Salesforce, Inc. (CRM): history, ownership, mission, how it works & makes money

A Brief History of Salesforce, Inc.

Salesforce, Inc., founded in 1999, has become a leader in customer relationship management (CRM) software. The company pioneered the delivery of enterprise applications via a simple website, disrupting traditional software models.

Company Growth and Acquisitions

Over the years, Salesforce has expanded its offerings through strategic acquisitions. Notable acquisitions include:

• Demandware (2016) for $2.8 billion, enhancing e-commerce capabilities.
• MuleSoft (2018) for $6.5 billion, integrating data and applications.
• Slack (2021) for $27.7 billion, enhancing collaboration tools.
• Spiff, Inc. (2024) for $419 million, focusing on incentive compensation management.

Financial Performance

As of July 31, 2024, Salesforce reported impressive financial metrics:

Salesforce's operating margin improved significantly to approximately 19% for the six months ended July 31, 2024, compared to 11% in the prior year.

Share Repurchase and Dividend Policies

Salesforce has implemented a robust share repurchase program, with an aggregate authorization of $30 billion as of February 2024. In the six months ended July 31, 2024, the company repurchased approximately 25 million shares for around $6.5 billion.

Additionally, Salesforce declared dividends totaling approximately $772 million during the same period, maintaining a consistent dividend policy.

Market Position and Future Outlook

As of July 31, 2024, Salesforce's total assets were valued at $92.2 billion, with a significant portion allocated to cash, cash equivalents, and marketable securities totaling $12.6 billion. The company reported a remaining performance obligation of approximately $53.5 billion, indicating strong future revenue potential.

Salesforce continues to adapt to market changes, focusing on expanding its global reach and enhancing customer experience through innovative solutions and strategic partnerships.

A Who Owns Salesforce, Inc. (CRM)

Major Shareholders

As of 2024, Salesforce, Inc. (CRM) has a diverse ownership structure comprising institutional investors, individual shareholders, and company executives. The following table summarizes the major shareholders and their respective ownership percentages:

Insider Ownership

Insider ownership plays a crucial role in the governance of Salesforce. As of July 31, 2024, insiders hold approximately 10% of the total shares outstanding. Key executives and their ownership stakes include:

Institutional Ownership Trends

Institutional ownership has been steadily increasing over recent years. As of January 31, 2024, institutional investors held approximately 80% of the total shares. The following table illustrates the trend in institutional ownership over the past few years:

Share Repurchase Activity

Salesforce has actively engaged in share repurchase programs to return value to shareholders. In the first half of fiscal 2025, the company repurchased approximately 25 million shares for about $6.5 billion. The following table summarizes the share repurchase activity:

Dividends

Salesforce initiated a dividend program in 2024, which reflects its commitment to returning capital to shareholders. The following table outlines the dividends declared in 2024:

Summary of Financial Performance

Salesforce has shown strong financial performance with the following key metrics for the six months ended July 31, 2024:

Salesforce, Inc. (CRM) Mission Statement

Company Overview

Salesforce, Inc. aims to be the world's most customer-centric company, empowering organizations to connect with their customers in a whole new way. The mission statement emphasizes the importance of customer success and the transformative power of technology.

Mission Statement

As of 2024, Salesforce's mission statement is: "We bring companies and customers together." This reflects their commitment to creating innovative solutions that enhance customer engagement and drive business growth.

Financial Performance

For the six months ended July 31, 2024, Salesforce reported:

• Total Revenue: $18.5 billion, an increase of 10% year-over-year.
• Income from Operations: $3.5 billion, with an operating margin of approximately 19%.
• Net Income: $2.96 billion, translating to a diluted net income per share of $3.03.

Revenue Breakdown

The revenue composition for the three months ended July 31, 2024, is as follows:

Global Reach

Revenue by geographic region for the three months ended July 31, 2024, is detailed below:

Remaining Performance Obligation

As of July 31, 2024, Salesforce's remaining performance obligation, which represents future revenue under contract yet to be recognized, was approximately:

• Total Remaining Performance Obligation: $53.5 billion.
• Current Remaining Performance Obligation: $26.5 billion.

