How CRM (Salesforce) Makes Money in 2025: A Deep-Dive With Income Statement

Welcome to the Value Sense Blog, your resource for insights on the stock market! At Value Sense, we focus on intrinsic value tools and offer stock ideas with undervalued companies. Dive into our research products and learn more about our unique approach at valuesense.io

Explore diverse stock ideas covering technology, healthcare, and commodities sectors. Our insights are crafted to help investors spot opportunities in undervalued growth stocks, enhancing potential returns. Visit us to see evaluations and in-depth market research.

Understanding how a cloud software leader like Salesforce (formerly Salesforce.com) makes money is essential for investors and anyone interested in the business of enterprise technology. In this post, we break down Salesforce's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Salesforce Overview

Salesforce operates as a global leader in cloud-based customer relationship management (CRM) software, offering a suite of applications for sales, service, marketing automation, analytics, and application development. Revenue comes primarily from multi-year subscription contracts for its cloud services, with a smaller share from professional services and consulting. The company’s business is organized into segments such as Sales Cloud, Service Cloud, Platform & Other, and Marketing & Commerce Cloud, each targeting different aspects of enterprise digital transformation.

Revenue Breakdown

• Total Revenue (Q2 2025): $10.2B (+9.8% YoY)
  • Total Subscription and Support Revenue: $9.69B (94.7% of total, +10.6% YoY)
  • Professional Services & Other Revenue: $546M (5.3% of total, -2.7% YoY)
  • Growth is powered by continued expansion in enterprise cloud adoption, upselling existing customers, and international market penetration.

Gross Profit and Margins

• Gross Profit: $7.99B (78.1% gross margin)
  • Cost of Revenue: $2.24B (+3.8% YoY)
  • Salesforce maintains robust margins due to its scalable digital business model and high recurring revenue base.
• Most costs come from cloud infrastructure, customer support, and personnel required to deliver and maintain its SaaS offerings.

Operating Income and Expenses

• Operating Income: $2.33B (+30.8% YoY, 22.8% margin)
• Operating Expenses: $5.66B (+7.1% YoY)
  • R&D: $1.48B (+9.8% YoY, 14.5% of revenue) — Focused on AI, automation, and platform innovation to maintain product leadership.
  • SG&A: $4.18B (+6.1% YoY, 40.8% of revenue) — Includes global sales force, marketing, and administrative costs to drive customer acquisition and retention.
  • Salesforce continues to prioritize innovation and invest in growth while maintaining efficiency and expanding operations globally.

Net Income

• Pre-Tax Income: $2.41B (+31.0% YoY, 23.5% margin)
• Income Tax: $519M (21.6% effective tax rate)
• Net Income: $1.89B (+32.1% YoY, 18.4% net margin)
• Salesforce converts a significant portion of sales into profit due to its scalable SaaS model and operational discipline.

What Drives Salesforce's Money Machine?

• Subscription and Support Revenue: 94.7% of revenue, driven by long-term contracts and high customer retention.
• Customer Base Expansion: Over 150,000 enterprise customers, with strong net revenue retention through upselling and cross-selling.
• R&D Investment: $1.48B in Q2 2025, fueling AI and automation capabilities to differentiate Salesforce’s platform.
• Professional Services: While not a profit center, these services support adoption and integration, driving future subscription growth.
• Future growth areas: Industry-specific cloud solutions and AI-powered analytics, though not yet major profit contributors.

Visualizing Salesforce's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant investments in R&D and global sales, 18.4% of revenue drops to the bottom line.

Key Takeaways

• Salesforce's money comes overwhelmingly from subscription and support services.
• High gross and net margins illustrate the power of Salesforce’s recurring-revenue SaaS business model.
• Heavy investment in R&D, balanced by efficiency in operating costs.
• Ongoing growth is driven by enterprise digital transformation, AI innovation, and international expansion.

Explore More Investment Opportunities

For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:

📌 50 Undervalued Stocks (Best) overall value plays for 2025
📌 50 Undervalued Dividend Stocks (For income-focused investors)
📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)

🔍 Check out these stocks on the Value Sense platform for free!

FAQ About Salesforce's Income Statement

1. What is the main source of Salesforce's revenue in 2025?

Salesforce generates over 94% of its revenue from subscription and support services, which include its core cloud-based CRM, analytics, and platform offerings. Professional services and other revenue contribute about 5%.

2. How profitable is Salesforce in Q2 2025?

Salesforce reported net income of $1.89B in Q2 2025, with a net margin of approximately 18.4%, reflecting strong profitability driven by high-margin subscription revenue and operational efficiency.

3. What are the largest expense categories for Salesforce?

The biggest expenses on Salesforce’s income statement are operating expenses, particularly Sales, General & Administrative (SG&A) at $4.18B (40.8% of revenue), and Research & Development (R&D) at $1.48B (14.5% of revenue) in Q2 2025, as Salesforce prioritizes innovation and global sales expansion.

4. Why does Professional Services operate at a loss?

Professional Services, despite generating $546M in revenue, posted an operating loss in Q2 2025. This is because Salesforce aggressively invests in customer onboarding, integration, and support, believing these will drive long-term subscription growth—even if the division is unprofitable today.

5. How does Salesforce's effective tax rate compare to previous years?

Salesforce’s effective tax rate in Q2 2025 was 21.6%, consistent with previous years. This moderate rate is primarily due to international structuring and tax benefits from share-based compensation.