Salesforce’s $50 Billion Buyback: A Debt-Fueled Bet on Future Growth

Salesforce, the cloud-based software giant, has initiated a massive $50 billion share repurchase program, the largest accelerated share repurchase (ASR) in history. This move, announced initially in February and commencing on March 16, 2026, is being financed in part through $25 billion in bond sales, raising questions about the company’s long-term financial strategy and its confidence in navigating a potentially turbulent market.

The Largest ASR in History

The $50 billion buyback program, first unveiled during Salesforce’s February 26 earnings call, aims to return capital to shareholders and offset dilution from previous acquisitions, including Slack ($27.1 billion in 2021) and Tableau ($15 billion in 2019). The initial $25 billion ASR, launched on Monday, involved the repurchase of 103 million shares, representing 80% of the total shares committed for buyback. Salesforce intends to complete the remaining share repurchases in the third or fourth quarter of fiscal year 2027. Salesforce Investor Relations

Funding the Buyback with Debt

A significant portion of the buyback is being funded through debt. Salesforce issued $25 billion in bonds last Friday, underwritten by J.P. Morgan Securities, BofA Securities, Barclays Capital, Citigroup Global Markets, and Wells Fargo Securities. These bonds have varying maturity dates, with some extending as far as 2066. The Register This long-term debt commitment has raised eyebrows, with some analysts suggesting it could saddle the company with repayments for decades.

Benioff’s Rationale and Market Context

CEO Marc Benioff has defended the strategy, stating that the company believes its stock is currently undervalued and that utilizing debt is a “great way” to capitalize on the opportunity. He views the current economic climate as a buying opportunity, despite concerns about the impact of AI coding tools and automated workflows on the software industry. The Register Benioff dismissed concerns about a “SaaSpocalypse,” referencing past economic downturns, including the COVID-19 pandemic, which the company successfully navigated.

Industry-Wide Trend

Salesforce is not alone in pursuing share buybacks. Competitors like ServiceNow have announced $5 billion repurchase plans, with CEO Bill McDermott personally investing $3 million and pledging not to sell shares. SAP is also undertaking a $11.5 billion buyback, and smaller players like Okta and Snowflake are also allocating capital to repurchase their own stock. The Register

Financial Performance and Future Outlook

Salesforce’s recent financial results have been solid, with fourth-quarter fiscal 2026 revenue reaching $11.2 billion and adjusted earnings per share at $3.81. For the full fiscal year, revenue was $41.5 billion with adjusted earnings of $12.52 per share. The company projects revenue growth of 10-11% for fiscal 2027, with contributions from the recent acquisition of Informatica. Yahoo Finance Salesforce aims to achieve $63 billion in revenue by fiscal 2030, representing a four-year compound annual growth rate of 10%.

Investor Reaction and Concerns

Despite the positive financial results, Salesforce’s stock has faced headwinds, declining 45% from its December 2024 high. Even as the stock has rebounded nearly 8% since last month, investor concerns remain regarding the impact of AI on the software industry and the company’s increasing debt load. The Register