|
|
x
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
Delaware
|
94-3320693
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer
Identification No.)
|
Large accelerated filer
x
|
Accelerated filer
¨
|
|
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
|
Page No.
|
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
PART I.
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
October 31,
2014 |
|
January 31,
2014 |
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
846,325
|
|
|
$
|
781,635
|
|
Restricted cash
|
114,935
|
|
|
0
|
|
||
Short-term marketable securities
|
79,779
|
|
|
57,139
|
|
||
Accounts receivable, net
|
794,590
|
|
|
1,360,837
|
|
||
Deferred commissions
|
172,717
|
|
|
171,461
|
|
||
Prepaid expenses and other current assets
|
287,612
|
|
|
309,180
|
|
||
Land and building improvements held for sale
|
143,197
|
|
|
0
|
|
||
Total current assets
|
2,439,155
|
|
|
2,680,252
|
|
||
Marketable securities, noncurrent
|
901,173
|
|
|
482,243
|
|
||
Property and equipment, net
|
1,109,816
|
|
|
1,240,746
|
|
||
Deferred commissions, noncurrent
|
136,699
|
|
|
153,459
|
|
||
Capitalized software, net
|
448,088
|
|
|
481,917
|
|
||
Goodwill
|
3,782,569
|
|
|
3,500,823
|
|
||
Other assets, net
|
595,163
|
|
|
613,490
|
|
||
Total assets
|
$
|
9,412,663
|
|
|
$
|
9,152,930
|
|
Liabilities, temporary equity and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
$
|
935,942
|
|
|
$
|
934,324
|
|
Deferred revenue
|
2,192,655
|
|
|
2,473,705
|
|
||
Convertible 0.75% senior notes, net
|
179,755
|
|
|
542,159
|
|
||
Term loan, current
|
0
|
|
|
30,000
|
|
||
Total current liabilities
|
3,308,352
|
|
|
3,980,188
|
|
||
Convertible 0.25% senior notes, net
|
1,064,683
|
|
|
1,046,930
|
|
||
Term loan, noncurrent
|
0
|
|
|
255,000
|
|
||
Revolving credit facility
|
300,000
|
|
|
0
|
|
||
Deferred revenue, noncurrent
|
31,322
|
|
|
48,410
|
|
||
Other noncurrent liabilities
|
915,810
|
|
|
757,187
|
|
||
Total liabilities
|
5,620,167
|
|
|
6,087,715
|
|
||
Temporary equity
|
1,882
|
|
|
26,705
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
631
|
|
|
610
|
|
||
Additional paid-in capital
|
4,331,314
|
|
|
3,363,377
|
|
||
Accumulated other comprehensive income (loss)
|
(1,251
|
)
|
|
17,680
|
|
||
Accumulated deficit
|
(540,080
|
)
|
|
(343,157
|
)
|
||
Total stockholders’ equity
|
3,790,614
|
|
|
3,038,510
|
|
||
Total liabilities, temporary equity and stockholders’ equity
|
$
|
9,412,663
|
|
|
$
|
9,152,930
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
$
|
1,288,513
|
|
|
$
|
1,004,476
|
|
|
$
|
3,668,406
|
|
|
$
|
2,749,541
|
|
Professional services and other
|
95,142
|
|
|
71,558
|
|
|
260,572
|
|
|
176,220
|
|
||||
Total revenues
|
1,383,655
|
|
|
1,076,034
|
|
|
3,928,978
|
|
|
2,925,761
|
|
||||
Cost of revenues (1)(2):
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
238,746
|
|
|
198,809
|
|
|
666,611
|
|
|
513,267
|
|
||||
Professional services and other
|
94,465
|
|
|
69,378
|
|
|
266,736
|
|
|
181,631
|
|
||||
Total cost of revenues
|
333,211
|
|
|
268,187
|
|
|
933,347
|
|
|
694,898
|
|
||||
Gross profit
|
1,050,444
|
|
|
807,847
|
|
|
2,995,631
|
|
|
2,230,863
|
|
||||
Operating expenses (1)(2):
|
|
|
|
|
|
|
|
||||||||
Research and development
|
195,460
|
|
|
170,690
|
|
|
586,927
|
|
|
450,708
|
|
||||
Marketing and sales
|
709,643
|
|
|
581,229
|
|
|
2,020,956
|
|
|
1,528,340
|
|
||||
General and administrative
|
167,383
|
|
|
153,859
|
|
|
498,565
|
|
|
434,143
|
|
||||
Total operating expenses
|
1,072,486
|
|
|
905,778
|
|
|
3,106,448
|
|
|
2,413,191
|
|
||||
Loss from operations
|
(22,042
|
)
|
|
(97,931
|
)
|
|
(110,817
|
)
|
|
(182,328
|
)
|
||||
Investment income
|
2,622
|
|
|
1,110
|
|
|
7,055
|
|
|
8,851
|
|
||||
Interest expense
|
(17,682
|
)
|
|
(22,929
|
)
|
|
(56,355
|
)
|
|
(54,468
|
)
|
||||
Gain on sales of land and building improvements
|
15,625
|
|
|
0
|
|
|
15,625
|
|
|
0
|
|
||||
Other expense
|
(372
|
)
|
|
(4,291
|
)
|
|
(15,095
|
)
|
|
(6,843
|
)
|
||||
Loss before benefit from (provision for) income taxes
|
(21,849
|
)
|
|
(124,041
|
)
|
|
(159,587
|
)
|
|
(234,788
|
)
|
||||
Benefit from (provision for) income taxes
|
(17,075
|
)
|
|
(393
|
)
|
|
(37,336
|
)
|
|
119,236
|
|
||||
Net loss
|
$
|
(38,924
|
)
|
|
$
|
(124,434
|
)
|
|
$
|
(196,923
|
)
|
|
$
|
(115,552
|
)
|
Basic net loss per share
|
$
|
(0.06
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.19
|
)
|
Diluted net loss per share
|
$
|
(0.06
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.19
|
)
|
Shares used in computing basic net loss per share
|
629,548
|
|
|
600,467
|
|
|
619,748
|
|
|
594,346
|
|
||||
Shares used in computing diluted net loss per share
|
629,548
|
|
|
600,467
|
|
|
619,748
|
|
|
594,346
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cost of revenues
|
$
|
20,351
|
|
|
$
|
33,844
|
|
|
$
|
70,294
|
|
|
$
|
77,699
|
|
Marketing and sales
|
15,095
|
|
|
15,211
|
|
|
44,708
|
|
|
22,147
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cost of revenues
|
$
|
14,118
|
|
|
$
|
12,119
|
|
|
$
|
38,905
|
|
|
$
|
32,778
|
|
Research and development
|
26,868
|
|
|
27,935
|
|
|
87,264
|
|
|
78,396
|
|
||||
Marketing and sales
|
72,892
|
|
|
73,296
|
|
|
210,510
|
|
|
189,231
|
|
||||
General and administrative
|
25,582
|
|
|
28,186
|
|
|
76,284
|
|
|
66,336
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net loss
|
$
|
(38,924
|
)
|
|
$
|
(124,434
|
)
|
|
$
|
(196,923
|
)
|
|
$
|
(115,552
|
)
|
Other comprehensive income (loss), before tax and net of reclassification adjustments:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation and other gains (losses)
|
(13,692
|
)
|
|
5,590
|
|
|
(15,876
|
)
|
|
(1,601
|
)
|
||||
Unrealized gains (losses) on investments
|
1,278
|
|
|
(450
|
)
|
|
(3,055
|
)
|
|
1,388
|
|
||||
Other comprehensive income (loss), before tax
|
(12,414
|
)
|
|
5,140
|
|
|
(18,931
|
)
|
|
(213
|
)
|
||||
Tax effect
|
0
|
|
|
427
|
|
|
0
|
|
|
(118
|
)
|
||||
Other comprehensive income (loss), net of tax
|
(12,414
|
)
|
|
5,567
|
|
|
(18,931
|
)
|
|
(331
|
)
|
||||
Comprehensive loss
|
$
|
(51,338
|
)
|
|
$
|
(118,867
|
)
|
|
$
|
(215,854
|
)
|
|
$
|
(115,883
|
)
