Salesforce Inc. (NYSE:CRM)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited an overall increasing trend from 2020 to 2025. There was a significant rise from 2422 million USD in 2020 to 4388 million USD in 2021, followed by a slight increase in 2022. A notable decline occurred in 2023, dropping to 2538 million USD, before rebounding strongly in 2024 and reaching a peak of 7196 million USD in 2025. This pattern indicates fluctuations with a robust recovery and growth in the final years.

Cost of Capital

The cost of capital remained relatively stable over the six-year period, fluctuating marginally between 16.37% and 16.92%. The values suggest consistent capital costs, with a slight decrease around 2022 and 2023, followed by a modest increase towards 2024 and 2025. Overall, the cost of capital showed minimal volatility.

Invested Capital

Invested capital increased steadily throughout the period. Beginning at 47247 million USD in 2020, it rose substantially to 53200 million USD in 2021 and then experienced a more pronounced jump to 81940 million USD in 2022. The capital base then grew moderately in subsequent years, reaching 85881 million USD by 2025. This indicates progressive expansion or reinvestment during the timeframe.

Economic Profit

Economic profit was consistently negative across all years, signifying that returns did not exceed the cost of capital. The magnitude of negative economic profit worsened from -5522 million USD in 2020 to a low of -11273 million USD in 2023. After 2023, there was an improvement, with economic losses decreasing to -7310 million USD by 2025. Despite the improvement, the ongoing negative economic profit reflects challenges in generating value beyond capital costs during the entire period.

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 demonstrates a negative trend throughout the period, indicating consistent economic losses. Starting at -$5,522 million in 2020, the economic profit decreased further to a low of -$11,273 million by 2023. However, subsequent years show some recovery, with losses diminishing to -$9,377 million in 2024 and -$7,310 million in 2025. This suggests a gradual reduction in economic loss over the latter part of the timeframe.

Invested Capital

Invested capital shows a steady increase over the six-year period. Beginning at $47,247 million in 2020, the invested capital rises consistently each year, reaching $85,881 million by 2025. The most pronounced growth appears between 2021 and 2022, where capital deployed increased notably from $53,200 million to $81,940 million. This upward trend reflects ongoing or expanding investment activities.

Economic Spread Ratio

The economic spread ratio remains negative throughout the period, indicating that the returns on invested capital are below the cost of capital. The ratio starts at -11.69% in 2020 and demonstrates some fluctuation, reaching the lowest point at -13.37% in 2023. Following this, there is a gradual improvement to -11.11% in 2024 and -8.51% in 2025, suggesting a narrowing gap between return and capital cost over time, though remaining negative.

The financial data over the observed periods reveal several noteworthy trends regarding the company's economic profit, adjusted revenues, and economic profit margin.

Adjusted Revenues

Adjusted revenues have shown a consistent upward trajectory from 19,196 million US dollars in early 2020 to 39,635 million US dollars projected for early 2025. This represents more than a doubling in revenue over the six-year span, indicating strong top-line growth and effective revenue-generating activities.

Economic Profit

Despite robust revenue growth, economic profit remains negative throughout the period, reflecting ongoing challenges in generating returns above the cost of capital. The economic loss was 5,522 million US dollars in early 2020, decreased to a smaller loss of 4,613 million in 2021, but then deteriorated significantly to a peak deficit of 11,273 million by early 2023. Subsequently, economic losses improved but remained substantial at 7,310 million in the 2025 projection. This pattern suggests fluctuations in operational efficiency or increased costs impacting profitability, ultimately showing some recovery but no transition to positive economic profit.

Economic Profit Margin

The economic profit margin, expressed as a percentage, aligns with the economic profit trends. It improved from -28.77% in 2020 to -19.88% in 2021, indicating a relative enhancement in economic profitability. However, the margin worsened significantly in 2022 and 2023, reaching -34.06%, before improving again in the subsequent years to -18.44% in 2025. This margin volatility highlights varying success in controlling costs relative to revenues and suggests periods of increased investment or operational challenges that adversely affected margins.

In summary, while revenue growth is strong and continuous, economic profit remains negative and volatile, indicating that the company's cost structure or capital charges have hindered translating top-line growth into positive economic returns. Recent trends show some margin recovery, which may hint at improving operational efficiencies or cost management in the near term. However, the persistent negative economic profit suggests ongoing challenges in achieving sustainable profitability above the cost of capital.