Salesforce.com 2009 Annual Report Download - page 19

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Table of Contents
against their use. The outcome of any litigation is inherently uncertain. Any intellectual property claims, including the one referenced above, with or without
merit, could be time-consuming and expensive to resolve, could divert management attention from executing our business plan and could 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 which may not
be available in the future at the same terms or at all. In addition, 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, or could otherwise adversely affect our operating results or cash
flows or both in a particular quarter.
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;
• the renewal rates for our service;
• the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business;
• the number of new employees added;
• changes in our pricing policies whether initiated by us or as a result of intense competition;
• the cost, timing and management effort for the introduction of new features to our service;
• the rate of expansion and productivity 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;
• expenses related to increasing our data center capacity and expanding our data centers domestically and internationally;
• changes in foreign currency exchange rates;
• changes in interest rates and our mix of investments, which would impact our return on our investments in cash and marketable securities;
• conditions, particularly sudden changes, in the financial markets have and may continue to impact the value of and access to our investment
portfolio;
• changes in the effective tax rates;
16