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Operating activities:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(38,924
|
)
|
|
$
|
(124,434
|
)
|
|
$
|
(196,923
|
)
|
|
$
|
(115,552
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
111,954
|
|
|
114,347
|
|
|
330,358
|
|
|
254,610
|
|
||||
Amortization of debt discount and transaction costs
|
9,420
|
|
|
13,343
|
|
|
31,160
|
|
|
36,207
|
|
||||
Gain on sales of land and building improvements
|
(15,625
|
)
|
|
0
|
|
|
(15,625
|
)
|
|
0
|
|
||||
Loss on conversions of convertible senior notes
|
1,340
|
|
|
0
|
|
|
10,230
|
|
|
0
|
|
||||
Amortization of deferred commissions
|
65,371
|
|
|
48,008
|
|
|
186,526
|
|
|
139,864
|
|
||||
Expenses related to employee stock plans
|
139,460
|
|
|
141,536
|
|
|
412,963
|
|
|
366,741
|
|
||||
Excess tax benefits from employee stock plans
|
(1,221
|
)
|
|
(1,578
|
)
|
|
(3,447
|
)
|
|
(2,166
|
)
|
||||
Changes in assets and liabilities, net of business combinations:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, net
|
39,792
|
|
|
(4,502
|
)
|
|
566,306
|
|
|
332,090
|
|
||||
Deferred commissions
|
(64,280
|
)
|
|
(57,968
|
)
|
|
(171,022
|
)
|
|
(120,798
|
)
|
||||
Prepaid expenses and other current assets and other assets
|
6,588
|
|
|
23,822
|
|
|
34,501
|
|
|
14,542
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
(1,933
|
)
|
|
40,404
|
|
|
(44,894
|
)
|
|
(126,154
|
)
|
||||
Deferred revenue
|
(129,431
|
)
|
|
(55,119
|
)
|
|
(298,642
|
)
|
|
(175,153
|
)
|
||||
Net cash provided by operating activities
|
122,511
|
|
|
137,859
|
|
|
841,491
|
|
|
604,231
|
|
||||
Investing activities:
|
|
|
|
|
|
|
|
||||||||
Business combinations, net of cash acquired
|
38,071
|
|
|
0
|
|
|
38,071
|
|
|
(2,614,732
|
)
|
||||
Proceeds from land activity, net
|
192,240
|
|
|
0
|
|
|
223,240
|
|
|
0
|
|
||||
Deposit for purchase of building and land
|
(114,935
|
)
|
|
0
|
|
|
(114,935
|
)
|
|
0
|
|
||||
Strategic investments
|
(12,852
|
)
|
|
(9,017
|
)
|
|
(47,905
|
)
|
|
(17,831
|
)
|
||||
Purchases of marketable securities
|
(154,560
|
)
|
|
(99,050
|
)
|
|
(690,024
|
)
|
|
(419,795
|
)
|
||||
Sales of marketable securities
|
46,908
|
|
|
16,820
|
|
|
197,293
|
|
|
1,022,470
|
|
||||
Maturities of marketable securities
|
22,288
|
|
|
427
|
|
|
46,248
|
|
|
21,031
|
|
||||
Capital expenditures
|
(73,426
|
)
|
|
(72,702
|
)
|
|
(205,100
|
)
|
|
(229,261
|
)
|
||||
Net cash used in investing activities
|
(56,266
|
)
|
|
(163,522
|
)
|
|
(553,112
|
)
|
|
(2,238,118
|
)
|
||||
Financing activities:
|
|
|
|
|
|
|
|
||||||||
Proceeds from borrowings on convertible senior notes, net
|
0
|
|
|
0
|
|
|
0
|
|
|
1,132,750
|
|
||||
Proceeds from issuance of warrants
|
0
|
|
|
0
|
|
|
0
|
|
|
84,800
|
|
||||
Purchase of convertible note hedge
|
0
|
|
|
0
|
|
|
0
|
|
|
(153,800
|
)
|
||||
Proceeds from term loan, net
|
0
|
|
|
0
|
|
|
0
|
|
|
298,500
|
|
||||
Proceeds from revolving credit facility, net
|
297,325
|
|
|
0
|
|
|
297,325
|
|
|
0
|
|
||||
Proceeds from employee stock plans
|
91,337
|
|
|
110,710
|
|
|
226,561
|
|
|
217,429
|
|
||||
Excess tax benefits from employee stock plans
|
1,221
|
|
|
1,578
|
|
|
3,447
|
|
|
2,166
|
|
||||
Payments on convertible senior notes
|
(89,645
|
)
|
|
0
|
|
|
(387,229
|
)
|
|
0
|
|
||||
Principal payments on capital lease obligations
|
(10,345
|
)
|
|
(12,440
|
)
|
|
(61,280
|
)
|
|
(33,047
|
)
|
||||
Payments on term loan
|
(270,000
|
)
|
|
(7,500
|
)
|
|
(285,000
|
)
|
|
(7,500
|
)
|
||||
Net cash provided by (used in) financing activities
|
19,893
|
|
|
92,348
|
|
|
(206,176
|
)
|
|
1,541,298
|
|
||||
Effect of exchange rate changes
|
(14,538
|
)
|
|
5,184
|
|
|
(17,513
|
)
|
|
(2,906
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
71,600
|
|
|
71,869
|
|
|
64,690
|
|
|
(95,495
|
)
|
||||
Cash and cash equivalents, beginning of period
|
774,725
|
|
|
579,881
|
|
|
781,635
|
|
|
747,245
|
|
||||
Cash and cash equivalents, end of period
|
$
|
846,325
|
|
|
$
|
651,750
|
|
|
$
|
846,325
|
|
|
$
|
651,750
|
|
Supplemental cash flow disclosure:
|
|
|
|
|
|
|
|
||||||||
Cash paid during the period for:
|
|
|
|
|
|
|
|
||||||||
Interest
|
$
|
4,285
|
|
|
$
|
7,200
|
|
|
$
|
21,274
|
|
|
$
|
12,391
|
|
Income taxes, net of tax refunds
|
$
|
6,187
|
|
|
$
|
6,105
|
|
|
$
|
30,986
|
|
|
$
|
25,626
|
|
Non-cash financing and investing activities:
|
|
|
|
|
|
|
|
||||||||
Fixed assets acquired under capital leases
|
$
|
38,604
|
|
|
$
|
13,857
|
|
|
$
|
119,939
|
|
|
$
|
487,531
|
|
Building in progress - leased facility acquired under financing obligation
|
$
|
29,756
|
|
|
$
|
0
|
|
|
$
|
62,804
|
|
|
$
|
0
|
|
Fair value of equity awards assumed
|
$
|
1,050
|
|
|
$
|
0
|
|
|
$
|
1,050
|
|
|
$
|
19,037
|
|
Fair value of common stock issued as consideration for business combinations
|
$
|
338,033
|
|
|
$
|
0
|
|
|
$
|
338,033
|
|
|
$
|
0
|
|
•
|
the best estimate of selling price of the deliverables included in multiple deliverable revenue arrangements,
|
•
|
the fair value of assets acquired and liabilities assumed for business combinations,
|
•
|
the recognition, measurement and valuation of current and deferred income taxes,
|
•
|
the recognition and measurement of loss contingencies,
|
•
|
the fair value of convertible notes,
|
•
|
the fair value of stock awards issued and related forfeiture rates,
|
•
|
the valuation of strategic investments and the determination of other-than-temporary impairments,
|
•
|
the estimate of real estate sublease rental rates and market conditions, and
|
•
|
the assessment of recoverability of long-lived assets (property and equipment, goodwill and identified intangibles).
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Americas
|
$
|
995,331
|
|
|
$
|
769,400
|
|
|
$
|
2,812,654
|
|
|
$
|
2,079,043
|
|
Europe
|
252,982
|
|
|
194,932
|
|
|
730,324
|
|
|
531,463
|
|
||||
Asia Pacific
|
135,342
|
|
|
111,702
|
|
|
386,000
|
|
|
315,255
|
|
||||
|
$
|
1,383,655
|
|
|
$
|
1,076,034
|
|
|
$
|
3,928,978
|
|
|
$
|
2,925,761
|
|
•
|
there is persuasive evidence of an arrangement;
|
•
|
the service has been or is being provided to the customer;
|
•
|
the collection of the fees is reasonably assured; and
|
•
|
the amount of fees to be paid by the customer is fixed or determinable.
