Salesforce Generates Strong Free Cash Flow - CRM Could Be 23% Too Cheap

Core Insights - Salesforce, Inc. (CRM) generated free cash flow (FCF) that was 22% higher year-over-year in its fiscal Q3 ending October 31, indicating that CRM stock could be undervalued by 23% [1][4][6] Financial Performance - Q3 revenue rose 8.63% year-over-year to $10.259 billion, while 9-month revenue increased by 8.68% to $30.324 billion, with 94.8% of revenue coming from subscription and support services [3][4] - FCF for Q3 was $2.177 billion, up 22.4% year-over-year, and for the 9-month period, it increased by 5.35% to $9.079 billion [4][5] - The Q3 FCF margin was 21.2%, an increase from 18.4% a year ago, while the trailing 12 months (TTM) FCF margin rose to approximately 32% from 31.64% last quarter [4][5] Future Projections - Analysts project that next year's sales will rise by 10.5% from management's guidance of $41.55 billion to $45.80 billion [7] - Applying a 32% FCF margin to the projected sales results in an estimated FCF of $14.656 billion for the next 12 months, which is 21% higher than the market's expected run rate of $12.105 billion [7]