Salesforce Borrows $25 Billion to Repurchase Stock and Slow Cash Flow Growth

Salesforce took out a $25 billion debt to buy back its own stock and reduce its cash flow growth guidance by half.

The accelerated share repurchase, the largest in history according to Salesforce, was funded with a $25 billion debt issuance. The company cut its fiscal 2027 free-cash-flow growth guidance from 9% to 10%, down from an earlier target of 4% to 5%. This reflects the cost of the new debt on top of the base cash flow.

The buyback is part of a $50 billion authorization Salesforce's board approved in February. Most of the share-count reduction landed immediately, with an upfront delivery of 103 million shares, about 80% of the total it expects to repurchase. The final settlement is expected in the fiscal third quarter.

The company generated $6.7 billion of operating cash flow and $6.6 billion of free cash flow in the fiscal first quarter, up only 3% and 4%, respectively, year over year. This growth rate is now expected to slow down to around 4% to 5%. The debt will add an interest burden on top of this base.

The buyback has reduced Salesforce's diluted share count by 10% from a year ago. Diluted earnings per share rose 52% year over year to $2.42 in the fiscal first quarter, though much of that jump came from a swing in gains on strategic investments rather than from operations.