||||||||||||||||||||
| Sales of marketable securities | |||||||||||||||||||||||||||||
| Maturities of marketable securities | |||||||||||||||||||||||||||||
| Capital expenditures | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net cash provided by (used in) investing activities | ( | ( | ( | ||||||||||||||||||||||||||
| Financing activities: | |||||||||||||||||||||||||||||
| Proceeds from issuance of debt, net of issuance costs | |||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | ( | ( | |||||||||||||||||||||||||
| Payments for taxes related to net share settlement of equity awards | ( | ( | ( | ( | |||||||||||||||||||||||||
| Proceeds from employee stock plans | |||||||||||||||||||||||||||||
| Principal payments on financing obligations | ( | ( | ( | ( | |||||||||||||||||||||||||
| Payments of dividends and dividend equivalents | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net cash used in financing activities | ( | ( | ( | ( | |||||||||||||||||||||||||
| Effect of exchange rate changes | ( | ( | |||||||||||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ( | |||||||||||||||||||||||||||
| Cash and cash equivalents, beginning of period | |||||||||||||||||||||||||||||
| Cash and cash equivalents, end of period | $ | $ | $ | $ | |||||||||||||||||||||||||
See accompanying Notes.
7
Salesforce, Inc.
Condensed Consolidated Statements of Cash Flows
Supplemental Cash Flow Disclosure
(in millions)
(unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Supplemental cash flow disclosure: | |||||||||||||||||||||||||||||
| Cash paid during the period for: | |||||||||||||||||||||||||||||
| Interest | $ | $ | $ | $ | |||||||||||||||||||||||||
| Income taxes, net of tax refunds | $ | $ | $ | $ | |||||||||||||||||||||||||
See accompanying Notes.
8
Salesforce, Inc.
Notes to Condensed Consolidated Financial Statements
1. Summary of Business and Significant Accounting Policies
Description of Business
Salesforce, Inc. (the “Company”) is a global leader in customer relationship management technology that brings companies and customers together. With the deeply unified Agentforce 360 Platform, the Company delivers a single source of truth, connecting customer data with integrated artificial intelligence (“AI”) across systems, apps and devices to help companies sell, service, market and conduct commerce from anywhere. The Company offers Agentforce, a layer of the trusted Agentforce 360 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. Since its founding in 1999, the Company has enabled companies of every size and industry to transform their businesses in the digital-first world, pioneering innovations in cloud, mobile, social, analytics and AI.
Fiscal Year
The Company’s fiscal year ends on January 31. References to fiscal 2027, for example, refer to the fiscal year ending January 31, 2027.
Basis of Presentation
The accompanying condensed consolidated balance sheet as of July 31, 2026 and the condensed consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the three and six months ended July 31, 2026 and 2025 are unaudited.
These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of July 31, 2026 and its results of operations, including its statements of comprehensive income, stockholders' equity and cash flows for the three and six months ended July 31, 2026 and 2025. All adjustments are of a normal recurring nature. The results for the three and six months ended July 31, 2026 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2027.
These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026, filed with the Securities and Exchange Commission (the “SEC”) on March 2, 2026.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the Company’s condensed consolidated financial statements and notes thereto.
Significant estimates and assumptions made by management include the determination of:
•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.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
9
Segments
The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Company’s chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. Over the past few years, the Company has completed a number of acquisitions which have allowed the Company to expand its offerings, presence and reach in various market segments. While the Company has offerings in multiple enterprise cloud computing market segments, including as a result of the Company's acquisitions, and operates in multiple countries, the Company’s business operates in one operating segment because most of the Company's service offerings operate on the Agentforce 360 Platform and are deployed in a nearly identical manner. Additionally, the Company’s CODM evaluates the Company’s financial information and resources, and assesses the performance of these resources, on a consolidated net income basis. The measure of segment assets is also reported on the condensed consolidated balance sheet as total consolidated assets.
The Company’s significant segment expenses, which are the expenses included in operating income as well as gains (losses) on strategic investments, and other segment items, which include other income and provision for income taxes, are included in the Company’s condensed consolidated statement of operations.
Concentrations of Credit Risk, Significant Customers and Investments
No single customer accounted for ten percent or more of accounts receivable as of July 31, 2026 and January 31, 2026. No single customer accounted for ten percent or more of total revenue during the three and six months ended July 31, 2026 and 2025. As of July 31, 2026 and January 31, 2026, assets located outside the Americas were 15 percent and 16 percent of total assets, respectively. As of July 31, 2026 and January 31, 2026, assets located in the United States were 84 percent and 82 percent of total assets, respectively.
The Company is also exposed to concentrations of risk in its strategic investment portfolio, including within specific industries, as the Company primarily invests in enterprise technology and artificial intelligence companies, as well as system integrators. As of July 31, 2026 and January 31, 2026, the Company’s privately held investment in Anthropic PBC (“Anthropic”) had a carrying value that represented approximately 45 percent and 22 percent, respectively, of the Company’s total strategic investments portfolio. As of July 31, 2026, no other privately held investments had carrying values that were individually greater than ten percent of the Company’s strategic investments portfolio. As of January 31, 2026, one additional privately held investment had a carrying value that represented approximately 13 percent of the portfolio.
Revenue Recognition
The Company derives its revenues from two sources: (1) subscription and support revenues and (2) professional services and other revenues. Subscription and support revenues primarily include subscription fees from customers accessing the Company’s enterprise cloud computing services (collectively, “Cloud Services”), software license revenues from the sales of term software licenses and support revenues from the sales of support and updates beyond the basic subscription or software license sales. Professional services and other revenues include professional and advisory services for process mapping, project management and implementation services and training services.
Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or service level penalties, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.
The Company determines the amount of revenue to be recognized through the application of the following steps:
•identification of the contract, or contracts, with a customer;
•identification of the performance obligations in the contract;
10
•determination of the transaction price;
•allocation of the transaction price to the performance obligations in the contract; and
•recognition of revenue when or as the Company satisfies the performance obligations.
Subscription and Support Revenues
Subscription and support revenues are comprised of fees that provide customers with access to Cloud Services, software licenses and related support and updates during the term of the arrangement.
Cloud Services allow customers to use the Company's multi-tenant software without taking possession of the software. Revenue is generally recognized ratably over the contract term. Substantially all of the Company’s subscription service arrangements are noncancellable and do not contain refund-type provisions.
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 software support and updates is recognized as the support and updates are provided, which is generally ratably over the contract term.
The Company typically invoices its customers annually and its payment terms provide that customers pay within 30 days of invoice. Amounts that have been invoiced are recorded in accounts receivable and in unearned revenue or revenue, depending on whether transfer of control to customers has occurred.
Professional Services and Other Revenues
The Company’s professional services contracts are either on a time and materials, fixed price or subscription basis. These revenues are recognized as the services are rendered for time and materials contracts, on a proportional performance basis for fixed price contracts or ratably over the contract term for subscription professional services contracts. Other revenues consist primarily of training revenues recognized as such services are performed.
Significant Judgments - Contracts with Multiple Performance Obligations
The Company enters into contracts with its customers that may include promises to transfer multiple performance obligations such as Cloud Services, software licenses, support and updates and professional services. A performance obligation is a promise in a contract with a customer to transfer products or services that are concluded to be distinct. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment.
Cloud Services, software licenses and support and updates services are generally concluded to be distinct because such offerings are often sold separately. In determining whether professional services are distinct, the Company considers the following factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the subscription start date and the contractual dependence of the service on the customer’s satisfaction with the professional services work. To date, the Company has concluded that professional services included in contracts with multiple performance obligations are distinct.
The Company allocates the transaction price to each performance obligation on a relative SSP basis. The SSP is the price at which the Company would sell a promised product or service separately to a customer. Judgment is required to determine the SSP for each distinct performance obligation.
The Company determines SSP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where services are sold, price lists, the Company's go-to-market strategy, historical and current sales and contract prices. In instances where the Company does not sell or price a product or service separately, the Company maximizes the use of observable inputs by using information that may include market conditions. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to SSP.
In certain cases, the Company is able to establish SSP based on observable prices of products or services sold or priced separately in comparable circumstances to similar customers. The Company uses a single amount to estimate SSP when indicated by the distribution of its observable prices.
Alternatively, the Company uses a range of amounts to estimate SSP when the pricing practices or distribution of the observable prices are highly variable. The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customer size and geography.
11
Costs Capitalized to Obtain Revenue Contracts
The Company capitalizes incremental costs of obtaining revenue contracts related to noncancellable Cloud Services subscriptions, ongoing Cloud Services support and license support and updates. For contracts with term software licenses where revenue is recognized upfront when the software is made available to the customer, costs allocable to those licenses are expensed as they are incurred. Capitalized amounts consist primarily of sales commissions paid to the Company’s sales force on new and renewal contracts, as well as the associated payroll and benefit costs.
Costs capitalized related to new revenue contracts are amortized on a straight-line basis over four years , which is longer than the typical initial contract period, but reflects the estimated average period of benefit, including expected contract renewals. In arriving at this average period of benefit, the Company evaluates both qualitative and quantitative factors which include the estimated life cycles of its offerings and customer attrition. The Company amortizes capitalized costs for renewals over two years based on similar considerations.
The capitalized amounts are recoverable through future revenue streams under all noncancellable customer contracts. The Company periodically evaluates whether there have been any changes in its business, the market conditions in which it operates or other events which would indicate that its amortization period should be changed or if there are potential indicators of impairment.
Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents are stated at fair value.
Marketable Securities
The Company considers all of its marketable debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classifies these securities within current assets on the condensed consolidated balance sheets. Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the condensed consolidated statements of comprehensive income until realized. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit losses. Expected credit losses on securities are recognized in other income on the condensed consolidated statements of operations and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income in stockholders' equity. For the purposes of computing realized and unrealized gains and losses, the cost of securities sold is based on the specific-identification method. Interest on securities classified as available for sale is included as a component of investment income within other income on the condensed consolidated statements of operations.
Strategic Investments
The Company holds strategic investments in publicly held equity securities, privately held equity securities and other investments in which the Company does not have a controlling interest.
Privately held equity securities where the Company lacks a controlling financial interest but does exercise significant influence are accounted for under the equity method. Privately held equity securities not accounted for under the equity method are recorded at cost and adjusted only for observable transactions for same or similar investments of the same issuer or impairment events (referred to as the measurement alternative). All gains and losses on privately held equity securities, realized and unrealized, are recorded through gains (losses) on strategic investments, net on the condensed consolidated statements of operations. Other privately held investments not classified as debt or equity securities are recorded at cost and adjusted for impairment events, with any associated gains and losses recorded through gains (losses) on strategic investments, net on the condensed consolidated statements of operations.
Valuations of privately held securities are inherently complex and require judgment due to the lack of readily available market data. In determining the estimated fair value of its strategic investments in privately held companies, the Company utilizes the most recent data available to the Company. The Company assesses its privately held strategic investments quarterly for impairment. The Company’s impairment analysis encompasses an assessment of both qualitative and quantitative factors, including the investee's financial metrics, market acceptance of the investee's product or technology and the rate at which the investee is using its cash. If the investment is considered impaired, the Company estimates the fair value of the investment and recognizes any resulting impairment through the condensed consolidated statements of operations.
12
Publicly held equity securities are measured at fair value with changes recorded through gains (losses) on strategic investments, net on the condensed consolidated statements of operations.
Fair Value Measurement
Derivative Financial Instruments
The Company enters into foreign currency derivative contracts with financial institutions to reduce foreign exchange risk associated with forecasted revenues, intercompany transactions and other monetary assets or liabilities denominated in currencies other than the functional currency of its subsidiaries. Beginning in the first quarter of fiscal 2027, the Company began to designate certain forward derivative contracts as hedging instruments in order to minimize the impact of foreign currency volatility on revenues denominated in Euro and Japanese Yen. The Company also uses forward currency derivative contracts, which are not designated as hedging instruments, to minimize the Company’s exposure to balances primarily denominated in the Euro, British Pound Sterling, Canadian Dollar, Australian Dollar, Brazilian Real and Japanese Yen.
The Company’s derivative financial instruments program is not conducted for trading or speculative purposes. The Company generally enters into master netting arrangements with the financial institutions with which it contracts for such derivatives, which permit net settlement of transactions with the same counterparty, thereby reducing risk of credit-related losses from a financial institution’s nonperformance. While the contract or notional amount is often used to express the volume of foreign currency derivative contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of the Company to the counterparties. All derivative instruments are recorded at fair value on the condensed consolidated balance sheet.
For foreign currency derivatives designated as cash flow hedges, gains or losses resulting from changes in fair value or net settlement are reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified into earnings in the period(s) the forecasted transactions affect earnings. The notional amount of outstanding foreign currency derivative contracts designated as cash flow hedges as of July 31, 2026 was $1.4 billion.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows:
| Buildings and building improvements | |||||
| Computers, equipment and software | |||||
| Furniture and fixtures | |||||
| Leasehold improvements | Shorter of the estimated lease term or | ||||
The Company estimates the useful lives of property and equipment upon initial recognition and periodically evaluates the useful lives and whether events or changes in circumstances warrant a revision to the useful lives.
When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from their respective accounts and any loss on such retirement is reflected in operating expenses.
Leases
The Company has entered into operating and finance leases for corporate offices, data centers, and equipment. The Company determines if an arrangement is a lease at inception and classifies its leases at commencement. Operating leases are included in operating lease right-of-use (“ROU”) assets and current and noncurrent operating lease liabilities on the Company’s condensed consolidated balance sheets. Assets (also referred to as ROU assets) and liabilities recognized from finance leases are included in property and equipment, accrued expenses and other liabilities and other noncurrent liabilities, respectively, on the Company’s condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for
13
the lease term. The corresponding lease liabilities represent its obligation to make lease payments arising from the lease. The Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less for any asset classes.
Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement, net of any future tenant incentives. The Company has lease agreements which contain both lease and non-lease components, which it has elected to combine for all asset classes. As such, minimum lease payments include fixed payments for non-lease components within a lease agreement but exclude variable lease payments not dependent on an index or rate, such as common area maintenance, operating expenses, utilities, or other costs that are subject to fluctuation from period to period. The Company’s lease terms may include options to extend or terminate the lease. Periods beyond the noncancellable term of the lease are included in the measurement of the lease liability only when it is reasonably certain that the Company will exercise the associated extension option or waive the termination option. The Company reassesses the lease term if and when a significant event or change in circumstances occurs within the control of the Company. As most of the Company’s leases do not provide an implicit rate, the net present value of future minimum lease payments is determined using the Company’s incremental borrowing rate. The Company's incremental borrowing rate is an estimate of the interest rate the Company would have to pay to borrow on a collateralized basis with similar terms and payments, in the economic environment where the leased asset is located.
The lease ROU asset is recognized based on the lease liability, adjusted for any rent payments or initial direct costs incurred or tenant incentives received prior to commencement.
Lease expense for operating leases, which includes amortization expense of ROU assets, is recognized on a straight-line basis over the lease term. Amortization expense of finance lease ROU assets is recognized on a straight-line basis over the lease term and interest expense for finance lease liabilities is recognized based on the incremental borrowing rate. Expense for variable lease payments is recognized as incurred.
On the lease commencement date, the Company also establishes assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are included in property and equipment, net and are amortized over the lease term.
The Company has entered into subleases or has made decisions and taken actions to sublease or discontinue use of certain leased assets. Similar to other long-lived assets discussed below, management tests ROU assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. For leased assets, such circumstances would include the decision to discontinue use prior to the end of the minimum lease term or subleases, in the case of office space, for which estimated cash flows do not fully cover the costs of the associated lease.
Intangible Assets Acquired through Business Combinations
Intangible assets are amortized over their estimated useful lives. Each period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization.
Impairment Assessment
The Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, including, but not limited to, significant adverse changes in business climate, market conditions or other events that indicate an asset's carrying amount may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset group to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.
Business Combinations
The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions, tax-related valuation allowances and pre-acquisition contingencies are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s condensed consolidated statements of operations.
14
In the event the Company acquires an entity with which the Company has a preexisting relationship, the Company will generally recognize a gain or loss to settle that relationship as of the acquisition date within operating income on the condensed consolidated statements of operations. In the event that the Company acquires an entity in which the Company previously held a strategic investment, the difference between the fair value of the shares as of the date of the acquisition and the carrying value of the strategic investment is recorded as a gain or loss and recorded within gains (losses) on strategic investments, net in the condensed consolidated statements of operations.
Restructuring
The Company generally recognizes employee severance costs when payments are probable and amounts are estimable or when notification occurs, depending on the region where an employee works. Costs related to contracts without future benefit or contract termination are recognized at the earlier of the contract termination or the cease-use dates. Other exit-related costs, including data center exits and office space reductions, are recognized as incurred once management approval is obtained and operations have ceased.
Stock-Based Compensation Expense
Stock-based compensation expense is measured based on grant date at fair value using the grant date closing stock price for restricted stock units and restricted stock awards and using the Black-Scholes option pricing model for stock options and shares issued pursuant to the Amended and Restated 2004 Employee Stock Purchase Plan (“ESPP”). The Company recognizes stock-based compensation expense related to restricted stock units, restricted stock awards, stock options and shares issued pursuant to the ESPP on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term of four years for restricted stock units, restricted stock awards, and stock options, and the 12-month offering period for shares issued pursuant to the ESPP. The estimated forfeiture rate applied is based on historical forfeiture rates.
The Company grants performance-based restricted stock units and performance-based stock options to executive officers and other members of senior management, which include awards with service and market conditions and awards with service and performance conditions. Stock-based compensation expense related to awards with a market condition are measured at fair value using a Monte Carlo simulation model and the expense related to these awards is recognized on a graded-vesting basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term. Stock-based compensation expense related to awards with a performance condition are measured based on the grant date closing stock price and the expense related to these awards is recognized based on the requisite service period elapsed, as well as the probability of achievement and estimated attainment of the performance condition as of the end of our reporting period.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the condensed consolidated statements of operations in the period that includes the enactment date.
The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, solely based on its technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in the income tax provision.
Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weighting of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law. The Company regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company’s judgments regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans. Should there be a change in the ability to recover deferred tax assets, the tax provision would increase or decrease in the period in which the assessment is changed.
Foreign Currency Translation
The functional currency of the Company’s major foreign subsidiaries is generally the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. Equity transactions are translated using
15
Warranties and Indemnification
The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe on a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any material liabilities related to such obligations in the accompanying condensed consolidated financial statements.
The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.
New Accounting Pronouncements Pending Adoption
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disaggregation of certain costs in a separate note to the financial statements, such as the amounts of employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption in annual and interim consolidated financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027 on a retrospective or prospective basis, with early adoption permitted. The Company is evaluating the effect that ASU 2024-03 will have on its financial statement disclosures.
Reclassifications
Reclassifications to the prior period were made to conform to the current period presentation in the Disaggregation of Revenue in Note 2 “Revenues” beginning in the first quarter of fiscal 2027. This reclassification did not affect total subscription and support revenue.
2. Revenues
Disaggregation of Revenue
Subscription and Support Revenue by the Company's Service Offerings
Subscription and support revenues consisted of the following (in millions):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Agentforce Apps | $ | $ | $ | $ | |||||||||||||||||||||||||
| Data 360, Headless Platform, and Other | |||||||||||||||||||||||||||||
| Hedging gains | |||||||||||||||||||||||||||||
| Total Subscription and Support Revenue | $ | $ | $ | $ | |||||||||||||||||||||||||
Total Revenue by Geographic Locations
16
Revenues by geographical region consisted of the following (in millions):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Americas | $ | $ | $ | $ | |||||||||||||||||||||||||
| Europe | |||||||||||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||||||||
| Hedging gains | |||||||||||||||||||||||||||||
| Total Revenue | $ | $ | $ | $ | |||||||||||||||||||||||||
Revenues by geography are determined based on the region of the Company's contracting entity, which may be different than the region of the customer. Americas revenue attributed to the United States was approximately 93
Contract Balances
Contract Assets
The Company records a contract asset when revenue recognized on a contract exceeds the billings. Contract assets were $855 million as of July 31, 2026 as compared to $818 million as of January 31, 2026. Current portions of the contract asset balance are included in prepaid expenses and other current assets and the noncurrent portions are presented within deferred tax assets and other assets, net on the condensed consolidated balance sheets.
Unearned Revenue
Unearned revenue represents amounts that have been invoiced in advance of revenue recognition and is recognized as revenue when transfer of control to customers has occurred or services have been provided. The unearned revenue balance does not represent the total contract value of annual or multi-year, noncancellable subscription agreements. The unearned revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, dollar size and new business linearity within the quarter.
The change in unearned revenue was as follows (in millions):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Unearned revenue, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Billings and other (1) | |||||||||||||||||||||||
| Revenue recognized over time | ( | ( | ( | ( | |||||||||||||||||||
| Revenue recognized at a point in time | ( | ( | ( | ( | |||||||||||||||||||
| Unearned revenue, end of period | $ | $ | $ | $ | |||||||||||||||||||
(1) Other includes, for example, the impact of foreign currency translation as well as contributions from contract assets and business combinations.
The majority of revenue recognized for these services is from the beginning of period unearned revenue balance.
Revenue recognized over time primarily includes Cloud Services subscription and support revenue, which is generally recognized ratably over time, and professional services and other revenue, which is generally recognized ratably or as delivered.
Revenue recognized at a point in time substantially consists of term software licenses.
Remaining Performance Obligation
Remaining performance obligation represents contracted revenue that has not yet been recognized and includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. The transaction price allocated to the remaining performance obligation is based on SSP. Remaining performance obligation is influenced by several factors, including seasonality, the timing of renewals, the timing of term license deliveries, average contract terms and foreign currency exchange rates. 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. Remaining performance obligation is subject to future economic risks, including bankruptcies, regulatory changes and other market factors.
17
The Company excludes amounts related to performance obligations from professional services contracts that are billed and recognized on a time and materials basis.
The majority of the Company's noncurrent remaining performance obligation is expected to be recognized in the next 13 to 36 months.
Remaining performance obligation consisted of the following (in billions):
| Current | Noncurrent | Total | |||||||||||||||
| As of July 31, 2026 | $ | $ | $ | ||||||||||||||
| As of January 31, 2026 | $ | $ | $ | ||||||||||||||
3. Investments
Marketable Securities
As of July 31, 2026, marketable securities consisted of the following (in millions):
| Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||
| Corporate notes and obligations | $ | $ | $ | ( | $ | ||||||||||||||||||
| U.S. treasury securities | ( | ||||||||||||||||||||||
| Mortgage-backed obligations | ( | ||||||||||||||||||||||
| Asset-backed securities | ( | ||||||||||||||||||||||
| Municipal securities | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total marketable securities | $ | $ | $ | ( | $ | ||||||||||||||||||
As of January 31, 2026, marketable securities consisted of the following (in millions):
| Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||
| Corporate notes and obligations | $ | $ | $ | $ | |||||||||||||||||||
| U.S. treasury securities | |||||||||||||||||||||||
| Mortgage-backed obligations | ( | ||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||
| Municipal securities | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total marketable securities | $ | $ | $ | ( | $ | ||||||||||||||||||
The contractual maturities of the investments classified as marketable securities were as follows (in millions):
| As of | |||||||||||
| July 31, 2026 | January 31, 2026 | ||||||||||
| Due within 1 year | $ | $ | |||||||||
| Due in 1 year through 5 years | |||||||||||
| Due in 5 years through 10 years | |||||||||||
| $ | $ | ||||||||||
Interest income from marketable securities for the three months ended July 31, 2026 and 2025 was $97 million and $150 million, respectively, and $206 million and $319 million for the six months ended July 31, 2026 and 2025, respectively. The amounts are included in other income in the condensed consolidated statements of operations.
