Salesforce
A dominant company in the business management software
Salesforce (NYSE: CRM) has a NabzdykRatings moat score of 3/10 because of their financial lock-in and product lock-in. This is down from the previous moat score of 5, when the financial lock-in was elite, and now it’s weak. A true ‘Elite’ capital-light moat (like Adobe – 10 or Verisk – 9.2) scales revenue effortlessly. In contrast, our data shows that Salesforce requires disproportionately high sales & marketing expenditures to generate each incremental dollar of revenue. The company relies on aggressive distribution rather than pure product gravity.
Furthermore, the workflow integration score is flagged as ‘Weak’, signalling that the company is extending significant credit or seeing slower cash conversion cycles compared to top-tier SaaS peers.
Salesforce is a massive business, but an inefficient one. Our rating reflects the cost of the moat, not just the size of it.
Salesforce has a NabzdykRatings Quality Score of 5/10. We observe that Salesforce is experiencing structural compression, and the current cost of operations impacts the actual return that shareholders can expect to have. That’s a friction that a company like Adobe doesn’t have. This score is down from February 2nd when they had a score of 5.2/10.
Even though the company might seem like it has a solid moat, my algorithm clearly says that it’s not efficient, which I make a pass on. Meanwhile, companies like Uber, which I have owned for some time, are growing in the moat and quality scores:
I’m not always 100% invested in companies with the widest moats, because I also want to experience some growth as well.
Salesforce sells access to a website that makes it easier for companies to manage their marketing, sales, service, and commerce, among other things, by making it available in one place. Easily scalable services ensure that companies, whether in growth mode or not, have services suited to their needs.
However, the business is notorious for its high stock-based compensation. The company took measures to ensure that shareholders are happier.
Agentforce is a buzzword – but it works
This is a platform that makes it easy to create AI agents (we don’t like that word – it sounds like the AI wants to kill us), which can access live business data that they can react to, as defined in the business logic - that’s the great thing about this – connecting deterministic logic with the speed & research of an AI.
Slack – the communicator for businesses (but why not Discord?)
Why not choose Discord, which is free? Well, it’s because when conversations happen on a server between employees, they're about meetings and business stuff – this data is important, so why not store it in one place so that an AI can have access to that? SlackBot helps with that by making meetings, creating content and organising answers.
The business is competitive, however, and that can be seen by analysing their 10-K documents, where we can compare the year-over-year changes.
We can see that the second dot has been added in the FY 2025 report.
AI-native companies and emerging startups that leverage generative AI and large language models as the core foundation of their architecture, offering highly specialized, autonomous, or automated solutions that may bypass traditional business process workflows or displace established user interfaces
This is a recent addition – with the rise of many AI startups, which have dynamic interfaces based on a user’s prompt – and that is what Google has recently made:
Sierra, founded by Bret Taylor, is a tool that creates AI agents which work in the background, for example, doing things like processing refunds while a customer waits for that or changing shipping records.
"Vibe Coding" & Just-in-Time Apps
AI Studio & Lovable – you might have seen them recently – all these websites made by your AI look the same and have the same style - i’’s obvious it’s made by an AI; they are making the exact thing a company wants, which might make Salesforce less used. (I don’t think so – the actual data lives on Salesforce, not in the AI app).
The comapny is generating positive FCF, so we can rate its valuation - it’s undevralued accriodng to a reverse DCF clacualtorm but taht is only if the future grwoth exceeds 3.1% per year for the next 10 years - othwerise, it’s dead money.
Antoni Nabzdyk