• Salesforce's shares have declined -29.7% YTD as of April 1, 2026, driven by the prevailing narrative that AI will structurally undermine per-seat SaaS pricing, as enterprises deploy AI agents to automate workflows and reduce reliance on Salesforce licenses.
• While AI is advancing quickly, we believe the risk of it displacing Salesforce is overstated, as incumbents still benefit from strong advantages in product depth and enterprise distribution, and competing solutions are unlikely to match them or gain meaningful paid adoption in the near term. 

• We believe Salesforce’s data gravity with trillion records, 150,000+ enterprise customers, and thousands of applications on AppExchange, constitutes an entrenched installed base that deepens rather than depreciates over time.

• The long-standing seat-based licensing model, where growth depended on adding more users, is gradually shifting toward consumption-based pricing and ELAs, enabling AI agents to autonomously handle enterprise workflows such as customer support resolution and lead qualification.
• Recent 4Q26 results support our view that AI disruption risks are overstated, with Remaining Performance Obligations (RPO) reached USD 72.4 billion (+14% y/y) while Current RPO (cRPO) increased 16% y/y to USD 35.1 billion, indicating solid near-term demand.

• Integration across core clouds, MuleSoft, and Data Cloud creates a high barrier to exit, as each additional Salesforce product deepens cross-functional workflows across sales, service, marketing, and analytics, raising switching costs and reinforcing platform dependency over time.

• While risks exist, Salesforce's elite free cash flow generation at 35% FCF margins and EBITDA margins expected to expand to approximately 40%. With the share price is now being valued at a market consensus forward PE multiple of 14x, we believe the market is mispricing Salesforce’s business with USD 72.4B in contracted backlog and 92% gross retention.

Executive Summary

We are initiating coverage on Salesforce, Inc. (CRM) with a BUY rating and price target of $288. At the current price of USD 186 (as of writing, 1 April 2026), this implies an upside potential of approximately 55%.

Salesforce is one of the most consequential enterprise software platforms ever built, serving as the customer data backbone for around 90% of the Fortune 500 and commanding approximately 21% of the global CRM market — more than 3x the share of its nearest competitor. The company’s FY2026 results strengthened the durability of this franchise: USD 41.5B in revenue, USD 14.4B in free cash flow, USD 72.4B in remaining performance obligations (RPO), and a 34.7% FCF margin that places Salesforce among the most cash-generative platforms in enterprise technology.

Our investment thesis rests on three pillars. First, the AI-driven selloff is overstated — Agentforce represents an additive consumption revenue layer, not a cannibalisation threat to the core seat-based model. Second, Salesforce’s data gravity with trillion records, 150,000+ enterprise customers, and thousands of applications on AppExchange, constitutes an entrenched installed base that deepens rather than depreciates over time. Third, elite free cash flow generation at 35% FCF margins and EBITDA margins expected to expand to approximately 40%, is being valued at a market consensus forward PE multiple of 14x, which we deemed as valuation mispriced for a business with USD 72.4B in contracted backlog and 92% gross retention.

Using a fair P/E of 17 times, the implied upside for Salesforce is 55% with a target price of USD 288.

Business Overview

Salesforce is the global leader in customer relationship management (CRM) software and a pioneer of the cloud-based SaaS model. Founded in 1999 by Marc Benioff, the company has evolved from a single sales automation product into a broad front-office platform that spans sales, service, marketing, commerce, analytics, integration, and enterprise collaboration. Today, it serves as a core system for managing customer-facing operations across major industries, including financial services, healthcare, manufacturing, retail, government, and technology.

Since its 2004 IPO, Salesforce has expanded into a multi-cloud enterprise platform through a mix of organic expansion and strategic acquisitions, including ExactTarget (Marketing Cloud, 2013), Demandware (Commerce Cloud, 2016), MuleSoft (integration, 2018), Tableau (analytics, 2019), and Slack (collaboration, 2021). These offerings are brought together under its Customer 360 ecosystem, a unified platform that integrates data, applications, and workflows across the full customer lifecycle.

Figure 1: Salesforce product expansion.