18
Strategic Investments
Strategic investments by form and measurement category as of July 31, 2026 were as follows (in millions):
| Measurement Category | |||||||||||||||||||||||
| Fair Value | Measurement Alternative | Other | Total | ||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Other investments | |||||||||||||||||||||||
Balance as of July 31, 2026 | $ | $ | $ | $ | |||||||||||||||||||
Strategic investments by form and measurement category as of January 31, 2026 were as follows (in millions):
| Measurement Category | |||||||||||||||||||||||
| Fair Value | Measurement Alternative | Other | Total | ||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Other investments | |||||||||||||||||||||||
Balance as of January 31, 2026 | $ | $ | $ | $ | |||||||||||||||||||
Gains (losses) on Strategic Investments, Net
The components of gains (losses) on strategic investments, net were as follows (in millions):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Unrealized gains (losses) recognized on publicly traded equity securities, net | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
| Unrealized gains recognized on privately held equity securities, net | |||||||||||||||||||||||||||||
| Impairments on privately held equity securities and other investments | ( | ( | ( | ( | |||||||||||||||||||||||||
| Unrealized gains (losses), net | ( | ( | |||||||||||||||||||||||||||
| Realized gains on sales of securities, net | |||||||||||||||||||||||||||||
| Gains (losses) on strategic investments, net | $ | $ | $ | $ | ( | ||||||||||||||||||||||||
Unrealized gains and losses recognized on privately held equity securities, net includes upward and downward adjustments from equity securities accounted for under the measurement alternative, as well as gains and losses from private equity securities in other measurement categories. For privately held securities accounted for under the measurement alternative, the Company recorded upward adjustments of $2.9 billion and $13 million and impairments and downward adjustments of $296 million and $85 million for the three months ended July 31, 2026 and 2025, respectively, and upward adjustments of $3.2 billion and $34 million and impairments and downward adjustments of $408 million and $145 million for the six months ended July 31, 2026 and 2025, respectively. Upward adjustments for the three and six months ended July 31, 2026 include unrealized gains of $2.7 billion and $3.0 billion, respectively, related to the Company’s investment in Anthropic.
4. Fair Value Measurement
The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2. Significant other inputs that are directly or indirectly observable in the marketplace.
Level 3. Significant unobservable inputs which are supported by little or no market activity.
All of the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are classified within Level 1 or Level 2 because these assets are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.
19
The following table presents information about the Company’s assets that were measured at fair value as of July 31, 2026 and indicates the fair value hierarchy of the valuation (in millions):
| Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | |||||||||||||||||||
| Cash equivalents (1): | |||||||||||||||||||||||
| Time deposits | $ | $ | $ | $ | |||||||||||||||||||
| Money market mutual funds | |||||||||||||||||||||||
| Cash equivalent securities | |||||||||||||||||||||||
| Marketable securities: | |||||||||||||||||||||||
| Corporate notes and obligations | |||||||||||||||||||||||
| U.S. treasury securities | |||||||||||||||||||||||
| Mortgage-backed obligations | |||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||
| Municipal securities | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Strategic investments: | |||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
| Foreign currency derivative contracts | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign currency derivative contracts | |||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets, in addition to $2.0 billion of cash, as of July 31, 2026.
The following table presents information about the Company’s assets that were measured at fair value as of January 31, 2026 and indicates the fair value hierarchy of the valuation (in millions):
| Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | |||||||||||||||||||
| Cash equivalents (1): | |||||||||||||||||||||||
| Time deposits | $ | $ | $ | $ | |||||||||||||||||||
| Money market mutual funds | |||||||||||||||||||||||
| Cash equivalent securities | |||||||||||||||||||||||
| Marketable securities: | |||||||||||||||||||||||
| Corporate notes and obligations | |||||||||||||||||||||||
| U.S. treasury securities | |||||||||||||||||||||||
| Mortgage-backed obligations | |||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||
| Municipal securities | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Strategic investments: | |||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $2.2 billion of cash, as of January 31, 2026.
20
Strategic Investments Measured and Recorded at Fair Value on a Non-Recurring Basis
Substantially all of the Company's privately held equity securities and other investments are recorded at fair value on a non-recurring basis. The estimation of fair value for these investments requires the use of significant unobservable inputs, and as a result, the Company deems these assets as Level 3 within the fair value measurement framework. For privately held equity investments without a readily determinable fair value, the Company applies valuation methods based on information available, including the market approach, the common stock equivalent method (“CSE”), option pricing models (“OPM”), or a combination of these methods. Observable transactions, such as the issuance of new equity by an investee, are indicators of investee enterprise value and are used to estimate the fair value of the privately held equity investments. The CSE method assumes all classes of stock have an equal fair value per share on a fully diluted, as-converted basis. By contrast, an OPM may be utilized to allocate value to the various classes of securities of the investee, including classes owned by the Company, adjusted to reflect varying rights and preferences between share classes. Fair value conclusions are determined using information shared by investee companies, which may be supplemented with estimates such as volatility and expected time to liquidity. When indicators of impairment are observed for privately held equity securities, the Company generally uses the market approach to estimate the fair value of its investment, giving consideration to the latest observable transactions, as well as the investee's current and projected financial performance and other significant inputs and assumptions, including estimated time to exit, selection and analysis of guideline public companies and the rights and obligations of the securities the Company holds. The Company's privately held equity securities and other investments amounted to approximately $11.3 billion and $7.6 billion as of July 31, 2026 and January 31, 2026, respectively.
5. Leases and Other Commitments
Leases
The Company has leases for corporate offices, data centers and equipment under noncancellable operating and finance leases with various expiration dates.
Total operating lease costs were $129 million and $149 million for the three months ended July 31, 2026 and 2025, respectively, and were $275 million and $296 million for the six months ended July 31, 2026 and 2025, respectively. Included in operating lease costs are amounts related to restructuring charges.
As of July 31, 2026, the maturities of lease liabilities under noncancellable operating and finance leases were as follows (in millions):
| Operating Leases | Finance Leases | ||||||||||
| Fiscal Period: | |||||||||||
| Remaining six months of fiscal 2027 | $ | $ | |||||||||
| Fiscal 2028 | |||||||||||
| Fiscal 2029 | |||||||||||
| Fiscal 2030 | |||||||||||
| Fiscal 2031 | |||||||||||
| Thereafter | |||||||||||
| Total minimum lease payments | |||||||||||
| Less: Imputed interest | ( | ( | |||||||||
| Total | $ | $ | |||||||||
The total lease commitment balance as of July 31, 2026, including leases not yet commenced, is $4.2 billion, of which approximately $3.5 billion is related to facilities space. The remaining commitment amount is primarily related to equipment.
Other Balance Sheet Accounts
Accounts payable, accrued expenses and other liabilities included approximately $2.2 billion and $3.3 billion of accrued compensation as of July 31, 2026 and January 31, 2026, respectively.
21
6. Business Combinations
Qualified
In April 2026, the Company acquired all of the outstanding stock of Qualified.com, Inc. ("Qualified"), a leading provider of agentic artificial intelligence marketing solutions. The acquisition date fair value of the consideration transferred for Qualified was $1.2 billion, which consisted primarily of $1.1 billion in cash. The Company recorded $954 million of goodwill in connection with the acquisition, which is primarily attributed to the assembled workforce and expanded market opportunities. The goodwill associated with the acquisition of Qualified has no basis and is not deductible for U.S. income tax purposes. The Company also recorded approximately $290 million of intangible assets for developed technology and customer relationships with useful lives of and eight years , respectively. The fair values assigned to assets acquired and liabilities assumed are based on management’s estimates and assumptions and may be subject to change as additional information is received and certain tax returns are finalized. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date. The Company has included the financial results of Qualified, which were not material, in its condensed consolidated financial statements from the date of acquisition. The transaction costs associated with the acquisition were also not material.
Pending Acquisitions
Contentful
In May 2026, the Company entered into an agreement to acquire Contentful Global, Inc. (“Contentful”), provider of a leading composable content platform, for approximately $1.5 billion in cash, net of the value of shares currently owned by Salesforce, and subject to customary purchase price adjustments. The acquisition is expected to close in the third quarter of the Company’s fiscal year 2027, subject to customary closing conditions, including the receipt of required regulatory approvals.
Fin
In June 2026, the Company entered into an agreement to acquire Intercom, Inc. (“Fin”), a customer agent platform providing autonomous, end-to-end AI service agents, for approximately $3.6 billion in cash, and subject to customary purchase price adjustments. The acquisition is expected to close in the third quarter of the Company’s fiscal year 2027, subject to customary closing conditions, including the receipt of required regulatory approvals.
7. Intangible Assets Acquired Through Business Combinations and Goodwill
Intangible Assets Acquired Through Business Combinations
Intangible assets acquired through business combinations were as follows (in millions):
| Intangible Assets, Gross | Accumulated Amortization | Intangible Assets, Net | Weighted Average Remaining Useful Life (Years) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| January 31, 2026 | Additions and retirements, net | July 31, 2026 | January 31, 2026 | Expense and retirements, net | July 31, 2026 | January 31, 2026 | July 31, 2026 | July 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||
| Acquired developed technology | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Customer relationships | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other (1) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets resulting from business combinations for the three months ended July 31, 2026 and 2025 was $522 million and $380 million, respectively, and $1.1 billion and $775 million for the six months ended July 31, 2026 and 2025, respectively.
22
The expected future amortization expense for intangible assets as of July 31, 2026 was as follows (in millions):
| Fiscal Period: | |||||
| Remaining six months of fiscal 2027 | $ | ||||
| Fiscal 2028 | |||||
| Fiscal 2029 | |||||
| Fiscal 2030 | |||||
| Fiscal 2031 | |||||
| Thereafter | |||||
| Total amortization expense | $ | ||||
Goodwill
Goodwill represents the excess of the purchase price in a business combination over the fair value of net assets acquired.
The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, were as follows (in millions):
| Balance as of January 31, 2026 | $ | ||||
| Acquisition of Qualified | |||||
| Other acquisitions and adjustments (1) | |||||
| Balance as of July 31, 2026 | $ | ||||
23
8. Debt
The components of the Company's borrowings were as follows (in millions):
| Instrument | Date of Issuance | Maturity Date | Contractual Interest Rate | Outstanding Principal as of July 31, 2026 | Carrying Value as of July 31, 2026 | Carrying Value as of January 31, 2026 | ||||||||||||||||||||||||||||||||||||||
Informatica 364-day Credit Agreement | November 2025 | November 2026 | N/A | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| March 2028 Senior Notes | March 2026 | March 2028 | % | |||||||||||||||||||||||||||||||||||||||||
| April 2028 Senior Notes | April 2018 | April 2028 | ||||||||||||||||||||||||||||||||||||||||||
| July 2028 Senior Sustainability Notes | July 2021 | July 2028 | ||||||||||||||||||||||||||||||||||||||||||
Informatica Three-year Credit Agreement | November 2025 | November 2028 | N/A | |||||||||||||||||||||||||||||||||||||||||
| March 2029 Senior Notes | March 2026 | March 2029 | ||||||||||||||||||||||||||||||||||||||||||
| 2026 Term Loan Credit Agreement (1) | March 2026 | March 2031 | ||||||||||||||||||||||||||||||||||||||||||
| July 2031 Senior Notes | July 2021 | July 2031 | ||||||||||||||||||||||||||||||||||||||||||
| September 2031 Senior Notes | March 2026 | September 2031 | ||||||||||||||||||||||||||||||||||||||||||
| March 2033 Senior Notes | March 2026 | March 2033 | ||||||||||||||||||||||||||||||||||||||||||
| March 2036 Senior Notes | March 2026 | March 2036 | ||||||||||||||||||||||||||||||||||||||||||
| July 2041 Senior Notes | July 2021 | July 2041 | ||||||||||||||||||||||||||||||||||||||||||
| March 2046 Senior Notes | March 2026 | March 2046 | ||||||||||||||||||||||||||||||||||||||||||
| July 2051 Senior Notes | July 2021 | July 2051 | ||||||||||||||||||||||||||||||||||||||||||
| March 2056 Senior Notes | March 2026 | March 2056 | ||||||||||||||||||||||||||||||||||||||||||
| July 2061 Senior Notes | July 2021 | July 2061 | ||||||||||||||||||||||||||||||||||||||||||
| March 2066 Senior Notes | March 2026 | March 2066 | ||||||||||||||||||||||||||||||||||||||||||
| Total carrying value of debt | ||||||||||||||||||||||||||||||||||||||||||||
| Less current portion of debt | ( | |||||||||||||||||||||||||||||||||||||||||||
| Total noncurrent debt | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
(1) The contractual interest rate represents the weighted-average for the period outstanding.
The Company was in compliance with all debt covenants as of July 31, 2026.
The carrying amount of the Company’s 2026 Term Loan Credit Agreement (as defined below) approximates fair value as it bears interest at a floating rate that resets frequently and reflects current market spreads for similar credit risk profiles. The fair value of the term loan is classified as Level 2 within the fair value hierarchy. The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above was $30.8 billion and $6.7 billion as of July 31, 2026 and January 31, 2026, respectively. The fair value was determined based on the closing trading price per $100
The contractual future principal payments for all borrowings as of July 31, 2026 were as follows (in millions):
| Fiscal Period: | |||||
| Remaining six months of fiscal 2027 | $ | ||||
| Fiscal 2028 | |||||
| Fiscal 2029 | |||||
| Fiscal 2030 | |||||
| Fiscal 2031 | |||||
| Thereafter | |||||
| Total principal outstanding | $ | ||||
24
Revolving Credit Facility
In October 2024, the Company 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 provides for a $5.0 billion unsecured revolving credit facility (“Credit Facility”) and matures in October 2029. The Company may use the proceeds of future borrowings under the Credit Facility for general corporate purposes. There were no outstanding borrowings under the Credit Facility as of July 31, 2026.
2026 Term Loan Credit Agreement
In March 2026, the Company entered into a $6.0 billion five-year senior unsecured term loan credit agreement (the "2026 Term Loan Credit Agreement"). The Company used the 2026 Term Loan Credit Agreement to refinance and extend the maturities of the outstanding principal amounts under its existing $4.0 billion 364-day Credit Agreement and $2.0 billion Three-year Credit Agreement (collectively, the “Informatica Credit Agreements”). This non-cash financing activity has been excluded from the Condensed Consolidated Statement of Cash Flows. The 2026 Term Loan Credit Agreement matures in March 2031. As of July 31, 2026, the entire $6.0 billion principal amount was outstanding under the 2026 Term Loan Credit Agreement.
March 2026 Notes
In March 2026, the Company issued $25.0 billion aggregate principal amount of unsecured Senior Notes (collectively, the “March 2026 Notes”), with maturities ranging from 2028 to 2066. The proceeds from this offering, net of discounts and debt issuance costs, was $24.8 billion. Interest on each of the March 2026 Notes is payable semi-annually in arrears. The Company may redeem any portion of the March 2026 Notes, either in whole or in part, at any time, subject to certain early redemption provisions.
The Company used the net proceeds from the March 2026 Notes to fund an accelerated share repurchase program of its common stock. For more information regarding the accelerated share repurchase program, see Note 9 “Stockholders’ Equity.”
9. Stockholders’ Equity
Stock option activity for the six months ended July 31, 2026 was as follows:
| Options Outstanding | |||||||||||||||||||||||
| Outstanding Stock Options (in millions) | Weighted- Average Exercise Price | Aggregate Intrinsic Value (in millions) | |||||||||||||||||||||
| Balance as of January 31, 2026 | $ | ||||||||||||||||||||||
| Options granted under all plans | |||||||||||||||||||||||
| Balance as of July 31, 2026 | $ | $ | |||||||||||||||||||||
| Vested or expected to vest | $ | $ | |||||||||||||||||||||
| Exercisable as of July 31, 2026 | $ | $ | |||||||||||||||||||||
Restricted stock activity for the six months ended July 31, 2026 was as follows:
| Restricted Stock Outstanding | |||||||||||||||||
| Outstanding (in millions) | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value (in millions) | |||||||||||||||
| Balance as of January 31, 2026 | $ | ||||||||||||||||
| Granted - restricted stock units and awards | |||||||||||||||||
| Granted - performance-based restricted stock units | |||||||||||||||||
| Canceled | ( | ||||||||||||||||
| Vested and converted to shares | ( | ||||||||||||||||
| Balance as of July 31, 2026 | $ | $ | |||||||||||||||
| Expected to vest | $ | ||||||||||||||||
25
The aggregate expected stock-based compensation expense remaining to be recognized as of July 31, 2026 was as follows (in millions):
| Fiscal Period: | |||||
| Remaining six months of fiscal 2027 | $ | ||||
| Fiscal 2028 | |||||
| Fiscal 2029 | |||||
| Fiscal 2030 | |||||
| Fiscal 2031 | |||||
| Total stock-based compensation expense | $ | ||||
The aggregate expected stock-based compensation expense remaining to be recognized reflects only outstanding stock awards as of July 31, 2026 and assumes no forfeiture activity and no changes in the expected level of attainment of performance share grants based on the Company’s financial performance relative to certain targets.
Share Repurchase Program
The Company’s 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 February 2026, the Board authorized $50.0 billion in share repurchases under the Share Repurchase Program, which is inclusive of the accelerated share repurchase described below and replaces the previous remaining unpurchased authorization. The Share Repurchase Program does not have a fixed expiration date and does not obligate the Company to acquire any specific number of shares. Under the Share Repurchase Program, shares of common stock may be repurchased using a variety of methods, including privately negotiated and or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as part of accelerated share repurchases and other methods. The timing, manner, price and amount of any repurchases are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions. The Company accounts for treasury stock under the cost method.
In March 2026, the Company entered into accelerated share repurchase agreements (the “ASR Agreements”) with several financial institutions to repurchase an aggregate $25.0 billion of its common stock. Pursuant to the terms of the ASR Agreements, the Company made up-front payments totaling $25.0 billion and received an initial delivery of approximately 103 million shares of its common stock at an average price per share of $198.34 . The initial share delivery represented approximately 80 percent of the total shares expected to be repurchased under the ASR Agreements. During the first quarter of fiscal 2027, the Company recorded $20.6 billion to treasury stock for the cost of the delivered shares as well as associated fees and excise taxes. A $4.6 billion reduction to additional paid-in capital was recorded for the unsettled portion of the ASR Agreements as forward contract components classified within stockholders’ equity. The final settlement of each transaction under the ASR agreements is expected to occur in the third quarter of fiscal 2027.
In addition to share repurchases under the ASR Agreements, the Company repurchased the following shares of its common stock in the open market, (in millions, except average price per share):
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Average price per share | Amount | Shares | Average price per share | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended April 30 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended July 31 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
As of July 31, 2026, the Company was authorized to purchase a remaining $22.9 billion of its common stock under the Share Repurchase Program.
26
Dividends
The Company announced the following dividends:
| Record Date | Payment Date | Dividend per Share | Amount (in millions) | |||||||||||||||||||||||
| Fiscal 2027 | ||||||||||||||||||||||||||
| Three months ended April 30, 2026 | April 9, 2026 | April 23, 2026 | $ | $ | ||||||||||||||||||||||
| Three months ended July 31, 2026 | June 11, 2026 | July 2, 2026 | $ | $ | ||||||||||||||||||||||
| Fiscal 2026 | ||||||||||||||||||||||||||
| Three months ended April 30, 2025 | April 10, 2025 | April 24, 2025 | $ | $ | ||||||||||||||||||||||
| Three months ended July 31, 2025 | June 18, 2025 | July 10, 2025 | $ | $ | ||||||||||||||||||||||
10. Income Taxes
Effective Tax Rate
The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. For the six months ended July 31, 2026, the Company reported a tax provision of $1.6 billion on pretax income of $7.3 billion, which resulted in an effective tax rate of 23 percent. The Company’s effective tax rate differed from the U.S. statutory rate of 21 percent primarily due to state and local taxes and non-deductible items, partially offset by research and development credits.
For the six months ended July 31, 2025, the Company reported a tax provision of $952 million on pretax income of $4.4 billion, which resulted in an effective tax rate of 22 percent. The Company’s effective tax rate differed from the U.S. statutory rate of 21 percent primarily due to state and local taxes and non-deductible items, partially offset by research and development credits.
Unrecognized Tax Benefits and Other Considerations
The Company records liabilities related to its uncertain tax positions. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions throughout the world. Certain prior year tax returns are currently being examined by various taxing authorities in countries including the United States, Germany, Israel, India and Australia. The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. As the outcome of the tax audits cannot be predicted with certainty, if any issues addressed in the Company’s tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future.
11. Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the fiscal period. Diluted net income per share is computed by giving effect to all potential weighted average dilutive common stock, including options and restricted stock units. The dilutive effect of outstanding awards is reflected in diluted net income per share by application of the treasury stock method.
A reconciliation of the denominator used in the calculation of basic and diluted net income per share is as follows (in millions):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||||||||
| Weighted-average shares outstanding for basic net income per share | |||||||||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||||||||
| Employee stock awards | |||||||||||||||||||||||||||||
| Weighted-average shares outstanding for diluted net income per share | |||||||||||||||||||||||||||||
27
The weighted-average number of shares outstanding used in the computation of diluted net income per share does not include the effect of the following potentially outstanding common stock. The effects of these potentially outstanding shares, including the unsettled forward contract component of the ASR Agreements, were not included in the calculation of diluted net income per share because the effect would have been anti-dilutive (in millions):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Employee stock awards | |||||||||||||||||||||||||||||
| Unsettled component of ASR Agreements | |||||||||||||||||||||||||||||
12. Legal Proceedings and Claims
In the ordinary course of business, the Company is or may be involved in various legal or regulatory proceedings, claims or purported class actions related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour and other claims. The Company has been, and may in the future be, put on notice or sued by third parties for alleged infringement of their proprietary rights, including patent infringement.
In general, the resolution of a legal matter could prevent the Company from offering its service to others, could be material to the Company’s financial condition or cash flows, or both, or could otherwise adversely affect the Company’s reputation and future operating results.
The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The outcomes of legal proceedings and other contingencies are, however, inherently unpredictable and subject to significant uncertainties. At this time, the Company is not able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued, including losses that could arise as a result of application of non-monetary remedies, with respect to the contingencies it faces, and the Company’s estimates may not prove to be accurate.
In management’s opinion, resolution of all current matters, including those described below, is not expected to have a material adverse impact on the Company’s financial statements. However, depending on the nature and timing of any such dispute, payment or other contingency, the resolution of a matter could materially affect the Company’s current or future results of operations or cash flows, or both, in a particular quarter.
