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Salesforce, Inc.
Salesforce : Quarterly Report for Quarter Ending April 30, 2026 (Form 10-Q)
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Salesforce : Quarterly Report for Quarter Ending April 30, 2026 (Form 10-Q)

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 Quarter of Fiscal 2027
•Revenue: For the three months ended April 30, 2026, revenue was $11.1 billion, an increase of 13 percent year-over-year.
•Income from Operations: For the three months ended April 30, 2026, income from operations was $2.3 billion as compared to $1.9 billion from a year ago. Operating margin, which represents income from operations as a percentage
of total revenue, increased to approximately 21 percent for the three months ended April 30, 2026 compared to approximately 20 percent in the prior year period.
•Net Income per Share: For the three months ended April 30, 2026, diluted net income per share was $2.42 as compared to diluted net income per share of $1.59 from a year ago. Our $25 billion Accelerated Share Repurchase ("ASR Agreements") executed in March 2026 resulted in the repurchase of approximately 103 million shares in the period and benefitted our diluted net income per share by $0.14.
•Cash: Cash provided by operations for the three months ended April 30, 2026 was $6.7 billion, an increase of three percent year-over-year. Total cash, cash equivalents and marketable securities as of April 30, 2026 was $11.8 billion.
•Remaining Performance Obligation: Total remaining performance obligation, which represents all future revenue under contract yet to be recognized, as of April 30, 2026 was approximately $67.9 billion, an increase of 11 percent year-over-year. Current remaining performance obligation as of April 30, 2026 was approximately $33.6 billion, an increase of 14 percent year-over-year.
•Dividend Program: For the three months ended April 30, 2026, we paid approximately $365 million in dividends and dividend equivalents as compared to $402 million from a year ago.
Our diversified product portfolio and global customer base has provided us with operational resiliency across various geographies, products, and industry segments. During the first quarter of fiscal 2027, we experienced sustained growth 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 three months ended April 30, 2026 were positively impacted by approximately two percent in foreign currency fluctuations compared to the three months ended April 30, 2025. Relative to April 30, 2025, our current remaining performance obligation growth as of April 30, 2026 was positively impacted by one percent compared to what would have been reported using constant currency rates. The impact of foreign currency fluctuations could impact our near-term results and ability to accurately predict our future results and earnings. The impact of these fluctuations can also be compounded by the seasonality of our business in which our fourth quarter has historically been our strongest quarter for new business and renewals.
Fiscal Year
Our fiscal year ends on January 31. References to fiscal 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 three months ended April 30, 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 months ended April 30, 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
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 April 30, 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
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.
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):
1 Three Months Ended April 30,
2026 % of Total Revenues 2025 % of Total Revenues
Revenues:
Subscription and support $ 10,593 95 % $ 9,297 95 %
Professional services and other 540 5 532 5
Total revenues 11,133 100 9,829 100
Cost of revenues (1)(2):
Subscription and support 1,953 18 1,611 16
Professional services and other 617 5 654 7
Total cost of revenues 2,570 23 2,265 23
Gross profit 8,563 77 7,564 77
Operating expenses (1)(2):
Research and development 1,627 14 1,460 15
Sales and marketing 3,769 34 3,429 35
General and administrative 740 7 697 7
Restructuring 80 1 36 0
Total operating expenses 6,216 56 5,622 57
Income from operations 2,347 21 1,942 20
Interest expense (317) (3) (68) 0
Gains (losses) on strategic investments, net 558 5 (63) (1)
Other income 133 1 163 1
Income before provision for income taxes 2,721 24 1,974 20
Provision for income taxes (614) (5) (433) (4)
Net income $ 2,107 19 % $ 1,541 16 %
(1) Amounts related to amortization of intangible assets acquired through business combinations, as follows (in millions):
Three Months Ended April 30,
2026 % of Total Revenues 2025 % of Total Revenues
Cost of revenues $ 244 2 % $ 162 2 %
Sales and marketing 317 3 233 2
(2) Amounts related to stock-based compensation expense, as follows (in millions):
Three Months Ended April 30,
2026 % of Total Revenues 2025 % of Total Revenues
Cost of revenues $ 138 1 % $ 151 1 %
Research and development 310 3 275 3
Sales and marketing 320 3 285 3
General and administrative 102 1 88 1
Restructuring 10 0 15 0
The following table sets forth selected balance sheet data and other metrics for each of the periods indicated (in billions):
As of
April 30, 2026
January 31, 2026
Cash, cash equivalents and marketable securities $ 11.8 $ 9.6
Unearned revenue 20.4 24.3
Remaining performance obligation 67.9 72.4
Principal due on our outstanding debt obligations (1) 39.5 14.5
(1) Amounts do not include operating or financing lease obligations.