|
Computer, equipment and software
|
3 to 9 years
|
Furniture and fixtures
|
5 years
|
Leasehold improvements
|
Shorter of the estimated lease term or 10 years
|
Building improvements
|
Amortized over the estimated useful lives of the respective assets when they are ready for their intended use
|
|
Three Months Ended
October 31, |
|
|
Nine Months Ended
October 31, |
|
||||||||||||||
Stock Options
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||||||
Volatility
|
37
|
|
%
|
|
39
|
|
%
|
|
37
|
|
%
|
|
39-43
|
|
%
|
||||
Estimated life
|
3.5 years
|
|
|
|
3.5 years
|
|
|
|
3.5 years
|
|
|
|
3.2 years
|
|
|
||||
Risk-free interest rate
|
1.34-1.53
|
|
%
|
|
1.03-1.21
|
|
%
|
|
1.20-1.53
|
|
%
|
|
0.48-1.21
|
|
%
|
||||
Weighted-average fair value per share of grants
|
$
|
17.32
|
|
|
|
$
|
14.52
|
|
|
|
$
|
16.46
|
|
|
|
$
|
11.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended
October 31, |
|
|
Nine Months Ended
October 31, |
|
||||||||||
ESPP
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Volatility
|
n/a
|
|
|
n/a
|
|
|
34-35
|
|
%
|
|
31-32
|
|
%
|
||
Estimated life
|
n/a
|
|
|
n/a
|
|
|
0.75 years
|
|
|
|
0.75 years
|
|
|
||
Risk-free interest rate
|
n/a
|
|
|
n/a
|
|
|
0.07-0.16
|
|
%
|
|
0.07-0.10
|
|
%
|
||
Weighted-average fair value per share of grants
|
n/a
|
|
|
n/a
|
|
|
$
|
14.53
|
|
|
|
$
|
9.69
|
|
|
Investments classified as Marketable Securities
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Corporate notes and obligations
|
$
|
596,671
|
|
|
$
|
2,186
|
|
|
$
|
(439
|
)
|
|
$
|
598,418
|
|
U.S. treasury securities
|
56,563
|
|
|
94
|
|
|
(28
|
)
|
|
56,629
|
|
||||
Mortgage backed obligations
|
46,629
|
|
|
192
|
|
|
(302
|
)
|
|
46,519
|
|
||||
Asset backed securities
|
125,599
|
|
|
88
|
|
|
(43
|
)
|
|
125,644
|
|
||||
Municipal securities
|
38,976
|
|
|
38
|
|
|
(79
|
)
|
|
38,935
|
|
||||
Foreign government obligations
|
20,031
|
|
|
309
|
|
|
0
|
|
|
20,340
|
|
||||
U.S. agency obligations
|
17,987
|
|
|
12
|
|
|
(16
|
)
|
|
17,983
|
|
||||
Covered bonds
|
75,089
|
|
|
1,395
|
|
|
0
|
|
|
76,484
|
|
||||
Total marketable securities
|
$
|
977,545
|
|
|
$
|
4,314
|
|
|
$
|
(907
|
)
|
|
$
|
980,952
|
|
Investments classified as Marketable Securities
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Corporate notes and obligations
|
$
|
340,706
|
|
|
$
|
1,314
|
|
|
$
|
(170
|
)
|
|
$
|
341,850
|
|
U.S. treasury securities
|
16,016
|
|
|
28
|
|
|
0
|
|
|
16,044
|
|
||||
Mortgage backed obligations
|
24,888
|
|
|
281
|
|
|
(93
|
)
|
|
25,076
|
|
||||
Asset backed securities
|
38,213
|
|
|
39
|
|
|
(35
|
)
|
|
38,217
|
|
||||
Municipal securities
|
2,000
|
|
|
1
|
|
|
(3
|
)
|
|
1,998
|
|
||||
Foreign government obligations
|
24,305
|
|
|
171
|
|
|
(2
|
)
|
|
24,474
|
|
||||
U.S. agency obligations
|
14,726
|
|
|
9
|
|
|
(10
|
)
|
|
14,725
|
|
||||
Covered bonds
|
76,282
|
|
|
717
|
|
|
(1
|
)
|
|
76,998
|
|
||||
Total marketable securities
|
$
|
537,136
|
|
|
$
|
2,560
|
|
|
$
|
(314
|
)
|
|
$
|
539,382
|
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Recorded as follows:
|
|
|
|
||||
Short-term (due in one year or less)
|
$
|
79,779
|
|
|
$
|
57,139
|
|
Long-term (due after one year)
|
901,173
|
|
|
482,243
|
|
||
|
$
|
980,952
|
|
|
$
|
539,382
|
|
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
Corporate notes and obligations
|
$
|
206,762
|
|
|
$
|
(410
|
)
|
|
$
|
3,276
|
|
|
$
|
(29
|
)
|
|
$
|
210,038
|
|
|
$
|
(439
|
)
|
U.S. treasury securities
|
25,671
|
|
|
(28
|
)
|
|
0
|
|
|
0
|
|
|
25,671
|
|
|
(28
|
)
|
||||||
Mortgage backed obligations
|
30,652
|
|
|
(281
|
)
|
|
1,399
|
|
|
(21
|
)
|
|
32,051
|
|
|
(302
|
)
|
||||||
Asset backed securities
|
45,589
|
|
|
(38
|
)
|
|
2,357
|
|
|
(5
|
)
|
|
47,946
|
|
|
(43
|
)
|
||||||
Municipal securities
|
22,391
|
|
|
(79
|
)
|
|
0
|
|
|
0
|
|
|
22,391
|
|
|
(79
|
)
|
||||||
U.S. agency obligations
|
9,980
|
|
|
(16
|
)
|
|
0
|
|
|
0
|
|
|
9,980
|
|
|
(16
|
)
|
||||||
|
$
|
341,045
|
|
|
$
|
(852
|
)
|
|
$
|
7,032
|
|
|
$
|
(55
|
)
|
|
$
|
348,077
|
|
|
$
|
(907
|
)
|
Description
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balances as of
October 31, 2014
|
||||||||
Cash equivalents (1):
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
$
|
0
|
|
|
$
|
129,590
|
|
|
$
|
0
|
|
|
$
|
129,590
|
|
Money market mutual funds
|
40,368
|
|
|
0
|
|
|
0
|
|
|
40,368
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate notes and obligations
|
0
|
|
|
598,418
|
|
|
0
|
|
|
598,418
|
|
||||
U.S. treasury securities
|
0
|
|
|
56,629
|
|
|
0
|
|
|
56,629
|
|
||||
Mortgage backed obligations
|
0
|
|
|
46,519
|
|
|
0
|
|
|
46,519
|
|
||||
Asset backed securities
|
0
|
|
|
125,644
|
|
|
0
|
|
|
125,644
|
|
||||
Municipal securities
|
0
|
|
|
38,935
|
|
|
0
|
|
|
38,935
|
|
||||
Foreign government obligations
|
0
|
|
|
20,340
|
|
|
0
|
|
|
20,340
|
|
||||
U.S. agency obligations
|
0
|
|
|
17,983
|
|
|
0
|
|
|
17,983
|
|
||||
Covered bonds
|
0
|
|
|
76,484
|
|
|
0
|
|
|
76,484
|
|
||||
Foreign currency derivative contracts (2)
|
0
|
|
|
667
|
|
|
0
|
|
|
667
|
|
||||
Total Assets
|
$
|
40,368
|
|
|
$
|
1,111,209
|
|
|
$
|
0
|
|
|
$
|
1,151,577
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts (3)
|
$
|
0
|
|
|
$
|
1,558
|
|
|
$
|
0
|
|
|
$
|
1,558
|
|
Total Liabilities
|
$
|
0
|
|
|
$
|
1,558
|
|
|
$
|
0
|
|
|
$
|
1,558
|
|
Description
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs (Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balances as of
January 31, 2014
|
||||||||
Cash equivalents (1):
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
$
|
0
|
|
|
$
|
212,700
|
|
|
$
|
0
|
|
|
$
|
212,700
|
|
Money market mutual funds
|
87,898
|
|
|
0
|
|
|
0
|
|
|
87,898
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate notes and obligations
|
0
|
|
|
341,850
|
|
|
0
|
|
|
341,850
|
|
||||
U.S. treasury securities
|
0
|
|
|
16,044
|
|
|
0
|
|
|
16,044
|
|
||||
Mortgage backed obligations
|
0
|
|
|
25,076
|
|
|
0
|
|
|
25,076
|
|
||||
Asset backed securities
|
0
|
|
|
38,217
|
|
|
0
|
|
|
38,217
|
|
||||
Municipal securities
|
0
|
|
|
1,998
|
|
|
0
|
|
|
1,998
|
|
||||
Foreign government obligations
|
0
|
|
|
24,474
|
|
|
0
|
|
|
24,474
|
|
||||
U.S. agency obligations
|
0
|
|
|
14,725
|
|
|
0
|
|
|
14,725
|
|
||||
Covered bonds
|
0
|
|
|
76,998
|
|
|
0
|
|
|
76,998
|
|
||||
Foreign currency derivative contracts (2)
|
0
|
|
|
1,598
|
|
|
0
|
|
|
1,598
|
|
||||
Total Assets
|
$
|
87,898
|
|
|
$
|
753,680
|
|
|
$
|
0
|
|
|
$
|
841,578
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts (3)
|
$
|
0
|
|
|
$
|
1,801
|
|
|
$
|
0
|
|
|
$
|
1,801
|
|
Total Liabilities
|
$
|
0
|
|
|
$
|
1,801
|
|
|
$
|
0
|
|
|
$
|
1,801
|
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Notional amount of foreign currency derivative contracts
|
$
|
661,238
|
|
|
$
|
563,060
|
|
Fair value of foreign currency derivative contracts
|
$
|
(891
|
)
|
|
$
|
(203
|
)
|
|
|
Fair Value of Derivative Instruments
|
||||||
|
|
As of
|
||||||
|
Balance Sheet Location
|
October 31, 2014
|
|
January 31, 2014
|
||||
Derivative Assets
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Foreign currency derivative contracts
|
Prepaid expenses and other current assets
|
$
|
667
|
|
|
$
|
1,598
|
|
Derivative Liabilities