Slack Litigation
Beginning in September 2019, seven purported class action lawsuits were filed against Slack, its directors, certain of its officers and certain investment funds associated with certain of its directors, each alleging violations of securities laws in connection with Slack’s registration statement on Form S-1 (the “Registration Statement”) filed with the SEC. All but one of these actions were filed in the Superior Court of California for the County of San Mateo, though one plaintiff originally filed in the County of San Francisco before refiling in the County of San Mateo (and the original San Francisco action was dismissed). The remaining action was filed in the U.S. District Court for the Northern District of California (the “Federal Action”). In the Federal Action, captioned Dennee v. Slack Technologies, Inc., Case No. 3:19-CV-05857-SI, Slack and the other defendants filed a motion to dismiss the complaint in January 2020. In April 2020, the court granted in part and denied in part the motion to dismiss. In May 2020, Slack and the other defendants filed a motion to certify the court’s order for interlocutory appeal, which the court granted. Slack and the other defendants filed a petition for permission to appeal the district court’s order to the Ninth Circuit Court of Appeals, which was granted in July 2020. Oral argument was heard in May 2021. On September 20, 2021, the Ninth Circuit affirmed the district court’s ruling. Slack filed a petition for rehearing with the Ninth Circuit on November 3, 2021, which was denied on May 2, 2022. Slack filed a petition for a writ of certiorari with the U.S. Supreme Court on August 31, 2022, which was granted on December 13, 2022. On June 1, 2023, the Supreme Court issued a unanimous decision vacating the Ninth Circuit’s decision and remanded for further proceedings. The Ninth Circuit ordered the parties to submit additional briefing in light of the Supreme Court’s decision. On February 10, 2025, the Ninth Circuit issued an opinion reversing the district court’s order and instructing the district court to dismiss the complaint with prejudice. On July 10, 2025, the plaintiff filed a petition for a writ of certiorari with the U.S. Supreme Court, which was denied on October 6, 2025. On November 4, 2025, the defendants requested that the district court enter judgment against the plaintiff in the Federal Action. On November 10, 2025, the court entered judgment for defendants and against the plaintiff, which marks the conclusion of the Federal Action. The state court actions were consolidated in November 2019, and the consolidated action is captioned In re Slack Technologies, Inc. Shareholder Litigation, Lead Case No. 19CIV05370 (the “State Court Action”). An additional state court action was filed in San Mateo County in June 2020 but was consolidated with the State Court Action in July 2020. Slack and the other defendants filed demurrers to the complaint in the State Court Action in February 2020. In August 2020, the court sustained in part and overruled in part the demurrers, and granted plaintiffs leave to file an amended complaint, which they filed in October 2020. Slack and the other defendants answered the complaint in November 2020. Plaintiffs filed a motion for class certification on October 21, 2021, which was never ruled upon. On October 26, 2022, the court stayed the State Court Action pending
28
resolution of Slack’s petition for a writ of certiorari in the Federal Action. On November 7, 2025, the court lifted the stay in the State Court Action solely to permit plaintiffs to take certain discovery and to file a renewed motion for class certification, if they choose to do so. The State Court Action seeks unspecified monetary damages and other relief on behalf of investors who purchased Slack’s Class A common stock issued pursuant and/or traceable to the Registration Statement.
Backpage Litigation
The Company has been named as a defendant in a number of state and federal actions relating to the activities of one of its former customers, Website Technologies, LLC (“Website Technologies”), an affiliate of Backpage.com, LLC (“Backpage”). Plaintiffs in these actions generally allege that they were victims of sex trafficking by individuals who advertised them on backpage.com, a website operated by Backpage, and assert various claims and theories premised on the Company’s provision to Website Technologies of Salesforce CRM Software and related products, which the plaintiffs allege facilitated the operation and growth of Backpage’s business. The initial action, filed in the Superior Court of California for the County of San Francisco on behalf of numerous plaintiffs, was dismissed with prejudice under Section 230 of the Communications Decency Act (“Section 230”), and that dismissal was affirmed by the California Court of Appeal in December 2021. In April 2020, an action involving a single plaintiff was filed in the U.S. District Court for the Northern District of Illinois, G.G. v. Salesforce, Inc., Case No. 1:20-CV-2335 (“G.G.”). The district court granted the Company’s motion to dismiss the action, and the Seventh Circuit Court of Appeals reversed that ruling in August 2023. On June 12, 2025, after discovery had commenced, plaintiff filed a substantially amended complaint. On July 9, 2025, the Company filed a motion to dismiss that complaint. The district court dismissed one of plaintiff’s claims in January 2026. Beginning in April 2020, five actions involving six plaintiffs were filed and consolidated in the U.S. District Court for the Southern District of Texas as A.B. v. Salesforce, Inc., Case No. 4:20-CV-01254 (“A.B.”). The Company moved for summary judgment on the basis that the claims were barred by Section 230. In November 2023, the court denied the Company’s motion and in December 2024, the Fifth Circuit Court of Appeals affirmed that ruling. In October 2025, the district court in A.B. granted the Company’s motion pursuant to 18 U.S.C. § 1595(b) to stay the action pending final adjudication of criminal proceedings involving Backpage.
Since May 2023, a number of similar actions have been filed in federal and state courts, including principally: (1) actions filed by 30 plaintiffs in the U.S. District Court for the Northern District of Texas, which were consolidated as S.M.A. v. Salesforce, Inc., Case No. 3:23-CV-0915-B (“S.M.A.”); (2) actions filed by 21 plaintiffs in Texas state court in Dallas County, which were removed to the U.S. District Court for the Northern District of Texas and consolidated as A.S. v. Salesforce, Inc., Case No. 3:23-CV-1039-B (“A.S.”); (3) an action by a single plaintiff filed in Texas state court in Harris County, which was removed to the U.S. District Court for the Southern District of Texas as T.S. v. Salesforce, Inc., Case No. 4:23-CV-01792 (“T.S.”); (4) an action by a single plaintiff filed in Texas state court in Harris County, which was removed to the U.S. District Court for the Southern District of Texas as A.A. v. Salesforce, Inc., Case No. 4:26-CV-00757 (“A.A.”); (5) an action filed by a single plaintiff in the U.S. District Court for the Southern District of Texas as Jane Doe (C.S.) v. Salesforce, Inc., Case No. 2:25-CV-189 (“C.S.”); (6) an action filed by a single plaintiff in the U.S. District Court for the Western District of Washington as M.K. v. Salesforce.com, Inc, Case No. 2:23-CV-435 (“M.K.”); (7) an action filed by a single plaintiff in the U.S. District Court for the Middle District of Florida as I.H. v. Salesforce.com, LLC, Case No. 8:24-CV-1678 (“I.H.”); (8) an action filed by 13 plaintiffs in the U.S. District Court for the Northern District of Illinois as A.G.B. v. Salesforce, Inc., Case No. 25-CV-15801 (“A.G.B.”); (9) an action filed by a single plaintiff in the U.S. District Court for the Northern District of Illinois as J.L.D. v. Salesforce, Inc., Case No. 26-CV-01580 (“J.L.D.”); (10) an action filed by two plaintiffs in the U.S. District Court for the Northern District of Illinois as E.Y.W. v. Salesforce, Inc., Case No. 1:26-CV-02632 (“E.Y.W.”); and (11) an action filed by 13 plaintiffs in the U.S. District Court for the Northern District of Illinois as F.A.P. v. Salesforce, Inc., Case No. 1:26-CV-07690 (“F.A.P.”). Six actions have further been filed by 244 plaintiffs in the U.S. District Court for the Northern District of Illinois and have been consolidated with G.G. (“G.G. consolidated cases”): A.I.R. v. Salesforce, Inc., Case No. 1:25-CV-6867; J.M.M. v. Salesforce, Inc., Case No. 1:25-CV-6868; K.B. v. Salesforce, Inc., Case No. 1:25-CV-6869; N.R.J. v. Salesforce, Inc., Case No. 1:25-CV-6870; M.K. v. Salesforce, Inc., Case No. 1:25-CV-6871; and N.A.M. v. Salesforce, Inc., Case No. 1:25-CV-6872. Thirteen actions have been filed by twenty-five plaintiffs in the U.S. District Court for the Northern District of California: A.A. v. Salesforce, Inc., Case No. 4:26-CV-01531; SF-00001 v. Salesforce, Inc., Case No. 4:26-CV-01594; SF-00002 v. Salesforce, Inc., Case No. 4:26-CV-01975; SF-00003 v. Salesforce, Inc., Case No. 4:26-CV-02162; SF-00004 v. Salesforce, Inc., Case No. 4:26-CV-02172; SF-00005 v. Salesforce, Inc., Case No. 4:26-CV-02296; SF-00009 v. Salesforce, Inc., Case No. 4:26-CV-02499; SF-00030 v. Salesforce, Inc., Case No. 4:26-CV-04711; SF-00031 v. Salesforce, Inc., Case No. 4:26-CV-05066; SF-00032 v. Salesforce, Inc., Case No. 4:26-CV-05257; SF-00033 v. Salesforce, Inc., Case No. 4:26-CV-05416; SF-00039 v. Salesforce, Inc., Case No 4:26-CV-07497; SF-00040 v. Salesforce, Inc., Case No. 3:26-CV-08214. Sixteen actions were filed by sixteen plaintiffs in the U.S. District Court for the Central District of California and all were transferred to the U.S. District Court for the Northern District of California in June and July 2026 and assigned new case numbers: SF-00014 v. Salesforce, Inc., Case No. 4:26-CV-05294 (“SF-00014”); SF-00015 v. Salesforce, Inc., Case No. 4:26-CV-05298 (“SF-00015”); SF-00016 v. Salesforce, Inc., Case No. 4:26-CV-05299 (“SF-00016”); SF-00017 v. Salesforce, Inc., Case No. 4:26-CV-05301 (“SF-00017”); SF-00018 v. Salesforce, Inc., Case No. 4:26-CV-05302 (“SF-00018”); SF-00019 v. Salesforce, Inc., Case No. 4:26-CV-05314 (“SF-00019”); SF-00020 v. Salesforce, Inc., Case No. 4:26-CV-05315 (“SF-00020”); SF-00021 v. Salesforce, Inc., Case No. 4:26-CV-05319 (“SF-00021”); SF-00022 v. Salesforce, Inc., Case No. 4:26-CV-05321 (“SF-00022”); SF-00023 v. Salesforce, Inc., Case No. 4:26-CV-05322 (“SF-00023”); SF-00024 v. Salesforce, Inc., Case No. 4:26-CV-05323 (“SF-00024”); SF-00025 v. Salesforce, Inc., Case No. 4:26-CV-05306 (“SF-00025”); SF-00026 v. Salesforce, Inc., Case No.
29
4:26-CV-05304 (“SF-00026”); SF-00027 v. Salesforce, Inc., Case No. 4:26-CV-06506 (“SF-00027”); SF-00028 v. Salesforce, Inc., Case No. 4:26-CV-06509 (“SF-00028”); SF-00029 v. Salesforce, Inc., Case No. 4:26-CV-06515 (“SF-00029”). Separately, 18 actions have been filed by 18 plaintiffs in Texas state court, which are proceeding in a Texas state court multidistrict litigation in Harris County District Court, captioned In re Jane Doe Cases, MDL 2020-28545 (“Texas MDL”). In March 2024, the district court in S.M.A. granted the Company’s consolidated motion to dismiss the complaint on the ground that plaintiffs had not alleged the requisite intent element under the federal trafficking statute, and in April 2024 an amended complaint was filed amending the federal law claim and adding a Texas state law claim. In May 2024, the Company moved to dismiss the amended complaint. In March 2025, the district court granted the motion as to the Texas state law claims, dismissed the Texas claim with prejudice, and denied the motion as to the federal law claim. In October 2025, S.M.A. was stayed pursuant to 18 U.S.C. § 1595(b) pending the final adjudication of the criminal proceedings involving Backpage. In September 2024, the district court in A.S. denied the Company’s motion to dismiss. In November 2024, the Company moved for judgment on the pleadings. In May 2025, the district court granted that motion with leave to amend. Plaintiffs then filed a consolidated amended complaint, and on June 20, 2025, the Company moved to dismiss that complaint. This motion was pending when, in October 2025, A.S. also was stayed pursuant to 18 U.S.C. § 1595(b) pending the final adjudication of the criminal proceedings involving Backpage. In June 2023, the Company moved to dismiss T.S., and that motion remains pending. In March 2024, T.S. was stayed pending the interlocutory appeal in A.B., which was remanded to the district court in January 2025. The Company filed a motion to dismiss in A.A. in February 2026, and that motion remains pending. In May 2026, the Company filed a motion to stay A.A. under 18 U.S.C § 1595(b) that remains pending. In July 2026, the court held an initial scheduling conference in A.A. and entered a scheduling order. In September 2025, the Company filed a motion to dismiss C.S. that was pending when the court granted the motion to stay under 18 U.S.C. § 1595(b) in April 2026. Plaintiff in M.K. voluntarily dismissed her claim against Salesforce in May 2024. In December 2025, the district court in I.H. stayed the action pursuant to 18 U.S.C. § 1595(b) pending final adjudication of the criminal proceedings involving Backpage. The Company filed a motion to dismiss in the G.G. consolidated cases in January 2026 that was pending when the district court granted the Company’s motion to stay under 18 U.S.C. § 1595(b) to stay the G.G. consolidated cases pending the final adjudication of the criminal proceedings involving Backpage in March 2026. Plaintiffs in the G.G. consolidated cases filed a motion for reconsideration of the stay order, and that motion remains pending. In March through July 2026, the district courts in A.G.B., J.L.D., E.Y.W., and F.A.P. granted the parties’ stipulations to stay the cases subject to the same stay entered in the G.G. consolidated cases. All but the most recently filed actions pending in the Northern District of California have been related and assigned to a single judge and most of the actions have been stayed by stipulation of the parties. In the Texas MDL, the Company moved to dismiss certain claims by plaintiffs in this MDL who reside outside of Texas on personal jurisdiction, extraterritoriality, and forum non conveniens grounds in the latter half of 2023. In February 2026, at a hearing on these motions, the court granted the Company’s motions to dismiss on forum non conveniens grounds. The Company will be dismissed from B.I.R., C.V., and T.K., in the Texas MDL pending the court’s written order. All of the foregoing actions seek unspecified monetary damages, attorneys’ fees, and costs. The Company intends to defend its interests in these proceedings vigorously.
30
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, helping organizations of any size become agentic enterprises. Founded in 1999, we bring humans, agents, apps, and data together on a trusted, unified platform to unlock growth and innovation.
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 artificial intelligence (“AI”), teams can be more responsive, productive and efficient, deliver intelligent, personalized experiences across every channel and increase productivity. We continue to expand the capabilities of our autonomous AI agent layer integrated across our platform. Agentforce enables organizations to deploy autonomous agents that reason, make decisions, and execute tasks. Salesforce is the platform that powers how humans and agents work together, whether using Customer 360 apps, Slack, Headless 360, or other user interfaces. 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 have accelerated our agentic roadmap, including our April 2026 acquisition of Qualified.com, Inc. (“Qualified”), our November 2025 acquisition of Informatica, Inc. (“Informatica”) and our October 2025 acquisition of Regrello Corp. (“Regrello”). These acquisitions bring 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 has included a reduction of our workforce, office space and data centers 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 Six Months of Fiscal 2027
•Revenue: For the six months ended July 31, 2026, revenue was $22.5 billion, an increase of 12 percent year-over-year.
•Income from Operations: For the six months ended July 31, 2026, income from operations was $4.7 billion as compared to $4.3 billion for the six months ended July 31, 2025.
31
•Net Income per Share: For the six months ended July 31, 2026, diluted net income per share was $6.67 as compared to diluted net income per share of $3.55 from a year ago. Gains (losses) on strategic investments impacted our diluted net income per share by $2.87 and ($0.05) for the six months ended July 31, 2026 and 2025, respectively, based on a U.S. tax rate of 23.5%. Our $25 billion accelerated share repurchase program, which commenced in March 2026, resulted in the repurchase of approximately 103 million shares which benefited our diluted net income per share by $0.57 for the six months ended July 31, 2026.
•Cash: Cash provided by operations for the six months ended July 31, 2026 was $8.0 billion, an increase of 10 percent year-over-year. Total cash, cash equivalents and marketable securities as of July 31, 2026 was $11.4 billion.
•Remaining Performance Obligation: Total remaining performance obligation, which represents all future revenue under contract yet to be recognized, as of July 31, 2026 was approximately $66.3 billion, an increase of 11 percent year-over-year. Current remaining performance obligation as of July 31, 2026 was approximately $33.5 billion, an increase of 14 percent year-over-year.
•Dividend Program: For the six months ended July 31, 2026, we paid approximately $729 million in dividends and dividend equivalents as compared to $801 million for the six months ended July 31, 2025.
Our diversified product portfolio and global customer base has provided us with operational resiliency across various geographies, products, and industry segments. During the second quarter of fiscal 2027, we experienced strong momentum in Agentforce Apps and Data 360, bolstered by the acquisition of Informatica.
In addition, the expanding global scope of our business and the heightened volatility of global markets expose us to the risk of fluctuations in foreign currency markets. Total revenues in the six months ended July 31, 2026 were positively impacted by approximately one percent from foreign currency fluctuations compared to the six months ended July 31, 2025. Relative to July 31, 2025, our current remaining performance obligation growth as of July 31, 2026 was minimally impacted 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 2027, for example, refer to the fiscal year ending January 31, 2027.
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 six months ended July 31, 2026.
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 six months ended July 31, 2026.
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 features across these service offerings. Depending on a customer’s actual and projected business requirements, more than one
32
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 July 31, 2026, our attrition rate, excluding Slack self-service, Informatica, and current year acquisitions, 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 developed technology. 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 organization facilitates the adoption of our service offerings, helps us to secure larger subscription revenue contracts and
33
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 data center exits and office space reductions. 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, 2026 for further discussion with respect to these policies and estimates.
34
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, except percentage data):
| 2 | Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % of Total Revenues | 2025 | % of Total Revenues | 2026 | % of Total Revenues | 2025 | % of Total Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subscription and support | $ | 10,820 | 95 | % | $ | 9,690 | 95 | % | $ | 21,413 | 95 | % | $ | 18,987 | 95 | % | |||||||||||||||||||||||||||||||||||||||||||
| Professional services and other | 525 | 5 | 546 | 5 | 1,065 | 5 | 1,078 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 11,345 | 100 | 10,236 | 100 | 22,478 | 100 | 20,065 | 100 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenues (1)(2): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subscription and support | 2,021 | 18 | 1,645 | 16 | 3,974 | 18 | 3,256 | 16 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Professional services and other | 628 | 5 | 597 | 6 | 1,245 | 5 | 1,251 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cost of revenues | 2,649 | 23 | 2,242 | 22 | 5,219 | 23 | 4,507 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit | 8,696 | 77 | 7,994 | 78 | 17,259 | 77 | 15,558 | 78 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating expenses (1)(2): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Research and development | 1,687 | 15 | 1,481 | 14 | 3,314 | 15 | 2,941 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | 3,859 | 34 | 3,443 | 34 | 7,628 | 34 | 6,872 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 725 | 6 | 734 | 7 | 1,465 | 6 | 1,431 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring | 94 | 1 | 4 | 0 | 174 | 1 | 40 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 6,365 | 56 | 5,662 | 55 | 12,581 | 56 | 11,284 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Income from operations | 2,331 | 21 | 2,332 | 23 | 4,678 | 21 | 4,274 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (473) | (4) | (67) | 0 | (790) | (4) | (135) | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Gains (losses) on strategic investments, net | 2,613 | 23 | 6 | 0 | 3,171 | 14 | (57) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other income | 81 | 0 | 135 | 1 | 214 | 1 | 298 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before provision for income taxes | 4,552 | 40 | 2,406 | 24 | 7,273 | 32 | 4,380 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | (1,026) | (9) | (519) | (6) | (1,640) | (7) | (952) | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 3,526 | 31 | % | $ | 1,887 | 18 | % | $ | 5,633 | 25 | % | $ | 3,428 | 17 | % | |||||||||||||||||||||||||||||||||||||||||||
(1) Amounts related to amortization of intangible assets acquired through business combinations, as follows (in millions):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % of Total Revenues | 2025 | % of Total Revenues | 2026 | % of Total Revenues | 2025 | % of Total Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenues | $ | 234 | 2 | % | $ | 150 | 2 | % | $ | 478 | 2 | % | $ | 312 | 2 | % | |||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | 288 | 3 | 230 | 2 | 605 | 3 | 463 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
35
(2) Amounts related to stock-based compensation expense, as follows (in millions):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % of Total Revenues | 2025 | % of Total Revenues | 2026 | % of Total Revenues | 2025 | % of Total Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenues | $ | 147 | 1 | % | $ | 126 | 1 | % | $ | 285 | 1 | % | $ | 277 | 1 | % | |||||||||||||||||||||||||||||||||||||||||||
| Research and development | 301 | 3 | 280 | 3 | 611 | 3 | 555 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | 345 | 3 | 293 | 3 | 665 | 3 | 578 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 111 | 1 | 94 | 1 | 213 | 1 | 182 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring | 2 | 0 | 0 | 0 | 12 | 0 | 15 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
The following table sets forth selected balance sheet data and other metrics for each of the periods indicated (in billions):
(1) Amounts do not include operating or financing lease obligations.
| As of | |||||||||||
July 31, 2026 | January 31, 2026 | ||||||||||
| Cash, cash equivalents and marketable securities | $ | 11.4 | $ | 9.6 | |||||||
| Unearned revenue | 18.8 | 24.3 | |||||||||
| Remaining performance obligation | 66.3 | 72.4 | |||||||||
| Principal due on our outstanding debt obligations (1) | 39.5 | 14.5 | |||||||||
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.
Impact of Acquisitions
The comparability of our operating results in the three and six months ended July 31, 2026 compared to the same period in fiscal 2026 was impacted by our recent acquisitions, including the acquisition of Informatica in November 2025. In our discussion of changes in our results of operations for the three and six months ended July 31, 2026, compared to the same period in fiscal 2026, we may quantitatively disclose the impact of our acquired products and services for the one-year period subsequent to the acquisition date to the growth in certain of our revenues where such discussions would be meaningful. Expense contributions from our recent acquisitions for each of the respective period comparisons generally were not separately identifiable due to the integration of these businesses into our existing operations or were insignificant to our results of operations during the periods presented.
