CRM
Salesforce, Inc.NYSEValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Aug 17, 2026 · Valuation Aug 16, 2026
What drives CRM's base case?
base-case thesisSalesforce's contracted backlog is growing faster than recent annual sales, and its newer data and AI products are expanding much faster than the core application group. This case assumes those products sustain company growth near management's medium-term objective before normal maturation. Costs grow more slowly than sales, but Salesforce continues investing heavily enough to protect the platform.
What shapes the assumptions
Current contracted backlog growth of 0.14
Current remaining performance obligations
Raises revenue growth
Data 360 and related category growth of 0.23 in constant currency
Faster-growing subscription-category revenue
Raises revenue growth
Sales and marketing fell to 0.34 of revenue from 0.35
Selling-cost efficiency
Raises operating margin
Product development remains near 0.14 of revenue
Research and development intensity
Raises reinvestment
Latest effective tax rate of 0.23
Cash tax burden
Informs tax rate
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 20.5% a year. Over the last 5 years it grew 13.9% a year — so the price assumes more than it has delivered.
What else could explain it?›
- Or, holding growth steady
- the price is also consistent with a 39.4% operating margin, against the 25.0% assumed here.
- How confident is this estimate?
- Robustness 54.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$42.8B
Diluted shares
871,000,000
Net cash
-$30.3B
Bear
low confidence$59.33
IV / share
-69.8% vs $196.23
- Explicit cash flows
- $25.05
- Terminal value
- $69.12
- Net cash
- -$34.84
- Intrinsic value / share
- $59.33
116.5% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
bear revenue growth (avg 6%) runs well above the trailing -18% trend
Revenue growth9.0% → 7.0% → 6.0% → 5.0% → 4.0%medium
How derived: Starting below management's fiscal 2027 guidance of 0.11, the path assumes Informatica's contribution fades, mature core applications remain near their recent 0.07 constant-currency growth, and competition steadily reduces growth.
Why this confidence: Current management guidance and product-level growth disclosures ↑, Five-year competitive and AI-adoption uncertainty ↓
Evidence for
- Agentforce Apps, representing the larger subscription category, grew only 0.07 in constant currency in Q1 FY27.[Salesforce Q1 FY27 Results]· primary
- Management said approximately 0.03 of fiscal 2027 growth comes from Informatica, making the reported 0.11 guidance materially acquisition-assisted.[Salesforce Q1 FY27 Results]· primary
Evidence against
- Current remaining performance obligations increased 0.14, while Agentforce and Data 360 annual recurring revenue exceeded 0.20 growth, indicating stronger demand than this case assumes.[Salesforce Q1 FY27 Results]· primary
Operating margin22.0%medium
How derived: Starting from the latest quarterly margin near 0.211 and fiscal 2027 guidance of 0.206, only modest expansion is allowed because continuing AI investment and acquisition amortization offset sales efficiency.
Why this confidence: Near-term GAAP guidance and recent reported margin ↑, Uncertain balance between AI efficiencies and reinvestment ↓
Evidence for
- Salesforce guided to a fiscal 2027 GAAP margin of 0.206, and Q1's reported margin was approximately 0.211.[Salesforce Q1 FY27 Results]· primary
- Management expects research and development to remain a consistent share of revenue while AI-related efficiencies are reinvested.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Management expects sales and marketing and general administration to decline as shares of revenue through self-service, partner channels, and AI-enabled productivity.[Salesforce Q1 FY27 Form 10-Q]· primary
Tax rate25.0%medium
How derived: Starting from the latest effective rate of 0.23, the assumption adds a cushion for state taxes, non-deductible costs, acquisition effects, and less favorable stock-compensation tax benefits.
Why this confidence: Recent reported effective tax rates ↑, Jurisdictional, acquisition, and discrete-item variability ↓
Evidence for
- The Q1 FY27 effective tax rate was 0.23, above the 0.21 federal statutory rate because of state and local taxes and non-deductible items.[Salesforce Q1 FY27 Form 10-Q]· primary
- Salesforce says its rate may vary with acquisitions, operating changes, stock compensation, foreign earnings, and tax-law changes.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Research and development credits partially offset the items that caused the latest rate to exceed the federal statutory rate.[Salesforce Q1 FY27 Form 10-Q]· primary
Reinvestment rate35.0%low
How derived: Expressed as a share of after-tax operating profit, this rate assumes weak growth efficiency because Salesforce continues funding AI infrastructure, product development, contract acquisition costs, and integration despite slower revenue growth.
