Salesforce Borrows $25 Billion for Record-Breaking Share Repurchase

Salesforce borrowed $25 billion to purchase its own stock in March, marking one of the largest capital-allocation decisions in software history. The company funded this massive buyback with a corresponding $25 billion debt issuance.

According to Salesforce's fiscal first-quarter results, the accelerated share repurchase program resulted in an upfront delivery of 103 million shares, approximately 80% of the total expected repurchases. Final settlement is anticipated for the fiscal third quarter.

The company returned a total of $27.5 billion to shareholders in a single quarter, comprising $27.1 billion in repurchases and $365 million in dividends. This sum surpasses the $23.9 billion in free cash flow generated over the entire prior fiscal year.

While Salesforce's diluted share count has decreased by 10% from a year ago, its revenue growth remains strong at 11%. However, the company is guiding operating and free-cash-flow growth for fiscal 2027 to be around 4% to 5%, down from the initial 9% to 10% target.

The cost of this debt will be evident in the company's cash flow, but Salesforce argues that retiring 10% of its share count at a price it considers low is a better use of funds than pursuing large acquisitions.