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Foreign currency derivative contracts
|
Accounts payable, accrued expenses and other liabilities
|
$
|
1,558
|
|
|
$
|
1,801
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Interest income
|
$
|
2,720
|
|
|
$
|
1,258
|
|
|
$
|
7,051
|
|
|
$
|
8,029
|
|
Realized gains
|
78
|
|
|
332
|
|
|
424
|
|
|
5,732
|
|
||||
Realized losses
|
(176
|
)
|
|
(480
|
)
|
|
(420
|
)
|
|
(4,910
|
)
|
||||
Total investment income
|
$
|
2,622
|
|
|
$
|
1,110
|
|
|
$
|
7,055
|
|
|
$
|
8,851
|
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Property and equipment, net
|
|
|
|
||||
Land and building improvements
|
$
|
0
|
|
|
$
|
297,835
|
|
Computers, equipment and software
|
1,133,701
|
|
|
931,171
|
|
||
Furniture and fixtures
|
69,542
|
|
|
58,956
|
|
||
Leasehold improvements
|
362,170
|
|
|
296,390
|
|
||
Building in progress—leased facility
|
102,975
|
|
|
40,171
|
|
||
|
1,668,388
|
|
|
1,624,523
|
|
||
Less accumulated depreciation and amortization
|
(558,572
|
)
|
|
(383,777
|
)
|
||
|
$
|
1,109,816
|
|
|
$
|
1,240,746
|
|
|
|
|
|
||||
Land and building improvements held for sale
(including perpetual parking rights)
|
$
|
143,197
|
|
|
$
|
0
|
|
|
Fair Value
|
||
Cash
|
$
|
1,123
|
|
Common stock (6,320,735 shares)
|
338,033
|
|
|
Fair value of stock options and restricted stock awards assumed
|
1,050
|
|
|
Total
|
$
|
340,206
|
|
|
Fair Value
|
||
Cash
|
$
|
39,194
|
|
Intangible assets
|
16,200
|
|
|
Goodwill
|
289,857
|
|
|
Current and noncurrent liabilities
|
(4,700
|
)
|
|
Deferred tax liability
|
(345
|
)
|
|
Net assets acquired
|
$
|
340,206
|
|
|
Fair Value
|
|
Useful Life
|
||
Developed technology
|
$
|
14,470
|
|
|
7 years
|
Customer relationships and other purchased intangible assets
|
1,730
|
|
|
1-3 years
|
|
Total
|
$
|
16,200
|
|
|
|
Balance as of January 31, 2014
|
$
|
3,500,823
|
|
RelateIQ
|
289,857
|
|
|
Finalization of acquisition date fair values
|
(8,111
|
)
|
|
Balance as of October 31, 2014
|
$
|
3,782,569
|
|
|
Par Value
|
|
Equity
Component Recorded at Issuance
|
|
Liability Component of Par Value as of
|
||||||||||
(In thousands)
|
October 31, 2014
|
|
January 31, 2014
|
||||||||||||
0.75% Convertible Senior Notes due January 15, 2015
|
$
|
181,637
|
|
|
$
|
125,530
|
|
(1)
|
$
|
179,755
|
|
|
$
|
542,159
|
|
0.25% Convertible Senior Notes due April 1, 2018
|
1,150,000
|
|
|
122,421
|
|
(2)
|
1,064,683
|
|
|
1,046,930
|
|
|
Conversion
Rate per $1,000
Par Value
|
|
Initial
Conversion
Price per
Share
|
|
Convertible Date
|
|||
0.75% Senior Notes
|
46.8588
|
|
|
$
|
21.34
|
|
|
October 15, 2014
|
0.25% Senior Notes
|
15.0512
|
|
|
$
|
66.44
|
|
|
January 1, 2018
|
•
|
during any fiscal quarter, if, for at least
20
trading days during the
30
consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sales price of the Company’s common stock for such trading day is greater than or equal to
130%
of the applicable conversion price on such trading day share of common stock on such last trading day;
|
•
|
in certain situations, when the trading price of the
0.25%
Senior Notes is less than
98%
of the product of the sale price of the Company’s common stock and the conversion rate;
|
•
|
upon the occurrence of specified corporate transactions described under the
0.25%
Senior Notes indenture, such as a consolidation, merger or binding share exchange; or
|
•
|
at any time on or after the convertible date noted above.
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Liability component :
|
|
|
|
||||
Principal:
|
|
|
|
||||
0.75% Senior Notes (1)
|
$
|
181,637
|
|
|
$
|
568,864
|
|
0.25% Senior Notes (1)
|
1,150,000
|
|
|
1,150,000
|
|
||
Less: debt discount, net
|
|
|
|
||||
0.75% Senior Notes (2)
|
(1,882
|
)
|
|
(26,705
|
)
|
||
0.25% Senior Notes (3)
|
(85,317
|
)
|
|
(103,070
|
)
|
||
Net carrying amount
|
$
|
1,244,438
|
|
|
$
|
1,589,089
|
|
(in thousands, except for shares)
|
Date
|
|
Purchase
|
|
Shares
|
|||
0.75% Note Hedges
|
January 2010
|
|
$
|
126,500
|
|
|
26,943,812
|
|
0.25% Note Hedges
|
March 2013
|
|
$
|
153,800
|
|
|
17,308,880
|
|
|
Date
|
|
Proceeds
(in thousands)
|
|
Shares
|
|
Strike
Price
|
|||||
0.75% Warrants
|
January 2010
|
|
$
|
59,300
|
|
|
26,943,812
|
|
|
$
|
29.88
|
|
0.25% Warrants
|
March 2013
|
|
$
|
84,800
|
|
|
17,308,880
|
|
|
$
|
90.40
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Contractual interest expense
|
$
|
2,190
|
|
|
$
|
3,329
|
|
|
$
|
7,777
|
|
|
$
|
6,922
|
|
Amortization of debt issuance costs
|
1,132
|
|
|
1,275
|
|
|
3,490
|
|
|
3,195
|
|
||||
Amortization of debt discount
|
8,637
|
|
|
12,547
|
|
|
28,837
|
|
|
34,139
|
|
||||
|
$
|
11,959
|
|
|
$
|
17,151
|
|
|
$
|
40,104
|
|
|
$
|
44,256
|
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Deferred income taxes, net
|
$
|
45,738
|
|
|
$
|
49,279
|
|
Prepaid income taxes
|
20,847
|
|
|
23,571
|
|
||
Customer contract asset
|
28,073
|
|
|
77,368
|
|
||
Prepaid expenses and other current assets
|
192,954
|
|
|
158,962
|
|
||
|
$
|
287,612
|
|
|
$
|
309,180
|
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Capitalized internal-use software development costs, net of accumulated amortization of $127,842 and $101,687, respectively
|
$
|
89,106
|
|
|
$
|
72,915
|
|
Acquired developed technology, net of accumulated amortization of $370,535 and $294,628, respectively
|
358,982
|
|
|
409,002
|
|
||
|
$
|
448,088
|
|
|
$
|
481,917
|
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Deferred income taxes, noncurrent, net
|
$
|
8,128
|
|
|
$
|
9,691
|
|
Long-term deposits
|
19,597
|
|
|
17,970
|
|
||
Purchased intangible assets, net of accumulated amortization of $111,273 and $66,399, respectively
|
349,665
|
|
|
416,119
|
|
||
Acquired intellectual property, net of accumulated amortization of $14,216 and $11,304, respectively
|
10,844
|
|
|
11,957
|
|
||
Strategic investments
|
132,150
|
|
|
92,489
|
|
||
Customer contract asset
|
3,747
|
|
|
18,182
|
|
||
Other
|
71,032
|
|
|
47,082
|
|
||
|
$
|
595,163
|
|
|
$
|
613,490
|
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Accounts payable
|
$
|
88,794
|
|
|
$
|
64,988
|
|
Accrued compensation
|
339,982
|
|
|
397,002
|
|
||
Accrued other liabilities
|
314,311
|
|
|
235,543
|
|
||
Accrued income and other taxes payable
|
141,388
|
|
|
153,026
|
|
||
Accrued professional costs
|
17,597
|
|
|
15,864
|
|
||
Customer liability, current
|
19,737
|
|
|
53,957
|
|
||
Accrued rent
|
14,133
|
|
|
13,944
|
|
||
|
$
|
935,942
|
|
|
$
|
934,324
|
|
|
As of
|
||||||
|
October 31,
2014 |
|
January 31,
2014 |
||||
Deferred income taxes and income taxes payable
|
$
|
106,759
|
|
|
$
|
108,760
|
|
Customer liability, noncurrent
|
2,546
|
|
|
13,953
|
|
||
Financing obligation, building in progress-leased facility
|
102,975
|
|
|
40,171
|
|
||
Long-term lease liabilities and other
|
703,530
|
|
|
594,303
|
|
||
|
$
|
915,810
|
|
|
$
|
757,187
|
|
|
|
|
Options Outstanding
|
||||||||||
|
Shares
Available for
Grant
|
|
Outstanding
Stock
Options
|
|
Weighted-
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
(in thousands)
|
||||||
Balance as of January 31, 2014
|
55,852,536
|
|
|
28,604,045
|
|
|
$
|
34.26
|
|
|
|
||
Increase in shares authorized:
|
|
|
|
|
|
|
|
||||||
2013 Equity Incentive Plan
|