Revenues
| Three Months Ended July 31, | Variance | ||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Dollars | Percent | |||||||||||||||||||
| Subscription and support | $ | 10,820 | $ | 9,690 | $ | 1,130 | 12 | % | |||||||||||||||
| Professional services and other | 525 | 546 | (21) | (4) | |||||||||||||||||||
| Total revenues | $ | 11,345 | $ | 10,236 | $ | 1,109 | 11 | % | |||||||||||||||
| Six Months Ended July 31, | Variance | ||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Dollars | Percent | |||||||||||||||||||
| Subscription and support | $ | 21,413 | $ | 18,987 | $ | 2,426 | 13 | % | |||||||||||||||
| Professional services and other | 1,065 | 1,078 | (13) | (1) | |||||||||||||||||||
| Total revenues | $ | 22,478 | $ | 20,065 | $ | 2,413 | 12 | % | |||||||||||||||
The increase in subscription and support revenues for the three and six months ended July 31, 2026 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 five percent of total subscription and support revenues for the three and six months ended July 31, 2026, respectively, and six percent of total subscription and support revenues for the three and six months ended July 31, 2025. Subscription and support revenues accounted for approximately 95 percent of our total revenues for the three and six months ended July 31, 2026 and 95 percent for the three and six months ended July 31, 2025.
The decrease in professional services and other revenues for the three and six months ended July 31, 2026 was primarily due to less demand for larger, multi-year transformation engagements, which may continue in the near term.
36
The acquisition of Informatica in November 2025 contributed approximately $456 million and $900 million of total revenues for the three and six months ended July 31, 2026, respectively.
Subscription and Support Revenues by Service Offering
Subscription and support revenues consisted of the following (in millions):
| Three Months Ended July 31, | |||||||||||||||||||||||||||||
| 2026 | As a % of Total Subscription and Support Revenues | 2025 | As a % of Total Subscription and Support Revenues | Growth Rate | |||||||||||||||||||||||||
| Agentforce Apps | $ | 7,193 | 67 | % | $ | 6,682 | 69 | % | 8 | % | |||||||||||||||||||
| Data 360, Headless Platform, and Other | 3,618 | 33 | 3,008 | 31 | 20 | ||||||||||||||||||||||||
| Hedging gains | 9 | 0 | 0 | — | N/A | ||||||||||||||||||||||||
| Total | $ | 10,820 | 100 | % | $ | 9,690 | 100 | % | 12 | % | |||||||||||||||||||
| Six Months Ended July 31, | |||||||||||||||||||||||||||||
| 2026 | As a % of Total Subscription and Support Revenues | 2025 | As a % of Total Subscription and Support Revenues | Growth Rate | |||||||||||||||||||||||||
| Agentforce Apps | $ | 14,102 | 66 | % | $ | 13,027 | 69 | % | 8 | % | |||||||||||||||||||
| Data 360, Headless Platform, and Other | 7,299 | 34 | 5,960 | 31 | 22 | ||||||||||||||||||||||||
| Hedging gains | 12 | 0 | 0 | — | N/A | ||||||||||||||||||||||||
| Total | $ | 21,413 | 100 | % | $ | 18,987 | 100 | % | 13 | % | |||||||||||||||||||
Effective as of the first quarter of fiscal year 2027, we have revised the presentation of our disaggregated revenue disclosures to reflect the evolution of our product architecture to deliver the Agentic Enterprise. Consistent with how management evaluates the performance of our business and how we develop, sell, serve, and engage customers, subscription and support revenue is now reported across two primary categories: Agentforce Apps and Data 360, Headless Platform, and Other. Agentforce Apps groups our applications with Agentforce, reflecting how Agentforce is embedded in every app, and is comprised of Agentforce Sales, Agentforce Service, Agentforce Marketing, Agentforce Commerce, Agentforce Apps Flex Credits and Slack. Data 360, Headless Platform, and Other groups our data context layer and unified platform, to reflect the foundation powering Agentforce Apps, and is comprised of Data 360, Data 360 and Platform Flex Credits, Headless Platform, Informatica, Agentforce Mulesoft, Agentforce Tableau and Other.
Revenues by Geography
| Three Months Ended July 31, | |||||||||||||||||||||||||||||
| (in millions) | 2026 | As a % of Total Revenues | 2025 | As a % of Total Revenues | Growth Rate | ||||||||||||||||||||||||
| Americas | $ | 7,404 | 65 | % | $ | 6,736 | 66 | % | 10 | % | |||||||||||||||||||
| Europe | 2,764 | 25 | 2,429 | 24 | 14 | ||||||||||||||||||||||||
| Asia Pacific | 1,168 | 10 | 1,071 | 10 | 9 | ||||||||||||||||||||||||
| Hedging gains | 9 | 0 | 0 | — | N/A | ||||||||||||||||||||||||
| $ | 11,345 | 100 | % | $ | 10,236 | 100 | % | 11 | % | ||||||||||||||||||||
| Six Months Ended July 31, | |||||||||||||||||||||||||||||
| (in millions) | 2026 | As a % of Total Revenues | 2025 | As a % of Total Revenues | Growth Rate | ||||||||||||||||||||||||
| Americas | $ | 14,637 | 65 | % | $ | 13,205 | 66 | % | 11 | % | |||||||||||||||||||
| Europe | 5,518 | 25 | 4,766 | 24 | 16 | ||||||||||||||||||||||||
| Asia Pacific | 2,311 | 10 | 2,094 | 10 | 10 | ||||||||||||||||||||||||
| Hedging gains | 12 | 0 | 0 | — | N/A | ||||||||||||||||||||||||
| $ | 22,478 | 100 | % | $ | 20,065 | 100 | % | 12 | % | ||||||||||||||||||||
37
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 minimally impacted due to fluctuations in foreign currencies during the three months ended July 31, 2026 compared to the three months ended July 31, 2025, and were positively impacted by one percent from foreign currency fluctuations during the six months ended July 31, 2026 compared to the six months ended July 31, 2025.
Cost of Revenues
| Three Months Ended July 31, | Variance | ||||||||||||||||||||||||||||
| (in millions) | 2026 | As a % of Total Revenues | 2025 | As a % of Total Revenues | Dollars | ||||||||||||||||||||||||
| Subscription and support | $ | 2,021 | 18 | % | $ | 1,645 | 16 | % | $ | 376 | |||||||||||||||||||
| Professional services and other | 628 | 5 | 597 | 6 | 31 | ||||||||||||||||||||||||
| Total cost of revenues | $ | 2,649 | 23 | % | $ | 2,242 | 22 | % | $ | 407 | |||||||||||||||||||
| Six Months Ended July 31, | Variance | ||||||||||||||||||||||||||||
| (in millions) | 2026 | As a % of Total Revenues | 2025 | As a % of Total Revenues | Dollars | ||||||||||||||||||||||||
| Subscription and support | $ | 3,974 | 18 | % | $ | 3,256 | 16 | % | $ | 718 | |||||||||||||||||||
| Professional services and other | 1,245 | 5 | 1,251 | 6 | (6) | ||||||||||||||||||||||||
| Total cost of revenues | $ | 5,219 | 23 | % | $ | 4,507 | 22 | % | $ | 712 | |||||||||||||||||||
Cost of revenues increased in absolute dollars, and by one percent as a percentage of total revenues, for the three and six months ended July 31, 2026 compared to the same period a year ago, primarily as a result of an increase in service delivery expenses, including spend on hosting services and generative AI technologies, as well as amortization of intangible assets acquired through business combinations.
We intend to continue to invest additional resources in our AI, agentic and cloud services to allow us to scale with our customers and continue to evolve our security measures. The timing of these expenses may cause our cost of revenues as a percentage of revenues to fluctuate over time due to changes in demand for our service offerings.
Operating Expenses
| Three Months Ended July 31, | Variance | ||||||||||||||||||||||||||||
| (in millions) | 2026 | As a % of Total Revenues | 2025 | As a % of Total Revenues | Dollars | ||||||||||||||||||||||||
| Research and development | $ | 1,687 | 15 | % | $ | 1,481 | 14 | % | $ | 206 | |||||||||||||||||||
| Sales and marketing | 3,859 | 34 | 3,443 | 34 | 416 | ||||||||||||||||||||||||
| General and administrative | 725 | 6 | 734 | 7 | (9) | ||||||||||||||||||||||||
| Restructuring | 94 | 1 | 4 | 0 | 90 | ||||||||||||||||||||||||
| Total operating expenses | $ | 6,365 | 56 | % | $ | 5,662 | 55 | % | $ | 703 | |||||||||||||||||||
| Six Months Ended July 31, | Variance | ||||||||||||||||||||||||||||
| (in millions) | 2026 | As a % of Total Revenues | 2025 | As a % of Total Revenues | Dollars | ||||||||||||||||||||||||
| Research and development | $ | 3,314 | 15 | % | $ | 2,941 | 15 | % | $ | 373 | |||||||||||||||||||
| Sales and marketing | 7,628 | 34 | 6,872 | 34 | 756 | ||||||||||||||||||||||||
| General and administrative | 1,465 | 6 | 1,431 | 7 | 34 | ||||||||||||||||||||||||
| Restructuring | 174 | 1 | 40 | 0 | 134 | ||||||||||||||||||||||||
| Total operating expenses | $ | 12,581 | 56 | % | $ | 11,284 | 56 | % | $ | 1,297 | |||||||||||||||||||
Research and development expenses as a percentage of total revenues during the three months ended July 31, 2026 increased by approximately one percent compared to the same period a year ago due to increased employee-related costs, as well as spend on hosting services and generative AI technologies. Research and development expenses as a percentage of total revenues during the six months ended July 31, 2026 were consistent compared to the same period a year ago. For the three and six months ended July 31, 2026, the increase in research and development expenses in absolute dollars was primarily attributable to these same cost drivers.
We expect that research and development expenses will likely remain consistent as a percentage of revenue over time as we continue investing in new and existing technologies, including AI, agents, Data Cloud offerings, and the integration of
38
Informatica. We plan to reinvest savings from efficiencies realized from the rapid deployment of generative AI technologies to accelerate our product roadmap.
Sales and marketing expenses as a percentage of total revenues during the three and six months ended July 31, 2026 were consistent compared to the same periods a year ago. For the three and six months ended July 31, 2026, the increase in sales and marketing expenses in absolute dollars was primarily due to an increase in employee-related costs, including stock-based compensation expense, and amortization of intangible assets acquired through business combinations.
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 and six months ended July 31, 2026 decreased by approximately one percent compared to the same periods a year ago due to revenue growth outpacing our general and administrative expenses growth. For the three and six months ended July 31, 2026, general and administrative expenses were relatively flat in absolute dollars compared to the same period a year ago.
We expect that general and administrative expenses may decrease as a percentage of revenues over time as we continue to invest in process efficiency initiatives, which includes the use of AI and agents.
In the three and six months ended July 31, 2026, we incurred approximately $94 million and $174 million, respectively, of costs related to our restructuring initiatives, which were primarily related to employee transitions, severance payments and employee benefits. We do not expect to incur significant additional charges in connection with our restructuring initiatives in the near term.
Other Income and Expense
| Three Months Ended July 31, | Variance | ||||||||||||||||
| (in millions) | 2026 | 2025 | Dollars | ||||||||||||||
| Interest expense | $ | (473) | $ | (67) | $ | (406) | |||||||||||
| Gains on strategic investments, net | 2,613 | 6 | 2,607 | ||||||||||||||
| Other income | 81 | 135 | (54) | ||||||||||||||
| Six Months Ended July 31, | Variance | ||||||||||||||||
| (in millions) | 2026 | 2025 | Dollars | ||||||||||||||
| Interest expense | $ | (790) | $ | (135) | $ | (655) | |||||||||||
| Gains (losses) on strategic investments, net | $ | 3,171 | $ | (57) | $ | 3,228 | |||||||||||
| Other income | 214 | 298 | (84) | ||||||||||||||
Interest expense primarily relates to our debt as well as our finance leases. Interest expense increased during the three and six months ended July 31, 2026, primarily due to incremental interest expense associated with our March 2026 debt offering. We expect this debt offering to cause interest expense to increase as compared to prior year throughout fiscal 2027.
Gains (losses) on strategic investments, net consists primarily of mark-to-market adjustments related to observable price adjustments related to our privately held equity securities, our publicly held equity securities and other adjustments, including impairments. Our strategic investment portfolio continues to be affected by market conditions for companies in which we hold private securities, including the pace of technological change driven by AI and volatility in public equity markets. For the three months ended July 31, 2026, our strategic investment portfolio gains were primarily driven by unrealized gains on privately held equity investments of $2.9 billion, partially offset by impairments on privately held investments of $285 million. For the six months ended July 31, 2026, our strategic investment portfolio gains were primarily driven by unrealized gains on privately held equity investments of $3.2 billion and realized gains on sales of securities of $354 million, partially offset by impairments on privately held investments of $404 million. The unrealized gains for the three and six months ended July 31, 2026 include gains of $2.7 billion and $3.0 billion, respectively, related to the Company’s investment in Anthropic.
Other income primarily consists of investment income on our marketable securities portfolio. Other income decreased during the three and six months ended July 31, 2026 compared to the three and six months ended July 31, 2025, primarily due to a decrease in investment income from lower interest rates.
Provision For Income Taxes
| Three Months Ended July 31, | Variance | ||||||||||||||||
| (in millions) | 2026 | 2025 | Dollars | ||||||||||||||
| Provision for income taxes | $ | (1,026) | $ | (519) | $ | (507) | |||||||||||
| Effective tax rate | 23 | % | 22 | % | |||||||||||||
39
| Six Months Ended July 31, | Variance | ||||||||||||||||
| (in millions) | 2026 | 2025 | Dollars | ||||||||||||||
| Provision for income taxes | $ | (1,640) | $ | (952) | $ | (688) | |||||||||||
| Effective tax rate | 23 | % | 22 | % | |||||||||||||
We recorded a tax provision of $1.0 billion and $519 million for the three months ended July 31, 2026 and 2025, respectively, and a tax provision of approximately $1.6 billion and $952 million for the six months ended July 31, 2026 and 2025, respectively. Our effective tax rates increased from a year ago primarily due to stock-based compensation. Our effective tax rate may fluctuate due to changes in our domestic and foreign earnings, material discrete tax items, or a combination of these factors resulting from transactions or events, including acquisitions, changes to our operating structure and other macroeconomic factors.
Liquidity and Capital Resources
As of July 31, 2026, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $11.4 billion and accounts receivable of $6.3 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 July 31, 2026, also serves as a source of liquidity.
Net cash provided by operating activities could continue to be affected by various risks and uncertainties, including, but not limited to, the risks detailed in Part II, Item 1A, “Risk Factors.” We believe our existing cash, cash equivalents, marketable securities, cash provided by operating activities, unbilled amounts related to contracted noncancellable subscription agreements, which are not reflected on the balance sheet, and, if necessary, our borrowing capacity under our Credit Facility will be sufficient to meet our working capital, capital expenditure and debt maintenance needs over the next 12 months and thereafter.
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.
Cash Flows
For the three and six months ended July 31, 2026 and 2025, our cash flows were as follows (in millions):
| 2 | Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 1,269 | $ | 740 | $ | 7,970 | $ | 7,216 | |||||||||||||||||||||
| Net cash provided by (used in) investing activities | (1,197) | 1,165 | (3,380) | (402) | |||||||||||||||||||||||||
| Net cash used in financing activities | (622) | (2,503) | (3,543) | (5,423) | |||||||||||||||||||||||||
Operating Activities
The net cash provided by operating activities during the six months ended July 31, 2026 was primarily comprised of net income of $5.6 billion, adjusted for non-cash items, including $3.2 billion of gains on strategic investments, $2.0 billion of depreciation and amortization, and $1.8 billion of stock-based compensation expense. Net cash provided by operating activities can be significantly impacted by factors such as growth in new business, timing of cash receipts from customers, vendor payment terms and timing of payments to vendors. Net cash provided by operating activities during the six months ended July 31, 2026 was further benefited by the change in accounts receivable, net of $8.0 billion, partially offset by the changes in unearned revenue of $5.6 billion. As our business continues to grow, and assuming our expenses remain in line with or less than our revenue growth, we expect to continue to see growth in net cash provided by operating activities.
The net cash provided by operating activities during the six months ended July 31, 2025 was primarily comprised of net income of $3.4 billion, adjusted for non-cash items, including $1.7 billion of depreciation and amortization and $1.6 billion of stock-based compensation expense. Net cash provided by operating activities during the six months ended July 31, 2025 was further benefited by the changes in accounts receivable, net of $6.3 billion, partially offset by the change in unearned revenue of $4.2 billion and the change in accounts payable and accrued expenses and other liabilities of $1.2 billion.
40
Investing Activities
The net cash used in investing activities during the six months ended July 31, 2026 was primarily related to net outflows for acquisitions of $1.5 billion, of which $1.1 billion related to the Qualified acquisition, as well as net outflows from marketable securities activity of $871 million.
The net cash used in investing activities during the six months ended July 31, 2025 was primarily related to net outflows from strategic investment activity of $279 million and capital expenditures of $314 million, partially offset by net inflows from marketable securities activity of $245 million.
Financing Activities
The net cash used in financing activities during the six months ended July 31, 2026 was primarily related to repurchases of common stock of $27.3 billion, which includes our March 2026 accelerated share repurchase, and payments of dividends and equivalents of $729 million, partially offset by proceeds from the issuance of debt, net of issuance costs of $24.8 billion.
The net cash used in financing activities during the six months ended July 31, 2025 was primarily related to $4.9 billion used for repurchases of common stock and $801 million related to payments of dividends, partially offset by $526 million of proceeds from equity plans.
Debt
As of July 31, 2026, we had senior unsecured notes outstanding, with maturities starting in March 2028 and extending through March 2066, with a total carrying value of $33.3 billion. We were in compliance with all debt covenants as of July 31, 2026.
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 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 July 31, 2026.
In March 2026, we entered into a $6.0 billion five-year senior unsecured term loan credit agreement (the “2026 Term Loan Credit Agreement”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The 2026 Term Loan Credit Agreement matures in March 2031. We used the full proceeds of the 2026 Term Loan Credit Agreement to settle all of the outstanding borrowings under our $4.0 billion 364-day Credit Agreement and our $2.0 billion Three-year Credit Agreement, which were originally entered into in June 2025 to finance the acquisition of Informatica. As of July 31, 2026, the full $6.0 billion was outstanding under the 2026 Term Loan Credit Agreement.
In March 2026, we also issued unsecured Senior Notes with an aggregate principal of $25.0 billion and maturities ranging from 2028 to 2066 (the “March 2026 Notes”). We used the net proceeds from the March 2026 Notes to fund an accelerated share repurchase program, as discussed below.
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 February 2026, the Board authorized $50.0 billion in share repurchases under the Share Repurchase Program that replaced the previous remaining unpurchased authorization. The Share Repurchase Program does not have a fixed expiration date and does not obligate us to acquire any specific number of shares.
In March 2026, we entered into accelerated share repurchase agreements (the “ASR Agreements”) with a syndicate of financial institutions to repurchase an aggregate of $25.0 billion of our common stock and received an initial delivery of approximately 103 million shares at an average price per share of $198.34, which represents approximately 80 percent of the total shares expected to be repurchased under the ASR Agreements. The final settlement of repurchased shares is expected to occur in the third quarter of fiscal 2027.
41
Excluding the repurchases made under the ASR Agreements in March 2026, we additionally repurchased the following shares of our common stock in the open market, (in millions, except average price per share):
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Average price per share | Amount | Shares | Average price per share | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended April 30 | 11 | $ | 192.00 | $ | 2,145 | 10 | $ | 273.42 | $ | 2,681 | |||||||||||||||||||||||||||||||||||||||||||
| Three months ended July 31 | 0 | $ | — | $ | 0 | 8 | $ | 269.96 | $ | 2,199 | |||||||||||||||||||||||||||||||||||||||||||
As of July 31, 2026, we were authorized to purchase a remaining $22.9 billion of the Company’s common stock under the Share Repurchase Program. Subsequent to July 31, 2026, we have not completed any additional share repurchases under the Share Repurchase Program.
Dividends
The Company announced the following dividends:
| Record Date | Payment Date | Dividend per Share | Amount (in millions) | |||||||||||||||||||||||
| Fiscal 2027 | ||||||||||||||||||||||||||
| Three months ended April 30, 2026 | April 9, 2026 | April 23, 2026 | $ | 0.440 | $ | 374 | ||||||||||||||||||||
| Three months ended July 31, 2026 | June 11, 2026 | July 2, 2026 | $ | 0.440 | $ | 373 | ||||||||||||||||||||
| Fiscal 2026 | ||||||||||||||||||||||||||
| Three months ended April 30, 2025 | April 10, 2025 | April 24, 2025 | $ | 0.416 | $ | 406 | ||||||||||||||||||||
| Three months ended July 31, 2025 | June 18, 2025 | July 10, 2025 | $ | 0.416 | $ | 404 | ||||||||||||||||||||
The declaration and payment of future cash dividends is subject to the Board continuing to determine that the declaration of dividends is in the best interests of the Company and our stockholders, after giving consideration to continued capital availability, general economic and market conditions, and applicable laws and agreements.
Contractual Obligations
As of July 31, 2026, 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, 2026. For more information regarding our lease obligations as of July 31, 2026, see Note 5 “Leases and Other Commitments” to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. We generally expect to satisfy these commitments with cash on hand and cash provided by operating activities.
We 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 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
In May 2026, the Company entered into an agreement to acquire Contentful Global, Inc. (“Contentful”), provider of a leading composable content platform, for approximately $1.5 billion in cash, net of the value of shares currently owned by Salesforce, and subject to customary purchase price adjustments. The acquisition is expected to close in the third quarter of the Company’s fiscal year 2027, subject to customary closing conditions, including the receipt of required regulatory approvals.
In June 2026, the Company entered into an agreement to acquire Intercom, Inc. (“Fin”), a customer agent platform providing autonomous, end-to-end AI service agents, for approximately $3.6 billion in cash, and subject to customary purchase price adjustments. The acquisition is expected to close in the third quarter of the Company’s fiscal year 2027, subject to customary closing conditions, including the receipt of required regulatory approvals.
As of July 31, 2026, we expect approximately $170 million to $190 million in future cash payments related to our restructuring initiatives, primarily related to workforce costs, such as severance payments. We generally expect to satisfy these commitments with cash on our balance sheet and cash provided by operating activities.
42
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. 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risks, including changes in foreign currency exchange rates, interest rates and equity investment risks. This exposure has increased due to recent financial market movements and changes to our expectations of near-term possible movements caused by the impact of the macroeconomic environment as discussed in more detail below.
Foreign Currency Exchange Risk
We primarily conduct our business in the following locations: the United States, Europe, Canada, Latin America, and Asia Pacific. The expanding global scope of our business exposes us to the risk of fluctuations in foreign currency markets, including emerging markets. This exposure is the result of selling in multiple currencies, operating in countries where the functional currency is the local currency and growth in our international investments, including infrastructure expansion, costs associated with third-party infrastructure providers and additional headcount in foreign countries. Specifically, our results of operations and cash flows are subject to fluctuations in the following currencies: the Euro, British Pound Sterling, Japanese Yen, Canadian Dollar, Australian Dollar, Indian Rupee, and Brazilian Real against the United States Dollar (“USD”). These exposures may change over time as business practices evolve and economic conditions change. Changes in foreign currency exchange rates could have an adverse impact on our financial results and cash flows.
