Salesforce Inc. (NYSE:CRM)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrates variability over the observed periods. There is a significant increase from 2,422 million USD in 2020 to 4,388 million USD in 2021, followed by a relatively stable figure around 4,442 million USD in 2022. However, 2023 experiences a sharp decline to 2,538 million USD, before rebounding strongly in 2024 to 4,830 million USD and reaching the highest point at 7,196 million USD in 2025. This indicates fluctuating operational profitability with a strong upward trend in the most recent years.

Cost of Capital

The cost of capital remains relatively stable across the years, with minor fluctuations between 16.57% and 17.13%. This stability suggests consistent capital market conditions or financing costs over time. The highest rate is observed in 2021 at 17.13%, with a slight decrease and subsequent return close to 17.1% by 2025.

Invested Capital

Invested capital shows a clear increasing trend throughout the period, starting at 47,247 million USD in 2020 and steadily rising to 85,881 million USD by 2025. The most notable growth occurs between 2021 and 2022, where invested capital increases from 53,200 million USD to 81,940 million USD, indicating substantial investment or asset accumulation during this timeframe. Growth continues at a slower but consistent pace thereafter.

Economic Profit

Economic profit remains negative for all periods, reflecting that the returns do not cover the cost of capital. The losses deepen from -5,621 million USD in 2020 to a peak negative value of -11,444 million USD in 2023. After 2023, there is some improvement, though economic profit remains substantially negative at -7,491 million USD in 2025. Despite improvements in NOPAT, the high level of invested capital and stable cost of capital result in ongoing economic losses, indicating challenges in value creation relative to the capital employed.

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 exhibited a consistently negative trend throughout the analyzed periods. Starting at -5621 million USD in early 2020, the deficit deepened to -11444 million USD by early 2023, marking the lowest point within the timeframe. However, in the subsequent two years, there was a noticeable improvement as the economic loss narrowed to -7491 million USD by early 2025. This pattern suggests persistent challenges in generating returns above the cost of capital, with some recovery evident in the last two observed periods.

Invested Capital

Invested capital showed a steady increase over the years, rising from 47247 million USD in early 2020 to 85881 million USD in early 2025. The most significant growth occurred between 2021 and 2022, where invested capital increased sharply from 53200 to 81940 million USD. After this rapid expansion, the growth rate slowed but maintained a positive trajectory through to 2025. This indicates ongoing capital deployment and asset accumulation aimed at supporting the business.

Economic Spread Ratio

The economic spread ratio remained negative throughout all periods, indicating returns below the cost of capital. Initially, it improved slightly from -11.9% in early 2020 to -8.88% in early 2021. Nonetheless, this was followed by a decline, reaching -13.57% in early 2023, the worst ratio observed. The last two periods show a gradual recovery back towards earlier levels, improving to -8.72% by early 2025. This trend aligns with the pattern of economic profit, reflecting challenges in achieving positive economic value added despite the increase in invested capital.

Over the analyzed period, the adjusted revenues demonstrated a consistent upward trend, increasing steadily from $19,196 million in early 2020 to $39,635 million by early 2025. This reflects a strong growth trajectory in revenue generation, nearly doubling over the five-year span.

In contrast, economic profit exhibited a negative value throughout the entire period, indicating ongoing challenges in generating profit above the cost of capital. Although the economic profit was negative in all observed years, there was notable volatility. The loss deepened from -$5,621 million in 2020 to a peak negative value of -$11,444 million in 2023, before improving somewhat towards -$7,491 million by 2025. This pattern suggests fluctuating operational efficiency or capital cost issues impacting profitability despite revenue growth.

The economic profit margin, which contextualizes economic profit relative to revenues, also remained negative in all years. It showed improvement in some years but overall remained significantly below zero, fluctuating between a low of -34.57% in 2023 and a high of -18.9% in 2025. The margin deterioration up to 2023 aligns with the widening economic profit loss, while the subsequent partial recovery corresponds with the reduced losses seen in 2024 and 2025.

Key Observations:

1. Adjusted revenues consistently increased year over year, reflecting robust top-line growth.

2. Economic profit remained negative, with losses deepening substantially before improving towards the end of the period.

3. Economic profit margin mirrored economic profit trends, showing significant negative values with some recovery in the later years.

4. The data implies strong revenue growth has not yet translated into economic profitability, suggesting issues such as high operating costs, capital expenses, or other financial factors impacting the bottom line.