Salesforce.com 2015 Annual Report Download

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Please find the complete 2015 Salesforce.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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 






2015
ANNUAL REPORT
 




   
   
   
   
   
  
  
   
   
  
   
  

   
   
   
   
   
   
   
   
 
 
  
200k 300k 400k 500k 600k


The Year of
ANALYTICS


   
   
   
   
   
  
  
   
   
  
   
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  
200k 300k 400k 500k 600k
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
The Year of
ANALYTICS

Table of contents

  • Page 1
    2015 A N N U A L R E P O RT 200k 300k 400k 500k 600k The Year of ANALYTICS

  • Page 2
    ... INNOVATIVE COMPANY IN THE WORLD (Source: Forbes, 2011, 2012, 2014) $5.4 BILLION IN REVENUE 32% REVENUE GROWTH 2.3 BILLION TRANSACTIONS AVERAGED EVERY BUSINESS DAY 2,700 APPEXCHANGE APPS and nearly 3 million installs 840,000 >16,000 EMPLOYEES HOURS CONTRIBUTED TO THE COMMUNITY SINCE INCEPTION

  • Page 3
    ...ranks among the most important enterprise applications announcements of 2014. - InformationWeek " 800k 0 100k 200k 300k 400k 500k 600k 700k 900 The Year of ANALYTICS I can tell you that every time I show "the product, people want it. " Alex Dayon President, Products

  • Page 4
    ... through mobile apps than they do through desktop browsers. PETER COFFEE VP for Strategic Research at Salesforce 0k ste d for en r a w ter for p pr software. ise A major - Ve n t ure B e a t "It doesn't take a data science degree, it takes 5 buttons." Anna Rosenman Product Marketing Director

  • Page 5
    ..., and data science technologies. And with six world-class clouds for sales, service, marketing, community, analytics, and app development, we have six engines for growth. In fact, four of our cloud services, if ranked separately by revenue, would be among the top eight pure-play enterprise cloud...

  • Page 6
    THANK Y U

  • Page 7
    ... 300 San Francisco, California 94105 (Address of principal executive offices) Telephone Number (415) 901-7000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock...

  • Page 8
    ... Data ...Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . Item 9A. Controls and Procedures ...Item 9B. Other Information ...Item 5. PART III Item 10. Directors, Executive Officers and Corporate Governance ...Item 11. Executive Compensation ...Item...

  • Page 9
    ...plan to build our business, including our strategy to be the leading provider of enterprise cloud computing applications and platforms and to lead the industry shift to the "customer company," our service performance and security, the expenses associated with new data centers, additional data center...

  • Page 10
    ...build branded communities for customers, partners and employees, deliver analytics for every business user and develop mobile apps quickly and easily. Our core service offerings are as follows: Sales Cloud. The Sales Cloud is a platform for sales force automation that enables companies to store data...

  • Page 11
    .... Our professional service engagements can be billed on a time and materials basis, for a fixed fee or through annual contracts. We offer a number of traditional classroom and online educational classes that address topics such as deploying, using, administering and developing on our service. We...

  • Page 12
    ...and the benefits of a multi-tenant platform. We provide the capability for business users to easily customize our applications to suit their specific needs, and also support a variety of programming language support so developers can code complex apps spanning multiple business processes and deliver...

  • Page 13
    ...features, functionality and security of our existing service offerings as well as developing new features, functionality and services. From time to time, we supplement our internal research and development activities with outside development resources and acquired technology. As part of our business...

  • Page 14
    ... fee. We recognize subscription and support revenue ratably over the contract term, beginning on the commencement date of each contract. The majority of our professional services contracts are on a time and materials basis, for which we generally recognize revenue as the services are rendered...

  • Page 15
    ... customers who purchase any of our paying subscription editions. We also offer premier customer support for an additional fee, which can include services such as priority access to technical resources, developer support, and system administration. In addition, we offer a mission critical support add...

  • Page 16
    ... 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...

  • Page 17
    ...obtain copies free of charge by contacting our Investor Relations department at our office address listed above. The public may read and copy any materials filed by the Company with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain...