Source: Is Investment, iFAST compilations. Data as of 16 December 2025.

Revenue Composition and Product Portfolio

In FY2026 (fiscal year ended January 31, 2026), Salesforce generated total revenue of USD 41.5B, growing 9% y/y in constant currency. Of this, subscription and support revenue comprised 95% (USD 39.4B), reflecting the recurring, advance-billed nature of the business. Professional services revenue contributed the remaining 5% (USD 2.1B), a segment that is deliberately being shifted to the partner ecosystem to improve consolidated margins. Geographically, the Americas accounted for 65.5% of revenue (USD 27.2B), Europe 24.1% (USD 10.0B), and Asia-Pacific 10.4% (USD 4.3B).

Table 1: FY2026 Key Performance Indicators

Metric	FY2026 (Year Ended Jan 2026)
Total Revenue	USD 41,525M (+10% Y/Y, +9% CC)
Subscription & Support Revenue	USD 39,388M (95% of total)
GAAP Operating Income	USD 8,989M (21.6% margin)
Non-GAAP Operating Income	USD 14,156M (34.1% margin)
Free Cash Flow	USD 14,402M (34.7% FCF margin)
Operating Cash Flow	USD 14,996M (+14% Y/Y)
Total RPO / Current RPO	USD 72.4B (+14%) / USD 35.1B (+16%)
Agentforce ARR	USD 800M (+169% Y/Y)
Data 360 ARR (incl. Informatica)	> USD 2.9B (+200% Y/Y)
Cumulative Agentforce Deals	29,000 (up 50% Q/Q)
Revenue Attrition	8%

FY 26 Core Offerings’ Performance

Sales Cloud (USD 9.0B, +8% CC) the foundation of Salesforce’s installed base. Sales Cloud is the original product, the system of record for pipeline management, forecasting, and account management at the majority of Fortune 500 companies. Growth is stable at high-single-digits, reflecting the maturity of core SFA (Sales Force Automation) functionality. While Microsoft Dynamics 365 is gaining share in the CRM market overall, Sales Cloud’s deeply embedded position in enterprise workflows — custom objects, Apex triggers, approval chains, and territory management rules built over years, making displacement a multi-year, high-risk initiative for any enterprise considering a switch.

Service Cloud (USD 9.8B, +7% CC) is the largest segment and the natural proving ground for Agentforce. Customer service workflows are the highest-volume, most repetitive processes in enterprise front offices, making them ideal candidates for autonomous AI agents. Salesforce service cloud targets to keep the human agents for complex escalations (seat-based), deploy AI agents for Tier 1 inquiries (consumption-based). If the company can demonstrate measurable deflection rates and cost savings, Service Cloud becomes the blueprint for Agentforce monetisation across the broader platform. Q4 showed +7% CC growth, stable against prior quarters, suggesting the base business is holding while the AI overlay begins to ramp.

Platform, Slack & Informatica (USD 8.9B, +37% reported, +8% CC) was the fastest-growing segment in Q4 on a reported basis, though headline growth is significantly inflated by the USD 399M Informatica contribution from the November 2025 acquisition. On an organic constant-currency basis, growth was approximately 8%. This segment houses the Salesforce Platform (Force.com, Heroku), Slack, and now Informatica’s data management capabilities. It is also where the majority of Agentforce consumption revenue flows through via Flex Credits. The integration of Informatica’s data cataloguing and master data management capabilities is strategically important for the AI thesis where it provides the governance layer that makes enterprise data AI-ready.

Marketing & Commerce (USD 5.4B, -1% CC) enabling enterprises to execute targeted, data-driven campaigns and directly convert that engagement into transactions through tightly integrated customer journeys across marketing, sales, and digital storefronts. However, the cloud has contracted for the first time in Q4, marking it as the weakest cloud in the portfolio. Marketing Cloud faces sustained competitive pressure from Adobe (Experience Cloud, Marketo) and Commerce Cloud is losing ground to Shopify in the direct-to-consumer segment.

