|
|
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
¨
|
|
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
|
Page No.
|
|
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|
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Item 1.
|
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6
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Item 2.
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Item 3.
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Item 4.
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Item 1.
|
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Item 1A.
|
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
|
|
July 31,
2015 |
|
January 31,
2015 |
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,089,351
|
|
|
$
|
908,117
|
|
Short-term marketable securities
|
81,118
|
|
|
87,312
|
|
||
Accounts receivable, net
|
1,067,799
|
|
|
1,905,506
|
|
||
Deferred commissions
|
211,314
|
|
|
225,386
|
|
||
Prepaid expenses and other current assets
|
330,291
|
|
|
280,554
|
|
||
Land and building improvements held for sale
|
136,914
|
|
|
143,197
|
|
||
Total current assets
|
2,916,787
|
|
|
3,550,072
|
|
||
Marketable securities, noncurrent
|
896,494
|
|
|
894,855
|
|
||
Property and equipment, net
|
1,725,184
|
|
|
1,125,866
|
|
||
Deferred commissions, noncurrent
|
143,871
|
|
|
162,796
|
|
||
Capitalized software, net
|
414,035
|
|
|
433,398
|
|
||
Goodwill
|
3,804,288
|
|
|
3,782,660
|
|
||
Strategic investments
|
477,886
|
|
|
175,774
|
|
||
Other assets, net
|
415,432
|
|
|
452,546
|
|
||
Restricted cash
|
0
|
|
|
115,015
|
|
||
Total assets
|
$
|
10,793,977
|
|
|
$
|
10,692,982
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
$
|
1,098,054
|
|
|
$
|
1,103,335
|
|
Deferred revenue
|
3,014,940
|
|
|
3,286,768
|
|
||
Total current liabilities
|
4,112,994
|
|
|
4,390,103
|
|
||
Convertible 0.25% senior notes, net
|
1,082,799
|
|
|
1,070,692
|
|
||
Loan assumed on 50 Fremont
|
198,813
|
|
|
0
|
|
||
Revolving credit facility
|
0
|
|
|
300,000
|
|
||
Deferred revenue, noncurrent
|
20,051
|
|
|
34,681
|
|
||
Other noncurrent liabilities
|
843,517
|
|
|
922,323
|
|
||
Total liabilities
|
6,258,174
|
|
|
6,717,799
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
660
|
|
|
651
|
|
||
Additional paid-in capital
|
5,165,892
|
|
|
4,604,485
|
|
||
Accumulated other comprehensive loss
|
(28,144
|
)
|
|
(24,108
|
)
|
||
Accumulated deficit
|
(602,605
|
)
|
|
(605,845
|
)
|
||
Total stockholders’ equity
|
4,535,803
|
|
|
3,975,183
|
|
||
Total liabilities and stockholders’ equity
|
$
|
10,793,977
|
|
|
$
|
10,692,982
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
$
|
1,521,319
|
|
|
$
|
1,232,587
|
|
|
$
|
2,926,606
|
|
|
$
|
2,379,893
|
|
Professional services and other
|
113,365
|
|
|
85,964
|
|
|
219,245
|
|
|
165,430
|
|
||||
Total revenues
|
1,634,684
|
|
|
1,318,551
|
|
|
3,145,851
|
|
|
2,545,323
|
|
||||
Cost of revenues (1)(2):
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
292,737
|
|
|
218,918
|
|
|
566,978
|
|
|
427,865
|
|
||||
Professional services and other
|
112,647
|
|
|
88,913
|
|
|
220,208
|
|
|
172,271
|
|
||||
Total cost of revenues
|
405,384
|
|
|
307,831
|
|
|
787,186
|
|
|
600,136
|
|
||||
Gross profit
|
1,229,300
|
|
|
1,010,720
|
|
|
2,358,665
|
|
|
1,945,187
|
|
||||
Operating expenses (1)(2):
|
|
|
|
|
|
|
|
||||||||
Research and development
|
234,100
|
|
|
203,109
|
|
|
456,228
|
|
|
391,467
|
|
||||
Marketing and sales
|
793,691
|
|
|
671,958
|
|
|
1,530,629
|
|
|
1,311,313
|
|
||||
General and administrative
|
181,685
|
|
|
169,087
|
|
|
357,496
|
|
|
331,182
|
|
||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Total operating expenses
|
1,209,476
|
|
|
1,044,154
|
|
|
2,307,736
|
|
|
2,033,962
|
|
||||
Income (loss) from operations
|
19,824
|
|
|
(33,434
|
)
|
|
50,929
|
|
|
(88,775
|
)
|
||||
Investment income
|
3,283
|
|
|
2,655
|
|
|
7,844
|
|
|
4,433
|
|
||||
Interest expense
|
(18,096
|
)
|
|
(18,314
|
)
|
|
(34,771
|
)
|
|
(38,673
|
)
|
||||
Other income (expense) (1)(3)
|
1,947
|
|
|
(3,876
|
)
|
|
1,029
|
|
|
(14,723
|
)
|
||||
Income (loss) before provisions for income taxes
|
6,958
|
|
|
(52,969
|
)
|
|
25,031
|
|
|
(137,738
|
)
|
||||
Provisions for income taxes
|
(7,810
|
)
|
|
(8,119
|
)
|
|
(21,791
|
)
|
|
(20,261
|
)
|
||||
Net income (loss)
|
$
|
(852
|
)
|
|
$
|
(61,088
|
)
|
|
$
|
3,240
|
|
|
$
|
(157,999
|
)
|
Basic net income (loss) per share
|
$
|
0.00
|
|
|
$
|
(0.10
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.26
|
)
|
Diluted net income (loss) per share
|
$
|
0.00
|
|
|
$
|
(0.10
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.26
|
)
|
Shares used in computing basic net income (loss) per share
|
659,366
|
|
|
617,016
|
|
|
656,636
|
|
|
614,797
|
|
||||
Shares used in computing diluted net income (loss) per share
|
659,366
|
|
|
617,016
|
|
|
672,231
|
|
|
614,797
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
20,839
|
|
|
$
|
21,271
|
|
|
$
|
40,529
|
|
|
$
|
49,943
|
|
Marketing and sales
|
19,002
|
|
|
14,648
|
|
|
39,029
|
|
|
29,613
|
|
||||
Other non-operating expense
|
1,301
|
|
|
0
|
|
|
2,116
|
|
|
0
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
16,340
|
|
|
$
|
12,977
|
|
|
$
|
31,721
|
|
|
$
|
24,787
|
|
Research and development
|
33,732
|
|
|
33,112
|
|
|
64,974
|
|
|
60,396
|
|
||||
Marketing and sales
|
71,724
|
|
|
70,485
|
|
|
142,258
|
|
|
137,618
|
|
||||
General and administrative
|
25,983
|
|
|
25,837
|
|
|
51,386
|
|
|
50,702
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net income (loss)
|
$
|
(852
|
)
|
|
$
|
(61,088
|
)
|
|
$
|
3,240
|
|
|
$
|
(157,999
|
)
|
Other comprehensive loss, before tax and net of reclassification adjustments:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation and other losses
|
(5,391
|
)
|
|
(5,299
|
)
|
|
(7,246
|
)
|
|
(2,184
|
)
|
||||
Unrealized gains (loss) on investments
|
5,599
|
|
|
1,164
|
|
|
3,210
|
|
|
(4,333
|
)
|
||||
Other comprehensive gain (loss), before tax
|
208
|
|
|
(4,135
|
)
|
|
(4,036
|
)
|
|
(6,517
|
)
|
||||
Tax effect
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Other comprehensive gain (loss), net of tax
|
208
|
|
|
(4,135
|
)
|
|
(4,036
|
)
|
|
(6,517
|
)
|
||||
Comprehensive loss
|
$
|
(644
|
)
|
|
$
|
(65,223
|
)
|
|
$
|
(796
|
)
|
|
$
|
(164,516
|
)
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Operating activities:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(852
|
)
|
|
$
|
(61,088
|
)
|
|
$
|
3,240
|
|
|
$
|
(157,999
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
131,675
|
|
|
107,596
|
|
|
259,602
|
|
|
218,404
|
|
||||
Amortization of debt discount and transaction costs
|
7,291
|
|
|
9,949
|
|
|
13,152
|
|
|
21,740
|
|
||||
50 Fremont lease termination, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Loss on conversions of convertible senior notes
|
0
|
|
|
361
|
|
|
0
|
|
|
8,890
|
|
||||
Amortization of deferred commissions
|
76,679
|
|
|
61,300
|
|
|
153,834
|
|
|
121,155
|
|
||||
Expenses related to employee stock plans
|
147,779
|
|
|
142,411
|
|
|
290,339
|
|
|
273,503
|
|
||||
Excess tax benefits from employee stock plans
|
133
|
|
|
6,815
|
|
|
(4,091
|
)
|
|
(2,226
|
)
|
||||
Changes in assets and liabilities, net of business combinations:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, net
|
(141,418
|
)
|
|
(150,168
|
)
|
|
837,752
|
|
|
526,514
|
|
||||
Deferred commissions
|
(70,745
|
)
|
|
(65,846
|
)
|
|
(120,837
|
)
|
|
(106,742
|
)
|
||||
Prepaid expenses and other current assets and other assets
|
(18,072
|
)
|
|
23,636
|
|
|
(29,346
|
)
|
|
27,913
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
193,771
|
|
|
142,638
|
|
|
(45,301
|
)
|
|
(42,961
|
)
|
||||
Deferred revenue
|
(21,830
|
)
|
|
28,289
|
|
|
(286,459
|
)
|
|
(169,211
|
)
|
||||
Net cash provided by operating activities
|
304,411
|
|
|
245,893
|
|
|
1,035,268
|
|
|
718,980
|
|
||||
Investing activities:
|
|
|
|
|
|
|
|
||||||||
Business combinations, net of cash acquired
|
(18,451
|
)
|
|
0
|
|
|
(30,921
|
)
|
|
0
|
|
||||
Purchase of 50 Fremont land and building
|
0
|
|
|
0
|
|
|
(425,376
|
)
|
|
0
|
|
||||
Deposit for purchase of 50 Fremont land and building
|
0
|
|
|
0
|
|
|
115,015
|
|
|
0
|
|
||||
Non-refundable amounts received for sale of land available for sale
|
3,432
|
|
|
1,000
|
|
|
6,284
|
|
|
31,000
|
|
||||
Strategic investments
|
(150,434
|
)
|
|
(18,807
|
)
|
|
(294,896
|
)
|
|
(35,053
|
)
|
||||
Purchases of marketable securities
|
(136,196
|
)
|
|
(284,928
|
)
|
|
(343,421
|
)
|
|
(535,464
|
)
|
||||
Sales of marketable securities
|
130,922
|
|
|
71,073
|
|
|
323,106
|
|
|
150,385
|
|
||||
Maturities of marketable securities
|
1,833
|
|
|
16,762
|
|
|
16,279
|
|
|
23,960
|
|
||||
Capital expenditures
|
(64,883
|
)
|
|
(71,576
|
)
|
|
(135,970
|
)
|
|
(131,674
|
)
|
||||
Net cash used in investing activities
|
(233,777
|
)
|
|
(286,476
|
)
|
|
(769,900
|
)
|
|
(496,846
|
)
|
||||
Financing activities:
|
|
|
|
|
|
|
|
||||||||
Proceeds from employee stock plans
|
114,799
|
|
|
61,429
|
|
|
269,814
|
|
|
135,224
|
|
||||
Excess tax benefits from employee stock plans
|
(133
|
)
|
|
(6,815
|
)
|
|
4,091
|
|
|
2,226
|
|
||||
Payments on convertible senior notes
|
0
|
|
|
(13,692
|
)
|
|
0
|
|
|
(297,584
|
)
|
||||
Principal payments on capital lease obligations
|
(41,074
|
)
|
|
(40,341
|
)
|
|
(57,899
|
)
|
|
(50,935
|
)
|
||||
Payments on revolving credit facility and term loan
|
0
|
|
|
(7,500
|
)
|
|
(300,000
|
)
|
|
(15,000
|
)
|
||||
Net cash provided by (used in) financing activities
|
73,592
|
|
|
(6,919
|
)
|
|
(83,994
|
)
|
|
(226,069
|
)
|
||||
Effect of exchange rate changes
|
3,169
|
|
|
(5,664
|
)
|
|
(140
|
)
|
|
(2,975
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
147,395
|
|
|
(53,166
|
)
|
|
181,234
|
|
|
(6,910
|
)
|
||||
Cash and cash equivalents, beginning of period
|
941,956
|
|
|
827,891
|
|
|
908,117
|
|
|
781,635
|
|
||||
Cash and cash equivalents, end of period
|
$
|
1,089,351
|
|
|
$
|
774,725
|
|
|
$
|
1,089,351
|
|
|
$
|
774,725
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Supplemental cash flow disclosure:
|
|
|
|
|
|
|
|
||||||||
Cash paid during the period for:
|
|
|
|
|
|
|
|
||||||||
Interest
|
$
|
20,592
|
|
|
$
|
8,322
|
|
|
$
|
28,671
|
|
|
$
|
16,989
|
|
Income taxes, net of tax refunds
|
$
|
5,621
|
|
|
$
|
14,805
|
|
|
$
|
16,202
|
|
|
$
|
24,799
|
|
Non-cash financing and investing activities:
|
|
|
|
|
|
|
|
||||||||
Fixed assets acquired under capital leases
|
$
|
2,166
|
|
|
$
|
75,449
|
|
|
$
|
5,126
|
|
|
$
|
81,335
|
|
Building in progress - leased facility acquired under financing obligation
|
$
|
14,636
|
|
|
$
|
20,288
|
|
|
$
|
36,859
|
|
|
$
|
33,048
|
|
Fair value of loan assumed on 50 Fremont
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
198,751
|
|
|
$
|
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 fair value of convertible notes,
|
•
|
the fair value of stock awards issued and related forfeiture rates,
|
•
|
the useful lives of intangible assets and property and equipment,
|
•
|
the valuation of strategic investments and the determination of other-than-temporary impairments, and
|
•
|
the assessment of determination of impairment of long-lived assets (property and equipment, goodwill and identified intangibles).
