QS Research · Michael Burry's Scion Capital analyst template · 2006
Salesforce, Inc. (CRM)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case none · downside -22% · upside +28%
Using the TTM to Jul 31, 2026 base, today's 16.1x EV/EBITDA on $12.66B EBITDA gives $203.72B EV, less $27.89B net debt equals $175.83B equity, or about $214/share against $213.65, so the base case is roughly 0%. A 13.0x downside gives about $166 (-22%) and a 20.0x upside gives about $274 (+28%), roughly 1.3:1 risk/reward, not the +30% base with a -25% floor that a long requires. The market is not missing the cash flow: $15.15B TTM FCF and an 8.6% FCF yield are visible, but it is discounting flat GAAP operating income, debt-funded buybacks ($35.07B TTM vs $15.15B FCF) and unproven organic AI monetization. This is a watch, not a long, until either the multiple falls toward the downside case or organic reacceleration is proven.
Key numbers
- Share price: $213.65
- Market cap: $175.83B
- Latest financial period: TTM to Jul 31, 2026
- Revenue (TTM): $43.94B
- EV / EBITDA (TTM): 16.1x
- P/E (TTM): 18.2x
- Price / book: 4.58x
The 15 boxes
- ✓ 1. Long-form business notes
Salesforce makes money primarily from subscriptions to CRM and agentic-enterprise software, sold through a direct sales force and, to a lesser extent, partners; the 10-K describes service offerings but gives no segment revenue split. FY2026 revenue was $41.52B, operating income $8.33B and operating cash flow $15.00B, versus FY2021 revenue $21.25B, operating income $455.0M and operating cash flow $4.80B. Between the FY2021 and FY2026 10-Ks the offering set moved from Customer 360 (Sales, Service, Marketing, Commerce, Experience, Platform, Analytics, Integration) and a pending Slack deal to an Agentforce 360 Platform with Agentforce, Data 360, Slack and Informatica, which closed in Q4 FY2026. Unit economics are described qualitatively through multi-tenancy and paying-subscription ranges, not ARPU or segment margins.
- ✓ 2. Competitive advantage
CRM shows a scale-and-cash-flow advantage, not a demonstrated durable moat: FY2026 revenue was $41.52B, gross profit $32.26B, operating income $8.33B and operating cash flow $15.00B on $594.0M capex, with gross/operating profit and operating cash flow up sharply from FY2021. The 10-K calls its market highly competitive and fragmented with low barriers to entry and lists AI-native startups, free/bundled software and platform vendors as competitors. Customer concentration is low, with no customer above 10% of revenue in FY2026, FY2025 or FY2024, but risk factors cite attrition/renewal uncertainty, pricing pressure and brand-maintenance risk. Net income is a poor read on the operating record because FY2021 and FY2023 net income diverge from pre-tax income without explanation in the XBRL.
- ✓ 3. 10-Q takeaways
Q2 FY27 (quarter ended July 31, 2026) revenue rose 11% to $11.3 billion and subscription and support rose 12% to $10.8 billion, but operating income was flat in dollars ($2,331M vs $2,332M) and GAAP operating margin slipped to 21% from 23%. Reported net income of $3,526M and GAAP diluted EPS of $4.29 are inflated by $2,613M of strategic-investment gains in the quarter, including $2.7 billion of unrealized Anthropic gains, so the quarter's headline profit is not an operating result. Cash flow was strong ($1,269M operating in the quarter, $7,970M for six months), cash is $11.4 billion against $39.5 billion of debt principal after the March 2026 offering, and management raised FY27 revenue guidance to $46.1-$46.4 billion with a 20.1% GAAP operating margin.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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