Integration & Analytics (USD 6.2B, +3% CC) decelerated from +6% in Q3 to +3% in Q4. MuleSoft, the API integration platform acquired for USD 6.5B in 2018, remains strategically critical as the connectivity layer between Salesforce and external systems. However, Tableau — the analytics and visualisation platform acquired for USD 15.7B in 2019, faces ongoing execution challenges, including leadership transitions and competitive pressure from Microsoft Power BI.

Figure 2: Salesforce’s revenue breakdown.

Industry Overview

Enterprises use customer relationship management (CRM) systems to centralise customer data, manage sales pipelines, automate marketing and service workflows, and improve conversion and retention through more targeted, data-driven engagement, as these platforms sit at the intersection of revenue generation and customer retention — the two most protected line items in any enterprise IT budget. As customer interactions become increasingly digital and fragmented across channels, CRM platforms have become essential tools for unifying touchpoints and enabling scalable, personalised customer management, further enhanced by the integration of AI capabilities.

Within the industry, Salesforce’s dominant share of about 21% reflects two decades of category leadership, but the competitive landscape is evolving. Microsoft Dynamics 365 is the fastest-growing major CRM platform, benefiting from its strong ecosystem like native integration with Teams, Copilot, Azure, and the broader Microsoft 365 stack. For enterprises already paying for M365 E3/E5 licences, the total cost of ownership argument for consolidating onto Microsoft’s CRM is compelling. Meanwhile, ServiceNow is expanding from IT service management into customer workflows, while HubSpot continues to capture mid-market share due to competitive pricing, easier and fast deployment.

At the same time, in this AI racing era, the broader AI infrastructure layer — where hyperscalers (AWS, Google Cloud, Azure) provide foundational models that third parties can build upon, this has created a narrative that enterprises may build their own bespoke CRM-adjacent AI solutions rather than buying from established vendors.

In this investment piece, we address the competitive dynamics underpinning our thesis. While the CRM market is becoming increasingly competitive and concerns around AI disruption are rising, we do not believe all CRM players will be displaced, as entrenched installed bases and proprietary data built over decades remain key moats. Although AI could disrupt the traditional seat-based pricing model over the long term, companies that successfully integrate AI into their offerings and transition toward a consumption-based pricing model are likely to emerge as winners.

Table 2: Salesforce vs. Key Competitors

	CRM	MSFT Dynamics 365	NOW	HUBS	Oracle CX	SAP CX
Forward P/E	13.9	22.0	25.1	19.1	19.7	20.0
Core Strength		Bundled with Office/Teams/Azure/Copilot	Workflow automation crossing into customer service	Simple, cheap, fast to deploy	Bundled with Oracle ERP/database	Bundled with SAP ERP
AI Strategy	Agentforce	Copilot	Now Assist	Breeze	HeatWave	Joule
Source: Bloomberg Finance L.P., iFAST compilations. Data as of 31 March 2026.

The AI Selloff is Overstated

AI augments human labour rather than driving seat optimisation

Salesforce shares have declined -29.7% YTD as of April 1, 2026, driven by the prevailing narrative that AI will structurally undermine per-seat SaaS pricing, as enterprises deploy AI agents to automate workflows and reduce reliance on Salesforce licenses.

Figure 3: Salesforce’s share price performance vs S&P 500 and internet peers.

While AI is advancing quickly, we believe the risk of it displacing Salesforce is overstated, as incumbents still benefit from strong advantages in product depth and enterprise distribution, and competing solutions are unlikely to match them or gain meaningful paid adoption in the near term. Salesforce’s seat licenses, Enterprise License Agreements (ELA), are not optional productivity tools but core systems of record that enterprises depend on to run daily operations. For example, Sales Cloud licenses allow teams to log activities, update pipeline stages, review account histories, and trigger workflows, many of which are tied to compliance and governance requirements.

Within enterprises, Ford is using multiple Salesforce applications and modules, including Salesforce Platform, Sales Cloud, and CRM Analytics to track orders, automate service requests, and other actions.

Spotify uses Salesforce Marketing Cloud to improve ad sales through automation and personalised content, with sales team productivity increased by 40%, and Sack-driven workflows that reduced meetings and emails have contributed to a 19% annual growth in advertising revenue.