  • Page 18
    ... may damage our business. If our security measures or those of our third-party data center hosting facilities, cloud computing platform providers, or third-party service partners, are breached, and unauthorized access is obtained to a customer's data, our data or our IT systems, our services may be...

  • Page 19
    ... 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...

  • Page 20
    ... and lengthen sales cycles. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. If we are unable to...

  • Page 21
    ... 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...

  • Page 22
    ...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...

  • Page 23
    ... and to develop our existing services in order to keep pace with technological developments may not succeed and may reduce our revenue growth rate and harm our business. We derive substantially all of our revenue from subscriptions to our CRM enterprise cloud computing application services, and we...

  • Page 24
    ... the applicable subscription term. If our customers do not renew their subscriptions for our services or reduce the number of paying subscriptions at the time of renewal, our revenue will decline and our business will suffer. If we cannot accurately predict subscription renewals or upgrade rates, we...

  • Page 25
    ... the development of these applications, both current and potential customers may not find our services sufficiently attractive. In addition, for those customers who authorize a third-party technology partner access to their data, we do not provide any warranty related to the functionality, security...

  • Page 26
    ... sales and professional services resources to a smaller number of larger transactions, while potentially requiring us to delay revenue recognition on some of these transactions until the technical or implementation requirements have been met. Pricing and packaging strategies for enterprise and other...

  • Page 27
    ... and enhancing the Salesforce brand and our other brands are critical to expanding our base of customers, partners and employees. Our brand strength will depend largely on our ability to remain a technology leader and continue to provide high-quality innovative products, services, and features. In...

  • Page 28
    ...at any time. The loss of one or more of our key employees or groups could seriously harm our business. In the technology industry, there is substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and Internet-related services...

  • Page 29
    .... These conditions affect the rate of information technology spending and could adversely affect our customers' ability or willingness to purchase our enterprise cloud computing services, delay prospective customers' purchasing decisions, reduce the value or duration of their subscription contracts...

  • Page 30
    ... of our research and development activities, corporate headquarters, information technology systems, and other critical business operations, are located near major seismic faults in the San Francisco Bay Area. Because we do not carry earthquake insurance for direct quake-related losses, with the...

  • Page 31
    ...our ability to make each of the required cash payments even if we have sufficient funds to make them. Furthermore, our ability to purchase the notes or to pay cash upon the conversion of the notes may be limited by law or regulatory authority. If we fail to purchase the notes, to pay interest due on...

  • Page 32
    ... restated certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the market price of our common stock. Our amended and restated certificate of incorporation and bylaws contain...

  • Page 33
    ... we entered into an office lease agreement to lease approximately 714,000 rentable square feet of an office building located in San Francisco, California that is under construction. The lease payments associated with the lease will be approximately $560.0 million over the 15.5 year term of the lease...

  • Page 34
    ... to enjoin our activities, lead to attempts by third parties to seek similar claims and, in the case of intellectual property claims, require us to change our technology, change our business practices, pay monetary damages or enter into short- or long-term royalty or licensing agreements. In general...

  • Page 35
    ... in key corporate finance positions. Previously, he worked at Arthur Andersen LLP for 11 years in its Audit and Business Advisory Services group. Mr. Allanson graduated from Santa Clara University with a B.S. in Accounting. Marc Benioff co-founded Salesforce in February 1999 and has served as our...

  • Page 36
    ...Chief Financial Officer of Logitech International S.A. Previously, Mr. Hawkins held various finance and business-management roles with Dell Inc. and Hewlett-Packard Company. Mr. Hawkins served on the Board of Directors of BMC Software, Inc. from May 2010 through September 2013, at which time BMC was...

  • Page 37
    ... above reflects the impact of the stock split. Dividend Policy We have never paid any cash dividends on our common stock. Our board of directors currently intends to retain any future earnings to support operations and to finance the growth and development of our business and does not intend to pay...

