Salesforce.com 2014 Annual Report Download - page 20

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• the timing of commission, bonus, and other compensation payments to employees; and
• the timing of payroll and other withholding tax expenses which is triggered by the payment of bonuses
and when employees exercise their vested stock awards.
Many of these factors are outside of our control, and the occurrence of one or more of them might cause our
operating results to vary widely. As such, we believe that quarter-to-quarter comparisons of our revenues,
operating results, changes in our deferred revenue and unbilled deferred revenue balances and cash flows may
not be meaningful and should not be relied upon as an indication of future performance.
Additionally, we may fail to meet or exceed the expectations of securities analysts and investors, and the
market price of our common stock could decline. If one or more of the securities analysts who cover us adversely
change their recommendation regarding our stock, the market price of our common stock could decline.
Moreover, our stock price may be based on expectations, estimates or forecasts of our future performance that
may be unrealistic or that may not be met. Further, our stock price may fluctuate based on reporting by the
financial media, including television, radio and press reports and blogs.
Our efforts to expand our service beyond the CRM market and to develop our existing service in order to
keep pace with technological developments may not succeed and may reduce our revenue growth rate and/or
harm our business.
We derive substantially all of our revenue from subscriptions to our CRM enterprise cloud computing
application service, and we expect this will continue for the foreseeable future. The markets for our Salesforce1
ExactTarget Marketing Cloud and Salesforce1 Platform remain relatively new and it is uncertain whether our
efforts will ever result in significant revenue for us. Further, the introduction of new services beyond the CRM
market may not be successful, and early stage interest and adoption of such new services may not result in long
term success or significant revenue for us. Our efforts to expand our service beyond the CRM market may not
succeed and may reduce our revenue growth rate.
Additionally, if we are unable to develop enhancements to and new features for our existing service or new
services that keep pace with rapid technological developments, our business will be harmed. The success of
enhancements, new features and services depends on several factors, including the timely completion, introduction
and market acceptance of the feature or edition. Failure in this regard may significantly impair our revenue growth.
In addition, because our service is designed to operate on a variety of network hardware and software platforms
using a standard browser, we will need to continuously modify and enhance our service to keep pace with changes
in Internet-related hardware, software, communication, browser and database technologies. We may not be
successful in either developing these modifications and enhancements or in bringing them to market timely.
Furthermore, uncertainties about the timing and nature of new network platforms or technologies, or modifications
to existing platforms or technologies, could increase our research and development or service delivery expenses.
Any failure of our service to operate effectively with future network platforms and technologies could reduce the
demand for our service, result in customer dissatisfaction and harm our business.
Because we recognize revenue from subscriptions for our service over the term of the subscription,
downturns or upturns in new business may not be immediately reflected in our operating results.
We generally recognize revenue from customers ratably over the terms of their subscription agreements,
which are typically 12 to 36 months. As a result, most of the revenue we report in each quarter is the result of
subscription agreements entered into during previous quarters. Consequently, a decline in new or renewed
subscriptions in any one quarter may not be reflected in our revenue results for that quarter. Any such decline,
however, will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in
sales and market acceptance of our service, and potential changes in our attrition rate may not be fully reflected
in our results of operations until future periods. Our subscription model also makes it difficult for us to rapidly
increase our revenue through additional sales in any period, as revenue from new customers must be recognized
over the applicable subscription term.
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