Meanwhile, the presence of AI agents does not remove the need for these licenses, as human oversight remains necessary to manage customer relationships, validate AI-generated outputs, and maintain the level of data accuracy required by regulators, auditors, and management.

Moreover, the rise of “vibe coding” driven by AI has clear parallels with the adoption of open-source software during and after the dot-com era, when many expected lower-cost, faster-moving alternatives to replace proprietary platforms. Despite open-source solutions have improved over time, platforms like Salesforce are expected to continue scaling, as enterprise adoption depends not just on software, but also on integration, reliability, support, and ecosystem strength.

Agentforce: A New Consumption Base Revenue Layer on Top of the Existing Subscription Base

The long-standing seat-based licensing model, where growth depended on adding more users, is gradually shifting toward consumption-based pricing and ELAs. These models tie revenue more closely to actual customer usage via Flex Credit (the pay-as-you-go currency for the Agentforce platform that allows businesses to pay for specific AI actions performed, for example, updating records or resolving cases) and allow companies to scale more flexibly.

Right now, Salesforce is introducing a new consumption-based revenue layer through Agentforce alongside its core subscription model, enabling AI agents to autonomously handle enterprise workflows such as customer support resolution and lead qualification.

We opine the Agentforce adoption is moving beyond early testing into more scaled deployment. Flex Credits accounted for 50% of Q4 bookings, with over 60% coming from existing customers, supporting additional monetisation within the installed base and translated into Agentforce ARR of USD 800 million (+169% y/y).

Meanwhile, usage trends also support this shift, with 19T tokens processed all-time and 2.4 billion Agentic Work Units (AWU) delivered to date (with 771 million in 4Q26, +57% q/q), each representing a task completed by an AI agent, reflecting a transition from AI-assisted workflows to fully automated execution at scale.

Figure 4: Agentic Work Unit (AWU)

Source: Salesforce, iFAST compilations. Data as of 25 February 2026.

RPO Visibility and the Revenue Floor

Recent 4Q26 results also support our view that AI disruption risks are overstated. In Q4 FY2026, Remaining Performance Obligations (RPO) reached USD 72.4 billion (+14% y/y), representing approximately 1.7 years of forward revenue visibility. Current RPO (cRPO), expected to be recognised within 12 months, increased 16% y/y to USD 35.1 billion, indicating solid near-term demand. Something worth to highlight is that, cRPO may increasingly understate demand because Agentforce's consumption-based Flex Credits (50% of Q4 bookings) don't flow through traditional cRPO the same way seats do.

At the same time, despite price-sensitive competition from HubSpot and Zoho, gross revenue retention remains stable at approximately 92%, with enterprise retention significantly higher. Adding to that, 29,000 Agentforce deals were closed and 2.4 billion AWUs delivered, yet seat growth in Sales and Service Cloud has not decelerated. JPMorgan’s February 2026 partner survey further indicates that while some customers are reducing headcount and deploying Agentforce agents, overall seat growth remains positive y/y, suggesting that enterprises are adopting AI alongside existing licenses rather than replacing them.

Figure 5: Salesforce’s cRPOs.

Figure 6: Revenue and RPO growth

Data Gravity Creates an Irreplaceable Compounding Asset

Data Gravity and the Switching Cost Moat

We believe Salesforce’s competitive advantage extends beyond product features to the scale of data, integrations, and workflows embedded within its platform, with the company (Data 360) processing over 112 trillion records across pipeline histories, customer interactions, support cases, marketing engagement, and transactions, all of which are deeply integrated into custom objects, application logic, and downstream systems via APIs, making migration operationally complex and disruptive to core business processes.

Moreover, as customers adopt additional Salesforce products, cross-functional workflows across sales, service, marketing, and analytics deepen, raising switching costs and increasing reliance on the platform over time. Not to mention, integration across core clouds, MuleSoft, and Data Cloud creates a very high barrier to exit, with Deutsche Bank research noting that transitions to modular platforms like Sierra can take 4 to 6 months and cost several million dollars, requiring extensive testing, data migration, and user retraining. In many cases, the operational risks, such as disruption to pipeline visibility, client onboarding, and revenue execution, consistently proven to be outweighed the potential cost savings.