  • Page 38
    ... upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. Comparison of Cumulative Total Return of salesforce.com, inc. 400 300 DOLLARS 200 100 3 2 0 1 /1 4 /1 /1 /1 31 /1 31 31 31 1/ 31 1/ 1/ 1/ 1/ 1/ Nasdaq Computer 1/31/2012 1/31/2013...

  • Page 39
    ... audited consolidated financial statements which are not included in this Form 10-K. Fiscal Year Ended January 31, (in thousands, except per share data) 2015 2014 2013 2012 2011 Consolidated Statement of Operations Revenues: Subscription and support ...$5,013,764 $3,824,542 Professional services...

  • Page 40
    ... include amortization of purchased intangibles from business combinations, as follows: Cost of revenues ...Marketing and sales ...(2) Amounts include stock-based expenses, as follows: Cost of revenues ...Research and development ...Marketing and sales ...General and administrative ... $ 90,300 64...

  • Page 41
    ..., continue to add substantial numbers of paying subscriptions, upgrade our customers to fully featured versions or arrangements such as an Enterprise License Agreement, provide high quality technical support to our customers, encourage the development of third-party applications on our platforms and...

  • Page 42
    ... period a year ago. Our typical subscription contract term is 12 to 36 months, although terms range from one to 60 months, so during any fiscal reporting period only a subset of active subscription contracts is eligible for renewal. We calculate our attrition rate as of the end of each month. Our...

  • Page 43
    ...that is included in the basic subscription fees; and (2) related professional services such as process mapping, project management, implementation services and other revenue. "Other revenue" consists primarily of training fees. Subscription and support revenues accounted for approximately 93 percent...

  • Page 44
    ...percent of our total subscription and support revenues for fiscal 2015, based on customers' estimated product demand plans and these allocated amounts are included in the table above. Additionally, some of our core service offerings have similar features and functions. For example, customers may use...

  • Page 45
    ...fluctuations, the timing of when unbilled deferred revenue is to be recognized as revenue, and changes in customer financial circumstances. For multi-year subscription agreements billed annually, the associated unbilled deferred revenue is typically high at the beginning of the contract period, zero...

  • Page 46
    .... General and Administrative. General and administrative expenses consist of salaries and related expenses, including stock-based expenses, for finance and accounting, legal, internal audit, human resources and management information systems personnel, legal costs, professional fees, other corporate...

  • Page 47
    ... our enterprise cloud computing services and from customers purchasing additional support beyond the standard support that is included in the basic subscription fee; and (2) related professional services such as process mapping, project management, implementation services and other revenue. "Other...

  • Page 48
    ...result in changes in relative selling prices, including both VSOE and BESP. Deferred Revenue. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Deferred revenue primarily consists of billings or payments received...

  • Page 49
    ... number of factors, including historical experience, market conditions, and information obtained from the management of acquired companies. Critical estimates in valuing certain intangible assets include, but are not limited to, historical and projected attrition rates, anticipated growth in revenue...

  • Page 50
    ... include but are not limited to: • • future expected cash flows from subscription and support contracts, professional services contracts, other customer contracts and acquired developed technologies and patents; the acquired company's trade name, trademark and existing customer relationship...

  • Page 51
    ... tables set forth selected data for each of the periods indicated (in thousands): Fiscal Year Ended January 31, 2015 2014 2013 Revenues: Subscription and support ...Professional services and other ...Total revenues ...Cost of revenues (1)(2): Subscription and support ...Professional services and...

  • Page 52
    ... and operating expenses include the following amounts related to stock-based expenses (in thousands): Fiscal Year Ended January 31, 2015 2014 2013 Cost of revenues ...Research and development ...Marketing and sales ...General and administrative ...Revenues by geography were as follows (in thousands...

  • Page 53
    ... Year Ended January 31, 2015 2014 2013 Revenues: Subscription and support ...Professional services and other ...Total revenues ...Cost of revenues: Subscription and support ...Professional services and other ...Total cost of revenues ...Gross profit ...Operating expenses: Research and development...

