|
|
x
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
Delaware
|
94-3320693
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer
Identification No.)
|
Large accelerated filer
x
|
Accelerated filer
¨
|
|
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
|
Page No.
|
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets as of October 31, 2015 and January 31, 2015
|
|
|
|
|
|
Condensed Consolidated Statements of Operations for the three and nine months ended October 31, 2015 and 2014
|
|
|
|
|
|
Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended October 31, 2015 and 2014
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows for the three and nine months ended October 31, 2015 and 2014
|
7
|
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
|
October 31,
2015 |
|
January 31,
2015 |
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,223,318
|
|
|
$
|
908,117
|
|
Short-term marketable securities
|
134,687
|
|
|
87,312
|
|
||
Accounts receivable, net
|
1,060,726
|
|
|
1,905,506
|
|
||
Deferred commissions
|
208,133
|
|
|
225,386
|
|
||
Prepaid expenses and other current assets
|
311,909
|
|
|
280,554
|
|
||
Land and building improvements held for sale
|
0
|
|
|
143,197
|
|
||
Total current assets
|
2,938,773
|
|
|
3,550,072
|
|
||
Marketable securities, noncurrent
|
943,301
|
|
|
894,855
|
|
||
Property and equipment, net
|
1,742,142
|
|
|
1,125,866
|
|
||
Deferred commissions, noncurrent
|
148,147
|
|
|
162,796
|
|
||
Capitalized software, net
|
397,013
|
|
|
433,398
|
|
||
Goodwill
|
3,849,054
|
|
|
3,782,660
|
|
||
Strategic investments
|
496,809
|
|
|
175,774
|
|
||
Other assets, net
|
396,727
|
|
|
452,546
|
|
||
Restricted cash
|
0
|
|
|
115,015
|
|
||
Total assets
|
$
|
10,911,966
|
|
|
$
|
10,692,982
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
$
|
1,149,693
|
|
|
$
|
1,103,335
|
|
Deferred revenue
|
2,827,285
|
|
|
3,286,768
|
|
||
Total current liabilities
|
3,976,978
|
|
|
4,390,103
|
|
||
Convertible 0.25% senior notes, net
|
1,088,910
|
|
|
1,070,692
|
|
||
Loan assumed on 50 Fremont
|
198,851
|
|
|
0
|
|
||
Revolving credit facility
|
0
|
|
|
300,000
|
|
||
Deferred revenue, noncurrent
|
19,225
|
|
|
34,681
|
|
||
Other noncurrent liabilities
|
878,048
|
|
|
922,323
|
|
||
Total liabilities
|
6,162,012
|
|
|
6,717,799
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
664
|
|
|
651
|
|
||
Additional paid-in capital
|
5,410,377
|
|
|
4,604,485
|
|
||
Accumulated other comprehensive loss
|
(33,325
|
)
|
|
(24,108
|
)
|
||
Accumulated deficit
|
(627,762
|
)
|
|
(605,845
|
)
|
||
Total stockholders’ equity
|
4,749,954
|
|
|
3,975,183
|
|
||
Total liabilities and stockholders’ equity
|
$
|
10,911,966
|
|
|
$
|
10,692,982
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
$
|
1,596,333
|
|
|
$
|
1,288,513
|
|
|
$
|
4,522,939
|
|
|
$
|
3,668,406
|
|
Professional services and other
|
115,634
|
|
|
95,142
|
|
|
334,879
|
|
|
260,572
|
|
||||
Total revenues
|
1,711,967
|
|
|
1,383,655
|
|
|
4,857,818
|
|
|
3,928,978
|
|
||||
Cost of revenues (1)(2):
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
303,045
|
|
|
238,746
|
|
|
870,023
|
|
|
666,611
|
|
||||
Professional services and other
|
120,638
|
|
|
94,465
|
|
|
340,846
|
|
|
266,736
|
|
||||
Total cost of revenues
|
423,683
|
|
|
333,211
|
|
|
1,210,869
|
|
|
933,347
|
|
||||
Gross profit
|
1,288,284
|
|
|
1,050,444
|
|
|
3,646,949
|
|
|
2,995,631
|
|
||||
Operating expenses (1)(2):
|
|
|
|
|
|
|
|
||||||||
Research and development
|
239,212
|
|
|
195,460
|
|
|
695,440
|
|
|
586,927
|
|
||||
Marketing and sales
|
818,820
|
|
|
709,643
|
|
|
2,349,449
|
|
|
2,020,956
|
|
||||
General and administrative
|
186,818
|
|
|
167,383
|
|
|
544,314
|
|
|
498,565
|
|
||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Total operating expenses
|
1,244,850
|
|
|
1,072,486
|
|
|
3,552,586
|
|
|
3,106,448
|
|
||||
Income (loss) from operations
|
43,434
|
|
|
(22,042
|
)
|
|
94,363
|
|
|
(110,817
|
)
|
||||
Investment income
|
3,507
|
|
|
2,622
|
|
|
11,351
|
|
|
7,055
|
|
||||
Interest expense
|
(18,249
|
)
|
|
(17,682
|
)
|
|
(53,020
|
)
|
|
(56,355
|
)
|
||||
Other expense (1)(3)
|
(7,093
|
)
|
|
(372
|
)
|
|
(6,064
|
)
|
|
(15,095
|
)
|
||||
Gain on sales of land and building improvements
|
21,792
|
|
|
15,625
|
|
|
21,792
|
|
|
15,625
|
|
||||
Income (loss) before provisions for income taxes
|
43,391
|
|
|
(21,849
|
)
|
|
68,422
|
|
|
(159,587
|
)
|
||||
Provisions for income taxes
|
(68,548
|
)
|
|
(17,075
|
)
|
|
(90,339
|
)
|
|
(37,336
|
)
|
||||
Net loss
|
$
|
(25,157
|
)
|
|
$
|
(38,924
|
)
|
|
$
|
(21,917
|
)
|
|
$
|
(196,923
|
)
|
Basic net loss per share
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.32
|
)
|
Diluted net loss per share
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.32
|
)
|
Shares used in computing basic net loss per share
|
664,131
|
|
|
629,548
|
|
|
659,160
|
|
|
619,748
|
|
||||
Shares used in computing diluted net loss per share
|
664,131
|
|
|
629,548
|
|
|
659,160
|
|
|
619,748
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
20,296
|
|
|
$
|
20,351
|
|
|
$
|
60,825
|
|
|
$
|
70,294
|
|
Marketing and sales
|
18,966
|
|
|
15,095
|
|
|
57,995
|
|
|
44,708
|
|
||||
Other non-operating expense
|
761
|
|
|
0
|
|
|
2,877
|
|
|
0
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
17,516
|
|
|
$
|
14,118
|
|
|
$
|
49,237
|
|
|
$
|
38,905
|
|
Research and development
|
31,534
|
|
|
26,868
|
|
|
96,508
|
|
|
87,264
|
|
||||
Marketing and sales
|
69,561
|
|
|
72,892
|
|
|
211,819
|
|
|
210,510
|
|
||||
General and administrative
|
25,706
|
|
|
25,582
|
|
|
77,092
|
|
|
76,284
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net loss
|
$
|
(25,157
|
)
|
|
$
|
(38,924
|
)
|
|
$
|
(21,917
|
)
|
|
$
|
(196,923
|
)
|
Other comprehensive loss, before tax and net of reclassification adjustments:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation and other losses
|
(1,173
|
)
|
|
(13,692
|
)
|
|
(8,419
|
)
|
|
(15,876
|
)
|
||||
Unrealized gains (loss) on investments
|
(2,873
|
)
|
|
1,278
|
|
|
337
|
|
|
(3,055
|
)
|
||||
Other comprehensive loss, before tax
|
(4,046
|
)
|
|
(12,414
|
)
|
|
(8,082
|
)
|
|
(18,931
|
)
|
||||
Tax effect
|
(1,135
|
)
|
|
0
|
|
|
(1,135
|
)
|
|
0
|
|
||||
Other comprehensive loss, net of tax
|
(5,181
|
)
|
|
(12,414
|
)
|
|
(9,217
|
)
|
|
(18,931
|
)
|
||||
Comprehensive loss
|
$
|
(30,338
|
)
|
|
$
|
(51,338
|
)
|
|
$
|
(31,134
|
)
|
|
$
|
(215,854
|
)
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Operating activities:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(25,157
|
)
|
|
$
|
(38,924
|
)
|
|
$
|
(21,917
|
)
|
|
$
|
(196,923
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
134,236
|
|
|
111,954
|
|
|
393,838
|
|
|
330,358
|
|
||||
Amortization of debt discount and transaction costs
|
7,138
|
|
|
9,420
|
|
|
20,290
|
|
|
31,160
|
|
||||
Gain on sales of land and building improvements
|
(21,792
|
)
|
|
(15,625
|
)
|
|
(21,792
|
)
|
|
(15,625
|
)
|
||||
50 Fremont lease termination, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Loss on conversions of convertible senior notes
|
0
|
|
|
1,340
|
|
|
0
|
|
|
10,230
|
|
||||
Abandonment of leasehold improvement
|
7,086
|
|
|
0
|
|
|
7,086
|
|
|
0
|
|
||||
Amortization of deferred commissions
|
78,934
|
|
|
65,371
|
|
|
232,768
|
|
|
186,526
|
|
||||
Expenses related to employee stock plans
|
144,317
|
|
|
139,460
|
