Salesforce Borrowed $25 Billion to Buy Its Own Stock and Cut Its Cash Flow Growth Guidance in Half

Salesforce (NYSE: CRM) made one of the biggest capital-allocation decisions in software this year, and it came in two parts. In March, the company entered a $25 billion accelerated share repurchase -- the largest such deal in history, by its own description -- funded with a $25 billion debt issuance. Then, reporting fiscal first-quarter results in late May, it told investors that fiscal 2027 operating and free-cash-flow growth would come in around 4% to 5%, half the 9% to 10% it had guided to in February, specifically to reflect the cost of that debt.

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Continue » Borrowing $25 billion to buy your own stock is an aggressive move for any company. For Salesforce, which spent years funding buybacks comfortably out of its own cash flow, it marks a change in posture. With the stock at about $196 as of this writing, roughly 27% below its 52-week high of $269.11, was the trade worth it?

The buyback is part of a $50 billion authorization Salesforce's board approved in February. The accelerated structure means most of the share-count reduction landed immediately: The company received an upfront delivery of 103 million shares, about 80% of the total it expects to repurchase, with final settlement expected in the fiscal third quarter. Add it up, and Salesforce returned $27.5 billion to shareholders in a single quarter ($27.1 billion of repurchases plus $365 million in dividends).

For perspective, that's more than the company generated in free cash flow over the entire prior fiscal year. Its diluted share count is now down 10% from a year ago. The price looks defensible, too.

The upfront shares were delivered against Salesforce's roughly $194 close in mid-March, near where the stock trades today, and the final tally will be set by the stock's average price over the life of the deal. Salesforce didn't buy the top. It bought after the market had already knocked the stock down by a quarter.