Salesforce.com 2015 Annual Report Download - page 47

During fiscal 2015, we recognized stock-based expense of $564.8 million. As of January 31, 2015, the
aggregate stock compensation remaining to be amortized to costs and expenses over a weighted-average period
of 2.0 years was $1.4 billion. We expect this stock compensation balance to be amortized as follows: $556.6
million during fiscal 2016; $411.6 million during fiscal 2017; $288.9 million during fiscal 2018; $127.4 million
during fiscal 2019 and $0.5 million during fiscal 2020. The expected amortization reflects only outstanding stock
awards as of January 31, 2015 and assumes no forfeiture activity. We expect to continue to issue stock-based
awards to our employees in future periods.
Amortization of Purchased Intangibles from Business Combinations. Our cost of revenues and operating
expenses include 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. We expect this expense to increase as we acquire more companies.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these consolidated financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses,
and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may
differ from these estimates under different assumptions or conditions.
We believe that of our significant accounting policies, which are described in Note 1 “Summary of Business
and Significant Accounting Policies” to our consolidated financial statements, the following accounting policies
involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most
critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.
Revenue Recognition. We derive our revenues from two sources: (1) subscription revenues, which are
comprised of subscription fees from customers accessing 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 revenue” consists primarily of training fees.
We commence revenue recognition when all of the following conditions are satisfied:
• 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.
Our subscription service 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 our service is made available to customers. Amounts that
have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on
whether the revenue recognition criteria have been met.
Professional Services and Other Revenues
The majority of our professional services contracts are on a time and material basis. When these services are
not combined with subscription revenues as a single unit of accounting, as discussed below, these revenues are
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