Why this confidence: Detailed investment and capital-expenditure disclosures ↑, Reinvestment includes internally developed software and selling costs not fully represented by capital expenditures ↓, Future acquisition spending is unpredictable ↓
Evidence for
- Management expects research and development to remain near 0.14 of revenue and says AI efficiencies will be reinvested in the product roadmap.[Salesforce Q1 FY27 Form 10-Q]· primary
- Salesforce expects continued investment in cloud capacity, security, internal systems, and Informatica integration.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Management's fiscal 2027 capital-expenditure guidance is only about 0.015 of revenue, and it says infrastructure investment could slow.[Salesforce Q1 FY27 Results]· primary
Terminal growth2.0%low
How derived: The mature growth rate is set below the five-year endpoint because Salesforce is already a large platform and its filing describes a rapidly evolving market with low entry barriers and intensifying AI competition.
Why this confidence: Recurring and diversified revenue base ↑, Terminal horizon extends beyond observable company guidance ↓, Rapid technological change ↓
Evidence for
- Salesforce describes its market as highly competitive, rapidly evolving, fragmented, and subject to low barriers to entry and frequent product introductions.[Salesforce FY26 Form 10-K]· primary
Evidence against
- Subscription and support produced approximately 0.95 of Q1 FY27 revenue, and no customer represented at least 0.10 of revenue, supporting durability and diversification.[Salesforce Q1 FY27 Form 10-Q]· primary
Base
low confidence$111.81
IV / share
-43.0% vs $196.23
- Explicit cash flows
- $35.29
- Terminal value
- $111.36
- Net cash
- -$34.84
- Intrinsic value / share
- $111.81
99.6% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
base revenue growth (avg 9%) runs well above the trailing -18% trend
Revenue growth11.0% → 10.0% → 9.0% → 8.0% → 7.0%medium
How derived: Starting at management's fiscal 2027 guidance of 0.11, growth gradually normalizes as fast-growing Data 360 and Agentforce offset slower core applications without indefinitely sustaining their early growth rates.
Why this confidence: Near-term guidance, contracted backlog, and FY30 management target ↑, Acquisition and currency effects obscure organic momentum ↓, Long-term AI monetization remains unproven at company scale ↓
Evidence for
- Management guided fiscal 2027 revenue growth to 0.11 and current remaining performance obligations grew 0.14.[Salesforce Q1 FY27 Results]· primary
- Salesforce targets organic revenue above $60 billion in fiscal 2030, implying organic compounded growth of at least 0.10 from fiscal 2026.[Salesforce FY30 Targets]· primary
Evidence against
- Approximately 0.03 of fiscal 2027 growth comes from Informatica, while Agentforce Apps grew only 0.07 in constant currency in Q1.[Salesforce Q1 FY27 Results]· primary
Operating margin25.0%medium
How derived: Starting from the latest quarterly margin near 0.211, the model allows expansion to 0.25 as revenue outgrows sales and administrative costs, while retaining substantial research, stock-compensation, and acquisition-amortization expense.
Why this confidence: Demonstrated expense leverage and explicit efficiency commentary ↑, Difference between GAAP results and management's non-GAAP framework ↓, Future stock awards and acquisition amortization ↓
Evidence for
- In Q1 FY27, research and development and sales and marketing each declined 0.01 as shares of revenue because revenue grew faster than those expenses.[Salesforce Q1 FY27 Form 10-Q]· primary
- Management expects sales and marketing and general administration to become smaller shares of revenue through self-service, partner channels, and AI productivity.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Fiscal 2027 GAAP margin guidance is only 0.206, including stock compensation of approximately 0.09 of revenue and intangible amortization of approximately 0.042.[Salesforce Q1 FY27 Results]· primary
Tax rate23.0%high
How derived: The assumption holds the latest 0.23 effective rate because the 0.21 federal rate is consistently supplemented by state, local, and non-deductible costs but partly offset by research credits.