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Americas
|
$
|
1,202,173
|
|
|
$
|
940,946
|
|
|
$
|
2,317,293
|
|
|
$
|
1,817,323
|
|
Europe
|
286,904
|
|
|
246,532
|
|
|
545,709
|
|
|
477,342
|
|
||||
Asia Pacific
|
145,607
|
|
|
131,073
|
|
|
282,849
|
|
|
250,658
|
|
||||
|
$
|
1,634,684
|
|
|
$
|
1,318,551
|
|
|
$
|
3,145,851
|
|
|
$
|
2,545,323
|
|
•
|
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
|
The remaining lease term or up to 10 years
|
|
Three Months Ended
July 31, |
|
|
Six Months Ended
July 31, |
|||||||||||||||
Stock Options
|
2015
|
|
|
2014
|
|
|
2015
|
|
2014
|
||||||||||
Volatility
|
35
|
|
%
|
|
37
|
|
%
|
|
35-37
|
|
%
|
|
37
|
|
%
|
||||
Estimated life
|
3.6 years
|
|
|
|
3.5 years
|
|
|
|
3.6 years
|
|
|
|
3.5 years
|
|
|
||||
Risk-free interest rate
|
1.31- 1.42
|
|
%
|
|
1.25- 1.46
|
|
%
|
|
1.13- 1.42
|
|
%
|
|
1.20- 1.46
|
|
%
|
||||
Weighted-average fair value per share of grants
|
$
|
20.24
|
|
|
|
$
|
15.81
|
|
|
|
$
|
19.81
|
|
|
|
$
|
16.15
|
|
|
|
Three Months Ended
July 31, |
|
|
Six Months Ended
July 31, |
|||||||||||||||
ESPP
|
2015
|
|
|
2014
|
|
|
2015
|
|
2014
|
||||||||||
Volatility
|
34
|
|
%
|
|
34-35
|
|
%
|
|
34
|
|
%
|
|
34-35
|
|
%
|
||||
Estimated life
|
0.75 years
|
|
|
|
0.75 years
|
|
|
|
0.75 years
|
|
|
|
0.75 years
|
|
|
||||
Risk-free interest rate
|
0.06- 0.27
|
|
%
|
|
0.07- 0.16
|
|
%
|
|
0.06- 0.27
|
|
%
|
|
0.07- 0.16
|
|
%
|
||||
Weighted-average fair value per share of grants
|
$
|
19.30
|
|
|
|
$
|
14.53
|
|
|
|
$
|
19.30
|
|
|
|
$
|
14.53
|
|
|
Investments classified as Marketable Securities
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Corporate notes and obligations
|
$
|
579,895
|
|
|
$
|
816
|
|
|
$
|
(992
|
)
|
|
$
|
579,719
|
|
U.S. treasury securities
|
108,471
|
|
|
193
|
|
|
(7
|
)
|
|
108,657
|
|
||||
Mortgage backed obligations
|
59,620
|
|
|
93
|
|
|
(406
|
)
|
|
59,307
|
|
||||
Asset backed securities
|
166,818
|
|
|
93
|
|
|
(150
|
)
|
|
166,761
|
|
||||
Municipal securities
|
36,388
|
|
|
102
|
|
|
(44
|
)
|
|
36,446
|
|
||||
Foreign government obligations
|
2,091
|
|
|
16
|
|
|
(1
|
)
|
|
2,106
|
|
||||
U.S. agency obligations
|
14,172
|
|
|
11
|
|
|
(3
|
)
|
|
14,180
|
|
||||
Covered bonds
|
10,224
|
|
|
212
|
|
|
0
|
|
|
10,436
|
|
||||
Total marketable securities
|
$
|
977,679
|
|
|
$
|
1,536
|
|
|
$
|
(1,603
|
)
|
|
$
|
977,612
|
|
Investments classified as Marketable Securities
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Corporate notes and obligations
|
$
|
605,724
|
|
|
$
|
3,031
|
|
|
$
|
(481
|
)
|
|
$
|
608,274
|
|
U.S. treasury securities
|
73,226
|
|
|
257
|
|
|
(1
|
)
|
|
73,482
|
|
||||
Mortgage backed obligations
|
44,181
|
|
|
159
|
|
|
(415
|
)
|
|
43,925
|
|
||||
Asset backed securities
|
120,049
|
|
|
131
|
|
|
(43
|
)
|
|
120,137
|
|
||||
Municipal securities
|
36,447
|
|
|
115
|
|
|
(25
|
)
|
|
36,537
|
|
||||
Foreign government obligations
|
12,023
|
|
|
278
|
|
|
0
|
|
|
12,301
|
|
||||
U.S. agency obligations
|
19,488
|
|
|
26
|
|
|
(4
|
)
|
|
19,510
|
|
||||
Covered bonds
|
66,816
|
|
|
1,185
|
|
|
0
|
|
|
68,001
|
|
||||
Total marketable securities
|
$
|
977,954
|
|
|
$
|
5,182
|
|
|
$
|
(969
|
)
|
|
$
|
982,167
|
|
|
As of
|
||||||
|
July 31,
2015 |
|
January 31,
2015 |
||||
Recorded as follows:
|
|
|
|
||||
Short-term (due in one year or less)
|
$
|
81,118
|
|
|
$
|
87,312
|
|
Long-term (due after one year)
|
896,494
|
|
|
894,855
|
|
||
|
$
|
977,612
|
|
|
$
|
982,167
|
|
|
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
|
$
|
322,777
|
|
|
$
|
(930
|
)
|
|
$
|
17,977
|
|
|
$
|
(62
|
)
|
|
$
|
340,753
|
|
|
$
|
(992
|
)
|
U.S. treasury securities
|
14,002
|
|
|
(7
|
)
|
|
0
|
|
|
0
|
|
|
14,002
|
|
|
(7
|
)
|
||||||
Mortgage backed obligations
|
36,878
|
|
|
(227
|
)
|
|
14,998
|
|
|
(179
|
)
|
|
51,876
|
|
|
(406
|
)
|
||||||
Asset backed securities
|
98,740
|
|
|
(127
|
)
|
|
6,230
|
|
|
(23
|
)
|
|
104,970
|
|
|
(150
|
)
|
||||||
Municipal securities
|
8,683
|
|
|
(27
|
)
|
|
6,046
|
|
|
(17
|
)
|
|
14,729
|
|
|
(44
|
)
|
||||||
Foreign government obligations
|
1,579
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
1,579
|
|
|
(1
|
)
|
||||||
U.S. agency obligations
|
2,172
|
|
|
(3
|
)
|
|
0
|
|
|
0
|
|
|
2,172
|
|
|
(3
|
)
|
||||||
|
$
|
484,831
|
|
|
$
|
(1,322
|
)
|
|
$
|
45,251
|
|
|
$
|
(281
|
)
|
|
$
|
530,081
|
|
|
$
|
(1,603
|
)
|
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
July 31, 2015
|
||||||||
Cash equivalents (1):
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
$
|
0
|
|
|
$
|
122,970
|
|
|
$
|
0
|
|
|
$
|
122,970
|
|
Money market mutual funds
|
289,410
|
|
|
0
|
|
|
0
|
|
|
289,410
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate notes and obligations
|
0
|
|
|
579,719
|
|
|
0
|
|
|
579,719
|
|
||||
U.S. treasury securities
|
0
|
|
|
108,657
|
|
|
0
|
|
|
108,657
|
|
||||
Mortgage backed obligations
|
0
|
|
|
59,307
|
|
|
0
|
|
|
59,307
|
|
||||
Asset backed securities
|
0
|
|
|
166,761
|
|
|
0
|
|
|
166,761
|
|
||||
Municipal securities
|
0
|
|
|
36,446
|
|
|
0
|
|
|
36,446
|
|
||||
Foreign government obligations
|
0
|
|
|
2,106
|
|
|
0
|
|
|
2,106
|
|
||||
U.S. agency obligations
|
0
|
|
|
14,180
|
|
|
0
|
|
|
14,180
|
|
||||
Covered bonds
|
0
|
|
|
10,436
|
|
|
0
|
|
|
10,436
|
|
||||
Foreign currency derivative contracts (2)
|
0
|
|
|
3,621
|
|
|
0
|
|
|
3,621
|
|
||||
Total Assets
|
$
|
289,410
|
|
|
$
|
1,104,203
|
|
|
$
|
0
|
|
|
$
|
1,393,613
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts (3)
|
$
|
0
|
|
|
$
|
(2,213
|
)
|
|
$
|
0
|
|
|
$
|
(2,213
|
)
|
Total Liabilities
|
$
|
0
|
|
|
$
|
(2,213
|
)
|
|
$
|
0
|
|
|
$
|
(2,213
|
)
|
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, 2015
|
||||||||
Cash equivalents (1):
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
$
|
0
|
|
|
$
|
292,487
|
|
|
$
|
0
|
|
|
$
|
292,487
|
|
Money market mutual funds
|
13,983
|
|
|
0
|
|
|
0
|
|
|
13,983
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate notes and obligations
|
0
|
|
|
608,274
|
|
|
0
|
|
|
608,274
|
|
||||
U.S. treasury securities
|
0
|
|
|
73,482
|
|
|
0
|
|
|
73,482
|
|
||||
Mortgage backed obligations
|
0
|
|
|
43,925
|
|
|
0
|
|
|
43,925
|
|
||||
Asset backed securities
|
0
|
|
|
120,137
|
|
|
0
|
|
|
120,137
|
|
||||
Municipal securities
|
0
|
|
|
36,537
|
|
|
0
|
|
|
36,537
|
|
||||
Foreign government obligations
|
0
|
|
|
12,301
|
|
|
0
|
|
|
12,301
|
|
||||
U.S. agency obligations
|
0
|
|
|
19,510
|
|
|
0
|
|
|
19,510
|
|
||||
Covered bonds
|
0
|
|
|
68,001
|
|
|
0
|
|
|
68,001
|
|
||||
Foreign currency derivative contracts (2)
|
0
|
|
|
10,611
|
|
|
0
|
|
|
10,611
|
|
||||
Total Assets
|
$
|
13,983
|
|
|
$
|
1,285,265
|
|
|
$
|
0
|
|
|
$
|
1,299,248
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts (3)
|
$
|
0
|
|
|
$
|
5,694
|
|
|
$
|
0
|
|
|
$
|
5,694
|
|
Total Liabilities
|
$
|
0
|
|
|
$
|
5,694
|
|
|
$
|
0
|
|
|
$
|
5,694
|
|
|
As of
|
||||||
|
July 31, 2015
|
|
January 31, 2015
|
||||
Notional amount of foreign currency derivative contracts
|
$
|
762,454
|
|
|
$
|
942,086
|
|
Fair value of foreign currency derivative contracts
|
$
|
1,408
|
|
|
$
|
4,917
|
|
|
|
Fair Value of Derivative Instruments
|
||||||
|
|
As of
|
||||||
|
Balance Sheet Location
|
July 31, 2015
|
|
January 31, 2015
|
||||
Derivative Assets
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Foreign currency derivative contracts
