Salesforce Borrows $25 Billion to Fund Massive Accelerated Buyback, Shifting Its Balance Sheet

Salesforce is borrowing $25 billion and sending virtually all of it to its own shareholders in what appears to be the largest accelerated share repurchase in history, a move that recasts the cloud software pioneer as one of the most aggressive capital allocators in big tech.

$25 billion bond sale to fund an ASR

The San Francisco company on March 11 priced an underwritten public offering of $25 billion in senior unsecured notes, one of the biggest U.S. investment-grade bond deals in recent years. Salesforce said it intends to use all of the net proceeds to repurchase common stock under accelerated share repurchase (ASR) agreements with several banks, with prepayment and the initial delivery of shares expected March 16.

The twin transactions mark a turning point for the roughly $180 billion software maker. Salesforce is sharply increasing its leverage, absorbing a credit rating downgrade and leaning on Wall Street’s buyback playbook at the same time it pitches itself as the “world’s No. 1 AI CRM” and the operating system for what it calls the “Agentic Enterprise.”

In a March 11 statement, Salesforce said it had “priced an underwritten public offering of $25.0 billion aggregate principal amount of senior notes” and that it “intends to use all of the net proceeds from the offering to repurchase shares of its common stock pursuant to one or more accelerated share repurchase agreements.” The company added that it entered into those ASR agreements with financial institutions “immediately following the pricing” of the notes.

The bond offering, expected to close March 13 subject to customary conditions, is split into multiple tranches across various maturities. Regulatory filings and deal summaries show shorter-dated series, including $3.5 billion of 4.50% notes due 2028 and $4.25 billion of 4.65% notes due 2029, as well as longer bonds stretching out to 2066 with coupons reportedly as high as about 6.7%. The notes are senior unsecured obligations ranking equally with Salesforce’s existing senior debt.

Joint book-running managers on the deal include J.P. Morgan Securities, BofA Securities, Barclays Capital, Citigroup Global Markets and Wells Fargo Securities, according to Salesforce.

How the accelerated buyback works

Under the ASR structure, Salesforce is expected to prepay roughly $25 billion to its bank counterparties around March 16, funded by the net proceeds from the bonds. In return, it will receive an initial block of shares—investor materials indicate about 103 million, or roughly four-fifths of the expected total—with the final number to be determined later this year based on the volume-weighted average price of Salesforce stock over a measurement period.

The buyback draws down roughly half of a new $50 billion repurchase authorization the company announced Feb. 25 alongside its fourth-quarter and full-year results. Salesforce also raised its quarterly dividend to 44 cents a share at that time.

Strong cash flow, softer sentiment

Financially, the move comes from a position of strength but at a moment of rising investor skepticism. For the fiscal year ended Jan. 31, Salesforce reported revenue of $41.5 billion, up 10% from a year earlier. Operating cash flow reached $15.0 billion and free cash flow $14.4 billion, both growing double digits. The company said its remaining performance obligation, a measure of contracted future business, rose 14% to $72.4 billion.

“Salesforce delivered another year of strong revenue growth, margin expansion and cash generation as customers standardize on our AI CRM platform,” Chair and CEO Marc Benioff said in a February earnings release. He described Salesforce as “the operating system for the AI- and data-driven enterprise.”

At the same time, the company’s stock had fallen roughly 30% from its 12-month high before the bond sale, as investors questioned the durability of growth across large-cap software and weighed new competition in artificial intelligence from Microsoft, ServiceNow and a wave of startups.

Analysts say the combination of robust free cash flow and a depressed share price made a large buyback more attractive to Salesforce’s board.

“This is a mature, highly cash-generative software franchise that sees its own equity as undervalued,” said one credit analyst at a large asset manager, speaking on condition of anonymity because he was not authorized to comment publicly. “Using investment-grade debt to accelerate repurchases is a way to pull forward shareholder returns, as long as they can keep growing earnings into the higher leverage.”

Leverage rises; Moody’s downgrades one notch

Before the transaction, Salesforce carried about $8 billion to $9 billion of existing senior notes and maintained a largely undrawn $5 billion revolving credit facility. It also held cash and marketable securities in the low-to-mid teens billions, leaving it with modest net debt by large-cap tech standards.

After issuing $25 billion in new notes and sending the proceeds into stock repurchases, gross debt will jump sharply and much of the cash cushion will be redeployed. Market observers estimate the company’s net leverage ratio—net debt to earnings before interest, taxes, depreciation and amortization—could move from well below 1x to somewhere around 1.7x to 2x, depending on final cash balances and earnings.

That shift drew an immediate response from credit rating agencies. Moody’s Investors Service cut Salesforce’s senior unsecured rating one notch, from A1 to A2, citing what it called a “material shift in financial policy” and the company’s increased “tolerance for higher leverage to fund shareholder returns,” according to people familiar with the report.

Despite the downgrade, Salesforce remains firmly in investment-grade territory, and demand for the bonds was described as solid. Investors pushed for wider risk premiums than in Salesforce’s 2021 bond sale, reflecting a market in which buyers are insisting on more compensation to hold even high-quality corporate debt.

One person involved in placing the bonds said demand came mainly from pension funds, insurance companies and large investment-grade bond funds looking for yield and duration. “There’s real appetite for long-dated paper from a name with Salesforce’s scale and recurring revenue, but buyers are price-sensitive,” the person said.

Market reaction and the buyback tax debate

Equity investors initially welcomed the announcement. Salesforce shares rose about 4% in trading the day after the bond pricing, though the stock remained well below its highs and key technical levels.

The transaction also lands squarely in the middle of Washington’s debate over stock buybacks. Since 2023, U.S. public companies have faced a 1% federal excise tax on the net value of shares they repurchase, imposed under the Inflation Reduction Act. For a $25 billion ASR, the gross tax exposure could theoretically approach $250 million before accounting for any stock Salesforce issues in the same period, such as for employee compensation or acquisitions.

Some lawmakers have proposed raising the buyback tax to 4%. Policy analysts say high-profile, debt-funded repurchases like Salesforce’s could fuel arguments that current rules are not enough to dissuade companies from using borrowed money to shrink their equity base.

Salesforce has not publicly detailed the tax impact of the ASR. In its offering documents, the company emphasized that the net proceeds from the notes would be used “to repurchase shares of our common stock” and that it believes the buyback is an efficient use of capital alongside ongoing investments in its business.

What comes next

The company also continues to rely heavily on stock-based compensation, which dilutes existing shareholders over time. Salesforce’s share repurchases in recent years have more than offset that dilution, and the $25 billion ASR will retire a significant portion of its outstanding shares in one stroke.

For now, investors in both the bond and stock markets are betting that Salesforce’s blend of AI-driven growth and recurring cloud revenue will support the heavier debt load. The company has set a long-term target of reaching $63 billion in annual revenue by fiscal 2030, including contributions from the recent acquisition of data management firm Informatica.

Whether this month’s financing marks a savvy use of balance sheet capacity or the start of a more fragile capital structure will depend on how well Salesforce executes on that strategy in a competitive and fast-changing AI landscape. The company will face its first tests as it reports results in coming quarters with a smaller share count, a larger stack of bonds and less room, in the eyes of rating agencies, for missteps.