Remaining performance obligation represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods.
Impact of Acquisitions
The comparability of our operating results in the three months ended April 30, 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 months ended April 30, 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 April 30, Variance
(in millions) 2026 2025 Dollars Percent
Subscription and support $ 10,593 $ 9,297 $ 1,296 14 %
Professional services and other 540 532 8 2
Total revenues $ 11,133 $ 9,829 $ 1,304 13 %
The increase in subscription and support revenues for the three months ended April 30, 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 the period. Revenues from term software licenses, which are recognized at a point in time, represented approximately six percent of total subscription and support revenues for the three months ended April 30, 2026 and 2025. Subscription and support revenues accounted for approximately 95 percent of our total revenues for the three months ended April 30, 2026 and 2025.
The increase in professional services and other revenues for the three months ended April 30, 2026 was primarily due incremental revenue from Informatica which was partially offset by less demand for larger, multi-year transformation engagements, which may continue in the near term.
The acquisition of Informatica in November 2025 contributed approximately $444 million of total revenues in the three months ended April 30, 2026.
Subscription and Support Revenues by Service Offering
Subscription and support revenues consisted of the following (in millions):
Three Months Ended April 30,
2026 As a % of Total Subscription and Support Revenues 2025 As a % of Total Subscription and Support Revenues Growth Rate
Agentforce Apps $ 6,910 65 % $ 6,345 68 % 9 %
Data 360, Headless Platform, and Other 3,683 35 2,952 32 25
Total $ 10,593 100 % $ 9,297 100 % 14 %
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 April 30,
(in millions) 2026 As a % of Total Revenues 2025 As a % of Total Revenues Growth Rate
Americas $ 7,233 65 % $ 6,469 66 % 12 %
Europe 2,754 25 2,337 24 18
Asia Pacific 1,146 10 1,023 10 12
Total $ 11,133 100 % $ 9,829 100 % 13 %
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. Foreign currency positively impacted the year over year fluctuations in revenue by approximately two percent.
Cost of Revenues
Three Months Ended April 30, Variance
Dollars
(in millions) 2026 As a % of Total Revenues 2025
As a % of Total Revenues
Subscription and support $ 1,953 18 % $ 1,611 16 % $ 342
Professional services and other 617 5 654 7 (37)
Total cost of revenues $ 2,570 23 % $ 2,265 23 % $ 305
For the three months ended April 30, 2026, the increase in cost of revenues in absolute dollars was primarily due to an increase in service delivery expenses and amortization of purchased intangibles, primarily associated with our acquisition of Informatica. Total cost of revenues as a percentage of total revenues during the three months ended April 30, 2026 was consistent with the same period a year ago.
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 April 30, Variance
Dollars
(in millions) 2026 As a % of Total Revenues 2025 As a % of Total Revenues
Research and development $ 1,627 14 % $ 1,460 15 % $ 167
Sales and marketing 3,769 34 3,429 35 340
General and administrative 740 7 697 7 43
Restructuring 80 1 36 0 44
Total operating expenses $ 6,216 56 % $ 5,622 57 % $ 594
For the three months ended April 30, 2026, the increase in research and development expenses in absolute dollars was primarily due to an increase in employee-related costs, including stock-based compensation expense. Research and development expenses as a percentage of total revenues during the three months ended April 30, 2026 decreased by one percent from the same period a year ago due to our total revenues growth outpacing our research and development expenses growth.
We expect 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 Informatica. Efficiencies realized from the rapid deployment of generative AI technologies will be reinvested to accelerate our product roadmap.
For the three months ended April 30, 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 increased amortization of purchased intangibles, primarily associated with our acquisition of Informatica. Sales and marketing expenses as a percentage of total revenues during the three months ended April 30, 2026 decreased by one percent from the same period a year ago due to our total revenues growth outpacing our sales and marketing expenses growth.
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.