Why this confidence: Two recent reported periods clustered near the assumption ↑, Discrete tax and acquisition effects ↓
Evidence for
- The effective tax rate was 0.23 in Q1 FY27 and 0.22 in fiscal 2026.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- The federal statutory rate is 0.21, and research credits partly reduce the effect of state taxes and non-deductible expenses.[Salesforce Q1 FY27 Form 10-Q]· primary
- Salesforce warns that acquisitions, stock compensation, foreign earnings, and tax-law changes can cause the rate to fluctuate.[Salesforce FY26 Form 10-K]· primary
Reinvestment rate27.0%low
How derived: Expressed as a share of after-tax operating profit, this rate balances modest physical capital needs with ongoing AI development, cloud capacity, contract acquisition, and Informatica integration required to support upper-single-digit growth.
Why this confidence: Company disclosure of capital spending and operating investment ↑, Accounting treatment obscures total economic reinvestment ↓, Acquisition cadence is not forecastable ↓
Evidence for
- Salesforce expects research and development to remain a consistent share of revenue while continuing investment in AI, agents, Data 360, and Informatica integration.[Salesforce Q1 FY27 Form 10-Q]· primary
- Capitalized customer-contract acquisition costs are amortized over four years for new contracts and two years for renewals, showing that selling investment supports multi-year revenue.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Fiscal 2027 capital expenditures are guided to approximately 0.015 of revenue, indicating that the subscription model is not physically capital intensive.[Salesforce Q1 FY27 Results]· primary
Terminal growth2.5%low
How derived: The mature rate is set below the explicit five-year growth path but above the bear case because recurring subscriptions, customer diversification, and a broad platform should support durable growth despite intense competition.
Why this confidence: Large recurring and diversified revenue base ↑, Forecast extends indefinitely beyond management guidance ↓, Competitive and technological disruption risk ↓
Evidence for
- Subscription and support generated approximately 0.95 of Q1 FY27 revenue, while no customer represented at least 0.10 of revenue.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Salesforce says competitors can offer better pricing, faster implementations, or more flexible contracts and that AI integration is increasing competition.[Salesforce FY26 Form 10-K]· primary
Bull
low confidence$176.85
IV / share
-9.9% vs $196.23
- Explicit cash flows
- $46.48
- Terminal value
- $165.21
- Net cash
- -$34.84
- Intrinsic value / share
- $176.85
93.4% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
bull revenue growth (avg 11%) runs well above the trailing -18% trend
Revenue growth12.0% → 12.0% → 11.0% → 10.0% → 9.0%low
How derived: Starting above fiscal 2027 guidance, the path assumes the 0.14 growth in contracted backlog converts well and rapid Agentforce and Data 360 adoption becomes large enough to produce sustained double-digit growth.
Why this confidence: Strong backlog and disclosed AI-product adoption ↑, Assumption exceeds near-term company guidance ↓, Fast-growing products remain small relative to total revenue ↓
Evidence for
- Agentforce and Data 360 annual recurring revenue reached nearly $3.4 billion and grew above 2.00, while Agentforce annual recurring revenue grew 2.05.[Salesforce Q1 FY27 Results]· primary
- Current remaining performance obligations grew 0.14, and management expects organic acceleration in the second half of fiscal 2027.[Salesforce Q1 FY27 Results]· primary
Evidence against
- Management's fiscal 2027 guidance is 0.11 reported growth with approximately 0.03 contributed by Informatica, below this case's assumed organic momentum.[Salesforce Q1 FY27 Results]· primary
- The much larger Agentforce Apps category grew only 0.07 in constant currency in Q1 FY27.[Salesforce Q1 FY27 Results]· primary
Operating margin28.0%low
How derived: Starting from the latest quarterly margin near 0.211, the model assumes strong sales productivity, self-service distribution, administrative automation, and revenue scale produce substantial GAAP expense leverage.
