Will Salesforce record a goodwill impairment charge by Q2 FY2027 (July 2026)?

Q4 FY2026 earnings dramatically strengthen the case against impairment. Revenue acceleration to 12% YoY (best quarter in observation period) directly feeds into the DCF-based impairment testing model -- higher growth rates produce higher fair values at every reporting unit. The FCF guidance raise to $16.5B+ means the cash-generating capacity supporting these goodwill balances is expanding, not contracting. The clean EY audit opinion from the prior 10-K already attested that fair values exceeded carrying values, and the business has only gotten stronger since. The annual impairment test in the upcoming 10-K (~April 2026) will reflect these improved fundamentals. Moving from 6% to 4% -- the acceleration removes the narrow 'what if Q4 disappoints' pathway that existed at the time of the prior prediction.

The Informatica integration 'outperforming expectations' with Cloud ARR at $1.1B and landing in 6 of top 10 deals is critical for the goodwill question. The prior prediction flagged Informatica's ~$6-7B goodwill addition as a potential 'big bath' trigger if integration disappointed. That pathway is now significantly weakened. However, I maintain slightly higher than the lowest estimates because: (1) the stock is still down 49% from ATH, which means market cap relative to book value cushion is reduced compared to peak, (2) ACCOUNTING_INTEGRITY remains QUESTIONABLE, and (3) the Informatica goodwill will appear on the balance sheet for the first time in the upcoming 10-K, creating a new reporting unit that hasn't been through a full impairment test cycle yet.

The total RPO reversal to $72B (+14% YoY) from the ~$60B decline observed earlier is a strong forward indicator. RPO represents contracted future revenue that directly supports the 'future cash flow' projections used in goodwill impairment testing. This reversal means the forward revenue visibility underpinning goodwill fair values has materially improved. Combined with the $50B buyback authorization (management signaling confidence in intrinsic value exceeding market price), the 15-17% AE capacity growth, and double-digit pipeline growth, every forward-looking metric that feeds into impairment test assumptions has improved. The only residual risk is an exogenous shock (macro recession, interest rate spike changing discount rates) -- but nothing in the current environment suggests this within 6 months.

Every data point from Q4 FY2026 earnings moves in the direction of LOWER impairment risk. Revenue accelerating, margins expanding to 34.3% guidance, FCF growing 18%+ to $16.5B, Informatica outperforming, RPO reversing upward, record deal sizes. The clean EY audit opinion from the prior 10-K was already strong evidence; now the business trajectory since that audit has only improved. Salesforce has zero impairment history across 20+ years of acquisitions. The combination of 'never done it before' + 'business is accelerating' + 'auditor just said everything is fine' + '6-month window' makes this essentially a tail-risk event requiring multiple simultaneous failures. Probability should be at the lower bound of reasonable estimates.

The calibration data from resolved sibling markets shows the ensemble was systematically too bearish on CRM execution metrics. Revenue growth 10% CC resolved YES vs. our 24% prediction (we were way too bearish), cRPO growth >11% resolved YES vs. our 54% (bearish again). This pattern suggests we should be even more confident in CRM's fundamental trajectory, which further reduces any impairment pathway. The margin guidance at 34%+ was predicted well (77% → YES), confirming the profitability thesis. With the business executing above expectations across the board, the gap between fair value and carrying value at every reporting unit is likely widening, not narrowing. Annual impairment test in the ~April 2026 10-K should pass easily.

The Q4 earnings specifically addressed the two highest-risk goodwill tranches. Slack (historically criticized as overpriced at $27.7B) is being repositioned as an AI platform layer -- the revenue acceleration and AgentForce strategy give management a defensible narrative for continued high carrying value. Informatica ($6-7B new goodwill) is outperforming with $1.1B Cloud ARR and appearing in 6 of top 10 deals, which provides strong evidence for the initial purchase price allocation. Tableau ($15.7B) benefits from the overall platform acceleration -- 12% company-wide growth supports segment-level growth assumptions. The discount rate environment hasn't changed materially (Fed holding steady), so neither the numerator (cash flows) nor denominator (discount rate) of the impairment test has moved adversely.

Strongest quarter ever eliminates near-term impairment risk. 12% revenue growth, $16.5B+ FCF guidance, Informatica outperforming, RPO at $72B. Clean audit opinion still in force. Zero impairment history. No triggering event possible in this environment -- would require sudden catastrophic revenue collapse, which Q4 results and FY27 guidance directly contradict.

While Q4 results are very strong, I maintain a slightly higher estimate than the floor because: (1) the stock is down 49% from ATH, meaning the market-cap-to-book-value cushion is reduced from its peak, (2) ACCOUNTING_INTEGRITY remains QUESTIONABLE in committee assessment, and (3) the annual impairment test in the April 10-K covers all reporting units including potentially challenging legacy Tableau assumptions. However, the strong operating results make it nearly impossible for management to justify a charge -- revenue growth at 12% would need to reverse dramatically in a very short window.

Post-earnings update confirms: business accelerating, not decelerating. Goodwill impairment requires fair value to drop below carrying value at the reporting unit level. With revenue growing 12%, FCF expanding, RPO reversing upward, and Informatica outperforming, fair values at every reporting unit are rising. The resolution window covers 3 filing periods but the April 10-K is the only one with an annual impairment test -- and that test will reflect these strong Q4 results. Probability decreases from prior 6% baseline.