Foreign Currency Transaction Risk
Our foreign currency exposures typically arise from selling annual and multi-year subscriptions in multiple currencies, customer accounts receivable, intercompany transfer pricing arrangements and other intercompany transactions. Our foreign currency management objective is to minimize the effect of fluctuations in foreign exchange rates on selected assets or liabilities and forecasted revenue without exposing us to additional risk associated with transactions that could be regarded as speculative. We pursue our objective by utilizing foreign currency forward contracts to offset foreign exchange risk. Our foreign currency forward contracts are generally short-term in duration. We record the fair value of forward contracts used to minimize the effect of foreign exchange rates on our assets or liabilities at the end of each reporting period, with changes in fair values recorded to other income (loss) on our consolidated statements of operations.
We enter into foreign currency forward contracts, which we designate as cash flow hedges, to manage the volatility in cash flows associated with forecasted revenue denominated in certain currencies other than the U.S. dollar. For contracts qualifying as cash flow hedges, the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified into earnings in the same period the forecasted transaction affects earnings. All of our foreign currency forward contracts mature within twelve months. These forward contracts reduce, but do not entirely eliminate, the impact of currency exchange rate movements in the current period.
Given the short duration of the forward contracts, the amount recorded is not significant. Our ultimate realized gain or loss with respect to foreign currency exposures will generally depend on the size and type of cross-currency transactions that we enter into, the currency exchange rates associated with these exposures and changes in those rates, the net realized gain or loss on our foreign currency forward contracts and other factors.
Foreign Currency Translation Risk
Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenues, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into USD. Total revenue during the three months ended July 31, 2026 were minimally impacted by fluctuations in foreign currencies compared to the three months ended July 31, 2025. In addition, fluctuations in foreign currencies minimally impacted our current remaining performance obligation growth rate as of July 31, 2026 compared to what we would have reported as of July 31, 2025 using constant currency rates.
Interest Rate Sensitivity
As of July 31, 2026, we had cash, cash equivalents and marketable securities totaling $11.4 billion. This amount was invested primarily in money market funds, time deposits, corporate notes and bonds, government securities and other debt securities with credit ratings of BBB or better. The cash, cash equivalents and marketable securities are held for general corporate purposes, including share repurchases, dividend payments, acquisitions of, or investments in, complementary
43
businesses, services or technologies, working capital and capital expenditures. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.
Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed-rate securities may have their market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our debt securities as “available for sale,” no gains or losses are recognized in our condensed consolidated statements of operations due to changes in interest rates. Gains or losses recognized in our condensed consolidated statements of operations are limited to those related to either the sale of securities prior to maturity or expected credit losses.
Our fixed-income portfolio is also subject to interest rate risk. An immediate increase or decrease in interest rates of 100 basis points at July 31, 2026 could result in a $36 million market value reduction or increase of the same amount. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in comprehensive income, net, and are realized only if we sell the underlying securities.
At January 31, 2026, we had cash, cash equivalents and marketable securities totaling $9.6 billion. Changes in interest rates of 100 basis points would have resulted in market value changes of $31 million.
Market Risk and Market Interest Risk
We deposit our cash with multiple financial institutions.
Debt
We maintain debt obligations that are subject to market interest risk, as follows (in millions):
| Instrument | Maturity Date | Principal Outstanding as of July 31, 2026 | Interest Terms | Contractual Interest Rate | ||||||||||||||||||||||
| March 2028 Senior Notes | March 2028 | $ | 3,500 | Fixed | 4.50% | |||||||||||||||||||||
| April 2028 Senior Notes | April 2028 | 1,500 | Fixed | 3.70 | ||||||||||||||||||||||
| July 2028 Senior Sustainability Notes | July 2028 | 1,000 | Fixed | 1.50 | ||||||||||||||||||||||
| March 2029 Senior Notes | March 2029 | 4,250 | Fixed | 4.65 | ||||||||||||||||||||||
Revolving Loan Credit Agreement | October 2029 | 0 | Floating | N/A | ||||||||||||||||||||||
| 2026 Term Loan Credit Agreement (1) | March 2031 | 6,000 | Floating | 4.24 | ||||||||||||||||||||||
| July 2031 Senior Notes | July 2031 | 1,500 | Fixed | 1.95 | ||||||||||||||||||||||
| September 2031 Senior Notes | September 2031 | 3,750 | Fixed | 4.90 | ||||||||||||||||||||||
| March 2033 Senior Notes | March 2033 | 2,750 | Fixed | 5.20 | ||||||||||||||||||||||
| March 2036 Senior Notes | March 2036 | 4,500 | Fixed | 5.55 | ||||||||||||||||||||||
| July 2041 Senior Notes | July 2041 | 1,250 | Fixed | 2.70 | ||||||||||||||||||||||
| March 2046 Senior Notes | March 2046 | 1,500 | Fixed | 6.40 | ||||||||||||||||||||||
| July 2051 Senior Notes | July 2051 | 2,000 | Fixed | 2.90 | ||||||||||||||||||||||
| March 2056 Senior Notes | March 2056 | 3,750 | Fixed | 6.55 | ||||||||||||||||||||||
| July 2061 Senior Notes | July 2061 | 1,250 | Fixed | 3.05 | ||||||||||||||||||||||
| March 2066 Senior Notes | March 2066 | 1,000 | Fixed | 6.70 | ||||||||||||||||||||||
(1) The contractual interest rate represents the weighted-average for the period outstanding.
Any borrowings under our Revolving Loan Credit Agreement bear interest, at our option, at a base rate plus a spread of 0.00% or an adjusted benchmark rate plus a spread of 0.50% to 0.85%, in each case, with such spread being determined based on our credit rating. We are also obligated to pay an ongoing commitment fee on undrawn amounts. As of July 31, 2026, there was no outstanding borrowing amount under the Credit Facility.
The borrowings under the 2026 Term Loan Credit Agreement bear interest at a fluctuating rate per annum equal to, at our option, an alternate base rate or an adjusted Term Secured Overnight Financing Rate (“SOFR”), in each case, plus an applicable margin calculated based on our credit ratings. As of July 31, 2026, the entire $6.0 billion principal amount was outstanding under the 2026 Term Loan Credit Agreement.
44
In March 2026, we issued the March 2026 Notes with an aggregate principal of $25.0 billion and maturities ranging from 2028 to 2066. While these notes do not expose us to risk from fluctuating interest rates, the fair value of this fixed-rate debt may be impacted by future changes in interest rates. Generally, the fair value of our fixed-rate debt will decrease as interest rates rise and increase as interest rates fall.
The bank counterparties to our derivative contracts potentially expose us to credit-related losses in the event of their nonperformance. To mitigate that risk, we only contract with counterparties who meet the minimum requirements under our counterparty risk assessment process. We monitor ratings, credit spreads and potential downgrades on at least a quarterly basis. Based on our ongoing assessment of counterparty risk, we adjust our exposure to various counterparties. We generally enter into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. However, we do not have any master netting arrangements in place with collateral features.
Strategic Investments
As of July 31, 2026, our strategic investment portfolio consisted of investments in over 450 companies with a combined carrying value of $11.3 billion, including the Company’s investment in Anthropic PBC (“Anthropic”) which represented approximately $5.1 billion of the total strategic investments portfolio. No other privately held investments had carrying values that were individually greater than ten percent of the Company’s strategic investments portfolio.
The following table sets forth additional information regarding active equity investments within our strategic investment portfolio as of July 31, 2026 and excludes exited investments (in millions):
| Investment Type | Capital Invested | Unrealized Gains (Cumulative) | Unrealized Losses (Cumulative) | Carrying Value as of July 31, 2026 | ||||||||||||||||||||||
| Publicly held equity securities | $ | 3 | $ | 1 | $ | (1) | $ | 3 | ||||||||||||||||||
| Privately held equity securities | 7,167 | 5,395 | (1,273) | 11,289 | ||||||||||||||||||||||
| Total equity securities | $ | 7,170 | $ | 5,396 | $ | (1,274) | $ | 11,292 | ||||||||||||||||||
Fluctuations in the value of our privately held equity securities are only recorded when there is an observable transaction for a same or similar security of the same issuer, or in the event of impairment. These investments are in various classes of equity with varying rights and preferences. The particular securities we hold, and their rights and preferences relative to other securities within the capital structure of a company, may impact the magnitude by which our investment value moves in relation to changes in the total fair value of that company. Our five largest privately held equity securities represent $7.0 billion in total strategic investments as of July 31, 2026. If the enterprise value of the companies in which we hold those securities decreased by ten percent, the carrying value of our investment portfolio would decline by approximately $641 million. We anticipate future volatility in our condensed consolidated statements of operations due to changes in market prices, observable price changes, and impairments of our strategic investments. The resulting gains or losses could be material depending on market conditions and events, particularly in periods with economic uncertainty, inflation, volatile public equity markets, or unsettled global market conditions.
We continually evaluate our investments in privately held and publicly traded companies. In certain cases, our ability to sell these investments may be impacted by contractual obligations to hold the securities for a set period of time after a public offering.
In addition, the financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering, acquisition or other favorable market event reflecting appreciation to the cost of our initial investment. All of our investments, particularly those in privately held companies, are therefore subject to a risk of partial or total loss of invested capital.
45
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report.
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable level, that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
(b) Management’s Report on Internal Control Over Financial Reporting
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the quarter covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
46
PART II.
ITEM 1. LEGAL PROCEEDINGS
We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and counterclaims, settlement or litigation potential and the expected effect on us. Our technologies may be subject to an injunction if they are found to infringe the rights of a third party. In addition, many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling on such a claim.
The outcome of any claims or litigation, regardless of the merits, is inherently uncertain. Any claims and other lawsuits, and the disposition of such claims and lawsuits, whether through settlement or litigation, could be time-consuming and expensive to resolve, divert our attention from executing our business plan, result in efforts to enjoin our activities, lead to attempts by third parties to seek similar claims and, in the case of intellectual property claims, require us to change our technology, change our business practices, pay monetary damages or enter into short- or long-term royalty or licensing agreements.
For more information regarding legal proceedings see Note 12 “Legal Proceedings and Claims” to the condensed consolidated financial statements in Item 1 of Part I.
ITEM 1A. RISK FACTORS
In evaluating our business, you should carefully consider the following discussion of material risks, events and uncertainties that make an investment in us speculative or risky in addition to the other information included in this Quarterly Report. A manifestation of any of the following risks and uncertainties could, in circumstances we may or may not be able to accurately predict, materially and adversely affect our business and operations, growth, reputation, prospects, operating and financial results, financial condition, cash flows, liquidity and stock price. Some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past and instead reflect our beliefs and opinions as to the factors, events or contingencies that could materially and adversely affect us in the future. The risks and uncertainties described below are not the only ones we face. Other events, factors or uncertainties that we do not currently anticipate or that we currently deem immaterial also may affect our business, financial condition, results of operations, cash flows, other key metrics and the trading price of our common stock. Therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face.
Risk Factor Summary
Operational and Execution Risks
•Any breaches in our security measures or those of our third-party data center providers, cloud computing platform providers, customers, partners, or other third-party vendors, or the underlying Internet infrastructure that cause unauthorized access to, disclosure, alteration, corruption, destruction or loss of customer data, our data or our IT systems, or disruption of authorized access thereto.
•Any defects or disruptions in our services that diminish demand for our services.
•Any interruptions or delays in services from third parties, including data center hosting facilities, cloud computing platform providers and other hardware and software vendors, as well as Internet infrastructure, or from our inability to adequately plan for and manage service interruptions or infrastructure capacity requirements.
•An inability to realize the expected business or financial benefits of company and technology acquisitions.
•Strain on our personnel resources and infrastructure from supporting our existing and growing customer base or an inability to scale our operations and increase productivity.
•Customer attrition, or our inability to accurately predict subscription renewals, customer usage of consumption-based offerings, and upgrade rates.
•Disruptions caused by periodic changes to our sales organization.
•Exposure to risks inherent in international operations from sales to customers outside the United States.
•A more time-consuming and expensive sales cycle, pricing pressure and implementation and configuration challenges for sales efforts to larger enterprise customers.
•Any loss of key members of our management team or development and operations personnel, or inability to attract and retain employees necessary to support our operations and growth.
•Any failure in the delivery of high-quality professional and technical support services related to our online applications.
47
Strategic and Industry Risks
•An inability to compete effectively in the intensely competitive markets in which we participate.
•Any failure to expand our services and to develop and integrate our existing services in order to keep pace with technological developments.
•An inability to maintain and enhance our brands.
•Partial or complete loss of invested capital, or significant changes in the fair value, of our strategic investment portfolio.
•Any discontinuance by third-party developers and vendors in embracing our technology delivery model and enterprise cloud computing services, or customers asking us for warranties for third-party applications, integrations, data and content.
•Social, ethical, and regulatory issues, including the development, deployment, use or capabilities of AI in our offerings.
•The evolving landscape related to environmental, social and governance matters.
Legal and Regulatory Risks
•Privacy concerns and laws as well as evolving regulation of cloud computing, AI services, increased restriction of cross-border data transfers and other regulatory developments.
•Evolving industry-specific regulations, requirements, interpretive positions or standards.
•Lawsuits against us by third parties for various claims, including alleged infringement of proprietary rights.
•Any failure to obtain registration or protection of our intellectual property rights.
•Risks related to government contracts and related procurement regulations.
•Governmental sanctions and export and import controls that could impair our ability to compete in international markets and may subject us to liability.
Financial Risks
•Downturns or upturns in new business, which may not be immediately reflected in our operating results because we generally recognize revenue from subscriptions for our services over the term of the subscription.
•Significant fluctuations in our rate of anticipated growth and any failure to balance our expenses with our revenue forecasts.
•Unanticipated changes in our effective tax rate and additional tax liabilities and global tax developments.
•Fluctuations in currency exchange rates, particularly the U.S. Dollar versus local currencies.
•Our debt service obligations, lease commitments and other contractual obligations.
Risks Related to Owning Our Common Stock
•Fluctuations in our quarterly results.
•Volatility in our stock price and associated litigation.
•Provisions in our governing documents and Delaware law that might discourage, delay or prevent a change of control of the Company or changes in our management.
General Risks
•Volatile and significantly weakened global economic conditions.
•The occurrence of natural disasters and other catastrophic events beyond our control.
•The long-term impact of climate change on our business.
Operational and Execution Risks
If our security measures, or those of our third-party data center providers, cloud computing platform providers, customers, partners, other third-party vendors or the underlying Internet infrastructure, are breached or otherwise compromised, resulting in the unauthorized access to, disclosure, alteration, corruption, destruction or loss of customer data, our data or our IT systems, or disruption of authorized access thereto, our services may be perceived as insecure, customers may reduce or terminate their use of our services, and we may incur significant reputational harm, legal liability, regulatory scrutiny or a negative financial impact.
48
Our services involve the storage and transmission of our customers’ and our customers’ customers’ proprietary and other sensitive data, including financial, health and other personal information. Our services and underlying infrastructure have in the past and may in the future be breached or compromised, including, for example, as a result of the following:
•attempts to fraudulently induce our employees, customers, partners, or third-party vendors to disclose sensitive information to gain unauthorized access to our or our customers’ data or IT systems;
•efforts by threat actors, including criminal organizations, state-sponsored actors and nation-states, to launch coordinated cyberattacks or supply chain attacks on our infrastructure or that of our third-party vendors, including through ransomware, destructive malware, distributed denial-of-service attacks or exploitation of previously unknown “zero-day” vulnerabilities, which may be discovered and weaponized by autonomous AI agents and through new frontier AI models;
•attempts to misuse our marketing, advertising, messaging or social products and functionalities to impersonate persons or organizations and disseminate information that is false, misleading or malicious;
•vulnerabilities arising from new technologies and infrastructures, including those from acquisitions, enhancements and updates to our existing products, and the adoption and deployment of AI technologies within our products, services, and internal systems, which may introduce novel security, data governance, or operational risks;
•vulnerabilities in products or components within the broad ecosystem in which our services operate and upon which they depend;
•attacks on, or vulnerabilities in, the underlying networks and services that power the Internet on which our products depend, most of which are not under our control or the control of our third-party vendors, partners or customers; and
•employee or contractor errors, omissions, unauthorized use or input of sensitive data, or intentional acts that compromise our security systems or lead to inadvertent exposure or loss of sensitive information.
Although we devote significant resources to protecting our data and IT systems, we can provide no assurances that our security measures, including systems and processes designed to protect the confidentiality, integrity and availability of our customers’ and our customers’ customers’ proprietary and sensitive data, will be effective or that a material cybersecurity incident will not occur. Our ability to mitigate these risks may be impacted by the following:
•evolving and increasingly sophisticated techniques used to breach or disrupt IT systems and infrastructure, including the use or exploitation of AI technologies by threat actors to identify previously unknown vulnerabilities and accelerate, scale or personalize cyberattacks, which may significantly reduce the time available for us to remediate vulnerabilities before they are exploited;
•the increasing complexity of our internal IT systems as we integrate acquired businesses and adopt new technologies and data-sharing models; and
•our limited control over our customers, partners, and third-party vendors (including those authorized by customers to access their data), or over the processing of data by such third parties, which may limit our ability to maintain the integrity or security of such transmissions or processing.
In the normal course of business, we and our customers are and have been the target of malicious cyberattacks and other security threats. Although to date we have not identified any security incidents involving our systems that have had a material financial impact on us, there can be no assurance that future incidents will not be material or significant. As our market presence grows, we may face increased risks of cyberattacks and other security threats. Additionally, as AI technologies, including generative and agentic AI, continue to evolve, threat actors are using and exploiting these technologies to enhance the sophistication, scale, speed and effectiveness of security threats that may be more difficult to detect and defend against, including future capabilities to identify previously unknown vulnerabilities and automate complex, multi-stage attack chains. Any delay in detecting, containing, or remediating a cybersecurity incident may result in additional harm, and in certain cases the full scope and impact of any such incident may not be immediately apparent.
A cybersecurity incident could result in unauthorized access to, or the loss or denial of authorized access to, our IT systems or data, or those of our customers, including intellectual property and other proprietary, sensitive or confidential information. We are subject to contractual, regulatory and other legal obligations to notify relevant stakeholders of certain security incidents. For example, SEC rules require disclosure on Form 8-K of the nature, scope and timing of any material cybersecurity incident and the reasonably likely impact of such incident. As data protection, cybersecurity, and privacy laws continue to evolve, we may face additional reporting requirements to regulatory authorities. Assessing whether an incident is material or reportable to one or more external parties may require complex judgment and investigation, and disclosure of an incident may itself adversely affect our reputation, customer relationships and exposure to legal or regulatory proceedings. A security incident or related disclosure could result in loss of confidence in the security of our services, harm our reputation, negatively impact future sales, disrupt our business operations, increase insurance premiums and result in legal, regulatory and financial liability. Additionally, it may take considerable time for us to investigate and evaluate the full impact of cybersecurity attacks, particularly for sophisticated attacks, which may inhibit our ability to provide prompt, full and reliable information
49
about the incident to our customers, regulators and the public. Further, there can be no assurance that our insurance coverage will be sufficient in type or amount to cover the losses arising from a cybersecurity incident. In addition, prevention, detection, investigation and remediation of actual or suspected vulnerabilities or incidents, including determining whether notification or disclosure is required, may not be straightforward, may result in significant direct and indirect costs, including increased infrastructure and security spending and the diversion of resources from development activities.
Defects or disruptions in our services could diminish demand for our services and subject us to substantial liability.
We have in the past and may in the future identify defects in or experience disruptions to our services. Such issues may arise in a variety of circumstances, including from customers using our services in unanticipated ways that disrupt access for other customers; from employee, contractor or other third-party action or inaction; or from the complexity of our services, which incorporate a variety of hardware, proprietary software and third-party and open-source software and AI models. Across the industry, cloud services frequently contain undetected errors when first introduced or when new versions or enhancements are released. Although we benchmark AI model performance on metrics relevant to our services and test new models introduced into our services prior to deployment, AI models are probabilistic in nature and we cannot predict model output and subsequent AI agent behavior with complete accuracy. The use of agentic AI by us, our third-party service providers or customers may result in unanticipated outcomes that disrupt our systems or those of our customers, which may be difficult to anticipate, detect, or reverse.
We have experienced and may in the future experience defects in our, our customers’, or third-party vendors’ products and components, which may create vulnerabilities that inadvertently permit unauthorized access to protected customer data. We can provide no assurance that such defects or vulnerabilities will not occur in the future, have a material adverse effect on our business or subject us to substantial liability. Vulnerabilities in open-source, proprietary or third-party products and components can persist even after security patches have been issued if updates are not timely implemented or if threat actors exploit vulnerabilities before remediation is complete. As frontier AI models enhance the ability of threat actors to rapidly identify previously unknown vulnerabilities and automate complex, multi-stage attack chains, the time available to develop and deploy countermeasures is likely to be significantly compressed. Consequently, we may be required to undertake more frequent emergency patching and remediation efforts, which could increase our operational costs and heighten the risk of service disruptions caused by the patching process itself. Additionally, in some cases, vulnerabilities may not be immediately detected, which may make it difficult to recover critical services and lead to damaged assets.
Since our customers rely on our products and services for important aspects of their operations, errors, defects, service disruptions or other performance issues have in the past adversely impacted our customers and could do so in the future. As a result, customers could elect to not renew their services, delay or withhold payment or make warranty or other claims against us. Such outcomes could reduce future sales, increase our allowance for doubtful accounts, increase collection cycles and expose us to litigation and related expenses.
Any interruptions or delays in services from third parties, including data center hosting facilities, cloud computing platform providers and other hardware and software vendors, as well as Internet infrastructure, or from our inability to adequately plan for and manage service interruptions or infrastructure capacity requirements, could impair the delivery of our services and harm our business.
We rely on third-party data center hosting facilities and cloud computing platform providers located in the United States and other countries, as well as the many different underlying networks and services that power the Internet, to deliver our products and services and operate critical business systems. We also rely on hardware purchased or leased from, software licensed from, and cloud computing platforms provided by third parties in order to offer our products and services, including database software, hardware and data from multiple vendors. Any disruption, degradation or failure of our systems, or those of the third parties on which we rely, regardless of cause, could result in service interruptions and harm our business. We have experienced service interruptions caused by technological and geopolitical incidents, and interruptions may occur in the future. As our reliance on these third-party systems increases, and particularly on third-party cloud computing platforms, our exposure to service interruptions and performance or quality issues may also increase. Service interruptions or other performance or quality issues may cause us to issue credits or pay penalties, cause customers to assert warranty or other claims or terminate their subscriptions, and adversely affect attrition rates and our ability to attract new customers, which could reduce revenue. Our business and reputation would also be harmed if our customers and potential customers perceive our services as unreliable.
In certain jurisdictions, government-imposed data residency requirements may negatively impact our resiliency options. Requirements to seek pre-approval before backing up, migrating or transferring customer data to alternate infrastructure, even as an emergency mitigation measure, or to condition exemptions from residency obligations on commitments to additional local infrastructure investment, could increase our costs or constrain our operational flexibility.
