Salesforce Inc. (NYSE:CRM)

Net Operating Profit After Taxes (NOPAT)

Over the analyzed periods, net operating profit after taxes shows considerable fluctuation. It nearly doubled from 2422 million USD in early 2020 to 4388 million USD in 2021, followed by a marginal increase in 2022. However, there is a notable decline to 2538 million USD in 2023 before rebounding sharply to reach the highest value of 7196 million USD in 2025. This pattern indicates volatility in operating profitability with a strong recovery and growth in the most recent period.

Cost of Capital

The cost of capital remains relatively stable across the years, fluctuating narrowly between 16.62% and 17.17%. This stability suggests a consistent risk profile and capital market conditions affecting the company’s financing costs throughout the period.

Invested Capital

Invested capital exhibits a consistent upward trend from 47247 million USD in 2020 to 85881 million USD in 2025. This indicates ongoing investment and asset expansion, with a particularly large increase between 2021 and 2022. The growth in invested capital suggests the company is allocating significant resources towards operational capacity or strategic initiatives.

Economic Profit

Economic profit remains negative throughout the period, indicating that the returns on invested capital have not covered the cost of capital. The negative economic profit worsened from -5640 million USD in 2020 to a low of -11477 million USD in 2023, reflecting increasing shortfall despite rising invested capital. There is some improvement from 2023 onwards, with economic loss decreasing to -7526 million USD by 2025, but it remains substantially negative. This pattern suggests that while profitability showed signs of recovery, value creation relative to the cost of capital has not been achieved.

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 consistent negative value across all periods, indicating the company experienced economic losses each year. The magnitude of these losses fluctuated, with a notable increase in economic loss in the fiscal year ending January 31, 2023, reaching its peak negative value of -11,477 million US dollars. Subsequently, the economic loss decreased in the following years, reaching -7,526 million US dollars by January 31, 2025, suggesting some improvement though remaining in negative territory.

Invested Capital

Invested capital demonstrated a general upward trend over the analyzed period. Beginning at 47,247 million US dollars, it increased steadily to 85,881 million US dollars by the fiscal year ending January 31, 2025. The most significant growth appears between January 31, 2021, and January 31, 2022, where invested capital surged from 53,200 million to 81,940 million US dollars, reflecting substantial investment or capital allocation increases during that period.

Economic Spread Ratio

The economic spread ratio remained consistently negative throughout the timeframe, highlighting that returns on invested capital were below the cost of capital. The ratio moved from -11.94% in 2020 to its highest negative value of -13.62% in 2023. However, there is a noticeable improvement thereafter, with the ratio improving to -8.76% by 2025, indicating a reduction in the economic inefficiency of capital deployment though not reaching positive returns.

Overall Insights

The company faced persistent economic losses over the years analyzed, despite steadily increasing invested capital. The peak in losses and economic spread in 2023 suggests a period of heightened inefficiency or unfavorable market conditions. The improvement in economic profit and spread ratio in the subsequent years indicates some recovery in profitability and capital efficiency, although economic profit remains negative. Continuous monitoring of capital utilization and return metrics is advisable to steer towards positive economic value creation.

The financial data indicates several notable trends over the examined period. Adjusted revenues have shown consistent growth, increasing from approximately 19.2 billion USD in early 2020 to nearly 39.6 billion USD by 2025. This represents a robust upward trajectory in revenue generation.

Despite this revenue growth, economic profit has remained negative throughout the period, although there are fluctuations in its magnitude. Starting from a deficit of roughly 5.6 billion USD in 2020, economic profit improved to about -4.7 billion USD in 2021, before deteriorating sharply to nearly -9.2 billion USD in 2022 and further worsening to -11.5 billion USD in 2023. Subsequently, the economic profit deficit lessened to -9.6 billion USD in 2024 and further to -7.5 billion USD in 2025.

The economic profit margin, expressed as a percentage, mirrors the trend in economic profit. It initially improves from -29.38% in 2020 to -20.46% in 2021, then worsens significantly to -31.08% in 2022 and further to -34.68% in 2023. Following this, the margin improves again to -26.28% in 2024 and further to -18.99% in 2025.

Revenue Trend

Consistent and steady increase in adjusted revenues, nearly doubling over five years.

Economic Profit Trend

Persistently negative economic profit indicates ongoing costs exceeding returns economically, with notable volatility—initial improvement, mid-period deterioration, and recent partial recovery.

Economic Profit Margin

Follows a similar pattern to economic profit, with margins markedly negative but showing phases of both decline and recovery.

Insight

Despite strong revenue growth, the firm has struggled with generating positive economic profit, suggesting challenges with managing costs or capital efficiency. Recent improvement in economic profit and margin may indicate progress in addressing these issues.