|
Prepaid expenses and other current assets
|
$
|
3,621
|
|
|
$
|
10,611
|
|
Derivative Liabilities
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Foreign currency derivative contracts
|
Accounts payable, accrued expenses and other liabilities
|
$
|
2,213
|
|
|
$
|
5,694
|
|
Derivatives Not Designated as Hedging
Instruments |
Gains (Losses) on Derivative Instruments
Recognized in Income |
||||||||
|
|
|
Three Months Ended
July 31, |
||||||
|
Location
|
|
2015
|
|
2014
|
||||
Foreign currency derivative contracts
|
Other expense
|
|
$
|
9,494
|
|
|
$
|
(2,914
|
)
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
Derivatives Not Designated as Hedging
Instruments |
Gains (Losses) on Derivative Instruments
Recognized in Income |
||||||||
|
|
|
Six Months Ended
July 31, |
||||||
|
Location
|
|
2015
|
|
2014
|
||||
Foreign currency derivative contracts
|
Other expense
|
|
$
|
14,069
|
|
|
$
|
(2,006
|
)
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
||||||||
Interest income
|
$
|
3,169
|
|
|
$
|
2,567
|
|
|
$
|
6,219
|
|
|
$
|
4,331
|
|
|
Realized gains
|
813
|
|
|
229
|
|
|
2,940
|
|
|
346
|
|
|
||||
Realized losses
|
(699
|
)
|
|
(141
|
)
|
|
(1,315
|
)
|
|
(244
|
)
|
|
||||
Total investment income
|
$
|
3,283
|
|
|
$
|
2,655
|
|
|
$
|
7,844
|
|
|
$
|
4,433
|
|
|
|
As of
|
||||||
|
July 31, 2015
|
|
January 31, 2015
|
||||
Land
|
$
|
183,888
|
|
|
$
|
0
|
|
Buildings
|
581,036
|
|
|
125,289
|
|
||
Computers, equipment and software
|
1,231,106
|
|
|
1,171,762
|
|
||
Furniture and fixtures
|
77,240
|
|
|
71,881
|
|
||
Leasehold improvements
|
419,040
|
|
|
376,761
|
|
||
|
$
|
2,492,310
|
|
|
$
|
1,745,693
|
|
Less accumulated depreciation and amortization
|
(767,126
|
)
|
|
(619,827
|
)
|
||
|
$
|
1,725,184
|
|
|
$
|
1,125,866
|
|
|
Fair Value
|
||
Cash
|
$
|
435,189
|
|
Loan assumed on 50 Fremont
|
200,000
|
|
|
Prorations due to ownership transfer midmonth
|
2,411
|
|
|
Total purchase consideration
|
$
|
637,600
|
|
|
Fair Value
|
||
Building
|
$
|
435,390
|
|
Land
|
183,888
|
|
|
Termination of salesforce operating lease
|
9,483
|
|
|
Acquired lease intangibles
|
7,590
|
|
|
Loan assumed on 50 Fremont fair market value adjustment
|
1,249
|
|
|
Total
|
$
|
637,600
|
|
Balance as of January 31, 2015
|
$
|
3,782,660
|
|
Other business combinations
|
21,628
|
|
|
Balance as of July 31, 2015
|
$
|
3,804,288
|
|
|
Par Value Outstanding
|
|
Equity
Component Recorded at Issuance
|
|
Liability Component of Par Value as of
|
||||||||||
(In thousands)
|
July 31,
2015 |
|
January 31,
2015 |
||||||||||||
0.25% Convertible Senior Notes due April 1, 2018
|
$
|
1,150,000
|
|
|
$
|
122,421
|
|
(1)
|
$
|
1,082,799
|
|
|
$
|
1,070,692
|
|
|
Conversion
Rate per $1,000
Par Value
|
|
Initial
Conversion
Price per
Share
|
|
Convertible Date
|
|||
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;
|
•
|
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
|
||||||
|
July 31,
2015 |
|
January 31,
2015 |
||||
Liability component :
|
|
|
|
||||
Principal:
|
|
|
|
||||
0.25% Senior Notes (1)
|
$
|
1,150,000
|
|
|
$
|
1,150,000
|
|
Less: debt discount, net
|
|
|
|
||||
0.25% Senior Notes (2)
|
(67,201
|
)
|
|
(79,308
|
)
|
||
Net carrying amount
|
$
|
1,082,799
|
|
|
$
|
1,070,692
|
|
(in thousands, except for shares)
|
Date
|
|
Purchase
|
|
Shares
|
|||
0.25% Note Hedges
|
March 2013
|
|
$
|
153,800
|
|
|
17,308,880
|
|
|
Date
|
|
Proceeds
(in thousands)
|
|
Shares
|
|
Strike
Price
|
|||||
0.25% Warrants
|
March 2013
|
|
$
|
84,800
|
|
|
17,308,880
|
|
|
$
|
90.40
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Contractual interest expense
|
$
|
2,843
|
|
|
$
|
2,684
|
|
|
$
|
6,193
|
|
|
$
|
5,587
|
|
Amortization of debt issuance costs
|
1,032
|
|
|
1,130
|
|
|
2,050
|
|
|
2,358
|
|
||||
Amortization of debt discount
|
6,110
|
|
|
9,216
|
|
|
12,169
|
|
|
20,200
|
|
||||
|
$
|
9,985
|
|
|
$
|
13,030
|
|
|
$
|
20,412
|
|
|
$
|
28,145
|
|
|
As of
|
||||||
|
July 31,
2015 |
|
January 31,
2015 |
||||
Deferred income taxes, net
|
$
|
45,032
|
|
|
$
|
35,528
|
|
Prepaid income taxes
|
20,763
|
|
|
21,514
|
|
||
Customer contract asset
|
6,172
|
|
|
16,620
|
|
||
Other taxes receivable
|
28,625
|
|
|
27,540
|
|
||
Prepaid expenses and other current assets
|
229,699
|
|
|
179,352
|
|
||
|
$
|
330,291
|
|
|
$
|
280,554
|
|
|
As of
|
||||||
|
July 31,
2015 |
|
January 31,
2015 |
||||
Capitalized internal-use software development costs, net of accumulated amortization of $159,880 and $136,314, respectively
|
$
|
109,022
|
|
|
$
|
96,617
|
|
Acquired developed technology, net of accumulated amortization of $437,137 and $392,736, respectively
|
305,013
|
|
|
336,781
|
|
||
|
$
|
414,035
|
|
|
$
|
433,398
|
|
|
As of
|
||||||
|
July 31,
2015 |
|
January 31,
2015 |
||||
Deferred income taxes, noncurrent, net
|
$
|
8,576
|
|
|
$
|
9,275
|
|
Long-term deposits
|
18,627
|
|
|
19,715
|
|
||
Purchased intangible assets, net of accumulated amortization of $171,668 and $130,968, respectively
|
296,861
|
|
|
329,971
|
|
||
Acquired intellectual property, net of accumulated amortization of $19,136 and $15,695, respectively
|
13,868
|
|
|
15,879
|
|
||
Customer contract asset
|
136
|
|
|
1,447
|
|
||
Other
|
77,364
|
|
|
76,259
|
|
||
|
$
|
415,432
|
|
|
$
|
452,546
|
|
|
As of
|
||||||
|
July 31,
2015 |
|
January 31,
2015 |
||||
Accounts payable
|
$
|
99,286
|
|
|
$
|
95,537
|
|
Accrued compensation
|
345,833
|
|
|
457,102
|
|
||
Accrued other liabilities
|
462,573
|
|
|
321,032
|
|
||
Accrued income and other taxes payable
|
131,475
|
|
|
184,844
|
|
||
Accrued professional costs
|
28,781
|
|
|
16,889
|
|
||
Customer liability, current (1)
|
9,645
|
|
|
13,084
|
|
||
Accrued rent
|
12,933
|
|
|
14,847
|
|
||
Financing obligation, building in progress-leased facility, current
|
7,528
|
|
|
0
|
|
||
|
$
|
1,098,054
|
|
|
$
|
1,103,335
|
|
|
As of
|
||||||
|
July 31,
2015 |
|
January 31,
2015 |
||||
Deferred income taxes and income taxes payable
|
$
|
111,294
|
|
|
$
|
94,396
|
|
Customer liability, noncurrent (1)
|
97
|
|
|
1,026
|
|
||
Financing obligation, building in progress-leased facility
|
157,562
|
|
|
125,289
|
|
||
Long-term lease liabilities and other
|
574,564
|
|
|
701,612
|
|
||
|
$
|
843,517
|
|
|
$
|
922,323
|
|
|
|
|
Options Outstanding
|
||||||||||
|
Shares
Available for
Grant
|
|
Outstanding
Stock
Options
|
|
Weighted-
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
|
||||||
Balance as of January 31, 2015
|
30,789,538
|
|
|
29,458,361
|
|
|
$
|
44.36
|
|
|
|
||
Increase in shares authorized:
|
|
|
|
|
|
|
|
||||||
2013 Equity Incentive Plan
|
38,559,416
|
|
|
0
|
|
|
0.00
|
|
|
|
|||
2014 Inducement Equity Incentive Plan
|
165,563
|
|
|
0
|
|
|
0.00
|
|
|
|
|||
Options granted under all plans
|
(998,298
|
)
|
|
998,298
|
|
|
69.57
|
|
|
|
|||
Restricted stock activity
|
(1,061,113
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Stock grants to board and advisory board members
|
(101,886
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Exercised
|
0
|
|
|
(5,615,494
|
)
|
|
34.23
|
|
|
|
|||
Plan shares expired
|
(1,325,580
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Canceled
|
1,391,393
|
|
|
(1,391,393
|
)
|
|
45.80
|
|
|
|
|||
Balance as of July 31, 2015
|
67,419,033
|
|
|
23,449,772
|
|
|
$
|
47.77
|
|
|
$
|
598,841,287
|
|
Vested or expected to vest
|
|
|
21,847,908
|
|
|
$
|
47.14
|
|
|
$
|
571,811,541
|
|
|