3,132,662
|
|
|
0
|
|
|
0.00
|
|
|
|
|||
2014 Inducement Equity Incentive Plan
|
654,957
|
|
|
0
|
|
|
0.00
|
|
|
|
|||
2011 Relate IQ Plan
|
291,361
|
|
|
0
|
|
|
0.00
|
|
|
|
|||
Options granted under all plans
|
(2,606,374
|
)
|
|
2,606,374
|
|
|
53.99
|
|
|
|
|||
Restricted stock activity
|
(6,307,825
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Stock grants to board and advisory board members
|
(177,674
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Exercised
|
0
|
|
|
(5,680,848
|
)
|
|
22.57
|
|
|
|
|||
Plan shares expired
|
(2,582,861
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Canceled
|
1,035,115
|
|
|
(1,035,115
|
)
|
|
33.49
|
|
|
|
|||
Balance as of October 31, 2014
|
49,291,897
|
|
|
24,494,456
|
|
|
39.11
|
|
|
$
|
609,478
|
|
|
Vested or expected to vest
|
|
|
23,057,598
|
|
|
$
|
38.59
|
|
|
$
|
585,703
|
|
|
Exercisable as of October 31, 2014
|
|
|
10,185,611
|
|
|
$
|
31.18
|
|
|
$
|
334,162
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise
Prices
|
|
Number
Outstanding
|
|
Weighted-
Average
Remaining
Contractual Life
(Years)
|
|
Weighted-
Average
Exercise
Price
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
|
||||||
$0.58 to $27.06
|
|
5,368,871
|
|
|
3.1
|
|
$
|
21.39
|
|
|
3,508,231
|
|
|
$
|
20.72
|
|
$27.56 to $34.63
|
|
1,004,893
|
|
|
3.6
|
|
30.86
|
|
|
428,981
|
|
|
30.54
|
|
||
$35.63
|
|
3,530,909
|
|
|
1.1
|
|
35.63
|
|
|
3,401,222
|
|
|
35.63
|
|
||
$35.87 to $39.09
|
|
5,736,545
|
|
|
2.9
|
|
38.12
|
|
|
2,578,871
|
|
|
38.13
|
|
||
$40.19 to $52.14
|
|
769,316
|
|
|
5.1
|
|
43.07
|
|
|
200,449
|
|
|
43.16
|
|
||
$52.30
|
|
5,278,748
|
|
|
6.1
|
|
52.30
|
|
|
0
|
|
|
0.00
|
|
||
$53.60 to $63.66
|
|
2,805,174
|
|
|
6.6
|
|
56.46
|
|
|
67,857
|
|
|
54.28
|
|
||
|
|
24,494,456
|
|
|
3.9
|
|
$
|
39.11
|
|
|
10,185,611
|
|
|
$
|
31.18
|
|
Options outstanding
|
24,494,456
|
|
Restricted stock awards and units outstanding
|
20,550,573
|
|
Stock available for future grant:
|
|
|
2013 Equity Incentive Plan
|
49,115,851
|
|
2014 Inducement Equity Incentive Plan
|
176,046
|
|
2004 Employee Stock Purchase Plan
|
4,298,711
|
|
Convertible senior notes
|
25,820,078
|
|
Warrants
|
44,252,692
|
|
|
168,708,407
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(38,924
|
)
|
|
$
|
(124,434
|
)
|
|
$
|
(196,923
|
)
|
|
$
|
(115,552
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding for basic loss per share
|
629,548
|
|
|
600,467
|
|
|
619,748
|
|
|
594,346
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Convertible senior notes
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Employee stock awards
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Warrants
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share
|
629,548
|
|
|
600,467
|
|
|
619,748
|
|
|
594,346
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Stock awards
|
19,922
|
|
|
14,613
|
|
|
20,115
|
|
|
18,629
|
|
Convertible senior notes
|
25,820
|
|
|
44,246
|
|
|
28,834
|
|
|
44,246
|
|
Warrants
|
44,253
|
|
|
44,253
|
|
|
44,253
|
|
|
44,253
|
|
|
Capital
Leases
|
|
Operating
Leases
|
|
Financing Obligation, Building in Progress-Leased Facility(1)
|
||||||
Fiscal Period:
|
|
|
|
|
|
||||||
Remaining three months of fiscal 2015
|
$
|
12,228
|
|
|
$
|
64,901
|
|
|
$
|
0
|
|
Fiscal 2016
|
101,584
|
|
|
259,691
|
|
|
1,777
|
|
|||
Fiscal 2017
|
112,748
|
|
|
233,260
|
|
|
16,877
|
|
|||
Fiscal 2018
|
116,995
|
|
|
190,736
|
|
|
21,107
|
|
|||
Fiscal 2019
|
112,592
|
|
|
181,184
|
|
|
21,551
|
|
|||
Thereafter
|
201,292
|
|
|
1,289,131
|
|
|
274,512
|
|
|||
Total minimum lease payments
|
657,439
|
|
|
$
|
2,218,903
|
|
|
$
|
335,824
|
|
|
Less: amount representing interest
|
(84,758
|
)
|
|
|
|
|
|||||
Present value of capital lease obligations
|
$
|
572,681
|
|
|
|
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
strengthening our market-leading solutions;
|
•
|
extending distribution into high-growth markets;
|
•
|
expanding relationships with our existing customer base;
|
•
|
pursuing new customers;
|
•
|
reducing our attrition rates;
|
•
|
building our business in top markets globally, which includes building partnerships that help add customers; and
|
•
|
encouraging the development of third-party applications on our cloud computing platforms.
|
|
Three Months Ended
October 31, 2014 |
|
Nine Months Ended
October 31, 2014 |
||||
Sales Cloud
|
$
|
625.0
|
|
|
$
|
1,811.7
|
|
Service Cloud
|
339.6
|
|
|
953.1
|
|
||
Salesforce1 Platform and Other
|
192.4
|
|
|
538.7
|
|
||
Marketing Cloud
|
131.5
|
|
|
364.9
|
|
||
Total
|
$
|
1,288.5
|
|
|
$
|
3,668.4
|
|
(in thousands)
|
April 30,
2014 |
|
July 31,
2014 |
|
October 31,
2014 |
|
|
||||||
Fiscal 2015
|
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
684,155
|
|
|
$
|
834,323
|
|
|
$
|
794,590
|
|
|
|
Deferred revenue, current and noncurrent
|
2,324,615
|
|
|
2,352,904
|
|
|
2,223,977
|
|
|
|
(in thousands)
|
April 30,
2013
|
|
July 31,
2013
|
|
October 31,
2013
|
|
January 31,
2014
|
||||||||
Fiscal 2014
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, net
|
$
|
502,609
|
|
|
$
|
599,543
|
|
|
$
|
604,045
|
|
|
$
|
1,360,837
|
|
Deferred revenue, current and noncurrent
|
1,733,160
|
|
|
1,789,648
|
|
|
1,734,619
|
|
|
2,522,115
|
|
(in thousands)
|
April 30,
2012
|
|
July 31,
2012
|
|
October 31,
2012
|
|
January 31,
2013
|
||||||||
Fiscal 2013
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, net
|
$
|
371,395
|
|
|
$
|
446,917
|
|
|
$
|
418,590
|
|
|
$
|
872,634
|
|
Deferred revenue, current and noncurrent
|
1,334,716
|
|
|
1,337,184
|
|
|
1,291,703
|
|
|
1,862,995
|
|
•
|
there is persuasive evidence of an arrangement;
|
•
|
the service has been or is being provided to the customer;
|
•
|
the collection of the fees is reasonably assured; and
|
•
|
the amount of fees to be paid by the customer is fixed or determinable.
|
•
|
future expected cash flows from subscription and support contracts, professional services contracts, other customer contracts and acquired developed technologies and patents;
|
•
|
the acquired company’s trade name, trademark and existing customer relationship, as well as assumptions about the period of time the acquired trade name and trademark will continue to be used in our offerings;
|
•
|
uncertain tax positions and tax related valuation allowances assumed; and
|
•
|
discount rates.
|
•
|
The estimated life for the stock options which is estimated based on an actual analysis of expected life. The estimated life for shares issued pursuant to our ESPP is based on the two purchase periods within the 12 month offering period;
|
•
|
The risk free interest rate which is based on the rate for a U.S. government security with the same estimated life at the time of the option grant and the stock purchase rights;
|
•
|
The future stock price volatility which is estimated considering both our observed option-implied volatilities and our historical volatility calculations. We believe this is the best estimate of the expected volatility over the expected life of our stock options and stock purchase rights; and
|
•
|
The probability of performance conditions, if any, that affect the vesting of certain awards being achieved. Expense is only recognized for those shares expected to vest.