  • Page 54
    ... in subscription and support revenues. We continue to invest in a variety of customer programs and initiatives, which, along with increasing enterprise adoption, have helped maintain our attrition rate. The net price per user per month for our three primary offerings, Professional Edition, 48

  • Page 55
    ... additional resources in our enterprise cloud computing services and data center capacity. Additionally, the amortization of purchased intangible assets may increase as we acquire additional businesses and technologies. We also plan to add additional employees in our professional services group to...

  • Page 56
    ... may increase as a percentage of revenues in future periods as we continue to add employees and invest in technology to support the development of new, and improve existing, technologies and the integration of acquired technologies. Marketing and Sales. Fiscal Year Ended January 31, 2015 2014 (in...

  • Page 57
    ... period a year ago. Interest expense. Fiscal Year Ended January 31, (in thousands) 2015 2014 Variance Dollars Interest expense ...Percent of total revenues ... $(73,237) $(77,211) $3,974 (1)% (2)% Interest expense consists of interest on our convertible senior notes, capital leases, term loan and...

  • Page 58
    ... fiscal 2013. We have continued to invest in a variety of customer programs and initiatives, which, along with longer contract durations and increasing enterprise adoption, have helped reduce our attrition rates. The net price per user per month for our three primary offerings, Professional Edition...

  • Page 59
    ... reduced aggregate international revenues by $24.4 million compared to fiscal 2013. Cost of Revenues. Fiscal Year Ended January 31, 2014 2013 (in thousands) Variance Dollars Subscription and support ...Professional services and other ...Total cost of revenues ...Percent of total revenues ... $711...

  • Page 60
    ... due to an increase of $70.6 million in employee-related costs, an increase of $21.7 million in stock-based expenses, an increase of $48.3 million in professional and outside services, which included transaction fees associated with the ExactTarget acquisition, and an increase in depreciation and...

  • Page 61
    ... agreement for software which we entered into in June 2013. Benefit from (provision for) Income Taxes. Fiscal Year Ended January 31, 2014 2013 Variance Dollars (in thousands) Benefit from (provision for) income taxes ...Effective tax rate ... $125,760 $(142,651) $268,411 35% (112)% We reported...

  • Page 62
    ... for subscriptions and support services and the subsequent collection of those billings. As described above in "Seasonal Nature of Deferred Revenue and Accounts Receivable," our fourth quarter has historically been our strongest quarter for new business and renewals. The year on year compounding...

  • Page 63
    ..., at any time without premium or penalty, subject to certain conditions, and amounts repaid or prepaid may be reborrowed. Borrowings under the Credit Facility bear interest, at our option at either a base rate formula or a LIBOR based formula, each as set forth in the Credit Agreement. Additionally...

  • Page 64
    ... of obligations under leases for office space, co-location data center facilities, and our development and test data center, as well as leases for computer equipment, software, furniture and fixtures. At January 31, 2015, the future non-cancelable minimum payments under these commitments were as...

  • Page 65
    ... revenues in future periods as a result of continued office build-outs, other leasehold improvements and data center investments. In the future, we may enter into arrangements to acquire or invest in complementary businesses or joint ventures, services and technologies, and intellectual property...

  • Page 66
    ... amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company's research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an...

  • Page 67
    ... items: Stock-Based Expenses, Amortization of Purchased Intangibles, Amortization of Debt Discount, Gains/Losses on Conversions of Debt, and Gains/Losses on sales of land and building improvements. The projected rate also assumes no new acquisitions in the three-year period, and takes into account...

  • Page 68
    ... are as follows (in thousands, except for share numbers): Non-GAAP gross profit Fiscal Year Ended January 31, 2015 2014 2013 GAAP gross profit ...Plus: Amortization of purchased intangibles ...Stock-based expenses ...Non-GAAP gross profit ... $4,084,316 90,300 53,812 $4,228,428 $3,102,575 109,356...

  • Page 69
    Non-GAAP net income Fiscal Year Ended January 31, 2015 2014 2013 GAAP net loss ...Plus: Amortization of purchased intangibles ...Stock-based expenses ...Amortization of debt discount, net ...Loss on conversion of debt ...Less: Gain on sales of land and building improvements ...Income tax effects ...

