A $50 Billion Buyback Is Raising Questions About Salesforce's Growth Story

"Non-GAAP EPS coming in at $3.81, beating a $3.05 estimate by 25%, and revenue of $11.2 billion grew 12% year-over-year, the fastest pace since early 2023. Full-year free cash flow hit $14.4 billion, up nearly 16%."

"What rattled investors was FY27 guidance of $45.8 to $46.2 billion, implying 10 to 11% growth, which trailed expectations and showed no meaningful acceleration."

"FY27 guidance of 10-11% implies only modest acceleration from FY26's 9.6%, despite the Agentforce buildout. Salesforce's own CFO acknowledged that token prices are going to start to go down over time and commoditize, threatening margins as AI infrastructure costs fall."

Salesforce delivered record quarterly revenue of $11.2 billion with 12% year-over-year growth and Non-GAAP EPS of $3.81, beating estimates by 25%. Free cash flow reached $14.4 billion, up 16%. However, FY27 guidance of $45.8 to $46.2 billion implied only 10-11% growth, trailing expectations and showing minimal acceleration from FY26's 9.6%. The company announced a $50 billion share repurchase program representing 26% of market cap. Retail investors interpreted the buyback as prioritizing capital returns over growth investment. Concerns include modest guidance acceleration despite Agentforce development and CFO acknowledgment that AI token prices will commoditize, threatening margins as infrastructure costs decline.

Read at 24/7 Wall St.