Salesforce's stock buyback programme will commit the company to debt repayment until 2066, with half of the $50 billion repurchase financed through bonds that will mature over 40 years beginning in 2028. The company has already commenced the buyback process, acquiring 103 million shares in an accelerated repurchase that represents 80 per cent of total shares committed for repurchase.
CEO Marc Benioff told investors that "we want to use our capital correctly, and I think debt is a great way to do that," while explaining the buyback rationale during the company's February earnings call. Benioff described current economic turmoil as a buying opportunity and said the company was not using debt effectively, despite being on track to generate about $16 billion in free cash this year. To fund the programme, Salesforce sold $25 billion in senior notes across eight tranches, with the first maturing in 2028 and the final $1 billion tranche in 2066.
The long duration of Salesforce's debt reflects a broader capital allocation choice that raises fiscal questions. Although Salesforce stock has rebounded nearly 8 per cent since last month, it remains down 45 per cent from its December 2024 high. This context matters: when share prices have fallen sharply, borrowing money to buy them back locks in losses if valuations do not recover as expected. The bond sale encountered lukewarm demand amid concerns over the debt-funded buyback and software sector worries, with final orders reaching $36 billion, or about 1.4 times the deal size.
Benioff attributed stock dilution to Salesforce's 2021 acquisition of Slack for $27.1 billion and its 2019 purchase of Tableau for $15 billion, with his comments coming as investors have been concerned that AI coding tools and automated workflows may reduce software vendors' relevance to users. The dramatic downturn in software stocks has been labelled the "SaaSpocalypse," though Benioff derided the term, saying the company had survived similar downturns before.
Salesforce is not alone in this capital return strategy. Other major SaaS vendors have announced similar buyback programmes, including ServiceNow's $5 billion repurchase plan and SAP's $11.5 billion programme, while smaller players such as Okta and Snowflake have announced $1 billion and $1.1 billion buybacks respectively. After a brutal sector sell-off that wiped out roughly 28 per cent of the software sector's value since October, companies rolled out aggressive buyback plans, though the market barely responded to the announcements.
The central tension is whether buybacks address investors' real concerns. Market worry centres on the future rather than optics; AI is no longer a feature but a platform shift moving faster than most SaaS roadmaps, and when generative AI tools can automate workflows, generate code, and analyse data natively, the question becomes how much traditional SaaS remains defensible. While buybacks improve financial engineering, they do not prove product relevance.
Benioff's 40-year debt commitment reflects a bet that Salesforce's core business will not only survive current disruption but generate sufficient returns to service this leverage through 2066. For investors and for Australian exporters watching this market, the real test lies not in financial manoeuvres but in whether Salesforce and its peers can demonstrate that their products remain indispensable in an AI-driven world.