  • Page 70
    ... Fiscal Year Ended January 31, 2015 2014 2013 Weighted-average shares outstanding for GAAP basic earnings per share ...Effect of dilutive securities: Convertible senior notes ...Warrants associated with the convertible senior note hedges ...Employee stock awards ...Adjusted weighted-average shares...

  • Page 71
    ...'s long term benefit over multiple periods. The remainder of this adjustment included the tax effects of legal and accounting fees incurred to facilitate transactions, which amount was not material. The related tax effects were computed by applying the relevant statutory tax rate to these items for...

  • Page 72
    ... other debt securities with credit ratings of at least BBB or better. The cash, cash equivalents and short-term marketable securities are held for general corporate purposes including possible acquisitions of, or investments in, complementary businesses, services or technologies, working capital and...

  • Page 73
    ... 6, 2014 and ended January 31, 2015. Changes in the overall level of interest rates affect the interest expense that we recognize in our statements of operations. We deposit our cash with multiple financial institutions, therefore our deposits, at times, may exceed federally insured limits. The bank...

  • Page 74
    ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS The following financial statements are filed as part of this Annual Report on Form 10-K: Page No. Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets ......

  • Page 75
    Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of salesforce.com, inc. We have audited the accompanying consolidated balance sheets of salesforce.com, inc. as of January 31, 2015 and 2014, and the related consolidated statements of operations, ...

  • Page 76
    ... of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of salesforce.com, inc. We have audited salesforce.com, inc.'s internal control over financial reporting as of January 31, 2015, based on criteria established in Internal Control-Integrated Framework issued...

  • Page 77
    salesforce.com, inc. Consolidated Balance Sheets (in thousands, except per share data) January 31, 2015 January 31, 2014 Assets Current assets: Cash and cash equivalents ...Short-term marketable securities ...Accounts receivable, net of allowance for doubtful accounts of $8,146 and $4,769 at ...

  • Page 78
    salesforce.com, inc. Consolidated Statements of Operations (in thousands, except per share data) Fiscal Year Ended January 31, 2015 2014 2013 Revenues: Subscription and support ...Professional services and other ...Total revenues ...Cost of revenues (1)(2): Subscription and support ...Professional ...

  • Page 79
    salesforce.com, inc. Consolidated Statements of Comprehensive Loss (in thousands) Fiscal Year Ended January 31, 2015 2014 2013 Net loss ...$(262,688) $(232,175) $(270,445) Other comprehensive income (loss), before tax and net of reclassification adjustments: Foreign currency translation and other ...

  • Page 80
    ...of stock options and stock grants to board members for board services ...20,237 Vested restricted stock units converted to shares ...6,564 Shares issued related to business combinations ...7,727 Shares issued under employee stock plans ...2,953 Tax benefits from employee stock plans ...0 Stock-based...

  • Page 81
    ... ...Proceeds from employee stock plans ...Excess tax benefits from employee stock plans ...Payments on convertible senior notes ...Principal payments on capital lease obligations ...Payments on term loan ...Net cash provided by (used in) financing activities ...Effect of exchange rate changes ...Net...

  • Page 82
    .... Notes to Consolidated Financial Statements 1. Summary of Business and Significant Accounting Policies Description of Business Salesforce.com, inc. (the "Company") is a leading provider of enterprise cloud computing services. The Company is dedicated to helping customers of all sizes and industries...

  • Page 83
    ...'s enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and (2) related professional services such as process mapping, project management, implementation services and other revenue. "Other...

  • Page 84
    ...arrangements are non-cancelable and do not contain refund-type provisions. Subscription and Support Revenues Subscription and support revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date the Company's service is made available...

  • Page 85
    ... result in changes in relative selling prices, including both VSOE and BESP. Deferred Revenue The deferred revenue balance does not represent the total contract value of annual or multi-year, noncancelable subscription agreements. Deferred revenue primarily consists of billings or payments received...