|
|
434,656
|
|
|
412,963
|
|
||||
Excess tax benefits from employee stock plans
|
(44,607
|
)
|
|
(1,221
|
)
|
|
(48,698
|
)
|
|
(3,447
|
)
|
||||
Changes in assets and liabilities, net of business combinations:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, net
|
15,262
|
|
|
39,792
|
|
|
853,014
|
|
|
566,306
|
|
||||
Deferred commissions
|
(80,030
|
)
|
|
(64,280
|
)
|
|
(200,867
|
)
|
|
(171,022
|
)
|
||||
Prepaid expenses and other current assets and other assets
|
33,841
|
|
|
6,588
|
|
|
4,495
|
|
|
34,501
|
|
||||
Accounts payable, accrued expenses and other liabilities
|
57,577
|
|
|
(1,933
|
)
|
|
12,276
|
|
|
(44,894
|
)
|
||||
Deferred revenue
|
(188,898
|
)
|
|
(129,431
|
)
|
|
(475,357
|
)
|
|
(298,642
|
)
|
||||
Net cash provided by operating activities
|
117,907
|
|
|
122,511
|
|
|
1,153,175
|
|
|
841,491
|
|
||||
Investing activities:
|
|
|
|
|
|
|
|
||||||||
Business combinations, net of cash acquired
|
(27,759
|
)
|
|
38,071
|
|
|
(58,680
|
)
|
|
38,071
|
|
||||
Proceeds from land and building improvements held for sale
|
127,066
|
|
|
192,240
|
|
|
127,066
|
|
|
223,240
|
|
||||
Purchase of 50 Fremont land and building
|
0
|
|
|
0
|
|
|
(425,376
|
)
|
|
0
|
|
||||
Deposit for purchase of 50 Fremont land and building
|
0
|
|
|
(114,935
|
)
|
|
115,015
|
|
|
(114,935
|
)
|
||||
Non-refundable amounts received for sale of land available for sale
|
0
|
|
|
0
|
|
|
6,284
|
|
|
0
|
|
||||
Strategic investments
|
(30,330
|
)
|
|
(12,852
|
)
|
|
(325,226
|
)
|
|
(47,905
|
)
|
||||
Purchases of marketable securities
|
(200,001
|
)
|
|
(154,560
|
)
|
|
(543,422
|
)
|
|
(690,024
|
)
|
||||
Sales of marketable securities
|
91,153
|
|
|
46,908
|
|
|
414,259
|
|
|
197,293
|
|
||||
Maturities of marketable securities
|
7,166
|
|
|
22,288
|
|
|
23,445
|
|
|
46,248
|
|
||||
Capital expenditures
|
(80,041
|
)
|
|
(73,426
|
)
|
|
(216,011
|
)
|
|
(205,100
|
)
|
||||
Net cash used in investing activities
|
(112,746
|
)
|
|
(56,266
|
)
|
|
(882,646
|
)
|
|
(553,112
|
)
|
||||
Financing activities:
|
|
|
|
|
|
|
|
||||||||
Proceeds from revolving credit facility, net
|
0
|
|
|
297,325
|
|
|
0
|
|
|
297,325
|
|
||||
Proceeds from employee stock plans
|
98,016
|
|
|
91,337
|
|
|
367,830
|
|
|
226,561
|
|
||||
Excess tax benefits from employee stock plans
|
44,607
|
|
|
1,221
|
|
|
48,698
|
|
|
3,447
|
|
||||
Payments on convertible senior notes
|
0
|
|
|
(89,645
|
)
|
|
0
|
|
|
(387,229
|
)
|
||||
Principal payments on capital lease obligations
|
(10,945
|
)
|
|
(10,345
|
)
|
|
(68,844
|
)
|
|
(61,280
|
)
|
||||
Payments on revolving credit facility and term loan
|
0
|
|
|
(270,000
|
)
|
|
(300,000
|
)
|
|
(285,000
|
)
|
||||
Net cash provided by (used in) financing activities
|
131,678
|
|
|
19,893
|
|
|
47,684
|
|
|
(206,176
|
)
|
||||
Effect of exchange rate changes
|
(2,872
|
)
|
|
(14,538
|
)
|
|
(3,012
|
)
|
|
(17,513
|
)
|
||||
Net increase in cash and cash equivalents
|
133,967
|
|
|
71,600
|
|
|
315,201
|
|
|
64,690
|
|
||||
Cash and cash equivalents, beginning of period
|
1,089,351
|
|
|
774,725
|
|
|
908,117
|
|
|
781,635
|
|
||||
Cash and cash equivalents, end of period
|
$
|
1,223,318
|
|
|
$
|
846,325
|
|
|
$
|
1,223,318
|
|
|
$
|
846,325
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Supplemental cash flow disclosure:
|
|
|
|
|
|
|
|
||||||||
Cash paid during the period for:
|
|
|
|
|
|
|
|
||||||||
Interest
|
$
|
4,085
|
|
|
$
|
4,285
|
|
|
$
|
32,756
|
|
|
$
|
21,274
|
|
Income taxes, net of tax refunds
|
$
|
8,248
|
|
|
$
|
6,187
|
|
|
$
|
24,450
|
|
|
$
|
30,986
|
|
Non-cash financing and investing activities:
|
|
|
|
|
|
|
|
||||||||
Fixed assets acquired under capital leases
|
$
|
2,065
|
|
|
$
|
38,604
|
|
|
$
|
7,191
|
|
|
$
|
119,939
|
|
Building in progress - leased facility acquired under financing obligation
|
$
|
38,477
|
|
|
$
|
29,756
|
|
|
$
|
75,336
|
|
|
$
|
62,804
|
|
Fair value of loan assumed on 50 Fremont
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
198,751
|
|
|
$
|
0
|
|
Fair value of common stock issued as consideration for business combinations
|
$
|
0
|
|
|
$
|
338,033
|
|
|
$
|
0
|
|
|
$
|
338,033
|
|
•
|
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 October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Americas
|
$
|
1,258,148
|
|
|
$
|
995,331
|
|
|
$
|
3,575,441
|
|
|
$
|
2,812,654
|
|
Europe
|
302,704
|
|
|
252,982
|
|
|
848,413
|
|
|
730,324
|
|
||||
Asia Pacific
|
151,115
|
|
|
135,342
|
|
|
433,964
|
|
|
386,000
|
|
||||
|
$
|
1,711,967
|
|
|
$
|
1,383,655
|
|
|
$
|
4,857,818
|
|
|
$
|
3,928,978
|
|
•
|
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
October 31, |
|
|
Nine Months Ended
October 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
|
1.21-1.27
|
|
%
|
|
1.34-1.53
|
|
%
|
|
1.13-1.42
|
|
%
|
|
1.20-1.53
|
|
%
|
||||
Weighted-average fair value per share of grants
|
$
|
19.72
|
|
|
|
$
|
17.32
|
|
|
|
$
|
19.79
|
|
|
|
$
|
16.46
|
|
|
|
Three Months Ended
October 31, |
|
|
Nine Months Ended
October 31, |
|||||||||||
ESPP
|
2015
|
|
|
2014
|
|
|
2015
|
|
2014
|
||||||
Volatility
|
n/a
|
|
|
n/a
|
|
|
34
|
|
%
|
|
34-35
|
|
%
|
||
Estimated life
|
n/a
|
|
|
n/a
|
|
|
0.75 years
|
|
|
|
0.75 years
|
|
|
||
Risk-free interest rate
|
n/a
|
|
|
n/a
|
|
|
0.06-0.27
|
|
%
|
|
0.07-0.16
|
|
%
|
||
Weighted-average fair value per share of grants
|
n/a
|
|
|
n/a
|
|
|
$
|
19.30
|
|
|
|
$
|
14.53
|
|
|
Investments classified as Marketable Securities
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Corporate notes and obligations
|
$
|
636,779
|
|
|
$
|
905
|
|
|
$
|
(1,678
|
)
|
|
$
|
636,006
|
|
U.S. treasury securities
|
126,837
|
|
|
149
|
|
|
(42
|
)
|
|
126,944
|
|
||||
Mortgage backed obligations
|
84,288
|
|
|
94
|
|
|
(401
|
)
|
|
83,981
|
|
||||
Asset backed securities
|
176,633
|
|
|
73
|
|
|
(240
|
)
|
|
176,466
|
|
||||
Municipal securities
|
36,358
|
|
|
141
|
|
|
(30
|
)
|
|
36,469
|
|
||||
Foreign government obligations
|
2,094
|
|
|
16
|
|
|
(2
|
)
|
|
2,108
|
|
||||
U.S. agency obligations
|
8,998
|
|
|
5
|
|
|
(9
|
)
|
|
8,994
|
|
||||
Covered bonds
|
6,863
|
|
|
157
|
|
|
0
|
|
|
7,020
|
|
||||
Total marketable securities
|
$
|
1,078,850
|
|
|
$
|
1,540
|
|
|
$
|
(2,402
|
)
|
|
$
|
1,077,988
|
|
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
|
||||||
|
October 31,
2015 |
|
January 31,
2015 |
||||
Recorded as follows:
|
|
|
|
||||
Short-term (due in one year or less)
|
$
|
134,687
|
|
|
$
|
87,312
|
|
Long-term (due after one year)
|
943,301
|
|
|
894,855
|
|
||
|
$
|
1,077,988
|
|
|
$
|
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
|
$
|
330,654
|
|
|
$
|
(1,382
|
)
|
|
$
|
51,475
|
|
|
$
|
(296
|
)
|
|
$
|
382,129
|
|
|
$
|
(1,678
|
)
|
U.S. treasury securities
|
47,184
|
|
|
(42
|
)
|
|
0
|
|
|
0
|
|
|
47,184
|
|
|
(42
|
)
|
||||||
Mortgage backed obligations
|
51,412
|
|
|
(298
|
)
|
|
9,143
|
|
|
(103
|
)
|
|
60,555
|
|
|
(401
|
)
|
||||||
Asset backed securities
|
122,349
|
|
|
(212
|
)
|
|
7,398
|
|
|
(28
|
)
|
|
129,747
|
|
|
(240
|
)
|
||||||
Municipal securities
|
3,990
|
|
|
(18
|
)
|
|
3,949
|
|
|
(12
|
)
|
|
7,939
|
|
|
(30
|
)
|
||||||
Foreign government obligations
|
1,576
|
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
|
1,576
|
|
|
(2
|
)
|
||||||
U.S. agency obligations
|
4,991
|
|
|
(9
|
)
|
|
0
|
|
|
0
|
|
|
4,991
|
|
|
(9
|
)
|
||||||
|
$
|
562,156
|
|
|
$
|
(1,963
|
)
|
|
$
|
71,965
|
|
|
$
|
(439
|
)
|
|
$