Exercisable as of July 31, 2015
|
|
|
8,330,075
|
|
|
$
|
36.49
|
|
|
$
|
306,602,667
|
|
|
|
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
|
||||||
$0.86 to $29.38
|
|
3,346,006
|
|
|
2.6
|
|
$
|
23.74
|
|
|
2,702,490
|
|
|
$
|
23.83
|
|
$29.67 to $39.09
|
|
5,345,529
|
|
|
2.0
|
|
37.47
|
|
|
3,606,196
|
|
|
37.24
|
|
||
$40.19 to $52.14
|
|
600,044
|
|
|
4.5
|
|
43.27
|
|
|
191,939
|
|
|
43.70
|
|
||
$52.30
|
|
4,216,122
|
|
|
5.3
|
|
52.30
|
|
|
1,479,702
|
|
|
52.30
|
|
||
$53.60 to $57.79
|
|
1,646,449
|
|
|
5.8
|
|
55.21
|
|
|
316,347
|
|
|
54.97
|
|
||
$59.34
|
|
6,639,011
|
|
|
6.3
|
|
59.34
|
|
|
0
|
|
|
0.00
|
|
||
$59.37 to $75.01
|
|
1,656,611
|
|
|
6.5
|
|
65.93
|
|
|
33,401
|
|
|
63.39
|
|
||
|
|
23,449,772
|
|
|
4.5
|
|
$
|
47.77
|
|
|
8,330,075
|
|
|
$
|
36.49
|
|
|
Restricted Stock Outstanding
|
|||||||||
|
Outstanding
|
|
Weighted-
Average
Exercise Price
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Balance as of January 31, 2015
|
23,144,008
|
|
|
$
|
0.001
|
|
|
|
||
Granted
|
1,892,770
|
|
|
0.001
|
|
|
|
|||
Canceled
|
(1,746,877
|
)
|
|
0.001
|
|
|
|
|||
Vested and converted to shares
|
(3,871,655
|
)
|
|
0.001
|
|
|
|
|||
Balance as of July 31, 2015
|
19,418,246
|
|
|
$
|
0.001
|
|
|
$
|
1,423,357,432
|
|
Expected to vest
|
16,885,093
|
|
|
|
|
$
|
1,237,677,317
|
|
Options outstanding
|
23,449,772
|
|
Restricted stock awards and units outstanding
|
19,418,246
|
|
Stock available for future grant:
|
|
|
2013 Equity Incentive Plan
|
66,729,922
|
|
2014 Inducement Equity Incentive Plan
|
689,111
|
|
Amended and Restated 2004 Employee Stock Purchase Plan
|
8,259,824
|
|
Convertible Senior Notes
|
17,308,880
|
|
Warrants
|
17,308,880
|
|
|
153,164,635
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(852
|
)
|
|
$
|
(61,088
|
)
|
|
$
|
3,240
|
|
|
$
|
(157,999
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding for basic loss per share
|
659,366
|
|
|
617,016
|
|
|
656,636
|
|
|
614,797
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Convertible senior notes
|
0
|
|
|
0
|
|
|
728
|
|
|
0
|
|
||||
Employee stock awards
|
0
|
|
|
0
|
|
|
14,867
|
|
|
0
|
|
||||
Warrants
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share
|
659,366
|
|
|
617,016
|
|
|
672,231
|
|
|
614,797
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Stock awards
|
23,637
|
|
|
18,868
|
|
|
8,652
|
|
|
20,116
|
|
Convertible senior notes
|
17,309
|
|
|
30,021
|
|
|
0
|
|
|
30,341
|
|
Warrants
|
17,309
|
|
|
44,253
|
|
|
17,309
|
|
|
44,253
|
|
|
Capital
Leases
|
|
Operating
Leases
|
|
Financing Obligation, Building in Progress-Leased Facility(1)
|
||||||
Fiscal Period:
|
|
|
|
|
|
||||||
Remaining six months of fiscal 2016
|
$
|
27,310
|
|
|
$
|
161,976
|
|
|
$
|
1,777
|
|
Fiscal 2017
|
115,866
|
|
|
307,829
|
|
|
16,877
|
|
|||
Fiscal 2018
|
120,070
|
|
|
265,756
|
|
|
21,107
|
|
|||
Fiscal 2019
|
113,472
|
|
|
199,172
|
|
|
21,551
|
|
|||
Fiscal 2020
|
201,508
|
|
|
183,369
|
|
|
21,995
|
|
|||
Thereafter
|
0
|
|
|
1,050,552
|
|
|
252,517
|
|
|||
Total minimum lease payments
|
578,226
|
|
|
$
|
2,168,654
|
|
|
$
|
335,824
|
|
|
Less: amount representing interest
|
(62,613
|
)
|
|
|
|
|
|||||
Present value of capital lease obligations
|
$
|
515,613
|
|
|
|
|
|
•
|
strengthening our market-leading solutions;
|
•
|
extending distribution into new and high-growth categories;
|
•
|
expanding strategic relationships with our existing customers;
|
•
|
pursuing new customers;
|
•
|
reducing customer attrition;
|
•
|
building our business in top software 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 July 31,
|
|
Six Months Ended July 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
Variance- Percent
|
|
2015
|
|
2014
|
|
Variance- Percent
|
||||||||
Sales Cloud
|
$
|
671.0
|
|
|
$
|
610.1
|
|
|
10%
|
|
$
|
1,301.4
|
|
|
$
|
1,186.7
|
|
|
10%
|
Service Cloud
|
445.2
|
|
|
318.7
|
|
|
40%
|
|
852.9
|
|
|
613.5
|
|
|
39%
|
||||
Salesforce1 Platform and Other
|
247.2
|
|
|
181.4
|
|
|
36%
|
|
471.2
|
|
|
346.3
|
|
|
36%
|
||||
Marketing Cloud
|
157.9
|
|
|
122.4
|
|
|
29%
|
|
301.1
|
|
|
233.4
|
|
|
29%
|
||||
Total
|
$
|
1,521.3
|
|
|
$
|
1,232.6
|
|
|
|
|
$
|
2,926.6
|
|
|
$
|
2,379.9
|
|
|
|
|
April 30,
2015 |
|
July 31,
2015 |
||||
Fiscal 2016
|
|
|
|
||||
Accounts receivable, net
|
$
|
926,381
|
|
|
$
|
1,067,799
|
|
Deferred revenue, current and noncurrent
|
3,056,820
|
|
|
3,034,991
|
|
||
Operating cash flow (1)
|
730,857
|
|
|
304,411
|
|
||
Unbilled deferred revenue, a non-GAAP measure
|
6.0 bn
|
|
|
6.2 bn
|
|
|
April 30,
2014 |
|
July 31,
2014 |
|
October 31,
2014 |
|
January 31,
2015 |
||||||||
Fiscal 2015
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, net
|
$
|
684,155
|
|
|
$
|
834,323
|
|
|
$
|
794,590
|
|
|
$
|
1,905,506
|
|
Deferred revenue, current and noncurrent
|
2,324,615
|
|
|
2,352,904
|
|
|
2,223,977
|
|
|
3,321,449
|
|
||||
Operating cash flow (1)
|
473,087
|
|
|
245,893
|
|
|
122,511
|
|
|
332,223
|
|
||||
Unbilled deferred revenue, a non-GAAP measure
|
4.8 bn
|
|
|
5.0 bn
|
|
|
5.4 bn
|
|
|
5.7 bn
|
|
|
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
|
|
||||
Operating cash flow (1)
|
283,189
|
|
|
183,183
|
|
|
137,859
|
|
|
271,238
|
|
||||
Unbilled deferred revenue, a non-GAAP measure
|
3.6 bn
|
|
|
3.8 bn
|
|
|
4.2 bn
|
|
|
4.5 bn
|
|
•
|
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 July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
$
|
1,521,319
|
|
|
$
|
1,232,587
|
|
|
$
|
2,926,606
|
|
|
$
|
2,379,893
|
|
Professional services and other
|
113,365
|
|
|
85,964
|
|
|
219,245
|
|
|
165,430
|
|
||||
Total revenues
|
1,634,684
|
|
|
1,318,551
|
|
|
3,145,851
|
|
|
2,545,323
|
|
||||
Cost of revenues (1)(2):
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
292,737
|
|
|
218,918
|
|
|
566,978
|
|
|
427,865
|
|
||||
Professional services and other
|
112,647
|
|
|
88,913
|
|
|
220,208
|
|
|
172,271
|
|
||||
Total cost of revenues
|
405,384
|
|
|
307,831
|
|
|
787,186
|
|
|
600,136
|
|
||||
Gross profit
|
1,229,300
|
|
|
1,010,720
|
|
|
2,358,665
|
|
|
1,945,187
|
|
||||
Operating expenses (1)(2):
|
|
|
|
|
|
|
|
||||||||
Research and development
|
234,100
|
|
|
203,109
|
|
|
456,228
|
|
|
391,467
|
|
||||
Marketing and sales
|
793,691
|
|
|
671,958
|
|
|
1,530,629
|
|
|
1,311,313
|
|
||||
General and administrative
|
181,685
|
|
|
169,087
|
|
|
357,496
|
|
|
331,182
|
|
||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Total operating expenses
|
1,209,476
|
|
|
1,044,154
|
|
|
2,307,736
|
|
|
2,033,962
|
|
||||
Income (loss) from operations
|
19,824
|
|
|
(33,434
|
)
|
|
50,929
|
|
|
(88,775
|
)
|
||||
Investment income
|
3,283
|
|
|
2,655
|
|
|
7,844
|
|
|
4,433
|
|
||||
Interest expense
|
(18,096
|
)
|
|
(18,314
|
)
|
|
(34,771
|
)
|
|
(38,673
|
)
|
||||
Other income (expense) (1)(3)
|
1,947
|
|
|
(3,876
|
)
|
|
1,029
|
|
|
(14,723
|
)
|
||||
Income (loss) before provisions for income taxes
|
6,958
|
|
|
(52,969
|
)
|
|
25,031
|
|
|
(137,738
|
)
|
||||
Provisions for income taxes
|
(7,810
|
)
|
|
(8,119
|
)
|
|
(21,791
|
)
|
|
(20,261
|
)
|
||||
Net income (loss)
|
$
|
(852
|
)
|
|
$
|
(61,088
|
)
|
|
$
|
3,240
|
|
|
$
|
(157,999
|
)
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
20,839
|
|
|
$
|
21,271
|
|
|
$
|
40,529
|
|
|
$
|
49,943
|
|
Marketing and sales
|
19,002
|
|
|
14,648
|
|
|
39,029
|
|
|
29,613
|
|
||||
Other non-operating expense
|
1,301