For many of our offerings, our production environment and customer data are replicated at geographically separate facilities. Certain offerings, including those added through acquisitions, may be delivered through alternate facilities or arrangements. We do not control the operation of any of these facilities, and they may be vulnerable to damage or interruption
50
from events outside of our control, such as natural disasters, supply chain disruptions, or geopolitical events. Despite precautions taken at these facilities, such as disaster recovery and business continuity arrangements, unanticipated events, problems, operational failures or other disruptions could result in prolonged service interruptions, and there can be no assurance that such interruptions would be remediated without significant cost, in a timely manner or at all.
The hardware, software, data and cloud computing platforms that we rely on, including, for example, the large language models leveraged in our AI offerings, may not continue to be available at reasonable prices, on commercially reasonable terms or at all. Access to certain frontier AI models may also be subject to sudden suspension or restriction by providers or by governments due to safety concerns, regulatory mandates, or shifting priorities among cloud platforms. Any loss of the right to use such hardware, software, data or cloud computing platforms could significantly increase our expenses and disrupt or delay the provision of our services until equivalent technology is either developed internally or obtained from third parties and integrated into our systems. There can be no assurance that such replacement technology would be available or implemented in a timely manner or at all.
As we scale our operations, the volume and nature of data processed by our offerings continue to evolve, including as a result of the deployment of AI technologies, and our infrastructure capacity requirements, including network capacity, computing power and energy requirements, may increase as a result. Additionally, increased energy consumption, including as a result of AI adoption, climate-related events, energy market volatility, and power grid disruptions may increase the operational costs related to inputs across our value chain, including for data centers. Increasing constraints on data center power, land, and water availability could limit our ability to expand data center capacity in affected regions, increase operational costs, or require us to modify our infrastructure plans in ways that could impair the delivery of our services. If we experience significant strains on our data center capacity, whether due to insufficient infrastructure capacity, public or governmental opposition to data centers or the unavailability of or limitations on suitable sites, or for other reasons outside of our control, our ability to migrate or scale operations could be constrained and our customers could experience performance degradation or service outages that may subject us to financial liabilities, result in customer losses, subject us to litigation and harm our reputation and business. As we add data centers and capacity and continue to move to cloud computing platform providers, we move or transfer our data and our customers’ data from time to time. Despite precautions taken during this process, any unsuccessful data transfers may impair the delivery of our services, which may damage our business.
As we acquire companies or technologies, we may not realize the expected business or financial benefits and the acquisitions could prove difficult to integrate, disrupt our operations, dilute stockholder value and adversely affect our operating results and the market value of our common stock.
As part of our business strategy, we periodically acquire complementary businesses, joint ventures, services and technologies and intellectual property rights. We continue to evaluate such opportunities and expect to make such acquisitions and other transactions and arrangements in the future, which may involve numerous risks and could create unforeseen operating difficulties and expenditures, including:
•potential failure to achieve the expected benefits on a timely basis or at all;
•potential identified or unknown security vulnerabilities in acquired products or technologies that expose us to additional cybersecurity risks, delay integration into our service offerings, or create challenges in increasing or maintaining the security standards of the acquired technologies;
•difficulty of transitioning the acquired technology onto our existing platforms;
•brand or reputational harm associated with our acquired companies;
•challenges converting the acquired company’s revenue recognition policies and forecasting the related revenues, including both consumption- and subscription-based revenues and term software license revenue;
•in the case of foreign acquisitions, challenges with integrating operations across different cultures and languages and addressing the particular economic, currency, political, cybersecurity, regulatory and market risks associated with certain countries;
•operational and financial difficulties and strains on resources in integrating acquired operations, technologies, services, platforms and personnel (including cultural integration and retention of employees);
•regulatory challenges from antitrust or other regulatory authorities that may block, delay or impose conditions on the completion of transactions or the integration of acquired operations;
•challenges with maintaining the acquired company’s customers, partners and third-party service providers;
•known and potential unknown liabilities associated with the acquired businesses, including due to litigation;
•difficulties in managing, or potential write-offs of, acquired assets, and potential financial and credit risks associated with acquired customers;
•negative impact to our results of operations because of the depreciation and amortization of acquired intangible assets, fixed assets and operating lease right-of-use assets;
51
•additional stock-based compensation issued or assumed in connection with the acquisition, including the impact on stockholder dilution and our results of operations;
•ineffective or inadequate controls, procedures and policies at the acquired company; and
•the tax effects related to integration and business operation changes, realizability of our deferred tax assets, and uncertain tax liabilities.
Any of these risks could harm our business or negatively impact our results of operations. In addition, to facilitate acquisitions, we may seek additional equity or debt financing, which may not be available on terms favorable to us or at all, which may affect our ability to complete subsequent acquisitions, and which may affect the risks of owning our common stock. If we finance acquisitions by issuing equity or convertible or other debt securities or taking out loans, our existing stockholders may be diluted, or we could face constraints related to the terms of, and repayment obligation related to, the incurrence of indebtedness that could affect our stock price. For example, in connection with our acquisition of Informatica, we entered into the Informatica Credit Agreements on an unsecured basis. In November 2025, the Company borrowed the full $6.0 billion available under the Informatica Credit Agreements to finance a portion of the cash consideration for the acquisition, repay existing indebtedness of Informatica and its subsidiaries, and pay related fees, costs, and expenses. For more information, see Note 8 “Debt” to the consolidated financial statements in Item 1 of Part I.
Our ability to acquire other businesses or technologies, or integrate acquired businesses effectively, may be impaired by trade tensions and increased global scrutiny of foreign investments and acquisitions in the technology sector. Governments may continue to adopt or tighten restrictions of this nature, some of which may apply to acquisitions or integrations of businesses by us, and such restrictions or government actions could negatively impact our business and financial results.
Supporting our existing and growing customer base could strain our personnel resources and infrastructure, and if we are unable to scale our operations, refine our operating model, and increase productivity, we may not be able to successfully implement our business plan.
We continue to experience significant growth in our customer base, including through acquisitions, which has placed a strain on our management, administrative, operational and financial infrastructure. We anticipate that significant additional investments, including in human capital software, agentic AI and other technologies, will be required to scale our operations and increase productivity, address the needs of our customers, develop and enhance our services, expand into new geographic areas and support continued growth. These investments will increase our cost base, making it more difficult to offset any future revenue shortfalls by reducing expenses in the short term. We may not be able to make these investments as quickly or effectively as necessary to successfully scale our operations.
We regularly upgrade or replace our software systems and processes. If the implementations of these new applications are delayed, or if we encounter problems with our new systems and processes or in migrating away from our existing systems and processes, our operations could be negatively impacted. For example, in the second quarter of fiscal 2026, we implemented a new enterprise resource planning system (“ERP”). Among other things, our ERP is essential to our financial planning, reporting, and compliance programs, and any unforeseen problems with our new ERP or in migrating away from previous systems and processes could harm our ability to manage our business.
Our success will depend in part upon the ability of our senior management to plan and manage our projected growth effectively. We must continue to increase the productivity of our existing employees and to hire, train and manage employees as needed. Additionally, changes in our work environment and workforce may not meet the needs and expectations of our workforce or may create operational and workplace culture challenges, which could negatively impact our ability to increase employee productivity or attract and retain our employees and could adversely affect our operations. Furthermore, new AI offerings and technologies, which are integrated into our operations, may disrupt workforce needs and could adversely affect our operations if not managed properly. To manage the expected growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls, our reporting systems and procedures and our utilization of real estate. If we fail to successfully scale our operations, refine our operating model, maintain effective governance and accountability, execute cross-functionally, and increase productivity across our organization, we may be unable to execute our business plan and the value of our common stock could decline.
If our customers do not renew their subscriptions or if they reduce subscriptions at renewal, or if customer usage of consumption-based offerings is below expected levels, our revenue and current remaining performance obligation could decline and our business may suffer. If we cannot accurately predict subscription renewals or upgrade rates or optimal pricing for consumption-based contracts, we may not meet our revenue targets, which may adversely affect our stock price.
Our customers have no obligation to renew their subscriptions after the expiration of their contractual subscription period, which is typically 12 to 36 months, and in the normal course of business, some customers have elected not to renew. Our customers may renew for fewer subscriptions, renew for shorter contract lengths or switch to lower cost offerings of our services. It is difficult to predict attrition rates given our varied customer base, the number of multi-year subscription contracts, and our shift toward consumption-based pricing models. Our attrition rates may increase or fluctuate as a result of various
52
factors, including customer dissatisfaction, customers’ spending levels, mix of customer base, decreases in the number of users at our customers, customer mergers and acquisitions, competition, pricing increases or changes, such as the increased prevalence of consumption-based pricing models and economic downturns. Additionally, our transition toward more complex pricing structures, including AI-driven consumption models, may make it more difficult to optimize our pricing, predict attrition rates, and accurately forecast revenue.
Our future success depends in part on our ability to sell additional features and services, more subscriptions or enhanced editions of our services to our current customers. This may also require increasingly sophisticated and costly sales efforts that are targeted at senior management. Similarly, the rate at which our customers purchase new or enhanced services depends on a number of factors, including general economic conditions and customer receptiveness to price changes related to these additional features and services. In addition, the markets and monetization strategies for certain offerings, including Agentforce and Data 360, remain relatively new and uncertain and may present additional risks and challenges. If customer usage for these offerings is below expected levels, we may not be able to adequately forecast renewals or optimize pricing, which may prevent us from meeting our revenue targets and adversely affect our stock price.
Periodic changes to our sales organization can be disruptive and may reduce our rate of growth.
We periodically change and make adjustments to our sales organization in response to market opportunities, competitive threats, management changes, product introductions or enhancements, acquisitions, sales performance, increases in sales headcount, cost levels and other internal and external considerations. Such changes have in some periods resulted in, and may in the future result in, a reduction of productivity, which could negatively impact our operating results. Further, any significant change to our sales organization’s compensation structure may be disruptive and negatively affect our operating results.
Sales to customers outside the United States expose us to risks inherent in international operations.
We sell our services throughout the world and are subject to risks and challenges associated with international business. The risks and challenges associated with sales to customers outside the United States or those that can affect international operations generally, include:
•regional economic and political conditions, natural disasters, acts of war, terrorism and actual or threatened public health emergencies, or other geopolitical events, including the evolving relations between the United States and China, the United States and Russia, and ongoing conflicts, such as the war in Ukraine and conflicts in the Middle East;
•localization of our services, including translation into foreign languages and associated expenses;
•regulatory frameworks or business practices favoring local competitors;
•pressure on the creditworthiness of sovereign nations, where we have customers and a balance of our cash, cash equivalents and marketable securities;
•foreign currency fluctuations and controls, which may make our services more expensive for international customers and could add volatility to or negatively impact our operating results;
•compliance with complex and evolving governmental laws and regulations, such as those governing AI;
•liquidity issues or political actions by sovereign nations, including nations with a controlled currency environment, could result in decreased values of these balances or potential difficulties protecting our foreign assets or satisfying local obligations;
•vetting and monitoring our third-party resellers in new and evolving markets to confirm they maintain standards consistent with our brand and reputation;
•treatment of revenue from international sources, evolving domestic and international tax environments and changes to tax codes, including being subject to and paying withholding taxes under foreign tax laws;
•uncertainty regarding changes in trade policies, including trade wars, the threat or imposition of tariffs or other trade restrictions, as well as any retaliatory actions;
•perceptions of U.S.-based companies in the regions where we operate or plan to operate;
•perceptions of regions or governments in the regions where we operate or plan to operate, resulting in negative publicity or reputational harm;
•different pricing environments;
•difficulties in staffing and managing foreign operations;
•different or lesser protection of our intellectual property, including increased risk of theft of our proprietary technology and other intellectual property, and more prevalent cybersecurity risks, particularly in jurisdictions in which we have historically chosen not to operate; and
•longer accounts receivable payment cycles and other collection difficulties.
53
Any of these factors could negatively impact our business and results of operations. The above factors may also negatively impact our ability to successfully expand into emerging market countries, where we have little or no operating experience, where it can be costly and challenging to establish and maintain operations, including hiring and managing required personnel, and difficult to promote our brand, and where we may not benefit from any first-to-market advantage or otherwise succeed.
Sales to larger enterprise customers may involve more time-consuming and expensive sales cycles, pricing pressure and implementation and configuration challenges, and, for some complex transactions, delayed revenue recognition, all of which could harm our business and operating results.
We may face greater costs, longer sales cycles, greater competition and less predictability in completing some of our sales to large enterprise customers, including governmental entities and customers in regulated industries. In these market segments, the customer’s decision to use our services—particularly our newer AI and data-related offerings such as Agentforce and Data 360—may require us to provide extensive implementation planning, education regarding the use and benefits of our services, as well as address other concerns, such as heightened privacy and data protection requirements.
In addition, larger enterprise customers and governmental entities often demand significant pricing and packaging flexibility, as well as complex configuration and integration services and features. These opportunities often require us to devote greater sales support and professional services resources to individual customers, driving up costs and time required to complete sales and diverting our own sales and professional services resources to a smaller number of larger transactions, while potentially requiring us to delay revenue recognition on some of these transactions until the technical or implementation requirements have been met. Additionally, the pricing and packaging strategies for enterprise and other customers for our offerings, including Agentforce and Data 360, may not be widely accepted. Our adoption of or failure to adopt changes to our pricing and packaging models, or failure to otherwise execute our go-to-market strategies for large, complex transactions, may harm our business.
We may lose key members of our management team or development and operations personnel, and may be unable to attract and retain employees we need to support our operations and growth.
Our success depends substantially upon the continued services of our executive officers and other key members of management, particularly our chief executive officer. We are also substantially dependent on existing development and operations personnel because of the complexity of our services and technologies. Our executive officers, key management, and development and operations personnel could terminate their employment with us at any time. Effective succession planning is important to our long-term success, and changes in our management team or the loss of one or more of our key employees or groups of employees could seriously harm our business.
The technology industry is subject to substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and technology services, as well as competition for sales executives, data scientists and development and operations personnel. We have experienced challenges with significant competition in talent recruitment and retention, particularly for engineers with experience in AI, and may not be successful in recruiting or retaining such talent. We have experienced and expect to continue to experience difficulty in hiring, developing, integrating and retaining highly skilled employees with appropriate qualifications. These difficulties may be amplified by evolving restrictions on immigration, travel, or availability of visas for skilled technology workers. Additionally, our compensation arrangements and benefits may not always be successful in attracting new employees or retaining and motivating our existing personnel. If we fail to attract new personnel or fail to retain current personnel, our business and future growth prospects could be severely harmed.
We have undertaken various restructuring initiatives intended to improve operating margins and continue advancing our ongoing commitment to profitable growth, which have included a workforce reduction, select data center exits, and office space reductions within certain markets. These restructuring actions, or any similar actions taken in the future, could negatively impact our ability to attract, integrate, retain and motivate key employees.
In addition, we believe in the importance of our corporate culture, which fosters dialogue, collaboration, recognition, equality and a sense of family. As our organization has grown and expanded globally, and as our workplace plans have developed, including workforce and office space reductions related to our restructuring actions, we have experienced and may continue to experience difficulties maintaining our corporate culture globally, including managing the complexities of communicating with all employees. Any inability to maintain our corporate culture could negatively impact our ability to attract and retain employees, harm our reputation with customers or negatively impact our future growth.
Any failure in the delivery of high-quality professional, training, and technical support services related to our online applications may adversely affect our relationships with our customers and our financial results.
Our customers sometimes require highly skilled and trained service professionals to successfully onboard and implement our applications. Customers depend on our customer success and support organizations to provide coaching, resolve technical issues, and offer proactive guidance relating to our applications. Implementation, training, and advisory services may be
54
performed by us, our customers, a third party, or a combination thereof. Our strategy is to work with third parties to increase the breadth of capability and depth of capacity for delivery of these services to our customers. If customers are not satisfied with the quality and timing of work or with the type of services or solutions delivered, we could incur additional costs to address the situation, the profitability of that work might be impaired, our revenue recognition could be impacted and the customer’s dissatisfaction with the services received could negatively impact our ability to sell our other offerings to that customer or retain existing customers. In addition, negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current or prospective customers. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for customer success and support services across our varying and diverse offerings. In addition, our sales process is highly dependent on our applications and business reputation and on positive recommendations from our existing customers. Any failure or perceived failure to maintain high-quality professional, onboarding, training, and technical support services could adversely affect our reputation, our ability to sell our service offerings to existing and prospective customers, and our business, operating results and financial position.
Strategic and Industry Risks
The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be harmed.
The market for enterprise applications and platform services is highly competitive, rapidly evolving, fragmented and subject to changing technology, low barriers to entry, shifting customer needs and frequent introductions of new products and services. Many prospective customers have invested substantial personnel and financial resources to implement and integrate their current enterprise software into their businesses and therefore may be reluctant or unwilling to migrate away from their current solution to a different enterprise software service. Additionally, third-party developers may be reluctant to build application services on our platform since they have invested in other competing technology platforms.
Our current competitors include:
•vendors of packaged business software, as well as companies offering enterprise applications delivered through on-premises offerings from enterprise software application vendors and cloud computing application service providers, either individually or with others;
•AI-native companies and emerging startups that leverage generative AI and large language models as the core foundation of their architecture, offering highly specialized, autonomous, or automated solutions that may bypass traditional business process workflows or displace established user interfaces;
•software companies that provide their product or service free of charge as a single product or when bundled with other offerings, or only charge a premium for advanced features and functionality, as well as companies that offer solutions that are sold without a direct sales organization;
•vendors who offer software tailored to specific services, industries or market segments, as opposed to our full suite of service offerings, including suppliers of traditional business intelligence and data preparation products, integration software vendors, marketing vendors, e-commerce solutions vendors or AI software and service vendors;
•productivity tool and email providers, unified communications providers and consumer application companies that have entered the business software market; and
•traditional platform development environment companies and cloud computing development platform companies who may develop toolsets and products that allow customers to build new applications, including AI-augmented applications, that run on the customers’ current infrastructure or as hosted services, as well as would-be customers who may develop enterprise applications for internal use.
In addition, we may face more competition as we expand our service offerings. Some of our current and potential competitors may have competitive advantages, such as greater name recognition, longer operating histories, more significant installed bases, broader geographic scope, broader suites of service offerings and larger marketing budgets, as well as substantially greater financial, technical, personnel and other resources. In addition, many of our current and potential competitors have established marketing relationships and access to larger customer bases, and have major distribution agreements with consultants, system integrators and resellers. We also experience competition from smaller competitors that may be more agile in responding to customers’ demands and offer more targeted and simplified solutions. Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements, or provide competitive pricing, more flexible contracts or faster implementations. Additionally, as we continue to increasingly build AI into many of our offerings, we face more competition as AI technologies are increasingly integrated into the markets in which we compete. New AI offerings may disrupt our service offerings or transform workforce needs and negatively impact demand for our offerings, or our competitors may be able to incorporate AI into their offerings more efficiently or successfully than we are able to and achieve greater and faster adoption. Even if our products and services are more effective than the products and services that our competitors offer, potential customers might select competitive
55
products and services in lieu of purchasing our products and services. For all of these reasons, we may not be able to compete successfully against our competitors, which could negatively impact our future sales and harm our business.
Our efforts to expand our service offerings and to develop and integrate our existing services in order to keep pace with technological developments may not succeed and may reduce our revenue growth rate and harm our business.
Our efforts to expand our current service offerings may not succeed and may reduce our revenue growth rate. In addition, the markets and monetization strategies for certain offerings, including Agentforce and Data 360, remain relatively new and uncertain and our expansion into such offerings, and related investments, may present additional risks and challenges. For example, we offer certain products, including Agentforce and Data 360, through a consumption-based business model and may increase the number of products through which we do so. We have limited experience with determining optimal pricing for our consumption-based contracts and may have lower levels of customer consumption of our products than we expect which may result in suboptimal pricing. Further, the introduction of future platform changes and upgrades may not result in long term revenue growth.
If we are unable to develop enhancements to, and new features for, our existing or new services that keep pace with rapid technological developments, our business could be harmed. The success of enhancements, new features and services depends on several factors, including its timely completion and introduction and market acceptance, as well as our ability to integrate all our product and service offerings and develop adequate selling capabilities in new markets. Failure in this regard may significantly impair our revenue growth as well as negatively impact our operating results if the additional costs are not offset by additional revenues. In addition, because our services are designed to operate over various network technologies and on a variety of mobile devices, operating systems and computer hardware and software platforms, we need to continuously modify and enhance our services to keep pace with changes in these technologies, as well as continue to maintain and support our services on legacy systems. We may not be successful in developing these modifications and enhancements or in bringing them to market timely.
Additionally, if we fail to timely anticipate or identify significant technology trends and developments, or if we do not devote appropriate resources to adapting to such trends and developments, our business could be harmed. Uncertainties about the timing and nature of new network platforms or technologies, modifications to existing platforms or technologies, including text messaging capabilities within these platforms, or changes in customer usage patterns thereof could increase our research and development or service delivery expenses or lead to our increased reliance on certain vendors. Any failure of our services to operate effectively with future network platforms and technologies could reduce the demand for our services, result in customer dissatisfaction and harm our business.
Our continued success depends on our ability to maintain and enhance our brands.
We believe that the brand identities we have developed, including associations with trust, customer success, innovation, equality and sustainability have significantly contributed to the success of our business. Maintaining and enhancing the Salesforce brand and our other brands is critical to expanding our base of customers, partners and employees. Our brand strength depends largely on our ability to remain a technology leader and provide high-quality innovative products, services and features in a secure, reliable manner that enhances our customers’ success even as we scale and expand our services. In order to maintain and enhance the strength of our brands, we have made and may in the future make substantial investments to expand or improve our product offerings and services, including our investments in data and AI technologies, or we may enter new markets that may be accompanied by initial complications or ultimately prove to be unsuccessful.
Further, entry into markets with weaker protection of brands or changes in the legal systems in countries where we operate may impact our ability to protect our brands. If we fail to maintain, enhance or protect our brands, or if we incur excessive expenses in our efforts to do so, our business, operating results and financial condition may be materially and adversely affected.
We are subject to risks associated with our strategic investments, including partial or complete loss of invested capital. Significant changes in the fair value of this portfolio could negatively impact our financial results.
We manage a portfolio of strategic investments in both privately held and publicly traded companies focused primarily on enterprise technology and AI companies, as well as systems integrators. While we invest in companies that we believe are digitally transforming their industries, advancing responsible AI, improving customer experiences, helping us expand our solution ecosystem or supporting other corporate initiatives, we may still experience unforeseen reputational harm associated with our investments. Our investments range from early- to late-stage companies, including investments made concurrent with a company’s initial public offering. Investments in early-stage companies are inherently speculative, as these companies may not yet be revenue-generating and could still be in the process of developing their products and services at the time of our investment. The financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering, acquisition or other favorable market event reflecting appreciation to the cost of our initial investment. Our investments may face challenges from regulatory authorities potentially resulting in unexpected costs, delays, or unfavorable conditions imposed on transactions involving our investment portfolio. In certain cases, our ability to sell these investments
56
may be impacted by contractual obligations to hold the securities for a set period of time after a public offering. All of our investments are subject to a risk of partial or total loss of invested capital.
