Salesforce Inc. (NYSE:CRM)

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrates a generally increasing trend over the observed periods, with some fluctuations. Starting from $2,422 million in 2020, it rose significantly to $4,388 million in 2021 and maintained a similar level in 2022. However, there was a notable decrease in 2023 to $2,538 million. This drop was followed by a strong recovery in 2024 and 2025, reaching $4,830 million and $7,196 million respectively, indicating improved operational profitability towards the end of the period.

Cost of Capital

The cost of capital remained fairly stable throughout the time frame, fluctuating slightly around 17%. It started at 17.02% in 2020 and saw minimal variation, ranging between 16.57% and 17.12%, finally settling at 17.09% in 2025. This stability suggests consistent market or company risk expectations during the period.

Invested Capital

Invested capital steadily increased over the years, reflecting ongoing investment or asset growth. Beginning at $47,247 million in 2020, it rose to $53,200 million in 2021 and saw a more pronounced jump to $81,940 million by 2022. After this significant increase, the growth moderated with invested capital reaching $85,881 million in 2025. This upward trend indicates expansion or capital deployment in the business.

Economic Profit

Economic profit remains negative throughout all years, indicating the company consistently did not generate returns above the cost of capital. The losses in economic profit worsened from -$5,618 million in 2020 to -$11,438 million in 2023, showing increasing value destruction despite growing NOPAT and invested capital. After 2023, economic losses diminished somewhat, improving to -$7,485 million in 2025. This improvement aligns with the rebound in NOPAT but still reflects challenges in creating shareholder value exceeding capital costs.

Overall Analysis

The profile points to an organization that is growing its invested capital and achieving higher operating profits in the latter years. However, consistent negative economic profits suggest that the returns on investments have not yet surpassed the cost of capital. The spike in invested capital and the volatility in NOPAT, particularly the dip in 2023, impact value creation adversely. The modest improvement in economic profit towards 2025 may signal initial steps towards more efficient capital utilization or improved profitability, yet the company remains challenged to create sustainable economic value.

The financial data indicates significant fluctuations in net income and net operating profit after taxes (NOPAT) over the analyzed years, highlighting periods of both substantial growth and decline.

Net Income Trends

Net income started at a relatively low level and then surged dramatically by the year ending January 31, 2021, reflecting a strong performance during this period. However, the following year saw a considerable drop, indicating either extraordinary costs or reduced profitability. The subsequent year also showed a low point before a sharp increase resumed, reaching peak levels by January 31, 2025. This pattern suggests volatility in profitability, with distinct cycles of growth and contraction.

Net Operating Profit After Taxes (NOPAT) Trends

NOPAT followed a similar but less volatile pattern compared to net income. It doubled from January 31, 2020, to January 31, 2021, showing operational strength and efficiency. The following years saw a moderate decline and recovery pattern, with a notable dip in 2023 before surpassing previous highs in the latest year. The progression indicates that operations remained generally profitable, with improved ability to generate profits from the core business activities, particularly in the last reported year.

Comparative Observations

While both net income and NOPAT exhibit growth over the overall period, net income shows greater relative fluctuations, likely reflecting impacts from non-operating items, taxes, or extraordinary events. NOPAT’s smoother trajectory underscores consistent operational profitability, even when net income faces pressures. The recovery and growth in the last years suggest effective management and operational improvements contributing to enhanced financial health.

Provision for (benefit from) income taxes

There is considerable volatility in the provision for income taxes over the years. Starting at a positive value of 580 million USD in 2020, it unexpectedly dropped to a negative figure of -1511 million USD in 2021, indicating a benefit or tax credit during that period. In subsequent years, the provision returned to positive territory and showed a steady increase, reaching 1241 million USD by 2025. This pattern suggests fluctuations in taxable income or tax rates, with a recovery and growth trend in the latter years.

Cash operating taxes

Cash paid for operating taxes exhibits a clear and consistent upward trend throughout the period. Beginning at 598 million USD in 2020, the amount increased steadily each year, more than quadrupling to 2531 million USD by 2025. This strong growth indicates rising taxable income, increased tax liabilities, or a change in tax payment timing or policies influencing cash outflows.