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
$
|
1,288,513
|
|
|
$
|
1,004,476
|
|
|
$
|
3,668,406
|
|
|
$
|
2,749,541
|
|
Professional services and other
|
95,142
|
|
|
71,558
|
|
|
260,572
|
|
|
176,220
|
|
||||
Total revenues
|
1,383,655
|
|
|
1,076,034
|
|
|
3,928,978
|
|
|
2,925,761
|
|
||||
Cost of revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
238,746
|
|
|
198,809
|
|
|
666,611
|
|
|
513,267
|
|
||||
Professional services and other
|
94,465
|
|
|
69,378
|
|
|
266,736
|
|
|
181,631
|
|
||||
Total cost of revenues
|
333,211
|
|
|
268,187
|
|
|
933,347
|
|
|
694,898
|
|
||||
Gross profit
|
1,050,444
|
|
|
807,847
|
|
|
2,995,631
|
|
|
2,230,863
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
195,460
|
|
|
170,690
|
|
|
586,927
|
|
|
450,708
|
|
||||
Marketing and sales
|
709,643
|
|
|
581,229
|
|
|
2,020,956
|
|
|
1,528,340
|
|
||||
General and administrative
|
167,383
|
|
|
153,859
|
|
|
498,565
|
|
|
434,143
|
|
||||
Total operating expenses
|
1,072,486
|
|
|
905,778
|
|
|
3,106,448
|
|
|
2,413,191
|
|
||||
Loss from operations
|
(22,042
|
)
|
|
(97,931
|
)
|
|
(110,817
|
)
|
|
(182,328
|
)
|
||||
Investment income
|
2,622
|
|
|
1,110
|
|
|
7,055
|
|
|
8,851
|
|
||||
Interest expense
|
(17,682
|
)
|
|
(22,929
|
)
|
|
(56,355
|
)
|
|
(54,468
|
)
|
||||
Gain on sales of land and building improvements
|
15,625
|
|
|
0
|
|
|
15,625
|
|
|
0
|
|
||||
Other expense
|
(372
|
)
|
|
(4,291
|
)
|
|
(15,095
|
)
|
|
(6,843
|
)
|
||||
Loss before benefit from (provision for) income taxes
|
(21,849
|
)
|
|
(124,041
|
)
|
|
(159,587
|
)
|
|
(234,788
|
)
|
||||
Benefit from (provision for) income taxes
|
(17,075
|
)
|
|
(393
|
)
|
|
(37,336
|
)
|
|
119,236
|
|
||||
Net loss
|
$
|
(38,924
|
)
|
|
$
|
(124,434
|
)
|
|
$
|
(196,923
|
)
|
|
$
|
(115,552
|
)
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cost of revenues
|
$
|
20,351
|
|
|
$
|
33,844
|
|
|
$
|
70,294
|
|
|
$
|
77,699
|
|
Marketing and sales
|
15,095
|
|
|
15,211
|
|
|
44,708
|
|
|
22,147
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cost of revenues
|
$
|
14,118
|
|
|
$
|
12,119
|
|
|
$
|
38,905
|
|
|
$
|
32,778
|
|
Research and development
|
26,868
|
|
|
27,935
|
|
|
87,264
|
|
|
78,396
|
|
||||
Marketing and sales
|
72,892
|
|
|
73,296
|
|
|
210,510
|
|
|
189,231
|
|
||||
General and administrative
|
25,582
|
|
|
28,186
|
|
|
76,284
|
|
|
66,336
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Americas
|
$
|
995,331
|
|
|
$
|
769,400
|
|
|
$
|
2,812,654
|
|
|
$
|
2,079,043
|
|
Europe
|
252,982
|
|
|
194,932
|
|
|
730,324
|
|
|
531,463
|
|
||||
Asia Pacific
|
135,342
|
|
|
111,702
|
|
|
386,000
|
|
|
315,255
|
|
||||
|
$
|
1,383,655
|
|
|
$
|
1,076,034
|
|
|
$
|
3,928,978
|
|
|
$
|
2,925,761
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Amortization of purchased intangibles:
|
|
|
|
|
|
|
|
||||
Cost of revenues
|
1
|
%
|
|
3
|
%
|
|
2
|
%
|
|
3
|
%
|
Marketing and sales
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Stock-based awards:
|
|
|
|
|
|
|
|
||||
Cost of revenues
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Research and development
|
2
|
|
|
3
|
|
|
2
|
|
|
3
|
|
Marketing and sales
|
5
|
|
|
7
|
|
|
5
|
|
|
6
|
|
General and administrative
|
2
|
|
|
3
|
|
|
2
|
|
|
2
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Revenues by geography:
|
|
|
|
|
|
|
|
||||
Americas
|
72
|
%
|
|
72
|
%
|
|
72
|
%
|
|
71
|
%
|
Europe
|
18
|
|
|
18
|
|
|
18
|
%
|
|
18
|
%
|
Asia Pacific
|
10
|
|
|
10
|
|
|
10
|
%
|
|
11
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Three Months Ended
October 31, 2014 compared to Three Months Ended October 31, 2013 |
|
Three Months Ended
October 31, 2013 compared to Three Months Ended October 31, 2012 |
||
Revenue constant currency growth rates
(as compared to the comparable prior periods)
|
|
|
|
||
Americas
|
29
|
%
|
|
41
|
%
|
Europe
|
34
|
%
|
|
39
|
%
|
Asia Pacific
|
25
|
%
|
|
17
|
%
|
Total growth
|
30
|
%
|
|
37
|
%
|
|
Three Months Ended October 31,
|
|
Variance
|
|||||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|||||||
Subscription and support
|
$
|
1,288,513
|
|
|
$
|
1,004,476
|
|
|
$
|
284,037
|
|
|
28
|
%
|
Professional services and other
|
95,142
|
|
|
71,558
|
|
|
23,584
|
|
|
33
|
%
|
|||
Total revenues
|
$
|
1,383,655
|
|
|
$
|
1,076,034
|
|
|
$
|
307,621
|
|
|
29
|
%
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Subscription and support
|
$
|
238,746
|
|
|
$
|
198,809
|
|
|
$
|
39,937
|
|
Professional services and other
|
94,465
|
|
|
69,378
|
|
|
25,087
|
|
|||
Total cost of revenues
|
$
|
333,211
|
|
|
$
|
268,187
|
|
|
$
|
65,024
|
|
Percent of total revenues
|
24
|
%
|
|
25
|
%
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Research and development
|
$
|
195,460
|
|
|
$
|
170,690
|
|
|
$
|
24,770
|
|
Percent of total revenues
|
14
|
%
|
|
16
|
%
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Marketing and sales
|
$
|
709,643
|
|
|
$
|
581,229
|
|
|
$
|
128,414
|
|
Percent of total revenues
|
52
|
%
|
|
54
|
%
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
General and administrative
|
$
|
167,383
|
|
|
$
|
153,859
|
|
|
$
|
13,524
|
|
Percent of total revenues
|
12
|
%
|
|
14
|
%
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Loss from operations
|
$
|
(22,042
|
)
|
|
$
|
(97,931
|
)
|
|
$
|
75,889
|
|
Percent of total revenues
|
(2
|
)%
|
|
(9
|
)%
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Investment income
|
$
|
2,622
|
|
|
$
|
1,110
|
|
|
$
|
1,512
|
|
Percent of total revenues
|
0
|
%
|
|
0
|
%
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Interest expense
|
$
|
(17,682
|
)
|
|
$
|
(22,929
|
)
|
|
$
|
5,247
|
|
Percent of total revenues
|
(1
|
)%
|
|
(2
|
)%
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Other expense
|
$
|
(372
|
)
|
|
$
|
(4,291
|
)
|
|
$
|
3,919
|
|
Percent of total revenues
|
0
|
%
|
|
(1
|
)%
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Benefit from (provision for) income taxes
|
$
|
(17,075
|
)
|
|
$
|
(393
|
)
|
|
$
|
(16,682
|
)
|
Effective tax rate
|
(78
|
)%
|
|
0
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
|||||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|||||||
Subscription and support
|
$
|
3,668,406
|
|
|
$
|
2,749,541
|
|
|
$
|
918,865
|
|
|
33
|
%
|
Professional services and other
|
260,572
|
|
|
176,220
|
|
|
84,352
|
|
|
48
|
%
|
|||
Total revenues
|
$
|
3,928,978
|
|
|
$
|
2,925,761
|
|
|
$
|
1,003,217
|
|
|
34
|
%
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Subscription and support
|
$
|
666,611
|
|
|
$
|
513,267
|
|
|
$
|
153,344
|
|
Professional services and other
|
266,736
|
|
|
181,631
|
|
|
85,105
|
|
|||
Total cost of revenues
|
$
|
933,347
|
|
|
$
|
694,898
|
|
|
$
|
238,449
|
|
Percent of total revenues
|
24
|
%
|
|
24
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Research and development
|
$
|
586,927
|
|
|
$
|
450,708
|
|
|
$
|
136,219
|
|
Percent of total revenues
|
15
|
%
|
|
15
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Marketing and sales
|
$
|
2,020,956
|
|
|
$
|
1,528,340
|
|
|
$
|
492,616
|
|
Percent of total revenues
|
51
|
%
|
|
52
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
General and administrative
|
$
|
498,565
|
|
|
$
|
434,143
|
|
|
$
|
64,422
|
|
Percent of total revenues
|
13
|
%
|
|
15
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Loss from operations
|
$
|
(110,817
|
)
|
|
$
|
(182,328
|
)
|
|
$
|
71,511
|
|
Percent of total revenues
|
(3
|
)%
|
|
(6
|
)%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Investment income
|
$
|
7,055
|
|
|
$
|
8,851
|
|
|
$
|
(1,796
|
)
|
Percent of total revenues
|
0
|
%
|
|
0
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Interest expense
|
$
|
(56,355
|
)
|
|
$
|
(54,468
|
)
|
|
$
|
(1,887
|
)
|
Percent of total revenues
|
(1
|
)%
|
|
(2
|
)%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Other expense
|
$
|
(15,095
|
)
|
|
$
|
(6,843
|
)
|
|
$
|
(8,252
|
)
|
Percent of total revenues
|
0
|
%
|
|
0
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
Dollars
|
||||||
Benefit from (provision for) income taxes
|
$
|
(37,336
|
)
|
|
$
|
119,236
|
|
|
$
|
(156,572
|
)
|
Effective tax rate
|
(23)%
|
|
|
51
|
%
|
|
|
|
Capital
Leases |
|
Operating
Leases |
|
Financing Obligation, Building in Progress-Leased Facility
|
||||||
Fiscal Period:
|
|
|
|
|
|
||||||
Remaining three months of fiscal 2015
|
$
|
12,228
|
|
|
$
|
64,901
|
|
|
$
|
0
|
|
Fiscal 2016
|
101,584
|
|
|
259,691
|
|
|
1,777
|
|
|||
Fiscal 2017
|
112,748
|
|
|
233,260
|
|
|
16,877
|
|
|||
Fiscal 2018
|
116,995
|
|
|
190,736
|
|
|
21,107
|
|
|||
Fiscal 2019
|
112,592
|
|
|
181,184
|
|
|
21,551
|
|
|||
Thereafter
|
201,292
|
|
|
1,289,131
|
|
|
274,512
|
|
|||
Total minimum lease payments
|
657,439
|
|
|
$
|
2,218,903
|
|
|
$
|
335,824
|
|
|
Less: amount representing interest
|
(84,758
|
)
|
|
|
|
|
|||||
Present value of capital lease obligations
|
$
|
572,681
|
|
|
|
|
|
•
|
Stock-Based Expenses
. The Company’s compensation strategy includes the use of stock-based compensation to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
|
•
|
Amortization of Purchased Intangibles.