|
634,121
|
|
|
$
|
(2,402
|
)
|
Description
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Balances as of
October 31, 2015
|
||||||||
Cash equivalents (1):
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
$
|
0
|
|
|
$
|
235,695
|
|
|
$
|
0
|
|
|
$
|
235,695
|
|
Money market mutual funds
|
339,446
|
|
|
0
|
|
|
0
|
|
|
339,446
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate notes and obligations
|
0
|
|
|
636,006
|
|
|
0
|
|
|
636,006
|
|
||||
U.S. treasury securities
|
0
|
|
|
126,944
|
|
|
0
|
|
|
126,944
|
|
||||
Mortgage backed obligations
|
0
|
|
|
83,981
|
|
|
0
|
|
|
83,981
|
|
||||
Asset backed securities
|
0
|
|
|
176,466
|
|
|
0
|
|
|
176,466
|
|
||||
Municipal securities
|
0
|
|
|
36,469
|
|
|
0
|
|
|
36,469
|
|
||||
Foreign government obligations
|
0
|
|
|
2,108
|
|
|
0
|
|
|
2,108
|
|
||||
U.S. agency obligations
|
0
|
|
|
8,994
|
|
|
0
|
|
|
8,994
|
|
||||
Covered bonds
|
0
|
|
|
7,020
|
|
|
0
|
|
|
7,020
|
|
||||
Foreign currency derivative contracts (2)
|
0
|
|
|
7,789
|
|
|
0
|
|
|
7,789
|
|
||||
Total Assets
|
$
|
339,446
|
|
|
$
|
1,321,472
|
|
|
$
|
0
|
|
|
$
|
1,660,918
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative contracts (3)
|
$
|
0
|
|
|
$
|
5,996
|
|
|
$
|
0
|
|
|
$
|
5,996
|
|
Total Liabilities
|
$
|
0
|
|
|
$
|
5,996
|
|
|
$
|
0
|
|
|
$
|
5,996
|
|
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
|
||||||
|
October 31, 2015
|
|
January 31, 2015
|
||||
Notional amount of foreign currency derivative contracts
|
$
|
1,067,250
|
|
|
$
|
942,086
|
|
Fair value of foreign currency derivative contracts
|
$
|
1,793
|
|
|
$
|
4,917
|
|
|
|
Fair Value of Derivative Instruments
|
||||||
|
|
As of
|
||||||
|
Balance Sheet Location
|
October 31, 2015
|
|
January 31, 2015
|
||||
Derivative Assets
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Foreign currency derivative contracts
|
Prepaid expenses and other current assets
|
$
|
7,789
|
|
|
$
|
10,611
|
|
Derivative Liabilities
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Foreign currency derivative contracts
|
Accounts payable, accrued expenses and other liabilities
|
$
|
5,996
|
|
|
$
|
5,694
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
||||||||
Interest income
|
$
|
3,700
|
|
|
$
|
2,720
|
|
|
$
|
9,919
|
|
|
$
|
7,051
|
|
|
Realized gains
|
257
|
|
|
78
|
|
|
3,197
|
|
|
424
|
|
|
||||
Realized losses
|
(450
|
)
|
|
(176
|
)
|
|
(1,765
|
)
|
|
(420
|
)
|
|
||||
Total investment income
|
$
|
3,507
|
|
|
$
|
2,622
|
|
|
$
|
11,351
|
|
|
$
|
7,055
|
|
|
|
As of
|
||||||
|
October 31, 2015
|
|
January 31, 2015
|
||||
|
|
|
|
||||
Land
|
$
|
183,888
|
|
|
$
|
0
|
|
Buildings
|
614,349
|
|
|
125,289
|
|
||
Computers, equipment and software
|
1,259,210
|
|
|
1,171,762
|
|
||
Furniture and fixtures
|
77,606
|
|
|
71,881
|
|
||
Leasehold improvements
|
450,565
|
|
|
376,761
|
|
||
|
$
|
2,585,618
|
|
|
$
|
1,745,693
|
|
Less accumulated depreciation and amortization
|
(843,476
|
)
|
|
(619,827
|
)
|
||
|
$
|
1,742,142
|
|
|
$
|
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
|
66,394
|
|
|
Balance as of October 31, 2015
|
$
|
3,849,054
|
|
|
Par Value Outstanding
|
|
Equity
Component Recorded at Issuance
|
|
Liability Component of Par Value as of
|
||||||||||
(In thousands)
|
October 31,
2015 |
|
January 31,
2015 |
||||||||||||
0.25% Convertible Senior Notes due April 1, 2018
|
$
|
1,150,000
|
|
|
$
|
122,421
|
|
(1)
|
$
|
1,088,910
|
|
|
$
|
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
|
||||||
|
October 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)
|
(61,090
|
)
|
|
(79,308
|
)
|
||
Net carrying amount
|
$
|
1,088,910
|
|
|
$
|
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 October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Contractual interest expense
|
$
|
2,843
|
|
|
$
|
2,190
|
|
|
$
|
9,036
|
|
|
$
|
7,777
|
|
Amortization of debt issuance costs
|
1,027
|
|
|
1,132
|
|
|
3,077
|
|
|
3,490
|
|
||||
Amortization of debt discount
|
6,148
|
|
|
8,637
|
|
|
18,317
|
|
|
28,837
|
|
||||
|
$
|
10,018
|
|
|
$
|
11,959
|
|
|
$
|
30,430
|
|
|
$
|
40,104
|
|
|
As of
|
||||||
|
October 31,
2015 |
|
January 31,
2015 |
||||
Deferred income taxes, net
|
$
|
42,605
|
|
|
$
|
35,528
|
|
Prepaid income taxes
|
23,167
|
|
|
21,514
|
|
||
Customer contract asset
|
3,572
|
|
|
16,620
|
|
||
Other taxes receivable
|
32,187
|
|
|
27,540
|
|
||
Prepaid expenses and other current assets
|
210,378
|
|
|
179,352
|
|
||
|
$
|
311,909
|
|
|
$
|
280,554
|
|
|
As of
|
||||||
|
October 31,
2015 |
|
January 31,
2015 |
||||
Capitalized internal-use software development costs, net of accumulated amortization of $172,728 and $136,314, respectively
|
$
|
114,058
|
|
|
$
|
96,617
|
|
Acquired developed technology, net of accumulated amortization of $459,215 and $392,736, respectively
|
282,955
|
|
|
336,781
|
|
||
|
$
|
397,013
|
|
|
$
|
433,398
|
|
|
As of
|
||||||
|
October 31,
2015 |
|
January 31,
2015 |
||||
Deferred income taxes, noncurrent, net
|
$
|
7,236
|
|
|
$
|
9,275
|
|
Long-term deposits
|
20,126
|
|
|
19,715
|
|
||
Purchased intangible assets, net of accumulated amortization of $191,807 and $130,968, respectively
|
277,898
|
|
|
329,971
|
|
||
Acquired intellectual property, net of accumulated amortization of $20,837 and $15,695, respectively
|
12,167
|
|
|
15,879
|
|
||
Customer contract asset
|
115
|
|
|
1,447
|
|
||
Other
|
79,185
|
|
|
76,259
|
|
||
|
$
|
396,727
|
|
|
$
|
452,546
|
|
|
As of
|
||||||
|
October 31,
2015 |
|
January 31,
2015 |
||||
Accounts payable
|
$
|
88,755
|
|
|
$
|
95,537
|
|
Accrued compensation
|
415,958
|
|
|
457,102
|
|
||
Accrued other liabilities
|
424,004
|
|
|
321,032
|
|
||
Accrued income and other taxes payable
|
154,020
|
|
|
184,844
|
|
||
Accrued professional costs
|
31,234
|
|
|
16,889
|
|
||
Customer liability, current (1)
|
10,315
|
|
|
13,084
|
|
||
Accrued rent
|
13,477
|
|
|
14,847
|
|
||
Financing obligation, building in progress-leased facility, current
|
11,930
|
|
|
0
|
|
||
|
$
|
1,149,693
|
|
|
$
|
1,103,335
|
|
|
As of
|
||||||
|
October 31,
2015 |
|
January 31,
2015 |
||||
Deferred income taxes and income taxes payable
|
$
|
113,801
|
|
|
$
|
94,396
|
|
Customer liability, noncurrent
|
81
|
|
|
1,026
|
|
||
Financing obligation, building in progress-leased facility
|
194,350
|
|
|
125,289
|
|
||
Long-term lease liabilities and other
|
569,816
|
|
|
701,612
|
|
||
|
$
|
878,048
|
|
|
$
|
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
|
38,833,915
|
|
|
0
|
|
|
0.00
|
|
|
|
|||
2014 Inducement Equity Incentive Plan
|
222,281
|
|
|
0
|
|
|
0.00
|
|
|
|
|||
Options granted under all plans
|
(1,243,913
|
)
|
|
1,243,913
|
|
|
70.06
|
|
|
|
|||
Restricted stock activity
|
(1,717,493
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Stock grants to board and advisory board members
|
(147,305
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Exercised
|
0
|
|
|
(7,139,738
|
)
|
|
34.67
|
|
|
|
|||
Plan shares expired
|
(1,533,380
|
)
|
|
0
|
|
|
0.00
|
|
|
|
|||
Canceled
|
1,623,954
|
|
|
(1,623,954
|
)
|
|
46.33
|
|
|
|
|||
Balance as of October 31, 2015
|
66,827,597
|
|
|
21,938,582
|
|
|
$
|
48.82
|
|
|
$
|
633,719,094
|
|
Vested or expected to vest
|
|
|
20,636,830
|
|
|
$
|
48.30
|
|
|
$
|
606,931,261
|
|
|
Exercisable as of October 31, 2015
|
|
|
7,999,144
|
|
|
$
|
37.53
|
|
|
$
|
321,427,698
|
|
|
|
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