  • Page 86
    ... Company capitalizes costs related to its enterprise cloud computing services and certain projects for internal use incurred during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Internal-use software is...

  • Page 87
    ... grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions and fair value per share: Stock Options 2015 Fiscal Year Ended January 31, 2014 2013 Volatility ...Estimated life ...Risk-free interest rate ...Weighted-average fair value per share...

  • Page 88
    ... of historical exercise activity. The estimated life of the ESPP was based on the two purchase periods within each offering period. The risk-free interest rate 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...

  • Page 89
    ...obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. New Accounting Pronouncement In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers...

  • Page 90
    ... as follows: Short-term (due in one year or less) ...Long-term (due after one year) ... $ 87,312 894,855 $982,167 $ 57,139 482,243 $539,382 As of January 31, 2015, the following marketable securities were in an unrealized loss position (in thousands): Less than 12 Months 12 Months or Greater Total...

  • Page 91
    ..., marketable securities and foreign currency derivative contracts are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs. The Company's restricted cash balance of $115.0 million at January 31, 2015 was held in a money market account and is...

  • Page 92
    ... the fair value hierarchy of the valuation (in thousands): Quoted Prices in Significant Other Significant Active Markets Observable Unobservable Balances as of for Identical Assets Inputs Inputs January 31, (Level 1) (Level 2) (Level 3) 2014 Description Cash equivalents (1): Time deposits ...Money...

  • Page 93
    ...Ended January 31, Location 2015 2014 2013 Foreign currency derivative contracts ... Other income (expense) $(1,186) $108 $16,591 Strategic Investments As of January 31, 2015, the Company has four investments in marketable equity securities measured using quoted prices in their respective active...

  • Page 94
    ... parking rights associated with an existing parking garage situated on the land. The Company capitalized pre-construction activities related to the development of the land, including interest costs and property taxes since the November 2010 purchase. During the first quarter of fiscal 2013, the...

  • Page 95
    ... In December 2012, the Company entered into a lease agreement for approximately 445,000 rentable square feet of office space at 350 Mission Street in San Francisco, California. The space rented is for the total office space available in the building, which is in the process of being constructed. As...

  • Page 96
    ... management's estimates and assumptions. The following table sets forth the components of identifiable intangible assets acquired (in thousands) and their estimated useful lives as of the date of acquisition: Fair Value Useful Life Developed technology ...Customer relationships and other purchased...

  • Page 97
    ... to the purchase consideration and $32.8 million was allocated to future services and will be expensed over the remaining service periods on a straight-line basis. Fiscal Year 2014 ExactTarget On July 12, 2013, the Company acquired for cash the outstanding stock of ExactTarget, a leading global...

  • Page 98
    ... On June 12, 2013, the Company acquired for cash and the Company's common stock the outstanding stock of EdgeSpring, Inc. ("EdgeSpring"), a provider of an end-to-end business intelligence exploration platform used to build analytic applications. The Company acquired EdgeSpring to, among other...

  • Page 99
    ... assets subject to amortization ... $31,030 560 710 $32,300 5-6 years 5 years 5 years Developed technology represents the estimated fair value of EdgeSpring's end-to-end business intelligence exploration technology. Customer relationships represent the fair values of the underlying relationships...

  • Page 100
    ... three months ended Janaury 31, 2015. Intangible assets acquired resulting from business combinations were as follows as of January 31, 2014 (in thousands): Weighted Average Remaining Useful Life Gross Fair Value Accumulated Amortization Net Book Value Acquired developed technology ...Customer...

  • Page 101
    ... the Company's common stock from the exercise of the note hedges related to the 0.75% Senior Notes during this same period. The Company recorded a loss of $10.3 million in the twelve months ended January 31, 2015 related to the extinguishment of the 0.75% Senior Notes converted by noteholders. This...

  • Page 102
    ... at any time on or after the convertible date noted above. • • • Holders of the 0.25% Senior Notes have the right to require the Company to purchase with cash all or a portion of the Notes upon the occurrence of a fundamental change, such as a change of control, at a purchase price equal to...