For the three months ended April 30, 2026, the increase in general and administrative expenses in absolute dollars was primarily due to an increase in employee-related costs, including stock-based compensation expense. General and administrative expenses as a percentage of total revenues during the three months ended April 30, 2026 was consistent with 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 months ended April 30, 2026, approximately $80 million of costs were incurred related to our restructuring initiatives, which was 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 Expenses
Three Months Ended April 30, Variance
Dollars
(in millions) 2026 2025
Interest expense (317) (68) (249)
Gains (losses) on strategic investments, net $ 558 $ (63) $ 621
Other income 133 163 (30)
Interest expense primarily relates to our debt as well as our finance leases. Interest expense increased during the three months ended April 30, 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 April 30, 2026, the net gain on our strategic investment portfolio was primarily driven by realized gains on privately held equity investments of $350 million and unrealized gains on privately held equity investments of $328 million, partially offset by impairments on privately held investments of $119 million. The realized gains in the period were primarily comprised of a $268 million gain resulting from the exit of a privately held equity investment. The unrealized gains in the period were primarily comprised of a $268 million mark-to-market gain from one privately held equity investment.
Other income primarily consists of interest income on our marketable securities portfolio. Other income decreased during the three months ended April 30, 2026, primarily due to a decrease in investment income from lower interest rates.
Provision For Income Taxes
Three Months Ended April 30, Variance
Dollars
(in millions) 2026 2025
Provision for income taxes $ (614) $ (433) $ (181)
Effective tax rate 23 % 22 %
We recorded a tax provision of $614 million on pretax income of $2.7 billion for the three months ended April 30, 2026. Our effective tax rate 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, or 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 April 30, 2026, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $11.8 billion and accounts receivable of $5.1 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 April 30, 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 months ended April 30, 2026 and 2025, our cash flows were as follows (in millions):
1 Three Months Ended April 30,
2026 2025
Net cash provided by operating activities $ 6,701 $ 6,476
Net cash used in investing activities (2,183) (1,567)
Net cash used in financing activities (2,921) (2,920)
Operating Activities
The net cash provided by operating activities during the three months ended April 30, 2026 was primarily comprised of net income of $2.1 billion, adjusted for non-cash items, including $985 million of depreciation and amortization and $857 million 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 three months ended April 30, 2026 was further benefited by the change in accounts receivable, net of $9.4 billion partially offset by the changes in unearned revenue of $4.0 billion and accounts payable and accrued expenses and other liabilities of $1.9 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 three months ended April 30, 2025 was primarily comprised of net income of $1.5 billion, adjusted for non-cash items, including $843 million of depreciation and amortization and $814 million of stock-based compensation expense. Net cash provided by operating activities during the three months ended April 30, 2025 was further benefited by the changes in accounts receivable, net of $7.6 billion, partially offset by the change in unearned revenue of $2.9 billion and the change in accounts payable and accrued expenses and other liabilities of $1.0 billion.
Investing Activities
The net cash used in investing activities during the three months ended April 30, 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 $676 million and capital expenditures of $145 million, partially offset by net inflows from strategic investment activity of $90 million.
The net cash used in investing activities during the three months ended April 30, 2025 was primarily related to net outflows from marketable securities activity of $1.2 billion, net outflows from strategic investment activity of $143 million and capital expenditures of $179 million.
Financing Activities
The net cash used in financing activities during the three months ended April 30, 2026 was primarily related to proceeds from the issuance of debt, net of issuance costs of $24.8 billion and proceeds from equity plans of $230 million partially offset by repurchases of common stock of $27.2 billion, which includes our March 2026 accelerated share repurchase, and payments of dividends and equivalents of $365 million.
The net cash used in financing activities during the three months ended April 30, 2025 was primarily related to $2.6 billion used for repurchases of common stock and $402 million related to payments of dividends, partially offset by $294 million of proceeds from equity plans.
Debt
As of April 30, 2026, we had senior unsecured debt 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 April 30, 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 April 30, 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 April 30, 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 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 second half of fiscal 2027.
Excluding the repurchases made under the ASR Agreements, 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
As of April 30, 2026, we were authorized to purchase a remaining $22.9 billion of the Company's common stock under the Share Repurchase Program. Subsequent to April 30, 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)
Three months ended April 30, 2026 April 9, 2026 April 23, 2026 $ 0.440 $ 374
Three months ended April 30, 2025 April 10, 2025 April 24, 2025 $ 0.416 $ 406
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 April 30, 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 April 30, 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.
During the three months ended April 30, 2026 and in future years, we have made, and expect to continue to make, additional investments in enterprise cloud computing services to allow us to scale with our customers and continue to evolve our security measures. We plan to upgrade or replace various internal systems to scale with our overall growth. While we continue to make investments in our infrastructure service providers to provide capacity for the growth of our business, our strategy may continue to change related to these investments and we may slow the pace of our investments.
Other Future Obligations
As of April 30, 2026, we expect approximately $130 million to $150 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.
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.