Salesforce.com 2004 Annual Report Download - page 39

Table of Contents
may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rates. Our
business will be harmed if our customers and potential customers believe our service is unreliable.
If we experience significant fluctuations in our operating results and rate of growth and fail to balance our expenses with our revenue and earnings
expectations, our results would be harmed and our stock price may fall rapidly and without advance notice.
Due to our limited operating history, our evolving business model and the unpredictability of our emerging industry, we may not be able to accurately
forecast our rate of growth. For example, in the last ten fiscal quarters, we have recorded quarterly operating income of as much as $4.3 million and quarterly
operating losses of as much as $4.9 million. We base our current and future expense levels and our investment plans on estimates of future revenue and future
rate of growth. Our expenses and investments are, to a large extent, fixed and we expect that these expenses will increase in the future. We may not be able to
adjust our spending quickly enough if our revenue falls short of our expectations.
As a result, we expect that our operating results may fluctuate significantly on a quarterly basis. Revenue growth may not be sustainable and may
decrease in the future. We believe that period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an
indication of future performance.
Our quarterly results can fluctuate and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment
could decline substantially.
Our quarterly operating results are likely to fluctuate, and if we fail to meet or exceed the expectations of securities analysts or investors, the trading
price of our common stock could decline. Some of the important factors that could cause our revenues and operating results 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;
• the renewal rates for our service;
• changes in our pricing policies;
• the introduction of new features to our service;
• the rate of expansion and effectiveness of our sales force;
• the length of the sales cycle for our service;
• new product and service introductions by our competitors;
• our success in selling our service to large enterprises;
• variations in the revenue mix of editions of our service;
• technical difficulties or interruptions in our service;
• general economic conditions in our geographic markets;
• the timing of additional investments in our on-demand application service and in our consulting service;
• regulatory compliance costs;
• payment defaults by customers; and
• extraordinary expenses such as litigation or other dispute-related settlement payments.
Some of these factors are not within 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 and operating results may not be meaningful and should not be relied upon as an indication of
future performance.
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