Salesforce’s $25B Buyback Raises Interest Costs Fivefold, FCF Guidance Cut
JEF•Salesforce borrowed $25 billion via accelerated share repurchase, boosting quarterly interest expense fivefold to $317 million from $68 million. Management cut full-year free cash flow growth guidance to 4%–5% from 9%–10%, triggering Barclays’ price target reduction to $236 and spurring heavier put options accumulation.
1. Accelerated Share Repurchase Details
Salesforce executed a $25 billion accelerated share repurchase to retire shares swiftly, reducing the public float and boosting earnings per share through immediate count reduction. Including dividends, the company returned $27.5 billion to shareholders this quarter.
2. Interest Expense Surge
Quarterly interest expense climbed to $317 million from $68 million a year earlier, adding a $249 million burden that permanently drags on cash flow available for product development, dividends, or future buybacks.
3. Free Cash Flow Guidance and Analyst Response
Management trimmed full-year free cash flow growth guidance to 4%–5% from 9%–10%, leading Barclays to cut its price target to $236. The guidance revision coincided with a surge in put-buying as options traders sought downside protection.