We are exposed to volatility in our operating results due to changes in market prices, observable price changes and impairments of our strategic investments. Concentrations of portfolio value in specific industry sectors, such as emerging technology and AI, or in one or more specific companies, could increase our exposure to such volatility in the event of industry-wide or company-specific downturns. The measurement of our non-marketable equity securities at fair value is inherently subjective and requires management judgment and estimation. The resulting gains or losses have been and could be material depending on market conditions and events, particularly in periods with economic uncertainty, inflation, geopolitical conflict, volatile public equity markets or unsettled global market conditions.
If third-party developers and vendors do not continue to embrace our technology delivery model and enterprise cloud computing services, or if our customers seek warranties from us for third-party applications, integrations, data and content, our business could be harmed.
Our success depends on the willingness of a growing community of third-party developers and vendors to build applications and provide integrations, data and content that are complementary to our services. Without the continued development of these applications and provision of such integrations, data and content, both current and potential customers may not find our services sufficiently attractive, which could impact future sales. In addition, for those customers who authorize a third-party technology partner to access their data, we do not provide any warranty related to the functionality, security or integrity of the data access, transmission or processing. Despite contract provisions to protect us, customers may look to us to support and provide warranties for the third-party applications, integrations, data and content, even though not developed or sold by us, which may expose us to potential claims, liabilities and obligations, all of which could harm our reputation and our business.
Social, ethical, and regulatory issues, including the development, deployment, use or capabilities of AI in our offerings, may result in reputational harm, legal liability and increased compliance costs.
Policies we adopt or choose not to adopt, on social and ethical issues, particularly regarding the development, deployment or use of our products, may be viewed as controversial by employees, customers, potential customers, or regulators who have varied, evolving and oftentimes conflicting expectations. These perceptions have in the past, and may in the future, impact our ability to attract or retain employees and customers and may result in negative publicity or reputational harm. Our decisions about whether to conduct business with potential customers, or whether to continue or expand relationships with existing customers, may also impact our stakeholder relationships and reputation. Actions taken by our customers or employees, including through the use or misuse of our products or technologies for unlawful activities, improper information sharing or other harmful purposes, may result in reputational harm, regulatory scrutiny or legal liability. Regulatory frameworks such as the EU Digital Services Act (“DSA”), the EU AI Act and other rapidly evolving and sometimes conflicting global laws and regulations related to AI, privacy and consumer protection could increase compliance costs, restrict features or data flows, delay launches and expose us to penalties or litigation.
We are increasingly building AI into many of our offerings, including generative and agentic AI. As with many technical innovations, AI offerings, such as Agentforce, and our Agentforce 360 Platform present additional risks and challenges that could affect customer adoption and therefore our business. For example, the development and deployment of AI offerings, including those involving information regarding our customers’ customers, raise emerging ethical, legal and operational considerations. If we enable or offer solutions that draw controversy due to their perceived or actual impact on human rights, privacy, employment or other social concerns, we may experience new or heightened governmental or regulatory scrutiny, investigations, enforcement actions, fines or penalties and reputational or competitive harm.
As we develop and deploy AI applications in our products and services, including in customer-facing contexts, the speed, scale and complexity of related data processing may increase. AI applications may be targeted or misused, or may perform in ways that are inaccurate, biased, unreliable or otherwise harmful, or that implicate personal or proprietary data in ways that may be difficult to anticipate, detect or control. Such issues could result in regulatory scrutiny, litigation, contractual disputes, loss of customer trust or reputational harm.
Inadequate or ineffective AI development, testing, deployment, content labeling, governance, monitoring or oversight, whether by us or others, could result in our AI applications not operating as intended or with reduced functionality, reduced acceptance of our products and services or diminished confidence in the decisions, predictions, analysis or other content that our AI applications produce. Such risks may be heightened as AI applications are integrated into a broader range of our products and services, or as coding assistants increase the pace of development. This could subject us to regulatory scrutiny, competitive harm, legal liability and reputational damage.
We may rely in part on third-party models, datasets, cloud infrastructure or other technologies in developing or offering certain AI applications. Our reliance on such third parties exposes us to risks relating to performance, availability, security vulnerabilities, intellectual property claims, licensing restrictions, cost increases or changes in terms of service. If a third-party
57
provider modifies, suspends or terminates access to its models, data or infrastructure, or if such technologies fail to perform as expected, our ability to offer, scale or support certain AI applications may be adversely affected, and we may incur additional costs to mitigate such impacts.
The rapid evolution of AI technologies and related regulatory requirements will require the allocation of significant resources to develop, test, monitor and maintain our products and services in order to comply with applicable laws and regulations and to address concerns relating to accuracy, bias, transparency, explainability, security and data provenance. Uncertainty surrounding new and emerging AI applications, including generative AI content creation, AI agents, and multi-organization and multi-agent interoperability considerations may require additional investment in compliance programs, governance frameworks, licensing arrangements, documentation, auditing and risk mitigation processes, which may be complex, costly and could impact our profit margins. Moreover, expansion of our AI capabilities to content generation, including through Agentforce and other generative AI offerings, introduces additional risks and responsibilities.
AI technologies may produce content that is inaccurate, misleading, biased, offensive or unsafe, and may implicate privacy, security or intellectual property rights, including through the generation of copyrighted or other protected material. If our customers or others rely on such content to their detriment, or if regulators or rights holders assert claims relating to AI-generated content, we may be exposed to litigation, regulatory investigations, enforcement actions, indemnification obligations, monetary penalties or other liabilities, or reputational harm. Developing, testing and deploying AI technologies may also increase the cost profile of our offerings due to the computing costs required. If we are unable to effectively mitigate these risks, or if our mitigation efforts result in excessive costs, our reputation, business, operating results and financial condition may be adversely affected.
The evolving landscape related to environmental, social and governance matters may expose us to risks that could adversely affect our reputation and performance.
Equality and sustainability are core values of the Company. In furtherance of these values, we have in the past and may in the future establish and disclose quantitative and qualitative statements related to equality and sustainability matters, which are subject to numerous risks and dependencies. The proliferation of regulations and guidance addressing climate, human capital and other topics at the regional, state and national levels has required and may continue to require significant effort and resources, and our practices, processes and controls may not ensure compliance with evolving standards. Further, various regulations or guidance may conflict with each other, making universal compliance challenging as a multinational company, and our status as a government contractor in various jurisdictions, including but not limited to the U.S. where we are headquartered, may also result in greater exposure or differentiated obligations or requirements with which we would seek to comply. The standards and frameworks for tracking and reporting on these matters continue to evolve, and our use, interpretation or application of such frameworks and standards may change from time to time or differ from those of other companies, which may result in a lack of consistent or meaningful comparative data from period to period or between Salesforce and other companies. Furthermore, the integration and use of AI in our products and operations introduces operational risks and complexities, which may impact our ability to accurately track, benchmark, or report on these matters. In addition, our practices and disclosures may not satisfy, appropriately respond to the concerns of or be supported by all investors, customers, partners, regulators, enforcement authorities or other stakeholders, whose expectations and requirements are evolving, varied, and oftentimes conflicting. Any violation of, non-compliance with or failure to meet such expectations or requirements, or negative publicity related to our practices or disclosures, could result in harm to our reputation, our ability to attract or retain employees, and our attractiveness as an investment, business partner, acquiror or service provider, could expose us to increased scrutiny or to regulatory or enforcement actions or litigation, and could cause us to incur increased costs to address or defend against such actions.
Legal and Regulatory Risks
Privacy concerns and laws as well as evolving regulation of cloud computing, AI services, cross-border data transfers and other domestic or foreign regulations may limit the use and adoption of our services and adversely affect our business.
Regulation related to the provision of services over the Internet continues to evolve, as federal, state and foreign governments adopt new, or modify existing, laws and regulations addressing data privacy, cybersecurity, data protection, data sovereignty and the collection, storage, hosting, transfer, use and other processing of data. The volume, complexity and scope of these regulatory requirements may continue to increase, including in response to heightened geopolitical tensions and the rapid advancement of frontier AI capabilities. In some cases, data privacy laws and regulations, such as the EU’s General Data Protection Regulation (“GDPR”), impose obligations directly on us as both a data controller and a data processor, as well as on many of our customers. In addition, domestic data privacy laws, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CCPA”), and similar laws that have passed, gone into effect or are being considered in numerous other U.S. states, impose obligations on us and many of our customers, potentially as both a covered business and service provider.
58
These laws continue to evolve and expand, including through the adoption of new comprehensive data protection regimes such as India’s Digital Personal Data Protection Act 2023, and through the introduction of additional implementing rules and regulations in various jurisdictions. As a result, we and our customers may become subject to additional regulatory burdens. New EU laws, including the DSA, the Data Act and the EU AI Act, have also been adopted and, depending on how they are implemented, interpreted and enforced, may impose additional rules, restrictions or compliance requirements on the development, deployment or use of our products and services, including AI-enabled features.
Historically, certain legal frameworks have provided safe harbors to companies that host or transmit content provided by others, including limitations on liability for monetary damages arising from copyright infringement or defamation based on customer-provided content. There is increasing legislative, regulatory and judicial scrutiny of these safe harbors, and ongoing legal efforts to repeal, narrow or limit these protections that were previously available to us. The loss or further erosion of these protections may require us to alter, limit or discontinue certain of our services, or may impose additional contractual terms on customers to mitigate potential liability for customer misconduct.
Compliance with these laws and regulations may require us to make changes to our practices, products or services to enable us or our customers to meet applicable legal requirements, and may increase our potential liability exposure through new or higher potential penalties, fines, investigations or litigation, including in connection with data breaches. Privacy and data protection laws and regulations are also subject to differing interpretations and may be inconsistent or conflicting across jurisdictions. These factors have increased scrutiny from customers, particularly those in the public sector and highly regulated industries and may be perceived differently from customer to customer. In addition, we may be subject to increased liability exposure or regulatory scrutiny related to the use of certain technologies associated with the collection, management or processing of data, including the use of cookies, automated AI processing, and similar technologies. These developments could reduce demand for our services, require us to take on more onerous contractual obligations, restrict our ability to store, transfer and otherwise process data or, in some cases, limit our or our customers’ ability to offer our services in certain locations, deploy our solutions, reach current or prospective customers, or derive insights from customer data on a global basis. For example, statutory damages available through a private right of action for certain data breaches under the CCPA may increase our and our customers’ potential liability exposure and the demands customers place on us.
In July 2020, the Court of Justice of the European Union (“CJEU”) invalidated the EU-U.S. Privacy Shield Framework, one of the mechanisms that previously permitted transfers of personal data from the European Economic Area (“EEA”) to the United States. Even though the CJEU decision upheld the use of Standard Contractual Clauses (“SCCs”) as a lawful transfer mechanism, the decision created ongoing uncertainty regarding EU-to-U.S. data transfers. While the EU and U.S. governments have since adopted the EU-U.S. Data Privacy Framework to facilitate such transfers and address the concerns raised by the CJEU, it remains uncertain whether this framework will withstand future legal challenges. As a result, regulators may continue to interpret the CJEU’s decision and the reasoning underlying it as significantly restricting certain cross-border data transfers increasing the cost and complexity of providing our services in certain markets. Certain countries outside of the EEA have enacted or are considering enacting laws that require varying degrees of local data residency or localization. Additionally, recent governmental actions and geopolitical developments have increased the perceived risk that our services, particularly in the EU, could be disrupted, suspended or terminated. Customers operating across jurisdictions with overlapping or conflicting data regulations may face compliance complexity that affects their adoption, use, or renewal of our services and may generate contractual demands that are difficult to standardize across our product and service offerings.
The costs of compliance with, and other burdens imposed by, privacy laws, regulations and standards may limit the use and adoption of our services, reduce overall demand for our services, make it more difficult to meet expectations from our commitments to customers and our customers’ customers, lead to significant fines, penalties or liabilities for noncompliance, impact our reputation or slow the pace at which we close sales transactions particularly where customers request specific warranties or broad indemnities for noncompliance with privacy laws, any of which could harm our business.
In addition to government activity, privacy advocates and industry groups have established or may establish new self-regulatory standards or voluntary certification requirements that customers may expect us to meet. If we are unable to maintain required certifications or comply with such standards, our ability to provide our services to certain customers could be adversely affected. We have also observed increased private enforcement of data protection obligations, including through private actions for alleged noncompliance, which could result in litigation, harm to our business, reputational harm or liability. For example, in 2020 we were named as a defendant in a legal proceeding brought by a Dutch privacy advocacy group (the Privacy Collective) on behalf of certain Dutch citizens alleging violations of the GDPR and Dutch Telecommunications Act. Although the claims were initially dismissed, that decision was later reversed on appeal, and that matter remains pending before the Dutch Supreme Court. Although we believe we have strong defenses in these or similar matters, current or future claims of this nature could cause reputational harm or liability. In addition, a shift in consumers’ data privacy expectations or other social, economic or political developments could impact regulatory enforcement priorities, require our cooperation with regulators and increase the cost of compliance with applicable privacy regulations.
59
Furthermore, the uncertain and evolving regulatory environment and broader trust climate may heighten concerns regarding data privacy, cybersecurity, and AI, particularly where advanced analytics or automated functionality is involved, which could cause our customers or their end users to limit the data they provide or their use of our products and services. Even the perception that personal data is not adequately protected or that our products or services do not comply with applicable regulatory requirements could inhibit sales, reduce adoption of our offerings or otherwise adversely affect our business.
Industry-specific regulations and other requirements and standards are evolving and industry-specific laws, regulations, interpretive positions or standards could harm our business.
Our customers and potential customers conduct business in a variety of industries, including financial services, the public sector, healthcare and telecommunications. Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing, AI services and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit our customers’ use and adoption of our services and reduce overall demand for our services. Compliance with these regulations may also require us to devote greater resources to support certain customers, which may increase costs and lengthen sales cycles. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our services where required, our business may be harmed. In addition, an inability to satisfy the standards of certain voluntary third-party certification bodies that our customers may expect may have an adverse impact on our business and results. Any inability in the future to achieve or maintain industry-specific certifications or other requirements or standards relevant to our customers may harm our business and adversely affect our results.
Further, in some cases, industry-specific, regionally-specific or product-specific laws, regulations or interpretive positions may impact our ability, as well as the ability of our customers, partners and data providers, to collect, augment, analyze, use, transfer and share personal and other information that is integral to certain services we provide. The interpretation of many of these statutes, regulations and rulings is evolving in the courts and administrative agencies and an inability to comply may have an adverse impact on our business and results. This impact may be particularly acute in countries that have passed or are considering passing legislation that requires data to remain localized “in country,” as this may impose financial costs on companies required to store data in jurisdictions not of their choosing and to use nonstandard operational processes that add complexity and are difficult and costly to integrate with global processes. This is also true with respect to the global proliferation of laws regulating the financial services industry, including its use of cloud services. In Europe, the Digital Operational Resilience Act (“DORA”) aims to ensure the resilience of the EU financial sectors, including through mandatory risk management, incident reporting, resilience testing and third-party outsourcing restrictions. The UK has implemented similar legislation and other countries may follow.
Further, jurisdictions are increasingly applying existing data privacy, consumer protection and other laws to AI, including emerging AI technologies such as generative AI. Additionally, AI-specific legal frameworks, such as the EU AI Act, the Utah Artificial Intelligence Policy Act, Colorado'’s law governing the use of automated decision-making technology (SB 26-189), the Texas Responsible Artificial Intelligence Governance Act, regulations issued under the CCPA governing automated decision-making technology, and similar laws and regulations that have passed, gone into effect or are being considered in other jurisdictions, can impose obligations on us or third-party providers on which we rely. As these laws and regulations are implemented, interpreted and enforced, they may impose new or additional compliance obligations or restrictions on our products, services or business practices, and requirements may vary or conflict across jurisdictions. Any failure, or perceived failure, by us to comply with applicable AI-related legal requirements could have an adverse impact on our business. Data privacy and other related regulations may also seek to impose additional direct security and enforcement obligations on us as a service provider or potentially require us to mandate specific security configurations for our customers. These requirements may impact the flexibility of our service offerings, increase our operational oversight costs, and potentially subject us to administrative sanctions.
There are also various statutes, regulations and regulatory rulings governing direct email marketing and text messaging, including the Telephone Consumer Protection Act (“TCPA”) and related Federal Communication Commission orders, which impose significant restrictions on the use of telephone calls and text messages to mobile telephone numbers without prior consent. We have been, and may in the future be, subject to class action and individual lawsuits alleging that one of our businesses or customers violated the TCPA or similar communications-based laws. A determination that we or our customers failed to comply with such requirements could expose us to significant statutory damages or other liabilities that could, individually or in the aggregate, materially harm our business. In addition, many jurisdictions across the world are considering, or have begun implementing, changes to antitrust and competition laws, regulations or interpretative positions intended to enhance competition in digital markets or address practices perceived to be anticompetitive. These developments may result in new or expanded legal or regulatory obligations that require changes to our business practices, increased compliance costs, or other measures that could adversely affect our business and operating results.
60
We have been and may in the future be sued by third parties for various claims, including alleged infringement of proprietary rights.
We are involved in various legal matters arising from the normal course of business activities. These include claims, suits, government investigations and other proceedings involving alleged infringement of third-party patents and other intellectual property rights, as well as commercial, corporate and securities, labor and employment, class actions, wage and hour, antitrust, data privacy, cybersecurity and other matters.
The software and Internet industries are characterized by the existence of many patents, trademarks, trade secrets and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. We have received in the past and may receive in the future communications from third parties, including practicing entities and non-practicing entities, claiming that we have infringed their intellectual property rights. We have also been, and may in the future be, sued by third parties for alleged infringement of their claimed proprietary rights. Our technologies may be subject to injunction if they are found to infringe the rights of a third party or we may be required to pay damages, or both. Further, many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim.
In addition, we have in the past been, and may in the future be, sued by third parties who seek to target us for actions taken by our customers, including through the use or misuse of our products. For example, we are subject to allegations in legal proceedings that we should be liable for the use of certain of our products by third parties. Although we believe we have a strong defense for these claims, such claims could result in liability and, regardless of outcome, could cause reputational harm to our brand or be costly to defend.
Our exposure to risks associated with various claims may be increased as a result of acquisitions of other companies. For example, we are subject to ongoing securities class action litigation and related stockholder derivative claims brought against Slack that remain outstanding, and as to which we may ultimately be subject to liability or settlement costs. Additionally, we may have a lower level of visibility into the development process with respect to intellectual property or the care taken to safeguard against infringement risks with respect to acquired companies or technologies. In addition, third parties have made claims in connection with our acquisitions and may do so in the future, and they may also make infringement and similar or related claims after we have acquired technology that had not been asserted prior to our acquisition.
The outcome of any claims or litigation, regardless of the merits, is inherently uncertain. Any claims or lawsuits, and the disposition of such claims and lawsuits, whether through settlement or licensing discussions, or litigation, could be time-consuming and expensive to resolve, divert management attention from executing our business plan, result in efforts to enjoin our activities, lead to attempts on the part of other parties to pursue similar claims and, in the case of intellectual property claims, require us to change our technology, change our business practices, pay monetary damages or enter into short- or long-term royalty or licensing agreements.
Any adverse determination or settlement could prevent us from offering our services to others, could be material to our financial condition or cash flows, or both, or could otherwise adversely affect our current or future operating results, including our results of operations or cash flows in a particular period.
Any failure to obtain registration or protection of our intellectual property rights could impair our ability to protect our proprietary technology and our brand, causing us to incur significant expenses and harm our business.
If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology, affecting our brand, causing us to incur significant expenses and harming our business. Any of our patents, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. While we have many U.S. patents and pending U.S. and international patent applications, we may be unable to obtain patent protection for the technology covered in our patent applications or the patent protection may not be obtained quickly enough to meet our business needs. In addition, our existing patents and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties. Similar uncertainty applies to our U.S. and international trademark registrations and applications. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain, and we also may face proposals to change the scope of protection for some intellectual property rights in the U.S. and elsewhere. Additionally, the intellectual property ownership and license rights, including copyright, surrounding AI technologies, which we are increasingly building into our product offerings, has not been fully addressed by U.S. courts or other federal or state laws or regulations, and some U.S. governmental entities and courts have expressed the view that U.S. copyright and patent protection should be limited to protecting inventions and works of authorship created by humans. If this position becomes widely accepted, intellectual property ownership and license rights, including copyright, may be limited, or not available at all, for inventions or works developed in part or wholly by AI technologies. Furthermore, the use or adoption of AI technologies in our products and services may expose us to copyright infringement or other intellectual property misappropriation claims related to AI training or output. Effective patent, trademark, copyright and trade secret protection may not be available to us in every country in which our services are available and legal changes and
61
uncertainty in various countries’ intellectual property regimes may result in making conduct that we believe is lawful to be deemed violative of others’ rights. The laws of some foreign countries may not be as protective of intellectual property rights as those in the U.S., and mechanisms for enforcement of intellectual property rights may be inadequate. Also, our involvement in standard-setting activity, our contribution to open source projects, various competition law regimes or the need to obtain licenses from others may require us to license our intellectual property in certain circumstances. Accordingly, despite our efforts, we may be unable to prevent third parties from using our intellectual property.
We may be required to spend significant resources and expense to monitor and protect our intellectual property rights. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. If we fail to protect our intellectual property rights, it could impact our ability to protect our technology and brand. Furthermore, any litigation, whether or not it is resolved in our favor, could result in significant expense to us, cause us to divert time and resources from our core business, and harm our business.
We may be subject to risks related to government contracts and related procurement regulations.
Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could adversely affect our business and operating results. Contracting with federal, state, local and foreign governments or state-owned entities subjects us to various regulations and other requirements relating to these contracts’ formation, administration and performance, as well as broader compliance obligations regarding our corporate activities and how we engage with government officials. Government contracts may also at times be modified or terminated for convenience. We are from time to time subject to audits, inquiries and investigations relating to our government contracts, which may result in adverse perceptions of our business, reductions in utilization of our services or termination of our contracts without cause and at any time. Additionally, any violations could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refunding or suspending of payments, forfeiture of profits, payment of fines and suspension or debarment from future government business, as well as reputational harm. Additionally, our relationships with certain government entities may result in negative publicity or reputational harm. Furthermore, pressures on and uncertainty regarding the U.S. federal government’s budget and potential changes in budgetary priorities could adversely affect the funding for and purchases of our services by government organizations. The occurrence of any of the foregoing could adversely impact our future sales, costs of doing business and operating results.
We may be subject to risks from governmental sanctions and export and import controls that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.
