Salesforce.com 2010 Annual Report Download - page 18

Table of Contents
If we experience significant fluctuations in our rate of anticipated growth and fail to balance our expenses with our revenue forecasts, our results
could be harmed.
Due to our evolving business model and the unpredictability of future general economic and financial market conditions, we may not be able to
accurately forecast our rate of growth. We plan our expense levels and investment on estimates of future revenue and future anticipated rate of growth. We
may not be able to adjust our spending quickly enough if the addition of new subscriptions or the renewal rate for existing subscriptions falls short of our
expectations.
As a result, we expect that our revenues, operating results and cash flows may fluctuate significantly on a quarterly basis. Our recent revenue growth
rates may not be sustainable and may decline in the future. We believe that period-to-period comparisons of our revenues, operating results and cash flows
may not be meaningful and should not be relied upon as an indication of future performance.
We have been and may in the future be sued by third parties for alleged infringement of their proprietary rights.
The software and Internet industries are characterized by the existence of a large number of patents, trademarks and copyrights and by frequent
litigation based on allegations of infringement or other violations of intellectual property rights. We have received in the past and may receive in the future
communications from third parties claiming that we have infringed the intellectual property rights of others. In addition we have been, and may in the future
be, sued by third parties for alleged infringement of their proprietary rights. Our technologies may be subject to injunction if they are held to infringe the
rights of a third party or we may be required to pay damages or both.
The outcome of any litigation, regardless of its merits, is inherently uncertain. Any intellectual property claims and lawsuits could be time-consuming
and expensive to resolve, divert management attention from executing our business plan and require us to change our technology, change our business
practices and/or pay monetary damages or enter into short- or long-term royalty or licensing agreements.
Many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, which would
increase the cost to us of an adverse ruling on such a claim. Any adverse determination related to intellectual property claims or litigation could prevent us
from offering our service to others, could be material to our net income or cash flows (or both) or could otherwise adversely affect our operating results.
Our exposure to risks associated with the use of intellectual property may be increased as a result of acquisitions, as we have a lower level of visibility
into the development process with respect to such technology or the care taken to safeguard against infringement risks. In addition, third parties may make
infringement and similar or related claims after we have acquired technology that had not been asserted prior to our acquisition.
Our quarterly results can fluctuate and our stock price and the value of your investment could decline substantially.
Our quarterly operating results are likely to fluctuate. For example, our fourth quarter has historically been our strongest quarter for new business and
renewals. The year-over-year compounding effect of this seasonality in billing patterns and overall new business and renewal activity causes the value of
invoices that we generate in the fourth quarter to continually increase in proportion to our billings in the other three quarters of our fiscal year.
Additionally, some of the important factors that may cause our revenues, operating results and cash flows to fluctuate from quarter to quarter include:
• our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers' requirements;
15