🧠 Takeaways:
Salesforce is posting its best financials in company history while its stock is getting clobbered.
Stop borrowing to buy back stock AND diluting shares with so much SBC.
Buy a major call center. AI it. Document the whole thing.
Bundle everything under Slack + Core CRM.
+ Coco July Update
LBAB Community: Coco July Update
July was our best month at Coco in Company history. June passed our 2025 Nov/Dev high. July flew by June.
Rev +15% MoM
APRA (Rev/Account): 2x’d YoY
This is the 3rd straight month of 15%+ MoM growth. It’s exactly what we want to see in the summer as we scale up heading into Holiday.
The Pre-holiday sales load in is happening and now it’s time for us to onboard as many brands as we can to hit that 2x YoY.
With this pacing 3x is in sight.
Let’s Examine This Biz
Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here 😉.
Salesforce (The enterprise CRM) had its best year ever, but Wall street doesn’t agree.
Despite leading the AI race, printing cash and seeing explosive growth from new AI products it’s still treated like every other SaaS tool in the space which is a huge mistake. This is the most oversold SaaSpocalypse stock.
Today we're buying low and riding the king of SaaS all the way back up.
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Financial Summary
Stock price: $192
Market Cap: $157B
L5 Performance: -23%
P/E Ratio: 22x
FY 2025 Financial Statements (YoY Comparison)
Rev: $41.5B (+9%) 👍
Gross Profits: $32.3B (10%) 👍
OPEX: $23.9B (+8%) 😐
Net Income: $7.5B (+20%) 💪
FCF: $14.4B (+15%) 😊
TLDR Analysis: Best Year Ever, First Year in Debt
Rev +9.6% to $41.5B, cRPO accelerating faster than revenue at +16% - real forward signal
Operating margin 20.1%, now ahead of ServiceNow AND Workday. Best pure-play SaaS margin story in the set
Net income +20.3% but about half the pretax gain is investment marks, not the core biz
What the street hated and why the stock isn’t up more is they flipped from $5.6B net cash
‘24 -> $4.9B net debt in ‘25 from funding a record $12.6B buyback + $9.3B Informatica Acquisition.
They’ve been on an M&A tear and scooping up the AI infinity stones.
Let’s TLDR This Biz
Founded:
1999 by Marc Benioff, Parker Harris, Dave Moellenhoff and Frank Dominguez, out of a rented apartment in San Francisco.
Started as the first cloud CRM sold straight over the internet - no install, no IT department gatekeeper, direct shot at Siebel's on-prem lock.
Aha Moment:
Early 2000s, the "No Software" campaign - actors in shirts with a red slash through the word "software," a mock funeral for the old model staged outside a Siebel conference.
Insight: selling CRM as a subscription instead of a license meant the buyer didn't need IT's permission anymore. That's what actually broke Siebel, not the product.
Growth:
Land and expand, then buy the next cloud instead of building it - ExactTarget (2013), Demandware (2016), MuleSoft (2018), Tableau (2019), Slack (2021), Informatica (2025).
Two decades of "sell Sales Cloud first, cross-sell everything else."
Now trying to layer Agentforce - agentic AI, consumption-based - on top of a seat-based model built for a different era.
Model:
Subscription and support is 95% of revenue - $39.4B of $41.5B.
Multi-cloud land-and-expand: one product gets you in the door, four more get cross-sold over time.
M&A is not a side activity here. It's the growth engine - $9.3B spent on acquisitions this year alone.
Where We Are Now:
Stock's at $184, still 32% below its 52-week high of $269, even after a 12-13% rally in the last week of July on Agentforce ARR hitting $1.2B (+205% YoY).
Market still hasn't decided if agentic AI grows Salesforce's business or eats it from the inside.
Let’s Fix This Biz
Here are the 3 moves Salesforce needs to clean up to get back to a $200B+ market cap.
1) End the SBC/Buyback Circularity
Every year Salesforce doles out $3.5B in Stock based compensation (SBC) which is 8.5% of Revenue. Compensation employees but diluting shareholders.
At the same time they’re borrowing money to buy back $12.6B in stock to increase the stock price for shareholders.
Either one is fine. Just don’t do both.
Pick a lane:
Cut SBC toward peer levels (Microsoft runs SBC at ~50% of Salesforce's)
Or keep paying employees in stock at this rate and stop borrowing and pretending the buyback is a value-return program.
It’s such a pointless exercise since diluted shares only fell from 974M -> 956M, a 1.8% reduction.
