Salesforce's $50B Stock Buyback: A 40-Year Debt Strategy That Outlives Its CEO

Salesforce CEO Marc Benioff's ambitious $50 billion stock buyback plan will keep the company indebted until 2066, when Benioff would be 102 years old if he were still alive. The tech giant announced the massive repurchase during its February 26 earnings call, with half of the funding coming from $25 billion in bonds that will mature as late as 2066, creating a 40-year debt obligation for the company.

The buyback represents Salesforce's largest capital return program to date, with the company already completing 80 percent of the initial accelerated share repurchase, taking in 103 million shares. The remaining shares are expected to be purchased in the third or fourth quarter of fiscal year 2027.

Benioff defended the strategy during the earnings call, stating, "These are great prices, I'm sure you would agree with that, and we want to use our capital correctly, and I think debt is a great way to do that." The CEO emphasized that he believes Salesforce stock is undervalued and wants the company's CFO, Robin Washington, to "buy as much of it as she possibly can."

The AI Disruption Context

The buyback announcement comes amid significant market turmoil for enterprise software companies. Salesforce's stock has plummeted 45 percent from its December 2024 high, part of what industry analysts have dubbed the "SaaSpocolypse" - a dramatic downturn in software-as-a-service valuations driven by fears that AI coding tools and automated workflows could make traditional software vendors less relevant.

Benioff dismissed these concerns, comparing the current situation to the COVID-19 pandemic. "This is not our first SaaSpocalypse. We have been through many SaaSpocalypses," he said. "I remember the horrible SaaSpocalypse of 2020 when not only the software industry was dying, but we were all dying, but we made it through that."

Funding the Future

The $25 billion bond offering, underwritten by major financial institutions including J.P. Morgan, Bank of America, Barclays, Citigroup, and Wells Fargo, features staggered maturities starting in 2028 and extending to 2066. This long-term debt structure suggests Salesforce is betting on its ability to generate sufficient cash flow over the next four decades to service the debt.

Salesforce projects it will generate approximately $16 billion in free cash flow this year, providing some confidence in its ability to manage the debt load. However, the company's recent history of large acquisitions - including the $27.1 billion purchase of Slack in 2021 and the $15 billion acquisition of Tableau in 2019 - has contributed to stock dilution that Benioff cited as justification for the buyback.

Industry-Wide Trend

Salesforce is not alone in pursuing aggressive buyback strategies during the market downturn. Competitor ServiceNow announced a $5 billion repurchase plan and CEO Bill McDermott personally invested $3 million in company stock, vowing not to sell any shares. SAP plans to repurchase $11.5 billion in shares, while Okta and Snowflake have each announced $1 billion+ buyback programs.

Strategic Implications

The 40-year debt timeline raises questions about Salesforce's long-term strategic planning. By committing to debt service until 2066, the company is essentially betting that:

• Enterprise software will remain relevant for at least four more decades
• AI disruption will not fundamentally alter the software business model
• The company can consistently generate enough cash flow to service the debt
• Market conditions will eventually justify the current stock price

Critics might argue that this strategy prioritizes short-term stock price support over long-term innovation investment. With AI rapidly transforming enterprise software, some question whether Salesforce should be using its capital to acquire AI capabilities or develop new technologies rather than buying back shares.

Market Reaction

Despite the dramatic downturn, Salesforce stock has rebounded nearly 8 percent since the buyback announcement, though it remains significantly below its 2024 peak. The company's willingness to take on substantial long-term debt during uncertain economic times signals confidence in its business model and future cash generation capabilities.

The buyback strategy also serves to offset dilution from previous acquisitions and potentially boost earnings per share metrics by reducing the share count. However, the 40-year debt commitment creates a significant financial anchor that will constrain Salesforce's flexibility for decades to come.

As enterprise software companies navigate the AI transition, Salesforce's bold capital allocation decision represents a high-stakes bet on the enduring value of its business model - a bet that will be tested not just in the coming years, but potentially for the rest of the century.