Customer behavior also supports this stickiness. A UBS survey shows that enterprises are deeply embedded in systems of record like Salesforce and are generally unwilling to undertake large-scale migrations due to the complexity and limited economic benefits.

Meanwhile, beyond its data advantage, Salesforce also benefits from a self-reinforcing ecosystem that increases switching costs. AppExchange, its enterprise app marketplace, hosts thousands of third-party applications built on the platform. These range from CPQ tools to industry-specific compliance solutions, extending functionality beyond what Salesforce develops internally. As a result, migrating away from Salesforce requires not only replacing the core CRM, but also finding alternatives for each AppExchange application in use, many of which do not have direct equivalents on competing platforms.

Therefore, with Salesforce’s entrenched installed base, data gravity, and its strong ecosystem, we believe platform transitions are particularly painful and resource-intensive for customised deployments, where workflows and data structures must be rebuilt, and that large enterprises view replacement as too operationally risky.

USD 50 Billion Buyback Authorisation Signals Management Conviction.

Amid lacklustre share price performance over the past year, Salesforce announced in its Q4 FY2026 earnings that it executed the largest accelerated share repurchase in corporate history in March, a USD 50 billion buyback. This represents the most significant capital allocation decision in the company’s 27-year history and is unambiguously bullish. CEO Marc Benioff’s remarks leave little room for interpretation, stating that the company is “aggressively repurchasing shares because we are so confident in the future of Salesforce.” We believe the message to investors is clear: the selloff is overstated, and management continues to see strong underlying value in the business.

Figure 7: Salesforce’s shares outstanding vs share price.

Valuation Remain Cheap. (Not a value trap!)

Salesforce generates USD 14.4B in annual free cash flow at a 34.7% FCF margin. This places it among the top five most cash-generative software companies globally, alongside Microsoft, Oracle, SAP, and Adobe. Such strong free cash flow is driven by advance-billed subscriptions (cash collected before revenue is recognised), minimal capex (1.4% of revenue), and operating leverage from a largely fixed cost base serving an expanding revenue stream.

At USD 186 per share, the market is valuing this cash flow stream at approximately 13x FY2027E Trailing 12-month FCF. To contextualise this multiple: the enterprise software peer group — Microsoft (MSFT), SAP (SAP), Intuit (INTU), and Autodesk (ADSK) — trades at approximately 18–34x forward EV/FCF.

Figure 8: EV/FCF comaprison between Salesforce and peers.

Adding to that, while the Rule of 40 is the SaaS industry standard for balancing growth and profitability, where revenue growth plus FCF margin should exceed 40%, Salesforce currently stands at 44.3% in FY2026. Management has announced a long-term framework, the Rule of 50, targeting USD 63 billion in revenue by FY2030 with a 11% organic CAGR from FY2026 to FY2030. Considering Salesforce’s position as the largest CRM player globally, rising industry competition, and the potential impact of AI, we believe that even if top line growth remains near current levels (10% y/y growth) and FCF margin is maintained in the 35%–40% range, the company will remain comfortably above the Rule of 40 threshold, maintaining a healthy balance between growth and profitability.

As such, we believe that, at the current price level, the market is mispricing Salesforce’s business, which has top-line visibility through its contracted backlog over the near to mid-term, 92% gross retention, an entrenched installed base of over 150,000 enterprise customers, and an AI-integrated business model.

In terms of earnings, the company's forward EPS is projected to grow at a strong double-digits (after factoring in AI disruption risks), driven by a steady 10% y/y top-line revenue expansion (assuming Salesforce can maintain its current growth rate given high customer retention rates and increasing Agentforce adoption). Under these assumptions, and using a fair P/E of 17 times, the implied upside for Salesforce is 55% with a target price of USD 288.