|
|
3,115,316
|
|
|
2.3
|
|
$
|
24.20
|
|
|
2,756,842
|
|
|
$
|
24.42
|
|
$29.67 to $39.09
|
|
4,239,789
|
|
|
2.1
|
|
37.94
|
|
|
2,856,120
|
|
|
37.86
|
|
||
$40.19 to $52.14
|
|
567,287
|
|
|
4.3
|
|
43.27
|
|
|
212,321
|
|
|
43.57
|
|
||
$52.30
|
|
4,107,344
|
|
|
5.1
|
|
52.30
|
|
|
1,693,467
|
|
|
52.30
|
|
||
$53.60 to $57.79
|
|
1,572,567
|
|
|
5.6
|
|
55.24
|
|
|
424,396
|
|
|
55.15
|
|
||
$59.34
|
|
6,561,546
|
|
|
6.1
|
|
59.34
|
|
|
0
|
|
|
0.00
|
|
||
$59.37 to $77.37
|
|
1,774,733
|
|
|
6.3
|
|
67.22
|
|
|
55,998
|
|
|
62.64
|
|
||
|
|
21,938,582
|
|
|
4.5
|
|
$
|
48.82
|
|
|
7,999,144
|
|
|
$
|
37.53
|
|
Options outstanding
|
21,938,582
|
|
Restricted stock awards and units outstanding
|
17,508,771
|
|
Stock available for future grant:
|
|
|
2013 Equity Incentive Plan
|
66,132,255
|
|
2014 Inducement Equity Incentive Plan
|
695,342
|
|
Amended and Restated 2004 Employee Stock Purchase Plan
|
8,259,824
|
|
Convertible Senior Notes
|
17,308,880
|
|
Warrants
|
17,308,880
|
|
|
149,152,534
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(25,157
|
)
|
|
$
|
(38,924
|
)
|
|
$
|
(21,917
|
)
|
|
$
|
(196,923
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding for basic loss per share
|
664,131
|
|
|
629,548
|
|
|
659,160
|
|
|
619,748
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Convertible senior notes
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Employee stock awards
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Warrants
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Adjusted weighted-average shares outstanding and assumed conversions for diluted loss per share
|
664,131
|
|
|
629,548
|
|
|
659,160
|
|
|
619,748
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Stock awards
|
20,191
|
|
|
19,922
|
|
|
22,634
|
|
|
20,115
|
|
Convertible senior notes
|
17,309
|
|
|
25,820
|
|
|
17,309
|
|
|
28,834
|
|
Warrants
|
17,309
|
|
|
44,253
|
|
|
17,309
|
|
|
44,253
|
|
|
Capital
Leases
|
|
Operating
Leases
|
|
Financing Obligation, Building in Progress-Leased Facility(1)
|
||||||
Fiscal Period:
|
|
|
|
|
|
||||||
Remaining three months of fiscal 2016
|
$
|
16,437
|
|
|
$
|
87,285
|
|
|
$
|
1,434
|
|
Fiscal 2017
|
116,792
|
|
|
347,232
|
|
|
16,877
|
|
|||
Fiscal 2018
|
121,012
|
|
|
311,403
|
|
|
21,107
|
|
|||
Fiscal 2019
|
114,085
|
|
|
241,180
|
|
|
21,551
|
|
|||
Fiscal 2020
|
201,507
|
|
|
213,419
|
|
|
21,995
|
|
|||
Thereafter
|
0
|
|
|
1,344,224
|
|
|
252,517
|
|
|||
Total minimum lease payments
|
569,833
|
|
|
$
|
2,544,743
|
|
|
$
|
335,481
|
|
|
Less: amount representing interest
|
(61,973
|
)
|
|
|
|
|
|||||
Present value of capital lease obligations
|
$
|
507,860
|
|
|
|
|
|
•
|
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 October 31,
|
|
|
|
Nine Months Ended October 31,
|
|
|
||||||||||||
|
2015
|
|
2014
|
|
Variance- Percent
|
|
2015
|
|
2014
|
|
Variance- Percent
|
||||||||
Sales Cloud
|
$
|
688.7
|
|
|
$
|
625.0
|
|
|
10%
|
|
$
|
1,990.1
|
|
|
$
|
1,811.7
|
|
|
10%
|
Service Cloud
|
469.5
|
|
|
339.6
|
|
|
38%
|
|
1,322.4
|
|
|
953.1
|
|
|
39%
|
||||
App Cloud and Other
|
269.1
|
|
|
192.4
|
|
|
40%
|
|
740.4
|
|
|
538.7
|
|
|
37%
|
||||
Marketing Cloud
|
169.0
|
|
|
131.5
|
|
|
29%
|
|
470.1
|
|
|
364.9
|
|
|
29%
|
||||
Total
|
$
|
1,596.3
|
|
|
$
|
1,288.5
|
|
|
|
|
$
|
4,523.0
|
|
|
$
|
3,668.4
|
|
|
|
|
April 30,
2015 |
|
July 31,
2015 |
|
October 31,
2015 |
||||||
Fiscal 2016
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
926,381
|
|
|
$
|
1,067,799
|
|
|
$
|
1,060,726
|
|
Deferred revenue, current and noncurrent
|
3,056,820
|
|
|
3,034,991
|
|
|
2,846,510
|
|
|||
Operating cash flow (1)
|
730,857
|
|
|
304,411
|
|
|
117,907
|
|
|||
Unbilled deferred revenue, a non-GAAP measure
|
6.0 bn
|
|
|
6.2 bn
|
|
|
6.7 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 net 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 relationships, 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 achieving performance conditions to which certain awards may be subject.
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
$
|
1,596,333
|
|
|
$
|
1,288,513
|
|
|
$
|
4,522,939
|
|
|
$
|
3,668,406
|
|
Professional services and other
|
115,634
|
|
|
95,142
|
|
|
334,879
|
|
|
260,572
|
|
||||
Total revenues
|
1,711,967
|
|
|
1,383,655
|
|
|
4,857,818
|
|
|
3,928,978
|
|
||||
Cost of revenues (1)(2):
|
|
|
|
|
|
|
|
||||||||
Subscription and support
|
303,045
|
|
|
238,746
|
|
|
870,023
|
|
|
666,611
|
|
||||
Professional services and other
|
120,638
|
|
|
94,465
|
|
|
340,846
|
|
|
266,736
|
|
||||
Total cost of revenues
|
423,683
|
|
|
333,211
|
|
|
1,210,869
|
|
|
933,347
|
|
||||
Gross profit
|
1,288,284
|
|
|
1,050,444
|
|
|
3,646,949
|
|
|
2,995,631
|
|
||||
Operating expenses (1)(2):
|
|
|
|
|
|
|
|
||||||||
Research and development
|
239,212
|
|
|
195,460
|
|
|
695,440
|
|
|
586,927
|
|
||||
Marketing and sales
|
818,820
|
|
|
709,643
|
|
|
2,349,449
|
|
|
2,020,956
|
|
||||
General and administrative
|
186,818
|
|
|
167,383
|
|
|
544,314
|
|
|
498,565
|
|
||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Total operating expenses
|
1,244,850
|
|
|
1,072,486
|
|
|
3,552,586
|
|
|
3,106,448
|
|
||||
Income (loss) from operations
|
43,434
|
|
|
(22,042
|
)
|
|
94,363
|
|
|
(110,817
|
)
|
||||
Investment income
|
3,507
|
|
|
2,622
|
|
|
11,351
|
|
|
7,055
|
|
||||
Interest expense
|
(18,249
|
)
|
|
(17,682
|
)
|
|
(53,020
|
)
|
|
(56,355
|
)
|
||||
Other expense (1)(3)
|
(7,093
|
)
|
|
(372
|
)
|
|
(6,064
|
)
|
|
(15,095
|
)
|
||||
Gain on sales of land and building improvements
|
21,792
|
|
|
15,625
|
|
|
21,792
|
|
|
15,625
|
|
||||
Income (loss) before provisions for income taxes
|
43,391
|
|
|
(21,849
|
)
|
|
68,422
|
|
|
(159,587
|
)
|
||||
Provisions for income taxes
|
(68,548
|
)
|
|
(17,075
|
)
|
|
(90,339
|
)
|
|
(37,336
|
)
|
||||
Net loss
|
$
|
(25,157
|
)
|
|
$
|
(38,924
|
)
|
|
$
|
(21,917
|
)
|
|
$
|
(196,923
|
)
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
20,296
|
|
|
$
|
20,351
|
|
|
$
|
60,825
|
|
|
$
|
70,294
|
|
Marketing and sales
|
18,966
|
|
|
15,095
|
|
|
57,995
|
|
|
44,708
|
|
||||
Other non-operating expense
|
761
|
|
|
0
|
|
|
2,877
|
|
|
0
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of revenues
|
$
|
17,516
|
|
|
$
|
14,118
|
|
|
$
|
49,237
|
|
|
$
|
38,905
|
|
Research and development
|
31,534
|
|
|
26,868
|
|
|
96,508
|
|
|
87,264
|
|
||||
Marketing and sales
|
69,561
|
|
|
72,892
|
|
|
211,819
|
|
|
210,510
|
|
||||
General and administrative
|
25,706
|
|
|
25,582
|
|
|
77,092
|
|
|
76,284
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Americas
|
$
|
1,258,148
|
|
|
$
|
995,331
|
|
|
$
|
3,575,441
|
|
|
$
|
2,812,654
|
|
Europe
|
302,704
|
|
|
252,982
|
|
|
848,413
|
|
|
730,324
|
|
||||
Asia Pacific
|
151,115
|
|
|
135,342
|
|
|
433,964
|
|
|
386,000
|
|
||||
|
$
|
1,711,967
|
|
|
$
|
1,383,655
|
|
|
$
|
4,857,818
|
|
|
$
|
3,928,978
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Cost of revenues
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
2
|
%
|
Marketing and sales
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Other non-operating expense
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Cost of revenues
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Research and development
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
Marketing and sales
|
4
|
|
|
5
|
|
|
4
|
|
|
5
|
|
General and administrative
