Common-Size Income Statement
Salesforce Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-31).
- Revenue Composition
- The proportion of subscription and support revenues has remained relatively stable, fluctuating slightly around the 93% to 94% range throughout the periods. Conversely, professional services and other revenues have shown minor variations but generally accounted for around 6% to 7% of total revenues, with a slight decreasing trend observed towards the final periods.
- Cost of Revenues and Gross Profit
- The cost of revenues as a percentage of total revenues increased from approximately 24.77% in early 2020, peaking near 26.66% by early 2023, before reversing downward to about 22.81% by early 2025. Correspondingly, gross profit demonstrated a complementary trend, decreasing from 75.23% to a low around 73.34% and then recovering strongly up to 77.19%, indicating improved cost efficiency in recent years.
- Operating Expenses
- Operating expenses, which include research and development, sales and marketing, general and administrative, and restructuring costs, have exhibited a downward trajectory as a percentage of revenues. Research and development expenses decreased modestly from around 16.18% to approximately 14.5%. Sales and marketing expenses showed a more pronounced reduction, from roughly 46.38% to 34.98%. General and administrative expenses also declined from about 9.97% to near 7.48%. Restructuring expenses were introduced in early 2023 and remained present through early 2025, averaging around 2% of revenues. Overall operating expenses dropped substantially from roughly 73.49% to 58.18%, reflecting enhanced operational leverage and efficiency.
- Profitability Metrics
- Income from operations progressively improved over the periods. Starting marginally positive at 1.74%, operating income rose steadily to reach 19.01% by early 2025, driven by reduced costs and expenses. Interest expense as a percentage of revenues remained relatively stable with minor fluctuations around 0.7% to 0.9%. Gains or losses on strategic investments showed considerable volatility, with substantial gains in early 2021 (above 10%) followed by slight negative contributions in later periods. Other income remained positive but modest in magnitude.
- Income Before and After Tax
- Income before provision for income taxes mirrored the improvement seen in operating income, rising from 4.13% up to 19.63%. Provision for income taxes, however, exhibited a fluctuating pattern, occasionally being a benefit rather than a provision, but generally representing a small negative impact compared to revenues in the final years. Net income as a percentage of revenues experienced significant improvement over the time frame, increasing from a minimal 0.74% to 16.35%, indicating enhanced overall profitability.
- Summary of Trends and Insights
- The data reveals a trend of improving profitability driven primarily by controlled costs and operating expenses. While subscription and support revenues remain the dominant component, cost of revenues initially rose but then declined, improving gross margins. Operating expenses, particularly sales and marketing, were reduced significantly, enhancing operational efficiency. Income from operations and net income showed strong upward trends, supported by consistent management of interest expenses and variable impacts from strategic investments and taxes. The introduction of restructuring expenses from early 2023 onwards represents transitional costs but has not materially impeded overall profit growth.