  • Page 103
    ...Note Hedges"). (in thousands, except for shares) Date Purchase Shares 0.75% Note Hedges ...0.25% Note Hedges ... January 2010 March 2013 $126,500 $153,800 26,943,812 17,308,880 The Note Hedges cover shares of the Company's common stock at a strike price that corresponds to the initial conversion...

  • Page 104
    ... under the Credit Facility at any time during the term of the Credit Agreement. The Company may also prepay borrowings under the Credit Agreement, in whole or in part, at any time without premium or penalty, subject to certain conditions, and amounts repaid or prepaid may be reborrowed. The Credit...

  • Page 105
    ... date that will be billed in the next 12 months. As the Company bills these customers this balance will reduce and accounts receivable will increase. Included in prepaid expenses and other current assets are value-added tax and sales tax receivables associated with the sale of the Company's services...

  • Page 106
    .... The Company capitalized $5.3 million, $3.5 million and $3.4 million of stock-based expenses related to capitalized internal-use software development and deferred professional services during fiscal 2015, 2014 and 2013, respectively. Other Assets, net Other assets consisted of the following...

  • Page 107
    ... legal obligation to provide future services that are contractually committed by ExactTarget's existing customers but unbilled as of the acquisition date. 7. Stockholders' Equity The Company maintains the following stock plans: the ESPP, the 2013 Equity Incentive Plan and the 2014 Inducement Equity...

  • Page 108
    ... a term of seven years. Stock activity excluding the ESPP is as follows: Options Outstanding WeightedAggregate Average Intrinsic Value Exercise Price (in thousands) Shares Available for Grant Outstanding Stock Options Balance as of January 31, 2014 ...Increase in shares authorized: 2013 Equity...

  • Page 109
    ....30 54.28 59.37 $34.37 Restricted stock activity is as follows: Restricted Stock Outstanding Aggregate WeightedIntrinsic Average Value Outstanding Exercise Price (in thousands) Balance as of January 31, 2013 ...Granted ...Canceled ...Vested and converted to shares ...Balance as of January 31, 2014...

  • Page 110
    ... Stock Plan. The expense related to these awards, which was expensed immediately at the time of the issuance, totaled $5.0 million, $4.5 million and $3.8 million for fiscal 2015, 2014 and 2013, respectively. Preferred Stock The Company's board of directors has the authority, without further action...

  • Page 111
    ... of operations is as follows (in thousands): Fiscal Year Ended January 31, 2015 2014 2013 U.S. federal taxes at statutory rate ...State, net of the federal benefit ...Foreign taxes in excess of the U.S. statutory rate ...Change in valuation allowance ...Tax credits ...Non-deductible expenses...

  • Page 112
    ...the Company's net operating loss carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit...

  • Page 113
    ... income tax audits by multiple tax jurisdictions throughout the world. Certain prior year tax returns are currently being examined by various taxing authorities in countries including the United States, Japan, Germany, Swtizerland and the United Kingdom. The Company recognizes the tax benefit of an...

  • Page 114
    ... thousands): Fiscal Year Ended January 31, 2015 2014 2013 Numerator: Net loss ...Denominator: Weighted-average shares outstanding for basic loss per share ...Effect of dilutive securities: Convertible senior notes ...Employee stock awards ...Warrants ...Adjusted weighted-average shares outstanding...

  • Page 115
    ... sheet. The Company's agreements for the facilities and certain services provide the Company with the option to renew. The Company's future contractual obligations would change if the Company exercised these options. The terms of the lease agreements provide for rental payments on a graduated basis...

  • Page 116
    ..., data center capacity and our development and test data center. In April 2014, the Company entered into an office lease agreement to lease approximately 714,000 rentable square feet of an office building located in San Francisco, California that is under construction. The lease payments associated...

  • Page 117
    ..., was chartered to build philanthropic programs that are focused on youth and technology. Beginning in 2008, Salesforce.org, which is a non-profit mutual benefit corporation, was established to resell the Company's services to nonprofit organizations and certain higher education organizations. The...