|
1
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
|
|
|
||||
Americas
|
73
|
%
|
|
72
|
%
|
|
74
|
%
|
|
72
|
%
|
Europe
|
18
|
|
|
18
|
|
|
17
|
|
|
18
|
|
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
October 31, 2015 compared to Three Months Ended October 31, 2014 |
Three Months Ended
October 31, 2014 compared to Three Months Ended October 31, 2013 |
Americas
|
27%
|
29%
|
Europe
|
28%
|
34%
|
Asia Pacific
|
25%
|
25%
|
Total growth
|
27%
|
30%
|
|
October 31, 2015 compared to
October 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
|
30%
|
|
35%
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
|
Percent
|
||||||
Subscription and support
|
$
|
1,596,333
|
|
|
$
|
1,288,513
|
|
|
$
|
307,820
|
|
|
24%
|
Professional services and other
|
115,634
|
|
|
95,142
|
|
|
20,492
|
|
|
22%
|
|||
Total revenues
|
$
|
1,711,967
|
|
|
$
|
1,383,655
|
|
|
$
|
328,312
|
|
|
24%
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Subscription and support
|
|
$
|
303,045
|
|
|
$
|
238,746
|
|
|
$
|
64,299
|
|
Professional services and other
|
|
120,638
|
|
|
94,465
|
|
|
26,173
|
|
|||
Total cost of revenues
|
|
$
|
423,683
|
|
|
$
|
333,211
|
|
|
$
|
90,472
|
|
Percent of total revenues
|
|
25
|
%
|
|
24
|
%
|
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Research and development
|
|
$
|
239,212
|
|
|
$
|
195,460
|
|
|
$
|
43,752
|
|
Percent of total revenues
|
|
14
|
%
|
|
14
|
%
|
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Marketing and sales
|
|
$
|
818,820
|
|
|
$
|
709,643
|
|
|
$
|
109,177
|
|
Percent of total revenues
|
|
48
|
%
|
|
52
|
%
|
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
General and administrative
|
|
$
|
186,818
|
|
|
$
|
167,383
|
|
|
$
|
19,435
|
|
Percent of total revenues
|
|
11
|
%
|
|
12
|
%
|
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Income (loss) from operations
|
|
$
|
43,434
|
|
|
$
|
(22,042
|
)
|
|
$
|
65,476
|
|
Percent of total revenues
|
|
2
|
%
|
|
(2
|
)%
|
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Investment income
|
|
$
|
3,507
|
|
|
$
|
2,622
|
|
|
$
|
885
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Interest expense
|
|
$
|
(18,249
|
)
|
|
$
|
(17,682
|
)
|
|
$
|
(567
|
)
|
Percent of total revenues
|
|
(1
|
)%
|
|
(1
|
)%
|
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Other expense
|
|
$
|
(7,093
|
)
|
|
$
|
(372
|
)
|
|
$
|
(6,721
|
)
|
|
|
Three Months Ended October 31,
|
|
Variance
|
|||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
|||
Gain on sales of land and building improvements
|
|
21,792
|
|
|
15,625
|
|
|
6,167
|
|
Percent of total revenues
|
|
2
|
%
|
|
1
|
%
|
|
|
|
|
Three Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
||||||
Provisions for income taxes
|
|
$
|
(68,548
|
)
|
|
$
|
(17,075
|
)
|
|
$
|
(51,473
|
)
|
Effective tax rate
|
|
158
|
%
|
|
(78
|
)%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
|
Percent
|
||||||
Subscription and support
|
$
|
4,522,939
|
|
|
$
|
3,668,406
|
|
|
$
|
854,533
|
|
|
23%
|
Professional services and other
|
334,879
|
|
|
260,572
|
|
|
74,307
|
|
|
29%
|
|||
Total revenues
|
$
|
4,857,818
|
|
|
$
|
3,928,978
|
|
|
$
|
928,840
|
|
|
24%
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Subscription and support
|
$
|
870,023
|
|
|
$
|
666,611
|
|
|
$
|
203,412
|
|
Professional services and other
|
340,846
|
|
|
266,736
|
|
|
74,110
|
|
|||
Total cost of revenues
|
$
|
1,210,869
|
|
|
$
|
933,347
|
|
|
$
|
277,522
|
|
Percent of total revenues
|
25
|
%
|
|
24
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Research and development
|
$
|
695,440
|
|
|
$
|
586,927
|
|
|
$
|
108,513
|
|
Percent of total revenues
|
14
|
%
|
|
15
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Marketing and sales
|
$
|
2,349,449
|
|
|
$
|
2,020,956
|
|
|
$
|
328,493
|
|
Percent of total revenues
|
49
|
%
|
|
51
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
General and administrative
|
$
|
544,314
|
|
|
$
|
498,565
|
|
|
$
|
45,749
|
|
Percent of total revenues
|
11
|
%
|
|
13
|
%
|
|
|
|
Nine Months Ended October 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
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Income (loss) from operations
|
$
|
94,363
|
|
|
$
|
(110,817
|
)
|
|
$
|
205,180
|
|
Percent of total revenues
|
2
|
%
|
|
(3
|
)%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Investment income
|
$
|
11,351
|
|
|
$
|
7,055
|
|
|
$
|
4,296
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Interest expense
|
$
|
(53,020
|
)
|
|
$
|
(56,355
|
)
|
|
$
|
3,335
|
|
Percent of total revenues
|
(1
|
)%
|
|
(1
|
)%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Other expense
|
$
|
(6,064
|
)
|
|
$
|
(15,095
|
)
|
|
$
|
9,031
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
|||||
(in thousands)
|
|
2015
|
|
2014
|
|
Dollars
|
|||
Gain on sales of land and building improvements
|
|
21,792
|
|
|
15,625
|
|
|
6,167
|
|
Percent of total revenues
|
|
1
|
%
|
|
0
|
%
|
|
|
|
Nine Months Ended October 31,
|
|
Variance
|
||||||||
(in thousands)
|
2015
|
|
2014
|
|
Dollars
|
||||||
Provisions for income taxes
|
$
|
(90,339
|
)
|
|
$
|
(37,336
|
)
|
|
$
|
(53,003
|
)
|
Effective tax rate
|
132
|
%
|
|
(23
|
)%
|
|
|
|
Capital
Leases |
|
Operating
Leases |
|
Financing Obligation, Building in Progress-Leased Facility
|
||||||
Fiscal Period:
|
|
|
|
|
|
||||||
Remaining three months of fiscal 2016
|
$
|
16,437
|
|
|
$
|
87,285
|
|
|
$
|
1,434
|
|
Fiscal 2017
|
116,792
|
|
|
347,232
|
|
|
16,877
|
|
|||
Fiscal 2018
|
121,012
|
|
|
311,403
|
|
|
21,107
|
|
|||
Fiscal 2019
|
114,085
|
|
|
241,180
|
|
|
21,551
|
|
|||
Fiscal 2020
|
201,507
|
|
|
213,419
|
|
|
21,995
|
|
|||
Thereafter
|
0
|
|
|
1,344,224
|
|
|
252,517
|
|
|||
Total minimum lease payments
|
569,833
|
|
|
$
|
2,544,743
|
|
|
$
|
335,481
|
|
|
Less: amount representing interest
|
(61,973
|
)
|
|
|
|
|
|||||
Present value of capital lease obligations
|
$
|
507,860
|
|
|
|
|
|
•
|
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 its core, 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. The difference between the cash proceeds received and the carrying value of the land and the building improvements as of the settlement date is recorded as a one-time gain on the statement of operations. 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 can vary in size and frequency. When projecting this long-term rate, the company evaluated a three-year financial projection that excludes the direct impact of the following items: stock-based expenses, amortization of purchased intangibles, amortization of acquired leases, amortization of debt discount, gains/losses on the 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. This long-term rate could be subject to change for a variety of reasons, such as significant changes in the geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where the company operates. The Company re-evaluates this long-term rate on an annual basis unless a significant event may materially affect it. As a result of the recent Tax Court opinion in Altera Corporation’s litigation with the IRS, the Company revised its fiscal 2016 non-GAAP tax rate from 36.5 percent to 35.5 percent during the quarter ended October 31, 2015 to account for the related tax impact. The year-to-date tax impact was fully recognized in the Company’s tax provision for the quarter ended October 31, 2015.
