Salesforce.com 2012 Annual Report Download - page 21

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by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate
profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with
respect to the economy. The European Union continues to face great economic uncertainty which could impact
the overall world economy or various other regional economies. 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, or affect renewal rates, all of which could adversely affect our operating results.
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 fiscal 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;
• changes in deferred revenue balances and unbilled revenue balances, which are not reflected in the
balance sheet, due to seasonality, the compounding effects of renewals, invoice duration, invoice
timing and new business linearity;
• 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 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 our real estate, our office leases and our data center capacity and expansion;
• 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 due to changes in the mix of earnings and losses in countries with
differing statutory tax rates, certain non-deductible expenses as a result of acquisitions, compensation,
the valuation of deferred tax assets and liabilities and changes in federal, state or international tax laws
and accounting principles;
17