Introduction

Salesforce, Inc. (CRM)is a global leader in customer relationship management (“CRM”) technology that brings companies and their customers together.

Salesforce has two sources of revenues:(1) subscription and support revenues, and(2) professional services and other revenues.

Subscription and support revenues include subscription fees from customers accessing the Company’s enterprise cloud computing services (collectively, “Cloud Services”), software license revenues from the sales of term software licenses and support revenues from the sales of support and updates beyond the basic subscription or software license sales. Professional services and other revenues include professional and advisory services for process mapping, project management and implementation services and training services.

Balance sheet analysis

At first, salesforce ‘s fiscal year ends January 31. References to fiscal 2024 refer to the fiscal year ending January 31, 2024.

Salesforce ‘s total assets were $99.82 billion and $99.85 billion in fiscal year 2024 and in fiscal year 2023, respectively.

Goodwill was $48.6 billion in 2024, representing 48.7% of total assets.

The rate of goodwill to total assets was very high. The solvency might be weakened.

By the way, accounts receivable, net were $11.4 billion and unearned revenue was $19 billion at January 31, 2024.

The rate of accounts receivable, net to total revenues was 32.7%, and the rate of unearned revenue to total revenue was 54.5% as of January 31,2024.

Of cause, the unearned revenue is not revenues currently.

But, we could see that salesforce have two types of business.

One is that people owes him money, and the other is that people pay him money in advance.

This situation may be caused by the business model  and its cash flow is very good.

Total current assets were $29 billion, and total current liabilities were $26.6 billion in fiscal year 2024.

Therefore, you could get a current ratio, about 1.1 times.

We think that the current ratio is overvalued as the amount of  unearned revenue dose not need to repay.

If the unearned revenue is moved from current assets, the current ratio is 3.8 times.

Salesforce ‘s liquidity was very abundant.

Speaking to debt ratio, the debt ratio may be underestimated. Because goodwill can not service debt.

If Salesforce ‘s goodwill is eliminated from total assets, and then the adjusted total assets were $51.2 billion at January 31, 2024.

If salesforce’ s unearned revenues is removed from total liabilities, and then the adjusted total liabilities were $21.2 billion at January 31,2024.

The adjusted debt ratio was 41.4%, which is a low level of debt.

Income statement analysis

Salesforce’ s total revenues were $34.96 billion, $31.35 billion and $26.5 billion in 2024, in 2023 and in 2022, respectively.

Salesforce’ s total revenues in 2024 were up 11.5% year-on-year.

Salesforce’ s total revenues in 2023 were up 18.3% year-on-year.

Salesforce ‘s net income amounted $4.1 billion, $0.2 billion and $1.4 billion in 2024, in 2023 and in 2022, respectively.

The net profit margin was 11.7%, 0.6% and 5.2% in 2024, in 2023 and in 2022, respectively.

The profitability is highly volatile and is not strong.

The gross profit margin was 75.5%, 73.5% and 73.6% for 2024, for 2023 and for 2022, respectively.

Salesforce’ s marketing and sales were $12.9 billion, $13.5 billion and $11.9 billion in 2024, in 2023 and in 2022,respectively.

The amount of marketing and sales in 2024 was down about 4% year-on-year.

The amount of marketing and sales in 2023 was up 13.4% year-on-year.

In fiscal year 2024,the surge in net income was driven by increasing revenues and effectively controlled expenses (marketing and sales).

Cash flow statement analysis

Salesforce’ s net cash provided by operating activities was $10.2 billion, $7.1 billion and $6 billion for 2024, for 2023 and for 2022, respectively.

The net cash provided by operating activities has been much more than net income.

Capital expenditures were $0.7 billion, $0.8 billion and $0.7 billion in 2024, in 2023 and in 2022, respectively.

Repurchases of common stock were $7.6 billion and $4 billion in 2024 and in 2023, respectively.

Summary

Salesforce’ s cash flow is strong and profitability is relatively average.

We would not consider to buy this stock ,unless Salesforce’ s market price plummets below 100 billion.

Disclaimer: The content is for reference only and does not constitute investment advice.