Total reported debt & leases

The total reported debt and leases exhibit a significant increase from January 31, 2020, to January 31, 2023. Starting at $6,257 million in 2020, the figure rises moderately to $6,413 million in 2021 before sharply increasing to $14,370 million in 2022 and further to $14,879 million in 2023. Following this peak, there is a declining trend in the subsequent years with amounts decreasing to $13,562 million in 2024 and further to $12,070 million in 2025. This pattern suggests a period of aggressive leverage growth until early 2023, followed by a measured reduction in debt levels.

Stockholders’ equity

Stockholders’ equity demonstrates consistent growth throughout the observed period. Beginning at $33,885 million in 2020, equity increases steadily year over year, reaching $41,493 million in 2021, $58,131 million in 2022, and then maintaining a more gradual increase to $58,359 million in 2023. This positive trend continues moderately, with equity reaching $59,646 million in 2024 and $61,173 million by 2025. The figures reflect a sustained strengthening in the company’s net asset base over the years.

Invested capital

Invested capital follows a trajectory generally aligned with the trends in debt and equity, showing considerable growth from 2020 to 2025. Initially at $47,247 million in 2020, invested capital rises to $53,200 million in 2021 before experiencing a substantial jump to $81,940 million in 2022. The increase continues at a slower pace, reaching $84,299 million in 2023 and remaining relatively stable with slight growth to $84,431 million in 2024 and $85,881 million in 2025. The sharp increase in 2022 may reflect capital expenditures, acquisitions, or other investments undertaken during this period, with subsequent years indicating stabilization in capital deployment.

Economic Profit

The economic profit shows a consistently negative trend over the analyzed period. Starting at -5618 million USD in early 2020, it improved slightly in 2021 to -4721 million USD, but then deteriorated sharply in 2022 and 2023 to -9135 million USD and -11438 million USD, respectively. Subsequently, there was an improvement in 2024 and 2025, reducing losses to -9548 million USD and -7485 million USD. Despite the improvement in the later years, the company maintains a significant negative economic profit throughout, indicating persistent value destruction.

Invested Capital

The invested capital demonstrates a steady upward trajectory across the years. Beginning at 47247 million USD in 2020, it increased to 53200 million USD in 2021. This growth accelerated from 2021 to 2022, reaching 81940 million USD. After this sharp increase, the invested capital continued to grow at a slower pace, reaching 84299 million USD in 2023, 84431 million USD in 2024, and 85881 million USD in 2025. This trend shows significant expansion in capital employed by the company, especially from 2021 to 2022.

Economic Spread Ratio

The economic spread ratio, a measure of return relative to cost of capital, is negative throughout the period indicating that the returns do not cover the cost of capital. Starting at -11.89% in 2020, the ratio improves slightly to -8.87% in 2021. It then worsens to -11.15% in 2022 and further declines to -13.57% in 2023. However, in 2024 and 2025, the ratio improves again to -11.31% and -8.72%, respectively. This pattern aligns with the economic profit trend and reflects continuing challenges in generating positive economic value despite some recovery in later years.

Adjusted Revenues Trends

The adjusted revenues exhibit a consistent upward trajectory across the periods analyzed. Starting at approximately $19.2 billion, revenues increased steadily each year, reaching nearly $39.6 billion by the latest period. This indicates a strong and continuous revenue growth trend over the six-year span.

Economic Profit Trends

The economic profit values are negative throughout all periods, indicating persistent economic losses. The losses initially decreased from about -$5.6 billion to -$4.7 billion but then increased sharply to reach a peak negative value of around -$11.4 billion. Subsequently, the economic losses decreased over the last two periods, improving to roughly -$7.5 billion by the end of the timeframe.

Economic Profit Margin Trends

The economic profit margin remains negative across all the time points, reflecting the ongoing phenomenon of economic losses relative to revenues. Although starting with a margin of approximately -29.3%, the margin improved moderately in the most recent periods after reaching a low point near -34.6%. The margin improved from -34.6% to -18.9% over the last two periods, indicating a reduction in economic loss intensity relative to revenue size.

Overall Insights

While revenues have demonstrated strong and consistent growth, the company has sustained significant economic losses throughout the entire period. The pattern suggests operational or cost inefficiencies that exceed revenue gains, especially notable in the middle years when losses deepened substantially. However, the latter periods show signs of improvement in economic profitability, with reductions in absolute economic losses and improvements in economic profit margin. This could imply more effective cost control or enhanced operational efficiency, although the company has not yet reached a positive economic profit status.