The Company views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While it is continually viewed for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
|
•
|
Amortization of Debt Discount.
Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, for GAAP purposes we are required to recognize imputed interest expense on the Company’s $575 million of convertible senior notes that were issued in a private placement in January 2010 and the Company’s $1.15 billion of convertible senior notes that were issued in a private placement in March 2013. The imputed interest rates were approximately 5.9% for the notes issued in January 2010 and approximately 2.5% for the notes issued in March 2013, while the coupon interest rates were 0.75% and 0.25%, respectively. The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management’s assessment of the Company’s operating performance because management believes that this non-cash expense is not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the Company’s operational performance.
|
•
|
Non-Cash Gains/Losses on Conversions of Debt.
Upon settlement of the Company’s convertible senior notes, we attribute the fair value of the consideration transferred to the liability and equity components of the convertible senior notes. The difference between the fair value of consideration attributed to the liability component and the carrying value of the liability as of settlement date is recorded as a non-cash gain or loss on the statement of operations. Management believes that the exclusion of the non-cash gain/loss provides investors an enhanced view of the company’s operational performance.
|
•
|
Gain on sales of land and building improvements.
The Company views the non-operating gains associated with the sales of the land and building improvements to be a discrete item. Management believes that the exclusion of the gains provides investors an enhanced view of the Company’s operational performance.
|
•
|
Income Tax Effects and Adjustments
. During fiscal 2014, the Company’s non-GAAP tax provision excluded the tax effects of expense items described above and certain tax items not directly related to the current fiscal year’s ordinary operating results. Examples of such tax items included, but are not limited to, changes in the valuation allowance related to deferred tax assets, certain acquisition-related costs and unusual or infrequently occurring items. Management believes the exclusion of these income tax adjustments provides investors with useful supplemental information about the Company’s operational performance. During fiscal 2015, the Company began to compute and utilize a fixed long-term projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of non-recurring and period-specific items such as changes in the tax valuation allowance and tax effects of acquisitions-related costs, since each of these items can vary in size and frequency. When projecting this long-term rate, the Company evaluated a three-year financial projection that excludes the impact of the following non-cash items: Stock-Based Expenses, Amortization of Purchased Intangibles, Amortization of Debt Discount, Gains/Losses on Conversions of Debt, and Gains/Losses on sales of land and building improvements. The projected rate also assumes no new acquisitions in the three-year period, and takes into account other factors including the Company’s current tax structure, its existing tax positions in various jurisdictions and key legislation in major jurisdictions where the Company operates. The non-GAAP tax rate for fiscal 2015 is 36.5%. The Company intends to re-evaluate this long-term rate on an annual basis or if any significant events that may materially affect this long-term rate occur. This long-term rate could be subject to change for a variety of reasons, for example, significant changes in the geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where the Company operates.
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Non-GAAP gross profit
|
|
|
|
|
|
|
|
||||||||
GAAP gross profit
|
$
|
1,050,444
|
|
|
$
|
807,847
|
|
|
$
|
2,995,631
|
|
|
$
|
2,230,863
|
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
20,351
|
|
|
33,844
|
|
|
70,294
|
|
|
77,699
|
|
||||
Stock-based expenses
|
14,118
|
|
|
12,119
|
|
|
38,905
|
|
|
32,778
|
|
||||
Non-GAAP gross profit
|
$
|
1,084,913
|
|
|
$
|
853,810
|
|
|
$
|
3,104,830
|
|
|
$
|
2,341,340
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Non-GAAP operating profit
|
|
|
|
|
|
|
|
||||||||
GAAP loss from operations
|
$
|
(22,042
|
)
|
|
$
|
(97,931
|
)
|
|
$
|
(110,817
|
)
|
|
$
|
(182,328
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
35,446
|
|
|
49,055
|
|
|
115,002
|
|
|
99,846
|
|
||||
Stock-based expenses
|
139,460
|
|
|
141,536
|
|
|
412,963
|
|
|
366,741
|
|
||||
Non-GAAP operating profit
|
$
|
152,864
|
|
|
$
|
92,660
|
|
|
$
|
417,148
|
|
|
$
|
284,259
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Non-GAAP net income
|
|
|
|
|
|
|
|
||||||||
GAAP net loss
|
$
|
(38,924
|
)
|
|
$
|
(124,434
|
)
|
|
$
|
(196,923
|
)
|
|
$
|
(115,552
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
35,446
|
|
|
49,055
|
|
|
115,002
|
|
|
99,846
|
|
||||
Stock-based expenses
|
139,460
|
|
|
141,536
|
|
|
412,963
|
|
|
366,741
|
|
||||
Amortization of debt discount, net
|
8,638
|
|
|
12,547
|
|
|
28,838
|
|
|
34,139
|
|
||||
Loss on conversion of debt
|
1,339
|
|
|
0
|
|
|
10,229
|
|
|
0
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Gain on sales of land and building improvements
|
(15,625
|
)
|
|
0
|
|
|
(15,625
|
)
|
|
0
|
|
||||
Income tax effects and adjustments of Non-GAAP items
|
(36,729
|
)
|
|
(21,096
|
)
|
|
(105,678
|
)
|
|
(210,307
|
)
|
||||
Non-GAAP net income
|
$
|
93,605
|
|
|
$
|
57,608
|
|
|
$
|
248,806
|
|
|
$
|
174,867
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Non-GAAP diluted earnings per share
|
|
|
|
|
|
|
|
||||||||
GAAP diluted loss per share
|
$
|
(0.06
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.19
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
0.05
|
|
|
0.08
|
|
|
0.18
|
|
|
0.16
|
|
||||
Stock-based expenses
|
0.21
|
|
|
0.22
|
|
|
0.63
|
|
|
0.58
|
|
||||
Amortization of debt discount, net
|
0.01
|
|
|
0.02
|
|
|
0.04
|
|
|
0.05
|
|
||||
Loss on conversion of debt
|
0.00
|
|
|
0.00
|
|
|
0.02
|
|
|
0.00
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Gain on sales of land and building improvements
|
(0.02
|
)
|
|
0.00
|
|
|
(0.02
|
)
|
|
0.00
|
|
||||
Income tax effects and adjustments of Non-GAAP items
|
(0.05
|
)
|
|
(0.02
|
)
|
|
(0.15
|
)
|
|
(0.32
|
)
|
||||
Non-GAAP diluted earnings per share
|
$
|
0.14
|
|
|
$
|
0.09
|
|
|
$
|
0.38
|
|
|
$
|
0.28
|
|
Shares used in computing diluted net income per share
|
658,538
|
|
|
640,067
|
|
|
652,276
|
|
|
629,923
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
Supplemental Diluted Sharecount Information (in thousands):
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Weighted-average shares outstanding for GAAP basic earnings per share
|
629,548
|
|
|
600,467
|
|
|
619,748
|
|
|
594,346
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||
Convertible senior notes
|
5,333
|
|
|
15,288
|
|
|
7,175
|
|
|
13,943
|
|
Warrants associated with the convertible senior note hedges
|
12,857
|
|
|
10,631
|
|
|
12,714
|
|
|
8,746
|
|
Employee stock awards
|
10,800
|
|
|
13,681
|
|
|
12,639
|
|
|
12,888
|
|
Adjusted weighted-average shares outstanding and assumed conversions for Non-GAAP diluted earnings per share
|
658,538
|
|
|
640,067
|
|
|
652,276
|
|
|
629,923
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
risk of entering new markets in which we have little or no experience or where competitors may have stronger market positions;
|
•
|
potential write-offs of acquired assets or investments, and potential financial and credit risks associated with acquired customers;
|
•
|
the potential loss of key employees of the acquired company;
|
•
|
inability to generate sufficient revenue to offset acquisition or investment costs;
|
•
|
the inability to maintain relationships with customers and partners of the acquired business;
|
•
|
the difficulty of transitioning the acquired technology onto our existing platforms and maintaining the security standards consistent with our other services for such technology;
|
•
|
potential unknown liabilities associated with the acquired businesses;
|
•
|
unanticipated expenses related to acquired technology and its integration into existing technology;
|
•
|
negative impact to our results of operations because of the depreciation and amortization of amounts related to acquired intangible assets, fixed assets and deferred compensation, and the loss of acquired deferred revenue and unbilled deferred revenue;
|
•
|
delays in customer purchases due to uncertainty related to any acquisition;
|
•
|
the need to implement controls, procedures and policies at the acquired company;
|
•
|
challenges caused by distance, language and cultural differences;
|
•
|
in the case of foreign acquisitions, the challenges associated with integrating operations across different cultures and languages and any currency and regulatory risks associated with specific countries; and
|
•
|
the tax effects of any such acquisitions.
