CRM Q4 FY2026: Thesis Upgraded to Price-Below-Value at ~10x FCF

Salesforce delivered its strongest quarter in years, and our thesis assessment has responded accordingly. After incorporating Q4 FY2026 earnings data across all nine forecast markets, we have upgraded the classification from “price-at-value” to “price-below-value” and reclassified EXPECTATIONS_PRICED from DEMANDING to MODEST. At $183 and approximately 10x forward EV/FCF on $16.5B+ guided FCF, the embedded expectations are now below what management has explicitly committed to deliver.

Price at Value

Prior classification

Price Below Value

Updated classification

$183

~10x forward EV/FCF

$11.2B

Q4 Revenue

+12% YoY / +10% CC

$72B

Total RPO

+14% YoY (reversal)

$800M

AgentForce ARR

+169% YoY, 120+ ILAs

$16.5B+

FY27 FCF Guide

+18% from FY26

What Drove the Upgrade

Q4 FY2026 broke the 7-quarter revenue growth band of 8-10%. Revenue of $11.2B (+12% YoY, +10% constant currency) fired our de-escalation trigger for NARRATIVE_REALITY_GAP. Total RPO reversed dramatically from ~$60B to $72B (+14% YoY), eliminating the forward commitment weakness that was our strongest negative competitive signal. Best-ever large deal performance (12 deals above $10M, including 1 above $50M) and AgentForce at $800M ARR with 120+ Integrated License Agreements confirm that the AI transition is beginning to materialize in operational metrics.

The single signal change from our 7-lens analysis — EXPECTATIONS_PRICED moving from DEMANDING to MODEST — reflects a fundamental shift in the risk-reward. At ~10x forward EV/FCF on $16.5B+ FY27 FCF guidance, with 10-11% revenue growth and 34.3% margin expansion, the stock now requires less than what management is explicitly committing to deliver. The deceleration fragility that drove the May 2024 20%+ decline is now priced into the multiple itself.

Prediction Ensemble: 4 Resolved, 5 Updated

Four markets resolved with an average Brier score of 0.22. The ensemble was well-calibrated on threshold events (AgentForce $1B: Brier 0.05, margin guidance: Brier 0.05) but systematically too bearish on execution metrics (revenue growth: Brier 0.58). This calibration feedback supports the upgrade: when the ensemble underestimates CRM execution, the remaining active markets may also be conservative.

AgentForce pricing remains stable57% → 67%0.87 agreement

Seat cannibalization evidence14% → 7%0.97 agreement

ValueAct board exit25% → 28%0.91 agreement

Goodwill impairment charge6% → 4%0.99 agreement

Attrition exceeds 10%6% → 4%0.99 agreement

Guide-and-Raise Pattern Confirmed

The Q4 earnings confirmed Salesforce's systematic guide-and-raise pattern for the fifth consecutive quarter. FY27 guidance of 10-11% revenue growth, 34.3% margin, and “at least $16.5B” FCF all represent achievable targets that management has consistently exceeded. The $50B buyback authorization — with Benioff calling these “great prices” — represents an informed insider signal about valuation. When the stock trades at ~10x the FCF that management is explicitly committing to deliver, the embedded expectations are modest by any reasonable measure.

Key Counterweight: Organic Growth Gap

The narrative-reality gap is narrowing but not closed. Organic cRPO growth (excluding the ~4pp Informatica contribution) was only ~9% constant currency — in-line with guidance but no beat. AgentForce at $800M is still only ~2% of revenue. The new AWU metric (2.4B Agentic Work Units) adds narrative without demonstrated revenue linkage. And the $50B buyback authorization with debt-for-buyback rhetoric creates capital allocation risk if executed aggressively. These factors keep our confidence at MEDIUM rather than HIGH.

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