EPS of $1.47 increased by 13.9% from previous year
Gross margin of 76.8%
Net income of 1.43B
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Salesforce Inc (CRM.NE) QQ2 2025 Results — Robust Revenue Growth, Solid Margins, and Prudent Capital Allocation
Executive Summary
Salesforce reported solid second quarter results for QQ2 2025, underscoring continued demand for its AI-enhanced CRM platform and a healthy revenue trajectory. Revenue of $9.325 billion represented YoY growth of 8.39% and QoQ growth of 2.10%, with a robust gross margin of 76.85% and an operating margin of 19.12% (expense discipline supports profitability given ongoing R&D and SG&A investments). Net income of $1.429 billion and diluted EPS of $1.47 reflect continued earnings power as the company monetizes its expanding product stack.
Cash flow remained constructive, with operating cash flow of $0.892 billion and free cash flow of $0.755 billion. The balance sheet remains well-capitalized, with cash and short-term investments totaling $12.636 billion and a total equity base of $57.633 billion. Deferred revenue sits at $15.222 billion, signaling revenue visibility and platform stickiness. Offsetting growth, Salesforce carries a sizable goodwill balance (~$48.94 billion) tied to past acquisitions, which warrants ongoing monitoring for impairment risk if growth slows. Share repurchases and dividends continued to return capital to shareholders, while investments in product development and platform expansion persist as a core strategic priority.
Overall, the QQ2 2025 results position Salesforce to pursue modest near-term growth while investing for long-term scale in AI-enabled CRM and integrated cloud capabilities. Investors should watch ARR/net retention, AI-driven product adoption, and the margin trajectory as scaling benefits materialize.
Key Performance Indicators
Revenue
9.33B
QoQ: 2.10% | YoY:8.39%
Gross Profit
7.17B
76.85% margin
QoQ: 2.80% | YoY:10.42%
Operating Income
1.78B
QoQ: 4.33% | YoY:20.80%
Net Income
1.43B
QoQ: -6.78% | YoY:12.79%
EPS
1.48
QoQ: -6.33% | YoY:13.85%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $9.325 billion; YoY +8.39%; QoQ +2.10% (Q2 2025 vs Q2 2024, Q2 2025 vs Q1 2025).
Cost structure and cash flow
- EBITDA: $2.789 billion; EBITDA margin ~29.91%.
- Research & Development: $1.349 billion; as a % of revenue ~14.5% (indicative of ongoing AI/innovation investments).
- SG&A: $3.935 billion (selling, general and administrative); as a % of revenue ~42.1%.
- Operating cash flow: $0.892 billion; Free cash flow: $0.755 billion; Capex: $0.137 billion.
- Change in working capital: cash outflow of $2.818 billion, illustrating the working capital dynamics typical of a large SaaS company with substantial deferred revenue.
Balance sheet and liquidity
- Total assets: $92.18 billion; Cash and cash equivalents: $7.682 billion; Short-term investments: $4.954 billion; Total cash + short-term investments: $12.636 billion.
- Deferred revenue: $15.222 billion; Total current liabilities: $21.001 billion; Long-term debt: $10.834 billion; Net debt: $3.711 billion.
- Goodwill: $48.941 billion; Intangible assets: $4.415 billion; Total stockholders' equity: $57.633 billion.
- Leverage and solvency: Debt-to-capitalization ~16.5%; Current ratio ~1.04; Dividend payout ~26.9%; Dividend yield ~2.64%; Cash flow sufficient to support ongoing buybacks and selective investments.
Operational efficiency and positioning
- Asset turnover: ~0.101; Revenue per unit of asset is modest but aligns with a high-capex, R&D-intensive software platform.
- Backlog/backlog visibility: Deferred revenue of $15.222 billion provides revenue visibility and supports near-term revenue consistency despite a large product and services ecosystem.