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Gross profit
|
|
|
|
|
|
|
|
||||||||
GAAP gross profit
|
$
|
1,288,284
|
|
|
$
|
1,050,444
|
|
|
$
|
3,646,949
|
|
|
$
|
2,995,631
|
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
20,296
|
|
|
20,351
|
|
|
60,825
|
|
|
70,294
|
|
||||
Stock-based expense
|
17,516
|
|
|
14,118
|
|
|
49,237
|
|
|
38,905
|
|
||||
Non-GAAP gross profit
|
$
|
1,326,096
|
|
|
$
|
1,084,913
|
|
|
$
|
3,757,011
|
|
|
$
|
3,104,830
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Income from operations
|
|
|
|
|
|
|
|
||||||||
GAAP income (loss) from operations
|
$
|
43,434
|
|
|
$
|
(22,042
|
)
|
|
$
|
94,363
|
|
|
$
|
(110,817
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
39,262
|
|
|
35,446
|
|
|
118,820
|
|
|
115,002
|
|
||||
Stock-based expense
|
144,317
|
|
|
139,460
|
|
|
434,656
|
|
|
412,963
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Non-GAAP income from operations
|
$
|
227,013
|
|
|
$
|
152,864
|
|
|
$
|
611,222
|
|
|
$
|
417,148
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net income
|
|
|
|
|
|
|
|
||||||||
GAAP net loss
|
$
|
(25,157
|
)
|
|
$
|
(38,924
|
)
|
|
$
|
(21,917
|
)
|
|
$
|
(196,923
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
39,262
|
|
|
35,446
|
|
|
118,820
|
|
|
115,002
|
|
||||
Amortization of acquired lease intangible
|
761
|
|
|
0
|
|
|
2,877
|
|
|
0
|
|
||||
Stock-based expense
|
144,317
|
|
|
139,460
|
|
|
434,656
|
|
|
412,963
|
|
||||
Amortization of debt discount, net
|
6,148
|
|
|
8,638
|
|
|
18,317
|
|
|
28,838
|
|
||||
Loss on conversion of debt
|
0
|
|
|
1,339
|
|
|
0
|
|
|
10,229
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Gain on sales of land and building improvements
|
(21,792
|
)
|
|
(15,625
|
)
|
|
(21,792
|
)
|
|
(15,625
|
)
|
||||
Operating lease termination resulting from purchase of 50 Fremont, net
|
0
|
|
|
0
|
|
|
(36,617
|
)
|
|
0
|
|
||||
Income tax effects and adjustments
|
(3,016
|
)
|
|
(36,729
|
)
|
|
(117,223
|
)
|
|
(105,678
|
)
|
||||
Non-GAAP net income
|
$
|
140,523
|
|
|
$
|
93,605
|
|
|
$
|
377,121
|
|
|
$
|
248,806
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Non-GAAP diluted earnings per share
|
|
|
|
|
|
|
|
||||||||
GAAP diluted loss per share (a)
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.32
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Amortization of purchased intangibles
|
0.06
|
|
|
0.05
|
|
|
0.18
|
|
|
0.18
|
|
||||
Amortization of acquired lease intangible
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
||||
Stock-based expenses
|
0.21
|
|
|
0.21
|
|
|
0.65
|
|
|
0.63
|
|
||||
Amortization of debt discount, net
|
0.01
|
|
|
0.01
|
|
|
0.03
|
|
|
0.04
|
|
||||
Loss on conversion of debt
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.02
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Gain on sales of land and building improvements
|
(0.03
|
)
|
|
(0.02
|
)
|
|
(0.03
|
)
|
|
(0.02
|
)
|
||||
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
|
0.00
|
|
|
(0.05
|
)
|
|
(0.19
|
)
|
|
(0.15
|
)
|
||||
Non-GAAP diluted earnings per share
|
$
|
0.21
|
|
|
$
|
0.14
|
|
|
$
|
0.56
|
|
|
$
|
0.38
|
|
Shares used in computing diluted net income per share
|
677,730
|
|
|
658,538
|
|
|
672,336
|
|
|
652,276
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||
Supplemental Diluted Sharecount Information (in thousands):
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Weighted-average shares outstanding for GAAP basic earnings per share
|
664,131
|
|
|
629,548
|
|
|
659,160
|
|
|
619,748
|
|
Effect of dilutive securities (1):
|
|
|
|
|
|
|
|
||||
Convertible senior notes (2)
|
1,437
|
|
|
5,333
|
|
|
964
|
|
|
7,175
|
|
Warrants associated with the convertible senior note hedges (2)
|
0
|
|
|
12,857
|
|
|
0
|
|
|
12,714
|
|
Employee stock awards
|
12,162
|
|
|
10,800
|
|
|
12,212
|
|
|
12,639
|
|
Adjusted weighted-average shares outstanding and assumed conversions for Non-GAAP diluted earnings per share
|
677,730
|
|
|
658,538
|
|
|
672,336
|
|
|
652,276
|
|
(1)
|
The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and nine months ended October 31, 2015 and 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, however, there is a dilutive effect for shares outstanding for the three and nine months ended October 31, 2015 and 2014.
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
||||||||||||
Free cash flow analysis
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Operating cash flow
|
|
|
|
|
|
|
|
||||||||
GAAP net cash provided by operating activities
|
$
|
117,907
|
|
|
$
|
122,511
|
|
|
$
|
1,153,175
|
|
|
$
|
841,491
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Capital expenditures
|
(80,041
|
)
|
|
(73,426
|
)
|
|
(216,011
|
)
|
|
(205,100
|
)
|
||||
Free cash flow
|
$
|
37,866
|
|
|
$
|
49,085
|
|
|
$
|
937,164
|
|
|
$
|
636,391
|
|
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;
|
•
|
evolving regulations of cloud computing and cross-border data transfer restrictions and similar regulations;
|
•
|
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 transfer, storage and 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;
|
•
|
variations in, and limitations of, the various financial and other metrics and modeling used by analysts in their research and reports about our business;
|
•
|
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.
|
Period
|
|
Total Number of
Shares
Purchased (1)
|
|
Average Price Paid
per Share (2)
|
|
Total Number of
Shares Purchased as
Part of
Publicly Announced
Plans or Programs
|
|
Approximate Dollar Value
of Shares that May Yet
Be Purchased Under the
Plans or Programs
|
|||||
August 1 to 31, 2015
|
|
0
|
|
|
$
|
0
|
|
|
0
|
|
|
0
|
|
September 1 to 30, 2015
|
|
0
|
|
|
$
|
0
|
|
|
0
|
|
|
0
|
|
October 1 to 31, 2015
|
|
9,351
|
|
|
$
|
5.00
|
|
|
0
|
|
|
0
|
|
Total
|
|
9,351
|
|
|
$
|
5.00
|
|
|
0
|
|
|
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
|
|
|
Dated: November 20, 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: November 20, 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
|
|
Amendment to Reseller Agreement, dated October 13, 2015, between salesforce.com, inc. 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
|
|
|
|
|
|
|
|
|
|
|
Reseller Full Legal Name
|
Salesforce.org
, a nonprofit public benefit corporation having its principal place of business at 50 Fremont Street, Suite 300, San Francisco, California 94105
|
1.
|
New Attachment
. The
Model Clauses Data Processing Addendum (Reseller)
attached hereto is added as new attachment to the Agreement.
|
2.
|
Scope of Model Clauses Data Processing Addendum (Reseller)
.
The Parties agree that the
Model Clauses Data Processing Addendum (Reseller)
applies only to the Processing of Personal Data by Salesforce in the course of providing the Resold Services. The Model Clauses Data Processing Addendum (Reseller) applies only to Personal Data that is transferred from the European Economic Area (EEA) to outside the EEA, either directly or via onward transfer, to any country or recipient: (i) not recognized by the European Commission as providing an adequate level of protection for personal data (as described in the EU Data Protection Directive), and (ii) not covered by a suitable framework recognized by the relevant authorities or courts as providing an adequate level of protection for personal data, including but not limited to Binding Corporate Rules for Processors.
|
3.
|
Effect of Amendment
. Subject to the above modifications, the Agreement remains in full force and effect.
|
4.
|
Entire Agreement
. The terms and conditions herein contained constitute the entire agreement between the Parties with respect to the subject matter of this Amendment and supersede any previous and contemporaneous agreements and understandings, whether oral or written, between the Parties hereto with respect to the subject matter hereof.
|
5.
|
Counterparts
. This Amendment may be executed in one or more counterparts, including facsimiles or scanned copies sent via email or otherwise, each of which will be deemed to be a duplicate original, but all of which, taken together, will be deemed to constitute a single instrument.
|
(1)
|
salesforce.com, inc
., The Landmark, One Market, Suite 300, San Francisco, California 94105 USA,
a company incorporated under the laws of the state of Delaware, USA
(
“
Salesforce
”
or
“
Sub-Processor
”
);
|
(2)
|
(i)
Salesforce.org
, a nonprofit public benefit corporation having its principal place of business at 50 Fremont Street, Suite 300, San Francisco, California 94105,
and
(ii)
solely for the purpose of meeting applicable requirements of Data Protection Laws,
Salesforce.org EMEA Limited,
(each the “
Reseller
” and each the “
Processor
” for purposes of this DPA)
|
1
|
BACKGROUND
|
(A)
|
Salesforce is a provider of enterprise cloud computing solutions and provides technology services to organizations (including the Pass-Through Customers).
|
(B)
|
Pursuant to EU Commission Decision 2010/87/EU, Reseller and the Pass-Through Customers may have entered into a data transfer agreement based on the Standard Contractual Clauses (“
Data Transfer Agreement
”) under which the Pass-Through Customers, as Controller, has agreed to transfer, and Reseller, as Processor, has agreed to receive, the Pass-Through Customers Personal Data intended for processing on the Pass-Through Customers’s behalf in accordance with the Data Transfer Agreement.
|
(C)
|
In accordance with Clause 11 of the Data Transfer Agreement and to safeguard the applicable Pass-Through Customers’s Personal Data (as defined below), the Parties have agreed to enter into this DPA.
|
(D)
|
For clarity, this DPA only applies to Pass-Through Customers Personal Data submitted to Salesforce’s systems by or for Pass-Through Customers as Customer Data (as defined in the Agreement) while such Customer Data is resident on Salesforce’s systems. The Pass-Through Customers Personal Data transferred will be processed under this DPA by Salesforce, Salesforce’s Affiliates (as defined in Clause 8 of this DPA) and non-Salesforce Affiliate sub-processors for the duration of the Agreement.
|
2
|
DEFINITIONS AND INTERPRETATION
|
2.1
|
In this DPA the following words and phrases shall have the following meanings, unless inconsistent with the context or as otherwise specified:
|
2.2
|
The headings used in this DPA are used for convenience only and are not to be considered in construing or interpreting this DPA. All references in this DPA to “
Clauses
” or “
Schedules
” shall, unless otherwise provided, refer to Clauses hereof or Schedules to this DPA, respectively.