|
|
|
0
|
|
|
2,116
|
|
|
0
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
16,340
|
|
|
$
|
12,977
|
|
|
$
|
31,721
|
|
|
$
|
24,787
|
|
Research and development
|
33,732
|
|
|
33,112
|
|
|
64,974
|
|
|
60,396
|
|
||||
Marketing and sales
|
71,724
|
|
|
70,485
|
|
|
142,258
|
|
|
137,618
|
|
||||
General and administrative
|
25,983
|
|
|
25,837
|
|
|
51,386
|
|
|
50,702
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Americas
|
$
|
1,202,173
|
|
|
$
|
940,946
|
|
|
$
|
2,317,293
|
|
|
$
|
1,817,323
|
|
Europe
|
286,904
|
|
|
246,532
|
|
|
545,709
|
|
|
477,342
|
|
||||
Asia Pacific
|
145,607
|
|
|
131,073
|
|
|
282,849
|
|
|
250,658
|
|
||||
|
$
|
1,634,684
|
|
|
$
|
1,318,551
|
|
|
$
|
3,145,851
|
|
|
$
|
2,545,323
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Cost of revenues
|
1
|
%
|
|
2
|
%
|
|
1
|
%
|
|
2
|
%
|
Marketing and sales
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Other non-operating expense
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Cost of revenues
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Research and development
|
2
|
|
|
3
|
|
|
2
|
|
|
2
|
|
Marketing and sales
|
4
|
|
|
5
|
|
|
4
|
|
|
5
|
|
General and administrative
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Revenues by geography:
|
|
|
|
|
|
|
|
||||
Americas
|
74
|
%
|
|
71
|
%
|
|
74
|
%
|
|
71
|
%
|
Europe
|
17
|
|
|
19
|
|
|
17
|
|
|
19
|
|
Asia Pacific
|
9
|
|
|
10
|
|
|
9
|
|
|
10
|
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Revenue constant currency growth rates
(as compared to the comparable prior periods)
|
Three Months Ended
July 31, 2015 compared to Three Months Ended July 31, 2014 |
Three Months Ended
July 31, 2014 compared to Three Months Ended July 31, 2013 |
Americas
|
28%
|
39%
|
Europe
|
29%
|
36%
|
Asia Pacific
|
25%
|
27%
|
Total growth
|
28%
|
37%
|
|
July 31, 2015 compared to
July 31, 2014 |
|
January 31, 2015 compared to
January 31, 2014 |
Deferred revenue, current and noncurrent constant currency growth rates (as compared to the comparable prior periods)
|
|
|
|
Total growth
|
33%
|
|
35%
|
|
Three Months Ended July 31,
|
|
Variance
|
|||||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
|
Percent
|
|||||||
Subscription and support
|
$
|
1,521,319
|
|
|
$
|
1,232,587
|
|
|
$
|
288,732
|
|
|
23
|
%
|
Professional services and other
|
113,365
|
|
|
85,964
|
|
|
27,401
|
|
|
32
|
%
|
|||
Total revenues
|
$
|
1,634,684
|
|
|
$
|
1,318,551
|
|
|
$
|
316,133
|
|
|
24
|
%
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Subscription and support
|
|
$
|
292,737
|
|
|
$
|
218,918
|
|
|
$
|
73,819
|
|
Professional services and other
|
|
112,647
|
|
|
88,913
|
|
|
23,734
|
|
|||
Total cost of revenues
|
|
$
|
405,384
|
|
|
$
|
307,831
|
|
|
$
|
97,553
|
|
Percent of total revenues
|
|
25
|
%
|
|
23
|
%
|
|
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Research and development
|
|
$
|
234,100
|
|
|
$
|
203,109
|
|
|
$
|
30,991
|
|
Percent of total revenues
|
|
14
|
%
|
|
16
|
%
|
|
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Marketing and sales
|
|
$
|
793,691
|
|
|
$
|
671,958
|
|
|
$
|
121,733
|
|
Percent of total revenues
|
|
49
|
%
|
|
51
|
%
|
|
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
General and administrative
|
|
$
|
181,685
|
|
|
$
|
169,087
|
|
|
$
|
12,598
|
|
Percent of total revenues
|
|
11
|
%
|
|
13
|
%
|
|
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Income (loss) from operations
|
|
$
|
19,824
|
|
|
$
|
(33,434
|
)
|
|
$
|
53,258
|
|
Percent of total revenues
|
|
1
|
%
|
|
(3
|
)%
|
|
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Investment income
|
|
$
|
3,283
|
|
|
$
|
2,655
|
|
|
$
|
628
|
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Interest expense
|
|
$
|
(18,096
|
)
|
|
$
|
(18,314
|
)
|
|
$
|
218
|
|
Percent of total revenues
|
|
(1
|
)%
|
|
(1
|
)%
|
|
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Other income (expense)
|
|
$
|
1,947
|
|
|
$
|
(3,876
|
)
|
|
$
|
5,823
|
|
|
|
Three Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Provisions for income taxes
|
|
$
|
(7,810
|
)
|
|
$
|
(8,119
|
)
|
|
$
|
309
|
|
Effective tax rate
|
|
112
|
%
|
|
(15
|
)%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
|||||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
|
Percent
|
|||||||
Subscription and support
|
$
|
2,926,606
|
|
|
$
|
2,379,893
|
|
|
$
|
546,713
|
|
|
23
|
%
|
Professional services and other
|
219,245
|
|
|
165,430
|
|
|
53,815
|
|
|
33
|
%
|
|||
Total revenues
|
$
|
3,145,851
|
|
|
$
|
2,545,323
|
|
|
$
|
600,528
|
|
|
24
|
%
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Subscription and support
|
$
|
566,978
|
|
|
$
|
427,865
|
|
|
$
|
139,113
|
|
Professional services and other
|
220,208
|
|
|
172,271
|
|
|
47,937
|
|
|||
Total cost of revenues
|
$
|
787,186
|
|
|
$
|
600,136
|
|
|
$
|
187,050
|
|
Percent of total revenues
|
25
|
%
|
|
24
|
%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Research and development
|
$
|
456,228
|
|
|
$
|
391,467
|
|
|
$
|
64,761
|
|
Percent of total revenues
|
14
|
%
|
|
15
|
%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Marketing and sales
|
$
|
1,530,629
|
|
|
$
|
1,311,313
|
|
|
$
|
219,316
|
|
Percent of total revenues
|
49
|
%
|
|
51
|
%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
General and administrative
|
$
|
357,496
|
|
|
$
|
331,182
|
|
|
$
|
26,314
|
|
Percent of total revenues
|
11
|
%
|
|
13
|
%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
$
|
(36,617
|
)
|
|
$
|
0
|
|
|
$
|
(36,617
|
)
|
Percent of total revenues
|
(1
|
)%
|
|
0
|
%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Income (loss) from operations
|
$
|
50,929
|
|
|
$
|
(88,775
|
)
|
|
$
|
139,704
|
|
Percent of total revenues
|
2
|
%
|
|
(3
|
)%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Investment income
|
$
|
7,844
|
|
|
$
|
4,433
|
|
|
$
|
3,411
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Interest expense
|
$
|
(34,771
|
)
|
|
$
|
(38,673
|
)
|
|
$
|
3,902
|
|
Percent of total revenues
|
(1
|
)%
|
|
(1
|
)%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Other income (expense)
|
$
|
1,029
|
|
|
$
|
(14,723
|
)
|
|
$
|
15,752
|
|
Percent of total revenues
|
0
|
%
|
|
(1
|
)%
|
|
|
|
Six Months Ended July 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Provisions for income taxes
|
$
|
(21,791
|
)
|
|
$
|
(20,261
|
)
|
|
$
|
(1,530
|
)
|
Effective tax rate
|
87
|
%
|
|
(15
|
)%
|
|
|
|
Capital
Leases |
|
Operating
Leases |
|
Financing Obligation, Building in Progress-Leased Facility
|
||||||
Fiscal Period:
|
|
|
|
|
|
||||||
Remaining six months of fiscal 2016
|
$
|
27,310
|
|
|
$
|
161,976
|
|
|
$
|
1,777
|
|
Fiscal 2017
|
115,866
|
|
|
307,829
|
|
|
16,877
|
|
|||
Fiscal 2018
|
120,070
|
|
|
265,756
|
|
|
21,107
|
|
|||
Fiscal 2019
|
113,472
|
|
|
199,172
|
|
|
21,551
|
|
|||
Fiscal 2020
|
201,508
|
|
|
183,369
|
|
|
21,995
|
|
|||
Thereafter
|
0
|
|
|
1,050,552
|
|
|
252,517
|
|
|||
Total minimum lease payments
|
578,226
|
|
|
$
|
2,168,654
|
|
|
$
|
335,824
|
|
|
Less: amount representing interest
|
(62,613
|
)
|
|
|
|
|
|||||
Present value of capital lease obligations
|
$
|
515,613
|
|
|
|
|
|
•
|
Stock-Based Expense
. 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 expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
|
•
|
Amortization of Purchased Intangibles and Acquired Leases.