  • Page 118
    ... financial information for fiscal 2015 and 2014 is as follows: 1st Quarter 2nd 3rd 4th Quarter Quarter Quarter (in thousands, except per share data) Fiscal Year Fiscal 2015 Revenues ...Gross profit ...Loss from operations ...Net loss ...Basic net loss per share ...Diluted net loss per share...

  • Page 119
    ... registered public accounting firm, as stated in its report which is included in Item 8 of this Annual Report on Form 10-K. (c) Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting that occurred during the quarter ended January...

  • Page 120
    ...; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. ITEM 9B...

  • Page 121
    ... Investor Relations, salesforce.com, inc., The Landmark @ One Market, Suite 300, San Francisco, California 94105 or by calling (415) 901-7000. We plan to post on our website at the address described above future amendments and waivers of our Code of Conduct as permitted under applicable NYSE and SEC...

  • Page 122
    ... Public Accounting Firm required by this Item is incorporated by reference herein to the section of this Annual Report on Form 10-K in Item 8, entitled "Consolidated Financial Statements and Supplementary Data." 2. Financial Statement Schedules: Schedule II Valuation and Qualifying Accounts is filed...

  • Page 123
    salesforce.com, inc. Schedule II Valuation and Qualifying Accounts Balance at Beginning of Year Deductions Write-offs Balance at End of Year Description Additions Fiscal year ended January 31, 2015 Allowance for doubtful accounts ...Fiscal year ended January 31, 2014 Allowance for doubtful ...

  • Page 124
    ... thereunto duly authorized. Dated: March 5, 2015 salesforce.com, inc. By: MARK HAWKINS Mark Hawkins Executive Vice President and Chief Financial Officer /S/ Dated: March 5, 2015 salesforce.com, inc. By: JOE ALLANSON Joe Allanson Senior Vice President, Chief Accounting Officer and Corporate...

  • Page 125
    ... V. Roos Director March 5, 2015 Director March 5, 2015 /s/ LAWRENCE TOMLINSON Lawrence Tomlinson ROBIN WASHINGTON Robin Washington MAYNARD WEBB Maynard Webb SUSAN WOJCICKI Susan Wojcicki Director March 5, 2015 /s/ Director March 5, 2015 /s/ Director March 5, 2015 /s/ Director March...

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  • Page 127
    ... Stock Certificate Indenture dated March 18, 2013 between salesforce.com, inc. and U.S. Bank National Association including the form of 0.25% Convertible Senior Notes due 2018 therein Form of Indemnification Agreement between salesforce.com, inc. and its officers and directors 1999 Stock Option Plan...

  • Page 128
    ...No. 1 to Credit Agreement, dated as of June 30, 2014, by and among salesforce.com, inc., the guarantors from time to time party thereto and Bank of America, N.A., as Administrative Agent RelateIQ, Inc. 2011 Stock Plan and related forms of equity award agreements Credit Agreement, dated as of October...

  • Page 129
    ... Settlement Agreement between salesforce.com, inc. and Bank of America, N.A., dated December 17, 2014 List of Subsidiaries Consent of Independent Registered Public Accounting Firm Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K) Certification of...

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    WORLDWIDE CORPORATE HEADQUARTERS salesforce.com inc. The Landmark @ One Market Suite 300 San Francisco, CA 94105 USA

  • Page 133
    ...INVESTOR RELATIONS STOCK LISTING [email protected], +1- 415-536-6250 Salesforce.com trades on the New York Stock Exchange under the ticker symbol "CRM." Note on Forward-Looking Statements This annual report contains forward-looking statements within the meaning of the federal securities laws...

  • Page 134
    The Landmark @ One Market | Suite 300 San Francisco, CA 94105 United States 1-800-NO-SOFTWARE Corporate Headquarters www.salesforce.com /salesforce @salesforce Copyright ©2015, salesforce.com, inc. All rights reserved. Salesforce and salesforce.com are registered trademarks of salesforce.com, ...