|
2.3
|
Capitalized terms not defined in this DPA shall have the meanings given to them in the Agreement.
|
3
|
DETAILS OF THE PROCESSING
|
3.1
|
The details of the processing are specified in
Schedule 1,
which forms an integral part of this DPA.
|
3.2
|
Application
. This Model Clauses Data Processing Addendum (Reseller) applies only to the Processing of Personal Data by Salesforce in the course of providing the Resold Services. The Model Clauses Data Processing Addendum (Reseller) applies only to Personal Data that is transferred from the European Economic Area (EEA) to outside the EEA, either directly or via onward transfer, to any country or recipient: (i) not recognized by the European Commission as providing an adequate level of protection for personal data (as described in the EU Data Protection Directive), and (ii) not covered by a suitable framework recognized by the relevant authorities or courts as providing an adequate level of protection for personal data, including but not limited to Binding Corporate Rules for Processors.
|
4
|
OBLIGATIONS OF THE SUB-PROCESSOR
|
4.1
|
The Sub-Processor agrees and warrants that it will:
|
(i)
|
process the Pass-Through Customers Personal Data only on behalf of the Pass-Through Customers and in compliance with Reseller’s (and/or Pass-Through Customers’s) instructions, including but not limited to the Agreement and this DPA; if it cannot provide such compliance for whatever reasons, it agrees to promptly inform Reseller of its inability to comply, in which case Reseller is entitled to suspend the processing of the Pass-Through Customers Personal Data permitted pursuant to the Agreement and/or terminate the DPA;
|
(ii)
|
process Pass-Through Customers Personal Data on behalf of and in accordance with Reseller and/or Pass-Through Customers’s, as the case may be, instructions as set forth in the Agreement and this DPA. Reseller and Pass-Through Customers instruct Sub-Processor to Process Pass-Through Customers Personal Data for the following purposes: (a) processing in accordance with the Agreement and applicable Service Order(s); and (b) processing initiated by the Pass-Through Customers’s Users (as defined in the Agreement). For clarity, as set forth in the Agreement, the Sub-Processor shall not disclose Pass-Through Customers Personal Data except as expressly permitted in writing by the Pass-Through Customers (or Reseller on Pass-Through Customers’s behalf) or where required by law, in which case to the extent permitted by law, the Sub-Processor shall provide the Reseller and/or Pass-Through Customers with prior notice of any such compelled disclosure;
|
(iii)
|
it has no reason to believe that the legislation applicable to it prevents it from fulfilling the instructions received from Reseller (and/or Pass-Through Customers) and its obligations under this DPA; in the event of a change in this legislation which is likely to have a substantial adverse effect on the warranties and obligations provided by this DPA, it will promptly notify the change to Reseller as soon as it is aware, in which case Reseller is entitled to suspend the processing of the Pass-Through Customers Personal Data permitted pursuant to the Agreement and/or terminate the DPA;
|
(iv)
|
it has implemented the Technical and Organizational Security Measures specified in
Schedule 2
before processing the Pass-Through Customers Personal Data;
|
(v)
|
it will promptly notify Reseller about:
|
(a)
|
any legally binding request for disclosure of the Pass-Through Customers Personal Data by a law enforcement authority or administrative or court order unless otherwise prohibited, such as a prohibition under criminal law to preserve the confidentiality of a law enforcement investigation;
|
(b)
|
any accidental or unauthorized access to, or use of disclosure of the Pass-Through Customers Personal Data; and
|
(c)
|
any request received directly from the Data Subjects, without responding to that request, unless it has been otherwise authorized to do so;
|
(vi)
|
it will deal promptly and properly with all inquiries from Reseller relating to its processing of the Pass-Through Customers Personal Data and to abide by the advice of the Supervisory
|
4.2
|
Audit.
|
4.2.1
|
Audit Report.
Sub-Processor uses external auditors to verify the adequacy of its Technical and Organizational Security Measures, including the physical security of the data centers from which Sub-Processor provides the Resold Services. This audit: (a) will be performed at least annually; (b) will be performed according to ISO 27001 standards or such other alternative standards that are substantially equivalent to ISO 27001; (c) will be performed by independent, third-party security inspection professional(s) in possession of professional qualifications and bound by a duty of confidentiality to Salesforce, at Sub-Processor’s selection and expense; (d) will result in the generation of an audit report (“
Audit Report
”) (e.g. in a Service Organization Controls 2 (SOC-2) report or its equivalent); and (e) may be performed for other purposes in addition to satisfying this Clause 4.2.1 (e.g. as part of Sub-Processor’s regular internal security procedures or to satisfy other contractual obligations).
|
4.2.2
|
On-Site Audit Right.
In addition, subject to the restrictions in Clause 4.2.3 below, Sub-Processor shall allow Reseller to audit Sub-Processor, or an Salesforce Affiliate engaged in the Processing of Personal Data, for compliance with the Technical and Organizational Security Measures set forth in
Schedule 2
of this DPA in the following limited circumstances:
|
(a)
|
Following any notice from Sub-Processor to Reseller of an actual or reasonably suspected unauthorized disclosure of Pass-Through Customers Personal Data submitted to the Resold Services, Reseller shall have the right to conduct, with reasonable prior written notice, either itself or through a third-party independent contractor selected by Reseller at Reseller’s expense, an on-site audit of Sub-Processor’s or the applicable Salesforce Affiliate’s systems, policies and procedures relevant to the security and integrity of Pass-Through Customers Personal Data submitted to the Resold Services; and
|
(b)
|
Reseller may conduct, either itself or through a third-party independent contractor selected by Reseller at Reseller’s expense, an on-site audit of Sub-Processor’s or the applicable Salesforce Affiliate’s systems, policies and procedures relevant to the security and integrity of Pass-Through Customers Personal Data submitted to the Resold Services, provided that such audit may be conducted only one time per year, with at least three week’s advance written request.
|
4.2.3
|
On-Site Audit Restrictions
. The audit rights set forth in Clause 4.2.2 above are subject to the following restrictions:
|
(i)
|
Reseller must promptly provide Sub-Processor with information regarding any non-compliance discovered during the course of an audit.
|
(ii)
|
Audits shall be conducted during reasonable times and shall be of reasonable duration and shall not unreasonably interfere with Sub-Processor’s day-to-day operations. In the event that Reseller conducts an audit through a third-party independent contractor, such independent contractor shall be required to enter into a non-disclosure agreement containing confidentiality provisions substantially similar to those set forth in the Agreement to protect Sub-Processor’s proprietary information. Additionally, such independent contractor must not be a competitor of Sub-Processor.
|
(iii)
|
If an audit requires the equivalent of more than one business day of time expended by Sub-Processor or a Sub-Processor Affiliate employee, Reseller agrees to reimburse Sub-Processor for any additional time expended at Sub-Processor’s then current professional services rates. Reseller may share a summary of the results of its audit or inspection with a Pass-Through Customers, provided that prior to sharing such summary, the Pass-Through Customers has entered into a non-disclosure agreement containing confidentiality provisions substantially similar to those set forth in the Agreement to protect Sub-Processor’s proprietary information.
|
5
|
CONFIDENTIALITY
|
5.1
|
The Sub-Processor agrees that it shall maintain the Pass-Through Customers Personal Data in confidence. In particular, the Sub-Processor agrees that, except with the prior written consent of Reseller and/or the Pass-Through Customers, it shall not make any use of any Customer Personal Data otherwise than in connection with the provision of the Resold Services and, subject to Clause 4.1(ii), shall not disclose any Customer Personal Data to any third-party.
|
5.2
|
The Sub-Processor agrees and acknowledges that Reseller may make available a copy of this DPA to the Pass-Through Customers or the Supervisory Authority for informational purposes; however Reseller shall remove any commercial information contained in this DPA
.
For the avoidance of doubt, this DPA is Confidential Information (as defined in the Agreement).
|
5.3
|
The Sub-Processor further agrees and acknowledges that Reseller may make available to the Data Subject for informational purposes, on request, a copy of this DPA; however Reseller shall remove any commercial information contained in this DPA, with the exception of
Schedule 2
, which shall be replaced by a summary description of the security measures in those cases where the Data Subject is unable to obtain a copy from the Customer. For the avoidance of doubt, this DPA is Confidential Information (as defined in the Agreement).
|
6
|
COOPERATION WITH SUPERVISORY AUTHORITIES
|
6.1
|
The Parties agree that the Supervisory Authority has the right to conduct an audit of the Sub-Processor, which has the same scope and is subject to the same conditions as would apply to an audit of the Pass-Through Customers under the data protection laws applicable to the Pass-Through Customers.
|
6.2
|
The Sub-Processor shall promptly inform Reseller about the existence of legislation applicable to it preventing the conduct of an audit of the Sub-Processor pursuant to Clause 6.1, in which case
|
7
|
LIABILITY AND THIRD-PARTY BENEFICIARY CLAUSE
|
7.1
|
The Data Subject can enforce against the Sub-Processor this Clause 7.1, Clause 7.2 and 7.3, Clause 4.1 (i)-(vi), Clause 5.3, Clause 6.1 Clause 8, Clause 9.2 and 9.3, Clause 10, Clause 12.2 and Clause 13 as a third party beneficiary.
|
7.2
|
If a Data Subject, who has suffered damage as a result of any breach by the Sub-Processor of any of its obligations under this DPA, is not able to bring a claim against the Pass-Through Customers or Reseller arising out of such breach because both the Pass-Through Customers and Reseller have factually disappeared or ceased to exist in law or have become insolvent, the Sub-Processor agrees that the Data Subject may issue a claim against the Sub-Processor with regard to its own processing operations under this DPA as if it were the Pass-Through Customers or Reseller (unless any successor entity has assumed the entire legal obligations of the Pass-Through Customers or Reseller by contract or by operation of law, in which case the Data Subject can enforce its rights against such entity). The liability of the Sub-Processor to the Data Subject as described in this Clause 7.2 shall be limited to its own processing operations under this DPA.
|
7.3
|
The Parties do not object to a Data Subject being represented by an association or other body if the Data Subject so expressly wishes and if permitted by national law.
|
8
|
FURTHER SUB-PROCESSORS
|
8.1
|
Pursuant to Clause 5(h) of the Data Transfer Agreement, Reseller acknowledges and expressly agrees that Sub-Processor is entitled to retain its Affiliates (“
Salesforce Affiliates
”) as further sub-processors for Sub-Processor and that Sub-Processor or Salesforce Affiliates respectively may engage third-party service providers as sub-processors that may provide customer support, including processing of Pass-Through Customers Personal Data, in connection with the Resold Services.
|
8.2
|
Sub-processors.