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, customer relationships and acquired lease intangibles, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated 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 $1.15 billion of convertible senior notes due 2018 that were issued in a private placement in March 2013. The imputed interest rate was approximately 2.53% for the convertible notes due 2018, while the actual coupon interest rate of the notes was 0.25%. 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 Conversion 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 at Mission Bay to be a discrete item. Management believes that the exclusion of the gains provides investors an enhanced view of the Company’s operational performance.
|
•
|
Lease Termination Resulting from Purchase of Office Building.
The Company views the non-cash, one-time gain associated with the termination of its lease at 50 Fremont 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
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 expense, amortization of purchased intangibles, amortization of acquired leases, amortization of debt discount, gains/losses on sales of land and building improvements, gains/losses on conversions of debt, and termination of office leases. 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 both fiscal
2016
and 2015 is 36.5%. The Company re-evaluates 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 July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Gross profit
|
|
|
|
|
|
|
|
||||||||
GAAP gross profit
|
$
|
1,229,300
|
|
|
$
|
1,010,720
|
|
|
$
|
2,358,665
|
|
|
$
|
1,945,187
|
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
20,839
|
|
|
21,271
|
|
|
40,529
|
|
|
49,943
|
|
||||
Stock-based expense
|
16,340
|
|
|
12,977
|
|
|
31,721
|
|
|
24,787
|
|
||||
Non-GAAP gross profit
|
$
|
1,266,479
|
|
|
$
|
1,044,968
|
|
|
$
|
2,430,915
|
|
|
$
|
2,019,917
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Income from operations
|
|
|
|
|
|
|
|
||||||||
GAAP income (loss) from operations
|
$
|
19,824
|
|
|
$
|
(33,434
|
)
|
|
$
|
50,929
|
|
|
$
|
(88,775
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
39,841
|
|
|
35,919
|
|
|
79,558
|
|
|
79,556
|
|
||||
Stock-based expense
|
147,779
|
|
|
142,411
|
|
|
290,339
|
|
|
273,503
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Non-GAAP income from operations
|
$
|
207,444
|
|
|
$
|
144,896
|
|
|
$
|
384,209
|
|
|
$
|
264,284
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net income
|
|
|
|
|
|
|
|
||||||||
GAAP net income (loss)
|
$
|
(852
|
)
|
|
$
|
(61,088
|
)
|
|
$
|
3,240
|
|
|
$
|
(157,999
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
39,841
|
|
|
35,919
|
|
|
79,558
|
|
|
79,556
|
|
||||
Amortization of acquired lease intangible
|
1,301
|
|
|
0
|
|
|
2,116
|
|
|
0
|
|
||||
Stock-based expense
|
147,779
|
|
|
142,411
|
|
|
290,339
|
|
|
273,503
|
|
||||
Amortization of debt discount, net
|
6,110
|
|
|
9,216
|
|
|
12,169
|
|
|
20,200
|
|
||||
Loss on conversion of debt
|
0
|
|
|
361
|
|
|
0
|
|
|
8,890
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Income tax effects and adjustments
|
(65,916
|
)
|
|
(41,134
|
)
|
|
(114,207
|
)
|
|
(68,949
|
)
|
||||
Non-GAAP net income
|
$
|
128,263
|
|
|
$
|
85,685
|
|
|
$
|
236,598
|
|
|
$
|
155,201
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Non-GAAP diluted earnings per share
|
|
|
|
|
|
|
|
||||||||
GAAP diluted income (loss) per share (a)
|
$
|
0.00
|
|
|
$
|
(0.10
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.26
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
0.06
|
|
|
0.06
|
|
|
0.12
|
|
|
0.12
|
|
||||
Amortization of acquired lease intangible
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
||||
Stock-based expenses
|
0.22
|
|
|
0.22
|
|
|
0.43
|
|
|
0.42
|
|
||||
Amortization of debt discount, net
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
|
0.03
|
|
||||
Loss on conversion of debt
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.01
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0.00
|
|
|
0.00
|
|
|
(0.05
|
)
|
|
0.00
|
|
||||
Income tax effects and adjustments of Non-GAAP items
|
(0.10
|
)
|
|
(0.06
|
)
|
|
(0.17
|
)
|
|
(0.08
|
)
|
||||
Non-GAAP diluted earnings per share
|
$
|
0.19
|
|
|
$
|
0.13
|
|
|
$
|
0.35
|
|
|
$
|
0.24
|
|
Shares used in computing diluted net income per share
|
672,627
|
|
|
647,790
|
|
|
672,231
|
|
|
648,356
|
|
|
Three Months Ended July 31,
|
|
Six Months Ended July 31,
|
||||||||
Supplemental Diluted Sharecount Information (in thousands):
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Weighted-average shares outstanding for GAAP basic earnings per share
|
659,366
|
|
|
617,016
|
|
|
656,636
|
|
|
614,797
|
|
Effect of dilutive securities (1):
|
|
|
|
|
|
|
|
||||
Convertible senior notes (2)
|
1,456
|
|
|
7,698
|
|
|
728
|
|
|
8,097
|
|
Warrants associated with the convertible senior note hedges (2)
|
0
|
|
|
12,066
|
|
|
0
|
|
|
12,643
|
|
Employee stock awards
|
11,805
|
|
|
11,010
|
|
|
14,867
|
|
|
12,819
|
|
Adjusted weighted-average shares outstanding and assumed conversions for Non-GAAP diluted earnings per share
|
672,627
|
|
|
647,790
|
|
|
672,231
|
|
|
648,356
|
|
(1)
|
The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three months ended July 31, 2015 and 2014 and six months ended July 31, 2014 because the effect would have been anti-dilutive.
|
(2)
|
Upon maturity in fiscal 2015, the convertible 0.75% senior notes and associated warrants were settled. The 0.25% senior notes were not convertible, therefore no dilutive effect for shares outstanding for the three and six
months ended July 31, 2015
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
the potential entry into 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;
|
•
|
potential loss of key employees of the acquired company;
|
•
|
inability to generate sufficient revenue to offset acquisition or investment costs;
|
•
|
inability to maintain relationships with customers and partners of the acquired business;
|
•
|
difficulty of transitioning the acquired technology onto our existing platforms and maintaining the security standards for such technology consistent with our other services;
|
•
|
potential unknown liabilities associated with the acquired businesses;
|
•
|
unanticipated expenses related to acquired technology and its integration into our 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.
|
•
|
on premise offerings from 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;
|
•
|
social media companies;
|
•
|
traditional platform development environment companies;
|
•
|
cloud computing development platform companies; and
|
•
|
internally developed applications (by our potential customers' IT departments).
|
•
|
our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements;
|
•
|
the attrition rates for our services;
|
•
|
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, size and timing, new business linearity between quarters and within a quarter and fluctuations due to foreign currency movements;
|
•
|
changes in foreign currency exchange rates;
|
•
|
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 services;
|
•
|
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 services;
|
•
|
new product and service introductions by our competitors;
|
•
|
our success in selling our services to large enterprises;
|
•
|
variations in the revenue mix of editions of our services;
|
•
|
technical difficulties or interruptions in our services;
|
•
|
expenses related to our real estate, our office leases and our data center capacity and expansion;
|
•
|
changes in interest rates and our mix of investments, which would impact the return on our investments in cash and marketable securities;
|
•
|
conditions, particularly sudden changes, in the financial markets, which have impacted and may continue to impact the value of and liquidity of our investment portfolio;
|
•
|
income tax effects;
|
•
|
our ability to realize benefits from strategic partnerships, acquisition or investments;
|
•
|
other than temporary impairments in the value of our strategic investments in early-to-late stage privately held companies, which could be material in a particular quarter;
|
•
|
expenses related to significant, unusual or discrete events, which are recorded in the period in which the events occur;
|
•
|
general economic conditions, which may adversely affect either our customers’ ability or willingness to purchase additional subscriptions or upgrade their services, or delay a prospective customer's purchasing decision, 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 services;
|
•
|
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 are triggered by the payment of bonuses and when employees exercise their vested stock awards.
|
•
|
localization of our services, including translation into foreign languages and associated expenses;
|
•
|
laws and business practices favoring local competitors;
|
•
|
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, which could result in decreased values of these balances;
|
•
|
foreign currency fluctuations and controls;
|
•
|
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;
|
•
|
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;
|
•
|
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.
|
•
|
impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes;
|
•
|
cause us to dedicate a substantial portion of our cash flows from operations towards debt service obligations and principal repayments;
|
•
|
make us more vulnerable to downturns in our business, our industry or the economy in general; and
|
•
|
due to limitations within the revolving credit facility covenants, 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 significant portion 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 holders of 66 2/3 percent of our outstanding capital stock;
|
•
|
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”);
|
•
|
prohibit 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 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
|
|
|
Dated: August 24, 2015
|
|
|
|
|
||
|
|
|
|
salesforce.com, inc.
|
||
|
|
|
|
|||
|
|
|
|
By:
|
|
/
S
/ M
ARK
J. H
AWKINS
|
|
|
|
|
|
|
Mark J. Hawkins
|
|
|
|
|
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
||||
Dated: August 24, 2015
|
|
|
|
|
||
|
|
|
|
salesforce.com, inc.
|
||
|
|
|
|
|||
|
|
|
|
By:
|
|
/
S
/ J
OE
A
LLANSON
|
|
|
|
|
|
|
Joe Allanson
|
|
|
|
|
|
|
Executive Vice President, Chief Accounting Officer and Corporate Controller
(Principal Accounting Officer)
|
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
|
|
Amended and Restated 2013 Equity Incentive Plan and related forms of agreement
|
|
|
|
8-K
|
|
001-32224
|
|
10.1
|
|
|
06/09/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
Amended and Restated 2004 Employee Stock Purchase Plan
|
|
|
|
8-K
|
|
001-32224
|
|
10.2
|
|
|
06/09/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
Amendment No. 1 to Credit Agreement, dated June 17, 2015, by and among salesforce.com, inc., the guarantors from time to time party thereto and Wells Fargo Bank, N.A., as Administrative Agent
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
Reseller Agreement, dated August 1, 2015, between salesforce.com, inc. and Salesforce.org
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
Resource Sharing Agreement, dated as of August 1, 2015, by and between salesforce.com, inc., the salesforce.com foundation and Salesforce.org
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
ADMINISTRATIVE AGENT
:
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
, as Administrative Agent
|
LENDERS:
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
, as a Lender, Issuing Lender and Swingline Lender
|
Exhibit A
Pass-Through Terms
|
Exhibit D
Services available for Resale under this Agreement
|
Exhibit G
Qualified Customer Exceptions
|
Exhibit B
Sales Training; Technical Training and Enablement
|
Exhibit E
HIPAA Business Associate Addendum
|
Exhibit H
Use Cases and Decision Trees
|
Exhibit C
Sample Reseller Order Form
|
Exhibit F
Data Processing Addendum
|
Exhibit
I
Licensed Marks
|
(i)
|
any organization that has received a determination letter from the U.S. Internal Revenue Service verifying that it qualifies for 501(c)(3) status, excluding certain public sector and health system accounts as specified in
Exhibit G
(Qualified Customer Exceptions);
|
(ii)
|
fiscally-sponsored organizations (i.e., any organization for which a non-profit organization has extended its tax-exempt status to the sponsored organization (e.g. the Tides Center));
|
(iii)
|
any charitable organization located outside the United States that has received a determination in its home jurisdiction substantially equivalent to that described in
Sub-part (i)
above;
|
(iv)
|
any for-profit or not-for profit corporation that meets comprehensive and transparent social and/or environmental standards as agreed in writing by Reseller and the Company from time to time, including 501(c)(4) and microfinance institutions, excluding certain public sector and health system accounts as specified in
Exhibit G
(Qualified Customer Exceptions); and
|
(v)
|
all for-profit and non-profit public or private institutions whose primary purpose is educational, including for example, K-12 elementary schools, secondary schools, colleges and universities, as well as university consortiums (but excluding for-profit colleges or universities).