Why this confidence: Demonstrated expense leverage and explicit productivity initiatives ↑, Target requires much faster GAAP improvement than current guidance ↓, Management's long-term framework uses non-GAAP profitability ↓
Evidence for
- Management expects sales and marketing and general administration to decline as shares of revenue through partner-led and self-service channels and AI productivity.[Salesforce Q1 FY27 Form 10-Q]· primary
- Salesforce's fiscal 2030 framework targets the sum of constant-currency subscription growth and non-GAAP profitability at 0.50.[Salesforce FY30 Targets]· primary
Evidence against
- Fiscal 2027 GAAP margin guidance is 0.206, and stock compensation plus acquired-intangible amortization account for approximately 0.132 of revenue in the GAAP-to-non-GAAP reconciliation.[Salesforce Q1 FY27 Results]· primary
Tax rate21.0%low
How derived: Starting from the 0.21 federal statutory rate, the assumption treats research credits and favorable global income mix as sufficient to offset most state, local, and non-deductible costs over time.
Why this confidence: Known federal statutory rate and recurring research credits ↑, Assumption is below recent effective rates ↓, Future global income mix and tax rules are uncertain ↓
Evidence for
- The U.S. federal statutory corporate rate cited by Salesforce is 0.21, and research and development credits reduce its effective burden.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Salesforce's actual effective rate was 0.23 in Q1 FY27 because state and local taxes and non-deductible items outweighed available offsets.[Salesforce Q1 FY27 Form 10-Q]· primary
Reinvestment rate20.0%low
How derived: Expressed as a share of after-tax operating profit, this rate assumes Salesforce converts AI-driven productivity and its recurring subscription model into unusually efficient growth while still funding development and cloud capacity.
Why this confidence: Low disclosed capital intensity ↑, Assumed productivity improvement has limited operating history ↓, Economic reinvestment in engineering and customer acquisition is difficult to measure ↓
Evidence for
- Fiscal 2027 capital expenditures are guided to only approximately 0.015 of revenue.[Salesforce Q1 FY27 Results]· primary
- Management expects AI, self-service, and partner channels to improve sales and administrative productivity.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Management expects research and development to remain a consistent share of revenue and plans to reinvest generative-AI efficiencies in the product roadmap.[Salesforce Q1 FY27 Form 10-Q]· primary
Terminal growth3.0%low
How derived: The mature rate assumes Salesforce's recurring, diversified platform remains a durable beneficiary of expanding enterprise data and automation demand, while still fading well below the explicit forecast.
Why this confidence: Recurring, diversified, and broadly integrated platform ↑, Perpetual assumption exceeds the period covered by company targets ↓, Long-run AI competition and regulation ↓
Evidence for
- Approximately 0.95 of revenue is subscription and support, no customer contributes at least 0.10 of revenue, and the platform spans sales, service, marketing, commerce, collaboration, data, integration, and analytics.[Salesforce Q1 FY27 Form 10-Q]· primary
Evidence against
- Salesforce identifies low barriers to entry, rapidly changing technology, AI regulation, pricing competition, and faster implementations by competitors as long-term risks.[Salesforce FY26 Form 10-K]· primary
Valuation robustness
reliability of the estimate, not a stock rating54 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 100% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The reinvestment assumption is low-confidence.→ reinvestment
- The terminal growth assumption is low-confidence.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q2 2025 | 8.4% | 0.78 | 21.8% | 973M | -1.3% |
| Q3 2025 | 8.3% | 1.84 | 32.4% | 965M | -1.6% |
| Q1 2026 | 7.6% | 6.49 | 5.1% | 970M | -1.5% |
| Q2 2026 | 9.8% | 0.63 | -19.0% | 962M | -1.1% |
| Q3 2026 | 8.6% | 2.29 | 24.0% | 952M | -1.3% |
| Q1 2027 | 13.3% | 7.53 | 15.9% | 871M | -10.2% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The 10-year U.S. Treasury par yield on the latest trading day is used as the nominal U.S.-dollar risk-free rate.
The regression beta for 309 U.S. software system and application companies is used because it is a transparent sector estimate matched to Salesforce's business.
The forward-looking implied premium derived from the S&P 500's price, expected cash flows, growth, and the Treasury rate is used instead of a historical-return average.
The most recent company-hosted delayed NYSE quote available from Salesforce Investor Relations is used as the observable share price.
Generated 8/16/2026, 7:53:07 AM · pipeline v1.1.0