Salesforce shall make available to Reseller a current list of sub-processors for the Resold Services with the identities of those Sub-processors (“
Sub-processor List
”). Salesforce shall provide Reseller with a mechanism to subscribe to updates to the Sub-processor List and shall provide such updates before authorizing any new Sub-processor(s) to Process Personal Data in connection with the provision of the Resold Services.
|
8.3
|
Objection Right for new Sub-processors.
If Reseller has a reasonable basis to object to Salesforce’s use of a new Sub-processor, Reseller shall notify Salesforce promptly in writing within 10 business days after receipt of Salesforce’s notice.
|
8.4
|
All sub-processors will be subject to data protection obligations at least equivalent to those contained in this DPA under a written agreement, and such sub-processors shall be obliged to comply with applicable Data Protection Laws and Regulations. Where the sub-processor fails to fulfil its data protection obligations under such written agreement Salesforce shall remain fully liable to the data exporter for the performance of the sub-processor's obligations under such agreement.
|
8.5
|
Sub-Processor shall audit third-party sub-processors that are not Salesforce Affiliates at least once per year to ensure they have appropriate physical, technical, organizational, and administrative controls in place. Upon Reseller’s reasonable request at reasonable intervals, Salesforce shall provide Reseller with an executive summary of the most recent audits of such third-party sub-processors. Salesforce Affiliates that are sub-processors are audited at least once per year pursuant to salesforce.com, inc.’s ISO 27001 certification.
|
8.6
|
Upon Reseller’s request, Salesforce agrees to promptly make available to Reseller a copy of an applicable sub-processor data processing agreement executed in relation to this DPA, provided that Salesforce may remove any commercial information contained in such agreement. Reseller may make available a summary of the agreement, or the agreement if required, to the Pass-Through Customers provided that such summary, or the agreement if required, is treated as Confidential Information, including that the Pass-Through Customers has entered into a non-disclosure agreement containing confidentiality provisions substantially similar to those set forth in the Agreement to protect Salesforce’s Confidential Information.
|
9
|
TERM AND TERMINATION
|
9.1
|
This DPA shall continue in full force and effect until the Agreement has been terminated or expires, it being understood, however, that the Sub-Processor's provision of data-processing services for the Pass-Through Customers pursuant to its obligations under the Agreement shall be terminated upon instruction of Reseller or upon termination of the processing of Pass-Through Customers Personal Data by Reseller for the Pass-Through Customers pursuant to the Data Transfer Agreement.
|
9.2
|
Upon request by Pass-Through Customers made within 30 days following termination of the provision of data-processing services for the Pass-Through Customers, the Sub-Processor will return all Pass-Through Customers Personal Data to Pass-Through Customers, unless prohibited from returning or destroying all or part of the Pass-Through Customers Personal Data by applicable law, including, but not limited to, a litigation hold, or unless otherwise required by an agreement between Pass-Through Customers and Sub-Processor. In that case the Sub-Processor warrants that it will guarantee the confidentiality of the Pass-Through Customers Personal Data and will not actively process the Pass-Through Customers Personal Data anymore except as required by applicable law or permitted by the applicable agreement between Pass-Through Customers and Sub-Processor.
|
9.3
|
The Pass-Through Customers Personal Data is destroyed through an automated technical process. This process is audited according to Clause 4.2.
|
10
|
VARIATION
|
11
|
SEVERABILITY AND WAIVER
|
12
|
GOVERNING LAW
|
12.1
|
Subject to Clause 12.2 below, this DPA shall be governed by, and construed in accordance with the laws of California. The state and federal Courts of the City and County of San Francisco, California shall have the non-exclusive jurisdiction to hear and determine any suit, action or proceedings relating to or arising in connection with this DPA.
|
12.2
|
The provisions of this DPA relating to data protection aspects of processing of Pass-Through Customers Personal Data shall exclusively be governed by the law of the Member State in which the Pass-Through Customers is established.
|
13
|
MEDIATION
|
13.1
|
The Sub-Processor agrees that if the Data Subject invokes against it third-party beneficiary rights and/or claims compensation for damages under this DPA, the Sub-Processor will accept the decision of the Data Subject:
|
(i)
|
to refer the dispute to mediation, by an independent person or, where applicable, by the Supervisory Authority; or
|
(ii)
|
to refer the dispute to the courts in the Member State in which the Pass-Through Customers is established.
|
13.2
|
The Parties agree that the choice made by the Data Subject will not prejudice its substantive or procedural rights to seek remedies in accordance with other provisions of national or international law.
|
•
|
prospects, customers, business partners and vendors of Pass-Through Customers (who are natural persons)
|
•
|
employees or contact persons of Pass-Through Customers's prospects, customers, business partners and vendors
|
•
|
employees, agents, advisors and freelancers of Pass-Through Customers (who are natural persons)
|
•
|
users of Pass-Through Customers authorized by Pass-Through Customers to use the Resold Services
|
•
|
First, middle and last name
|
•
|
Title
|
•
|
Position
|
•
|
Employer
|
•
|
Contact information (email addresses, phone numbers, physical address information)
|
1.
|
Access control to premises and facilities
to prevent unauthorized persons from gaining access to data processing systems for processing or using Personal Data, 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.
|
2.
|
Access control to systems
to prevent data processing systems from being used without authorization.
|
•
|
Unique User identifiers (User IDs) to ensure that activities can be attributed to the responsible individual.
|
•
|
User passwords are stored using a one-way hashing algorithm (SHA-256) and are never transmitted unencrypted.
|
•
|
Access to the Resold 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.
|
•
|
Controls to ensure generated initial passwords must be reset on first use.
|
•
|
Controls to revoke access after several consecutive failed login attempts.
|
•
|
Controls on the number of invalid login requests before locking out a User.
|
•
|
Controls to force a User password to expire after a period of use.
|
•
|
Controls to terminate a User session after a period of inactivity.
|
•
|
Password history controls to limit password reuse.
|
•
|
Password length controls
|
•
|
Password complexity requirement (requires letters and numbers).
|
•
|
Verification question before resetting password.
|
•
|
The ability to accept logins to the Resold Services from only certain IP address ranges.
|
•
|
The ability to restrict logins to the Resold Services to specific time periods (Developer Edition, Enterprise Edition, and Unlimited Edition only).
|
•
|
Ability to delegate user authentication or federate authentication via SAML.
|
3.
|
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.
|
•
|
Reseller and/or Pass-Through Customers may implement a granular sharing model and User permission profiles to limit data accessible to different Users.
|
•
|
Reseller and/or Pass-Through Customers, 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 Pass-Through Customers’s, as applicable, designated system administrators.
|
4.
|
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.
|
•
|
Salesforce uses industry accepted encryption products to protect Customer Data and communications during transmissions between Reseller and/or Pass-Through Customers’s network and the Reseller Services, including minimum 128-bit VeriSign SSL Certification and minimum 2048-bit RSA public keys.
|
5.
|
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.
|
•
|
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 Pass-Through Customers or its ISP.
|
•
|
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.
|
•
|
Certain administrative changes to the Resold 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 Pass-Through Customers’s designated system administrator(s). Pass-Through Customers may download and store this data locally.
|
•
|
Successful and failed login attempts for Pass-Through Customers’s instance(s) of the Services are tracked in an area known as the “Login History” and are available for viewing by Pass-Through Customers’s designated system administrator(s). Pass-Through Customers may download and store this data locally.
|
•
|
Pass-Through Customers 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 Resold Services. All entries include the date, time, nature of the change, and the User who made the change.
|
6.
|
Job control
to ensure that personal data processed on behalf of others are processed strictly in compliance with the Data Controller’s instructions.
|
•
|
As set forth in the DPA, Salesforce shall process Personal Data in accordance with the instructions of Reseller and/or Pass-Through Customers, including to provide the Resold Services as set forth in the Agreement and as instructed by Users in their use of the Resold Services.
|
7.
|
Availability control
to ensure that Personal Data are protected against accidental destruction or loss.
|
•
|
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.
|
•
|
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.
|
•
|
Viruses. The Resold Services will not introduce any viruses to Reseller’s systems; however, the Resold Services do not scan for viruses that could be included in attachments or other Customer Data uploaded into the Resold Services by Reseller and/or Pass-Through Customers. Any such uploaded attachments will not be executed in the Resold Services and therefore will not damage or compromise the Resold Services.
|
8.
|
Segregation control
to ensure that data collected for different purposes can be processed separately.
|
•
|
Strong logical separation of Customer Data, which is achieved via Reseller and/or Pass-Through Customers-specific “Organization IDs” that permit only Users to view related Customer Data.
|
•
|
Pass-Through Customers may implement a granular sharing model and User permission profiles to limit data accessible to different Users.
|
1.
|
I have reviewed this report on Form 10-Q of salesforce.com, inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
November 20, 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.
|
November 20, 2015
|
/s/ M
ARK
J. H
AWKINS
|
|
Mark J. Hawkins
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
November 20, 2015
|
/s/ M
ARC
B
ENIOFF
|
|
Marc Benioff
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
November 20, 2015
|
/s/ M
ARK
J H
AWKINS
|
|
Mark J. Hawkins
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|