Demand is improving, but the market is too optimistic about how much growth deserves an exceptional valuation. Our forecast allows continued expansion and better cash generation, yet points to a lower share price over twelve months.
Key points
- 63% revenue growth in FY2028 would support today's price at our valuation multiple.
- $8.4 billion of recurring subscriptions is our January 2028 forecast, allowing continued strong sales.
- $204.74 a share is our October 2027 target, despite a generous growth valuation.
The call
The market is too optimistic. Today's enterprise value, the share value plus debt minus cash, is roughly 36 times our FY2028 revenue forecast. At our 28-times multiple and projected share count, supporting today's price would require 63% revenue growth. Our forecast is 25%.
What turns an operating loss into adjusted profit ($ millions)Source: August 26, 2026 earnings release; Q2 FY2027 ended July 31.
The business can succeed while the stock falls. We forecast $1.8 billion of new annualized subscriptions in FY2028. Separately priced AI protection supports expansion, but flexible purchasing commitments are not proof of lasting usage. Quarterly updates on renewals and cash generation should shift attention from new contracts to their economics.
Valuation
| October 2027 valuation input | Our estimate |
|---|
| FY2028 revenue, ending January 2028 | $7.50 billion |
| Enterprise value / FY2028 revenue | 28 times |
| Implied enterprise value | $210 billion |
| October 2027 net cash | $6 billion |
| October 2027 diluted shares | 1.055 billion |
| Twelve-month target | $204.74 a share |
Even faster growth struggles to support today's share priceOur FY2028 scenarios; 28 times revenue, $6 billion net cash, 1.055 billion diluted shares.
Revenue uses average contracted subscriptions, a recognition allowance and service sales. Our multiple still equals roughly 88 times forecast FY2028 cash left after capital spending, granting years of expansion rather than assuming maturity. Our favorable scenario reaches $274 a share versus $156 in an adverse scenario, making the downside larger than the upside and supporting sell.
Risks
- AI protection could accelerate beyond our forecast; watch separately disclosed sales and sustained subscription growth rather than partnership announcements.
- Investors could keep paying exceptional multiples; watch whether long-term Treasury yields fall and flexible-plan customers expand at renewal.
- Cash generation could improve faster; watch capitalized software and infrastructure spending, not adjusted earnings alone. Employee share pay remains costly, while longer commission amortization makes reported margins look better without improving cash.
What would change my mind
I would reconsider if FY2028 revenue growth heads above 35% with stronger renewal spending and declining employee share pay relative to revenue.