Table 3: Salesforce’s Valuation

In Millions of USD	FY 2026	FY 2027 E	FY 2028 E	FY 2029 E
Revenue	41,525.00	46,121.80	50,514.30	55,666.70
Growth %, YoY	9.60%	11.10%	9.50%	10.20%
EPS	12.52	13.20	14.86	16.98
Growth %, YoY	22.75%	5.43%	12.58%	14.27%
P/E	24.27	14.14	12.56	10.99
Fair P/E				17
Upside Potential				54.6%
Target Price				288
Source: Bloomberg Finance L.P., iFAST compilations. Data as of 1 April 2026.

Investment Risks

Our BUY rating is underpinned by the three thesis pillars above, but we acknowledge a few material risks that could delay or impair the path to our target price.

1.     Competition from legacy vendors is intensifying.

Salesforce has grown into an over USD 100 billion market cap software company, in part by taking share from incumbents such as Oracle, Microsoft, and SAP. While these players initially relied on acquisitions to build their SaaS presence, they are now allocating more resources toward developing in-house SaaS and PaaS solutions, some of which directly compete with Salesforce. Although these offerings have yet to attract the same level of investor enthusiasm, we expect continued product progress to gradually weigh on Salesforce’s growth and competitive positioning.

Competitive intensity is already rising. For example, Microsoft Dynamics is gaining traction, particularly among enterprises with over USD 500 million in revenue that are deeply embedded in Azure, where bundled pricing and broader cloud commitments make it harder for Salesforce to compete. At the same time, HubSpot is seeing increasing success upmarket, as cost-sensitive business units within large enterprises opt for more affordable, out-of-the-box solutions, especially as Salesforce pushes further downmarket.

2.       Stagnating top-line growth.

While constant-currency subscription revenue grew 10% overall, with 11% y/y growth in 4Q26, momentum has slowed, with growth trending in the high single digits at 8% to 9% since 3Q25. At the same time, the Marketing & Commerce segment has weakened, declining 1% y/y in 4Q26. Adding to this, ongoing uncertainty around AI adoption in the software industry is weighing on demand, with management indicating that enterprise customers may delay application software spending, a trend that could extend beyond the next 12 to 18 months.

Meanwhile, although Agentforce ARR reached USD 800 million, up 169% y/y with 2H26 bookings accelerating, it still represents only 2% of total revenue, any slowdown in generative AI adoption could pose a risk to growth. At the same time, with 48.5% of total RPO (cRPO) set to be recognised in 2026, Salesforce will require stronger ARR expansion and new RPO growth to sustain top-line growth in the subsequent years.

3.       Agentforce ROI remain unclear.

The rapid pace of AI innovation has amplified uncertainty among enterprise buyers and investors. While interest in generative and agentic AI is high, fast-evolving models and tools create the perception that current investments may become obsolete before delivering tangible results. This uncertainty affects budget planning, as CIOs hesitate to commit to multi-year AI contracts without clear performance and cost visibility. Technological innovation is outpacing organisational adoption, leading to uneven productivity gains and doubts about scalability. For recurring-revenue vendors like Salesforce, this creates pressure to balance ARR growth expectations with clients’ demand for transparent pricing and assured ROI. Specifically, hesitancy centres on Agentforce. Despite 15–16 months existence in market, the ROI that customers expect vendors to quantify remain unclear.

Key Takeaway — "BUY"

BUY Rating | Price Target: $288 | Upside: 55%

All in all, Salesforce remains the leading CRM platform, but the recent AI-driven selloff has created a valuation disconnect relative to its fundamentals. AI disruption risks appear overstated, as Agentforce is being layered on as a complementary, consumption-based revenue stream, while enterprise adoption continues alongside existing licenses. The company’s scale, integrations, and ecosystem sustain high switching costs and retention, supported by strong revenue visibility (USD 72.4B RPO) and about 35% free cash flow margins.

That said, organic growth has moderated to high single digits, with weakness in Marketing & Commerce and limited near-term contribution from Agentforce, while AI monetisation still lacks clear ROI visibility. At the same time, the expected increase in ramping Agentic Enterprises (AEs) and slower recognition of revenue would lower the near-term earnings. Despite these risks, we believe current valuation implies structural decline that is inconsistent with its durable growth and cash flow profile, leaving room for multiple re-rating. As such, we issue a BUY call for Salesforce, with the target price of USD 288.

Disclaimers:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.