|
|
||
C O N F I D E N T I A L
|
|
Page
2
of 46
|
•
|
With respect to Reseller’s resale of Services in the United States or another country in North, South or Central America or the Caribbean, the Salesforce.com entity is salesforce.com, inc. with a principal place of business located at The Landmark @ One Market, Suite 300, San Francisco, CA 94105 USA;
|
•
|
With respect to Reseller’s resale of Services in a country in Europe, the Middle East or Africa, the Salesforce.com authorizing entity is salesforce.com EMEA Ltd., with a principal place of business located at Floor 26, Salesforce Tower, 110 Bishopsgate, London EC2N 4AY, UNITED KINGDOM.
|
|
||
C O N F I D E N T I A L
|
|
Page
3
of 46
|
•
|
With respect to Reseller’s resale of Services in the United States or another country in North, South or Central America or the Caribbean, the Salesforce.org Entity acting as the Reseller is Salesforce.org, with a principal place of business located at 50 Fremont Street, Suite 300, San Francisco, CA 94105 USA; and
|
•
|
With respect to Reseller’s resale of Services in a country in Europe, the Middle East or Africa, the Salesforce.org Entity acting as the Reseller is Salesforce.org EMEA Limited, with a principal place of business at Village 9, Floor 26 Salesforce Tower, 110 Bishopsgate, London EC2N 4AY, UNITED KINGDOM.
|
1.
|
Marketing Rights.
|
2.
|
Resale Rights.
|
3.
|
Services.
|
4.
|
Reseller Requirements.
|
|
||
C O N F I D E N T I A L
|
|
Page
5
of 46
|
5.
|
Customer Agreements and Product Specific Terms.
|
6.
|
Provisioning of the Service and Upgraded Support Offerings.
|
7.
|
Intentionally Left Blank
.
|
8.
|
Fees.
|
|
||
C O N F I D E N T I A L
|
|
Page
6
of 46
|
9.
|
Invoicing and Payment.
|
|
||
C O N F I D E N T I A L
|
|
Page
7
of 46
|
10.
|
Salesforce.com Support.
|
11.
|
Term and Termination
|
|
||
C O N F I D E N T I A L
|
|
Page
8
of 46
|
12.
|
Confidentiality
|
|
||
C O N F I D E N T I A L
|
|
Page
9
of 46
|
13.
|
Intellectual Property
|
|
||
C O N F I D E N T I A L
|
|
Page
10
of 46
|
14.
|
Trademark License.
|
|
||
C O N F I D E N T I A L
|
|
Page
11
of 46
|
15.
|
Representations, Warranties and Disclaimers
|
|
||
C O N F I D E N T I A L
|
|
Page
12
of 46
|
|
||
C O N F I D E N T I A L
|
|
Page
13
of 46
|
16.
|
Mutual Indemnification
|
17.
|
Limitation of Liability
|
|
||
C O N F I D E N T I A L
|
|
Page
14
of 46
|
18.
|
Compliance.
|
|
||
C O N F I D E N T I A L
|
|
Page
15
of 46
|
19.
|
General
|
|
||
C O N F I D E N T I A L
|
|
Page
16
of 46
|
|
||
C O N F I D E N T I A L
|
|
Page
17
of 46
|
|
||
C O N F I D E N T I A L
|
|
Page
18
of 46
|
1.
|
Salesforce.com RESPONSIBILITIES
|
|
||
C O N F I D E N T I A L
|
|
Page
19
of 46
|
2.
|
USE OF SERVICES AND CONTENT
|
|
||
C O N F I D E N T I A L
|
|
Page
20
of 46
|
3.
|
NON-SALESFORCE.COM PROVIDERS
|
4.
|
FEES AND PAYMENT
|
|
||
C O N F I D E N T I A L
|
|
Page
21
of 46
|
5.
|
PROPRIETARY RIGHTS AND LICENSES
|
|
||
C O N F I D E N T I A L
|
|
Page
22
of 46
|
6.
|
CONFIDENTIALITY: COMPELLED DISCLOSURE
|
7.
|
DISCLAIMERS
|
8.
|
LIMITATION OF LIABILITY
|
9.
|
TERM AND TERMINATION
|
|
||
C O N F I D E N T I A L
|
|
Page
23
of 46
|
10.
|
GENERAL PROVISIONS
|
|
||
C O N F I D E N T I A L
|
|
Page
24
of 46
|
|
||
C O N F I D E N T I A L
|
|
Page
25
of 46
|
|
||
C O N F I D E N T I A L
|
|
Page
27
of 46
|
1.
|
Third party products that Salesforce resells as Salesforce.com products and/or as part of a Salesforce.com product, or that Salesforce.com resells on a pass through basis (e.g., Remedyforce) under a Salesforce.com Order Form, including any Services for which Salesforce.com incurs fixed costs in the form of fees payable to a third party such as royalty fees or per subscription data center infrastructure fees (e.g., Data.com);
|
2.
|
Products previously offered by entities that Salesforce has since acquired but that Salesforce.com has not yet itself made generally available to customers under Order Forms submitted by customers directly to Salesforce.com; and/or
|
3.
|
Salesforce.com products that are not yet available through the Reseller’s quoting tool, notwithstanding both Parties’ commercially reasonable efforts to identify and resolve such technical and/or resource limitations nor the Parties’ shared commitment to a common goal of making such Salesforce.com products available through Reseller’s quoting tool.
|
4.
|
Services and support offerings that are not Upgraded Support.
|
|
||
C O N F I D E N T I A L
|
|
Page
29
of 46
|
|
||
C O N F I D E N T I A L
|
|
Page
30
of 46
|
1.
|
Definitions
|
“
Data Controller
”
|
has the meaning specified for “controller” in European Data Protection Laws.
|
“
Data Processor
”
|
has the meaning specified for “processor” in European Data Protection Laws.
|
“
Data Subject
”
|
has the meaning specified for “data subject” in European Data Protection Laws.
|
“
Personal Data
”
|
has the meaning specified for “personal data” in European Data Protection Laws where such data is submitted by or for Pass-Through Customer to the Services as Customer Data.
|
“
Processing
”
|
has the meaning specified for “processing” in European Data Protection Laws.
|
“
Salesforce Affiliates
”
|
means Affiliates (as defined in the Agreement) of salesforce.com, inc.
|
“
Sub-processor
”
|
means any Data Processor engaged by Salesforce.com or by any other Sub-processor of Salesforce.com that Processes Personal Data on behalf of Pass-Through Customer.
|
3.
|
Salesforce.com Obligations
|
|
||
C O N F I D E N T I A L
|
|
Page
32
of 46
|
|
||
C O N F I D E N T I A L
|
|
Page
33
of 46
|
4.
|
Reseller Obligations
|
5.
|
Salesforce.com Personnel
|
|
||
C O N F I D E N T I A L
|
|
Page
34
of 46
|
6.
|
Sub-processors
|
7.
|
Rights of the Data Subject
|
8.
|
Third Party Certifications
|
9.
|
Audit Rights
|
|
||
C O N F I D E N T I A L
|
|
Page
35
of 46
|
|
||
C O N F I D E N T I A L
|
|
Page
36
of 46
|
Entity Name
|
Entity Type
|
Entity Country
|
salesforce.com, inc.
|
Salesforce Affiliate
|
United States
|
Salesforce Australia Pty. Ltd.
|
Salesforce Affiliate
|
Australia
|
salesforce.com Canada Corporation
|
Salesforce Affiliate
|
Canada
|
salesforce.com France S.A.S.
|
Salesforce Affiliate
|
France
|
salesforce.com EMEA Ltd.
(formerly Salesforce UK Ltd.) |
Salesforce Affiliate
|
UK
|
Salesforce Netherlands B.V.
|
Salesforce Affiliate
|
The Netherlands
|
salesforce.com Germany GmbH
|
Salesforce Affiliate
|
Germany
|
salesforce.com Sàrl
|
Salesforce Affiliate
|
Switzerland
|
salesforce.com India Private Limited
|
Salesforce Affiliate
|
India
|
Salesforce Ireland Limited
|
Salesforce Affiliate
|
Ireland
|
Kabushiki Kaisha salesforce.com (salesforce.com Co., Ltd.
)
|
Salesforce Affiliate
|
Japan
|
salesforce.com Singapore Pte. Ltd.
|
Salesforce Affiliate
|
Singapore
|
Cognizant Technology Solutions U.S. Corporation
|
Third-Party Service Provider: Customer Support*
|
United States
|
Cognizant Technology Solutions Hungary Kft.
|
Third-Party Service Provider: Customer Support*
|
Hungary
|
Cognizant Technology Solutions India Pvt. Ltd.
|
Third-Party Service Provider: Customer Support*
|
India
|
Cognizant Technology Solutions Philippines, Inc
|
Third-Party Service Provider: Customer Support*
|
Philippines
|
HCL Technologies Limited - Contracting Entity
|
Third-Party Service Provider: Customer Support*
|
India
|
HCL Technologies Philippines, Inc.
|
Third-Party Service Provider: Customer Support*
|
Philippines
|
HCL America, Inc.
|
Third-Party Service Provider: Customer Support*
|
United States
|
HCL Poland sp. z o.o.
|
Third-Party Service Provider: Customer Support*
|
Poland
|
SFDC EMEA Data Centre Limited
|
Salesforce Affiliate
|
Japan
|
Entity Name
|
Entity Type
|
Entity Country
|
salesforce.com, inc.
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Salesforce Affiliate
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United States
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Kabushiki Kaisha salesforce.com (salesforce.com Co., Ltd.)
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Salesforce Affiliate
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Japan
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C O N F I D E N T I A L
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Page
37
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1.
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Access control to premises and facilities to prevent unauthorized persons from gaining access to data processing systems for processing or using Personal Data.
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•
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Salesforce’s production data centers have an access system that controls access to the data center. This system permits only authorized personnel to have access to secure areas. The facility is secured by around-the-clock guards, biometric access screening, and escort-controlled access.
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2.
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Access control to systems to prevent data processing systems from being used without authorization.
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•
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Unique User identifiers (User IDs) to ensure that activities can be attributed to the responsible individual.
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•
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User passwords are stored using a one-way hashing algorithm (SHA-256) and are never transmitted unencrypted.