Doesn’t really seem like worth borrowing $6B. Current shareholders are running to stay in place.
Doing both at once is how a company with $14.4B of free cash flow ends up net-debt for the first time in its history.
Takeaway: Borrowing to buy back diluted SBC stock is a waste of time.
2) Buy a Broken Call Center. Document The AI Overhaul.
Agentforce - Salesforce’s branded AI services, still requires an incredible amount of social proof.
While every enterprise and their mother is talking about AI, most haven’t figured out how to drive real ROI from it.
Salesforce customers aren’t the innovative type who want to learn and try. They need to see what works and that this is a safe bet.
It must be a win for them + No risk of losing their job.
If Salesforce can be their own customer it opens up a massive social proof opportunity for them.
The Service unit is Salesforce’s actual largest Revenue unit $9.8B (23% of total Rev) + they dropped $3B+ on Fin (aka Intercom) to expand their AI support arsenal.
The 2027 Marketing campaign of the year:
Buy a well known Call center.
Agentforce it to the teeth.
Document the entire process (Truman show style) and release it to the world.
Show the trials, tribulations, processes, and agents to truly stand up this process in one of the best use cases that apply to their customers.
Give away the blueprints, templates, playbooks and data.
Owning the call center gives them complete control how it’s deployed and what works. What processes still need a human interaction and how to best use AI + humans.
The proof points are priceless:
Huge Case study for core offering.
The exact playbook to drive more managed services.
SalesForce could become the largest AI powered Call center in the US.
Building characters of the Forward Deployed Engineers, Marketers, Support Reps is Marketing gold.
How they interact with the agents is content gold that all customers will want to learn more about.
Trojan horse Sales enablement as Marketing.
Takeaway: No better social proof than showing step by step how it works.
3) Only Sell the AI Bundle
This is more of a culture point than a literal one.
Salesforce needs to stop selling all of their solution piecemeal and push every customer into the AI bundle.
If every Ent org is really going to AI their entire stack, Salesforce NEEDS to be the One-stop shop with the easiest integrated bundle built around CRM + Slack.
Their acquisition spree illustrates they see the writing on the wall.
Agentforce 360 Platform, Slack & Other unit grew 22% YoY this year - the fastest of Salesforce's five reporting categories.
Smaller base but significantly outpacing Agentforce Sales (+8.5%) or Marketing & Commerce (+2.8%).
Today the avg customer buys ~1.8 /5 of Salesforce’s products.
Everyone needs a simple common place to store their key data (CRM) + a simple place for their team to interact with it (Slack).
Charging for usage instead of seats will have an exponential impact on Rev. Especially when you layer on Marketing, Sales, Service, Analytics, Governance.
At a certain point the per seat pricing model (charge for each user who uses the product) is limited by hiring trends.
This is Salesforce’s “Microsoft moment”.
The core Microsoft biz is a beast because no matter what you buy, you’re buying the 365 bundle.
You may not get the CRM or Ecom platform, but if you want Word or Excel, you’re getting email, teams etc. Most likely you’re also buying Azure.
If they truly make it the no brainer bundle option they also kill the DIY stack industry.
If Salesforce can move the avg customer from 1.8 products to:
2.5 products: $13B in incremental Rev.
3.2 products: $26B
5 products: $56B (2x the total biz).
The opportunity is waiting for them to consolidate the tech stack around AI. No one really wants to build all this themselves.
Takeaway: Be the 1-Stop Shop for Ent AI.
Final Thought
I’m baffled by Salesforce stock getting beaten up so much. Trading with the rest of the SaaS index.
It's comical to me. They're obviously one of the biggest winners of the AI infrastructure build out without having to spend any money on it themselves.
Everyone's problem with Microsoft, Google, and Amazon is that they're spending all of their free cashflow on infra buildouts.
Salesforce spends less than 2% of its revenue on CapEx. It's investing next to nothing in a cloud infrastructure business because they get all the benefits without the costs.
Their model is: We're going to store, secure, organize + AI your data.
We don’t need to build out data centers to make money.
It's mind-blowing to me. This is the perfect biz (similar to Shopify that will benefit from both sides).
As everybody freaks out on either side of the coin :
Software businesses that aren't going to exist in 5 years,
Hyperscalers eviscerate their cash volcanos.
Salesforce plays the middle.
They've already made the product + M&A moves to thrive in the age of AI while not falling into cash blackholes.
Maybe I'm missing something here, but to me this is one of the most obvious winners of the AI race.
