Salesforce [CRM]
As of 2026-07-29 · spot $188.46 · Two outputs are required and both are given: a 12-month target and the implied-path test. Neither replaces the other.
Every figure below is from the Q1 FY27 10-Q balance sheet and income statement, read directly, not from XBRL aggregation alone.
| Input | Value | Source / note |
|---|---|---|
| Spot | $188.46 | 2026-07-29 close, Alpaca |
| Shares outstanding | 819.0m | dei cover, 2026-05-21 |
| Shares pro-forma for ASR completion | ~793m | 103m of ~129m delivered; ~26m still due, cash already paid |
| Market cap | $154,349m | 819.0m × $188.46 |
| Market cap pro-forma | $149,438m | 793m × $188.46 |
| Cash and equivalents | $8,935m | balance sheet |
| Marketable securities | $2,902m | balance sheet |
| Debt, current | $0m | balance sheet |
| Noncurrent debt | $39,280m | balance sheet |
| Net cash (ex-lease) | −$27,443m | net debt |
| Operating leases (current + noncurrent) | $557m + $2,047m | if treated as debt: −$30,047m |
| Strategic investments | $7,772m | excluded from net cash; disclosed here |
| TTM revenue | $42,829m | 10,236 + 10,259 + 11,201 + 11,133 |
| TTM GAAP operating income | $8,731m | Q2–Q4 FY26 + Q1 FY27 |
| TTM GAAP operating margin | 20.4% | |
| Enterprise value | $181,792m | market cap + net debt |
| EV / TTM sales | 4.24x | screen said 4.17x |
| EV / TTM GAAP EBIT | 20.8x | screen said 20.8x ✓ |
Screen discrepancy, reported not silently adopted: the screen's net cash of −$30,025m includes operating lease liabilities as debt but omits the $557m current portion. Neither treatment is wrong; the difference is $2,582m, or 1.4% of EV. I use the ex-lease figure as the headline and disclose the alternative.
Criteria requirement: an exit multiple may only be drawn from a comparator set whose growth brackets the subject's growth at the exit year. If no such set exists, declare it UNIDENTIFIED.
CRM's organic run-rate is 8.8%, decaying toward high single digits by year 5. The comparator set below is mature, GAAP-profitable enterprise software, with every member's latest-quarter revenue growth verified from its own XBRL filings and every EV computed from its own balance sheet on this date:
| Comparator | Latest-Q growth | TTM GAAP op margin | EV / TTM EBIT |
|---|---|---|---|
| ADP | 7.0% | n/a (tag absent) | n/a |
| CRM (subject) | 8.8% organic | 20.4% | 20.8x |
| INTU | 10.4% | 27.5% | 16.2x |
| ADBE | 12.0% organic | 36.1% | 11.6x |
| WDAY | 13.5% | 10.4% | 40.5x |
| VEEV | 16.3% | 28.8% | 27.7x |
| MSFT | 17.7% | 46.8% | 18.8x |
| ORCL | 20.6% | 30.6% | 14.9x |
The set brackets the subject on growth (7.0% to 20.6% versus 8.8%). Growth-matched: SATISFIED. It is not a set of sub-$100m shells and it is not universe-wide — every member is a $10bn+ enterprise-software company.
Usable EV/EBIT anchors (excluding WDAY and ADP, whose margins are not normalised): ADBE 11.6x · ORCL 14.9x · INTU 16.2x · MSFT 18.8x · CRM 20.8x · VEEV 27.7x.
Per criteria.md, the base may not sit below every stated anchor without a separately argued reason. 17.5x sits inside the set, at its median. No silent haircut is applied.
Terminal operating margin: 24%. Evidenced, not asserted. GAAP operating margin ran 2.1% (FY22) → 3.3% → 14.4% → 19.0% → 20.1% (FY26) → 20.4% TTM. The expansion has visibly flattened: +1.4pp across the last two years. Non-GAAP is 34.8%, which caps the plausible range. 24% assumes +3.6pp over five years — roughly the observed pace of the last two years continued, and well short of closing the non-GAAP gap.
Solved with assets/reverse_dcf.py. Terminal value is 100% of EV by construction in this instrument, so the
reverse DCF is mandatory as the primary long-horizon output and the forward DCF is not reported as a verdict.
Held fixed: terminal EBIT margin 24%, WACC 9.5%, horizon 5 years.
| Case | Revenue base | Shares | Exit multiple | Required 5y revenue CAGR | Demonstrated organic | Margin (pp) |
|---|---|---|---|---|---|---|
| TTM base | $42,829m | 819.0m | 11.6x (anchor low) | 19.1% | 8.8% | −10.3 |
| TTM base | $42,829m | 819.0m | 17.5x (anchor median) | 9.7% | 8.8% | −0.9 |
| TTM base | $42,829m | 819.0m | 27.7x (anchor high) | 0.1% | 8.8% | +8.7 |
| Pro-forma | $46,050m (FY27 guide) | 793.0m | 11.6x | 16.8% | 8.8% | −8.0 |
| Pro-forma | $46,050m | 793.0m | 17.5x | 7.6% | 8.8% | +1.2 |
| Pro-forma | $46,050m | 793.0m | 27.7x | −1.9% | 8.8% | +10.7 |
Held fixed: revenue CAGR 8.8% (demonstrated organic run-rate), terminal margin 24%, WACC 9.5%.
Not on scenario probabilities. That was the NTRA failure and it is not repeated.
| Exit multiple | 11.6x | 14.9x | 17.5x | 20.8x | 27.7x |
|---|---|---|---|---|---|
| Required CAGR (TTM base) | 19.1% | 13.6% | 9.7% | 5.6% | 0.1% |
| Margin vs 8.8% demonstrated | −10.3pp | −4.8pp | −0.9pp | +3.2pp | +8.7pp |
The verdict flips between the 14.9x and 20.8x anchors. Both are real observations in the growth-matched set (ORCL and CRM's own current multiple).