Note: All figures are in USD and reflect QQ2 2025 reported numbers.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
9.33B
8.39%
2.10%
Gross Profit
7.17B
10.42%
2.80%
Operating Income
1.78B
20.80%
4.33%
Net Income
1.43B
12.79%
-6.78%
EPS
1.48
13.85%
-6.33%
Key Financial Ratios
currentRatio
1.04
grossProfitMargin
76.8%
operatingProfitMargin
19.1%
netProfitMargin
15.3%
returnOnAssets
1.55%
returnOnEquity
2.48%
debtEquityRatio
0.2
operatingCashFlowPerShare
$0.92
freeCashFlowPerShare
$0.78
dividendPayoutRatio
26.9%
priceToBookRatio
0.25
priceEarningsRatio
2.55
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript data not provided in the input. Therefore, no management quotes or themes from the QQ2 2025 earnings call are available in this analysis.
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Forward Guidance
No official forward-looking guidance provided in the supplied data. Based on the results, Salesforce demonstrated solid current-quarter growth with a large backlog and continued investment in AI-enabled CRM capabilities. Key factors that would influence the forward trajectory include: (i) AI feature adoption and monetization across Sales, Service, Marketing, and Commerce Clouds; (ii) net retention rate and expansion outcomes from cross-sell opportunities within the Customer 360 ecosystem; (iii) operating expense discipline and the potential for margin expansion as a function of scale; and (iv) balance sheet management, including capital allocation decisions between acquisitions, buybacks, and investment in platform enhancements. Investors should monitor ARR/net retention, AI-driven product adoption metrics, churn trends, and the evolution of gross and operating margins over the next few quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CRM.NE Focus
76.85%
19.10%
2.48%
2.55%
AMD.NE
49.10%
4.61%
0.47%
35.47%
JPM.NE
93.90%
47.20%
5.33%
78.60%
MA.NE
76.90%
58.00%
43.90%
1.47%
DIS.NE
35.80%
13.00%
-0.02%
-247.34%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Moderate-to-constructive long-term thesis: Salesforce remains a leading, diversified cloud software platform with strong revenue visibility, healthy profitability, and ample cash generation. The primary catalysts are AI-enabled product differentiation and deeper cross-sell across the Customer 360 stack, supported by a large backlog. Risks center on competitive intensity, macro volatility, and the need to manage goodwill impairment risk if growth slows. Near-term momentum will depend on AI feature adoption, retention metrics, and the ability to sustain margin progression as scale increases. Key monitorables include ARR/net retention, AI-enabled ARR expansion, margin trajectory, and capital allocation efficiency between buybacks, acquisitions, and investment in platform innovations.
Key Investment Factors
Growth Potential
Salesforce’s diversified, AI-enabled CRM platform (Sales, Service, Marketing, Commerce Clouds plus Tableau and MuleSoft) supports cross-sell opportunities and revenue visibility via a substantial deferred revenue backlog, suggesting durable growth potential as AI features mature and enterprise adoption accelerates.
Profitability Risk
Key risks include intensity of competition (from hyperscale cloud providers and niche CRM players), macroeconomic uncertainty affecting enterprise IT budgets, potential churn in large, complex deals, and impairment risk related to the substantial goodwill on the balance sheet if growth decelerates. Additionally, high SG&A and R&D intensity could pressure near-term margins if revenue growth slows.
Financial Position
Strong liquidity with $12.6B in cash and short-term investments and a net debt position of $3.711B. High goodwill (~$48.94B) warrants ongoing impairment monitoring. Backlog of $15.222B provides revenue visibility and supports continued cash generation; capital allocation has included share repurchases and dividends alongside ongoing investment in product development.
SWOT Analysis
Strengths
Scale and breadth of offerings (Sales Cloud, Service Cloud, Marketing Cloud, Tableau, MuleSoft, Slack) enabling cross-sell and higher switching costs
Robust gross margin (76.85%) and healthy operating margin (19.12%) for a high-growth SaaS player
Strong balance sheet with substantial cash and investments and a large equity base