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•
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Access to the Services require a valid User ID and password combination, which are encrypted via SSL while in transmission. Following a successful authentication, a random session ID is generated and stored in the User’s browser to preserve and track session state.
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•
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Controls to ensure generated initial passwords must be reset on first use.
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•
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Controls to revoke access after several consecutive failed login attempts.
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•
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Controls on the number of invalid login requests before locking out a User.
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•
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Controls to force a User password to expire after a period of use.
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•
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Controls to terminate a User session after a period of inactivity.
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•
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Password history controls to limit password reuse.
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•
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Password length controls
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•
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Password complexity requirement (requires letters and numbers).
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•
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Verification question before resetting password.
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•
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The ability to accept logins to the Services from only certain IP address ranges.
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•
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The ability to restrict logins to the Services to specific time periods (Developer Edition, Enterprise Edition, and Unlimited Edition only).
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•
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Ability to delegate user authentication or federate authentication via SAML.
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3.
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Access control to data to ensure that persons authorized to use a data processing system have access only to those data they are authorized to access, and that Personal Data cannot be read, copied, altered, or removed without authorization during use and after recording.
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•
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Reseller and/or Qualified Customer may implement a granular sharing model and User permission profiles to limit data accessible to different Users.
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•
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Reseller and/or Qualified Customer, as applicable, may create custom fields that are encrypted at rest and are only visible to Users that have been granted the “View Encrypted Data” permission by Reseller or Qualified Customer’s, as applicable, designated system administrators.
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4.
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Disclosure control to ensure that Personal Data cannot be read, copied, altered, or removed without authorization during electronic transfer or transfer or transport or while being recorded onto data storage media, and that it is possible to check and establish to which parties Personal Data are to be transferred by means of data transmission facilities.
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•
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Salesforce uses industry accepted encryption products to protect Customer Data and communications during transmissions between Reseller and/or Pass-Through Customer’s network and the Reseller Services, including minimum 128-bit VeriSign SSL Certification and minimum 2048-bit RSA public keys.
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C O N F I D E N T I A L
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Page
38
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5.
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Input control to ensure that it is possible to after-the-fact check and establish whether Personal Data has been entered into, altered, or removed from data processing systems, and if so, by whom.
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•
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User access log entries will be maintained, containing date, time, User ID, URL executed or entity ID operated on, operation performed (viewed, edited, etc.) and source IP address. Note that source IP address might not be available if NAT (Network Access Translation) or PAT (Port Address Translation) is used by Reseller and/or Qualified Customer or its ISP.
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•
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If there is a suspicion of inappropriate access, Salesforce can provide Reseller log entry records to assist in forensic analysis. This service will be provided to Reseller on a time and materials basis.
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•
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Certain administrative changes to the Services (such as password changes and adding custom fields) are tracked in an area known as the “Setup Audit Log” and are available for viewing by Qualified Customer’s designated system administrator(s). Qualified Customer may download and store this data locally.
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•
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Successful and failed login attempts for Qualified Customer’s instance(s) of the Services are tracked in an area known as the “Login History” and are available for viewing by Qualified Customer’s designated system administrator(s). Qualified Customer may download and store this data locally.
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•
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Qualified Customer may implement functionality known as “Set History Tracking” to track the history of specific objects or fields within the Customer’s instance(s) of the Services. All entries include the date, time, nature of the change, and the User who made the change.
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6.
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Job control to ensure that personal data processed on behalf of others are processed strictly in compliance with the Data Controller’s instructions.
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•
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As set forth in the DPA, Salesforce shall process Personal Data in accordance with the instructions of Reseller and/or Qualified Customer, including to provide the Services as set forth in the Agreement and as instructed by Users in their use of the Services.
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7.
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Availability control to ensure that Personal Data are protected against accidental destruction or loss.
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•
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Disaster recovery. Salesforce can utilize disaster recovery facilities that are geographically remote from primary data centers, along with required hardware, software, and Internet connectivity, in the event Salesforce production facilities at the primary data center were to be rendered unavailable. Salesforce has disaster recovery plans in place and tests them at least once per year. Salesforce will discuss results of these tests with Reseller on request.
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•
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Reliability and Backup. All networking components, SSL accelerators, load balancers, Web servers, and application servers are configured in a redundant configuration. All Customer Data is stored on a primary database server that is clustered with a backup database server for redundancy. All Customer Data is stored on carrier-class disk storage RAID disks and multiple data paths. All Customer Data, up to the last committed transaction, is automatically backed up on a regular basis. Any backup tapes are verified for integrity stored in an offsite facility in a secure, fire-resistant location.
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•
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Viruses. The Services will not introduce any viruses to Reseller’s systems; however, the Services do not scan for viruses that could be included in attachments or other Customer Data uploaded into the Services by Reseller and/or Qualified Customer. Any such uploaded attachments will not be executed in the Services and therefore will not damage or compromise the Services.
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8.
|
Segregation control to ensure that data collected for different purposes can be processed separately.
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•
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Strong logical separation of Customer Data, which is achieved via Reseller and/or Qualified Customer-specific “Organization IDs” that permit only Users to view related Customer Data.
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C O N F I D E N T I A L
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Page
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•
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Qualified Customer may implement a granular sharing model and User permission profiles to limit data accessible to different Users.
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◦
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Chambers of Commerce (excluding foundations)
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Business Improvement Districts
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Local and regional economic development organizations
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◦
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Non-profits funded by local, state or federal government that function without an independent board of directors, or which are managed by a government agency
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◦
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Academic Medical Center use cases:
|
▪
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Reseller eligible: full-time/part time students, faculty, alumni, donors, staff, and fundraising.
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▪
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Salesforce.com eligible: patient care and clinical use cases only
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◦
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Separate accounts may be created for the same organization to distinguish between patient care and educational use cases.
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C O N F I D E N T I A L
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Page
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Elder Care
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Hospice
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Community Health Services
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Mental Health Treatment
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Substance Abuse Treatment
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◦
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Blood & Organ Transplant Banks
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Developmental Services
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Disability Services
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Reproductive Health Services
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C O N F I D E N T I A L
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◦
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C O N F I D E N T I A L
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Page
43
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C O N F I D E N T I A L
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Page
44
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1.
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Salesforce
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2.
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Power of Us
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3.
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any marks that are currently being applied for on behalf of Salesforce.org for its use in connection with this Agreement.
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C O N F I D E N T I A L
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Page
45
of 46
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A.
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The Foundation is a non-profit entity, exempt from income tax under Internal Revenue Code §501(c)(3) and corresponding provisions of state law, and as a result of federal tax law, the Foundation is not legally permitted to reimburse certain related Parties for expenses.
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B.
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SFDO is a non-profit entity that became taxable as of February 1, 2015.
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C.
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Both SFDC and SFDO desire to provide employees, office space, furniture, equipment, facilities, services and other resources (collectively, the “
Resources
”) to the Foundation, and SFDC desires to provide Resources to SFDO.
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D.
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The Parties desire to enter into a contractual relationship regarding the sharing of the Resources within North America, South America, Europe, the Middle East, Africa and countries located in or that border the Caribbean Sea (the “
Regions
”).
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1.
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Resources
. SFDC and SFDO may provide Resources in the Regions to the Foundation, and SFDC may provide Resources in the Regions to SFDO, as mutually agreed from time to time. Unless otherwise agreed by the Parties in writing, all Resources provided by SFDC or SFDO to the Foundation will be at no cost to the Foundation, and Resources provided by SFDC to SFDO will be at no cost to SFDO. For clarity, and without limiting the foregoing:
|
(a)
|
Employees
. To the extent feasible, each Party will hire, compensate, supervise, discipline, and discharge its own full-time and part-time employees, who will be under the sole control and ultimate supervision of its own board of directors. Unless otherwise agreed by the Parties (including with respect to certain retirement plans to which each Parties’ employees may participate), each Party will be solely responsible for: (i) compensating and providing benefits to its own full-time and part-time employees, (ii) withholding and paying all amounts required for any employer or employee tax or contribution, including local, state, and federal income tax, unemployment insurance, and disability insurance; and (iii) compliance with all applicable employments laws and regulations. Part-time employees of any Party may also be part-time employees of another Party. Full-time and part-time employees of SFDC may, from time to time, perform services for SFDO and the Foundation. Services provided by SFDC employees to SFDO or the Foundation will be at no cost to SFDO or the Foundation.
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(b)
|
Office Space and Equipment
. SFDC owns or leases office space in the Regions (including office space located at 50 Fremont, San Francisco, CA 94105, the “
Premises
”), portions of which SFDC has assigned, and will continue to assign, to SFDO and the Foundation for their direct use. The Foundation and SFDO also make use of, and will continue to make use of, a proportionate share of
|
(c)
|
Networking and Information Technology
. SFDC allows, and will continue to allow, SFDO and the Foundation to use certain network and telecommunication equipment and facilities owned or licensed by SFDC, including servers, bandwidth, ISP, and data center and hosting services. Use of such networking and information technology equipment and facilities will be at no cost to SFDO or the Foundation.
|
(d)
|
Hardware
. SFDC allows, and will continue to allow, SFDO and the Foundation to use certain hardware licensed to, or purchased by, SFDC (including, for example, laptop computers and mobile devices), subject to any applicable license terms between SFDC and applicable third parties. Use of such hardware will be at no cost to SFDO or the Foundation.
|
(e)
|
Software.
SFDC allows, and will continue to allow, SFDO and the Foundation to use certain productivity software licensed to, or purchased by, SFDC (including, for example, email and file-sharing software applications), subject to any applicable license terms between SFDC and applicable third parties. Use of such third party productivity software will be at no cost to SFDO or the Foundation.
|
(f)
|
Internal Business Applications
. SFDC allows, and will continue to allow, SFDO and the Foundation to use certain SFDC-owned internal business applications (including Org62). Use of such internal business applications will be at no cost to SFDO or the Foundation. Notwithstanding the foregoing, SFDO and the Foundation will each be responsible for implementing and maintaining their own billing and collection systems.
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2.
|
Valuation
. From time to time, the Parties may calculate the allocable share of expenses related to SFDO and the Foundation’s use of the Resources described in Section 1 (Resources) of this Agreement. For example, the Parties may calculate the expenses related to SFDO and the Foundation’s use of the Premises by considering the number of SFDO and/or Foundation personnel using the Premises versus the total number of SFDC, SFDO, and Foundation personnel using the Premises. The calculations to be performed under this paragraph are for the Parties’ valuation purposes only, and the Resources will be at no cost to SFDO or the Foundation.
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3.
|
Confidentiality
.
|
4.
|
Term and Termination
. This Agreement will begin on the Effective Date and continue in effect until terminated by a Party upon one hundred eighty (180) days’ written notice.
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5.
|
General
.
|
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.
|
August 24, 2015
|
/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.
|
August 24, 2015
|
/s/ M
ARK
J. H
AWKINS
|
|
Mark J. Hawkins
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
August 24, 2015
|
/s/ M
ARC
B
ENIOFF
|
|
Marc Benioff
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
August 24, 2015
|
/s/ M
ARK
H
AWKINS
|
|
Mark J. Hawkins
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|