Salesforce.com 2014 Annual Report Download - page 51

Download and view the complete annual report

Please find page 51 of the 2014 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.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

order to improve and extend our service offerings and develop new technologies. The majority of the increase in
headcount was due to the acquisition of ExactTarget. In June 2013, we entered into a large capital lease agreement
for software for a period of nine years, which consists of the contractual term of six years and a renewal option of
three years. A portion of the depreciation expense on this asset was allocated to research and development which is
included in the amount above. We expect the costs associated with this software agreement to increase in future
fiscal years. We expect that research and development expenses will increase in absolute dollars and may increase
as a percentage of revenues in future periods as we continue to invest in additional employees and 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, Variance
Dollars(in thousands) 2014 2013
Marketing and sales ........................ $2,168,132 $1,614,026 $554,106
Percent of total revenues .................... 53% 53%
Marketing and sales expenses were $2.2 billion, or 53 percent of total revenues, for fiscal 2014, compared to
$1.6 billion, or 53 percent of total revenues, during the same period a year ago, an increase of $554.1 million. The
increase in absolute dollars was primarily due to an increase of $357.1 million in employee-related costs, an
increase of $59.3 million in stock-based expenses, an increase of $57.2 million in advertising, marketing and event
costs and an increase of $49.8 million in allocated overhead. Our marketing and sales headcount increased by 33
percent since January 31, 2013. The increase in headcount was primarily attributable to the hiring of additional sales
personnel to focus on adding new customers and increasing penetration within our existing customer base, while a
portion of the increase was due to the acquisition of ExactTarget.
General and Administrative.
Fiscal Year Ended
January 31, Variance
Dollars(in thousands) 2014 2013
General and administrative .................... $596,719 $433,821 $162,898
Percent of total revenues ...................... 15% 15%
General and administrative expenses were $596.7 million, or 15 percent of total revenues, for fiscal 2014,
compared to $433.8 million, or 15 percent of total revenues, during the same period a year ago, an increase of
$162.9 million. The increase was primarily 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 amortization expense. Our general and administrative headcount increased by 28 percent since
January 31, 2013 as we added personnel to support our growth. The majority of the increase in headcount was
due to the acquisition of ExactTarget.
Loss from operations.
Fiscal Year Ended
January 31, Variance
Dollars(in thousands) 2014 2013
Loss from operations ........................ $(286,074) $(110,710) $(175,364)
Percent of total revenues ..................... (7)% (4)%
Loss from operations for fiscal 2014, was $286.1 million and included $503.3 million of stock-based
expenses and $146.5 million of amortization of purchased intangibles. During the same period a year ago,
operating loss was $110.7 million and included $379.4 million of stock-based expenses and $88.2 million of
amortization of purchased intangibles.
47