INDETERMINATE. The margin is −0.9pp on the TTM base and +1.2pp on the pro-forma base — inside ±3pp in both directions.
The analysis does not determine the answer for Salesforce. A judgement input does, and it is identifiable precisely: it is whether a 9%-growing, 20%-GAAP-margin application-software business with $27.4bn of net debt should exit at ORCL's 14.9x or at its own current 20.8x. That is a 6pp swing in the required growth rate and it is not resolvable from the filings. I decline to manufacture a verdict from it.
What can be said without judgement: the price does not require acceleration. It requires 9.7% against 8.8% demonstrated, at the median of a defensible growth-matched anchor set. That is a materially different statement from PANW's 60.4% or CRWD's 44.8% in the same cluster, and it is why CRM ranks 2nd of 5 rather than 5th.
Price/sales at each fiscal quarter end, priced ~45 days after period end (filing proxy), share counts as-reported, split factors applied explicitly (CRM: none):
2019-01 13.0 · 2020-01 11.3 · 2021-01 9.4 · 2021-10 10.4 · 2022-01 8.0 · 2022-10 4.3 · 2023-01 5.9 ·
2023-10 7.6 · 2024-01 8.5 · 2024-10 9.3 · 2025-01 7.2 · 2025-07 5.9 · 2026-01 4.5 · 2026-04 3.4
| Value | |
|---|---|
| P/S today | 3.60x |
| Percentile within its own five-year history | 5th |
| Percentile within its full 30-quarter history | 3rd |
| Five-year median | 6.52x · p25 5.90x · p75 7.95x |
| Five-year range | 3.35x – 10.42x |
CRM has never been cheaper on sales in the observable record.
valuation.md: "If the history is too short or spans a regime change, declare it UNIDENTIFIED rather than substituting a peer median."
| Then | Now | Δ | |
|---|---|---|---|
| Revenue growth | 24.3% (FY2022, 26,492/21,252) | 8.8% organic | −15.5pp |
| Net cash | +$2.6bn (a year ago) | −$27.4bn | re-leveraged |
The own-multiple history spans a documented growth-regime change of 15.5pp and a capital-structure change. A 6.52x median set when the company grew 24% is not a valid anchor for a company growing 8.8% with $27bn of net debt. Mean reversion within that history is therefore declared UNIDENTIFIED, and I do not report a reversion-based target as the target. Doing so would produce +107% and would be an artifact.
What is identified over 12 months, requiring no multiple judgement, is the arithmetic of forward revenue and a shrinking share count.
| Case | Multiple | 12-month value | vs spot |
|---|---|---|---|
| STATED TARGET — multiple unchanged at 3.60x | 3.60x | $215 | +14.2% |
| Half-reversion to the five-year median | 5.06x | $302 | +60.5% |
| Full reversion to the five-year median | 6.52x | $390 | +106.8% |
| Reversion down to the five-year low | 3.35x | $200 | +6.2% |
Twelve-month target: $215, +14.2% to spot. It is above spot, which valuation.md says to expect and which item B16 records this process previously failing to produce.
The target is deliberately unambitious: it credits Salesforce with delivering its own guidance and completing its own announced buyback, and credits the multiple with nothing. The +60% and +107% cases are shown because they are arithmetically available, and are explicitly labelled a judgement input rather than an output. If the multiple mean-reverts even halfway, this is a 60% return; the analysis cannot tell you whether it will.
Each appears in the Catalyst Calendar with a date. Per the brief, none is invented. 1. Q2 FY27 results (~late Aug 2026) — the organic growth number, guided to ~6–7%. 2. Q3 FY27 results (~early Dec 2026) — where management has promised organic acceleration; also ASR final settlement, which fixes the share count. 3. Q4 FY27 / FY28 guidance (~late Feb 2027) — first FY28 guide, first period where Informatica anniversaries and organic growth becomes visible in the reported line.
No professional target is on file for CRM in this book's reference set, so the sanity check cannot be run. Stated rather than fabricated.
Type: MEASURED. Logged, scored, and it does not reject the name.
Scenario — consumption transition compresses revenue per customer while the balance sheet is levered. Probability 25%.
Named cause and mechanism. Salesforce is deliberately migrating from per-seat to consumption pricing (28.6trn tokens processed, Agentic Work Units as the unit of account, "consumption" mentions up from zero two years ago). In every historical software pricing transition the transitional period compresses revenue per customer before it expands it, because the new meter is sold at a discount to win the migration. Salesforce discloses no seat count, no price, and no retention rate (Research §4–5), so the compression would be invisible until it appeared in cRPO — and cRPO is currently masked by Informatica's backlog until Q1 FY28.
Quantified: organic growth falls from 8.8% to ~4% for two years. On the anchor's low end (11.6x, the ADBE observation) with the terminal margin held at 24%, the implied equity value is approximately $95–105 per share, a 45–50% permanent impairment, and the $39.3bn of debt does not amortise while it happens. Interest of ~$2.0bn a year against a shrinking EBIT base is what converts a de-rating into an impairment.
Not a going-concern case. $14.996bn of TTM operating cash flow against ~$2.0bn of interest is 7.5x cover; the debt is a valuation risk, not a solvency risk. This is stated explicitly because criteria.md requires a going-concern case to be flagged when it exists, and here it does not.
Interim control: inverse-volatility sizing. CRM's 252-day volatility is 40.6% — the lowest of the five names in this cluster — so it sizes up relative to CRWD (47.6%) and WDAY (49.0%) automatically.