Salesforce reported a resilient Q4 2025, with revenue of $9.993 billion, representing 7.6% year-over-year growth and 5.8% quarter-over-quarter growth. Gross margin stood at 77.8%, yielding $7.776 billion in gross profit, while operating income reached $1.82 billion (operating margin ~18.2%) and net income was $1.708 billion (net margin ~17.1%). Diluted earnings per share were $1.75, with GAAP EPS of $1.78.
The company generated robust cash flow, delivering $3.97 billion of cash flow from operations and free cash flow of $3.82 billion. At period end, Salesforce held $8.85 billion in cash and equivalents and $14.03 billion in cash and short-term investments, against total debt of $11.39 billion and a net debt figure of approximately $2.54 billion reported in the dataset. Deferred revenue remained a material $20.74 billion, highlighting the subscription-driven model and the value booked upfront from annual/multi-year contracts.
While near-term margins faced pressure from continued investment in product development and go-to-market initiatives, Salesforce maintains a strong balance sheet, sizable ARR, and meaningful multi-product cross-sell opportunities across the Customer 360 platform, Slack, Tableau, and MuleSoft. Management commentary likely emphasized AI-enabled product enhancements and broader cross-sell initiatives as key catalysts for long-term ARR acceleration and operating leverage, albeit with quarterly operating income fluctuations tied to ongoing investment activity.
Financial highlights (Q4 2025 vs prior periods):
- Revenue: $9.993B; YoY +7.6%; QoQ +5.81%
- Gross Profit: $7.776B; Gross Margin 77.81%; YoY +8.92%; QoQ +5.95%
- Operating Income: $1.82B; Operating Margin 18.21%; YoY +12.21%; QoQ -3.86%
- Net Income: $1.708B; Net Margin 17.11%; YoY +18.12%; QoQ +11.85%
- EPS (diluted): $1.75; EPS (basic): $1.78; YoY +19.46%; QoQ +11.25%
- EBITDA: $2.995B; EBITDA Margin ~29.97%
- Cash Flow: Operating Cash Flow $3.97B; Free Cash Flow $3.82B; FCF Margin ~38.2%
- Balance sheet: Cash and cash equivalents $8.848B; Cash and short-term investments $14.032B; Total debt $11.392B; Net debt $2.544B; Deferred revenue $20.743B; Total assets $102.928B; Total stockholders’ equity $61.173B
- Capital allocation: Acquisitions net cash outflow $2.217B; Purchases of investments $2.003B; Sales maturities of investments $1.438B; Dividends paid $0.383B; Stock repurchases $0.076B; Net cash used in financing activities $(0.073)B
- Efficiency and leverage: Current ratio 1.06; Debt-to-capitalization ~15.7%; ROE ~2.79%; Asset turnover ~0.0971; Free cash flow per share $3.99; Operating cash flow per share $4.15
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
9.99B
7.60%
5.81%
Gross Profit
7.78B
8.92%
5.95%
Operating Income
1.82B
12.21%
-3.86%
Net Income
1.71B
18.12%
11.85%
EPS
1.78
19.46%
11.25%
Key Financial Ratios
currentRatio
1.06
grossProfitMargin
77.8%
operatingProfitMargin
18.2%
netProfitMargin
17.1%
returnOnAssets
1.66%
returnOnEquity
2.79%
debtEquityRatio
0.19
operatingCashFlowPerShare
$4.15
freeCashFlowPerShare
$3.99
dividendPayoutRatio
22.4%
priceToBookRatio
5.34
priceEarningsRatio
47.81
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript insights are not provided in the supplied data. No verbatim management quotes or theme-by-theme excerpts from an earnings call are available in the input. Future analysis could incorporate management emphasis on AI-driven product enhancements, cross-sell opportunities across the Customer 360 suite, Slack/Tabele/MuleSoft ecosystem expansion, and path to operating leverage as these areas materialize in ARR growth and expense optimization.
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Forward Guidance
No formal forward guidance is included in the provided materials. The outlook section relies on qualitative interpretation of industry trends and Salesforce’s strategic positioning. In the near term, investors should monitor:
- AI and data platform monetization (Einstein capabilities, analytics, and automation) and their impact on ARR expansion and add-on sales across Sales, Service, Marketing, and Commerce clouds.
- Cross-sell efficiency across the Customer 360 family (including Slack, Tableau, and MuleSoft) to lift ARR per customer and reduce churn.
- Investment cadence in R&D and GTM that may temporarily pressure quarterly margins but supports long-term operating leverage.
- Deferred revenue dynamics and renewal/match rates in a subscription-led model, which influence revenue visibility and cash flow quality.
- FX and macro effects on international revenue growth and customer deal cycles.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
FOO.F Focus
77.81%
18.20%
2.79%
47.81%
307.F
48.10%
16.50%
11.20%
26.31%
MSF.F
69.60%
43.10%
8.21%
38.16%
NVD.F
73.00%
61.10%
27.80%
32.89%
SAP.DE
74.30%
26.60%
3.52%
42.99%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Base case: Salesforce maintains its leadership position in CRM and continues to monetize AI and cross-sell across the Customer 360 suite, delivering mid-to-high single-digit revenue growth with stable gross margins and durable FCF generation. Valuation remains premium given the growth profile (P/S ~32.7x, P/E ~47.8x), so sustained execution on ARR expansion and operating leverage is critical for upside.
Bull case: Acceleration in ARR growth driven by AI-enabled product adoption and stronger cross-sell, resulting in margin expansion and higher FCF generation per share, justifying the current premium multiples.
Bear case: Slower-than-expected customer renewal rates or increased competition could compress growth and margins, leading to multiple contraction and weaker near-term cash flow quality.
Key metrics for investors to monitor include: ARR growth and net-new bookings, renewal rates, gross-to-operating margin progression, cadence of AI-related product monetization, deferred revenue evolution, and the pace of debt reduction vs. buybacks and acquisitions. The company’s ability to sustain FCF while funding acquisitions will be a critical determinant of long-term value creation.
Key Investment Factors
Growth Potential
Strong long-term growth potential from a broad, integrated CRM and data platform (Sales Cloud, Service Cloud, Marketing Cloud, Tableau, MuleSoft, Slack) with AI-enabled enhancements expected to help accelerate ARR and drive deeper cross-sell across the Customer 360 suite.
Profitability Risk
Key risks include elevated selling, general, and administrative costs pressuring margins, competition from SAP, Oracle, Microsoft, and others, potential churn in large enterprise contracts, and the impact of currency fluctuations and macro slowdowns on international growth. Substantial one-off cash outflows for acquisitions and investments could also temper near-term free cash flow and ROIC.
Financial Position
Solid liquidity profile with $14.0B in cash/short-term investments and a net debt figure of approximately $2.54B, supported by robust FCF generation ($3.82B in FCF for the quarter) and strong equity base. Deferred revenue remains a large asset, underscoring subscription visibility and revenue-recognition dynamics.
SWOT Analysis
Strengths
Market-leading CRM and data platform with a comprehensive product suite (Sales Cloud, Service Cloud, Marketing Cloud, Tableau, MuleSoft, Slack) enabling broad cross-sell opportunities.
High gross margin ~77.8% and robust free cash flow generation ($3.82B) support long-term value creation.
Strong balance sheet liquidity (cash and short-term investments of ~$14.0B) and a durable ARR-driven business model with large deferred revenue (~$20.7B).
Global scale and deep enterprise penetration across industries, enabling durable revenue streams and resilience to near-term cycles.