Salesforce Drops $27 Billion on Stock Buybacks Amid 'SaaSpocalypse' Fears

Salesforce spent a record $27 billion on stock buybacks in its first quarter, ending April. This move represents nearly 19% of the company's market cap as of April 30. CEO Marc Benioff calls this significant capital return 'a big vote of confidence in the future.' The repurchase signals that management believes the current market price undervalues the company's long-term earnings power.

The buyback has a direct impact on investors: it reduces diluted shares outstanding, which lifts earnings per share. In the first quarter, non-GAAP EPS increased by $0.23, driving a 50% year-over-year rise in adjusted earnings. Without the repurchase, adjusted earnings would have risen only 41%. This move reinforces the idea that Salesforce's AI strategy is strengthening its business, countering the 'SaaSpocalypse' narrative weighing on the stock.

The 'SaaSpocalypse' refers to the fear that artificial intelligence (AI) agents will disrupt corporate spending on software-as-a-service (SaaS) products. However, Salesforce appears to be benefiting from this shift, with Agentforce's annual recurring revenue reaching $1.2 billion in fiscal Q1, a 205% year-over-year increase.