|
•
|
our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements;
|
•
|
the attrition rates for our service;
|
•
|
the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business;
|
•
|
changes in deferred revenue and unbilled deferred revenue balances, which are not reflected in the balance sheet, due to seasonality, the compounding effects of renewals, invoice duration, invoice timing and new business linearity between quarters and within a quarter;
|
•
|
the number of new employees;
|
•
|
changes in our pricing policies and terms of contracts, whether initiated by us or as a result of competition;
|
•
|
the cost, timing and management effort for the introduction of new features to our service;
|
•
|
the costs associated with acquiring new businesses and technologies and the follow-on costs of integration and consolidating the results of acquired businesses;
|
•
|
the rate of expansion and productivity of our sales force;
|
•
|
the length of the sales cycle for our service;
|
•
|
new product and service introductions by our competitors;
|
•
|
our success in selling our service to large enterprises;
|
•
|
variations in the revenue mix of editions of our service;
|
•
|
technical difficulties or interruptions in our service;
|
•
|
expenses related to our real estate, our office leases and our data center capacity and expansion;
|
•
|
changes in foreign currency exchange rates;
|
•
|
changes in interest rates and our mix of investments, which would impact our return on our investments in cash and marketable securities;
|
•
|
conditions, particularly sudden changes, in the financial markets have and may continue to impact the value of and access to our investment portfolio;
|
•
|
changes in the effective tax rates due to changes in the mix of earnings and losses in countries with differing statutory tax rates, certain non-deductible expenses, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, changes in federal, state or international tax laws including fundamental changes to tax laws applicable to corporate multinationals that may be considered by the United States and many countries in the European Union, changes in accounting principles, changes in judgment from the evaluation of new information that results in a recognition, derecognition or change in measurement of a tax position taken in a prior period, results of tax examinations by the Internal Revenue Service, state and foreign taxing authorities, as well as changes in excess tax benefits related to exercises and vesting of stock-based compensation;
|
•
|
changes to non-income taxes due to changes in federal, state or international tax laws; changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions; results of tax examinations, settlements or judicial decisions; changes in accounting principles; changes to the business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period;
|
•
|
our ability to realize benefits from strategic partnerships;
|
•
|
expenses related to significant, unusual or discrete events, which are recorded in the period in which the events occur;
|
•
|
general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional subscriptions or upgrade their service, or delay a prospective customers’ purchasing decision, or reduce the value of new subscription contracts, or affect attrition rates;
|
•
|
timing of additional investments in our enterprise cloud computing application and platform services and in our consulting service;
|
•
|
regulatory compliance costs;
|
•
|
the timing of customer payments and payment defaults by customers;
|
•
|
extraordinary expenses such as litigation or other dispute-related settlement payments;
|
•
|
the impact of new accounting pronouncements;
|
•
|
equity issuances, including as consideration in acquisitions or due to the conversion of our outstanding convertible notes at the election of the note holders;
|
•
|
the timing of stock awards to employees and the related adverse financial statement impact of having to expense those stock awards on a straight-line basis over their vesting schedules;
|
•
|
the timing of commission, bonus, and other compensation payments to employees; and
|
•
|
the timing of payroll and other withholding tax expenses which is triggered by the payment of bonuses and when employees exercise their vested stock awards.
|
•
|
enterprise software application vendors;
|
•
|
cloud computing application service providers;
|
•
|
software companies that provide their product or service free of charge, and only charge a premium for advanced features and functionality;
|
•
|
traditional platform development environment companies; and
|
•
|
cloud computing development platform companies.
|
•
|
localization of our service, including translation into foreign languages and associated expenses;
|
•
|
laws and business practices favoring local competitors;
|
•
|
compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy, anti-corruption, import/export, antitrust, data protection and industry-specific laws and regulations, including rules related to compliance by our third-party resellers;
|
•
|
pressure on the creditworthiness of sovereign nations, particularly in Europe, where we have customers and a balance of our cash, cash equivalents, and marketable securities. Liquidity issues or political actions by sovereign nations could result in decreased values of these balances;
|
•
|
regional data privacy laws and other regulatory requirements that apply to outsourced service providers and to the transmission of our customers’ data across international borders;
|
•
|
treatment of revenue from international sources and changes to tax codes, including being subject to foreign tax laws and being liable for paying withholding income or other taxes in foreign jurisdictions;
|
•
|
foreign currency fluctuations and controls;
|
•
|
different pricing environments;
|
•
|
difficulties in staffing and managing foreign operations;
|
•
|
different or lesser protection of our intellectual property;
|
•
|
longer accounts receivable payment cycles and other collection difficulties;
|
•
|
natural disasters, acts of war, terrorism, pandemics or security breaches; and
|
•
|
regional economic and political conditions.
|
•
|
it may impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes;
|
•
|
an increased portion of our cash flows from operations may have to be dedicated towards repaying the principal beginning in 2015 or earlier if necessary;
|
•
|
it may make us more vulnerable to downturns in our business, our industry or the economy in general; and
|
•
|
limitations within the revolving credit facility covenants may restrict our ability to incur additional indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions, repurchase stock and enter into restrictive agreements, as defined in the credit agreement.
|
•
|
variations in our operating results, earnings per share, cash flows from operating activities, deferred revenue and other financial metrics and non-financial metrics, and how those results compare to analyst expectations;
|
•
|
forward-looking guidance to industry and financial analysts related to future revenue and earnings per share;
|
•
|
changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock;
|
•
|
announcements of technological innovations, new services or service enhancements, strategic alliances or significant agreements by us or by our competitors;
|
•
|
announcements by us or by our competitors of mergers or other strategic acquisitions, or rumors of such transactions involving us or our competitors;
|
•
|
announcements of customer additions and customer cancellations or delays in customer purchases;
|
•
|
recruitment or departure of key personnel;
|
•
|
disruptions in our service due to computer hardware, software, network or data center problems;
|
•
|
the economy as a whole, market conditions in our industry and the industries of our customers;
|
•
|
trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock;
|
•
|
the issuance of shares of common stock by us, whether in connection with an acquisition, a capital raising transaction or upon conversion of some or all of our outstanding convertible senior notes; and
|
•
|
issuance of debt or other convertible securities.
|
•
|
permit the board of directors to establish the number of directors;
|
•
|
provide that directors may only be removed “for cause” and only with the approval of 66 2/3 percent of our stockholders;
|
•
|
require super-majority voting to amend some provisions in our amended and restated certificate of incorporation and bylaws;
|
•
|
authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”);
|
•
|
eliminate the ability of our stockholders to call special meetings of stockholders;
|
•
|
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and
|
•
|
establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit
No.
|
|
Exhibit Description
|
|
Provided
Herewith
|
|
Incorporated by Reference
|
|||||||
Form
|
|
SEC File No.
|
|
Exhibit
|
|
Filing Date
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of salesforce.com, inc.
|
|
|
|
8-K
|
|
001-32224
|
|
3.1
|
|
|
06/11/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of salesforce.com, inc.
|
|
|
|
8-K
|
|
001-32224
|
|
3.2
|
|
|
06/11/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Credit Agreement, dated as of October 6, 2014, by and among salesforce.com, inc., the guarantors from time to time party thereto, the lenders from time to time party thereto and Wells Fargo Bank, N.A., as Administrative Agent.
|
|
|
|
8-K
|
|
001-32224
|
|
10.1
|
|
|
10/06/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
Purchase and Sale Agreement, dated November 10, 2014, between salesforce.com, inc. and 50 Fremont Tower, LLC
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3*
|
|
Leave of Absence Agreement, dated November 24, 2014, between salesforce.com, inc. and George Hu
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
|
|
Exhibit
No.
|
|
Exhibit Description
|
|
Provided
Herewith
|
|
Incorporated by Reference
|
||||||
|
|
|
Form
|
|
SEC File No.
|
|
Exhibit
|
|
Filing Date
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Extension Definition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
*
|
Indicates a management contract or compensatory plan or arrangement
|
|
|
|
|
|
salesforce.com, inc.
|
November 25, 2014
|
/s/ M
ARK
H
AWKINS
|
|
Mark Hawkins
|
|
Executive Vice President and Chief Financial Officer
|
|
salesforce.com, inc.
|
November 25, 2014
|
/s/ J
OE
A
LLANSON
|
|
Joe Allanson
|
|
Senior Vice President, Chief Accountant and Controller
(Principal Accounting Officer)
|
1.
|
Start Date
. Executive’s first day of LOA will be December 2, 2014.
|
1.
|
I have reviewed this report on Form 10-Q of salesforce.com, inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
November 25, 2014
|
/s/ M
ARC
B
ENIOFF
|
|
Marc Benioff
|
|
Chairman of the Board of Directors and Chief
Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q of salesforce.com, inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
November 25, 2014
|
/s/ M
ARK
H
AWKINS
|
|
Mark Hawkins
|
|
Executive Vice President and Chief Financial Officer
|
November 25, 2014
|
/s/ M
ARC
B
ENIOFF
|
|
Marc Benioff
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
November 25, 2014
|
/s/ M
ARK
H
AWKINS
|
|
Mark Hawkins
|
|
Executive Vice President and Chief Financial Officer
|