Cash and Liquidity

Salesforce maintains a robust cash position with:

• Total Cash, Cash Equivalents, and Marketable Securities: $12.6 billion.
• Cash Provided by Operations for the six months: $7.1 billion.

Shareholder Returns

During the six months ended July 31, 2024, Salesforce executed a significant share repurchase program:

• Shares Repurchased: Approximately 25 million shares.
• Total Amount Spent: Approximately $6.5 billion.
• Dividends Paid: Approximately $772 million.

Corporate Responsibility

Salesforce is committed to sustainability and social responsibility, focusing on:

• Environmental Initiatives: Reducing carbon footprint and promoting sustainability.
• Social Impact: Enhancing community engagement and supporting equality initiatives.

Conclusion

Salesforce's mission and financial performance underscore its position as a leader in customer relationship management, demonstrating a clear commitment to innovation, customer success, and corporate responsibility.

How Salesforce, Inc. (CRM) Works

Business Model

Salesforce, Inc. operates primarily as a cloud-based software company offering customer relationship management (CRM) solutions. The company generates revenue through subscription and support services, which accounted for approximately 94 percent of total revenues for the six months ended July 31, 2024.

Financial Performance

For the six months ended July 31, 2024, Salesforce reported total revenues of $18.458 billion, representing a 10 percent increase year-over-year compared to $16.850 billion for the same period in 2023.

Revenue Breakdown

Salesforce's subscription and support revenues are categorized into various service offerings:

Operating Expenses

Salesforce's total operating expenses for the six months ended July 31, 2024, were $10.645 billion, which includes:

Cash Flow Analysis

Salesforce's cash flow from operating activities showed significant growth:

Remaining Performance Obligation (RPO)

As of July 31, 2024, Salesforce's total remaining performance obligation was approximately $53.5 billion, reflecting a 15 percent increase year-over-year.

Geographical Revenue Distribution

Salesforce's revenue by geographical region for the six months ended July 31, 2024, was as follows:

Stock Performance and Share Repurchase Program

Salesforce has authorized a share repurchase program totaling $30 billion as of February 2024. During the six months ended July 31, 2024, Salesforce repurchased approximately 25 million shares for about $6.5 billion.

How Salesforce, Inc. (CRM) Makes Money

Revenue Streams

Salesforce generates revenue primarily through its subscription-based business model, which includes various service offerings:

For the six months ended July 31, 2024, the total revenue from subscription and support was $17.3 billion, up from $15.6 billion in the same period of the previous year, representing an 11% increase.

Cost of Revenues

The costs associated with revenues predominantly stem from the following categories:

Total cost of revenues for Q2 2024 was $2.16 billion, compared to $2.11 billion in Q2 2023.

Operating Expenses

Salesforce's operating expenses consist of research and development, sales and marketing, and general and administrative expenses:

Total operating expenses for Q2 2024 were $5.38 billion, reflecting an increase from $5.01 billion in Q2 2023.

Net Income and Profitability

Salesforce reported a net income of $1.43 billion for Q2 2024, up from $1.27 billion in Q2 2023, leading to a basic net income per share of $1.48 compared to $1.30 a year earlier.

Geographic Revenue Distribution

The distribution of Salesforce's revenue by geography highlights its strong presence in the Americas:

In Q2 2024, Salesforce's total revenue was $9.33 billion, with the Americas contributing approximately 67%.

Remaining Performance Obligation

As of July 31, 2024, Salesforce's remaining performance obligation was approximately $53.5 billion, reflecting a 15% increase year-over-year.

Share Repurchase and Dividend Programs

During the first half of fiscal 2025, Salesforce repurchased about 25 million shares for approximately $6.5 billion and paid approximately $772 million in dividends.

Cash and Cash Flow

As of July 31, 2024, Salesforce had cash, cash equivalents, and marketable securities totaling $12.6 billion. The cash provided by operations for the six months ended July 31, 2024, was $7.1 billion, marking a 35% increase year-over-year.