Our solutions are subject to trade control laws and regulations where we conduct our business activities, including the U.S. Commerce Department’s Export Administration Regulations, U.S. customs regulations, U.S. supply chain regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. If we fail to comply with applicable trade control laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of trade privileges; fines, which may be imposed on us and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers. Obtaining necessary authorizations, including any required licenses, may be time-consuming, requires expenditure of corporate resources, is not guaranteed, and may result in the delay or loss of sales opportunities or the ability to realize value from certain acquisitions or engagements. Acquisitions may also subject us to successor liability and other integration compliance risks. Furthermore, export control and economic sanctions laws and regulations may prohibit or limit the transfer of certain products and services to embargoed or sanctioned countries, governments and parties. We can provide no assurance that any of the precautions we take to prevent our solutions from being provisioned or provided to sanctions targets in violation of applicable regulations will be effective, and, accordingly, our solutions could be provisioned or provided to those targets, including by our resellers or other third parties, which could have negative consequences for our business, including government investigations, penalties and reputational harm. Changes in our solutions or trade control laws and regulations may create delays in the introduction, sale and deployment of our solutions in international markets or prevent the export or import of our solutions to certain countries, governments or persons altogether. Any decreased use of our solutions or limitation on our ability to export or sell our solutions may adversely affect our business, financial condition and results of operations. Sanctions and export and import control regulations in the United States and other countries are subject to change and uncertainty, including as a result of tariff policy changes, rapidly evolving technology, increased government regulation of AI and cloud service solutions, and geopolitical developments such as events affecting relations between the United States and China, multi-jurisdictional sanctions on Russia, the war in Ukraine and conflicts in the Middle East. Regulators in the United States and elsewhere have signaled an increased emphasis on sanctions and export control enforcement, including efforts to combat diversion of services to sanctioned countries and parties, several recent high-profile enforcement actions and increased pressure for companies to self-disclose potential violations.
62
Financial Risks
Because we generally recognize revenue from subscriptions for our services over the term of the subscription, downturns or upturns in new business may not be immediately reflected in our operating results.
We generally recognize revenue from customers ratably over the terms of their subscription and support agreements, which are typically 12 to 36 months. As a result, most of the revenue we report in each quarter is the result of subscription and support agreements entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any one quarter may not be reflected in our revenue results for that quarter but will negatively impact our revenue in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of our services, and changes in our attrition rate, may not be fully reflected in our results of operations until future periods. Our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription and support term.
If we experience significant fluctuations in our rate of anticipated growth and fail to balance our expenses with our revenue forecasts, our business could be harmed and our stock price could decline.
Due to the unpredictability of future general economic and financial market conditions, we may not be able to realize our projected revenue growth plans. We plan our expense and investment levels based on estimates of future revenue and future anticipated rate of growth. We may not be able to adjust our spending appropriately if the addition of new subscriptions or the renewals of existing subscriptions fall short of our expectations, and unanticipated events may cause us to incur expenses beyond what we anticipated. A portion of our expenses may also be fixed in nature for some minimum amount of time, such as with costs capitalized to obtain revenue contracts, data center and infrastructure service contracts or office leases, so it may not be possible to reduce costs in a timely manner, or at all, without the payment of fees to exit certain obligations early. Additionally, if sales through indirect channels or for consumption-based product offerings increase, this may lead to greater difficulty in forecasting revenue and anticipated rate of growth. As a result, our revenues, operating results and cash flows may fluctuate significantly on a quarterly basis and revenue growth rates may not be sustainable and may decline in the future. If we are not able to provide continued operating margin expansion, our business could be harmed and our stock price could decline.
Unanticipated changes in our effective tax rate and additional tax liabilities and global tax developments may impact our financial results.
We are subject to income taxes in the United States and various other jurisdictions. Significant judgment is often required in the determination of our worldwide provision for income taxes. Our effective tax rate could be impacted by changes in our earnings and losses in countries with differing statutory tax rates, changes in operations, changes in non-deductible expenses, changes in the tax effects of stock-based compensation expense, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability of withholding taxes, effects from acquisitions and changes in accounting principles and tax laws. Any changes, ambiguity or uncertainty in taxing jurisdictions’ administrative interpretations, decisions, policies and positions could also materially impact our income tax liabilities. For example, as a result of the One Big Beautiful Bill Act (“OBBBA”), we could be subject to Corporate Alternative Minimum Tax (“CAMT”). Our tax provision may be adversely impacted to the extent additional clarification or interpretive guidance related to the OBBBA is released, or if there are changes to our valuation allowance assessment related to CAMT.
We may also be subject to additional tax liabilities and penalties due to changes in non-income based taxes resulting from changes in federal, state, local or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies and positions, results of tax examinations, settlements or judicial decisions, changes in accounting principles, or changes to our business operations, including as a result of acquisitions. Any resulting increase in our tax obligation or cash taxes paid could adversely affect our cash flows and financial results.
We are also subject to tax examinations or engaged in alternative resolutions in multiple jurisdictions. While we regularly evaluate new information that may change our judgment resulting in recognition, derecognition or changes in measurement of a tax position taken, there can be no assurance that the final determination of any examinations will not have an adverse effect on our operating results or financial position.
As our business continues to grow, increasing our brand recognition and profitability, we may be subject to increased scrutiny and corresponding tax disputes, which may impact our cash flows and financial results. Furthermore, our growing prominence may bring public attention to our tax profile, and if perceived negatively, may cause brand or reputational harm.
Global tax developments may have a material impact on our business, cash flows, or financial results. For example, heightened interest in multinationals participating in the digital economy led many countries to adopt Pillar Two, a 15% corporate minimum tax proposed by the Organization for Economic Cooperation and Development (“OECD”). In January 2026, the OECD introduced new guidance including a "side-by-side safe harbor" which, if elected, exempts U.S. parented groups from certain provisions of Pillar Two. However, the election does not relieve foreign subsidiaries from certain jurisdiction specific minimum taxes. The guidance will need to be incorporated into local tax legislation to be effective.
63
We are exposed to fluctuations in currency exchange rates that have in the past and could in the future negatively impact our financial results and cash flows from changes in the value of the U.S. Dollar versus local currencies.
We primarily conduct our business in the following regions: the Americas, Europe and Asia Pacific. The expanding global scope of our business exposes us to risk of fluctuations in foreign currency markets, including in emerging markets. This exposure is the result of selling in multiple currencies, growth in our international investments, additional headcount in foreign locations, and operating in countries where the functional currency is the local currency. Specifically, our results of operations and cash flows are subject to currency fluctuations primarily in Euro, British Pound Sterling, Japanese Yen, Canadian Dollar, Australian Dollar, Brazilian Real and Indian Rupee against the U.S. Dollar. These exposures may change over time as business practices evolve, economic and political conditions change and evolving tax regulations come into effect. The fluctuations of currencies in which we conduct business can both increase and decrease our overall revenue and expenses for any given fiscal period. Furthermore, fluctuations in foreign currency exchange rates, combined with the seasonality of our business, could affect our ability to accurately predict our future results and earnings.
Additionally, global events as well as geopolitical developments, including the war in Ukraine and conflicts in the Middle East, fluctuating commodity prices, uncertainty regarding changes in trade policy and inflation, have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which has and could in the future amplify the volatility of currency fluctuations. We attempt to mitigate some of this volatility by using derivative instruments, such as foreign currency forward contracts, to hedge exposures to changes in foreign currency exchange rates. Our hedging activities are limited in scope and may not effectively offset the adverse financial impacts that may result from unfavorable movements in foreign currency exchange rates, which could adversely impact our financial condition or results of operations.
Our debt service obligations, lease commitments and other contractual obligations may adversely affect our financial condition, results of operations and cash flows.
As of July 31, 2026, we had a substantial level of outstanding debt, including our Senior Notes. We are also party to the Revolving Loan Credit Agreement, which provides for our $5.0 billion Credit Facility, as well as the 2026 Term Loan Credit Agreement. Although there were no outstanding borrowings under the Credit Facility as of July 31, 2026, we may use the proceeds of future borrowings under the Credit Facility for general corporate purposes. In March 2026, we borrowed $6.0 billion under the 2026 Term Loan Credit Agreement to repay in full the outstanding principal under the Informatica Credit Agreements and to pay related fees and expenses. In March 2026, we also issued the March 2026 Notes with an aggregate principal amount of $25.0 billion, with maturities ranging from 2028 to 2066. We used the net proceeds from the March 2026 Notes to fund an accelerated share repurchase program of our common stock.
In addition to the outstanding and potential debt obligations above, we have also recorded substantial liabilities associated with noncancellable future payments on our long-term lease agreements. We also have significant other contractual commitments, including leases that have not yet commenced and commitments with infrastructure service providers, which are not reflected on our condensed consolidated balance sheets. Additionally, under the ASR Agreements, volatility in our stock price may obligate us to deliver shares of our common stock or make a cash payment to the counterparty upon final settlement.
Maintenance of our indebtedness and contractual commitments and any additional issuances of indebtedness could:
•impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes;
•cause us to dedicate a substantial portion of our cash flows from operations toward debt service obligations and principal repayments; and
•make us more vulnerable to downturns in our business, our industry or the economy in general.
Our ability to meet our expense and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors. We will not be able to control many of these factors, such as economic conditions and governmental regulations. Further, our operations may not generate sufficient cash to enable us to service our debt or contractual obligations resulting from our leases. If we fail to make a payment on our debt, we could be in default on such debt. If we are at any time unable to generate sufficient cash flows from operations to service our indebtedness when payment is due, we may be required to attempt to renegotiate the terms of the instruments relating to the indebtedness, seek to refinance all or a portion of the indebtedness or obtain additional financing. There can be no assurance that we would be able to successfully renegotiate such terms, that any such refinancing would be possible or that any additional financing could be obtained on terms that are favorable or acceptable to us. Any new or refinanced debt may be subject to substantially higher interest rates, which could adversely affect our financial condition and impact our business.
In addition, adverse changes by any rating agency to our credit ratings may negatively impact our reputation, the value and liquidity of both our debt and equity securities, as well as the potential costs associated with a refinancing of our debt. Downgrades in our credit ratings could also affect the terms of any such refinancing or future financing or restrict our ability to obtain additional financing in the future.
64
The indentures governing our Senior Notes and the Revolving Loan Credit Agreement impose restrictions on us and require us to maintain compliance with specified covenants. Our ability to comply with these covenants may be affected by events beyond our control. A failure to comply with the covenants and other provisions of our outstanding debt could result in events of default under such instruments, which could permit acceleration of all of our debt and borrowings. Any required repayment of our debt as a result of a fundamental change or other acceleration would lower our current cash on our balance sheet such that we would not have those funds available for use in our business.
Lease accounting guidance requires that we record a liability for operating lease activity on our condensed consolidated balance sheet, which increases both our assets and liabilities and therefore may impact our ability to obtain the necessary financing from financial institutions at commercially viable rates or at all. Our lease terms may include options to extend or terminate the lease. Periods beyond the noncancellable term of the lease are included in the measurement of the lease liability and associated asset only when it is reasonably certain that we will exercise the associated extension option or waive the termination option. We reassess the lease term if and when a significant event or change in circumstances occurs within our control. The potential impact of these options to extend could be material to our financial position and financial results.
Risks Related to Owning Our Common Stock
Our quarterly results are likely to fluctuate, which may cause the value of our common stock to decline substantially.
Our quarterly results have fluctuated, and are likely to fluctuate in the future, as a result of a number of known and unknown factors, including: the factors described in this Part II, Item 1A of this Quarterly Report; the cyclical nature and seasonality of our sales cycle and our customers’ businesses, especially our Commerce service offering customers; the global economic impact of geopolitical events, including ongoing conflicts and uncertainty about the interest rate environment; the timing of contract execution and term software license sales; the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business; the timing of commission, bonus and other compensation payments to employees; expenses related to our real estate or changes in the nature or extent of our use of existing real estate, including our office leases and data centers; expenses related to significant, unusual or discrete events, which are recorded in the period in which the events occur, including litigation or other dispute-related settlement payments; and equity or debt issuances, including as consideration in or in conjunction with acquisitions. In addition, our fiscal fourth quarter has historically been our strongest quarter for new business and renewals, and the year-over-year compounding effect of this seasonality in billing patterns and overall new business and renewal activity causes the value of invoices that we generate in the fourth quarter to continually increase in proportion to our billings in the other three quarters of our fiscal year. As a result, our fiscal first quarter has typically been our largest collections and operating cash flow quarter. Many of these factors are outside of our control, and the occurrence of one or more of them might negatively and materially impact our operating results.
Our stock price is likely to be volatile and could subject us to litigation.
The stock market in general, and the market for technology companies in particular, has historically been highly volatile. Accordingly, our stock price has been and is likely to continue to be subject to wide fluctuations. Our stock price could be affected by many factors, some of which are beyond our control, including: the factors described in this Part II, Item 1A of this Quarterly Report; announcements or rumors by us or our competitors regarding technological innovations, new services or service enhancements, strategic alliances, mergers, other strategic acquisitions or significant agreements, customer additions, customer cancellations or delays in customer purchases; investor sentiment regarding AI-related business models, our competitors, and our industry in general; variations in our financial results and how those results compare to analyst expectations; changes to guidance or long-range targets, in the estimates of our operating results or in recommendations by securities analysts that follow our stock; variations in investors’ or analysts’ valuation metrics and modeling for our business; the issuance of, changes to, or our ability to meet or exceed, our forward-looking guidance and long-range targets, estimates or recommendations by analysts, or expectations of investors, analysts or others; the coverage of our business in the press, social media, and analyst community; the economy as a whole, geopolitical conditions, including global trade and health concerns, market conditions in our and our customers’ industries, and financial institution instability; trading activity by our stockholders, including institutional or activist investors; changes in the amounts and frequency of share repurchases or dividends; issuance of equity, debt or other convertible securities; changes to our credit ratings; and issues impacting our brand and reputation.
Some companies that have experienced volatility in their stock price have been the subject of securities class action litigation, such as the securities litigation brought against Slack before our acquisition. Such litigation, whether against us or an acquired subsidiary, could result in substantial costs and a diversion of management’s attention and resources and any liability resulting from or the settlement of such litigation could result in material adverse impacts to our operating cash flows or results of operations for a given period.
65
Provisions in our governing documents and Delaware law might discourage, delay or prevent a change of control of the Company or changes in our management and, therefore, depress our stock price.
Our certificate of incorporation and bylaws contain provisions that could depress our stock price by acting to discourage, delay or prevent a change in control of the Company or changes in our management that our stockholders may deem advantageous. These provisions among other things:
•permit the Board to establish the number of directors;
•authorize the issuance of “blank check” preferred stock that our Board could use to implement a stockholder rights plan (also known as a “poison pill”);
•prohibit stockholder action by written consent, requiring all stockholder actions to be taken at a stockholder meeting;
•permit the Board to make, alter or repeal our bylaws; and
•establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and holders of 15 percent or more of our common stock.
There can be no assurance that we will continue to declare cash dividends in any particular amounts, or at all.
Whether we continue to pay cash dividends, as well as the rate at which we pay cash dividends, in the future is subject to continued capital availability, general economic and market conditions, applicable laws and agreements and our Board continuing to determine that the declaration of dividends is in the best interests of the Company and its stockholders. The declaration and payment of any dividend may be discontinued at any time and dividend amounts may be reduced at any time. A discontinuation of or reduction in our dividend payments could have a negative effect on our stock price.
General Risks
Volatile and significantly weakened global economic conditions have in the past and may in the future adversely affect our industry, business and results of operations.
Our overall performance depends in part on worldwide economic and geopolitical conditions. The United States and other key international economies have experienced significant economic and market downturns in the past, and are likely to experience additional cyclical downturns from time to time in which economic activity is impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, inflation, bankruptcies and overall uncertainty with respect to the economy. These economic conditions can arise suddenly and the full impact of such conditions can be difficult to predict. In addition, geopolitical and domestic political developments, such as uncertainty regarding changes in trade policy, including the threat or imposition of tariffs or other trade restrictions and related retaliatory actions, as well as other events beyond our control, such as war in Ukraine and conflicts in the Middle East, have increased and may continue to increase levels of political and economic unpredictability globally and the volatility of global financial markets. Moreover, these conditions have affected and may continue to affect the rate of IT spending; could adversely affect our customers’ ability or willingness to attend our events or to purchase our enterprise cloud computing services; have delayed and may delay customer purchasing decisions; and have reduced and may in the future reduce the value and duration of customer subscription contracts or cause our customers to seek to modify their existing subscription contracts. All of these risks and conditions could materially adversely affect our future sales, attrition rates and operating results.
Geopolitical crises, natural disasters and other catastrophic events beyond our control have in the past and may in the future materially adversely affect us.
Geopolitical crises, natural disasters or other catastrophic events have in the past and may in the future cause damage or disruption to our people, operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations, as well as the business operations of our customers and third-party providers or suppliers that we rely on, are subject to interruption or disruption by geopolitical crises (including tensions between governments of markets where we operate), natural disasters, fire, power or water shutoffs or shortages, telecommunications failures, terrorist attacks, acts of violence, political and/or civil unrest, acts of war or other military actions, actual or threatened public health emergencies and other events beyond our control. For example, the occurrence of regional conflicts, epidemics or a global pandemic have in the past and may in the future materially affect how we and our customers operate our businesses, as well as our operating results and cash flows. Although we maintain crisis management and disaster response plans, if such catastrophic events occur it could make it difficult or impossible for us to deliver our services to our customers or negatively impact demand for our services, which could materially and adversely affect our financial condition and operating results.
66
Climate change may have an impact on our business.
While we seek to mitigate our business risks associated with climate change by establishing appropriate environmental programs and partnering with organizations who are focused on mitigating their own climate-related risks, there are inherent climate-related risks to our business. In particular, increased energy consumption, including as a result of AI-related growth, climate-related events, energy market volatility, and power grid disruptions, may increase the operational costs related to inputs across our value chain, including for data centers. Any of our primary locations may be vulnerable to the adverse effects of climate change. For example, our offices globally are projected to continue to experience climate-related events at increased frequency, including drought, water scarcity, heat waves, cold waves, flooding, wildfires and resultant air quality impacts and power shutoffs. These events in turn have impacts on inflation risks, the cost and availability of insurance, food security, water security (including for water availability for data center cooling), energy security and on our employees’ health, productivity and well-being. Changing market dynamics, global policy developments and the increasing frequency and impact of extreme weather events on critical infrastructure have the potential to disrupt our business, as well as the business of the companies we invest in, third-party providers or suppliers that we rely on, and our customers, and may cause us to experience higher attrition, losses and additional costs to maintain or resume operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
In connection with acquisitions made during the three months ended July 31, 2026, the Company issued 31,429 shares of its common stock on July 1, 2026. These issuances were made in reliance on one or more of the following exemptions or exclusions from the registration requirements of the Securities Act: Section 4(a)(2) of the Securities Act, Regulation D promulgated under the Securities Act and Regulation S promulgated under the Securities Act.
Issuer Purchases of Equity Securities
Share repurchases of the Company’s common stock for the three months ended July 31, 2026 were as follows (in millions, except for average price paid per share):
| Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (2) | ||||||||||
| May 2026 | 0 | $— | 0 | $22,855 | ||||||||||
| June 2026 | 0 | — | 0 | $22,855 | ||||||||||
| July 2026 | 0 | — | 0 | $22,855 | ||||||||||
| Total | 0 | 0 | ||||||||||||
(1) The Board authorized the Share Repurchase Program, which commenced in fiscal 2023. In February 2026, the Board authorized $50.0 billion in share repurchases under the Share Repurchase Program that replaced the previous remaining unpurchased authorization. The Share Repurchase Program does not have a fixed expiration date and does not obligate the Company to acquire any specific number of shares. Under the Share Repurchase Program, shares of common stock may be repurchased using a variety of methods, including privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, as part of accelerated share repurchases and other methods. The timing, manner, price and amount of any repurchases are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions. Any repurchases disclosed in the table were made pursuant to the publicly announced Share Repurchase Program.
(2) The remaining authorized amount under the Share Repurchase Program was reduced by the full $25.0 billion in up-front payments made as part of the March 2026 accelerated share repurchase.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
67
ITEM 5. OTHER INFORMATION
During the three months ended July 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption termination
ITEM 6. EXHIBITS
The documents listed in the Index to Exhibits of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).
Index to Exhibits
| Exhibit No. | Provided Herewith | Incorporated by Reference | ||||||||||||||||||||||||||||||||||||
| Exhibit Description | Form | SEC File No. | Exhibit | Filing Date | ||||||||||||||||||||||||||||||||||
| 3.1 | 8-K | 001-32224 | 3.2 | 7/1/2024 | ||||||||||||||||||||||||||||||||||
| 3.2 | 8-K | 001-32224 | 3.1 | 12/10/2024 | ||||||||||||||||||||||||||||||||||
| 10.1* | 8-K | 001-32224 | 10.1 | 6/1/2026 | ||||||||||||||||||||||||||||||||||
| 10.2* | 8-K | 001-32224 | 10.2 | 6/1/2026 | ||||||||||||||||||||||||||||||||||
| 31.1 | X | |||||||||||||||||||||||||||||||||||||
| 31.2 | X | |||||||||||||||||||||||||||||||||||||
| 32.1 | X | |||||||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document | |||||||||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Extension Definition | |||||||||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||||||||||||||
| 104 | The Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101) | |||||||||||||||||||||||||||||||||||||
| * | Indicates a management contract or compensatory plan or arrangement. | ||||
68
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: August 26, 2026 | ||||||||||||||||||||
| Salesforce, Inc. | ||||||||||||||||||||
| By: | /s/ ROBIN WASHINGTON | |||||||||||||||||||
| Robin Washington | ||||||||||||||||||||
| President and Chief Operating and Financial Officer (Principal Financial Officer) | ||||||||||||||||||||
| Dated: August 26, 2026 | ||||||||||||||||||||
| Salesforce, Inc. | ||||||||||||||||||||
| By: | /s/ GUY WANGER | |||||||||||||||||||
| Guy Wanger | ||||||||||||||||||||
| Executive Vice President and Chief Accounting Officer (Principal Accounting Officer) | ||||||||||||||||||||
69
Exhibit 31.1
CERTIFICATION
I, Marc Benioff, certify that:
1. I have reviewed this report on Form 10-Q of Salesforce, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| August 26, 2026 | /s/ MARC BENIOFF | ||||
| Marc Benioff | |||||
| Chair of the Board of Directors and Chief Executive Officer (Principal Executive Officer) | |||||
Exhibit 31.2
CERTIFICATION
I, Robin Washington, certify that:
1.I have reviewed this report on Form 10-Q of Salesforce, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| August 26, 2026 | /s/ ROBIN WASHINGTON | ||||
| Robin Washington | |||||
| President and Chief Operating and Financial Officer (Principal Financial Officer) | |||||
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING AND FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Based on my knowledge, I, Marc Benioff, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Salesforce, Inc. on Form 10-Q for the period ended July 31, 2026 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Salesforce, Inc.
| August 26, 2026 | /s/ MARC BENIOFF | ||||
| Marc Benioff | |||||
| Chair of the Board of Directors and Chief Executive Officer (Principal Executive Officer) | |||||
Based on my knowledge, I, Robin Washington, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Salesforce, Inc. on Form 10-Q for the period ended July 31, 2026 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Salesforce, Inc.
| August 26, 2026 | /s/ ROBIN WASHINGTON | ||||
| Robin Washington | |||||
| President and Chief Operating and Financial Officer (Principal Financial Officer) | |||||